<PAGE> 1
DATED 31st October, 2000
CRODA INTERNATIONAL PUBLIC LIMITED COMPANY
and
CRODA DO BRASIL LTDA
and
SOVEREIGN HOLDINGS, LLC
and
CRODA ADESIVOS DO BRASIL LTDA
and
SOVEREIGN SPECIALTY CHEMICALS, INC.
-----------------------------------------------
BUSINESS AND SHARE SALE AGREEMENT
FOR THE SALE OF A SPECIALITY ADHESIVES BUSINESS
-----------------------------------------------
<PAGE> 2
CONTENTS
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PAGE
<S> <C> <C>
1. Interpretation 2
2. Sale and Purchase; Partial Spin-off of
Croda Adesivos do Brasil 26
3. Consideration 30
4. First Completion 32
5. Second Completion 33
6. Action after First Completion 34
7. Contracts 36
8. Assumed Liabilities and Excluded Liabilities 38
9. Receivables (other than Brazilian Receivables) 41
10. Brazilian Receivables 43
11. VAT 45
12. Employees 45
13. Pensions 48
14. Risk 48
15. Vendor's warranties and Purchaser's remedies 48
16. Purchaser's and Guarantor's warranties 50
17. Certain Undertakings 53
18. Restrictions on Croda International 56
19. Books and Records 58
20. Payments 58
21. Guarantee 59
</TABLE>
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<TABLE>
<S> <C> <C>
22. Effect of Completion 60
23. Remedies, Waivers and Indemnification 61
24. No Assignment 63
25. Further Assurance 64
26. Entire Agreement 65
27. Notices 66
28. Announcements 68
29. Confidentiality 69
30. Costs and Expenses 70
31. Counterparts 70
32. Invalidity 70
33. Governing Law 71
34. Arbitration 71
35. Language 71
36. Agent for Service 71
37. Bulk Transfer Law Compliance 72
Schedule 1 (First Completion Arrangements) 73
1. General 73
2. U.S. Properties 77
3. Properties 77
4. Brazil 77
5. Italy 78
6. Belgium 78
Schedule 2 (Warranties) Part A 79
</TABLE>
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<TABLE>
<S> <C> <C>
1. Capacity 79
2. Solvency 80
3. Subsidiaries 81
4. Ownership of Assets 81
5. Encumbrances 81
6. Accounts 81
7. Management Accounts 82
8. Events since the Management Accounts Date 82
9. Plant and Machinery 83
10. Motor Vehicles 83
11. Stocks 83
12. Contracts 84
13. Customers and Suppliers 85
14. Substantial dependence 85
15. Litigation 85
16. Investigations 85
17. Properties 85
18. Intellectual Property and Information Technology 86
19. Competition and trade regulation law 88
20. Employment 88
21. Pensions 90
22. Environment 92
23. Brokers' Fees 92
24. Regulatory licences 92
</TABLE>
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<TABLE>
<S> <C> <C>
25. Product liability 93
26. Compliance with Laws 93
27. Grants and Allowances 93
28. Taxation 94
29. Brazilian Purchaser 94
Part B 95
1. Ownership of Shares 95
2. Encumbrances 95
Schedule 3 (Limitations on Croda International's Liability) 96
Schedule 4 (Employee Matters) 104
Schedule 5 (Pension Matters) 107
Schedule 6 (Property Matters) 110
1. Consideration 113
2. Matters to which the sale is subject 113
3. Vacant possession 114
4. Title 114
5. Public Requirements 114
6. Apportionments 115
7. The Property Transfer 115
8. Standard Conditions 116
9. Property Encumbrances 116
Schedule 7 (Environmental Matters) 120
1. Interpretation 120
2. Covenant 122
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
3. Financial limits 122
4. Trigger condition and time limit 122
5. Other limits and exclusions 123
6. Conduct 124
7. Expert Procedure 127
8. Exclusive remedy 128
Schedule 8 (Listed Employees) 135
Schedule 9 (Stocks) 136
Schedule 10 (Motor Vehicles) 137
Schedule 11 (Receivables) 138
Schedule 12 (Trade Payables) 139
Schedule 13 (Designated Purchaser) 140
Schedule 14 (Second Completion Arrangements) 141
Schedule 15 (Earnout and Working Capital Calculations) 143
Schedule 16 Part A Covenants Related to Brazilian Business Pending Second Completion 147
Part B Form of Gross Margin Statement 151
</TABLE>
<PAGE> 7
BUSINESS AND SHARE SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 31st day of October, 2000
BETWEEN:
1. CRODA INTERNATIONAL PUBLIC LIMITED COMPANY whose registered office is
at Cowick Hall, Snaith, Goole, East Yorkshire, England ("CRODA
INTERNATIONAL");
2. CRODA DO BRASIL LTDA, a limited liability company (sociedade por quotas
de responsabilidade limitada) incorporated in Brazil whose registered
office is at Rua Croda 580, Campinas, SP, Brazil ("CRODA DO BRASIL");
3. SOVEREIGN HOLDINGS, LLC whose principal place of business is at 225
West Washington Street, Suite 2200, Chicago, Illinois, IL 60606, USA
(the "PURCHASER");
4. CRODA ADESIVOS DO BRASIL LTDA., a limited liability company (sociedade
por quotas de responsabilidade limitada) incorporated in Brazil whose
registered office is at Rua Croda 580, Building A, Campinas, SP, Brazil
("CRODA ADESIVOS DO BRASIL");
AND
5. SOVEREIGN SPECIALTY CHEMICALS, INC. whose principal place of business
is at 225 West Washington Street, Suite 2200, Chicago, Illinois, IL
60606, USA (the "GUARANTOR").
WHEREAS:
(A) The Vendor Companies, which are subsidiaries of Croda International,
carry on a specialty adhesives business.
(B) Croda International has agreed to procure the sale of, and the
Purchaser has agreed to purchase, the Business other than the Brazilian
Business (each as defined in this Agreement) comprising the Assets
other than the Brazilian Assets (each as defined in this Agreement), as
a going concern, on the terms of this Agreement.
(C) Croda do Brasil has agreed to transfer by means of a partial spin-off
and Croda Adesivos do Brasil has agreed to have contributed to its
corporate capital the Brazilian Business (as defined in this Agreement)
comprising the Brazilian Assets (as defined in this Agreement), as a
going concern, on the terms of this Agreement.
<PAGE> 8
2
(D) Croda International has agreed to procure the sale of and the Purchaser
has agreed to purchase the Shares (as defined in this Agreement) on the
terms of this Agreement.
(E) The Guarantor has agreed to guarantee the obligations of each member of
the Purchaser's Group under this Agreement and any other documents
required to be delivered by the members of the Purchaser's Group at
First Completion and Second Completion pursuant to this Agreement.
NOW IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement and the Schedules to it:
"ACCOUNTS" means the financial statements for the
Business as at, and for the accounting
reference period ended on, the Accounts
Date as reviewed by the auditors of
Croda International for the purposes of
incorporation into, and as used in the
preparation of, the audited consolidated
financial statements of Croda
International for the accounting
reference period ended on the Accounts
Date, in the form attached to the
Disclosure Letter;
"ACCOUNTS DATE" means 31 December, 1999;
"AGREED ENVIRONMENTAL LIABILITIES" means any obligations or liabilities in
relation to Environmental Matters in
respect of the Business or the
Properties, solely to the extent such
obligations or liabilities arise from
facts, circumstances or conditions first
existing after the First Completion Date
with respect to the Business (other than
the Brazilian Business) and first
existing after the Second Completion
Date with regard to the Brazilian
Business and in each case, for the
avoidance of doubt, excluding any
obligations or liabilities which give
rise to a claim under the Environmental
Warranties and/or the Environmental
Covenant;
<PAGE> 9
3
"AGREED FORM" means, in relation to any document, such
document in a form that has been agreed
and initialled for the purposes of
identification by or on behalf of the
Purchaser and Croda International;
"AGREED RATE" in relation to interest accruing in
respect of any day means a rate one per
cent. per annum above the base rate of
Barclays Bank plc prevailing at the
close of business on that day;
"ASSETS" means the Business and all the assets
agreed to be purchased or, as the case
may be, transferred by spin-off under
this Agreement, whether by the Purchaser
or by Croda Adesivos do Brasil;
"ASSURANCE" means any warranty, representation,
statement, assurance, covenant,
agreement, undertaking, indemnity,
guarantee or commitment of any nature
whatsoever;
<PAGE> 10
4
"BELGIAN BUSINESS SALE AGREEMENT" means the business sale agreement to be
entered into between Sovereign
Speciality Chemicals BVBA and Croda
Adhesives Europe in the Agreed Form;
"BELGIAN LISTED EMPLOYEES" means those individuals who are employed
by Croda Adhesives Europe in the
Business as at the close of business on
the First Completion Date and whose
names are listed in Part C of Schedule 8
(Listed Employees);
"BELGIAN PROPERTY" means the Property described in Part A2
of Schedule 6 (Property Matters);
"BOOKS AND RECORDS" means all books and records of any
member of the Croda Group containing
Business Information, including, without
limitation, all documents and other
material (including all forms of
computer or machine readable material
but excluding Information Technology);
"BRAZIL NET WORKING CAPITAL" as at a particular date equals (A) the
sum of (i) cash of Croda Adesivos do
Brasil, (ii) Brazilian Receivables less
the amount of any agreed provision at
that date in respect of specific
Brazilian Receivables being bad or
doubtful, (iii) Brazilian Stocks and
(iv) other current assets of Croda
Adesivos do Brasil, but not including,
in any case, amounts which have been
paid, whether by way of deposit or
prepayment or otherwise, by or on behalf
of Croda Adesivos do Brasil prior to
that date for goods or services
(including but not limited to prepaid
insurance) with respect to which Croda
Adesivos do Brasil will not have any
right or benefit following that date
over (B) the sum of (i) Brazilian Trade
Payables, (ii) accrued liabilities of
Croda Adesivos do Brasil (including all
debt obligations) and (iii) accrued
taxes payable by Croda
<PAGE> 11
5
Adesivos do Brasil, and for this purpose
any reference in "BRAZILIAN
RECEIVABLES", "BRAZILIAN STOCK" and
"BRAZILIAN TRADE PAYABLES" to the First
Completion Date shall be construed as a
reference to such particular date and
shall be set forth on schedules prepared
as at such date in a manner consistent
with the basis on which Schedules 9, 11
and 12 hereof were prepared;
"BRAZILIAN BOOKS AND RECORDS" means all Books and Records of Croda do
Brasil;
"BRAZILIAN BUSINESS" means that part of the Business which is
carried on by Croda do Brasil and
following First Completion, will be
carried on by Croda Adesivos do Brasil;
"BRAZILIAN BUSINESS INFORMATION" means the Business Information which is
owned by Croda do Brasil;
"BRAZILIAN CONTRACTS" means those Contracts to which Croda do
Brasil is a party or the benefit of
which is held in trust for or has been
assigned to Croda do Brasil or in
respect of which Croda do Brasil has any
liability or obligation;
"BRAZILIAN GOODWILL" means all the Goodwill in relation to
the Brazilian Business;
"BRAZILIAN INFORMATION TECHNOLOGY" means the Business Information
Technology which is owned by Croda do
Brasil;
BRAZILIAN INTELLECTUAL PROPERTY" means the Business Intellectual Property
which is owned by Croda do Brasil;
"BRAZILIAN LEASE" means a lease agreement to be entered
into between Croda do Brasil and Croda
Adesivos do Brasil in the Agreed Form;
"BRAZILIAN LISTED EMPLOYEES" means those individuals who are employed
by Croda do Brasil in the Business as at
close of business on the First
Completion Date and whose names are
listed in Part E
<PAGE> 12
6
of Schedule 8 (Listed Employees);
"BRAZILIAN MOTOR VEHICLES"; means the Motor Vehicles which are owned
by Croda do Brasil;
"BRAZILIAN PLANT AND MACHINERY" means the Plant and Machinery owned by
Croda do Brasil;
"BRAZILIAN PROVISION" has the meaning set out in sub-clause
10.3(i);
"BRAZILIAN RECEIVABLES" means the Receivables owned by Croda do
Brasil;
"BRAZILIAN STOCKS" means the Stocks owned by Croda do
Brasil;
"BRAZILIAN SERVICES AGREEMENT" means a services agreement to be entered
into between Croda do Brasil and Croda
Adesivos do Brasil in the Agreed Form;
"BRAZILIAN TRADE PAYABLES" means the Trade Payables of Croda do
Brasil;
"BUSINESS" means the business of manufacturing,
distributing and selling specialty
adhesives and coatings, including,
without limitation, those used for
flexible packaging, packaging and
converting, book binding, print
finishing and industrial applications,
carried on by the Vendor Companies as at
the date of this Agreement;
"BUSINESS DAY" means a day (other than a Saturday or a
Sunday) on which banks are open for
business (other than solely for trading
and settlement in euro) in London, U.K.
and Chicago, Illinois, U.S.A.;
"BUSINESS INFORMATION" means all information and know-how
(whether or not confidential and in
whatever form held) which relates to the
Business and is owned by any member of
the Croda Group including, without
limitation, all formulae, formulations,
processes, designs, specifications,
<PAGE> 13
7
drawings, data, trade secrets of the
Business, manuals and instructions and
all customer and supplier lists, sales
and purchase information, employment,
health and safety and environmental
records, business plans and forecasts
and all technical or other expertise, in
each case relating to the Business;
"BUSINESS INFORMATION TECHNOLOGY" means the Information Technology owned
by any member of the Croda Group and
used exclusively by the Business;
"BUSINESS INTELLECTUAL PROPERTY" means the Intellectual Property which is
owned by any member of the Croda Group
and used exclusively by the Business
but, for the avoidance of any doubt,
does not include the Croda Marks;
"CANADIAN LISTED EMPLOYEE" means the individual employed by Croda
Canada in the Business as at close of
business on the First Completion Date
and whose name is listed in Part G of
Schedule 8 (Listed Employees);
"COMPANIES ACTS" means the Companies Act 1985, the
Companies Consolidation (Consequential
Provisions) Act 1985, the Companies Act
1989 and Part V of the Criminal Justice
Act 1993;
"COMPLETION DOCUMENTS" means the Brazilian Lease, the Brazilian
Services Agreement, the Ewing Lease, the
Italian Transfer Deed, the US
Substitution Agreement, the US Bill of
Sale, the US Employment Contract
Assignments, the US Assignment and
Assumption Agreement, the Belgian
Business Sale Agreement, the
Transitional Services Agreement, the
Property Transfers, the Patent
Assignments, the Letter of Credit and
the minutes of Shareholders' Meetings of
Croda do Brasil and Croda Adesivos do
Brasil, approving the partial spin-off
of Croda do Brazil and the contribution
of the Brazilian
<PAGE> 14
8
Assets to Croda Adesivos do Brasil;
"CONTRACTS" means all the contracts, arrangements
and engagements relating either
exclusively to the Business or relating
in part to the Business (but then only
to the extent that they do so relate) to
which any member of the Croda Group is
(itself or through an agent) a party or
the benefit of which is held in trust
for or has been assigned to any member
of the Croda Group as at First
Completion and which, in any case, are
current or unperformed as at First
Completion or in respect of which any
member of the Croda Group has any
liability or obligation as at First
Completion but excluding:
(i) contracts with Listed Employees
(other than such contracts
pertaining to John T. Koufis,
Jerald P. Stempel, and Scott
Goldstein, all of which shall be
assumed by the relevant member of
the Purchaser's Group);
(ii) contracts of insurance relating
to the Business;
(iii) contracts relating to the
ownership and occupation of the
Properties; and
(iv) the non-competition covenant set
forth in clause 12 of that
certain agreement dated 30
November, 1998 among Croda
Australia Pty Limited, HB Fuller
Company Australia Pty Limited,
Croda International plc and HB
Fuller Company;
"CONTROLLED MATERIAL" means:-
(i) anything which alone or in
combination with other things is
capable of causing harm to the
Environment;
<PAGE> 15
9
(ii) any waste; and
(iii) anything that is regulated by, or
may provide a basis for liability
under, any Environmental Law;
"CRODA ADHESIVES" means Croda Adhesives Limited, a limited
liability company incorporated in
England and Wales with registered number
369379 and whose registered office is at
Cowick Hall, Snaith, Goole, East
Yorkshire, England;
"CRODA ADHESIVES EUROPE" means Croda Adhesives Europe N.V., a
limited liability company incorporated
in Belgium whose registered office is at
Hoogboomsteenweg 166, B-2950 Kapellen,
Belgium;
"CRODA ADHESIVES, INC." means Croda Adhesives Inc., a company
incorporated in Delaware, United States
of America whose registered office is
c/o United Corporate Services, Inc., 15
East North Street, Dover, Delaware;
"CRODA CANADA" means Croda Canada Limited, a limited
liability company incorporated in Canada
whose registered office is at 78 Tisdale
Avenue, Toronto, Ontario, Canada;
"CRODA FRANCE" means Croda France S.A., a limited
liability company incorporated in France
whose registered office is at Immoparc,
RN10, 78190 Trappes, France;
"CRODA GmBH" means Croda GmbH, a limited liability
company incorporated in Germany whose
registered office is at Amtsgericht HR
41334 Nettetal, Postfach 1163, 41301
Nettetal, Germany;
"CRODA GROUP CONFIDENTIAL means all information which is not in
INFORMATION" the public domain in whatever form held
relating to any member of the Croda
Group or the business of any member of
the
<PAGE> 16
10
Croda Group and which was:
(i) supplied in confidence by or on
behalf of any member of the Croda
Group to the Business; or
(ii) supplied in confidence to any
member of the Croda Group by any
third party,
and as at the First Completion Date
remains the subject of the obligation of
confidentiality under which it was
supplied and where such obligation of
confidentiality is fairly disclosed in
the Disclosure Letter by reference to
sub-clause 17.7 (Certain Undertakings);
"CRODA GROUP" means Croda International and its
subsidiaries at any time and from time
to time;
"CRODA INVESTMENTS" means Croda Investments BV, a limited
liability company incorporated in The
Netherlands whose registered office is
at Officia 1, De Boelelaan 7, 1083 HJ,
Amsterdam;
"CRODA ITALIANA" means Croda Italiana SpA, a limited
liability company incorporated in Italy
whose registered office is at Via Grocco
917/919, 27036 Mortara (PV), Italy;
"CRODA MARKS" has the meaning specified in sub-clause
17.3 (Certain Undertakings);
"CRODA NORDICA" means Croda Nordica A.B., a limited
liability company incorporated in Sweden
whose registered office is at
Krossverksgatan 5 C, SE-216 16, Limhamn,
Sweden;
"CRODA POLYMERS" means Croda Polymers International
Limited, a company incorporated in
England whose registered office is at
Cowick Hall, Snaith, Goole, East
Yorkshire, England;
<PAGE> 17
11
"DEPOSIT" means the amount of(pound)1,246,000;
"DETERMINATION DATE" has the meaning specified in
sub-paragraph 2(D) of Schedule 15
(Earnout Amount and Working Capital
Calculations);
"DESIGNATED PURCHASER" means the Purchaser and those designated
members of the Purchaser's Group with
respect to the Assets as listed in
Schedule 13 (Designated Purchaser);
"DISCLOSURE LETTER" means the letter of the same date as
this Agreement in the Agreed Form
written by Croda International to the
Purchaser and Croda Adesivos do Brasil
for the purposes of paragraph 9 of
Schedule 3 (Limitations on Croda
International's Liability);
"EARNOUT AMOUNT" means the amount calculated in
accordance with the following formula:
E = (Gross Margin -(pound)1,065,000)
8.333,
subject to a maximum amount of
(pound)2,500,000 in circumstances where
the Gross Margin is equal to or greater
than Forecast Gross Margin;
"ENVIRONMENT" means all or any part of the air
(including, without limitation, the air
within buildings and the air within
other natural or man-made structures
above or below ground), water and land
and any living systems or organisms
supported by those media;
"ENVIRONMENTAL COVENANT" means the environmental covenant in
Schedule 7 (Environmental Matters) to
this Agreement;
"ENVIRONMENTAL LAWS" means all European Community, national,
federal, state, provincial, regional,
local or other applicable statutes,
subordinate legislation, regulations,
<PAGE> 18
12
statutory guidance, orders, decisions
and/or common law which relate to
Environmental Matters and are in force
and binding on the relevant member of
the Croda Group in relation to the
Business at the date of this Agreement;
"ENVIRONMENTAL MATTERS" means:-
(i) the release, spillage, deposit,
escape, discharge, leak,
migration, emission into the
Environment of Controlled
Materials or the presence of
Controlled Materials at any
onsite or offsite location; or
(ii) the existence or effect of noise,
vibration, radiation, dust, odour
or common law or statutory
nuisance; or
(iii) worker health and safety; or
(iv) other matters relating to the
protection of the Environment or
the maintenance of human health
or safety including, without
limitation, matters arising out
of the manufacturing, processing,
treatment, keeping, handling,
use, possession, supply, receipt,
sale, purchase, import, export or
transportation of Controlled
Materials;
"ENVIRONMENTAL PERMITS" means any permit, licence, consent or
authorisation required by Environmental
Laws in relation to the operation during
the Relevant Period of the Business or
the Plant and Machinery;
"ENVIRONMENTAL REPORT" means the environmental reports,
memoranda and related documents in
respect of the Properties as attached to
the Disclosure Letter and includes,
without limitation, the environmental
<PAGE> 19
13
report dated 18 April 2000 by Dames &
Moore on the UK Property;
"ENVIRONMENTAL WARRANTIES" means the Warranties in paragraph 22 of
Part A of Schedule 2 (Warranties);
"EXCHANGE RATE" means a rate of exchange for converting
an amount in Brazilian Reals into an
amount in pounds sterling. The "EXCHANGE
RATE" applicable to any date will be the
closing mid-point spot rate applicable
to the relevant amount of Brazilian
Reals at close of business in London on
that date or, if such day is not a
Business Day, on the Business Day
immediately preceding such day, as shown
in the relevant Financial Times (London
first edition) showing such rates or, if
the Financial Times showing such rates
is not published within five Business
Days after that date, the London closing
middle-point spot rate for the relevant
day quoted by Barclays Bank for pounds
sterling applicable to amounts
equivalent to(pound)50,000 or more;
"EWING LEASE" means the lease agreement to be entered
into between Croda Adhesives, Inc. and
Sovereign Adhesives, Inc. for the
property located at 200 Upper Ferry
Road, in the Township of Ewing, County
of Mercer, in the State of New Jersey in
the United States of America in the
Agreed Form;
"EXCLUDED ASSETS" has the meaning given in sub-clause 2.1
(Sale and Purchase);
"FIRST COMPLETION" means completion of the sale and
purchase of the Business and the Assets
(other than the Brazilian Assets) under
this Agreement and the completion of the
partial spin-off of Croda do Brasil and
the contribution of the Brazilian Assets
to the corporate capital of Croda
Adesivos do Brasil;
<PAGE> 20
14
"FIRST COMPLETION DATE" means the date of this Agreement;
"FORECAST GROSS MARGIN" means(pound)1,365,000;
"GOODWILL" means all the goodwill of the Croda
Group in relation to the Business
together with the exclusive right for
the Purchaser and its assignees to
represent itself as carrying on the
Business in succession to the Croda
Group, but excluding the goodwill in, or
relating to, the Croda Marks;
"GROSS MARGIN" means, in respect of sales by the
Brazilian Business, the net selling
price, less raw materials, less
packaging costs, all as determined
in accordance with paragraph 1 of
Schedule 15 (Earnout and Working Capital
Calculations), converted to pounds
sterling at an exchange rate of 2.72
Brazilian Reals for each 1 pound
sterling;
"IMMOVABLE PROPERTY" means freehold and leasehold land and
buildings, fixtures or other immovable
property anywhere in the world;
"INDEMNIFIED CLAIM" has the meaning given it in sub-clause
23.4 (Remedies, Waivers and
Indemnification);
"INDEMNIFIED PERSON" has the meaning given it in sub-clause
23.4 (Remedies, Waivers and
Indemnification);
"INDEMNIFYING PARTY" has the meaning given it in sub-clause
23.4 (Remedies, Waivers and
Indemnification);
"INFORMATION MEMORANDUM" means the information memorandum
prepared by Croda International relating
to the Business dated April, 2000;
"INFORMATION TECHNOLOGY" means all computer hardware, software
and networks including without
limitation telecommunications networks;
<PAGE> 21
15
"INTELLECTUAL PROPERTY" means patents, trade marks and service
marks, rights in designs, trade or business
names, copyrights (including rights in
computer software), database rights and
topography rights (whether or not any of
these is registered and including
applications for registration of any such
thing) and all rights or forms of protection
of a similar nature or having equivalent or
similar effect to any of these which may
subsist anywhere in the world;
"INTERIM BRAZIL means the amount of Brazil Net Working
NET WORKING CAPITAL AMOUNT" Capital as at 31 December, 2000 as
determined in accordance with paragraph 1 of
Schedule 15 (Earnout and Working Capital
Calculations);
"ITALIAN LISTED EMPLOYEES" means those individuals who are employed by
Croda Italiana in the Business as at the
close of business on the First Completion
Date and whose names are listed in Part D of
Schedule 8 (Listed Employees);
"ITALIAN TRANSFER DEED" means a transfer deed to be entered into on
the First Completion Date between Croda
Italiana and the Purchaser in the Agreed
Form;
"LEASED PLANT AND means all Plant and Machinery which is
MACHINERY" subject to a lease or similar arrangement
and details of which are attached to the
Disclosure Letter;
"LETTER OF CREDIT" has the meaning set out in sub-clause 3.7
(Consideration);
"LICENSED INFORMATION means Information Technology other than
TECHNOLOGY" Business Information Technology used by any
member of the Croda Group in the Business
under licence from a third party;
"LISTED EMPLOYEES" means the UK Listed Employees, the US Listed
Employees, the Belgian Listed
<PAGE> 22
16
Employees, the Brazilian Listed Employees,
the Canadian Listed Employee, the Italian
Listed Employees and the Other European
Employees;
"MANAGEMENT ACCOUNTS" means the unaudited management accounts of
the Business for the period from 1 January
2000 to the Management Accounts Date, as
attached to the Disclosure Letter;
"MANAGEMENT ACCOUNTS DATE" means 30th September, 2000;
"MOTOR VEHICLES" means those motor vehicles owned (but not
leased) by any member of the Croda Group
which are used in connection with the
Business at the close of business on the
First Completion Date and which are listed
in Schedule 10 (Motor Vehicles);
"NEW BRAZILIAN means:
RECEIVABLES"
(i) all payments owing to Croda Adesivos
do Brasil as at close of business on
the Second Completion Date (and
whether or not yet due and payable)
for goods or services supplied by it
in the ordinary course of the
Business; and
(ii) all amounts which have been paid
(whether by way of deposit or
prepayment or otherwise) by or on
behalf of Croda Adesivos do Brasil
prior to the close of business on the
Second Completion Date for goods or
services (including, but not limited
to, utility services) supplied to it
and all business rents, rates and
similar periodic outgoings incurred
by it in the ordinary course of the
Business, in each case which relate,
and are properly attributable, to the
period after Second Completion,
in each case as listed in a schedule to
<PAGE> 23
17
be compiled and delivered to the Purchaser
at Second Completion (the "NEW BRAZILIAN
RECEIVABLES SCHEDULE");
"NOTICE" means a notice or notification given in
accordance with the provisions of clause 27;
"OTHER EUROPEAN EMPLOYEES" means those individuals who are employed by
Croda GmbH, Croda France or Croda Nordica in
the Business as at the close of business on
the First Completion Date and whose names
are listed in Part F of Schedule 8 (Listed
Employees);
"PATENT ASSIGNMENTS" means the assignments of patents and patent
applications in the Agreed Form to be
entered into pursuant to sub-clause 2.5 and
2.6;
"PERMITTED ENCUMBRANCES" means security interests arising in the
ordinary course of business or by operation
of law (including, without limitation,
mechanics', carriers', workmen's and
repairmen's liens) with respect to amounts
that are not yet overdue for a period of 60
days or amounts being contested in good
faith by appropriate proceedings, security
interests in sales contracts entered into in
the ordinary course of business with title
retention provisions and equipment leases
with third parties entered into in the
ordinary course of business and security
interests for Taxes and other governmental
charges which are not due and payable or
which may thereafter be paid without
penalty;
"PLANT AND MACHINERY" means all the plant, machinery, equipment,
loose tools, fittings, furniture,
partitioning, spares and other goods owned
by the Vendor Companies and used or to be
used exclusively in the Business, but
excluding the Motor Vehicles and any motor
vehicle which is leased by any member of the
Croda Group
<PAGE> 24
18
and excluding Information Technology;
"POST SECOND COMPLETION means an amount equal to:
ADJUSTMENT AMOUNT"
(i) the Working Capital Adjustment
Amount; minus (if the Working Capital
Adjustment Amount is a positive
number) or plus (if the Working
Capital Adjustment Amount is a
negative number), as the case may be
(ii) an amount equal to 7% of the net
sales of Croda Adesivos do Brasil
during the period from, but
excluding, 31 December, 2000 to, and
including, the Second Completion Date
as determined in accordance with
paragraph 2 of Schedule 15 (Earnout
and Working Capital Calculations);
plus
(iii) interest on such amount calculated at
the Agreed Rate from the Second
Completion Date to, but excluding,
the date of payment;
"PROCEEDINGS" means any proceeding, suit or action arising
out of or in connection with this Agreement
or any transaction contemplated hereby;
"PROPERTIES" means the Immovable Property specified in
Part A of Schedule 6 (Property Matters) and
references to "Property" shall be construed
accordingly;
"PROPERTY TRANSFERS means the transfers of the Properties in the
Agreed Form in accordance with the relevant
provisions of Schedule 6 (Property Matters);
"PROVISION" has the meaning given in sub-clause 9.3
(Receivables (other than Brazilian
Receivables));
"PURCHASER'S COMPLETION has the meaning given in sub-clause 16.1
<PAGE> 25
19
DOCUMENTS" (Purchaser's and Guarantor's Warranties);
"PURCHASER'S GROUP" means the Guarantor and its subsidiaries
from time to time;
"PURCHASER'S AND means the warranties of the Purchaser and
GUARANTOR'S WARRANTIES" the Guarantor set out in sub-clause 16.1 and
"Purchaser's and Guarantor's Warranty" shall
be construed accordingly; "RECEIVABLES"
means:
(i) all payments owing to the Vendor
Companies (other than Croda Italiana)
as at close of business on the First
Completion Date (and whether or not
yet due and payable) for goods or
services supplied by them to persons
other than members of the Croda Group
in the ordinary course of the
Business; and
(ii) all amounts which have been paid
(whether by way of deposit or
prepayment or otherwise) by or on
behalf of any of the Vendor Companies
(other than Croda Italiana) prior to
the close of business on the First
Completion Date for goods or services
(including, but not limited to,
utility services) supplied to them by
persons other than members of the
Croda Group and all business rents,
rates and similar periodic outgoings
incurred by them in the ordinary
course of the Business other than
those owed to other members of the
Croda Group in each case which
relate, and are properly
attributable, to the period after
First Completion,
in each case as listed in Schedule 11;
"RELEVANT PERIOD" means:
<PAGE> 26
20
(i) in relation to the warranty in
paragraph 22(A) and (B) of Part A of
Schedule 2 the period commencing on
the date ten years prior to the date
of this Agreement and ending on the
date of this Agreement;
(ii) in relation to the warranty in
paragraph 22(D) of Part A of Schedule
2, the period commencing on the date
six years prior to the date of this
Agreement and ending on the date of
this Agreement;
"SECOND COMPLETION" means completion of the sale and purchase of
the Shares under this Agreement;
"SECOND COMPLETION BRAZIL means the amount of Brazil Net Working
NET WORKING CAPITAL AMOUNT" Capital as at the Second Completion Date as
determined in accordance with paragraph 2 of
Schedule 15 (Earnout and Working Capital
Calculations);
"SECOND COMPLETION DATE" means the fifth Business Day following the
final agreement or determination by the
Arbiter of the Earnout Amount in accordance
with paragraph 1 of Schedule 15 (Earnout and
Working Capital Calculations) or such other
date as Croda International and the
Purchaser may agree being no later than the
fifteenth Business Day after the date of the
final agreement of the Earnout Amount as
aforesaid;
"SERVICE DOCUMENT" means a writ, summons, order, judgment or
other process issued out of the courts of
England and Wales;
"SHARES" means the entire issued share capital in
Croda Adesivos do Brasil, including the new
shares to be issued as a result of the
contribution of the Brazilian Assets to the
corporate capital of Croda Adesivos do
Brasil;
"SHARED INTELLECTUAL means all Intellectual Property owned by
<PAGE> 27
21
PROPERTY" each member of the Croda Group and which is
used in the Business, other than the
Business Intellectual Property and the Croda
Marks;
"SHARED INFORMATION means all Information Technology owned by
TECHNOLOGY" each member of the Croda Group and which is
used in the Business, other than the
Business Information Technology;
"SO FAR AS CRODA means so far as is within the knowledge of
INTERNATIONAL IS AWARE" any of the directors of Croda International
(having made due inquiry of J. Stempel, S.
Goldstein, J. Kouffis, G. Bergmans, P.
Johnson, M. de Bellis, C. Holt, T. Reed, W.
Read, J. Barrie, J. Cork, Russell Nesiewicz
and Roy Ainger);
"STOCKS" means all raw materials and consumables,
engineers' stores, stocks-in-process and
finished stocks, goods for resale and
packaging and promotional material owned by
the Vendor Companies, wherever held, and
used or to be used by or in the Business as
at close of business on the First Completion
Date as listed in Schedule 9 (Stocks);
"TAX AUTHORITY" means any taxing or other authority
(anywhere in the world) competent to impose,
collect or administer any liability to Tax;
"TAX" OR "TAXATION" means all taxes, levies, duties, imposts,
charges and contributions and withholdings
of any nature whatsoever whether of the
United Kingdom or elsewhere, and whether
national, federal, state, municipal or
other, together with all penalties, charges
and interest relating to any of them;
"TRADE PAYABLES" means:
(i) all payments due from the Vendor
Companies' (other than Croda
Italiana) as at close of business
<PAGE> 28
22
on the First Completion Date for
goods and services supplied to them
by persons other than the members of
the Croda Group in the ordinary
course of the Business that are not
yet 30 days or more past due;
(ii) all amounts which have not been paid
by or on behalf of any of the Vendor
Companies (other than Croda Italiana)
as at close of Business on the First
Completion Date for goods or services
(including, but not limited to,
utility services) supplied to them by
persons other than the members of the
Croda Group and all business rents,
rates and similar periodic outgoings
incurred by them, in the ordinary
course of the Business (other than
those owed to any member of the Croda
Group), in each case which relate,
and are properly attributable, to the
period before First Completion;
in each case as specified in Schedule 12
(Trade Payables);
"TRANSFER REGULATIONS" means the Transfer of Undertakings
(Protection of Employment) Regulations 1981
as amended ("TUPE") or equivalent
legislation implementing the provisions of
the EU Acquired Rights Directive;
"TRANSITIONAL SERVICES means the transitional services agreement to
AGREEMENT" be entered into on the First Completion Date
between Croda International and the
Purchaser in the Agreed Form;
"UNKNOWN ENVIRONMENTAL has the meaning given in the Environmental
INDEMNITY MATTERS" Covenant;
"US ASSIGNMENT AND means the assignment and assumption
ASSUMPTION AGREEMENT" agreement to be entered into between Croda
Adhesives, Inc. and Sovereign
<PAGE> 29
23
Adhesives, Inc. in the Agreed Form;
"US BILL OF SALE" means the bill of sale to be entered into
between Croda Adhesives, Inc. and Sovereign
Adhesives, Inc. in the Agreed Form;
"US EMPLOYMENT CONTRACT means the two assignment agreements to be
ASSIGNMENTS" entered into between Croda Adhesives, Inc.
and Sovereign Adhesives, Inc. in the Agreed
Form respectively relating to certain
confidentiality and procedures agreements in
respect of certain US Listed Employees, and
interests under Jerald P. Stempel's and John
T. Koufis' employment agreements with Croda
Adhesives, Inc.;
"US SUBSTITUTION AGREEMENT" means the substitution agreement to be
entered into between Teamsters Local Union
No. 929 affiliated with the International
Brotherhood of Teamsters, Croda Adhesives,
Inc. and Sovereign Adhesives, Inc. in the
Agreed Form;
"UK LISTED EMPLOYEES" means those individuals who were employed by
Croda Polymers in the Business at the close
of business on the First Completion Date and
whose names are listed in Part A of Schedule
8 (Listed Employees);
"UK PROPERTY" means those Properties described in Part A1
of Schedule 6 (Property Matters);
"US LISTED EMPLOYEES" means those individuals who are employed by
Croda Adhesives Inc. in the Business as at
the close of business on the First
Completion Date and whose names are listed
in Part B of Schedule 8 (Listed Employees);
"US PROPERTIES" means those Properties described in Part A3
of Schedule 6 (Property Matters);
"VAT" means in relation to any jurisdiction within
the European Community, the Tax imposed by
Sixth Council Directive of the
<PAGE> 30
24
European Communities and any national
legislation implementing that directive
together with legislation supplemental
thereto;
"VENDOR COMPANIES" means Croda Polymers, Croda Adhesives, Croda
Adhesives, Inc., Croda do Brasil, Croda
Italiana, Croda Adhesives Europe, Croda
GmbH, Croda France, Croda Canada and Croda
Nordica, and "Vendor Company" means any of
them;
"VENDOR'S COMPLETION means this Agreement and the other
DOCUMENTS" Completion Documents which are to be
executed by any member of the Croda Group at
First Completion;
"WARRANTIES" means the warranties set out in Schedule 2
and "Warranty" shall be construed
accordingly;
"WORKING CAPITAL ADJUSTMENT means the amount by which the Second
AMOUNT" Completion Brazil Net Working Capital Amount
exceeds or is less than, as the case may be,
the Interim Brazil Net Working Capital
Amount, as agreed or determined by the
Arbiter in accordance with paragraph 2 of
Schedule 15 (Earnout and Working Capital
Calculations); and
"WORKING HOURS" means 9.30 a.m. to 5.30 p.m. (local time) on
a Business Day.
1.2 In this Agreement and the Schedules to it, unless otherwise specified:
(A) references to Clauses, sub-clauses, paragraphs, sub-paragraphs and
Schedules are to Clauses, sub-clauses, paragraphs, sub-paragraphs, of,
and Schedules to, this Agreement;
(B) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted;
(C) references to a "COMPANY" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
<PAGE> 31
25
(D) references to a "PERSON" shall be construed so as to include any
individual, firm, company, government, governmental, regulatory,
self-regulatory or quasi-governmental agency, authority or body, Tax
Authority, state or agency of a state, court, arbitrator or any joint
venture, association, partnership, works council or employee
representative body (whether or not having separate legal
personality);
(E) the expressions "ACCOUNTING REFERENCE DATE", "ACCOUNTING REFERENCE
PERIOD", "PROFIT AND LOSS ACCOUNT", "SUBSIDIARY", "SUBSIDIARY
UNDERTAKING" AND "HOLDING COMPANY" shall have the meanings
respectively given thereto in the Companies Acts;
(F) references to writing shall include any modes of reproducing words in
a legible and non-transitory form;
(G) references to times of the day are to local time in the relevant
jurisdiction;
(H) headings are for convenience only and do not affect the interpretation
of this Agreement;
(I) references to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official, or
any legal concept or thing shall in respect of any jurisdiction other
than England be deemed to include what most nearly approximates in
that jurisdiction to the English legal term;
(J) where any Warranty is qualified or phrased by reference to
materiality, such reference shall, unless specified to the contrary,
be construed as a reference to materiality in the context of the
Business taken as a whole and where any Warranty contains a reference
to a material adverse effect, such reference shall be construed as a
reference to a material adverse effect on the Business taken as a
whole;
(K) where it is necessary to determine whether any monetary threshold in a
Warranty which is expressed in pounds sterling has been met or
exceeded, any non-sterling amount shall, where applicable, be
translated into pounds sterling at the closing mid-point spot rate
applicable to that amount of the non-sterling currency at close of
business in London on the date of First Completion or, if such day is
not a Business Day, on the Business Day immediately following such
day, as shown in the relevant Financial Times (London first edition)
showing such rates or, if the Financial Times showing such rates is
not published within five Business Days after that day, the London
closing middle-point spot rate for the relevant day quoted by Barclays
Bank for pounds sterling applicable to amounts equivalent
to(pound)50,000 or more;
<PAGE> 32
26
(L) references to "INDEMNIFY" and "INDEMNIFYING" any person include
indemnifying and keeping that person harmless from all actions,
claims, demands and proceedings from time to time made against that
person and all liabilities, loss, damages and all reasonable payments,
costs and expenses (including, without limitation, any reasonable
legal and/or other adviser's fees and disbursements) made or incurred
by that person as a consequence of or which would not have arisen but
for that fact, matter or circumstance or thing in respect of which the
relevant indemnity is expressed to be given and (a) the provisions of
sub-clauses 23.4 to 23.7 shall apply to such indemnification, (b)
references to the Purchaser or Croda Adesivos do Brasil indemnifying
each member of the Croda Group shall constitute undertakings by the
Purchaser or Croda Adesivos do Brasil, as applicable, to Croda
International for itself and on behalf of each other member of the
Croda Group and (c) references to Croda International indemnifying
each member of the Purchaser's Group shall constitute undertakings by
Croda International to the Purchaser for itself and on behalf of each
other member of the Purchaser's Group;
(M) references to the singular shall include the plural and vice versa;
(N) references to "(POUND)" are to pounds sterling, the lawful currency of
the United Kingdom; and
(O) the Schedules form part of this Agreement and shall have the same
force and effect as if set out in the body of this Agreement and any
reference to this Agreement shall include the Schedules.
2. SALE AND PURCHASE; PARTIAL SPIN-OFF OF CRODA ADESIVOS DO BRASIL
2.1 On the terms set out in this Agreement, Croda International shall sell or
procure the sale of, and the Purchaser shall purchase or procure the
purchase by the relevant Designated Purchasers of, the Assets listed below
as at, and with effect from, First Completion with full title guarantee and
free and clear of all liens, claims and encumbrances other than Permitted
Encumbrances:
(A) the Goodwill (other than the Brazilian Goodwill);
(B) the Plant and Machinery (other than the Brazilian Plant and
Machinery);
(C) the Motor Vehicles (other than the Brazilian Motor Vehicles);
(D) the Stocks (other than the Brazilian Stocks);
(E) the benefit (subject to the burden) of the Contracts (other than the
Brazilian Contracts);
<PAGE> 33
27
(F) the Business Intellectual Property (other than the Brazilian
Intellectual Property);
(G) the Business Information Technology (other than the Brazilian
Information Technology);
(H) the Properties;
(I) the Receivables (other than the Brazilian Receivables) less the
Provision;
(J) subject to Clause 19 (Books and Records), such of the Books and
Records (other than the Brazilian Books and Records) as are used
exclusively or predominantly by the Business;
(K) the Business Information (other than the Brazilian Business
Information); and
(L) all other property, rights and all other assets of whatsoever nature
to which any of the Vendor Companies (other than Croda do Brasil) is
entitled and which are used exclusively by the Business,
but excluding the following assets (the "EXCLUDED ASSETS"):
(i) the Croda Marks;
(ii) cash at bank and cash equivalents used in the Business;
(iii) amounts recoverable in respect of Taxation arising exclusively
in respect of any period of account for Taxation purposes
ending on or before First Completion, or in respect of any
acts, events or occurrences occurring wholly on or before First
Completion;
(iv) the benefit of any insurance policy of any member of the Croda
Group relating to the Business or any of the Assets or Listed
Employees (except as provided in Schedule 5 with respect to the
Croda Adhesives Inc. Medical Plan); and
(v) any rights of any member of the Croda Group arising under this
Agreement.
2.2 On the terms set out in this Agreement and as approved by the shareholders
of Croda do Brasil and Croda Adesivos do Brasil in the Agreed Form, Croda
do Brasil shall be partially spun-off and the Assets listed below, with
full title guarantee and free and clear of all liens, claims and
encumbrances other than Permitted Encumbrances, as well as the liabilities
corresponding thereto, shall
<PAGE> 34
28
be contributed to the corporate capital of Croda Adesivos do Brasil at, and
with effect from, First Completion:
(A) the Brazilian Goodwill;
(B) the Brazilian Plant and Machinery;
(C) the Brazilian Motor Vehicles;
(D) the Brazilian Stocks;
(E) the benefit (subject to the burden) of the Brazilian Contracts;
(F) the Brazilian Intellectual Property;
(G) the Brazilian Information Technology;
(H) the Brazilian Receivables;
(I) the Brazilian Books and Records;
(J) the Brazilian Business Information; and
(K) all other property, rights and all other assets of whatsoever nature
owned by Croda do Brasil and which are used exclusively by the
Brazilian Business,
(together the "BRAZILIAN ASSETS").
2.3 On the terms set out in this Agreement, Croda International shall sell or
procure the sale of and the Purchaser shall purchase or procure that a
member of the Purchaser's Group purchases, with full title guarantee and
free and clear of all liens, claims and encumbrances other than Permitted
Encumbrances, the Shares as at, and with effect from, Second Completion.
2.4 To the extent that the benefit of any express or implied warranties of
suitable quality or fitness or like terms of sale made by manufacturers or
previous sellers of the Plant and Machinery, the Motor Vehicles or the
Stocks to any member of the Croda Group (other than Croda Adesivos do
Brasil) can be assigned to the Purchaser, the relevant Designated Purchaser
or Croda Adesivos do Brasil, as applicable, Croda International shall use
its reasonable endeavours to assign the same or use its reasonable
endeavours to arrange for the novation of the same or procure the
assignment of the same for the benefit of the Purchaser, the relevant
Designated Purchaser or Croda Adesivos do Brasil, as applicable and, until
such assignment or novation, Croda International will co-operate with the
Purchaser or Croda Adesivos do Brasil, as applicable, in any reasonable
arrangements designed to provide for the Purchaser, the relevant
<PAGE> 35
29
Designated Purchaser or Croda Adesivos do Brasil, as applicable, the
benefit of such warranties or like terms including enforcement.
2.5 Sub-clause 2.1 shall, subject to its terms, operate as an assignment with
effect from First Completion of such of the Business Intellectual
Property (other than Brazilian Intellectual Property)(to the extent that
the same is so assignable) as is not the subject of a registration or an
application for registration as at First Completion. Any Business
Intellectual Property (other than Brazilian Intellectual Property) which
is registered or which is the subject of an application for registration
shall be assigned in the Agreed Form to the Purchaser pursuant to the
assignments referred to in sub-paragraph 1(A)(iii) of Schedule 1 (First
Completion Arrangements).
2.6 Sub-clause 2.2 shall, subject to its terms, operate as an assignment with
effect from First Completion of such of the Brazilian Intellectual
Property (to the extent that the same is assignable) as is not the
subject of a registration or an application for registration as at First
Completion. Any Brazilian Intellectual Property which is registered or
which is the subject of an application for registration (if any) shall be
assigned in the Agreed Form to the Purchaser.
2.7 Notwithstanding sub-clause 2.1 above, Croda International agrees to
procure that the Vendor Company named in Part A of Schedule 6 (Property
Matters) as the owner sells, and the Purchaser agrees to procure the
purchase by the relevant Designated Purchaser of, the Properties in
accordance with the terms of Part B of Schedule 6 (Property Matters)
which are stated to be applicable to the relevant Property.
2.8 Any Plant and Machinery at a Property which is leasehold is sold subject
to the rights of the relevant landlord arising under the law relating to
landlord's fixtures and tenants fixtures and under the relevant lease.
2.9 The purchase price for the sale will be as set out in Clause 3
(Consideration).
2.10 With effect from First Completion the Purchaser shall have a
non-exclusive, royalty free, perpetual, irrevocable, world wide licence
to use the Shared Intellectual Property with a right to:
(i) sub-license its rights under such licence for the purposes
of carrying on the Business or any part thereof; and
(ii) sub-license and assign its right under such licence to any
member of the Purchaser's Group or to any future purchaser
or transferee of the Business or any part thereof , provided
always that any further right to sub-license or assign is
subject to the same terms and conditions as are contained in
this clause 2.10.
<PAGE> 36
30
2.11 With effect from First Completion the Purchaser shall have a
non-exclusive, royalty free, perpetual, irrevocable, world wide licence
to use the Shared Information Technology with a right to:
(i) sub-license its rights under such licence for the purposes
of carrying on the Business or any part thereof; and
(ii) sub-license and assign its right under such licence to any
member of the Purchaser's Group or to any future purchaser
or transferee of the Business or any part thereof, provided
always that any further right to sub-license or assign is
subject to the same terms and conditions as are contained in
this clause 2.11.
3. CONSIDERATION
3.1 The total consideration for the sale of the Assets (other than the
Brazilian Assets) shall be (pound)40,109,005 together with an amount in
respect of VAT thereon, being the aggregate of the amounts payable for
the Assets (other than the Brazilian Assets) under sub-clause 3.2, less
the sum of (pound)5,489,000, being the aggregate amount of the Trade
Payables (other than the Brazilian Trade Payables).
3.2 The amount payable for each of the Assets shall be as follows:
(A) the Goodwill (other than the Brazilian (pound)3,000,000 US
Goodwill); (pound)500,000 Belgium
(pound)1 UK
(B) the Plant and Machinery (other than the (pound)4,409,000 US
Brazilian Plant and Machinery);
(pound)4,020,000 UK
(pound)403,000 Belgium
(pound)28,000 Other
(C) the Motor Vehicles (other than the (pound)163,000 US
Brazilian Motor Vehicles)
(pound)7,000 UK
(pound)12,000 Belgium
(pound)31,000 Italy
(pound)18,000 Other
<PAGE> 37
31
(D) the Stocks (other than the Brazilian (pound)3,064,000 US
Stocks)
(pound)2,085,000 UK
(pound)539,000 Belgium
(pound)114,000 Other
(E) the benefit (subject to the burden) of
the Contracts (other than the Brazilian (pound)1 US
Contracts), the Business Intellectual
Property (other than the Brazilian (pound)17,479,999 UK
Intellectual Property), the Business
Information (other than the Brazilian (pound)1 Belgium
Business Information) and the Business
Information Technology (other than the (pound)1 Other
Brazilian Information Technology)
(F) the Properties (pound)272,000 US
(pound)1,632,000 UK
(pound)417,000 Belgium
(G) the Receivables (other than the (pound)3,750,000 US
Brazilian Receivables) less the Provision
(pound)2,025,000 UK
(pound)1,338,000
Belgium
(pound)291,000 Other
(H) the Books and Records referred to in (pound)1
sub-clause 2.1(J)
(I) all other property, assets and rights (pound)1
to which any Vendor Company (other than
Croda do Brasil) is entitled and which
are used exclusively in the Business
3.3 The consideration for the sale of the Assets (other than the Brazilian
Assets) shall be payable at First Completion in accordance with Clause 4
(First Completion), together with amounts in respect of VAT in accordance
with Clause 11 (VAT).
3.4 As a result of the partial spin-off of Croda do Brasil and the
contribution of the Brazilian Assets to the corporate capital of Croda
Adesivos do Brazil,
<PAGE> 38
32
2,389,000 (two million, three hundred and eighty nine thousand) shares of
Croda do Brasil representing the Brazilian Assets currently held by Croda
Investments shall be cancelled and replaced by 2,389,000 (two million,
three hundred and eighty nine thousand) new shares of Croda Adesivos do
Brasil representing the Brazilian Assets which shall be subscribed by
Croda Investments.
3.5 The consideration for the sale of the Shares shall be an amount equal to
the aggregate of:
(A) the Deposit; plus
(B) the Earnout Amount; plus
(C) the Interim Brazil Net Working Capital Amount converted to pounds
sterling at the Exchange Rate applicable to 31 December, 2000; less
(D) an amount equal to 7% of the net sales of Croda Adesivos do Brasil
during the period from, but excluding, the First Completion Date to,
and including, 31 December, 2000 calculated in accordance with
paragraph 1 of Schedule 15 (Earnout and Working Capital
Calculations) converted to pounds sterling at the Exchange Rate
applicable to 31 December, 2000; plus or minus
(E) the Post Second Completion Adjustment Amount converted to pounds
sterling at the Exchange Rate applicable to the Second Completion
Date.
3.6 The Deposit shall be payable by the Purchaser at First Completion in
accordance with clause 4 (First Completion). An amount equal to the
aggregate of the amounts set out in sub-clause 3.5(B) and (C) less the
amount set out in sub-clause 3.5(D) shall be payable by the Purchaser at
Second Completion in accordance with clause 5 (Second Completion). The
Post Second Completion Adjustment Amount shall be payable by the
Purchaser to Croda International or, as the case may be, by Croda
International to the Purchaser, three (3) Business Days following the
Determination Date in accordance with sub-paragraphs 2(D) and 2(E) of
Schedule 15 (Earnout and Working Capital Calculations).
3.7 At First Completion the Purchaser shall deliver to Croda International a
letter of credit in the Agreed Form in the sum of (pound)2,500,000 (the
"LETTER OF CREDIT").
4. FIRST COMPLETION
4.1 Completion of the sale and purchase of the Assets (other than the
Brazilian Assets) and of the partial spin-off of Croda do Brasil followed
by the contribution of the Brazilian Assets to the corporate capital of
Croda Adesivos do Brasil shall take place on the First Completion Date at
the offices of Slaughter and May at Avenue de Cortenburg 118, B-1000
Brussels, Belgium and at
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33
such other places as are specified in Schedule 1 (First Completion
Arrangements).
4.2 At First Completion each of Croda International, Croda do Brasil, the
Purchaser and Croda Adesivos do Brasil shall do, or procure the doing of,
all those things respectively listed in relation to them in Schedule 1
(First Completion Arrangements).
4.3 None of Croda International, Croda do Brasil, the Purchaser or Croda
Adesivos do Brasil shall be obliged to complete the sale and purchase of
the Assets (other than the Brazilian Assets) or, as the case may be, the
partial spin-off of Croda do Brasil followed by the contribution of the
Brazilian Assets to the corporate capital of Croda Adesivos do Brasil
unless all of the requirements set out in Schedule 1 (First Completion
Arrangements) have been complied with.
4.4 If the respective obligations of Croda International, Croda do Brasil,
the Purchaser and Croda Adesivos do Brasil under sub-clause 4.2 and
Schedule 1 (First Completion Arrangements) are not complied with on the
First Completion Date, Croda International or the Purchaser as the case
may be, may elect to:-
(A) defer First Completion (so that the provisions of this Clause 4
shall apply to First Completion as so deferred) to a day being no
later than 20 Business Days after the First Completion Date or such
other date as Croda International and the Purchaser may agree; or
(B) proceed to First Completion as far as practicable (without limiting
its rights under this Agreement); or
(C) treat this Agreement as terminated for breach of a condition.
4.5 Payment by telegraphic transfer (through the CHAPS system) for the amount
stated in sub-clause 3.1 in accordance with Schedule 1 (First Completion
Arrangements) shall constitute payment of the consideration for the
Assets (other than the Brazilian Assets) and shall discharge the
obligations of the Purchaser under Clause 2 (Sale and Purchase).
5. SECOND COMPLETION
5.1 Completion of the sale and purchase of the Shares shall take place on the
Second Completion Date at the offices of Pinheiro Neto at Av. Nilo
Pecanha 11, Edificio Jockey Club, 20020-100 Rio de Janeiro, Brazil and at
such other places as are specified in Schedule 14 (Second Completion
Arrangements).
5.2 At Second Completion each of Croda International and the Purchaser shall
do, or procure the doing of, all those things respectively listed in
relation to them in Schedule 14 (Second Completion Arrangements).
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34
5.3 Payment by telegraphic transfer (through the CHAPS system) for:-
(A) the amount of the Deposit in accordance with Schedule 1 (First
Completion Arrangements); and
(B) the aggregate of the amounts stated in sub-clause 3.5(B) and (C)
less the amount stated in sub-clause 3.5(D) in accordance with
Schedule 14 (Second Completion Arrangements); and
(C) if applicable, the Post Second Completion Adjustment Amount in
accordance with Schedule 15 sub-paragraph 2(D) (Earnout Amount and
Working Capital Calculations),
shall constitute payment of the consideration for the Shares and shall
discharge the obligations of the Purchaser under Clause 2 (Sale and
Purchase).
5.4 If the obligations of Croda International under sub-clause 5.2 and
Schedule 14 (Second Completion Arrangements) are not complied with on the
Second Completion Date, and the Purchaser has complied with its
obligations under sub-clause 5.2 and Schedule 14 (Second Completion
Arrangements) Croda International shall pay or procure the payment of an
amount equal to:-
(A) the Deposit; plus
(B) an amount equal to 7% of the net sales of Croda Adesivos do Brasil
during the period from, but excluding, the First Completion Date to,
and including the date of payment under this sub-clause 5.4
converted to pounds sterling at the Exchange Rate applicable to the
Business Day preceding that date of payment,
by wire transfer of immediately available funds to an account designated
in writing to Croda International by the Purchaser.
5.5 Croda Adesivos do Brasil undertakes that it will procure that at Second
Completion any outstanding amounts in relation to the Brazilian Lease are
paid to Croda do Brasil in full.
6. ACTION AFTER FIRST COMPLETION
6.1 If the Purchaser so requests, Croda International shall procure that the
Vendor Companies shall, for a period of two months following First
Completion, join with the Purchaser in sending out notices and letters in
such form as Croda International and the Purchaser shall (each acting
reasonably) agree to all of the Vendor Companies' suppliers, customers
and other business contacts (other than those of Croda do Brasil)
relating to the Business informing them of the transfer of the Business.
Croda International shall procure that Croda do Brasil shall, for a
period of two months following First Completion, join with
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35
Croda Adesivos do Brasil in sending out notices and letters in such form
as Croda International and the Purchaser shall (each acting reasonably)
agree to all of Croda do Brasil's suppliers, customers and other business
contacts relating to the Brazilian Business informing them of the
transfer of the Brazilian Business.
6.2 Croda International shall procure that originals of all notices,
correspondence, information, orders or enquiries relating solely to the
Business and copies of all notices, correspondence, information, orders
or enquiries relating partly to the Business and partly to one or more of
the remaining businesses of the Croda Group which are received by any
member of the Croda Group on or after First Completion shall be passed as
soon as practicable to the Purchaser or Croda Adesivos do Brasil, as the
case may be, provided that Croda International shall be free to blank out
or remove from any such notice, correspondence, information, order or
enquiry any matter which does not directly relate to the Business.
6.3 The Purchaser shall procure that originals of all notices,
correspondence, information, orders or enquiries relating solely to one
or more of the remaining businesses of the Croda Group and copies of all
notices, correspondence, information, orders or enquiries relating partly
to one or more of the remaining businesses of the Croda Group and partly
to the Business which is received by the Purchaser's Group on or after
First Completion shall be passed as soon as practicable to the relevant
member of the Croda Group, provided that the Purchaser shall be free to
blank out or remove from any such notice, correspondence, information,
order or enquiry, any matter which does not directly relate to one or
more of the remaining businesses of the Croda Group.
6.4 Croda International shall procure that each relevant member of the Croda
Group shall, as soon as reasonably practicable after receipt thereof, pay
to the Purchaser or, as the case may be, Croda Adesivos do Brasil an
amount equal to any moneys which it actually receives after First
Completion to the extent that such moneys are owned by the Purchaser or,
as the case may be, Croda Adesivos do Brasil and were comprised within or
were represented by any of the Assets sold at First Completion to the
Purchaser or, as the case may be, Croda Adesivos do Brasil pursuant to
this Agreement.
6.5 The Purchaser shall, as soon as reasonably practicable after receipt
thereof, pay to the relevant member of the Croda Group an amount equal to
any moneys which any member of the Purchaser's Group actually receives
after First Completion to the extent that such moneys are owned by that
member of the Croda Group and were not part of the Assets sold to the
Purchaser or a Designated Purchaser at First Completion pursuant to this
Agreement.
6.6 Croda International shall comply with the covenants and undertakings set
out in Part A of Schedule 16 (Covenants related to Brazilian Business
Pending Second
<PAGE> 42
36
Completion) at all times during the period beginning on First Completion
and ending on Second Completion. The liability of Croda International
under or in relation to such covenants and undertakings shall be limited
as set out in Schedule 3 (Limitations on Croda International's
Liability).
6.7 Croda International and the Purchaser shall co-operate with each other in
connection with the making of, and where required, jointly make, such
notifications and filings as are necessary to affect the transfer of
operating permits and licences related to the conduct of the Business at
the Properties.
7. CONTRACTS
7.1 Where any consent or agreement of any third party is required to enable
the Purchaser to perform or to procure the performance by the relevant
Designated Purchaser of any Contract after First Completion or to enable
Croda Adesivos do Brasil to perform any Brazilian Contract after First
Completion or to enable any member of the Croda Group to assign or
transfer the benefit or burden of any Contract to the Purchaser, the
relevant Designated Purchaser or Croda Adesivos do Brasil , as the case
may be, then the following provisions shall apply:
(A) this Agreement shall not constitute an assignment or an attempted
assignment of the relevant Contract if, or to the extent that, such
an assignment or attempted assignment would constitute a breach of
such Contract;
(B) after First Completion, Croda International and the Purchaser or
Croda Adesivos do Brasil, as the case may be, shall use their
respective reasonable endeavours to obtain the consent or agreement
of the other parties to the relevant Contract to whatever
assignment, transfer or novation is necessary to enable the
Purchaser so to perform or procure the performance by the relevant
Designated Purchaser of or, as the case may be, to enable Croda
Adesivos do Brasil so to perform such Contract after First
Completion or, as the case may be, to transfer the benefit and
burden of such Contract to the Purchaser, the relevant Designated
Purchaser or Croda Adesivos do Brasil, as the case may be; and
(C) until the consent or agreement referred to in paragraph (B) above is
obtained, the Purchaser shall perform or procure the performance by
the relevant Designated Purchaser of, or Croda Adesivos do Brasil,
as the case may be, shall perform, in each case unless the relevant
Contract prohibits it, all the obligations of the relevant member of
the Croda Group under such Contract as agent for, or sub-contractor
to, such member of the Croda Group and the Purchaser (on behalf of
itself and each of the Designated Purchasers) agrees with Croda
International (for itself and as trustee for each other member of
the Croda Group) that the Purchaser shall indemnify each member of
the Croda Group and Croda Adesivos do
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37
Brasil agrees with Croda International (for itself and as trustee for
each other member of the Croda Group) that Croda Adesivos do Brasil shall
indemnify each member of the Croda Group in respect of such performance
or, if the relevant Contract or any provision of applicable law prohibits
the Purchaser, the relevant Designated Purchaser or Croda Adesivos do
Brasil, as the case may be, from so performing such obligations, or the
Purchaser, the relevant Designated Purchaser or Croda Adesivos do Brasil,
as the case may be, cannot be permitted so to perform because of
confidentiality obligations, Croda International shall, to the extent
that it is reasonably able, at the cost of the Purchaser (in respect of
the Purchaser and the other Designated Purchasers) or, as the case may
be, Croda Adesivos do Brasil do, or procure the doing by a member of the
Croda Group of, all such acts and things as the Purchaser (in respect of
the Purchaser and the other Designated Purchasers) or, as the case may
be, Croda Adesivos do Brasil, may reasonably require to constitute due
performance of the Contract and to provide for the Purchaser, the
relevant Designated Purchaser or Croda Adesivos do Brasil, as the case
may be, the benefits, subject to the burdens, of the Contract, and the
Purchaser (for itself and each of the Designated Purchasers) agrees with
Croda International (for itself and as trustee for each other member of
the Croda Group) that the Purchaser shall indemnify each member of the
Croda Group and Croda Adesivos do Brasil agrees with Croda International
(for itself and as trustee for each other member of the Croda Group) that
Croda Adesivos do Brasil shall indemnify each member of the Croda Group
in respect of such performance of the relevant Contract. For this
purpose, without prejudice to generality it shall not be reasonable to
require any member of the Croda Group to make any payment unless such
member of the Croda Group has first received from the Purchaser (in
respect of the Purchaser and any other relevant Designated Purchasers)
or, as the case may be, Croda Adesivos do Brasil sufficient cleared funds
to make such payment. The Purchaser's and Croda Adesivos do Brasil's
indemnities under this sub-clause 7.1 (C) shall not apply to any matter
arising out of any wilful misconduct or gross negligence by the relevant
member of the Croda Group in the performance of such Contract or breach
of this Agreement or any Completion Document by any member of the Croda
Group or to any assessment, claim, action, demand or proceeding in
respect of which Croda International or any other member of the Croda
Group is obliged to indemnify any member of the Purchaser's Group in
accordance with sub-clause 8.7(C).
7.2 After First Completion, and until such time as the consent or agreement
referred to in sub-clause 7.1 is obtained, the relevant member of the
Croda Group shall be deemed to hold the benefit of the relevant Contract
referred to in sub-clause 7.1 on trust for the Purchaser, the relevant
Designated Purchaser or Croda Adesivos do Brasil, as the case may be.
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38
8. ASSUMED LIABILITIES AND EXCLUDED LIABILITIES
8.1 Except as otherwise provided in this Agreement, the Purchaser agrees with
Croda International (for itself and as trustee for each other member of
the Croda Group) that it will duly and properly perform, assume and pay
and discharge when due, and indemnify each member of the Croda Group
against, all Assumed Liabilities.
8.2 In this Agreement, "ASSUMED LIABILITIES" means the following:
(A) the obligations and liabilities of Croda International, each Vendor
Company or any other member of the Croda Group (other than Croda do
Brasil and Croda Adesivos do Brasil) under the Contracts other than
the obligations and liabilities which are the subject of the
indemnity given by Croda International pursuant to sub-clause
8.7(C);
(B) all Trade Payables (other than Brazilian Trade Payables); and
(C) the Agreed Environmental Liabilities.
8.3 The Purchaser undertakes that, except as otherwise provided in sub-clause
7.1(C), from First Completion it will perform or procure the performance
by a member of the Purchaser's Group of the outstanding obligations and
liabilities under the Contracts (other than the Brazilian Contracts) to
the extent that they arise in respect of the carrying on of the Business
by the Purchaser or any member of the Purchaser's Group PROVIDED THAT,
save in respect of the Trade Payables (other than Brazilian Trade
Payables), nothing in this Agreement shall:
(A) require the Purchaser to perform or procure the performance of any
such obligation falling due for performance, or which should have
been performed, before First Completion, save to the extent that the
relevant obligation represents a Trade Payable (other than a
Brazilian Trade Payable);
(B) make the Purchaser or any other member of the Purchaser's Group
liable for any act, neglect, default, breach of contract, breach of
duty, breach of warranty, strict liability or omission in respect of
any of the Contracts committed by any member of the Croda Group or
occurring before First Completion; or
(C) impose any obligation or liability on the Purchaser or any other
member of the Purchaser's Group for or in respect of any product
delivered by any member of the Croda Group or any service performed
or received by any member of the Croda Group before First
Completion.
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8.4 Except as otherwise provided in this Agreement, Croda Adesivos do Brasil
agrees with Croda International (for itself and as trustee for each other
member of the Croda Group) that it will duly and properly perform, assume
and pay and discharge when due, and indemnify each member of the Croda
Group against, all Brazilian Assumed Liabilities.
8.5 In this Agreement, "BRAZILIAN ASSUMED LIABILITIES" means the following:
(A) the obligations and liabilities of Croda Investments and Croda do
Brasil under the Brazilian Contracts other than the obligations and
liabilities which are the subject of the indemnity given by Croda
International pursuant to sub-clause 8.7(C); and
(B) all Brazilian Trade Payables.
8.6 Croda Adesivos do Brasil undertakes that, except as otherwise provided in
sub-clause 7.1(C), from First Completion it will perform the outstanding
obligations and liabilities under the Brazilian Contracts to the extent
that they arise in respect of the carrying on of the Brazilian Business
by Croda Adesivos do Brasil PROVIDED THAT, save in respect of Brazilian
Trade Payables, nothing in this Agreement shall:
(A) require Croda Adesivos do Brasil to perform any such obligation
falling due for performance, or which should have been performed,
before First Completion, save to the extent that the relevant
obligation represents a Brazilian Trade Payable;
(B) make Croda Adesivos do Brasil liable for any act, neglect, default,
breach of contract, breach of duty, breach of warranty, strict
liability or omission in respect of any of the Brazilian Contracts
committed by any other member of the Croda Group or occurring before
First Completion; or
(C) impose any obligation or liability on Croda Adesivos do Brasil for
or in respect of any product delivered or any service performed by
any other member of the Croda Group before First Completion.
8.7 Except in relation to Assumed Liabilities and except as expressly set
forth in paragraph 2 of Part A of Schedule 7 (Environmental Matters) with
respect to the sharing of 50% of certain Protected Losses and except as
otherwise provided in this Agreement or any of the Completion Documents:
(A) No member of the Purchaser's Group shall assume or become
responsible for any liabilities or obligations of Croda
International or any other member of the Croda Group in respect of
the Business arising or accruing on or prior to, or by reference to
facts or circumstances existing or events occurring, on or prior to,
the First Completion Date ("EXCLUDED PRE-
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COMPLETION LIABILITIES"), or for any claims or demands in respect of
any Excluded Pre-Completion Liability; and
(B) all Excluded Pre-Completion Liabilities shall remain the sole
obligation of and shall be satisfied by Croda International or
another member of the Croda Group, as the case may be, provided that
Croda International's liability in relation to Environmental Matters
shall be governed by the provisions of Schedule 7 (Environmental
Matters); and
(C) (except in relation to Environmental Matters, which shall be
governed by the provisions of Schedule 7 (Environmental Matters))
Croda International agrees with the Purchaser (for itself and as
trustee for each other member of the Purchaser's Group) that Croda
International shall, or shall procure that another member of the
Croda Group shall, indemnify each member of the Purchaser's Group
against any assessment, claim, action, demand or proceeding made or
brought in respect of any Excluded Pre-Completion Liability by any
person who is not a member of the Purchaser's Group.
8.8 No member of the Croda Group shall assume or become responsible for any
liabilities of the Purchaser or any other member of the Purchaser's Group
in respect of the Business accruing or arising after, or by reference to
facts or circumstances existing or events occurring after, the First
Completion Date ("EXCLUDED POST COMPLETION LIABILITIES"), or for any
claims or demands in respect of any Excluded Post Completion Liability,
and all Excluded Post Completion Liabilities shall remain the sole
obligation of and shall be satisfied by the Purchaser or another member
of the Purchaser's Group, as the case may be, and the Purchaser shall, or
shall procure that another member of the Purchaser's Group shall,
indemnify each member of the Croda Group against any assessment, claim,
action, demand or proceeding made or brought in respect of any Excluded
Post Completion Liability by any person who is not a member of the Croda
Group.
8.9 Without prejudice to the provisions of sub-clauses 8.1 to 8.3
(inclusive), the Purchaser shall promptly discharge the Trade Payables
(other than the Brazilian Trade Payables) on their respective due dates
and agrees with Croda International (for itself and as trustee for each
other member of the Croda Group) that it will indemnify each member of
the Croda Group in respect of any liability, obligation, loss, cost,
expense or other matter which they may incur or suffer as a result of the
Purchaser's failure to do so. Without prejudice to the provisions of
sub-clauses 8.4 to 8.7 (inclusive), Croda Adesivos do Brasil shall
promptly discharge the Brazilian Trade Payables on their respective due
dates and agrees with Croda International (for itself and as trustee for
each other member of the Croda Group) that Croda Adesivos do Brasil will
indemnify each member of the Croda Group in respect of any liability,
obligation, loss, cost, expense or other matter which they may incur or
suffer
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41
as a result of Croda Adesivos do Brasil's failure to do so after the
Second Completion Date.
9. RECEIVABLES (OTHER THAN BRAZILIAN RECEIVABLES)
9.1 Croda International (for itself and each of the Vendor Companies)
covenants that:
(A) Croda International and the Vendor Companies shall from the First
Completion Date give to the Purchaser such assistance and
information as the Purchaser may reasonably require to assist the
Purchaser or the relevant Designated Purchaser in the collection of
the Receivables (other than the Brazilian Receivables) including,
without limitation, the sending of a letter jointly by Croda
International and/or the relevant Vendor Company and the Purchaser
and/or the relevant Designated Purchaser, if requested by the
Purchaser and at the Purchaser's cost, to any debtors by whom the
Receivables (other than the Brazilian Receivables) are owed
concerning the transfer of the Business and the Receivables (other
than the Brazilian Receivables) to the Purchaser or the relevant
Designated Purchaser; and
(B) in the event that, at any time after the First Completion Date, the
Purchaser shall request Croda International or any Vendor Company to
execute an assignment of any of the Receivables (other than the
Brazilian Receivables) as specified by the Purchaser to the
Purchaser or the relevant Designated Purchaser, Croda International
or the relevant Vendor Company (as appropriate) shall forthwith
execute an assignment of such Receivables (other than the Brazilian
Receivables) in such form as shall be agreed between the parties to
be appropriate in any relevant jurisdiction (such agreement not to
be unreasonably withheld or delayed) to the Purchaser or the
relevant Designated Purchaser.
9.2 During the period of 120 days from (but excluding) the First Completion
Date, the Purchaser will use all commercially reasonable efforts to
collect or procure the collection by the relevant Designated Purchaser of
the Receivables (other than the Brazilian Receivables), and the Purchaser
will collect or procure the collection by the relevant Designated
Purchaser of the Receivables (other than the Brazilian Receivables)
substantially in accordance with the procedures and practices heretofore
used by Croda International or the relevant Vendor Company (excluding the
bringing of legal proceedings to enforce payment thereof). Any payment
received by a member of the Purchaser's Group from a debtor after the
First Completion Date which is not allocated by the debtor to a
particular Receivable shall be allocated first to the earliest
outstanding Receivable of that debtor.
9.3 In the event that, at the end of such 120 day period:
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(i) any of the Receivables (other than the Brazilian Receivables)
which have not been collected by the Purchaser and the
Designated Purchasers exceed the aggregate of the amount of the
provision set forth in Part II of Schedule 11 (Receivables) of
this Agreement in respect of the Receivables (other than the
Brazilian Receivables) being bad or doubtful (the "PROVISION"),
the Purchaser shall advise Croda International of the amount by
which those Receivables (other than the Brazilian Receivables)
which have not been collected exceed the aggregate of the
amount of the Provision (the "UNCOLLECTED EXCESS RECEIVABLES")
and the amount of the Uncollected Excess Receivables which the
Purchaser wishes Croda International to repurchase (the
"DESIGNATED RECEIVABLES"), and Croda International (on behalf
of itself and the relevant Vendor Companies) shall pay to the
Purchaser (on behalf of itself and the other relevant
Designated Purchasers) within fourteen days after the end of
such 120 day period a sum equal to the full value of the
Designated Receivables as reflected in Schedule 11
(Receivables) of this Agreement and such sum paid to the
Purchaser shall constitute a reduction in the consideration
received by Croda International by the amount so paid;
(ii) all the Receivables (other than the Brazilian Receivables)
shall have been collected by the Purchaser and the Designated
Purchasers and there shall be an amount of the Provision not
utilized, or the unutilized portion of the Provision shall
exceed the Receivables (other than the Brazilian Receivables)
outstanding, the Purchaser shall pay to Croda International
within sixty days after the end of such 120 day period a sum
equal in the first case to the unutilized amount of the
Provision, and in the second case, to the excess unutilized
Provision and such sum paid to Croda International shall
constitute additional consideration paid by the Purchaser by
the amount so paid.
9.4 On the making of the payment described in sub-paragraph 9.3(i), the
Purchaser shall and shall procure that the other Designated Purchasers
shall assign to Croda International or any relevant Vendor Company all
right, title and interest that the Purchaser and each of the other
Designated Purchasers has in the Designated Receivables in respect of
which such payment is made.
9.5 The Purchaser shall, within seven days of the end of such 120 day period,
supply to Croda International a statement in writing of the amount of the
Receivables as at the end of such 120 day period collected by the
Purchaser and the other Designated Purchasers, the amount thereof
remaining outstanding, and the amount, if any, of the Provision remaining
unused. Croda International and Croda International's auditors shall be
given reasonable access to the premises, records and personnel of the
Business on reasonable notice and during
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Working Hours for the purposes of ensuring that the provisions of this
Clause have been observed and of verifying the said statement.
9.6 Croda International shall promptly pay, or procure that each member of
the Croda Group promptly pays, to the Purchaser all sums received by any
member of the Croda Group after First Completion which are Receivables
and not Designated Receivables or Brazilian Receivables and shall procure
that pending such payment the relevant member of the Croda Group will
hold such sums so received on trust for the Purchaser.
9.7 The Purchaser shall promptly pay to Croda International all sums received
by any member of the Purchaser's Group after First Completion which are
Designated Receivables and shall procure that pending such payment the
relevant member of the Purchaser's Group will hold such sums so received
on trust for Croda International.
10. NEW BRAZILIAN RECEIVABLES
10.1 Croda International (for itself and Croda do Brasil) covenants that:
(A) Croda International and Croda do Brasil shall from the Second
Completion Date give to Croda Adesivos do Brasil such assistance and
information as Croda Adesivos do Brasil may reasonably require to
assist Croda Adesivos do Brasil in the collection of the New
Brazilian Receivables including, without limitation, the sending of
a letter jointly by Croda International and/or Croda do Brasil and
Croda Adesivos do Brasil, if requested by Croda Adesivos do Brasil
and at Croda Adesivos do Brasil's cost, to any debtors by whom the
New Brazilian Receivables are owed concerning the transfer of the
Brazilian Business and the Brazilian Receivables to Croda Adesivos
do Brasil and the sale of the Shares; and
(B) in the event that, at any time after the Second Completion date,
Croda Adesivos do Brasil shall request Croda International or Croda
do Brasil to execute an assignment to Croda Adesivos do Brasil of
any of the New Brazilian Receivables, Croda International shall
procure that Croda do Brasil shall forthwith execute an assignment
of such New Brazilian Receivables in such form as shall be agreed
between the parties to be appropriate in Brazil (such agreement not
to be unreasonably withheld or delayed) to Croda Adesivos do Brasil.
10.2 During the period of 120 days from (but excluding) the Second Completion
Date, Croda Adesivos do Brasil will use all commercially reasonable
efforts to collect the New Brazilian Receivables, and the New Brazilian
Receivables will be collected by Croda Adesivos do Brasil substantially
in accordance with the procedures and practices used by Croda
International, Croda do Brasil and Croda Adesivos do Brasil prior to the
Second Completion Date (excluding the bringing of legal proceedings to
enforce payment thereof). Any payment in respect of
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New Brazilian Receivables received by a member of the Purchaser's Group
from a debtor after the Second Completion Date which is not allocated by
the debtor to a particular New Brazilian Receivable shall be allocated
first to the earliest outstanding New Brazilian Receivable of that
debtor.
10.3 In the event that, at the end of such 120 day period:
(i) any of the New Brazilian Receivables which have not been
collected by Croda Adesivos do Brasil exceed the aggregate of
the amount of the provision set forth in the New Brazilian
Receivables Schedule in respect of the New Brazilian
Receivables being bad or doubtful (the "BRAZILIAN PROVISION"),
Croda Adesivos do Brasil shall advise Croda International of
the amount by which those New Brazilian Receivables which have
not been collected exceed the aggregate of the amount of the
Brazilian Provision (the "UNCOLLECTED EXCESS NEW BRAZILIAN
RECEIVABLES") and the amount of the Uncollected Excess New
Brazilian Receivables which Croda Adesivos do Brasil wishes
Croda International to purchase (the "DESIGNATED NEW BRAZILIAN
RECEIVABLES"), and Croda International shall pay (on behalf of
itself and Croda Investments) to Croda Adesivos do Brasil
within fourteen days after the end of such 120 day period a sum
equal to the full value of the Designated New Brazilian
Receivables as reflected in the New Brazilian Receivables
Schedule, and such sum paid to Croda Adesivos do Brasil shall
constitute a reduction in the consideration received by Croda
Investments for the Shares by the amount so paid;
(ii) all the New Brazilian Receivables shall have been collected by
Croda Adesivos do Brasil and there shall be an amount of the
Brazilian Provision not utilized, or the unutilized portion of
the Brazilian Provision shall exceed the New Brazilian
Receivables outstanding, the Purchaser shall procure the
payment by the relevant member of the Purchaser's Group to
Croda International within sixty days after the end of such 120
day period a sum equal in the first case to the unutilized
amount of the Brazilian Provision, and in the second case, to
the excess unutilized Brazilian Provision and such sum paid to
Croda International shall constitute additional considerations
paid by the Purchaser by the amount so paid.
10.4 On the making of the payment described in sub-clause 10.3(i), Croda
Adesivos do Brasil shall assign to Croda International all right, title
and interest that Croda Adesivos do Brasil has in the Designated New
Brazilian Receivables in respect of which such payment is made.
10.5 Croda Adesivos do Brasil shall, within seven days of the end of such 120
day period, supply to Croda International a statement in writing of the
amount of
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45
the New Brazilian Receivables as at the end of such 120 day period
collected by Croda Adesivos do Brasil, the amount thereof remaining
outstanding, and the amount, if any, of the Brazilian Provision remaining
unused. Croda International and Croda International's auditors shall be
given reasonable access to the premises, records and personnel of Croda
Adesivos do Brasil on reasonable notice and during Working Hours for the
purposes of ensuring that the provisions of this Clause have been
observed and of verifying the said statement.
10.6 Croda International shall promptly pay, or procure that the relevant
member of the Croda Group promptly pays, to Croda Adesivos do Brasil all
sums received by any member of the Croda Group after Second Completion
which are New Brazilian Receivables and not Designated New Brazilian
Receivables and shall procure that pending such payment the relevant
member of the Croda Group will hold such sums so received on trust for
Croda Adesivos do Brasil.
10.7 The Purchaser shall promptly pay to Croda International all sums received
by any member of the Purchaser's Group after Second Completion which are
Designated New Brazilian Receivables and shall procure that pending such
payment the relevant member of the Purchaser's Group will hold such sums
so received on trust for Croda International.
11. VAT
The Purchaser shall pay to Croda International at First Completion (on
behalf of the relevant member of the Croda Group) by way of additional
consideration an amount equal to the amount of VAT chargeable in respect
of the supply of Assets (other than Brazilian Assets and the Brazilian
Business) under this Agreement (against delivery by Croda International
on behalf of the relevant member of the Croda Group of an appropriate tax
invoice for VAT purposes).
12. EMPLOYEES
12.1 Croda International and the Purchaser anticipate that, in relation to the
Listed Employees, the Transfer Regulations will apply to the sale and
purchase of the Business under this Agreement.
12.2 In this Clause 12 indemnities given by Croda International and the
Purchaser shall be interpreted as being given for themselves and as
trustee for each member of the Croda Group or the Purchaser's Group as
the case may be.
12.3 If the contract of employment of any person who is not a Listed Employee
is found or alleged to have effect after First Completion as if
originally made with the Purchaser as a consequence of the sale and
purchase of the Business under this Agreement, Croda International agrees
that:
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46
(A) in consultation with, and if so requested by, the Purchaser, it
will, within seven Business Days after being so requested by the
Purchaser (as long as the request is made no later than fourteen
Business Days after the Purchaser becomes aware of such finding or
allegation), make to that person an offer in writing to employ him
under a new contract of employment to take effect upon the
termination referred to below; and
(B) the offer to be made will be such that none of the terms and
conditions of the new contract will differ from the corresponding
provision of that person's contract of employment immediately before
First Completion.
Upon that offer being made (or at any time after the expiry of the seven
Business Days if the offer is not made as requested), the Purchaser shall
terminate the employment of the person concerned and Croda International
undertakes to indemnify the Purchaser against any and all liabilities,
losses, charges, costs, claims or demands which the Purchaser may suffer
or incur arising out of or in connection with the employment of such
person after First Completion until any termination of this nature and
against any and all liabilities, losses, charges, costs, claims or
demands which the Purchaser may suffer or incur arising out of any
termination of this nature.
12.4 If the contract of employment of any Listed Employee is found or alleged
not to have effect after First Completion as if originally made with the
Purchaser as a consequence of the sale and purchase of the Business under
this agreement, other than by virtue of Regulation 5(4A) of TUPE (or its
equivalent under any other European legislation), the Purchaser agrees
that:
(A) in consultation with Croda International, it will, within seven days
of being so requested by Croda International (as long as the request
is made no later than fourteen Business Days after Croda
International becomes aware of such finding or allegation), make to
that Listed Employee an offer in writing to employ him under a new
contract of employment to take effect upon the termination referred
to below; and
(B) the offer to be made will be such that none of the terms and
conditions of the new contract (other than the identity of the
employer and any terms and conditions relating to an occupational
pension scheme) will differ from the corresponding provisions of the
Employee's contract of employment immediately before First
Completion.
Upon that offer being made (or after the expiry of the seven Business
Days if the offer is not made as requested), Croda International shall
forthwith terminate the employment of the Listed Employee concerned.
Croda International undertakes that before any termination of employment
of this nature it will not make any change to the terms and conditions of
the Listed Employee's contract of employment as existing immediately
before First Completion.
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47
12.5 Croda International shall indemnify the Purchaser against any and all
liabilities, things and matters arising out of or related to:
(A) the employment or termination, in each case by a member of the Croda
Group, of the employment of any person engaged at any time in the
Business who is not a Listed Employee;
(B) the employment of any Listed Employee during the period before First
Completion or the termination of employment or the subsequent expiry
of notice given to any Listed Employee by any member of the Croda
Group during such period,
including, without prejudice to the generality of the foregoing, in each
case any actual or alleged breach of contract, unfair dismissal,
statutory or contractual redundancy pay, unlawful discrimination or
personal injury but shall not include any failure by the Purchaser to
comply with its obligations under Regulation 10 of TUPE (or its
equivalent under any other European legislation).
12.6 The Purchaser shall indemnify Croda International against any and all
liabilities, things and matters arising out of or related to the
employment or termination of employment of any Listed Employee during the
period after First Completion.
12.7 Each of Croda International and the Purchaser confirms that it complied
with its obligations under Regulation 10 of TUPE and otherwise (including
under the laws of other relevant jurisdictions) to inform and consult
representatives of the Listed Employees and other employees affected by
the sale and purchase of the Business under this Agreement.
12.8 All wages, salaries and other periodic outgoings including the cost of
any accrued entitlements (including holiday entitlement and bonus
entitlement) and other remuneration entitlements and all Taxes and
insurances of the Listed Employees for any period of time before the end
of the First Completion Date shall be borne by Croda International or a
member of the Croda Group and for any period of time after that day shall
be borne by the Purchaser.
12.9 Croda International shall provide or procure that the relevant member of
the Croda Group shall provide the Purchaser with such information and
assistance as the Purchaser may reasonably request in the event of any
claim or proceedings brought by any Listed Employee in respect of the
period before First Completion.
12.10 Croda International and the Purchaser each agree to:
(A) comply with their respective obligations as set out in Part A of
Schedule 4 (Employee Matters) with respect to the US Listed
Employees;
<PAGE> 54
48
(B) comply with their respective obligations as set out in Part B of
Schedule 4 (Employee Matters)with respect to Belgian Listed
Employees;
(C) comply with their respective obligations as set out in Part C of
Schedule 4 (Employee Matters) with respect to the Italian Listed
Employees;
(D) comply with their respective obligations as set out in Part D of
Schedule 4 (Employee Matters) with respect to the Brazilian Listed
Employees; and
(E) comply with their respective obligations as set out in Part E of
Schedule 4 (Employee Matters) with respect to Other European
Employees.
12.11 Sub-clauses 12.3 to 12.4 shall not apply to any of the Brazilian Listed
Employees, the US Listed Employees or the Canadian Listed Employee.
13. PENSIONS
Croda International shall comply or procure compliance and the Purchaser
shall comply with the requirements applicable to them set out in Schedule
5 (Pension Matters).
14. RISK
Risk in the Business and the Assets other than the Brazilian Business and
the Brazilian Assets shall pass to the Purchaser on First Completion.
15. VENDOR'S WARRANTIES AND PURCHASER'S REMEDIES
15.1 Subject as provided in this Agreement, Croda International warrants to
the Purchaser at the date of this Agreement:
(i) in the terms set out in Part A of Schedule 2 (Warranties) to
the extent that such Warranties relate to the Vendor Companies
other than Croda do Brasil, the Business other than the
Brazilian Business and the Assets other than the Brazilian
Assets; and
(ii) in the terms set out in Part B of Schedule 2 (Warranties).
15.2 Subject as provided in this Agreement, Croda International warrants to
Croda Adesivos do Brasil at the date of this Agreement in the terms set
out in Part A of Schedule 2 (Warranties) to the extent that such
Warranties relate to Croda do Brasil, the Brazilian Assets and the
Brazilian Business.
15.3 The only Warranties given:
(A) in respect of the Properties are those contained in paragraph 17 of
Schedule 2 (Warranties) and each of the other Warranties shall be
deemed
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49
not to be given in relation to the Properties and the Purchaser
shall not be entitled to claim against Croda International in
relation to the Properties under any other Warranty;
(B) in respect of Intellectual Property and Information Technology are
those contained in paragraph 18 of Schedule 2 (Warranties) and each
of the other Warranties shall be deemed not to be given in relation
to Intellectual Property and Information Technology and the
Purchaser shall not be entitled to claim against Croda International
in relation to the Intellectual Property and Information Technology
under any other Warranty;
(C) in respect of competition, anti-restrictive trade practice or
anti-trust laws are those contained in paragraph 19 of Schedule 2
(Warranties) and each of the other Warranties shall be deemed not to
be given in relation to competition, anti-restrictive trade practice
or anti-trust laws and the Purchaser shall not be entitled to claim
against Croda International in relation to competition,
anti-restrictive trade practice or anti-trust laws under any other
Warranty;
(D) in respect of all pensions matters are those contained in paragraph
21 of Schedule 2 (Warranties) and each of the other Warranties shall
be deemed not to be given in relation to such pensions matters and
the Purchaser shall not be entitled to claim against Croda
International in relation to pension matters under any other
Warranty;
(E) in respect of Environmental Matters are those contained in paragraph
22 of Schedule 2 (Warranties) and each of the other Warranties shall
be deemed not to be given in relation to Environmental Matters and
the Purchaser shall not be entitled to claim against Croda
International in relation to Environmental Matters under any other
Warranty or any other provision of this Agreement, except the
Environmental Covenant; and
(F) in respect of Tax matters are those contained in paragraph 28 of
Schedule 2 (Warranties) and each of the other warranties shall be
deemed not to be given in relation to such Tax matters and the
Purchaser shall not be entitled to claim against Croda International
in relation to Tax matters under any other Warranty.
15.4 The liability of Croda International:-
(A) under or in relation to the Warranties (other than the Environmental
Warranties) shall be limited as set out in Schedule 3 (Limitations
on Croda International's Liability); and
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50
(B) under or in relation to the Environmental Warranties shall be
limited as set at in Schedule 3 (Limitations on Croda
International's Liability) to the extent applicable, and Schedule 7
(Environmental Matters).
15.5 The only remedy of the Purchaser and Croda Adesivos do Brasil for breach
of the Warranties shall be damages (subject to Schedule 3 (Limitations on
Croda International's Liability)) and each of the Purchaser and Croda
Adesivos do Brasil hereby agrees to waive any other right, power or
remedy it may have in relation to a breach of the Warranties.
Notwithstanding that the Purchaser or Croda Adesivos do Brasil, as the
case may be, becomes aware at any time (whether it does so by reason of
any disclosure made in the Disclosure Letter or not) that there has been
any breach of the Warranties or any other term of this Agreement or that
there may be a claim under any Assurance given by Croda International
under or pursuant to this Agreement, the Purchaser or Croda Adesivos do
Brasil, as the case may be, shall not be entitled to rescind this
Agreement or treat this Agreement as terminated but shall be entitled to
claim damages or exercise any other right, power or remedy under this
Agreement or (subject to the terms of this Agreement) as otherwise
provided by law. Each of the Purchaser and Croda Adesivos do Brasil
waives all and any rights of rescission in respect of this Agreement it
may have (howsoever arising or deemed to arise). Any damages payable in
respect of the Warranties and/or Schedule 7 (Environmental Matters) shall
constitute a reduction by the amount received of the consideration paid
by the Purchaser for the Assets (other than the Brazilian Assets) and the
Shares specified in sub-clauses 3.1 and 3.5.
15.6 Croda International accepts that the Purchaser and Croda Adesivos do
Brasil are entering into this Agreement and the Completion Documents in
reliance upon the Warranties.
16. PURCHASER'S AND GUARANTOR'S WARRANTIES
16.1 The Purchaser and the Guarantor each warrants to Croda International on
behalf of itself that:
(A) it and each relevant member of its Group has the requisite power and
authority to enter into and perform this Agreement and the other
documents which are to be executed by it at First Completion (the
"PURCHASER'S COMPLETION DOCUMENTS");
(B) this Agreement constitutes and the Purchaser's Completion Documents
will, when executed by it or the relevant member of its Group,
constitute its binding obligations or, as the case may be, the
binding obligations of such member in accordance with their
respective terms (i) except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganisation, moratorium or
other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, and (ii) subject to
limitations imposed by general equitable principles;
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51
(C) the execution and delivery of, and the performance by it and each
relevant member of its Group of its obligations under this Agreement
and the Purchaser's Completion Documents will not:
(i) result in a breach of any provision of its constitutional
documents;
(ii) conflict with, result in a breach of, or constitute a default
under, any instrument to which it is a party or by which it
is bound which will have a material adverse effect on its
ability to execute and deliver, or perform its obligations
under, this Agreement and the Purchaser's Completion
Documents;
(iii) result in a breach of any order, judgment or decree of any
court or governmental agency to which it is a party or by
which it is bound or subject and which will have a material
adverse effect on its ability to execute and deliver, or
perform its obligations under, this Agreement and the
Purchaser's Completion Documents; or
(iv) save as contemplated by this Agreement, require it to obtain
any consent or approval of, or give any notice to or make any
registration with, any governmental or other authority which
has not been obtained or made at the date of this Agreement
and is in full force and effect where failure to obtain such
consent or approval, give such notice or make such
registration which will have a material adverse effect on its
ability to execute and deliver, or perform its obligations
under, this Agreement and the Purchaser's Completion
Documents;
(D) there are no:
(i) outstanding judgments, orders, injunctions or decrees of any
governmental or regulatory body or arbitration tribunal
against or affecting any member of its Group;
(ii) lawsuits, actions or proceedings pending or, to its
knowledge, threatened against or affecting any member of its
Group; or
(iii) investigations by any governmental or regulatory body which
are, to its knowledge, pending or threatened against any
member of its Group,
and which, in the case of each of sub-paragraphs (D)(i), (ii) and
(iii), have or will have a material adverse effect on its ability to
execute and deliver, or perform its obligations under, this
Agreement and the Purchaser's Completion Documents; and
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(E) it has no liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions
contemplated by this Agreement, in each case for which Croda
International could become liable or obligated.
16.2 The only remedy of Croda International for breach of the Purchaser's and
Guarantor's Warranties shall be damages (subject as hereinafter provided)
and Croda International hereby agrees to waive any other right, power or
remedy it may have in relation to a breach of the Purchaser's and
Guarantor's Warranties. Notwithstanding that Croda International becomes
aware at any time that there has been any breach of the Purchaser's and
Guarantor's Warranties or any other term of this Agreement or that there
may be a claim under any Assurance given by the Purchaser or the
Guarantor under or pursuant to this Agreement, Croda International shall
not be entitled to rescind this Agreement or treat this Agreement as
terminated but shall be entitled to claim damages or exercise any other
right, power or remedy under this Agreement or (subject to the terms of
this Agreement) as otherwise provided by law. Croda International waives
all and any rights of rescission in respect of this Agreement it may have
(howsoever arising or deemed to arise). The provisions of Schedule 3
(Limitations on Liability) shall apply mutatis mutandis to the
Purchaser's and Guarantor's Warranties save that for this purpose:
(i) any reference to the Purchaser shall be construed as a
reference to Croda International and any reference to the
Purchaser's Group shall be construed as a reference to the
Croda Group;
(ii) any reference to Croda International shall be construed as a
reference to the Purchaser and/or the Guarantor and any
reference to the Croda Group shall be construed as a
reference to the Purchaser's Group;
(iii) any reference to Warranties or a Warranty shall be construed
as a reference to the Purchaser's and Guarantor's Warranties
or a Purchaser's and Guarantor's Warranty, as the case may
be;
(iv) any reference to a provision of Schedule 3 shall be construed
as a reference to this Clause 16;
(v) any reference to Schedule 7 (Environmental Matters) shall be
deemed to be deleted with such necessary consequential
amendments as may be necessary to give sense to the relevant
provision of this Clause 16 in the absence of such reference;
and
(vi) paragraph 9 of Schedule 3 shall be deemed not to apply.
16.3 It accepts that Croda International is entering into this Agreement in
reliance upon the Purchaser's and Guarantor's Warranties.
<PAGE> 59
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17. CERTAIN UNDERTAKINGS
17.1 The Purchaser agrees and undertakes on behalf of itself and each other
member of the Purchaser's Group and Croda Adesivos do Brasil agrees and
undertakes on behalf of itself that (in the absence of fraud) it has no
rights against and shall not make any claim against any employee,
director, agent, officer or adviser of any member of the Croda Group on
whom it or any of its professional advisors or agents may have relied
before entering into this Agreement or any other agreement or document
referred to herein.
17.2 Croda International agrees and undertakes on behalf of itself and each
other member of the Croda Group that (in the absence of fraud) it has no
rights against and shall not make any claim against any employee,
director, agent, officer or adviser of any member of the Purchaser's
Group or Croda Adesivos do Brasil on whom it or any of its professional
advisors or agents may have relied before entering into this Agreement or
any other agreement or document referred to herein. Croda International
agrees and undertakes on behalf of itself and each other member of the
Croda Group that it has no rights against and shall not make any claim
against any Listed Employee on whom it or any of its professional
advisers or agents may have relied before entering into this Agreement or
any other agreement or document referred to herein.
17.3 The Purchaser acknowledges and agrees on behalf of itself and each member
of the Purchaser's Group that nothing in this Agreement shall operate as
an agreement to transfer (nor shall transfer) any right, title or
interest in, and (subject to sub-clause 17.4), the Purchaser shall
procure that no member of the Purchaser's Group shall from First
Completion adopt, use or carry on business under (whether in hard copy,
electronic or any other form), the name, word, mark or logo "Croda" or
any name or mark which includes or consists of the word "Croda" in
relation to the Business and/or any chemical business (the "CRODA
MARKS"). It is expressly understood and agreed that the term "Croda
Marks" shall not include any product or catalogue numbers that are used
to identify products, and the Purchaser and any member of the Purchaser's
Group with an interest in the Business shall be free to use such numbers
following First Completion in the conduct of the Business without
restriction. In addition, neither the Purchaser nor any member of the
Purchaser's Group or Croda Adesivos do Brasil will use or register any
domain name which incorporates the Croda Marks.
17.4 Croda International agrees that for the period of twelve months after
First Completion (the "CRODA STOCK PERIOD") the Purchaser and the
relevant Designated Purchaser shall be entitled to sell those of the
Stocks (other than the Brazilian Stocks) which as at the First Completion
Date are in progress or finished and which carry the Croda Marks (the
"CRODA STOCKS") provided always that the Croda Stocks shall only be sold
if at the time of such sale they are in an undamaged condition. The
Purchaser shall procure that by no later than the end of the Croda Stock
Period the Croda Marks shall be destroyed and/or
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54
deleted from all stocks of the Business (other than the Brazilian
Business) (including, but not limited to, the Stocks other than the
Brazilian Stocks) which carry the Croda Marks. Croda International agrees
that for the period of twelve months after Second Completion (the
"BRAZILIAN STOCK PERIOD") Croda Adesivos do Brasil shall be entitled to
sell those of the Brazilian Stocks which as at the Second Completion Date
are in progress or finished and which carry the Croda Marks (the "CRODA
BRAZILIAN STOCKS") provided always that the Croda Brazilian Stocks shall
only be sold if at the time of such sale they are in undamaged condition.
The Purchaser shall procure that by no later than the end of the
Brazilian Stock Period the Croda Marks shall be destroyed and/or deleted
from all stocks of the Brazilian Business (including, but not limited to,
the Brazilian Stocks) which carry the Croda Marks. Notwithstanding the
foregoing, Croda International agrees that for a period of four months
following the First Completion Date, the Purchaser and the members of the
Purchaser's Group shall be entitled to produce and use new labels and use
existing labels for products and packaging that bear the Croda Marks
including without limitation the right to use the Croda Marks on existing
data sheets and product literature and that for a period of four months
following the Second Completion Date, Croda Adesivos do Brasil shall be
entitled to produce and use new labels and use existing labels for
products and packaging that bear the Croda Marks including without
limitation the right to use the Croda Marks on existing data sheets and
product literature.
17.5 For the period of three years from the First Completion Date, the
Purchaser shall, where reasonably requested to do so by Croda
International and subject to reimbursement by Croda International of all
reasonable out-of-pocket expenses of the Purchaser, use its reasonable
endeavours to procure that financial data existing in respect of the
Business prior to First Completion and required by any member of the
Croda Group for financial accounts, management accounts or statutory
accounts and any data required for compliance with any reporting
requirements of any stock exchange or securities or other regulatory
authority under any applicable law, rule or regulation shall be
retrieved, collated and delivered to Croda International as soon as
reasonably practicable upon request by Croda International to the
Guarantor.
17.6 The Purchaser undertakes with Croda International (for itself and as
trustee for each other member of the Croda Group) and Croda International
undertakes with the Purchaser (for itself and as trustee for each other
member of the Purchaser's Group) to comply with all notifications and
other requirements arising as a result of this Agreement and the
transactions contemplated hereunder under any relevant competition,
anti-restrictive trade practices or anti-trust laws (except to the extent
that such requirements are the responsibility of the other of them under
such laws). The Purchaser shall indemnify each member of the Croda Group
against any and all costs, claims, expenses and liabilities whatsoever
which Croda International or any such member of the Croda Group may
suffer or incur as a result of the Purchaser's failure to comply with
such laws and Croda International shall indemnify each
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member of the Purchaser's Group against any and all costs, claims,
expenses and liabilities whatsoever which the Purchaser or any such
member of the Purchaser's Group may suffer or incur as a result of the
Croda Group's failure to comply with such laws.
17.7 The Purchaser undertakes on behalf of itself and each member of the
Purchaser's Group that each member of the Purchaser's Group will treat as
strictly confidential and not use or disclose to any person (other than
on a strictly confidential basis to any other member of the Purchaser's
Group or to its professional advisers, auditors and bankers provided that
the Purchaser shall be liable for any failure by such professional
advisers, auditors and bankers to keep such information strictly
confidential) any Croda Group Confidential Information except if and to
the extent required by the law of any relevant jurisdiction or required
by any securities exchange or regulatory or governmental body to which it
is subject or submits, wherever situated. Without prejudice to sub-clause
29 (Confidentiality), this sub-clause shall cease to apply to any Croda
Group Confidential Information as and when the information in question
ceases to be the subject of the obligation of confidentiality in respect
of which it is identified in the Disclosure Letter as Croda Group
Confidential Information or if and to the extent the information has come
into the public domain through no fault of the Purchaser or any member of
the Purchaser's Group.
17.8 With respect to the Belgian Property, Croda International shall, at its
sole expense, take all actions necessary to comply in a timely fashion
with any applicable Environmental Law concerning the transfer of
property, including, without limitation, any investigation, remediation
or removal activities required under the Flemish Statute on Soil Clean-up
dated 22 February, 1995, its implementing decrees, and under the
undertaking ("eenzijdige verbintemis tot bodemsanering") which
constitutes Annex 2 to the Ministerial Decree of 25 July, 2000 granting
to Croda Adhesives Europe N.V. a deviation to the Articles 37, 38 and 39
of the Flemish Statute on Soil Clean-up dated 22 February, 1995 (the
"OVAM MATTER"). With respect to any action undertaken by Croda
International pursuant to this sub-clause 17.8, sub-paragraphs 6.3, 6.5,
6.6 and 6.7 of Schedule 7 shall apply.
17.9 Croda International shall, at its sole expense, take all actions
necessary, including, without limitation, obtaining required consents,
approvals and authorisations, to comply with the Industrial Site Recovery
Act, N.J.S.A. 13:1K-6 et.seq. ("ISRA") with respect to the Ewing, New
Jersey facility. With respect to any action undertaken by Croda
International pursuant to this sub-clause 17.9, sub-paragraphs 6.3, 6.5,
6.6 and 6.7 of Schedule 7 shall apply provided, however, that the
acknowledgement in the Remediation Agreement Application (signed by the
Purchaser in connection with the ISRA process) shall not affect the
Purchaser's rights under this Agreement with regard to any Work related
to ISRA.
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17.10 Croda International shall pay to the Purchaser a sum equal to any
redundancy payment made to Mr S.G. Wootton following First Completion up
to the Maximum Amount (as defined below) provided that Mr S.G. Wootton is
dismissed as redundant by the Purchaser within 6 months of the date of
this Agreement. For the purposes of this clause the "Maximum Amount"
shall be an amount not exceeding 1.75 times the statutory redundancy
payment which Mr S.G. Wootton is entitled to at the time of his dismissal
in accordance with section 162 of the Employment Rights Act 1996.
17.11 Croda do Brasil hereby agrees to indemnify Croda Adesivos do Brasil
against any and all costs, charges, losses, liabilities and expenses
which Croda Adesivos do Brasil may suffer or incur by virtue of:-
(A) labour and social security actions filed against Croda Adesivos do
Brasil by Croda do Brasil's employees or any subcontractors employed
in the performance of Croda do Brasil's own activities; and
(B) any notice or assessment which Croda Adesivos do Brasil receives
from any municipal, state or federal tax authority relating to the
assessment of the Tax on Distribution of Goods and Services (ICMS)
on the assets of Croda do Brasil which results from the
non-segregation of the areas on which Croda do Brasil and Croda
Adesivos do Brasil perform their own activities.
17.12 Croda Adesivos do Brasil hereby agrees to indemnify Croda do Brasil
against any and all costs, charges, losses, liabilities and expenses
which Croda do Brasil may suffer or incur by virtue of:-
(A) labour and social security actions filed against Croda do Brasil by
Croda Adesivos do Brasil's employees or any subcontractors employed
in the performance of Croda Adesivos's own activities; and
(B) any notice or assessment which Croda do Brasil receives from any
municipal, state or federal tax authority relating to the assessment
of the Tax on Distribution of Goods and Services (ICMS) on the
assets of Croda Adesivos do Brasil which results from the
non-segregation of the areas on which Croda do Brasil and Croda
Adesivos do Brasil perform their own activities.
18. RESTRICTIONS ON CRODA INTERNATIONAL
18.1 Croda International undertakes that it shall not, and shall procure that
each other member of the Croda Group (for as long as it remains such a
member) shall not:
(A) for a period of three years after the First Completion Date directly
or indirectly carry on or be engaged, concerned or interested in any
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57
business which competes with the Business as conducted immediately
prior to First Completion; or
(B) for a period of one year after the First Completion Date solicit or
entice away from the employment of any member of the Purchaser's
Group any Listed Employee other than a Listed Employee whose
employment has then ceased or who has given (or received) notice
terminating such employment or who responds (without any prior
solicitation from any member of the Croda Group or any agent
therefor) to any public advertisement placed by or on behalf of any
member of the Croda Group.
18.2 Nothing in sub-clause 18.1 shall prevent any member of the Croda Group:
(A) carrying on and being engaged, concerned and interested in the
Brazilian Business in accordance with the terms of this Agreement
between the execution of this Agreement and Second Completion;
(B) carrying on or being engaged in or economically interested in any
business which, at the date of this Agreement, it currently carries
on or is engaged in or economically interested in (except such
business as is being transferred pursuant to this Agreement) or any
reasonable extension or development thereof;
(C) carrying on or being engaged in or economically interested in any
business referred to in sub-clause 18.1 after such time as the
Purchaser or any member of the Purchaser's Group ceases to carry on
or be engaged in or economically interested in such business to any
significant extent;
(D) being the holder of shares (conferring not more than five per cent.
of the votes which would normally be cast at a general meeting of
that company or representing not more than a five per cent.
beneficial interest) or debentures or other securities listed,
quoted or dealt in on any investment exchange of a company which is
engaged in any business referred to in sub-clause (A);
(E) acquiring the whole or any part of a business that includes
activities the carrying on of which would otherwise amount to a
breach of the undertaking contained in paragraph (A) of sub-clause
18.1 if at the date of such acquisition the annual turnover
attributable to those activities represents five per cent. or less
of the annual turnover of the acquired business; or
(F) carrying on or being engaged in or economically interested in any
business which only supplies goods or services to members of the
Croda Group.
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58
Croda International for itself and each member of the Croda Group
considers that the restrictions contained in this Clause are no greater
than is reasonable and necessary for the protection of the interest of
the Purchaser and the members of the Purchaser's Group and if any such
restriction shall be held to be void or voidable but would be valid and
enforceable if deleted in part or reduced in application, such
restriction shall apply with such deletion or modification as may be
necessary to make it valid and enforceable.
19. BOOKS AND RECORDS
19.1 Croda International shall procure that the relevant members of the Croda
Group shall deliver to the Purchaser originals of all the Books and
Records as are used exclusively or predominantly by the Business or the
Assets excluding any Books and Records relating exclusively or
predominantly to Taxation and excluding the Brazilian Books and Records.
19.2 For a period of six years from First Completion the Purchaser shall
maintain and make available the Books and Records which are delivered to
the Purchaser under this Agreement for inspection and copying by
representatives of any member of the Croda Group and its professional
advisers during Working Hours on reasonable advance notice and such
undertaking as to confidentiality as the Purchaser may reasonably require
being given.
19.3 For a period of six years from First Completion, Croda International
shall maintain and make available to the Purchaser any Books and Records
not delivered to the Purchaser pursuant to sub-clause 19.1 which contain
material Business Information which is required by the Purchaser in
connection with the Business or any Asset (including, without limitation,
any Tax or other return or filing in connection therewith) for inspection
and copying by representatives of the Purchaser and/or the Guarantor
during Working Hours on reasonable advance notice being given (and, if it
is not practicable only to make available the relevant parts thereof,
upon such undertaking as to confidentiality as Croda International may
reasonably require) including, without prejudice to the generality of the
foregoing, access on reasonable notice to the books and records of any
member of the Croda Group required by the Purchaser or the Guarantor for
the purposes of compiling financial accounts and/or any data required for
compliance with the reporting requirements of any applicable U.S.
securities laws and, in addition, if so requested by the Guarantor, Croda
International shall use reasonable endeavours, at the Guarantor's cost,
to provide such assistance to the Purchaser and/or the Guarantor as the
Guarantor may reasonably require for such purpose.
20. PAYMENTS
20.1 Except to the extent otherwise set out in this Agreement, any payment to
be made by any party under this Agreement shall be made in full without
any set-off, restriction or condition (whether for or on account of any
counterclaim or
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59
otherwise) and without, and free and clear of, any deduction or
withholding whatsoever (save only as required by law). If any deduction
or withholding is required by law to be made from any sums payable under
this Agreement (except for payments of interest), the party who is
obliged to make the payment shall also be obliged to pay to the party to
whom payment is to be made such sum as will, after such deduction or
withholding has been made, leave the party to whom payment is to be made
with the same amount as it would have been entitled to receive in the
absence of any such requirement to make such deduction or withholding.
20.2 If following the payment of an additional amount under sub-clause 20.1,
the payee subsequently obtains the benefit of a saving, reduction, credit
or payment in respect of Tax in consequence of which the net after Tax
amount received by the payee is greater than the amount which would have
been payable but for sub-clause 20.1, the payee shall pay to the payer
such sums as shall leave the payee (after such payments) in no worse
position than it would have been in had no additional payment been
required under sub-clause 20.1 within 7 days of receipt of the benefit of
the saving, reduction, credit or repayment of Tax as the case may be.
20.3 Clauses 20.1 and 20.2 will not apply if the Purchaser is required by
Brazilian law to make a payment under sub-clause 3.5 of this Agreement in
consideration for the sale of the Shares net of a withholding or
deduction. The Purchaser agrees to notify Croda International if it
becomes aware that this sub-clause 20.3 applies. The Purchaser will pay
to the appropriate authority all amounts withheld or deducted by it and
agrees to deliver to Croda International a receipt or other evidence of
payment as soon as practicable.
21. GUARANTEE
21.1 In consideration of Croda International agreeing to procure the sale of
the Assets and to sell the Shares on the terms set out in this Agreement,
the Guarantor unconditionally and irrevocably guarantees to Croda
International the due and punctual performance by each member of the
Purchaser's Group of all of their respective obligations, commitments and
undertakings under or pursuant to this Agreement and any Completion
Document and agrees with Croda International (for itself and as trustee
for each other member of the Croda Group) that the Guarantor shall
indemnify each member of the Croda Group in respect of any breach by any
member of the Purchaser's Group of any of their obligations, commitments
and undertakings under or pursuant to this Agreement or any Completion
Document. The liability of the Guarantor under this Agreement and any
Completion Document shall not be released or diminished by any variation
of the terms of this Agreement or any Completion Document (whether or not
agreed by the Guarantor), any forbearance, neglect or delay in seeking
performance of the obligations imposed by this Agreement or any granting
of time for such performance.
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60
21.2 If and whenever any member of the Purchaser's Group defaults for any
reason whatsoever in the performance of any obligation, commitment or
undertaking undertaken or expressed to be undertaken under or pursuant to
this Agreement or any Completion Document, the Guarantor shall forthwith
upon demand unconditionally perform (or procure performance of) and
satisfy (or procure the satisfaction of) the obligation, commitment or
undertaking in regard to which such default has been made in the manner
prescribed by this Agreement and any Completion Document and so that the
same benefits shall be conferred on Croda International as would have
been received if said obligation, commitment or undertaking had been duly
performed and satisfied by the relevant member of the Purchaser's Group.
21.3 This guarantee is to be a continuing guarantee and accordingly is to
remain in force until all the obligations of the members of the
Purchaser's Group shall have been performed or satisfied in full
regardless of the legality, validity or enforceability of any provisions
of this Agreement and any Completion Document and notwithstanding the
winding-up, liquidation, dissolution or other incapacity of any member of
the Purchaser's Group or any change in the status, control or ownership
of any member of the Purchaser's Group. This guarantee is in addition to,
without limiting and not in substitution for, any rights or security
which Croda International may now or after the date of this Agreement
have or hold for the performance and observance of the obligations,
commitments and undertakings of the members of the Purchaser's Group
under or in connection with this Agreement or any Completion Document.
21.4 As a separate and independent stipulation, the Guarantor agrees that any
obligation, commitment or undertaking expressed to be undertaken by any
member of the Purchaser's Group in this Agreement or any Completion
Document (including, without limitation, any moneys expressed to be
payable under this Agreement or any Completion Document) which may not be
enforceable against or recoverable from the relevant member of the
Purchaser's Group by reason of any legal limitation, disability or
incapacity on or of any member of the Purchaser's Group or any fact or
circumstance (other than any limitation imposed by this Agreement or any
Completion Document) shall nevertheless be enforceable against and
recoverable from the Guarantor as though the same had been incurred by
the Guarantor and the Guarantor were the sole or principal obligor in
respect thereof and shall be performed or paid by the Guarantor on
demand.
22. EFFECT OF COMPLETION
Save as otherwise provided herein, any provision of this Agreement or of
any other document referred to herein which is capable of being performed
after but which has not been performed at or before First Completion and
all Warranties contained in or entered into pursuant to this Agreement
shall (subject to Schedule 3 (Limitations on Croda International's
Liability)) remain in full force and effect notwithstanding First
Completion.
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61
23. REMEDIES, WAIVERS AND INDEMNIFICATION
23.1 No delay or omission on the part of any party to this Agreement in
exercising any right, power or remedy provided for under this Agreement
or any other documents referred to in it shall impair such right, power
or remedy or operate as a waiver thereof.
23.2 The single or partial exercise of any right, power or remedy provided
under this Agreement or any document referred to in this Agreement shall
not preclude any other or further exercise thereof or the exercise of any
other right, power or remedy except where expressly stated in this
Agreement.
23.3 The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law
unless otherwise stated in this Agreement.
23.4 If any person (the "INDEMNIFIED PERSON") becomes aware of any assessment,
claim, action or demand of a third party (an "INDEMNIFIED CLAIM") against
it which gives rise to any claim for indemnification under this Agreement
(other than the Warranties or the Environmental Covenant), the
Indemnified Person shall (except to the extent otherwise required by the
law of any relevant jurisdiction or by any securities exchange or
regulatory or governmental body to which it is subject or submits):
(A) as soon as reasonably practicable give Notice thereof to the person
from whom indemnification is sought (the "INDEMNIFYING PARTY");
(B) subject to the Indemnifying Party indemnifying the Indemnified
Person against any liability, cost, damage or expense which may be
incurred thereby, take such action and give such information and
access to personnel, premises, chattels, documents and records to
the Indemnifying Party and its professional advisers as the
Indemnifying Party may reasonably request and the Indemnifying Party
shall be entitled to require any relevant company (being a member of
the Purchaser's Group where the Indemnified Person is a member of
the Purchaser's Group or a member of the Croda Group where the
Indemnified Person is a member of the Croda Group) to take such
action and give such information and assistance in order to avoid,
dispute, resist, mitigate, settle, compromise, defend or appeal any
claim in respect thereof or adjudication with respect thereto;
(C) subject to the Indemnifying Party indemnifying the Indemnified
Person against any liability, cost, damage or expense which may be
incurred thereby, at the request of the Indemnifying Party, allow
the Indemnifying Party to take the sole conduct of the Indemnified
Claim in the name of the Indemnified Person or any such relevant
company referred to above and in that connection the Indemnified
Person shall give or cause to be given
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62
to the Indemnifying Party all such assistance as it may reasonably
require in avoiding, disputing, resisting, settling, compromising,
defending or appealing the Indemnified Claim and shall instruct such
legal or other professional advisors as the Indemnifying Party may
nominate to act on behalf of the Indemnified Person or any relevant
company, as appropriate, but to act in accordance with the
Indemnifying Party's instructions provided that the Indemnified
Person shall not be required to commence any legal proceedings where
either:
(i) the Indemnified Person has validly assigned all of its rights
in relation to the relevant claim to the Indemnifying Party
in a manner which entitles the Indemnifying Party to the same
benefits in respect of such rights as the Indemnified Person
had; or
(ii) where sub-paragraph (i) does not apply, the Indemnifying
Party has not notified the person against whom the
proceedings are brought that they are being brought at the
instruction of the Indemnifying Party;
(D) be entitled to participate (acting reasonably) in the defence of any
Indemnified Claim and to employ separate counsel to represent it at
its own expense, provided that the Indemnifying Party shall control
the defence of the Indemnified Claim; and
(E) not make any admission of liability, agreement, settlement or
compromise with any third party in relation to the Indemnified Claim
without the prior written consent of the Indemnifying Party.
23.5 An Indemnified Person shall take all reasonable action to mitigate its
loss in respect of an actual or potential Indemnified Claim.
23.6 The Indemnifying Party shall be entitled at any stage and in its absolute
discretion, after prior Notice to the Indemnified Person, to settle any
Indemnified Claim.
23.7 Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defence of any Indemnified Claim (and shall be
liable for the reasonable expenses (including legal expenses) incurred by
the Indemnified Person in defending such Indemnified Claim) if the
Indemnified Claim is for relief other than damages (including any order,
injunction or other equitable relief) against the Indemnified Person
which the Indemnified Person reasonably determines cannot be separated
from any related claim for damages. If such claim for other relief can be
separated from the claim for damages, the Indemnifying Party shall be
entitled to assume the defence of the claim for damages.
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63
23.8 The parties to the Agreement do not intend that any term of this
Agreement should be enforceable, by virtue of the Contracts (Rights of
Third Parties) Act 1999, by any person who is not a party to this
Agreement.
24. NO ASSIGNMENT
(A) The benefit of this Agreement shall not be assignable except that
the Purchaser may, (i) effective on and after the First Completion
Date, grant a security interest in all payments due to the Purchaser
in accordance with the terms of this Agreement, to the Chase
Manhattan Bank, in its capacity as administrative agent for the
senior lenders to the Purchaser (together with any successor in such
capacity, the "SENIOR AGENT"), and (ii) upon giving Notice to Croda
International, assign the benefit of all or any of its rights under
this Agreement to a member of the Purchaser's Group (a "PERMITTED
ASSIGNEE") provided that and subject to the condition that:
(i) this shall not increase any liability of Croda International
under this Agreement; and
(ii) if such Permitted Assignee shall subsequently cease to be a
member of the Purchaser's Group, the Purchaser shall procure
that prior to its ceasing to be a member of the Purchaser's
Group the Permitted Assignee shall assign the benefit of any
of the rights under this Agreement which it holds to the
Purchaser or (upon giving further Notice to Croda
International) to another member of the Purchaser's Group.
Croda International hereby irrevocably agrees with the Purchaser
that, without the Senior Agent's prior written consent, Croda
International shall not waive or otherwise modify the terms of this
Clause 24 to permit the Purchaser or any Permitted Assignee to
assign, including, without limitation, to grant a security interest
in or lien on, any of the Purchaser's rights or any of such
Permitted Assignee's rights under this Agreement to any person other
than the Senior Agent. Any assignment in contravention of this
clause shall be void.
(B) Croda International acknowledges that the Purchaser proposes to give
warranties to a member or members of the Purchaser's Group in the
same terms as the Warranties which Croda International gives to the
Purchaser in this Agreement and subject to all the same limitations
on and exemptions from liability of Croda International under or in
relation to the Warranties including, without limitation, by virtue
of the Disclosure Letter and the provisions of Schedule 3
(Limitations on Croda International's Liability) provided that it is
agreed that:
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(i) this acknowledgement shall not have the effect of increasing
any liability of Croda International under this Agreement;
and
(ii) the Purchaser agrees that it shall not assert, and that it
shall indemnify Croda International if any such member of the
Purchaser's Group or any other person asserts, that this
acknowledgement has such effect.
25. FURTHER ASSURANCE
25.1 At any time after the date of this Agreement, Croda International shall
and shall procure that any relevant member of the Croda Group shall
execute such documents and do such acts and things as the Purchaser or
the Guarantor may reasonably require for the purpose of giving full
effect to this Agreement and the Completion Documents and securing to the
Purchaser and the Guarantor the full benefit of the rights, powers and
remedies conferred upon them under this Agreement and the Completion
Documents or to enable the Purchaser to become registered as the
proprietor of the registered Business Intellectual Property. Croda
International shall and shall procure that any relevant member of the
Croda Group shall use all reasonable endeavours to procure that any
necessary third party shall and any third party reasonably identified by
the Purchaser to Croda International for the purposes of this sub-clause
25.1 shall execute such documents and do such acts and things as the
Purchaser or the Guarantor may reasonably require for the purpose of
giving full effect to this Agreement and the Completion Documents and
securing to the Purchaser and the Guarantor the full benefit of the
rights, powers and remedies conferred upon them under this Agreement and
the Completion Documents.
25.2 At any time after the date of this Agreement, the Purchaser shall and
shall procure that any relevant member of the Purchaser's Group shall
execute such documents in particular (without limitation) any instruments
of assumption and acknowledgements and do such acts and things as Croda
International may reasonably consider necessary to effect the release and
discharge in full of any Assumed Liability or any Brazilian Assumed
Liability of any member of the Croda Group and the Purchaser's assumption
of the Assumed Liabilities and Croda Adesivos do Brasil's assumption of
the Brazilian Assumed Liabilities or to enable Croda International to
pursue recovery of any Designated Receivable in respect of which payment
is made by Croda International under the provisions of sub-clause 9.3(i)
and sub-clause 10.3(i). The Purchaser shall and shall procure that any
relevant member of the Purchaser's Group shall use all reasonable
endeavours to procure that any necessary third party shall and any third
party reasonably identified by Croda International to the Purchaser for
the purposes of this sub-clause 25.2 shall execute such documents in
particular (without limitation) any instruments of assumption and
acknowledgements and do such acts and things as Croda International may
reasonably require for the purpose of giving full effect to this
Agreement and the Completion Documents and securing to Croda
International the full benefit of all of the rights,
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powers and remedies conferred upon it under this Agreement and the
Completion Documents.
26. ENTIRE AGREEMENT
26.1 This Agreement, the Disclosure Letter and the Completion Documents and
the confidentiality agreement referred to in Clause 29 (Confidentiality)
constitute the whole and only agreement between the parties relating to
the sale and purchase of the Assets and the Shares and, except to the
extent expressly repeated in this Agreement, the Disclosure Letter or the
Completion Documents, any prior drafts, agreements, undertakings,
representations, warranties and arrangements of any nature whatsoever,
whether or not in writing, relating thereto are superseded and
extinguished.
26.2 The Purchaser acknowledges and agrees (for itself and on behalf of each
other member of the Purchaser's Group) with Croda International (on
behalf of itself and each other member of the Croda Group and on behalf
of their respective agents, directors, officers, employees and advisers)
and Croda International acknowledges and agrees (for itself and on behalf
of each other member of the Croda Group) with the Purchaser (on behalf of
itself and each other member of the Purchaser's Group and on behalf of
their respective agents, directors, officers, employees and advisers)
that:
(A) it does not rely on and has not been induced to enter into this
Agreement or any other agreement or document referred to herein on
the basis of any Assurance (express or implied) made or given by or
on behalf of any member of the Croda Group or the Purchaser's Group
(as the case may be) or any of their respective agents, directors,
officers, employees or advisers other than those expressly set out
in this Agreement or, to the extent that it has been, it has (in the
absence of fraud) no rights or remedies in relation thereto and
shall make no claim in relation thereto or against any such party;
(B) without limiting the generality of paragraph (A), and except for the
Warranties expressly set forth in this Agreement, no member of the
Croda Group makes any express or implied representation or warranty
as to the physical condition or suitability for any particular
purpose of any of the Assets, individually or collectively;
(C) any warranty or other rights which may be implied by law in any
jurisdiction in relation to the sale of the Assets in such
jurisdiction shall be excluded or, if incapable of exclusion,
irrevocably waived.
26.3 The Purchaser agrees that, except as expressly set out in this Agreement
and/or the Completion Documents, no member of the Croda Group or any of
its respective agents, directors, officers, employees and advisers has
made or makes any representation or warranty as to the accuracy,
completeness, reliability or
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66
reasonableness of any information, forecasts, budgets, estimates,
projections, statements of intent or statements of opinion relating to
the Business, the Assets and the Shares which have been provided, made or
made available by Croda International or any other member of the Croda
Group or their respective agents, directors, officers, employees and
advisers (including, without prejudice to the generality of the
foregoing, the contents of the Information Memorandum, the Disclosure
Letter and the Data Room) or accepts any duty of care in relation to the
Purchaser or any other member of the Purchaser's Group or any provider of
finance to any such person in respect of any such information, forecasts,
budgets, estimates, projections, statements of intent or statements of
opinion and that no member of the Croda Group or any of their respective
agents, directors, officers, employees and advisers shall be under any
liability if, for whatever reason, any such information, forecast,
budget, estimate, projection, statement of intent or statement of opinion
is or becomes inaccurate, incomplete, unreliable, unreasonable or
misleading in any particular and that, in the absence of fraud or wilful
misconduct, the Purchaser (for itself and each other member of the
Purchaser's Group) agrees and undertakes that it shall have no rights or
remedies in relation to any of the foregoing save as otherwise expressly
set out in this Agreement and/or the Completion Documents.
26.4 Each of the Purchaser and other members of the Purchaser's Group and each
of Croda International and other members of the Croda Group have had
independent legal, financial and technical advice relating to the sale
and purchase of the Assets and the Shares and to the terms of this
Agreement and the documents to be executed pursuant to it.
26.5 This Agreement may only be varied by a document signed by each of the
parties and expressed to be a variation to this Agreement.
27. NOTICES
27.1 Any notice or other communication given or made under or in connection
with the matters contemplated by this Agreement shall be in writing.
27.2 Any such notice or other communication shall be addressed as provided in
sub-clause 27.3 and, if so addressed, shall be deemed to have been duly
given or made as follows:
(A) if sent by personal delivery, upon delivery at the address of the
relevant party;
(B) if sent by facsimile, when received,
provided that if, in accordance with the above provisions, any such
notice or other communication would otherwise be deemed to be given or
made outside
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67
Working Hours, such notice or other communication shall be deemed to be
given or made at the start of Working Hours on the next Business Day.
27.3 The relevant addressee, address and facsimile number of each party for
the purposes of this Agreement, subject to sub-clause 27.4, are:
Name of party Address Facsimile No.
Croda International Cowick Hall, 01405 861767
Public Limited Snaith,
Company Goole,
East Yorkshire,
England.
For the attention of: The Company Secretary
Croda do Brasil Ltda Cowick Hall, 01405 861767
Snaith,
Goole,
East Yorkshire,
England
For the attention of: The Company
Secretary, Croda
International Public
Limited Company
Sovereign Holdings, LLC 225 West Washington 001 312 419 7151
Street,
Suite 2200,
Chicago,
Illinois,
IL 60606,
USA
For the attention of: The Treasurer
Croda Adesivos do Rua Croda 580, 00 55 19 3765 3500
Brasil Ltda Building A, Campinas,
SP, Brazil
For the attention of: Miguel de Bellis
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Name of party Address Facsimile No.
Sovereign Specialty 225 West Washington 001 312 419 7151
Chemicals Inc. Street,
Suite 2200,
Chicago,
Illinois,
IL 60606,
USA
For the attention of: The Chief Financial
Officer
27.4 A party may notify the other party to this Agreement of a change to its
name, relevant addressee, address or facsimile number for the purposes of
sub-clause 27.3 provided that such notification shall only be effective
on:
(A) the date specified in the notification as the date on which the
change is to take place; or
(B) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
falling five Business Days after notice of any such change has been
given.
27.5 For the avoidance of doubt, the parties agree that the provisions of this
Clause shall not apply in relation to the service of any writ, summons,
order, judgment or other document relating to or in connection with any
Proceedings.
28. ANNOUNCEMENTS
28.1 Subject to sub-clause 28.2, no announcement concerning the sale or
purchase of the Assets and the Shares, or either of them, or any
ancillary matter, shall be made by any party without the prior written
approval of the others, such approval not to be unreasonably withheld or
delayed.
28.2 Any party may make an announcement or filing concerning the sale or
purchase of the Assets and the Shares, or either of them or any ancillary
matter if required by:
(A) the law of any relevant jurisdiction;
(B) 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 Limited) whether or
not the requirement has the force of law,
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in which case the party concerned shall take all such steps as may
be reasonable and practicable in the circumstances to agree the
contents of such announcement or filing with the other party before
making such announcement and provided that any such announcement
shall be made only after notice to the other party.
28.3 The restrictions contained in this Clause shall continue to apply after
the termination of this Agreement without limit in time.
29. CONFIDENTIALITY
29.1 Subject to sub-clause 29.2 and Clause 28 (Announcements), 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:
(A) the other party and, in the case of Croda International, the
Purchaser's Group and, in the case of the Purchaser, the Croda
Group;
(B) the provisions or the subject matter of this Agreement; or
(C) the negotiations relating to this Agreement or any document referred
to herein.
29.2 Any party may disclose information which would otherwise be confidential
if and to the extent:
(A) required by the law of any relevant jurisdiction or for the purpose
of any judicial proceedings;
(B) 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 plc or any
Tax Authority), whether or not the requirement for information has
the force of law;
(C) that the information is disclosed on a strictly confidential basis
to the professional advisers, auditors and bankers of such party
provided that such party shall be liable for any failure by its
professional advisers, auditors and bankers to keep such information
strictly confidential;
(D) that the other party has given prior written consent to the
disclosure;
(E) it does so to a member of the Croda Group (in the case of Croda
International) or a member of the Purchaser's Group (in the case of
the Purchaser) which accepts restrictions in the terms of this
Clause;
(F) required to enable that party to enforce its rights under this
Agreement;
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(G) if and to the extent the information has come into the public domain
through no fault of that party; or
(H) the information is made available to the disclosing party by a third
party who is not bound by any obligation of confidentiality in
respect of such information,
provided that any such information disclosed pursuant to paragraph (A) or
(B) shall be disclosed only after Notice to the other party.
29.3 The restrictions contained in this Clause shall continue to apply after
the termination of this Agreement without limit in time.
30. COSTS AND EXPENSES
30.1 Save as otherwise stated in any other provision of this Agreement, each
party shall pay its own costs and expenses in relation to the
negotiations leading up to the sale of the Assets and the Shares and to
the preparation, execution and carrying into effect of this Agreement and
all other documents referred to in it.
30.2 Without prejudice to sub-clause 30.1 and except in relation to VAT to
which Clause 11 (VAT) shall apply, all stamp, transfer, registration,
sales and other similar Taxes, duties and charges and all notarial fees
payable in connection with the sale or purchase of the Assets under this
Agreement shall be paid by the Purchaser.
31. COUNTERPARTS
31.1 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.
31.2 Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same
instrument.
32. 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:
(A) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
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33. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
English law.
34. ARBITRATION
34.1 Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or termination,
shall be referred to and finally resolved by arbitration under the Rules
of the London Court of International Arbitration ("LCIA"), which Rules
are deemed to be incorporated by reference into this Clause.
34.2 The number of arbitrators shall be 3.
34.3 The place of arbitration shall be Stockholm, Sweden.
34.4 The arbitration proceedings shall be conducted in the English language
and any award shall be in English.
34.5 The proceedings of the arbitration shall be governed by the laws of
England.
34.6 Section 69 of the Arbitration Act 1996 is expressly excluded for the
purposes of this Clause 34.
35. LANGUAGE
35.1 Each notice, demand, request, statement, instrument, certificate, or
other communication given, delivered or made by any party to any other
party under or in connection with this Agreement shall be:
(A) in English; or
(B) if not in English, accompanied by an English translation made by a
translator, and certified by such translator to be accurate.
35.2 The receiving party shall be entitled to assume the accuracy of and rely
upon any English translation of any document provided pursuant to
sub-clause 35.1(B).
36. AGENT FOR SERVICE
36.1 Each of the Purchaser and the Guarantor irrevocably agrees that any
Service Document may be sufficiently and effectively served on it in
connection with Proceedings in England and Wales by service on its agent,
Jordan Company Secretaries Limited, if no replacement agent has been
appointed and Notice
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given to Croda International pursuant to sub-clause 36.3 or on the
replacement agent if one has been appointed and Notice given to Croda
International.
36.2 Any Service Document served pursuant to this Clause shall be marked for
the attention of:
(A) Sovereign Speciality Chemicals Inc. c/o Jordan Company Secretaries
Limited at 20-22 Bedford Row, London WC1R 4JS or such other address
within England or Wales as may be set out in a Notice given to the
other parties by the Purchaser; or
(B) such other person as is appointed as agent for service pursuant to
sub-clause 36.3 at the address set out in the Notice given pursuant
to sub-clause 36.3.
36.3 If the agent referred to in sub-clause 36.1 (or any replacement agent
appointed pursuant to this Clause 36) at any time ceases for any reason
to act as such, the Purchaser shall appoint a replacement agent to accept
service having an address for service in England or Wales and shall give
Notice to the other parties of the name and address of the replacement
agent; failing such appointment and notification, the other parties shall
be entitled by Notice to appoint such a replacement agent to act on the
Purchaser's behalf.
36.4 A copy of any Notice served on an agent pursuant to this Clause shall be
given to the Purchaser and the Guarantor, or either of them as applicable
at its address as set out in Clause 27 (Notices), but no failure or delay
in so doing shall prejudice the effectiveness of service of the Notice in
accordance with the provisions of sub-clause 36.1.
37. BULK TRANSFER LAW COMPLIANCE
The parties hereby waive compliance with the provisions of any so-called
bulk transfer law in any jurisdiction in connection with the transactions
contemplated hereby. Croda International shall, and shall procure that
each relevant member of the Croda Group shall, indemnify the Purchaser
and each member of the Purchaser's Group from and against all costs,
claims, liabilities, expenses, obligations and undertakings, including
any of the foregoing that are attributable to Taxes, which may be
incurred by reason of such waiver.
IN WITNESS whereof the parties have entered into this Agreement the day and year
first before written.
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SCHEDULE 1
(FIRST COMPLETION ARRANGEMENTS)
1. GENERAL
(A) Matters to be dealt with by Croda International
-----------------------------------------------
At First Completion, Croda International shall deliver to the Purchaser
or procure that there is delivered to the Purchaser or as it may
direct:
(i) all the Assets (other than the Brazilian Assets) which
are capable of transfer by delivery;
(ii) the Transitional Services Agreement duly executed by
Croda International;
(iii) the assignments of all Business Intellectual Property
(other than Brazilian Intellectual Property) that is the
subject of a registration or application for registration
in the Agreed Form;
(iv) a copy of the minutes of a meeting of the directors of
Croda International authorising the execution by Croda
International of this Agreement and all other relevant
documents referred to in this Agreement endorsed with a
certificate by the secretary of Croda International that
those copy minutes are a true and accurate record of the
meeting and that the authority conferred remains valid
and outstanding;
(v) these Books and Records transferred under Clause 2 (Sale
and Purchase) and required to be delivered under
sub-clause 18.1 (Books and Records);
(B) Matters to be dealt with by the Purchaser
-----------------------------------------
At First Completion the Purchaser shall:-
(i) deliver or procure that there is delivered to Croda
International or as it may direct:-
(a) the Transitional Services Agreement duly executed by the
Purchaser;
(b) a copy of the minutes of meetings of the directors of the
Purchaser and each other member of the Purchaser's Group
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which is a party to any Purchaser's Completion Document
authorising the execution by the Purchaser or such member
of the Purchaser's Group as the case may be of this
Agreement and all other documents referred to in this
Agreement endorsed with a certificate by the secretary of
the Purchaser that those copy minutes are a true and
accurate record of the meeting and that the authority
conferred remains valid and outstanding;
(c) a copy of the minutes of a meeting of the directors of
of the Guarantor authorising the execution by the
Guarantor of this Agreement endorsed with a certificate
by the secretary of the Guarantor that those copy minutes
are a true and accurate record of the meeting and that
the authority conferred remains valid and outstanding;
(d) Letter of Credit;
(ii) pay the consideration payable in respect of the Assets
(other than the Brazilian Assets) pursuant to this
Agreement by way of telegraphic transfer (through the
CHAPS system);
(iii) pay the Deposit pursuant to this Agreement by telegraphic
transfer (through the CHAPS system);
(C) Matters to be dealt with by Sovereign Adhesives, Inc.
-----------------------------------------------------
At First Completion Sovereign Adhesives, Inc. shall deliver to Croda
Adhesives, Inc. or procure that there is delivered to Croda Adhesives,
Inc. or as it may direct:
(i) the US Assignment and Assumption Agreement duly executed
by Sovereign Adhesives, Inc.;
(ii) the US Bill of Sale duly executed by Sovereign Adhesives,
Inc.;
(iii) each of the US Employment Contract Assignments duly
executed by Sovereign Adhesives, Inc.;
(iv) the US Substitution Agreement duly executed by Sovereign
Adhesives, Inc.
(D) Matters to be dealt with by Croda Adhesives, Inc.
-------------------------------------------------
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At First Completion Croda Adhesives, Inc. shall deliver to Sovereign
Adhesives, Inc. or procure that there is delivered to Croda Adhesives,
Inc. or as it may direct:
(i) the US Assignment and Assumption Agreement duly executed
by Croda Adhesives, Inc.;
(ii) the US bill of Sale duly executed by Croda Adhesives,
Inc.;
(iii) each of the US Employment Contract Assignments duly
executed by Croda Adhesives, Inc.;
(iv) the US Substitution Agreement duly executed by each of
the Teamsters Local Union No. 929 affiliated with the
International Brotherhood of Teamsters and Croda
Adhesives, Inc.
(E) Matters to be dealt with by Croda do Brasil
-------------------------------------------
At First Completion Croda do Brasil shall deliver to Croda Adesivos do
Brasil or procure that there is delivered to Croda Adesivos do Brasil
or as it may direct:
(i) all the Brazilian Assets which are capable of transfer by
delivery;
(ii) an original copy of the minutes of a shareholders' meeting of
Croda do Brasil in the Agreed Form, duly signed by the
shareholders of Croda do Brasil or by an attorney-in-fact
thereof, deciding upon:
(a) the authorisation for the execution by Croda do Brasil
of this Agreement and all other relevant documents
referred to in the Agreement;
(b) the approval of the Protocol of Justification of the
Partial Spin-off of Croda do Brasil executed by and
between the managements of Croda do Brasil and Croda
Adesivos do Brasil and of the respective Evaluation
Report;
(c) the approval of the partial spin-off of Croda do
Brasil and the contribution of the spun-off assets to
the corporate capital of Croda Adesivos do Brasil; and
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(d) the approval of the Amendment to the Articles of
Association of Croda do Brasil, deciding upon the
reduction of the corporate capital of the company as
a result of the spin-off.
(iii) a certified copy of the power of attorney in the Agreed Form
evidencing the powers of the attorney-in-fact who has signed
the minutes mentioned in item (ii) above on behalf of Croda do
Brasil's shareholders; and
(iv) a certified copy of the corporate documents of Croda do Brasil
in the Agreed Form evidencing the appointment of the legal
representative who shall sign the Brazilian Lease and the
Brazilian Services Agreement on its behalf.
(F) Matters to be dealt with by Croda Adesivos do Brasil
----------------------------------------------------
At First Completion Croda Adesivos do Brasil shall deliver to Croda do
Brasil or procure that there is delivered to Croda do Brasil or as it
may direct:
(i) an original copy of the minutes of a shareholders' meeting of
Croda Adesivos do Brasil in the Agreed Form, duly signed by
the shareholders of Croda Adesivos do Brasil or by an
attorney-in-fact thereof, deciding upon:
(a) the authorisation for the execution by Croda Adesivos
do Brasil of this Agreement and all other relevant
documents referred to in the Agreement;
(b) the approval of the Protocol of Justification of the
Partial Spin-off of Croda do Brasil executed by and
between the managements of Croda do Brasil and Croda
Adesivos do Brasil and of the respective Evaluation
Report;
(c) the approval of the partial spin-off of Croda do
Brasil and the contribution of the spun-off assets to
the corporate capital of Croda Adesivos do Brasil; and
(d) the approval of the Amendment to the Articles of
Association of Croda Adesivos do Brasil, deciding upon
the increase of the corporate capital of the company
as a result of the contribution of the spun-off assets.
(ii) a certified copy of the power of attorney in the Agreed Form
evidencing the powers of the attorney-in-fact who has signed
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the minutes mentioned in item (i) above on behalf of Croda
Adesivos do Brasil's shareholders; and
(iii) a certified copy of the corporate documents of Croda Adesivos
do Brasil in the Agreed Form evidencing the appointment of the
legal representative who shall sign the Brazilian Lease and
the Brazilian Services Agreement on its behalf.
2. U.S. PROPERTIES
Croda Adhesives Inc. and Sovereign Adhesives Inc. shall both execute
and deliver, at or prior to the First Completion the Ewing Lease.
At or prior to the First Completion, Croda International shall deliver
an assignment assumption and consent with respect to each of the leases
referred to in paragraph II of Part A of Schedule 6 (Property Matters).
3. PROPERTIES
(A) Matters to be dealt with by Croda International
Croda International shall deliver or procure that there is delivered
to, or to the order of, the Purchaser:-
(i) all title deeds relating to the UK Property as listed in
Schedule 6; and
(ii) duly executed Property Transfer in respect of the UK
Property.
(B) Matters to be dealt with by the Purchaser
The Purchaser shall deliver or procure that there is delivered to, or
to the order of Croda International duly executed Property Transfer in
respect of the UK Property.
4. BRAZIL
(A) Croda do Brasil and Croda Adesivos do Brasil shall both execute and
deliver, at the offices of Pinheiro Neto in Rio de Janeiro (Croda
International's Brazilian counsel):-
(i) the Brazilian Lease; and
(ii) the Brazilian Services Agreement.
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5. ITALY
Croda Italiana and the Purchaser will execute and deliver the Italian
Transfer Deed before an Italian notary at the offices of Becchis,
Nunziante & Partners in Rome (Croda International's Italian counsel).
6. BELGIUM
(A) Croda Adhesives Europe and Sovereign Specialty Chemicals
S.P.R.L./B.V.B.A. shall appear before Notary Wuyts in Belgium in order
to execute and deliver the notarial deed relating to the transfer of
the Belgian Property.
(B) Croda Adhesives Europe shall provide:-
(i) a bank guarantee issued by the National Westminster Bank
of BEF 45,000,000 for the benefit of the Ministry of
Environmental affairs and OVAM with regard to the soil
sanitation works on the Belgian Property;
(ii) Articles of Association of n.v. Croda Adhesives Belgium;
(iii) Publication of nomination of the directors in the Belgian
Official Journal; and
(iv) the original certificate referred to in Article 422 bis of
the Belgian Income Tax Code ("ITC") to Sovereign Specialty
Chemicals S.P.R.L./B.V.B.A
(C) Sovereign Specialty Chemicals S.P.R.L./B.V.B.A. shall file this
Agreement jointly with the certificate with the tax controller in
accordance with Article 442 bis ITC.
(D) Croda Adhesives Europe and Sovereign Specialty Chemicals BVBA shall
each execute and deliver the Belgian Business Sale Agreement.
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SCHEDULE 2
(WARRANTIES)
PART A
1. CAPACITY
(A) Croda International is a company duly incorporated and validly existing
under the laws of England and Wales.
(B) Each of Croda International, Croda do Brasil and Brazilian Purchaser has
the requisite power and authority to enter into and perform this
Agreement and any Vendor's Completion Documents to be executed by it at or
after First Completion.
(C) Each member of the Croda Group which is party to this Agreement and/or any
of the Vendor's Completion Documents is duly incorporated and validly
existing under the laws of its jurisdiction of incorporation and has the
requisite power and authority to enter into and perform its obligations
under this Agreement and/or that Vendor's Completion Document.
(D) This Agreement constitutes and the Vendor's Completion Documents executed
by Croda International and/or any member of the Croda Group will, when
executed, constitute binding obligations of Croda International and/or any
member of the Croda Group in accordance with their respective terms (i)
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganisation, moratorium or other laws now or hereafter in
effect relating to or affecting creditors' rights generally, and (ii)
subject to limitations imposed by general equitable principles.
(E) The execution and delivery of this Agreement and that of the Vendor's
Completion Documents by which Croda International and/or any member of the
Croda Group and the performance by each of Croda International and/or the
relevant member of the Croda Group of its respective obligations
thereunder will not:
(i) result in a breach of any provision of its memorandum or
articles of association (or equivalent constitutional
documents);
(ii) conflict with, result in a breach of, or constitute a default
under, any instrument to which it is a party or by which it is
bound and which will have a material adverse effect on its
ability to perform its obligations hereunder or under any of
the Vendor's Completion Documents to which it is a party;
<PAGE> 86
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(iii) result in a breach of any order, judgment or decree of any
court or governmental agency to which it is a party or by
which it is bound or subject and which will have a material
adverse effect on its ability to perform its obligations
hereunder or under any of the Vendor's Completion Documents to
which it is a party; or
(iv) save as contemplated by this Agreement, require it to obtain
any consent or approval of, or give any notice to or make any
registration with, any governmental or other authority which
has not been obtained or made at the date of this Agreement
and is in full force and effect where failure to obtain such
consent or approval, give such notice or make such
registration will have a material adverse effect on its
ability to perform its obligations hereunder or under any of
the Vendor's Completion Documents to which it is a party.
2. SOLVENCY
(A) No order has been made and no resolution has been passed for the
winding-up of Croda International or Croda Polymers or for a
provisional liquidator to be appointed and no petition has been
presented and no meeting has been convened for the purposes of winding
up Croda International or Croda Polymers.
(B) No administration order has been made and no petition for any such
order has been presented in respect of Croda International or Croda
Polymers.
(C) No receiver (which expression shall include an administrative receiver)
has been appointed in respect of Croda International or Croda Polymers.
(D) No voluntary arrangement has been applied for under section 1 of the
Insolvency Act 1986 in relation to Croda International or Croda
Polymers.
(E) No event analogous to any of the foregoing has occurred in respect of
any Vendor Company or any member of the Croda Group which owns an Asset
or is or will be a licensor of the Shared Intellectual Property or the
Shared Information Technology.
(F) No distress, distraint, charging order, garnishee order or execution
has been levied in respect of any of the Assets.
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(G) There are no proceedings under any applicable insolvency,
reorganisation or similar law in any jurisdiction in respect of any of
the Vendor Companies.
3. SUBSIDIARIES
Each Vendor Company is a member of the Croda Group.
4. OWNERSHIP OF ASSETS
(A) Each of the Assets (other than the Leased Plant and Machinery) is owned
by a Vendor Company and each of the Assets capable of possession is in
the possession of a Vendor Company or a member of the Croda Group and
located on one of the Properties (save for any Plant and Machinery,
Motor Vehicles or Stocks which are on the premises, or otherwise under
the control, of any customer or supplier, details of which are set out
in the Books and Records delivered to the Purchaser at First
Completion).
(B) The Assets comprise all of the property, rights and assets which are
necessary for the continuation of the Business as it is carried on by
Croda International, the Vendor Companies or any other member of the
Croda Group at the First Completion Date.
(C) No member of the Croda Group has agreed to acquire any of the Assets
(but excluding for this purpose the Stocks) on terms that title does
not pass to such member of the Croda Group until full payment is made.
5. ENCUMBRANCES
Save for Permitted Encumbrances, no option, right to acquire, mortgage,
charge, pledge, lien or other form of security or encumbrance or equity
on, over or affecting the whole or any part of the Assets is
outstanding and there is no agreement or commitment entered into by any
member of the Croda Group to give or create any, or any claim made
against any member of the Croda Group by any person to be entitled to
any.
6. ACCOUNTS
The Accounts:
(i) were prepared in accordance with accounting principles,
standards and practices applied in the preparation of the
annual audited financial statements for Croda International
and
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its subsidiary undertakings for the accounting period
ending in the Accounts Date (save as disclosed otherwise
therein);
(ii) are complete and accurate in all material respects in so
far as they relate to the Business;
(iii) show a true and fair view of (x) the assets, liabilities,
financial position and the state of affairs of the Business
as of the end of the accounting period ended on the
Accounts Date; and (y) the profits and losses of the
Business for the period ended on the Accounts Date; and
(iv) except as the Accounts expressly disclose, are not affected
by any exceptional or extraordinary items (as such terms
are defined in accordance with generally accepted
accounting principles as applied in the United Kingdom).
7. MANAGEMENT ACCOUNTS
(A) The Management Accounts:
(i) reflect with reasonable accuracy the accounting records of
the Business;
(ii) give a reasonably accurate view of the state of affairs,
income arising and expenses incurred of the Business for
the period in respect of which they have been prepared; and
(iii) have been prepared with all reasonable care and attention
in accordance with the same accounting principles,
standards and practices applied in the preparation of the
Accounts.
8. EVENTS SINCE THE MANAGEMENT ACCOUNTS DATE
Since the Management Accounts Date:
(i) there has been no material adverse change in the financial
or trading position of the Business taken as a whole;
(ii) the Business has in all material respects been carried on
in the ordinary course; and
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(iii) there has been no unusual increase or decrease in the
level of Stock, work in progress or current assets or
liabilities of the Business.
9. PLANT AND MACHINERY
(A) All the Plant and Machinery is serviceable and capable of being used
in connection with the Business.
(B) Details of all of the material Plant and Machinery which is owned by
any Vendor Company or any member of the Croda Group and used or to be
used in the Business are attached to the Disclosure Letter and for the
purposes of this sub-paragraph, sub-clause 1.2(J) shall not apply and
the reference to material shall be construed as a reference to material
in the context of the portion of the Business that is conducted at the
Property where the item of Plant and Machinery detailed is located.
(C) Details of all of the Leased Plant and Machinery are attached to the
Disclosure Letter.
(D) No capital expenditure for the purposes of the Business in excess of
(pound)100,000 per capital project or (pound)500,000 in the aggregate
which as at the First Completion Date had not yet been incurred has
been budgeted by any member of the Croda Group on or before the First
Completion Date.
10. MOTOR VEHICLES
(A) The Motor Vehicles are roadworthy and duly licensed.
(B) All forms of taxation payable in respect of the Motor Vehicles
(including VAT and road fund tax or, in relation to any jurisdiction
other than the United Kingdom, the equivalent Tax in that jurisdiction)
have been fully paid within the applicable time limit.
11. STOCKS
(A) The Stocks are all in good condition.
(B) The details of the Stocks set out in Schedule 9 (Stocks) are accurate
and correct in all material respects.
(C) In respect of the US Properties, no Stocks have been removed from the
Properties or sold since the close of business on 30 October, 2000 and
no Stocks have been removed from the other Properties or sold since the
close of business on 27 October, 2000.
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(D) Due provision has been made in the Management Accounts for the
obsolescence of any Stocks.
(E) The amounts of Stock (whether raw materials, work-in-progress or
finished goods) are not excessive, but are reasonable for the present
level of trading of the Business.
12. CONTRACTS
(A) No member of the Croda Group is in material breach of any of the
Contracts nor, so far as Croda International is aware, is any other
party to any of the Contracts.
(B) No Contract:
(i) cannot be determined or terminated within a period of
one year or less;
(ii) materially restricts the carrying on of the Business
in any part of the world; or
(iii) cannot readily be fulfilled or performed by the
relevant Vendor Company on time without undue or
unusual expenditure of money, effort or personnel.
(C) The Disclosure Letter and the documents delivered with the Disclosure
Letter contain all material details of all Contracts which:
(i) are material agency, distributorship, franchise, marketing,
purchasing, manufacturing or licensing agreements affecting
the Business;
(ii) contain material rebate obligations in respect of goods
already sold; or
(iii) involve expenditure in excess of(pound)300,000.
None of these Contracts are invalid and no written notice of
termination or intention to terminate has been received in respect
thereof.
(D) No member of the Croda Group is party to any joint venture or
consortium or any partnership arrangement or agreement or any
arrangement or agreement for sharing commissions or other income
affecting the Business.
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(E) There is not outstanding in respect of the Business any letter of
credit, guarantee or agreements for or deed of indemnity or for
suretyship given by or for the accommodation of or in connection with
the Business or any of the Assets.
13. CUSTOMERS AND SUPPLIERS
So far as Croda International is aware, no substantial customer or
supplier of the Business has during the 12 months preceding the date of
this Agreement ceased, or given written notice which is currently
outstanding that it will cease, trading with, the Business.
14. SUBSTANTIAL DEPENDENCE
Neither in the accounting reference period ending at the Accounts Date
nor in the period since has any single person purchased from or sold to
the Business more than five per cent. of the aggregate amount of all
sales or purchases made by the Business during such period.
15. LITIGATION
(A) No member of the Croda Group is engaged in any material litigation or
arbitration, or any material administrative or criminal proceedings,
whether as plaintiff, defendant or otherwise in each case in respect of
the Business (other than as plaintiff in proceedings for the collection
of debts arising in the ordinary course of the Business).
(B) So far as Croda International is aware, no such litigation or
arbitration or administrative or criminal proceedings as are referred
to in sub-paragraph (A) are pending or have been threatened in writing.
16. INVESTIGATIONS
No member of the Croda Group has received notification that any
investigation or inquiry is being or has been conducted by any
supranational, national or local authority or governmental agency in
respect of the business or affairs of the Business.
17. PROPERTIES
(A) The Properties are the only Immovable Property owned, used or occupied
in connection with the Business.
(B) Croda International has in its possession or under its control free of
any lien except for Permitted Encumbrances all of the title deeds and
documents necessary to prove the title of the Vendor Company
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which owns the Property in question to the Property. All the documents
of title to the Properties consist of original stamped documents or a
properly examined abstract and all of such documents are listed in an
attachment to the Disclosure Letter.
(C) The Property is not subject to the payment of any outgoings other than
general and water rates (and in the case of leasehold the sums reserved
by the lease) and all outgoings have been paid to date.
(D) All replies to enquiries given by or on behalf of Croda International
are so far as Croda International is aware true and accurate in all
material respects.
18. INTELLECTUAL PROPERTY AND INFORMATION TECHNOLOGY
(A) Up-to-date details of the registered Business Intellectual Property
(including any application to register such Intellectual Property) are
set out in the Disclosure Letter.
(B) All registered Business Intellectual Property is owned by the Vendor
Company identified against the relevant right in Warranty 18(A) above
and is free from charges and security interests.
(C) There are no claims outstanding at the date of First Completion for
compensation of any employee of the Business in relation to the
invention by such employee in the course of his employment of any
patent disclosed pursuant to Warranty 18(A) above.
(D) There are no domain names registered to any member of the Croda Group
which are used exclusively in the Business and which do not contain the
name or mark "Croda".
(E) All renewal fees and administrative steps required for the maintenance
of the registered Business Intellectual Property (including any
application to register any Business Intellectual Property) due to be
paid or taken on or prior to First Completion have been paid or taken.
So far as Croda International is aware, none of the registered Business
Intellectual Property (including any application to register any
Business Intellectual Property) is the subject of any impending or
threatened proceedings for opposition, cancellation, revocation or
rectification.
(F) Details of all material Intellectual Property licences granted to or by
any member of the Croda Group in relation to the Business are set out
in the Disclosure Letter.
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(G) So far as Croda International is aware, no member of the Croda Group is
in breach of any licence referred to in sub-paragraph (F) and no such
breach has been alleged.
(H) So far as Croda International is aware, the conduct of the Business,
the processes and methods employed, the services provided and the
products manufactured, used or dealt with in the conduct of the
Businesses do not infringe the Intellectual Property rights of any
other person.
(I) So far as Croda International is aware, no third party is infringing
the Business Intellectual Property.
(J) No member of the Croda Group has received any enforcement notice,
de-registration notice or transfer prohibition notice relating to the
Business under any Data Protection legislation and, so far as Croda
International is aware, no member of the Croda Group has received any
notification from any Data Protection Registrar in respect of any
non-compliance with any Data Protection legislation by the activities
of the Business.
(K) Details of the Business Information Technology are set out in the
Disclosure Letter and the Business Information Technology disclosed is
free from charges and security interests.
(L) Details of all material Information Technology licences and material
agreements relating to the maintenance and support and disaster
recovery used in relation to the Business Information Technology and
Licensed Information Technology are set out in the Disclosure Letter.
(M) So far as Croda International is aware, no member of the Croda Group
and no third party is in material breach of any licence or agreement
disclosed pursuant to Warranty 18(L) above.
(N) There have been no material failures or breakdowns in the Business
Information Technology or the Licensed Information Technology, which
have caused substantial disruption or interruption in or to the
Business in the 12 months immediately prior to First Completion.
(O) So far as Croda International is aware, the Business Information
Technology material to the running of the Business is in all material
respects in good working order as at First Completion.
(P) The Business has not experienced any material disruption to its
operations which has had a material adverse effect on the Business as a
result of Year 2000 Matters. In this Warranty 18(P), "YEAR 2000
MATTERS" means whether the performance or functionality of
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Information Technology has been affected by dates prior to and during
the year 2000 and in particular:
(a) no value for current date has caused any interruption in
operation;
(b) date-based functionality has behaved consistently for dates
prior to and during the year 2000;
(c) in all interfaces and data storage, the century in any date is
specified either explicitly or by unambiguous algorithms or
inferencing rules; and
(d) the year 2000 is recognized as a leap year.
19. COMPETITION AND TRADE REGULATION LAW
No member of the Croda Group is a party to any agreement relating to
the Business and the Assets which is material and which is the subject
of any notice received from any relevant regulatory authority that it:
(i) is unenforceable or void; or
(ii) renders such member of the Croda Group liable to civil,
criminal or administrative proceedings,
in either case by virtue of any anti-trust or similar legislation in
any jurisdiction in which the Business is carried on.
20. EMPLOYMENT
(A) The Listed Employees comprise all of the employees who are employed
exclusively in the Business as operated by the Vendor Companies at the
date of First Completion.
(B) The payroll details of the Listed Employees attached to the Disclosure
Letter are accurate in all material respects as at the dates at which
such details are stated in the Disclosure Letter to have been prepared.
(C) No Listed Employee will become entitled to any enhancement in or
improvement to his or her remuneration, benefits or terms and
conditions of employment or to any bonus payment solely by reason of
the First Completion and so far as Croda International is aware no
Senior Manager has threatened to terminate his or her employment
because of First Completion. For the purposes of this sub-paragraph
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"Senior Manager" means each Listed Employee who is entitled to a salary
at a rate in excess of (pound)40,000 per annum.
(D) The standard terms and conditions of employment (including notice
periods and material benefits) of the Listed Employees have been
disclosed in the Disclosure Letter and, save for those cases where a
specific employment contract for a specific Listed Employee has been
disclosed in the Disclosure Letter, all Listed Employees are employed
on one or other of the standard terms and conditions of employment so
disclosed. The date of commencement of service of each Listed Employee
is listed in the documents attached to the Disclosure Letter.
(E) There is no material dispute relating to any of the Listed Employees
between the relevant member of the Croda Group and any trade union or
other organisation formed for a similar purpose existing, pending or
threatened in writing to such member of the Croda Group and, except as
disclosed in the Disclosure Letter, there is no material collective
bargaining agreement (whether binding or not) currently in force or
being negotiated applicable to any of the Listed Employees to which
the relevant member of the Croda Group is a party and for the purposes
of this sub-paragraph sub-clause 1.2(J) shall not apply and the
reference to material shall be construed as a reference to material in
the context of that part of the Business that is conducted at the
Property which constitutes the normal place of work of the relevant
Listed Employees.
(F) Copies of all (if any) collective agreements, collective bargaining
agreements and any union recognition agreements for the time being
affecting the Listed Employees or any of them and their conditions of
employment are attached to the Disclosure Letter.
(G) No negotiations for any increase in the remuneration or emoluments of
any Listed Employees are current or, based on past practice,
anticipated to take place within six months after the First Completion
Date other than annual reviews in the ordinary course of the Business
and no material increase in such remuneration or emoluments have been
agreed which have taken effect or will take effect after the date at
which such Listed Employees' payroll details are stated in the
Disclosure Letter to have been prepared.
(H) No member of the Croda Group has outstanding any material undischarged
liability to pay to any governmental or regulatory authority in any
jurisdiction any contribution, Taxation or other impost arising in
connection with the employment or engagement in that jurisdiction of
personnel by that member of the Croda Group in the Business.
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21. PENSIONS
(A) There is no arrangement to or in which any member of the Croda Group
contributes or participates in relation to the Listed Employees under
which benefits on retirement are provided except:
(i) the Croda Schemes;
(ii) permanent health insurance schemes;
(iii) the national insurance or social security or sick pay schemes
of such of the countries in which the Business operates; and
(iv) such benefits arising under the terms of any applicable
collective labour agreement.
(B) True, complete and accurate copies of the trust deeds and rules
governing the Croda UK Schemes, together with all material
announcements (to members of the Croda UK Schemes who are UK Listed
Employees) which have not been incorporated into the trust deed and
rules of the Croda UK Schemes are attached to or referred to in the
Disclosure Letter.
(C) (i) True and complete copies of each United States Plan and
related documents have been made available to the Purchaser.
The list of each "employee benefit plan" (as such term is
defined in Section 3(3) of the United States Employee
Retirement Income Security Act of 1974, as amended ("ERISA"))
maintained by Croda Adhesives Inc. with respect to employees
of Croda Adhesives Inc. (the "UNITED STATES PLANS") attached
to the Disclosure Letter is accurate and complete in all
material respects. No member of the Croda Group has incurred
liability under Title IV of ERISA in connection with any of
the United States Plans which could become a liability of the
Purchaser.
(ii) Each United States Plan (excluding any multiemployer plan as
defined in Section 3 (37) of ERISA) has been administered in
accordance with the terms thereof and all applicable law.
There is no pending or, so far as Croda International is
aware, threatened, litigation or governmental audit,
examination or investigation relating to any United States
Plan. Each United States Plan which is intended to be
qualified under Section 401(a) of the United States Internal
Revenue Code of 1986, as amended (the "CODE") has received a
favourable determination letter from the Internal Revenue
Service, and no member of the Croda Group is aware of any
circumstances reasonably likely to
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result in the revocation or denial of any such favourable
determination letter.
(D) The Croda UK Schemes are exempt approved schemes within the meaning of
Chapter 1 of Part XIV of the Income and Corporation Taxes Act 1988
("ICTA") and, so far as Croda International is aware, there is no
ground on which such approval may be withdrawn or cease to apply.
(E) The Croda UK Schemes are contracted-out schemes (each on a reference
scheme basis).
(F) Neither Croda International nor any member of the Croda Group has
received any notification of any regulatory enquiries or material
actions threatened or pending (other than for routine claims for
benefits) in connection with the Croda UK Schemes and, so far as Croda
International is aware, there is no fact or circumstance likely to give
rise to litigation or regulatory enquiry.
(G) All due contributions in relation to the UK Listed Employees in respect
of the Croda U.K. Schemes (whether payable by Croda International, any
member of the Croda Group or the U.K. Listed Employees) have been paid.
(H) Neither Croda International nor any member of the Croda Group has made
or proposed any voluntary or ex gratia payments to any UK Listed
Employee in respect of any "RELEVANT BENEFITS" within the meaning of
Section 612 of ICTA or any other death, retirement, sickness or
disability benefits.
(I) Neither Croda International nor any of the Croda Group has given any
undertaking or assurance to any UK Listed Employee as to the
introduction of any relevant benefits (as defined in paragraph (H)
above).
(J) Defined terms used in this paragraph 21:
"CRODA SCHEMES" means the Croda UK Schemes and the Croda US Scheme;
"CRODA UK SCHEMES" means the Croda Group Pension Scheme and/or the
Croda International Supplemental Scheme;
"CRODA US SCHEME" means the Croda Inc. Retirement Plan; and
"UNITED STATES PLANS" has the meaning given to it in paragraph 21(C).
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22. ENVIRONMENT
(A) So far as Croda International is aware, all material Environmental
Permits have been obtained, are being complied with in all material
respects in relation to the Business as at the date of this Agreement
and have been complied with in all material respects in relation to the
Business during the Relevant Period, provided that this Warranty shall
not apply to any past non-compliance which has been remedied or
corrected or otherwise will not give rise to any future liability.
(B) So far as Croda International is aware, the relevant members of the
Croda Group as at the date of this Agreement are operating and during
the Relevant Period have operated the Business and the Plant and
Machinery in compliance in all material respects with Environmental
Laws, provided that this Warranty shall not apply to any past
non-compliance which has been remedied or corrected or otherwise will
not give rise to any future liability.
(C) No member of the Croda Group has received written notice of any
material current or so far as Croda International is aware threatened
claims, investigations or other proceedings which are outstanding as at
the date of this Agreement against or involving the Business under any
Environmental Laws in respect of Environmental Matters.
(D) Croda International has made available to Purchaser's Group copies of
any material reports, studies and audits commissioned during the
Relevant Period in the possession of any member of the Croda Group
relating to any Environmental Matters with respect to the Business or
the Properties, which copies are attached to the Disclosure Letter.
(E) The provisions of Schedule 7 (Environmental Matters) shall apply to
claims under the warranties in this paragraph 22 to the extent
expressly specified in Schedule 7.
23. BROKERS' FEES
Croda International has no liability to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Purchaser could become
liable.
24. REGULATORY LICENCES
(A) All governmental, quasi-governmental and regulatory licences, consents,
permissions and approvals necessary for carrying on the Business as it
is now carried on have been obtained and are in full force and effect
and are not limited in duration or subject to
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onerous conditions, are listed in the Disclosure Letter and have been
complied with in all material respects.
(B) Croda International is not aware of any facts or circumstances which
might be expected to cause any such licence consent, permission or
authority to be revoked.
25. PRODUCT LIABILITY
(A) So far as Croda International is aware, none of the Vendor Companies is
under any material obligation or liability in respect of products or
goods supplied or services provided to any person prior to the date
hereof which (a) is, was or will become, in any material respect,
faulty or defective or (b) does not comply in any material respect with
any material warranty, express or implied, made by or on behalf of the
relevant Vendor Companies in respect of it or with all laws,
regulations, standards and requirements applicable to it.
(B) So far as Croda International is aware, none of the Vendor Companies
(or anyone on their behalf) has used any corporate or other funds for
unlawful contributions, payments, gifts or entertainment, made any
unlawful expenditure relating to any political activity, made any
direct or indirect unlawful payments to government officials or others,
or paid any bribe (monetary or otherwise), nor, so far as Croda
International is aware, has any of the Vendor Companies committed any
breach of the US Corrupt Foreign Practices Act.
26. COMPLIANCE WITH LAWS
(A) So far as Croda International is aware, the Business has been conducted
in accordance with all applicable laws and regulations of the United
Kingdom and any other relevant jurisdiction and no notice has been
received by Croda International or any other member of the Croda Group
that there is any investigation or inquiry (proposed or actual) by, and
there is no order, decree or judgment of, any court or any governmental
or other competent authority or agency of the United Kingdom or any
other relevant jurisdiction, outstanding against the Business or any
member of the Croda Group in respect of the Business.
27. GRANTS AND ALLOWANCES
In relation to the Business and/or any of the Assets, no grant,
allowance, aid or subsidy has been applied for or received from any
supranational, national, state, local or other authority or government
agency during the last six years.
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28. TAXATION
(A) No election to waive exemption has been made pursuant to paragraph 2
of Schedule 10 VATA (or under any overseas legislation having a
substantially similar effect thereto) in respect of the Properties by
Croda International and/or any other member of the Croda Group (or a
relevant associate for the purposes of paragraph 2(1) of Schedule 10
to VATA).
(B) None of the Assets constitutes a capital item to which Part XV of the
Value Added Tax Regulations 1995 (Capital Goods Scheme)(or any
overseas legislation having a substantially similar effect thereto)
applies.
(C) Neither Croda International nor any other member of the Croda Group
are involved in any dispute with the Inland Revenue or the
Commissioners of Customs and Excise or any other Tax Authority
concerning any matter materially affecting either the Business or any
of the Assets.
(D) There is no Tax Authority charge over any of the Assets pursuant to
any Taxation legislation and no circumstances exist whereby any power
under any Taxation legislation could be exercised by any Tax Authority
to charge any of the Assets.
(E) All documents relating to the Assets have been duly stamped and there
is no liability to any penalty in respect of such duty which are
subject to stamp duty.
(F) No Tax Authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict application of the
relevant legislation) in relation to the Business whether in respect
of benefits provided to its employees, the valuation of stocks or
depreciation of assets or in respect of any administrative or other
matter whatsoever.
(G) Croda International has not participated in or operated any payroll
deduction scheme as defined in Section 202 Income and Corporation
Taxes Act 1988 which extends to any employees of the Business.
29. BRAZILIAN PURCHASER
Prior to First Completion, Croda Adesivos do Brasil did not own any
assets and had not traded and, save for the negotiations to enter into
this Agreement, was not party to any contract, arrangement or agreement
(whether legally binding or not) nor had it incurred any
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95
indebtedness or liability whatsoever. At First Completion (i) the
only assets owned by Croda Adesivos do Brasil are the Brazilian
Assets, (ii) the only liabilities of Croda Adesivos do Brasil are the
Brazilian Assumed Liabilities and (iii) Croda Adesivos do Brasil has
not suffered or incurred, nor will it be required to accrue any
expense or liability whatsoever arising out of or attributable to the
partial spin-off of Croda do Brasil and the related transactions
described in sub-clause 3.4 of this Agreement.
PART B
1. OWNERSHIP OF SHARES
Croda Investments B.V. is the sole legal and beneficial owner of the
Shares.
2. ENCUMBRANCES
Save for Permitted 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 or any of them and there is
no agreement or commitment entered into by any member of the Croda
Group to give or create any, or any claim made against any member of
the Croda Group by any person to be entitled to any.
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SCHEDULE 3
(LIMITATIONS ON CRODA INTERNATIONAL'S LIABILITY)
1. WARRANTIES AND UNDERTAKINGS
The provisions of this Schedule shall operate to limit the liability of
Croda International both in respect of any claim by the Purchaser or
Croda Adesivos do Brasil for any breach or inaccuracy of the Warranties
or in respect of the Undertakings and contain specific limits on the
liability of Croda International in respect of claims by the Purchaser
in respect of the Environmental Covenant. For the purposes of this
Schedule "UNDERTAKINGS" shall mean any covenant and undertaking given
by Croda International in or pursuant to sub-clause 6.6 and Part A of
Schedule 16 of this Agreement.
2. LIMITATION ON QUANTUM AND GENERAL
(A) Neither the Purchaser nor Croda Adesivos do Brasil shall be entitled in
any event to damages or other payment in respect of any claim or claims
under any of the Warranties (except for the Environmental Warranties):
(i) in respect of any individual claim (or series of related
claims with respect to the same facts or circumstances) for
less than an amount which is equal to (pound)200,000; or
(ii) unless and until the aggregate amount of all such claims
(taking no account of those referred to in (i) above) exceeds
an amount which is equal to 3 1/2 percent. of the aggregate
of the total consideration set out in sub-clause 3.1 of this
Agreement and the total consideration set out in sub-clause
3.5 of this Agreement, in which event Croda International's
liability shall be limited to the amount by which the
Deductible is exceeded. For the purposes of this
sub-paragraph, the "Deductible" means an amount equal to
1 1/2 percent. of the aggregate of the total consideration
specified in sub-clause 3.1 of this Agreement and the total
consideration set out in sub-clause 3.7 of this Agreement as
reduced by any payment made by Croda International to the
Purchaser under sub-clause 9.3(i) or under sub-clause 10.3(i)
or, as the case may be, as increased by any payment made by
the Purchaser to Croda International under sub-clause 9.3(ii)
or sub-clause 10.3(ii) of this Agreement.
(B) The Purchaser shall not be entitled in any event to damages or other
payment in respect of any claim or claims under any of the
Undertakings:
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(i) in respect of any individual claim (or series of related
claims with respect to the same facts or circumstances) for
less than an amount which is equal to (pound)50,000; or
(ii) unless and until the aggregate of all such claims (taking no
account of those referred to in (i) above) exceeds an amount
which is equal to (pound)250,000, in which event Croda
International's liability shall be limited to the amount in
excess of (pound)100,000.
(C) The total aggregate liability of Croda International under the
Warranties and in respect of the Undertakings and the Environmental
Covenant shall not in any event exceed the aggregate of the total
consideration set out in sub-clause 3.1 of this Agreement and the total
consideration set out in sub-clause 3.5 of this Agreement as reduced by
any payment made by Croda International to the Purchaser under
sub-clause 9.3(i) and under sub-clause 10.3(i) of this Agreement or, as
the case may be, as increased by any payments made by the Purchaser to
Croda International under sub-clause 9.3(ii) or sub-clause 10.3(ii) of
this Agreement.
(D) Neither the Purchasers nor Croda Adesivos do Brasil shall be entitled
to claim for any indirect or consequential loss (including loss of
profit) or punitive damages.
(E) Each provision of this Schedule shall be read and construed without
prejudice to each of the other provisions of this Schedule.
(F) The provisions of this Schedule shall to the extent expressly specified
in this Schedule 3 operate to limit the liability of Croda
International under the Environmental Covenant.
3. TIME LIMITS FOR BRINGING CLAIMS
No claim shall be brought against Croda International in respect of any
of the Warranties or under any of the Undertakings unless the Purchaser
or Croda Adesivos do Brasil, as the case may be, shall have given to
Croda International Notice of such claim specifying (in reasonable
detail) the matter which gives rise to the claim, the nature of the
claim and the amount claimed in respect thereof (detailing to the
extent reasonably practicable the Purchaser's or Croda Adesivos do
Brasil's (as the case may be) calculation of the loss thereby alleged
to have been suffered by it or the relevant member of the Purchaser's
Group on or before the date which is 18 months after the date of this
Agreement, provided that the liability of Croda International in
respect of such claim shall absolutely terminate (if such claim has not
been previously satisfied, settled
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or withdrawn) if a written request for arbitration in respect of such
claim has not been made within six months of the service of such
notice in accordance with clause 34 of this Agreement.
4. CONDUCT OF LITIGATION
(A) Upon the Purchaser or any member of the Purchaser's Group or Croda
Adesivos do Brasil becoming aware of any assessment, claim, action or
demand against it or any other matter likely to give rise to any claim
in respect of any of the Warranties (other than the Environmental
Warranties which shall be subject to the relevant provisions of the
Environmental Covenant) and Undertakings, the Purchaser or Croda
Adesivos do Brasil, as the case may be, shall:
(i) as soon as reasonably practicable give Croda International
Notice as soon as it appears to the Purchaser or Croda
Adesivos do Brasil, as the case may be, that any assessment,
claim, action or demand of a third party received by or coming
to the notice of the Purchaser or any member of the
Purchaser's Group or Croda Adesivos do Brasil, as the case may
be, may result in a claim under the Warranties or
Undertakings;
(ii) subject to Croda International indemnifying the Purchaser or
Croda Adesivos do Brasil, as the case may be, against any
liability, cost, damage or expense which may be incurred
thereby, take such action and give such information and access
to personnel, premises, chattels, documents and records to
Croda International and its professional advisers as Croda
International may reasonably request and Croda International
shall be entitled to require Croda Adesivos do Brasil or any
member of the Purchaser's Group to take such reasonable action
and give such information and assistance in order to avoid,
dispute, resist, mitigate, settle, compromise, defend or
appeal any claim in respect thereof or adjudication with
respect thereto;
(iii) subject to Croda International indemnifying the Purchaser or
Croda Adesivos do Brasil, as the case may be, against any
liability, cost, damage or expense which may be incurred
thereby, at the request of Croda International, allow Croda
International to take the sole conduct of such actions as
Croda International may reasonably deem appropriate in
connection with any such assessment or claim in the name of
the Purchaser or Croda Adesivos do Brasil or any relevant
member of the Purchaser's Group and in that connection the
Purchaser shall give or cause to be given to Croda
International all such assistance as it may reasonably
require in avoiding, disputing,
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resisting, settling, compromising, defending or appealing any
such claim and shall instruct such legal or other
professional advisors as Croda International may nominate to
act on behalf of the Purchaser or Croda Adesivos do Brasil or
any relevant member of the Purchaser's Group, as appropriate,
but to act in accordance with Croda International's
instructions provided that neither the Purchaser nor Croda
Adesivos do Brasil shall be required to commence any legal
proceedings where either:
(a) the Purchaser, Croda Adesivos do Brasil or the
relevant member of the Purchaser's Group, as the case
may be, has validly assigned all of its rights in
relation to the relevant claim to Croda International
in a manner which entitles Croda International to the
same benefits in respect of such rights as the
Purchaser or Croda Adesivos do Brasil, as the case may
be, had; or
(b) where sub-paragraph (A)(iii)(a) does not apply, Croda
International has not notified the relevant party
against whom such proceedings are brought that such
proceedings are being brought at the instruction of
Croda International;
(iv) make no admission of liability, agreement, settlement or
compromise with any third party in relation to any such claim
or adjudication without the prior written consent of Croda
International (such consent not to be unreasonably withheld or
delayed); and
(v) take all reasonable action to mitigate any loss suffered by it
or any member of the Purchaser's Group in respect of which a
claim could be made under the Warranties or the Undertakings.
(B) Notwithstanding the foregoing, Croda International shall not be
entitled to assume the defence of any claim, action or demand of a
third party (and shall be liable for the reasonable expenses
(including legal expenses) incurred by the Purchaser, Croda Adesivos
do Brasil or the relevant member of the Purchaser's Group as the case
may be in defending such claim, action or demand) if such claim,
action or demand seeks any relief other than damages (including any
order, injunction or other equitable relief) against the Purchaser,
Croda Adesivos do Brasil or the relevant member of the Purchaser's
Group as the case may be which the Purchaser or Croda Adesivos do
Brasil, as the case may be, reasonably determines cannot be separated
from any related claim for damages. If such claim for other relief can
be separated from the claim for damages, Croda International shall be
entitled to assume the defence of the claim for damages.
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(C) Croda International shall be entitled at any stage and at its absolute
discretion, after prior Notice to the Purchaser or Croda Adesivos do
Brasil, as the case may be, to settle any such third party assessment
or claim.
5. NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED FOR
(A) No liability shall attach to Croda International by reason of any
breach of any of the Warranties or under the Undertakings to the extent
that the same loss has been recovered by the Purchaser or Croda
Adesivos do Brasil pursuant to the Environmental Covenant, any other
Warranty or term of this Agreement or any other document referred to in
this Agreement and accordingly the Purchaser and Croda Adesivos do
Brasil may only recover once in respect of the same loss.
(B) Croda International shall not be liable for breach of any of the
Warranties nor under any of the Undertakings nor under the
Environmental Covenant to the extent that the subject of the claim has
been or is made good or is otherwise compensated for without cost to
the Purchaser, Croda Adesivos do Brasil or any other member of the
Purchaser's Group.
(C) In calculating the liability of Croda International for any breach of
the Warranties or any of the Undertakings or pursuant to the
Environmental Covenant there shall be taken into account the amount by
which any Taxation for which the Purchaser, Croda Adesivos do Brasil or
any other member of the Purchaser's Group which the Purchaser procures
to purchase the Assets is now or in the future accountable or liable to
be assessed is reduced or extinguished as a result of the matter giving
rise to such liability.
6. RECOVERY FROM THIRD PARTIES
(A) Where the Purchaser, Croda Adesivos do Brasil or any member of the
Purchaser's Group is at any time entitled to recover from some other
person any amount in respect of any matter giving rise to a claim
under the Warranties and/or the Undertakings or under the
Environmental Covenant, the Purchaser or Croda Adesivos do Brasil, or
both of them, shall, and shall procure that the member of the
Purchaser's Group concerned shall, take all reasonable steps to
enforce such recovery prior to taking action against Croda
International (other than to notify Croda International of the claim
against Croda International and to make a written request for
arbitration in respect of such claim prior to the expiry of any
applicable time limit in respect thereof) and, in the event that the
Purchaser, Croda Adesivos do Brasil or any member of the Purchaser's
Group shall recover any amount from such other person, the amount of
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the claim against Croda International shall be reduced by the amount
recovered provided that neither the Purchaser nor Croda Adesivos do
Brasil shall be required to commence any legal proceedings where
either:
(i) the Purchaser or Croda Adesivos do Brasil, as the case may be,
has validly assigned all of its rights in relation to the
relevant claim to Croda International in a manner which
entitles Croda International to the same benefits in respect
of such rights as the Purchaser or Croda Adesivos do Brasil,
as the case may be, had; or
(ii) where sub-paragraph (A)(i) does not apply, Croda International
has not notified the relevant party against whom such
proceedings are brought that such proceedings are being
brought at the instruction of Croda International.
(B) If Croda International pays at any time to the Purchaser or Croda
Adesivos do Brasil or any member of the Purchaser's Group an amount
pursuant to a claim in respect of the Warranties and/or the
Undertakings or under the Environmental Covenant or under any other
provision of this Agreement and the Purchaser or Croda Adesivos do
Brasil or other relevant member of the Purchaser's Group subsequently
recovers from some other person any amount in respect of any matter
giving rise to such claim, the Purchaser or Croda Adesivos do Brasil,
or both of them, shall, and shall procure that the relevant member of
the Purchaser's Group shall, repay to Croda International the lesser
of (i) the amount paid by Croda International to the Purchaser or
Croda Adesivos do Brasil or the other member of the Purchaser's Group
and (ii) the amount (including interest (if any)) recovered from such
other person.
(C) For the avoidance of doubt, references in this paragraph 6 to amounts
recovered are to the amounts so recovered net of the costs and expenses
of the relevant members of the Purchaser's Group properly incurred in
effecting such recovery and less any liability to Taxation that is
incurred by the relevant member of the Purchaser's Group in respect of
such amount which would not have been incurred if Croda International
paid that amount to the relevant member of the Purchaser's Group.
7. ACTS OF PURCHASER
No claim shall lie against Croda International under or in relation to
the Warranties (other than the Environmental Warranties which shall be
subject to the relevant provisions of the Environmental
<PAGE> 108
102
Covenant) or under the Undertakings to the extent that such claim is
attributable to:
(i) any voluntary act, omission, transaction, or arrangement
carried out at the request of or with the express consent of
the Purchaser or any member of the Purchaser's Group before
First Completion or under the terms of this Agreement or any
other agreement contemplated by it;
(ii) any voluntary act, omission, transaction, or arrangement
carried out at the request of or with the express consent of
the Purchaser or any member of the Purchaser's Group on or
after First Completion;
(iii) any voluntary act, omission, transaction, or arrangement
carried out by the Purchaser or by any member of the
Purchaser's Group on or after First Completion otherwise than
(i) in the ordinary course of the Business or (ii) carried out
or effected pursuant to a legally binding commitment in this
Agreement; or
(iv) any admission of liability made in breach of the provisions of
this Schedule after the date of this Agreement by the
Purchaser or on its behalf or by persons deriving title from
the Purchaser or by a member of the Purchaser's Group.
8. RETROSPECTIVE LEGISLATION
No liability shall arise in respect of any breach of any of the
Warranties (other than the Environmental Warranties which shall be
subject to the relevant provisions of the Environmental Covenant) or
under the Undertakings to the extent that liability for such breach
occurs or is increased directly or indirectly as a result of any
legislation not in force on or prior to the date of this Agreement or
as a result of the withdrawal of any extra-statutory concession or
other agreement or arrangement currently granted by or made with any
governmental authority or Tax Authority or as a result of any change
after the date of this Agreement of any generally accepted
interpretation or application of any legislation or in the enforcement
policy or practice of the relevant authorities or as a result of the
withdrawal of any extra-statutory concession or any other formal
agreement or arrangements with any Tax Authority (whether or not having
the force of law) currently granted by or made with any Tax Authority.
<PAGE> 109
103
9. DISCLOSURE
Neither the Purchaser nor Croda Adesivos do Brasil shall be entitled to
claim that any fact, matter or circumstance causes any of the
Warranties or Undertakings to be breached if fairly disclosed in the
Disclosure Letter or in any document delivered with the Disclosure
Letter.
<PAGE> 110
104
SCHEDULE 4
(EMPLOYEE MATTERS)
PART A
PROVISIONS RELATING TO US LISTED EMPLOYEES
Effective on the First Completion Date, the Purchaser shall offer
employment to all of the US Listed Employees upon terms and conditions
(including wages, salaries, and bonus compensation) and with employee
benefit plans, programmes and arrangements substantially equivalent in
the aggregate to those in effect with respect to such employees prior
to the First Completion Date and the Purchaser shall credit the US
Listed Employees with all of their years of service credited by Croda
Adhesives Inc. under the United States Plans as at the First Completion
Date for all purposes (other than for benefit accrual) under any
employee benefit plan, programme or arrangement of the Purchaser in
which such employees participate to the extent that those years of
service would have been credited under the relevant Purchaser employee
benefit plan, programme or arrangement if such US Listed Employee had
been a similarly situated employee of the Purchaser during the relevant
period of time. Nothing in this paragraph shall be interpreted to
prohibit the Purchaser or any of its subsidiaries from amending or
terminating any employee benefit plan or programme or arrangement in
which a US Listed Employee may participate following the First
Completion Date in accordance with the terms thereof, provided that
such amendment or termination shall be applied uniformly, to the extent
applicable, to all of Purchaser's employees including the US Listed
Employees. Further, notwithstanding the foregoing, subject to the terms
of permitted employment agreements, the Purchaser shall not be
obligated to continue to employ any US Listed Employee for any
particular length of time. Effective on the First Completion Date, the
Purchaser shall assume the employment contracts pertaining to John T.
Koufis and Jerald P. Stempel and shall be solely responsible for all
liabilities and obligations thereunder.
PART B
PROVISIONS RELATING TO BELGIAN LISTED EMPLOYEES
1. Croda International and the Purchaser acknowledge and accept that, with
effect from the First Completion Date, the Belgian Listed Employees
will be transferred to the Purchaser in accordance with the Belgian
Collective Bargaining Agreement CAO ("Collective Arbeidsovereenkomst")
32bis and applicable Belgian labour law. Croda International and the
Purchaser agree that the effect of this will be
<PAGE> 111
105
that, with effect from the First Completion Date, all obligations of
Croda Adhesives Europe in connection with the employment agreements
and arrangements of the Belgian Listed Employees will be transferred
to the Purchaser and the Belgian Listed Employees will be entitled to
enforce their rights against the Purchaser and not against Croda
Adhesives Europe.
2. The Purchaser agrees to use its reasonable endeavours to procure that
as soon as reasonably practicable after the First Completion Date, and
in any event no later than three months after the First Completion
Date, each of the Belgian Listed Employees executes an agreement in the
Agreed Form in which such employee confirms his or her employment with
the Purchaser and that he or she has no further rights and no claims of
any sort against Croda Adhesives Europe.
PART C
PROVISIONS RELATING TO ITALIAN LISTED EMPLOYEES
The Italian Listed Employees shall be transferred to the Purchaser in
compliance with applicable provisions of Italian law as a trasferimento
di ramo d'azienda (sale of part of a business) and any applicable
collective bargaining arrangements so that each Italian Listed Employee
will, with effect from the First Completion Date, be employed by the
Purchaser on substantially the same terms as he or she was employed by
Croda Italiana immediately prior to the First Completion Date.
PART D
PROVISIONS RELATING TO BRAZILIAN LISTED EMPLOYEES
Croda International and the Purchaser acknowledge and agree that with
effect from the First Completion Date the Brazilian Listed Employees
will be transferred to Croda Adesivos do Brasil in accordance with
applicable Brazilian law.
PART E
PROVISIONS RELATING TO OTHER EUROPEAN EMPLOYEES
Croda International and the Purchaser acknowledge and accept that, with
effect from the First Completion Date the employment of Other European
Employees will be transferred to the Purchaser in accordance with
applicable national laws relating to those individuals.
<PAGE> 112
106
PART F
PROVISIONS RELATING TO THE CANADIAN LISTED EMPLOYEE
Effective on the First Completion Date, the Purchaser shall offer
employment to the Canadian Listed Employee upon terms and conditions
(including wages, salaries, and bonus compensation) and with employee
benefit plans, programmes and arrangements substantially equivalent to
those in effect with respect to such employee prior to the First
Completion Date and the Purchaser shall credit the Canadian Listed
Employee with all of their years of service with Croda Canada for all
purposes (other than for benefit accrual) under any employee benefit
plan, programme or arrangement of the Purchaser in which such employees
participate.
<PAGE> 113
107
SCHEDULE 5
(PENSION MATTERS)
US
Pension Plan: Prior to First Completion, Croda International and the Vendor
Companies shall take such action as may be necessary to cause each US Listed
Employee to become fully vested under the Croda Inc. Retirement Plan (the
"Retirement Plan") with respect to benefits accrued as of First Completion. As
of First Completion, all US Listed Employees shall cease to accrue benefits (if
any) under the Retirement Plan and Croda Adhesives Inc. shall cease to be a
participating employer under the Retirement Plan. Croda International and the
Vendor Companies shall take, or cause to be taken, all such action as may be
necessary to effect such cessation of participation. No assets or liabilities
with respect to the US Listed Employees shall be transferred as a result of this
Agreement from the Retirement Plan to any plan or arrangement established by the
Purchaser or any other employer for the benefit of the US Listed Employees.
401(K) Plan: Prior to First Completion, Croda International and the Vendor
Companies shall take such action as may be necessary to cause each US Listed
Employee to become fully vested under the Croda Inc. Retirement Savings Plan
(the "Croda 401(k) Plan") with respect to benefits accrued as of First
Completion. As soon as practicable following First Completion, Purchaser shall,
or shall cause a member of the Purchaser's Group to, establish or designate a
defined contribution plan ("Purchaser's 401(k) Plan") to provide benefits to the
US Listed Employees who, as of First Completion, participate in the Croda 401(k)
Plan. Purchaser's 401(k) Plan will be qualified under Section 401(a) of the
Code. The Croda Group will or will cause the applicable Croda Group member to
make all contributions, premiums and payments required to be made under the
terms of the Croda 401(k) Plan with respect to the US Listed Employees for the
period ending as of First Completion. As of First Completion, all US Listed
Employees shall cease to be eligible to participate in the Croda 401(k) Plan.
Croda International and the Vendor Companies shall take, or cause to be taken
all such action as may be necessary to effect such cessation of participation.
As soon as practicable after First Completion, (and upon their receipt of
evidence acceptable to them that the Purchaser's 401(k) Plan is qualified under
Section 401(k) of the Code and that the transfer hereunder contemplated will not
adversely affect the Croda 401(k) Plan's qualification under Section 401(a) of
the Code, Croda International and the Vendor Companies shall cause the trustee
of the Croda 401(k) Plan to transfer to the trust forming a part of Purchaser's
401(k) Plan cash (except that promissory notes reflecting participant loans
shall be transferred in kind) in an amount equal to
<PAGE> 114
108
the account balances of the US Listed Employees as of a valuation date not more
than 60 days prior to the transfer, increased by any contribution due for
periods prior to First Completion and not made as of such valuation date and
reduced by any benefits paid from such valuation date until the transfer.
As of the First Completion Date, Purchaser shall assume the Croda Adhesives
Inc. Medical Plan covering US Listed Employees.
Multiemployer Pension Plan: Croda Adhesives Inc. has an obligation to contribute
to the Teamsters Pension Trust Fund of Philadelphia and Vicinity which is a
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA (the
"Multiemployer Pension Plan"). The Purchaser agrees that, from and after the
First Completion Date, the Purchaser shall have an obligation to contribute to
the Multiemployer Pension Plan for substantially the same number of contribution
base units for which Croda Adhesives Inc. had an obligation to contribute prior
to the First Completion Date. The Purchaser may apply to the Pension Benefit
Guaranty Corporation or to the sponsor of the Multiemployer Pension Plan and
shall use its reasonable best efforts to obtain for the benefit of the Purchaser
and Croda Adhesives Inc. an individual exemption or variance from the
requirements of Section 4204(a)(1)(B) and (C) of ERISA. Croda Adhesives Inc.
shall cooperate in the prosecution of any such application and implementation of
any such exemption or variance. To the extent that before the First Completion
Date such an exemption or variance is not granted with respect to the
Multiemployer Pension Plan, then the following provisions shall apply (unless
such a variance or exemption is granted prior to the first day of the first plan
year of the Multiemployer Pension Plan beginning after the First Completion
Date):
(A) The Purchaser shall provide to the Multiemployer Pension Plan
annually for a period of five (5) years of the Multiemployer Pension
Plan (commencing with the first plan year of the Multiemployer Pension
Plan beginning after the First Completion Date) a bond issued by a
corporate surety company that is an acceptable surety for purposes of
Section 412 of ERISA, or an amount held in escrow by a bank or a
similar financial institution satisfactory to the Multiemployer
Pension Plan, or such other equivalent form of security permitted for
this purpose in an amount equal to 100% (or 200% in the event that the
Multiemployer Pension Plan is in reorganisation in the plan year
during which the First Completion Date occurs) of the greater of (1)
the average annual contribution required to have been made by Croda
Adhesives Inc. with respect to the operations under the Multiemployer
Pension Plan for the three (3) plan
<PAGE> 115
109
years of the Multiemployer Pension Plan preceding the plan year in
which the First Completion Date occurs, or (2) the annual contribution
that Croda Adhesives Inc. was required to have made with respect to
the operations under the Multiemployer Pension Plan for the last plan
year of the Multiemployer Pension Plan preceding the plan year in
which the First Completion Date occurs; which bond, escrow or security
shall be paid to the Multiemployer Pension Plan if the Purchaser
withdraws from the Multiemployer Pension Plan, or fails to make a
contribution to the Multiemployer Pension Plan when due, at any time
during the first five (5) plan years of the Multiemployer Pension Plan
beginning after the First Completion Date.
(B) Croda Adhesives Inc. hereby agrees that, if the Purchaser withdraws
from the Multiemployer Pension Plan in a complete withdrawal or a
partial withdrawal with respect to operations during the first five
(5) plan years of the Multiemployer Pension Plan beginning after the
First Completion Date, Croda Adhesives Inc. will be secondarily liable
to the Multiemployer Pension Plan for any withdrawal liability Croda
Adhesives Inc. would have incurred to the Multiemployer Pension Plan
(but for Section 4204 of ERISA in the event the liability of the
Purchaser with respect to the Multiemployer Pension Plan is not paid.
(C) The Purchaser hereby agrees that, in the event Croda Adhesives Inc.
is required to provide a bond or amount in escrow pursuant to Section
4204(a)(1)(C) or 4204(a)(3) of ERISA, the Purchaser shall pay to Croda
International the cost of such bond (including any required
collateral) or the amount of such escrow within ten (10) days prior to
the establishment of such escrow.
BRAZIL
The Purchaser shall observe the applicable legislation as regards pension
schemes to Brazilian Listed Employees, and, without prejudice to the foregoing
generality, shall maintain in relation to the Brazilian Listed Employees, on and
after Second Completion, a retirement benefits scheme with the same general
characteristics as the retirement benefits scheme applicable to the Brazilian
Listed Employees immediately prior to Second Completion. The Purchaser shall
indemnify each member of the Croda Group against any liability, cost, claim or
expense which results from a failure so to maintain.
<PAGE> 116
110
SCHEDULE 6
(PROPERTY MATTERS)
PART A
PROPERTIES
<TABLE>
<CAPTION>
A1. UK PROPERTIES
FREEHOLD PROPERTIES WITH REGISTERED TITLES
REGISTERED PROPRIETOR TITLE NUMBER NATURE OF TITLE SHORT DESCRIPTION
(OWNER)
<S> <C> <C> <C> <C>
Croda Polymers NT276712 Freehold Absolute Land North of Quibell's Aggregate
Lane,Newark, value of
Nottinghamshire UK
Properties:
(pound)1,632,000
FREEHOLD PROPERTIES WITH UNREGISTERED TITLES
ESTATE OWNER DATE OF PARTIES SHORT DESCRIPTION
CONVEYANCE TO
ESTATE OWNER
Croda Polymers 21/12/1981 Croda Polymers Quibell's Lane Works,
Properties Newark, Nottinghamshire
Ltd (1) Croda
Polymers (2)
A2. BELGIAN PROPERTIES
OWNER NATURE OF TITLE SHORT DESCRIPTION VALUE ((POUND))
Croda Adhesives Europe Full property title Immovable property located in (pound)417,000
Kapellen, Afdeling 3, section M,
403-M, 403-N, 406-V-3, 406-A-4,
located Hoogboomsesteenweg 166
</TABLE>
<PAGE> 117
111
<TABLE>
<CAPTION>
A3. U.S. PROPERTIES
LESSOR LESSEE ADDRESS RENT (US$)
<S> <C> <C> <C>
Croda Adhesives Inc. Sovereign Adhesives Inc. 200 Upper Ferry Road, Ewing, US$200,000
New Jersey per annum
LESSOR LESSEE ADDRESS RENT (US$)
Centerpoint Properties Trust Croda Adhesives Inc. 2301 North Route 30, US$494,682.00
Plainfield, Illinois per annum
Master Dundee 53 LLC Croda Adhesives Inc. 1400 West Dundee Road, US$85,500.00
Arlington Heights, Illinois per annum
</TABLE>
<PAGE> 118
112
PART B
(PROVISIONS APPLICABLE TO SALE OF PROPERTIES)
B1. UK PROPERTIES
1. CONSIDERATION
The aggregate value attributed to the UK Properties by sub-clause 3.2
(Consideration) shall be allocated in accordance with any amounts shown
in Part A of this Schedule.
2. MATTERS TO WHICH THE SALE IS SUBJECT
The UK Properties are sold subject to and (where appropriate) with the
benefit of the following matters:
(A) all local land charges and all matters capable of registration
as local land charges;
(B) all entries made in any public register (including those
maintained by H.M. Land Registry or its Land Charges
Department or by Companies House) and all matters referred to
therein;
(C) all notices served and orders, demands, proposals or
requirements made by any local or other competent authority;
(D) all covenants, restrictions, stipulations, burdens, agreements,
conditions, rights of pre-emption, or other incumbrances or
provisions affecting the UK Properties including those that
Croda Polymers does not know about;
(E) the matters contained or referred to in the documents listed in
paragraph 9 of this Part B of this Schedule;
(F) all exceptions and reservations of whatever nature, all rights
of way, water, light, air or other rights, easements,
quasi-easements, servitudes and wayleaves (whether constituted
in the title deeds or otherwise) and all public or private
rights;
(G) all matters which are (or would be if the title to the UK
Property were registered at HM Land Registry) overriding
interests under Section 70(1) of the Land Registration Act
1925; and
<PAGE> 119
113
(H) all matters which would be disclosed by searches of the local
and other competent authorities which a prudent purchaser
would make whether such searches and enquiries have been made
or not.
3. VACANT POSSESSION
Each UK Property is sold subject to the provisions of this Agreement
and the Letting as defined in paragraph 9 but otherwise with vacant
possession of the whole on the First Completion Date.
4. TITLE
4.1 In the case of any of the UK Properties title to which is registered at
H.M. Land Registry section 110 Land Registration Act 1925 shall apply
and the Purchaser shall be deemed to be purchasing with full knowledge
of the contents of the entries on the relevant registers of title, any
documents or any part of any document noted on the registers and of the
filed plans copies of which have been supplied to the Purchaser before
the date of this agreement.
4.2 In the case of any of the UK Properties title to which is not
registered at H.M. Land Registry the Purchaser shall be deemed to be
purchasing with full knowledge of the contents of all deeds and other
documents of title copies of which have been supplied to the Purchaser
before the date of this agreement.
4.3 Before the date of this Agreement, Croda Polymers' title to the UK
Properties has been produced to the Purchaser and the Purchaser accepts
the title without any further enquiry or requisition save in respect of
any matters arising as a result of any pre-Completion searches at HM
Land Registry, the Land Charges Department or Companies House.
5. PUBLIC REQUIREMENTS
The Purchaser buys with full notice of the use or development of the UK
Properties for which permission has been granted and accepts the
position without any further enquiry or requisition and the UK
Properties are sold subject to all matters arising under UK town and
country planning legislation.
<PAGE> 120
114
6. APPORTIONMENTS
6.1 All rents, rates and other outgoings in respect of the UK Properties
for the period before and including the First Completion Date shall be
borne by Croda Polymers and for any period after the First Completion
Date shall be borne by the Purchaser.
6.2 Save to the extent that the same constitute Receivables or Trade
Payables, all rents and other periodical payments receivable in respect
of the UK Properties for any period of time before and including the
First Completion Date shall belong to and be payable to Croda Polymers
and for any period of time after that day shall belong to and be
payable to the Purchaser.
7. THE PROPERTY TRANSFER
7.1 The Purchaser will at its own expense execute an H.M. Land Registry
form TR1 relating to the UK Properties with registered and unregistered
title (which in this Part B of this Schedule shall together be referred
to as the "Property Transfer") in duplicate and deliver the duplicate
(duly stamped and denoted) to, or to the order of, Croda International
as soon as practicable after First Completion.
7.2 On the First Completion Date Croda Polymers will deliver duly executed
Property Transfer relating to all of the UK Properties to, or to the
order of, the Purchaser.
7.3 Croda Polymers shall not be required to execute a Property Transfer
except to the Designated Purchaser.
7.4 Croda Polymers sells with full title guarantee. For the purposes of
this paragraph:
(A) Croda Polymers' compliance with the covenant for further
assurance implied by section 2(1)(b) of the Law of Property
(Miscellaneous Provisions) Act 1994 shall be at the cost of
the Purchaser; and
(B) in addition to not being liable for the matters and things
referred to in section 6(1) or (2) of that Act, Croda Polymers
shall not be liable under the covenants implied by virtue of
section 2(1)(a) or section 3 of that Act in respect of matters
which are referred to in the Disclosure Letter or are matters
of public record or in respect of instruments or matters of
which the Purchaser is deemed to
<PAGE> 121
115
have actual notice by section 198 of the Law of Property Act
1925, the sale being expressly made subject to them.
8. STANDARD CONDITIONS
Insofar as the same are applicable and are not inconsistent with the
express terms of this agreement the Standard Commercial Property
Conditions (1st Edition) are incorporated in this agreement except
that:
(A) (i) the "contract rate" means the Agreed Rate;
(ii) "transfer" means the Property Transfer;
(iii) "working day" means Business Day;
(B) Conditions 1.1.1(a), 1.2, 1.3, 1.4, 2, 3.3.3(a), and (b),
4.1.1, 4.2.1, 4.3.2, 5.1.3, 5.2, 6.1, 6.3.1, 6.3.2, 6.3.6,
6.4, 6.7, 6.8, 7.1, 7.2, 7.3, 7.5, 7.6 and 9 shall not apply.
9. PROPERTY ENCUMBRANCES
For the purposes of paragraphs 2, 3 and 7 of this Part of this Schedule
the matters subject to which the UK Properties are sold are as follows:
------------- ------------------------------ --------------------------
DATE DOCUMENT PARTIES
------------- ------------------------------ --------------------------
------------- ------------------------------ --------------------------
12.03.1960 Residential Tenancy (1) British Glues
Agreement herein referred and Chemicals
to as "the Letting" Limited
(2) Harold Smith
------------- ------------------------------ --------------------------
------------- ------------------------------ --------------------------
23.08.1988 Deed of Easement (1) Croda Polymers
(2) British Gas plc
------------- ------------------------------ --------------------------
------------- ------------------------------ --------------------------
The registers of title
number NT276712.
------------- ------------------------------ --------------------------
------------- ------------------------------ --------------------------
21.12.1981 Conveyance (1) Croda Polymers
Properties Limited
(2) Croda Polymers
(all matters referred to
in this document and the
other documents referred
to therein as listed in
the Property Transfers)
------------- ------------------------------ --------------------------
<PAGE> 122
116
B2. BELGIAN PROPERTY
The Belgian Property referred to in Part A2 of Schedule 6 (Property
Matters) shall be transferred via a notarial transfer deed in the
Agreed Form to be entered into at First Completion between Croda
Adhesives Europe and the relevant member of the Purchaser's Group
<PAGE> 123
117
B3. US PROPERTIES
1. The US Property referred to in paragraph I of Part A3 of Schedule 6
(Property Matters) shall be leased to Sovereign Adhesives Inc. from
Croda Adhesives Inc., pursuant to the Ewing Lease, to be fully
executed at or prior to the First Completion.
2. The US Property referred to in paragraph II of Part A3 of Schedule 6
(Property Matters) shall be transferred, at or prior to the First
Completion, via an assignment of lease containing no representations
and warranties beyond those contained in this Agreement.
<PAGE> 124
118
SCHEDULE 7
(ENVIRONMENTAL MATTERS)
PART A
1. INTERPRETATION
In this Schedule:-
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, as amended;
"CLAIM" means any claim, written demand, express,
written requirement, order or suit by the
Environmental Authority or any third party
under Environmental Laws which could
reasonably be expected to result in Protected
Losses being incurred by a member of the
Purchaser's Group;
"EMERGENCY" has the meaning given in sub-paragraph 4.2;
"ENVIRONMENTAL AUTHORITY" means the relevant governmental agency or
other regulatory body acting in accordance
with its powers and duties under Environmental
Laws;
"ENVIRONMENTAL INDEMNITY means Known Environmental Indemnity Matters
MATTERS" and Unknown Environmental Indemnity Matters;
"ENVIRONMENTAL WARRANTY means matters which give rise to a claim under
MATTERS" any of the Environmental Warranties;
"ISRA" has the meaning given in paragraph 17.9 of the
Business Sale Agreement;
"KNOWN ENVIRONMENTAL means the Environmental Indemnity Matters
INDEMNITY MATTERS" referred to in Part C of this Schedule;
"OVAM MATTER" has the meaning given in paragraph 17.8 of the
Business Sale Agreement;
<PAGE> 125
119
"PROTECTED LOSSES" means:-
(i) fines, penalties, damages or other
liabilities in relation to the relevant
Claim;
(ii) the cost of Work which is carried out
after the First Completion Date; and
(iii) the reasonable cost of professional
advice which is provided to a member of
the Purchaser's Group after the First
Completion Date in relation to a Claim
as referred to in (i) or Work as
referred to in (ii),
subject to paragraphs 3 to 8 and, in relation
to a Claim or Works where the Purchaser has
Control under paragraph 6, to the extent
actually paid by the relevant member of the
Purchaser's Group after the First Completion
Date;
"RELEVANT PROPERTY" means all or any part of the Properties;
"REQUIRED" means required pursuant to:-
(i) an express and binding instruction,
requirement, decision or demand of the
Environmental Authority;
(ii) an express and positive requirement of
Environmental Law that a particular
step or action is taken;
"UNKNOWN ENVIRONMENTAL means the matters referred to in Part B of this
INDEMNITY MATTERS" Schedule and excludes Known Environmental
Indemnity Matters;
"WORK" means any work in order to inspect,
investigate, assess, audit, sample, monitor,
remove, treat, abate, control, remediate or
contain a Environmental Indemnity Matter.
<PAGE> 126
120
2. COVENANT
Subject to paragraphs 3 to 8 below, Croda International covenants with the
Purchaser to pay to the Purchaser and to indemnify and hold harmless the
Purchaser from and against:-
2.1 all Protected Losses of any member of the Purchaser's Group in
relation to any Known Environmental Indemnity Matters; and
2.2 50% of all Protected Losses of any member of the Purchaser's Group in
relation to any Unknown Environmental Indemnity Matters.
3. FINANCIAL LIMITS
Croda International shall not be liable under this Schedule in respect of an
Unknown Environmental Matter or the Environmental Warranties in respect of an
Environmental Warranty Matter:-
3.1 unless the liability of Croda International under this Schedule in
respect of the individual Unknown Environmental Indemnity Matter or the
Environmental Warranties in respect of an Environmental Warranty Matter
in respect of which the claim is made (before paragraph 2.2 is applied)
exceeds (pound)50,000;
3.2 unless the aggregate liability of Croda International under this
Schedule in respect of all Unknown Environmental Indemnity Matters
(before paragraph 2.2 is applied) and the Environmental Warranties in
respect of Environmental Warranty Matters exceeds (pound)500,000, in
which case such liability shall be limited to the excess of such
aggregate over (pound)100,000.
4. TRIGGER CONDITION AND TIME LIMIT
The Purchaser shall not be entitled to claim under this Schedule in respect of
an Unknown Environmental Indemnity Matter unless:-
4.1 a Claim against a member of the Purchaser's Group in relation to such
Unknown Environmental Indemnity Matter has been made or expressly
threatened in writing on or before the fifth anniversary of the First
Completion Date (the "Trigger Date") (i) by an Environmental Authority
or (ii) by any other person (other than a member of the Purchaser's
Group) under Environmental Laws in respect of the same Environmental
Indemnity Matter; or
<PAGE> 127
121
4.2 on or before the Trigger Date such Unknown Environmental Indemnity
Matter gives rise to an immediate and serious risk to human health
which amounts to an emergency ("EMERGENCY") in the reasonable belief of
the Purchaser and it is substantially more likely than not that an
Environmental Authority or other third party would make a Claim against
a member of the Purchaser's Group, if the Environmental Authority were
aware as at that date of the nature and extent of such Unknown
Environmental Indemnity Matter; or
4.3 on or before the Trigger Date, such Unknown Environmental Indemnity
Matter is, or would be, if known to any Environmental Authority or
other third party, substantially more likely than not to result in a
Claim under any Environmental Law;
and the Purchaser has given Notice to Croda International of its claim under
this Schedule on or before the Trigger Date specifying (in reasonable detail)
the matter which gives rise to a claim, the condition under sub-paragraph 4.1,
4.2 or 4.3 which is satisfied in relation to such matter and the amount of the
Protected Losses (to the extent known or reasonably capable of estimation).
5. OTHER LIMITS AND EXCLUSIONS
The Purchaser shall not be entitled to recover under this Schedule to the extent
that a claim would not have arisen but for, results from or is increased by:-
5.1 any act or omission by any member of the Purchaser's Group after the
First Completion Date which is negligent;
5.2
(a) except in relation to the Belgian Property, demolition,
closure or temporary or permanent cessation of operations at
any Relevant Property after the First Completion Date;
(b) change in the nature of the operation to a non-industrial use,
or an industrial use in relation to which more demanding
environmental or health and safety standards apply, compared
to the current manufacture of adhesives;
5.3
(a) laws which come into force or become binding after the First
Completion Date; or
<PAGE> 128
122
(b) variations, changes, modifications, additions or amendments
after the First Completion Date (whether under laws which are
in force before, on or after the First Completion Date) to
applicable standards, codes, criteria, guidance, policy or
interpretations;
5.4 loss of profits, loss of sales, loss of production, business
interruption, reduction in value of any asset or shares or any other
indirect or consequential loss or damage or internal cost; or
5.5 any indemnity, covenant, undertaking, warranty, assurance or other
contractual protection entered into or given by any member of the
Purchaser's Group on or after the First Completion Date;
5.6 any failure by any member of the Purchaser's Group to comply with this
Schedule.
This paragraph 5 shall also apply to any claim under the Environmental
Warranties.
6. CONDUCT
6.1 The Purchaser shall not be entitled to claim under this Schedule to the
extent that such claim would not have arisen but for, results from or
is increased by any of the following steps or actions being carried out
or taken after the First Completion Date and before paragraph 4 is
satisfied in relation to an Unknown Environmental Indemnity Matter:-
(A) intrusive investigation, sampling or testing;
(B) notification, report or disclosure to a third party (other
than to third party professional advisers of a member of the
Purchaser's Group); or
(C) other step or action by any member of the Purchaser's Group
after the First Completion Date which will or could encourage,
provoke, accelerate or otherwise result in a Claim being made
or paragraph 4 otherwise becoming satisfied,
provided that this sub-paragraph 6.1 does not apply where (a) such step
or action (a) is Required; (b) such step or action is not Required but
there is an express provision of Environmental Laws which relates
specifically to such step or action and would be breached if such step
or action were not carried out; or (c)
<PAGE> 129
123
such step or action is an appropriate immediate response to an
Emergency.
6.2 Croda International shall be notified promptly in writing if any member
of the Purchaser's Group becomes aware of any matter which is or might
be an Unknown Environmental Indemnity Matter or Environmental Warranty
Matter.
6.3 The Purchaser shall have control and conduct of any Work and/or any
Claim (if applicable) with effect from the First Completion Date in
relation to any Environmental Indemnity Matter or Environmental
Warranty Matter, except that Croda International shall have control and
conduct of any Work and/or Claim (if applicable) in relation to the
OVAM Matter and ISRA. The controlling party shall ensure with effect
from the First Completion Date that:
(A) control and conduct shall be exercised in a cost effective and
commercially reasonable manner (without regard to the
availability of indemnification hereunder) and the
non-controlling party shall be fully consulted in relation to
such control and conduct, including with respect to the
selection of consultants (without prejudice to sub-paragraph
(C) in relation to matters which are subject to prior written
consent);
(B) to the extent feasible, the non-controlling party (and/or its
advisers) shall be given a reasonable opportunity (a) to
attend any material site visits or meetings; (b) to comment in
advance on any instructions, scope of work, specifications,
proposals, statements, reports or other material documents or
correspondence; and (c) to attend and inspect the carrying out
of any Work at any time whilst it is being carried out in
relation to such matter;
(C) any relevant Claim shall so far as is consistent with (A) be
defended and contested;
(D) the prior written consent of the non-controlling party shall
be obtained before the controlling party:-
(i) agrees upon any Work plan or schedule of Work to be
performed;
(ii) agrees, makes or offers any concession, admission or
settlement (including any failure to appeal or
decision not to do so);
<PAGE> 130
124
where the non-controlling party is the indemnifying party,
such consent not to be withheld to the extent that the
relevant matter for which consent is sought (a) is Required or
would very likely be Required after the passage of time if not
addressed; or (b) where paragraph 4 has been satisfied prior
to the relevant request for consent or in the case of Known
Environmental Indemnity Matters where paragraph 4 is
inapplicable, the costs associated with such step or action
are substantially similar to, or less than, the costs
associated with the steps or actions which would likely be
Required if the relevant matter were contested; or (c) is an
appropriate response to an Emergency.
Notwithstanding the foregoing, Croda International shall not
unreasonably withhold consent under this paragraph based solely on the
possibility that an Environmental Authority may agree to resolve a
particular Known Environmental Indemnity Matter or an Unknown
Environmental Indemnity Matter in a different manner than the one
proposed by the Purchaser, if such different manner will either result
in (1) the material diminution in value of the relevant Property
because of restrictions on the use to which it can be put (as compared
to the Purchaser's proposal) and any additional cost of the Purchaser's
proposal is proportionate to the diminution in value which is avoided
or (2) the material disruption or interference with the operation of
Business at the relevant Property (as compared to the Purchaser's
proposal) and any additional cost of the Purchaser's proposal is
proportionate to the disruption or interference with the operation of
the Business which is avoided.
6.4 Work shall be conducted in a cost effective and commercially reasonable
manner (without regard to the availability of indemnification
hereunder).
6.5 The Purchaser shall procure that each member of the Purchaser's Group
shall so far as reasonable avoid, reduce and mitigate any claim under
this Schedule and any liability of Croda in relation to the OVAM Matter
and ISRA, provided that this sub-paragraph 6.5 is subject to all of the
other provisions of this paragraph 6 above and shall not require any
member of the Purchaser's Group to incur (or entitle the Purchaser to
claim in respect of) any cost or expense which is not recoverable when
all of the other provisions of this paragraph 6 have been applied.
6.6 Each party shall comply with reasonable requests of any other party for
arrangements to maintain confidentiality or privilege
<PAGE> 131
125
of information or documents passing between the parties under this
paragraph 6.
6.7 Where it is the controlling party, Croda International shall make all
reasonable efforts to minimise interference with the Purchaser's
ability to conduct its business.
7. EXPERT PROCEDURE
7.1 The Purchaser shall provide Croda International with a copy of a report
by an independent expert (the "PURCHASER'S REPORT" and the "PURCHASER'S
EXPERT") addressing any technical or factual issues in relation to any
Environmental Indemnity Matter or Environmental Warranty Matter which
are the subject of any dispute between Croda International and the
Purchaser which is unresolved within 30 days of Croda International or
the Purchaser giving Notice of the dispute referring to this paragraph
7 and identifying the relevant issue (the "INITIAL DISPUTE NOTICE"),
provided that this paragraph 7 shall not apply to any issue which is to
be determined by the Environmental Authority or Court in any Claim (if
applicable). The Purchaser's Report shall be so provided within 10 days
of the date of the Initial Dispute Notice.
7.2 Croda International shall, within 30 days of having received the
Purchaser's Report, give the Purchaser a Notice stating whether or not
Croda International disputes any of the findings in the Purchaser's
Report and, if so, giving reasons (the "UNRESOLVED DISPUTE NOTICE").
Croda International shall be entitled to provide the Purchaser with a
report by an independent expert (the "SELLERS' REPORT" and the
"SELLER'S EXPERT") giving such reasons. The Purchaser shall procure
that Croda International and its advisers are provided with all
facilities, information and access as they may reasonably require in
order to decide whether Croda International disputes any of the
findings in the Purchaser's Report and to provide a Seller's Report.
7.3 If the parties cannot resolve a dispute within 90 days of the
Unresolved Dispute Notice (or such longer period as the Purchaser and
Croda International may agree), then the dispute shall be referred to
an independent expert (the "INDEPENDENT EXPERT"), the identity of such
expert to be agreed by Croda International and the Purchaser or
(failing agreement between them within 20 days) to be appointed by the
Chairman for the time being of the Institute of Environmental
Assessment (or its nearest equivalent in the relevant jurisdiction).
The Independent Expert shall be required to have at least ten years'
<PAGE> 132
126
experience of advising in relation to matters of the same general
description as the relevant Environmental Indemnity Matter in the
relevant jurisdiction (or, if none, in other jurisdictions where
relevant law and practice are similar).
7.4 The Independent Expert shall act as an expert and not as an arbitrator
and the parties shall be bound by expert findings of the Independent
Expert. The Independent Expert shall determine the procedure for making
findings, provided that the Independent Expert shall (i) invite each of
the parties to make oral or written representations in relation to the
particular matter on or before 30 days after appointment of the
Independent Expert; (ii) make findings on the basis of the information
provided by the parties through the representations referred to above
and shall not be entitled to require that further Work be carried out
before making findings (unless the parties agree that it is appropriate
for further Work to be carried out before the relevant findings are
made); (iii) confine findings to the issues in the Unresolved Dispute
Notice; and (iv) provide findings on or before 60 days after
appointment.
7.5 The costs and expenses of the Independent Expert (if appointed) shall
be borne as the Independent Expert shall decide.
8. EXCLUSIVE REMEDY
8.1 The rights of the Purchaser under this Schedule constitute the only
rights of any Protected Person to claim against Croda International or
any other member of the Croda Group in respect of Environmental
Indemnity Matters. Except for claims by the Purchaser under this
Schedule, no Protected Person shall be entitled to claim against Croda
International or any other member of the Croda Group in respect of
Environmental Indemnity Matters under this Schedule, any of the
Environmental Warranties or any other provisions of this Agreement.
8.2 The Purchaser (on behalf of itself and each Protected Person)
irrevocably releases and discharges Croda International and each member
of Croda International's Group from any claims, causes of action,
losses, costs, expenses or liabilities known or unknown, whether based
on statute or other law including, without limitation, CERCLA in
relation to Environmental Indemnity Matters, except for claims under
this Schedule or for fraud or any other claim where exclusion is not
permitted by applicable law.
<PAGE> 133
127
PART B
UNKNOWN ENVIRONMENTAL INDEMNITY MATTERS
1. Pollution or contamination of soil and groundwater in existence at, on,
under, within, or migrating to or from any Properties including,
without limitation, any properties formerly owned, operated or
controlled by the Business.
2. The transportation, disposal, or arranging for transportation or
disposal at any offsite location of any Controlled Material used,
generated or stored by Croda International or any predecessor in
connection with the Business;
in each case arising from and facts, circumstances or conditions existing or
occurring prior to the First Completion Date.
<PAGE> 134
128
PART C
KNOWN ENVIRONMENTAL INDEMNITY MATTERS
1. Newark, UK - onsite and offsite soil and groundwater contamination as
follows:-
Known Environmental Indemnity Matters comprise and are limited to
investigative and (if required) remedial works in relation to potential
impacts on the River Trent or other controlled waters described below
(the "MAY 2000 FINDINGS"), in each case as identified and described in
Dames & Moore's Report (the "MAY 2000 REPORT") on the Croda Adhesives,
Newark site dated 8th May, 2000 and in each case only to the extent
such potential impact is confirmed and delineated through the proposed
investigative works described in the May 2000 Report and summarised
below (the "MAY 2000 PROPOSALS") and, if found to be necessary, the
investigative works described in the Addendum dated 20th July, 2000
(the "JULY 2000 ADDENDUM") and also summarised below (the "JULY 2000
ADDENDUM PROPOSALS").
For the avoidance of doubt:-
(a) Known Environmental Indemnity Matters do not include any
contamination caused after the First Completion Date;
(b) whether or not any remedial works are required in relation to
any Known Environmental Indemnity Matters and, if so, the
extent of any such remedial works shall be determined in
accordance with paragraph 6 of this Schedule.
------------------------- ---------------------------------------------
LOCATION MAY 2000 FINDINGS AND MAY 2000 PROPOSALS
-------- ----------------------------------------
(references
are to the
areas
identified in
Figure 5 of
the May 2000
Report)
------------------------- ---------------------------------------------
<PAGE> 135
129
------------------------- ---------------------------------------------
AREA 1: MAY 2000 FINDINGS:
------
Former Solvent Presence of chlorinated solvents and Toluene
USTs in soil and groundwater, principally
Trichloroethane, and (to the extent confirmed
by the investigative works described below)
the potential for limited migration to or
impact on River Trent or other controlled
waters.
MAY 2000 PROPOSALS:
To place a groundwater well down gradient of
the tank surround to evaluate VOCs.
To perform further shallow soil sampling and
analysis for VOCs to assess the lateral
extent of contamination.
------------------------- ---------------------------------------------
------------------------- ---------------------------------------------
AREA 2: MAY 2000 FINDINGS:
------
Former Waste Presence of chlorinated solvents in
Store groundwater, and (to the extent confirmed by
the investigative works described below) the
potential for migration to or impact on River
Trent or other controlled waters.
MAY 2000 PROPOSALS:
To place a groundwater well down gradient to
evaluate VOCs.
To perform further shallow soil sampling and
analysis for VOCs to confirm that there is
only a limited source in the soil which does
not pose a risk to controlled waters.
------------------------- ---------------------------------------------
<PAGE> 136
130
------------------------- ---------------------------------------------
AREA 3: MAY 2000 FINDINGS:
------
Central Yard Presence of Benzene in shallow soil.
Area
Presence of PAHs in soil.
Presence of petroleum hydrocarbons in shallow
soil.
In relation to each of the above, (to the
extent confirmed by the investigative works
described below) the potential for migration
to or impact on River Trent or other
controlled waters.
MAY 2000 PROPOSALS:
To place a groundwater well down gradient to
evaluate the extent of BTEX, TPH, PAHs and
phenol . Also to include further monitoring
of the existing boreholes identified as 104
and 105 for VOCs, TPH, phenol and PAHs.
To perform further shallow soil sampling and
analysis for BTEX, TPH, PAHs and phenol.
------------------------- ---------------------------------------------
------------------------- ---------------------------------------------
AREA 4: MAY 2000 FINDINGS:
------
Location of Presence of dichloroethene, dichloroethane
Former Solvent and trichloroethane in shallow soil, and (to
Store(Canteen the extent confirmed by the investigative
Area) works described below) the potential for
migration to or impact on River Trent or
other controlled waters.
MAY 2000 PROPOSALS:
To place a groundwater well down gradient to
evaluate VOCs.
------------------------- ---------------------------------------------
<PAGE> 137
131
------------------------- ---------------------------------------------
AREA 6: MAY 2000 FINDINGS:
------
Drainage ditch Petroleum hydrocarbons in sediment, and (to
the extent confirmed by the investigative
works described below)the potential for
migration to or impact on River Trent or
other controlled waters.
MAY 2000 PROPOSALS:
Continued monitoring of borehole 105 for
VOCs, TPH, phenol and PAHs to focus on the
potential for degradation.
------------------------- ---------------------------------------------
------------------------- ---------------------------------------------
LOCATION JULY 2000 ADDENDUM PROPOSALS
------------------------- ---------------------------------------------
------------------------- ---------------------------------------------
OTHER Should the investigations proposed in the
LOCATIONS May 2000 Proposals indicate increased risks
IDENTIFIED IN to the shallow groundwater then it is
THE JULY 2000 proposed in the July 2000 Addendum Proposals
ADDENDUM that the following monitoring locations
should be established:
o at locations 405, 406 and 407 to
monitor soil and groundwater for VOCS,
SVOCs, TPHs and heavy metals,
o at locations 402 and 311 to monitor
soil for VOCs, SVOCs, TPHs and heavy
metals,
o at the three fields identified at
paragraph Q of the July 2000 Addendum to
monitor soil for VOCs, SVOCs, TPHs and
heavy metals.
------------------------- ---------------------------------------------
2. Newark, UK - replacement of vinyl acetate tank.
3. Kapellen, Belgium - removal of underground storage tanks as detailed
below.
<PAGE> 138
132
------------ --------------- ------------------ ------------------------
TANK BUILT IN CONTENT EMPTIED IN/PUT OUT
OF USE IN
------------ --------------- ------------------ -------------------------
------------ --------------- ------------------ -------------------------
1 1985 Gasoil 1999
------------ --------------- ------------------ -------------------------
------------ --------------- ------------------ -------------------------
2 1980 Gasoil 1999
------------ --------------- ------------------ -------------------------
------------ --------------- ------------------ -------------------------
5 1980 Gasoil 1999
------------ --------------- ------------------ -------------------------
------------ --------------- ------------------ -------------------------
8 1989 Gasoil 1999
------------ --------------- ------------------ -------------------------
4. Any Claim made against any member of the Purchaser's Group by OVAM, in
relation to a failure by Croda International to comply with its
obligations in relation to the OVAM Matter under paragraph 17.8 of the
Business Sale Agreement.
5. Any Claim made against any member of the Purchaser's Group by the New
Jersey Department of Environmental Protection, in relation to a failure
by Croda International to comply with its obligations in relation to
ISRA under paragraph 17.9 of the Business Sale Agreement.
6. Newark, UK - Any Works which are Required in order to address a risk to
human health resulting from asbestos which is in an exposed and
dangerous condition, if any such risk is identified in the Fibrecount
UK Ltd report in relation to the PVA Building which is due to be
provided to Croda International.
<PAGE> 139
133
SCHEDULE 8
(LISTED EMPLOYEES)*
*Schedule 8 has been intentionally omitted. Please see "Information
Required in accordance with Item 601(b)(2) of Regulation S-K" following the
execution page hereof.
<PAGE> 140
134
SCHEDULE 9
(STOCKS)*
*Schedule 9 has been intentionally omitted. Please see "Information
Required in accordance with Item 601(b)(2) of Regulation S-K" following the
execution page hereof.
<PAGE> 141
135
SCHEDULE 10
(MOTOR VEHICLES)*
*Schedule 10 has been intentionally omitted. Please see "Information
Required in accordance with Item 601(b)(2) of Regulation S-K" following the
execution page hereof.
<PAGE> 142
136
SCHEDULE 11
(RECEIVABLES)*
*Schedule 11 has been intentionally omitted. Please see "Information
Required in accordance with Item 601(b)(2) of Regulation S-K" following the
execution page hereof.
<PAGE> 143
137
SCHEDULE 12
(TRADE PAYABLES)*
*Schedule 12 has been intentionally omitted. Please see "Information
Required in accordance with Item 601(b)(2) of Regulation S-K" following the
execution page hereof.
<PAGE> 144
138
SCHEDULE 13
(DESIGNATED PURCHASER)
The Purchaser shall procure that the Assets (other than the Brazilian Business
and the Brazilian Assets) which it purchases or for which it procures a
purchaser pursuant to this Agreement are acquired by the members of the
Purchaser's Group set out in the first column below at First Completion.
SOVEREIGN PURCHASING ENTITY ASSETS PURCHASED
Sovereign Holdings, LLC All of the Assets other than the Brazilian
Assets, the Brazilian Business and the Assets
specified below.
Sovereign Adhesives, Inc. Assets that are tangible assets owned by Croda
Adhesives, Inc. and Croda Canada, Contracts
related to the ownership, lease or maintenance
of such tangible assets and all Goodwill of
Croda Adhesives, Inc. and Croda Canada.
Sovereign Speciality Chemicals The UK property and Assets that are tangible
Limited Assets (but not including any Receivables or
Stocks) owned by, and related Goodwill of,
Croda International, Croda Polymers and
Croda Adhesives.
Sovereign Speciality Chemicals Assets that are tangible assets owned by Croda
Italiana S.r.l. Italiana, Contracts related to the ownership,
lease or maintenance of such tangible assets
and all Goodwill of Croda Italiana.
Sovereign Speciality Chemicals Assets that are tangible assets owned by Croda
S.P.R.L./B.V.B.A. Adhesives Europe, Contracts related to the
ownership, lease or maintenance of such
tangible assets and all Goodwill of Croda
Adhesives Europe.
<PAGE> 145
139
SCHEDULE 14
(SECOND COMPLETION ARRANGEMENTS)
(A) Matters to be dealt with by Croda International prior to Second Completion:
Prior to, and in preparation for, Second Completion, Croda
International shall
(i) comply with, and shall procure that Croda Adesivos do Brasil
complies with, the procedures set out in Schedule 15 (Earnout
and Working Capital Calculations); and
(ii) prepare and deliver to the Purchaser a calculation of the
amount referred to in sub-clause 3.5(E) (the Post Second
Completion Adjustment Amount converted to pounds sterling at
the Exchange Rate applicable to the Second Completion Date).
(B) Matters to be dealt with by Croda International at Second Completion:
At Second Completion, Croda International shall:
(i) effect such amendments to the Articles of Association of Croda
Adesivos do Brasil as are necessary, in accordance with
applicable Brazilian law, to complete the transfer of the
Shares to the Purchaser;
(ii) deliver to the Purchaser the New Brazilian Receivables
Schedule; and
(iii) an estoppel letter in a form to be agreed (such agreement not
to be unreasonably withheld or delayed) between Croda
International and the Purchaser certifying that all rent and
other sums due under the Brazilian Lease on or before the
Second Completion Date have been paid in full and that Croda
Adesivos do Brasil is not in default or in breach of the
Brazilian Lease as at the Second Completion Date.
(C) Matters to be dealt with by the Purchaser prior to Second Completion:
Prior to, and in preparation for, Second Completion, Purchaser shall
comply with the procedures set out in Schedule 15 (Earnout and Working
Capital Calculations).
(D) Matters to be dealt with by the Purchaser at Second Completion:
<PAGE> 146
140
At Second Completion, the Purchaser shall:
(i) change or procure the change of the name of Croda Adesivos do
Brasil to a name which does not include or consist of the
name "Croda" or any similar name;
(ii) pay or procure the payment of the consideration payable in
respect of the Shares pursuant to this Agreement by
telegraphic transfer (through the CHAPS system) to the account
of Croda International notified by Croda International to the
Purchaser; and
(iii) co-operate with Croda International in connection with
effecting such amendments to the Articles of Association of
Croda Adesivos do Brasil as are necessary, in accordance with
applicable Brazilian law, to complete the transfer of the
Shares to the Purchaser.
(E) Matters to be dealt with by the parties following Second Completion:
The parties shall comply with the calculation and payment procedures
related to the Second Completion Brazil Net Working Capital Amount and
the Working Capital Adjustment Amount as described in paragraph 2 of
Schedule 15 (Earnout and Working Capital Calculations).
(F) The parties shall co-operate with each other in connection with the
making of any required filings with any Brazilian antitrust authority
as a result of the transactions contemplated by this Agreement (or any
of them) in accordance with any applicable Brazilian law.
<PAGE> 147
141
SCHEDULE 15
(EARNOUT AND WORKING CAPITAL CALCULATIONS)
1. EARNOUT CALCULATION AND REVIEW
(A) Croda International shall, as promptly as practicable following 31
December, 2000 determine
(i) the net sales of the Brazilian Business conducted by Croda do
Brasil and Croda Adesivos do Brasil for the year ended 31
December, 2000;
(ii) the Gross Margin with respect to such net sales;
(iii) the Interim Brazil Net Working Capital Amount; and
(iv) the net sales of Croda Adesivos do Brasil during the period
from, but excluding, the First Completion Date to, and
including, 31 December, 2000.
(B) These amounts will be extracted from:
(i) the Management Accounts; and
(ii) the monthly management accounts for the Brazilian Business for
October, November and December 2000 prepared on the same bases
on which the Management Accounts were prepared.
On or before the date falling ten Business Days after 31 December,
2000, Croda International shall deliver to the Purchaser copies of the
items set out in sub-paragraphs (B)(i) and (ii) (together the "RELEVANT
BRAZILIAN Accounts") and a statement setting forth the calculations of
such annual net sales, the Gross Margin, the Interim Brazil Net Working
Capital Amount and net sales from, but excluding, the First Completion
Date to, and including, 31 December, 2000 (the "RESULTS STATEMENT"),
all certified by a duly authorized officer of Croda International. The
Purchaser shall thereupon have the right to review such calculations
(together with any independent public accounting firm engaged by the
Purchaser ("PURCHASER'S ACCOUNTANT")). In this connection, the
Purchaser and Purchaser's Accountant shall be permitted, upon
reasonable notice during normal business hours and without undue
interference to the ordinary course of business, to examine the Books
and Records related to the Brazilian Business and the work papers used
or generated by Croda International in connection with the preparation
of such Relevant Brazilian Accounts and the Results Statement.
<PAGE> 148
142
(C) Within 10 days of receipt of the Results Statement, the Purchaser
shall deliver to Croda International a written statement describing in
reasonable detail its objections (if any) to any of the items set
forth on the Results Statement. If the Purchaser does not so raise
objections within such period, the Results Statement shall become
final and binding upon the parties at the end of such period. If the
Purchaser does so raise objections, the parties shall negotiate in
good faith to resolve any such objections, and the Results Statement
shall be revised to reflect any such resolution, and such Results
Statement as revised shall be final and binding on the parties. If the
parties are unable to resolve any dispute within 7 days after the
delivery by the Purchaser of its objection statement, such dispute
shall, at the election of either party, be submitted to an
internationally recognized independent accounting firm (other than
Purchaser's Accountant and any independent public accounting firm
engaged by Croda International) mutually agreeable to the parties (the
"ARBITER"), with a description of the item(s) in dispute and the
respective values claimed by the parties with respect to the
calculation of such item(s). The Arbiter shall be instructed to
resolve such dispute within 10 days. In resolving any such dispute,
the Arbiter shall examine only the item or items in dispute. The
resolution of such dispute by the Arbiter shall be set forth in
writing and shall be conclusive, binding (and non-appealable) upon the
parties, and the Results Statement shall be revised, if necessary, to
reflect such resolution. The Results Statement, as revised if
necessary, shall be final and binding on the parties. The costs and
expenses of the Arbiter shall be paid by the party whose claimed
aggregate value(s) bears the greatest difference to the aggregate
value(s) calculated by the Arbiter.
(D) The Earnout Amount and the Interim Brazil Working Capital Amount, less
an amount equal to 7% of the net sales of Croda Adesivos do Brasil
during the period from, but excluding, the First Completion Date, to
and including 31 December, 2000, will be paid by the Purchaser to Croda
International in accordance with clause 5 of this Agreement.
2. WORKING CAPITAL ADJUSTMENT
(A) On or before the date falling fifteen Business Days after the Second
Completion Date, Croda International shall prepare and deliver to the
Purchaser a statement setting forth Croda International's calculation
of
(i) the Second Completion Brazil Net Working Capital Amount; and
<PAGE> 149
143
(ii) the net sales of Croda Adesivos do Brasil during the period
from, but excluding, 31 December, 2000 to, and including, the
Second Completion Date (the "SECOND COMPLETION DATE").
These amounts will be extracted from Croda Adesivos do Brasil's Books
and Records as of the Second Completion Date in a manner consistent
with the calculation of the Results Statement, as finally agreed or
determined by the Arbiter in accordance with paragraph 1 above.
(B) The Purchaser and its representatives shall be permitted, upon
reasonable notice during normal business hours, to examine the work
papers used or generated by Croda International in connection with the
preparation of the Second Results Statement.
(C) Within 10 days of receipt of the Second Results Statement, the
Purchaser shall deliver to Croda International a written statement
describing in reasonable detail its objections (if any) to any of the
items forth on the Second Results Statement. If the Purchaser does not
so raise objections within such period, the Second Results Statement
shall become final and binding upon the parties at the end of such
period. If the Purchaser does so raise objections, the parties shall
negotiate in good faith to resolve any such objections, and the Second
Results Statement shall be revised to reflect any such resolution, and
such Second Results Statement, as revised shall be final and binding
on the parties. If the parties are unable to resolve any dispute
within 7 days after the delivery by the Purchaser of its objection
statement, such dispute shall, at the election of either party, be
submitted to an Arbiter, with a description of the item(s) in dispute
and the respective values claimed by the parties with respect to the
calculation of such item(s). The Arbiter shall be instructed to
resolve such dispute within 10 days. In resolving any such dispute,
the Arbiter shall examine only the item in dispute. The resolution of
such dispute by the Arbiter shall be set forth in writing and shall be
conclusive, binding (and non-appealable) upon the parties, and the
Second Results Statement shall be revised, if necessary, to reflect
such resolution. The Second Results Statement, as revised if
necessary, shall be final and binding on the parties. The costs and
expenses of the Arbiter shall be paid by the party whose claimed
value(s) bears the greatest difference to the value(s) selected by the
Arbiter.
(D) If the Second Completion Brazil Net Working Capital Amount, as finally
agreed or as determined in accordance with the foregoing procedures,
exceeds the Interim Brazil Net Working Capital Amount, such excess
shall be the Working Capital Adjustment Amount, and the Purchaser shall
pay to Croda International, within three (3) Business Days following
the date of such final agreement or determination (the
<PAGE> 150
144
"DETERMINATION DATE"), an amount equal to the Post Second Completion
Amount, which shall be added to the consideration for the Shares, by
wire transfer of immediately available funds to an account designated
in writing to the Purchaser by Croda International.
(E) If the Second Completion Brazil Net Working Capital Amount , as finally
agreed or as determined in accordance with the foregoing procedures, is
less than the Interim Brazil Net Working Capital Amount, such
deficiency shall be the Working Capital Adjustment Amount, and Croda
International shall pay to the Purchaser, within three (3) Business
Days following the Determination Date an amount equal to the Post
Second Completion Adjustment Amount, which shall be subtracted from the
consideration for the Shares, by wire transfer of immediately available
funds to an account designated in writing to Croda International by the
Purchaser.
<PAGE> 151
145
SCHEDULE 16
PART A
COVENANTS RELATED TO BRAZILIAN BUSINESS PENDING SECOND COMPLETION
Where any covenant and undertaking in this Schedule 16 is qualified or
phrased by reference to materiality such reference shall be construed as a
reference to materiality in the context of the Brazilian Business taken as a
whole. Croda International covenants, undertakes and agrees that, between the
time of this Agreement and the Second Completion Date and except as otherwise
agreed to by the Purchaser
1. Business in the Ordinary Course. The Brazilian Business
shall be conducted solely in the ordinary course of
business consistent with past practice.
2. Existing Condition and Practices. Croda International shall
not cause or permit to occur any of the following with
respect to Croda Adesivos do Brasil
(a) the incurrence by Croda Adesivos do Brasil of any
liabilities, other than liabilities incurred in the
ordinary course of business consistent with past
practice, or the payment by Croda Adesivos do Brasil
of any liabilities other than in the ordinary course
of business consistent with past practice, or the
failure by Croda Adesivos do Brasil to pay or
discharge when due any liabilities of which the
failure to pay or discharge will cause any material
damage or risk of material loss to the Brazilian
Business or any of the Brazilian Assets;
(b) the sale, pledge, assignment or transfer of any of the
Brazilian Assets, or the other assets (including,
without prejudice to the generality of the foregoing,
the Brazilian Stock) owned or held at any time by
Croda Adesivos do Brasil between the date of this
Agreement and the Second completion, except for the
sale of inventory in the ordinary course of business
consistent with past practice;
(c) the creation, incurrence, assumption or guarantee of
any indebtedness for borrowed money other than
borrowings for working capital purposes, not to exceed
(pound)500,000 (or its equivalent in Brazilian Reals)
consistent with past practice and on arm's length
terms, the mortgage or pledge of the Brazilian Assets
or the Shares, or the subjection of the Brazilian
Assets or the Shares to any
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146
lien, security interest, or other encumbrance of any
nature whatsoever, except for Permitted Encumbrances;
(d) the making or suffering to be made of any material
amendment or any termination of any Contract to which
Croda Adesivos do Brasil is party or by which it is
bound, or the cancellation, modification or waiver of
any material debts or claims held by it, or the waiver
of any rights of material value to Croda Adesivos do
Brasil considered individually, whether or not in the
ordinary course of business (including without
limitation any rights of whatever nature under the
Agreement of which this Schedule is a part);
(e) the provision of special discounts, rebates, payment
terms, customer incentives, allowances or sales
promotions outside the ordinary course of business
consistent with past practice.
(f) the declaration, setting aside or payment by Croda
Adesivos do Brasil of any dividend or the making of
(or entering into an agreement to make) any other
distribution or payment in respect of Croda Adesivos
do Brasil's capital shares or the redemption or
purchase (or the entering into of an agreement to
redeem or purchase) of any of its capital shares;
(g) the making by Croda Adesivos do Brasil of any
commitments or its entering into any agreements for
capital expenditures or capital additions or
betterments, except such as may be involved in
ordinary repair, maintenance, service or replacement
of the Brazilian Assets;
(h) any change in the salaries, benefits or other
compensation of, or the making of any advance
(excluding advances for ordinary and necessary
business expenses) or loan to, any of the employees of
Croda Adesivos do Brasil other than salary increases
in the ordinary course and at Croda do Brasil's normal
rates made after consultation with the Purchaser;
(i) any change in the accounting principles followed by
the Croda Group with respect to the Brazilian
Business or the methods of applying such principles;
(j) any change outside the ordinary course of business
consistent with past practice in the sales policies
or
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147
credit policies followed by the Croda Group with
respect to the Brazilian Business or the methods of
applying such policies (it being expressly understood
and agreed that the conduct of the Brazilian Business
consistent with past practice will not involve the
offering or provision of special discounts, special
rebates, special payment terms, special customer
incentives, special allowances or special sales
promotions in the last two months of the fiscal year
made primarily for the purpose of accelerating the
booking of sales and revenues in the current fiscal
year).
(k) Croda Adesivos do Brasil's entering into any
transaction other than in the ordinary course of
business consistent with past practice and on arm's
length terms.
3. Maintenance of Assets. Croda International shall cause Croda
Adesivos do Brasil to continue to carry out ordinary
maintenance and service of the Brazilian Assets in accordance
with its past practice.
4. Employees and Business Relations. Croda International shall
cause the labor agreements with the Brazilian Listed Employees
to be transferred to the name of Croda Adesivos do Brasil in
accordance with applicable law, and shall cause Croda Adesivos
do Brasil to use its best efforts to keep available the
services of the Listed Employees and agents of the Brazilian
Business. Croda International shall cause Croda Adesivos do
Brasil to use its best efforts to maintain its relations and
goodwill with the suppliers, customers, distributors and any
others having business relations with the Brazilian Business.
5. Maintenance of Insurance. Croda International shall maintain
in full force and effect all existing insurance policies
covering the Brazilian Business, the Brazilian Listed
Employees and the Brazilian Assets for the benefit of Croda
Adesivos do Brasil.
6. Compliance with Laws, etc. Croda International shall cause
Croda Adesivos do Brasil to comply with all laws, ordinances,
rules, regulations and orders applicable to the Brazilian
Business and the Brazilian Assets, the non-compliance with
which would materially affect the Brazilian Business or the
Brazilian Assets.
7. Claims and Proceedings. Croda International shall, and shall
cause Croda Adesivos do Brasil to, consult with the Purchaser
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148
prior to initiating any action, claim, demand or proceeding
against any third party other than in the ordinary course of
business.
8. Access and Reports. Croda International shall, and shall
cause Croda Adesivos do Brasil to, afford to the Purchaser's
nominated officers, employees, counsel and accountants full
access, without undue interference to the ordinary course of
business and upon reasonable notice during normal business
hours to, and the right to inspect, the Brazilian Assets and
the premises of the Brazilian Business and shall permit them
without undue interference to the ordinary course of business
and upon reasonable notice during normal business hours to
consult with the officers, employees, accountants, counsel
and agents of Croda International and Croda Adesivos do
Brasil for the purpose of making such investigation of the
Brazilian Business and the Brazilian Assets as the Purchaser
shall desire to make. Furthermore, Croda International shall,
and shall cause Croda Adesivos do Brasil to, furnish to the
Purchaser copies of all such Brazilian Business Information
and copies of any working papers relating thereto as the
Purchaser shall from time to time reasonably request. On or
before the tenth calendar day of each month, Croda
International shall deliver to the Purchaser (i) a balance
sheet (prepared in accordance with policies and procedures
used in the preparation of the Management Accounts) of Croda
Adesivos do Brasil as at the last day of the immediately
preceding calendar month in sufficient detail satisfactory to
the Purchaser, and (ii) a statement, in the form of Part B of
this Schedule 16, providing information with respect to the
net sales and the Gross Margin for the immediately preceding
calendar month and for the year-to-date period ended as of
the last day of such immediately preceding calendar month.
For the purposes of this Schedule the "Brazilian Business"
shall mean the Brazilian Business and the Business as
conducted by Croda Adesivos do Brasil from First Completion to
and including Second Completion.
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149
PART B
FORM OF GROSS MARGIN STATEMENT
SALES (NET OF TAXES) BY CUSTOMER
--------------------------------------- ----------------------------------------
Customer name Sales
RS
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
Total
--------------------------------------- ----------------------------------------
SALES (NET OF TAXES) AND GROSS MARGIN BY PRODUCT
------------------ ------------------ --------------------- --------------------
Product name Sales Raw materials and Gross margin
RS packaging RS
RS
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
------------------ ------------------ --------------------- --------------------
Total
------------------ ------------------ --------------------- --------------------
<PAGE> 156
EXECUTION PAGE
Signed by Barbara Richmond )
--------------------------
for and on behalf of )
CRODA INTERNATIONAL )
PUBLIC LIMITED COMPANY ) /s/ Barbara Richmond
-------------------------------------
Signed by Miguel de Bellis )
--------------------------
for and on behalf of )
CRODA DO BRASIL LTDA ) /s/ Miguel de Bellis
-------------------------------------
Signed by Louis M. Pace )
--------------------------
for and on behalf of )
SOVEREIGN HOLDINGS, LLC ) /s/Louis M. Pace
-------------------------------------
Signed by Miguel de Bellis
--------------------------
for and on behalf of )
CRODA ADESIVOS DO BRASIL LTDA ) /s/ Miguel de Bellis
-------------------------------------
Signed by Louis M. Pace )
-------------------------
for and on behalf of )
SOVEREIGN SPECIALTY CHEMICALS, INC. ) /s/Louis M. Pace
------------------------------------
<PAGE> 157
151
Information Required in accordance with
Item 601(b)(2) of Regulation S-K
The following schedules have not been filed herewith pursuant to Item
601(b)(2) of Regulation S-K:
o Schedule 8 (Listed Employees) - provides names of employees, listed by
jurisdiction, who were transferred in connection with the purchase and
sale of the Croda specialty adhesives business.
o Schedule 9 (Stocks) - provides information concerning the nature,
identity and value of inventories, listed by jurisdiction, which were
acquired in connection with the purchase and sale of the Croda
specialty adhesives business.
o Schedule 10 (Motor Vehicles) - provides information identifying the
motor vehicles, listed by jurisdiction, which were acquired in
connection with the purchase and sale of the Croda specialty adhesives
business.
o Schedule 11 (Receivables) - provides information concerning the nature,
identity and value of accounts receivable, listed by jurisdiction,
which were acquired in connection with the purchase and sale of the
Croda specialty adhesives business.
o Schedule 12 (Trade Payables) - provides information concerning the
nature, identity and value of accounts payable, listed by jurisdiction,
which were assumed in connection with the purchase and sale of the
Croda specialty adhesives.
The issuer agrees to furnish supplementally a copy of any of the
foregoing omitted schedules to the Securities and Exchange Commission upon
request.
