UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205494
------------------------
FORM 20-F
( ) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 1-10173
------------------------
HUNTINGDON LIFE SCIENCES GROUP plc
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ENGLAND AND WALES
(JURISDICTION OF INCORPORATION OR ORGANIZATION)
WOOLLEY ROAD, ALCONBURY, HUNTINGDON, PE17 5HS, CAMBRIDGESHIRE, ENGLAND
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------- ----------------------------
Ordinary Shares, par value 5 pence per share, New York Stock Exchange, Inc.
in the form of American Depositary Shares
represented by American Depositary Receipts
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
OF THE ACT:
None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
Ordinary Shares of 5 pence each as at December 31, 1998 291,010,294
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No __
Indicate by check mark which financial statement item the Registrant has elected
to follow.
Item 17 Item 18X
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
EXCHANGE RATE FLUCTUATIONS
The following table sets forth, for the periods and dates indicated, certain
information concerning the exchange rate for translating sterling into US
dollars, based on the noon buying rate in New York City for cable transfers in
foreign currencies, as certified for customs purposes by the Federal Reserve
Bank of New York.
<TABLE>
<CAPTION>
YEAR ENDED AT SEPTEMBER 30 AVERAGE RATE(1) HIGH(2) LOW(2)
SEPTEMBER 30
------------------------- -------------------- ------------------- --------------- --------------
<S> <C> <C> <C> <C>
1994 1.58 1.51 1.58 1.46
1995 1.58 1.59 1.61 1.56
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AT DECEMBER 31 AVERAGE RATE(1) HIGH(2) LOW(2)
DECEMBER 31
------------------------- -------------------- ------------------- --------------- --------------
<S> <C> <C> <C> <C>
1996 1.71 1.57 1.66 1.52
1997 1.64 1.64 1.69 1.60
1998 1.66 1.66 1.70 1.64
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED AT DECEMBER 31 AVERAGE RATE(1) HIGH(2) LOW(2)
DECEMBER 31
------------------------- -------------------- ------------------- --------------- --------------
<S> <C> <C> <C> <C>
1995 1.55 1.55 1.58 1.54
</TABLE>
(1) Based on the average of the exchange rates on the last day of each month
during the period.
(2) Based on the monthly average of the daily average rate.
----------------------------------------------------------
On April 16, 1999 the noon buying rate for sterling was $1.6138 =(pound)1.00
----------------------------------------------------------
The operations of Huntingdon Life Sciences Group plc (the "Company") and its
consolidated subsidiaries (collectively with the Company, "Huntingdon") are
located in the United Kingdom (the "UK"), and the United States (the "USA" or
the "US"). Substantially all of the revenues generated by the Company's UK-based
subsidiary is invoiced in sterling, and most sources of materials, supplies and
services utilized in generating such revenues are located within the UK. All of
the revenues generated by the Company's US subsidiary are invoiced in US dollars
and most sources of materials, supplies and services utilized in generating such
revenues are located within the US. With the exception of Huntingdon Life
Sciences Limited, whose US contracts are denominated in US dollars, each
subsidiary's earnings are not materially affected by movements in the exchange
rates between sterling and/or the US dollar and/or a third currency, but
Huntingdon's results on consolidation are affected by movements in the exchange
rate between sterling, and the US dollar. Fluctuations in sterling relative to
the US dollar would also affect any US dollar translations of Huntingdon's
financial results. In addition, payment of dividends on the Company's ordinary
shares, par value 5 pence per ordinary share (the "Ordinary Shares"), traded in
the form of American Depositary Receipts ("ADRs"), evidencing American
Depositary Shares ("ADSs"), each ADS representing five Ordinary Shares, will be
in sterling and exchange rate fluctuations will affect the US dollar amounts
received by holders of the ADRs on conversion by The Bank of New York, the
depositary for the Ordinary Shares represented by ADSs (the "Depositary"), of
the cash dividends paid on the Ordinary Shares underlying the ADRs.
TABLE OF CONTENTS
ITEM PAGE
PART I
1. Description of Business ........................................ 1
2. Description of Properties ...................................... 12
3. Legal Proceedings .............................................. 12
4. Control of Registrant .......................................... 12
5. Nature of Trading Market ....................................... 13
6. Exchange Controls and Other Limitations Affecting
Security Holders ............................................... 14
7. Taxation........................................................ 14
8. Selected Financial Data ........................................ 15
9 Management's Discussion and Analysis of Financial
Condition and Results of Operations ..............................16
10. Directors and Officers of the Registrant......................... 22
11. Compensation of Directors and Officers .......................... 22
12. Options to Purchase Securities from the Registrant ............. 24
13. Interest of Management in Certain Transactions .................. 26
PART II
14. Description of Securities to be Registered ..................... 27
PART III
15. Defaults Upon Senior Securities ................................ 27
16. Changes in Securities and Changes in Security for
Registered Securities .......................................... 27
PART IV
17. Financial Statements ......................................... 27
18. Financial Statements (See Item 19 for a List of Financial
Statements Filed Under Item 18) .............................. 27
19. Financial Statements and Exhibits .............................. 28
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION
Huntingdon is one of the world's leading Contact Research Organisations (CRO's)
specialising in the areas of non-clinical safety and efficacy testing for the
pharmaceutical, biotechnology, agrochemical, veterinary, food and chemical
industries. Over half of its sales are in support of early stage development of
promising new pharmaceutical and biotech compounds. The remainder is associated
with safety testing for chemical compounds used in the manufacture of products,
foodstuffs, and agricultural products. The company is based in the United
Kingdom, with facilities in Huntingdon (Cambridgeshire) and Eye (Suffolk),
England, and the Princeton Research Centre in New Jersey (USA). Huntingdon is a
world-wide provider of pre-clinical toxicology, pharmacology, pharmaco-kinetics,
molecular biology, analytical chemistry, environmental and regulatory services.
GENERAL DEVELOPMENT OF THE BUSINESS
The Company was incorporated in England in 1951 as a private limited company and
was a wholly-owned subsidiary of Becton, Dickinson and Company from 1964 to
1983. In April 1983, the Company was re-registered as a public limited company
with the name "Huntingdon Research Centre plc". In June 1985, the Company's name
was changed from Huntingdon Research Centre plc to Huntingdon International
Holdings plc and subsequently in April 1997 to Huntingdon Life Sciences Group
plc. In June 1985 the Company transferred the assets which constituted its life
sciences business to its subsidiary Huntingdon Research Centre Ltd. In 1991 the
Company began operating a subsidiary, Leicester Clinical Research Centre Ltd.
("LCRC") which provided a wide range of biological and psychological assessment
procedures involving healthy human volunteers. This subsidiary was sold in
November 1995 to Applied Bioscience International Inc ("APBI") (see below).
From 1985 until their sale in May 1995, the Company, through HIH USA Inc and its
subsidiary, Huntingdon Engineering and Environmental Services Inc. ("HEE")
provided construction-related engineering services, environmental services,
consultancy and testing in the USA. Outside the USA, following the acquisition
of Travers Morgan Limited and its subsidiaries ("TM") in December 1991, the
Company began to provide consultancy and expert services in the areas of civil
and structural engineering, consultation on the planning and development of
transportation systems, project management and environmental consultancy.
On December 15, 1994 the High Court of Justice, Chancery Division, Companies
Court (the "Court") granted an administrative order (the "Order") under the UK
Insolvency Act 1986. Under the Order, joint administrators were appointed to
Travers Morgan Limited, as a result of which control passed from the Company,
the trading of TM was isolated from the Company and the Group wrote off its
investment, providing (pound)11.6 million against the amounts receivable from
Travers Morgan Ltd. Management expects the administration will be concluded
during 1999 and following discussions with the Joint Administrators the Group
determined that the provision was excessive and accordingly released (pound)2.1
million which was recorded as an exceptional gain in the accounts for the 12
months ended December 31, 1997. 90% of the anticipated dividend was received in
1998.
On November 21, 1995, the Company acquired the toxicology business of APBI which
comprised laboratories in the UK near Newcastle and near Diss, and in the USA
near Princeton. The total consideration of $43,000,000 ((pound)27,000,000)
comprised cash of $32,500,000 and approximately (pound)3,800,000 in respect of
cash acquired with the business and an agreed value of $4,500,000
((pound)2,900,000) in respect of LCRC (see above). The small laboratory near
Newcastle in the UK was closed in July 1996 and subsequently sold in September
1996. Immediately upon acquisition the toxicology business of APBI in the UK was
merged with that of Huntingdon Research Centre Ltd and the name of that company
changed to Huntingdon Life Sciences Ltd. The US business acquired operates as
Huntingdon Life Sciences Inc.
In March 1997, Huntingdon through Huntingdon Life Sciences Ltd completed the
purchase of a small specialist research centre located close to Manchester at
Wilmslow in the UK. This comprises 38 acres of which approximately half is
developed and on which there is 92,000 sq. feet of laboratories, animal
accommodation and offices. Due to a decline in revenues the site has now been
closed and management intends to dispose of the site.
<PAGE>
Huntingdon suffered from a collapse in confidence from a number of its
previously supportive clients following allegations of malpractice at both its
UK and US operations in the Spring of 1997. The UK allegations were received by
the supervising authorities following a program in the Channel 4 television
series `Countryside Undercover'. Those in the U.S. were submitted to the USDA
and based on reports received by PeTA, an animal activist group.
In July 1997 the UK Home Office inspectors confirmed to their satisfaction that
whilst there was an incident of maltreatment, it was isolated. However, a
statement was made by the Government that caused many clients to conclude that
there were separate further allegations. The Home Office then established a
number of conditions, which Huntingdon had to comply with by the end of
November. On September 29, 1997 the Home Office stated that the company had
demonstrated full compliance with the conditions and that they were fully
satisfied.
In the US the USDA undertook two inspections during the summer of 1997 and one
in February 1998 , these followed their annual inspection in April and an
intensive FDA inspection in February - both of which were satisfactory. In
December 1997 Huntingdon announced the receipt of a settlement agreement as a
Court Order in which PeTA agreed to give up all of its campaign against
Huntingdon. The Association for Assessment and Accreditation of Laboratory
Animal Care (AAALAC) inspected the site and unanimously endorsed its continued
accreditation. In April 1998 the USDA investigation was concluded and did not
include any concessions of violations by Huntingdon. In December 1998 the USDA
conducted it's annual routine inspection of the laboratories and concluded that
they were in full compliance with all aspects of its Regulations.
As described in a Prospectus dated August 10, 1998, and effected September 2,
1998 a New Investor Group saw an opportunity in Huntingdon where new management
and a strengthened balance sheet could reinstate a company with a distinguished
scientific reputation and a history of success and profitability.
As a result of the highly visible public allegations of malpractice discussed
above, the Group had experienced a substantial decline (approximately 30%) in
revenues and a concurrent reversal of profits and cash flow in the proceeding 18
months.
The New Investor Group, led by Andrew Baker of Focused Healthcare Partners,
believed that Huntingdon's core competency was sound and the need for their
service clearly existed. They were suffering from a lack of confidence that had
resulted from the allegations that occurred over a year previously. The Company
had met all of the requirements vis a vis regulatory authorities and inspection
agencies, but the thing that was missing was the spirit of management. Immediate
steps needed to be taken to strengthen the balance sheet of the Company, and
decisive actions were required at senior management and board level to restore
the confidence of customers.
To help effect those changes, (pound)22million (approximately $37 million) of
new equity was raised for Huntingdon Life Science Group. There were changes in
senior management with the addition of respected and experienced industry
leaders. New management, led by Andrew Baker (Executive Chairman) and Brian Cass
(Chief Operating Officer and Managing Director) established that the Company's
highest priorities were the return of good relations with its clients and the
re-establishment of the sales levels enjoyed previously. Concurrently, they
effected a cost reduction program in order to more appropriately realign
expenses with the Company's reduced revenue levels. The aim of the new
management is to develop the operational, commercial and cultural aspects of the
Company to ensure improvements in efficiency, customer service and
communications, both externally and internally. The results will drive revenues
and create a sense of pride in staff. The employees are the `make or break' of
this business and therefore the essence of shareholder return. Their individual
rejuvenation is critical to the Group's success.
Building from the Company's core strengths - scientific expertise, experience,
knowledge and reputation - our goals are clear: To be appreciated as the
listening, understanding and reliable partner in creative compound development
and safety assessment; to be the first choice for the industries we serve.
To provide our staff with the opportunity for individual development in a
caring, rewarding and safe working environment.
<PAGE>
To be recognised positively in the local communities in which we operate -------
and, consequently, to grow to significant profitability and improved return on
investment for our shareholders. Our vision is to create a new standard and
level of partnership in our industry, built upon our technical, scientific and
regulatory expertise, the ethical standards we adopt, our problem solving
approach and a dedication to customer service and teamwork.
DESCRIPTION OF THE BUSINESS
Huntingdon offers non-clinical safety and efficacy assessment services to most
of the world's leading pharmaceutical, biopharmaceutical, agricultural and
industrial chemical manufacturers, and is a trusted developmental partner to
some of the largest blue chip companies. Huntingdon helps it's customers bring
to market safe and effective new compounds - compounds which are safe whether
exposed to humans, animals or the environment. All of the company's services are
designed to meet the requirements of governments around the world. The most
demanding of these evaluations are those driven by the regulations controlling
the pharmaceutical and veterinary industries. The aim of all of Huntingdon's
services is to provide its customers with data that will satisfy regulatory
authorities around the world.
o Pharmaceuticals: Huntingdon plays a crucial role in the development of new
medicines. Promising compounds, which may become
important clinical treatments of the future, are identified by discovery
research carried out by pharmaceutical and biopharmaceutical companies.
Safety and efficacy testing is then required before clinical trials can
begin in humans. Studies must be carried out to determine what happens to
the compound inside the body, for example, how much of a compound is
absorbed, how much is retained in the tissues, how it may react with other
medicines and how well it will be clinically tolerated. Rightly, our society
expects the highest standards of quality and safety in the medicines we
take. This demands a correspondingly high level of safety assessment, as we
assume that any substance reaching the market place will be essentially free
from harmful effects. All chemical substances can be toxic if given at
sufficiently high levels - even within their normal dosage range medicines
have clinical side effects. Cytotoxic agents used in cancer treatment are a
good example of this risk/benefit analysis, where the threat to life from
the disease far outweighs the drug's toxic potential. The decision to
licence a new drug, or other substance, must weigh the balance between
benefit and risk to health. A clear understanding of what those risks are is
crucial. Today the legislation governing pharmaceutical safety assessment
insists that the majority of this essential work is conducted using
experimental animals. It is Huntingdon's responsibility, monitored by
government authorities, to ensure that these tests are performed to strict
scientific protocols and when animal testing is required, with acknowledged
high standards of animal care and welfare.
Non-animal models and computer simulations can provide supplementary data
and so reduce animal usage in some cases, but few are currently accepted as
viable alternatives to animal tests by regulatory authorities. Huntingdon is
at the leading edge in the development of these alternative techniques to
animal testing. The company is committed to the scientific principles of the
3 Rs - Reduction, Refinement and Replacement of animals in research. This
means we actively support the search for validated studies which minimise
the numbers of animals used, which make sure animals suffer as little as
possible, and which replace animal procedures wherever possible. Currently
in-vitro laboratory and other non-animal testing work accounts for almost
half of Huntingdon's revenues. It is also the responsibility of the company
and of the regulatory authorities to ensure that all tests are performed to
strict scientific criteria, and when animal testing is required, with
leading standards of animal care and welfare.
o Agricultural Chemicals: Huntingdon has an established reputation as the
world market leader in offering full development programmes that bring
agricultural chemicals to market. These major contracts involve assessing
the safety, environmental impact and efficacy of the compound. A project
management driven approach to programs of toxicology, environmental fate and
affect, and field trials, often running over several years, generate both
good value to the client and a good return to Huntingdon's business.
Agrochemicals are a real success story for Huntingdon Life Sciences.
<PAGE>
Agricultural chemicals are facing increasing regulatory demands driven by
international guidelines, currently one high profile area is neurotoxicity.
Huntingdon is fortunate to have experienced scientists in this and related
diciplines and so is able to offer a resource that is second to none.
Additionally, regulatory authorities now often request data not only from
controlled laboratory experiments, but also from systems which more
accurately mimic the natural environment. An example is the mesocosm which
is a new facility being developed at Huntingdon that will enable the company
to offer additional services in the assessment of environmental impact. It
is a system of 24 man made ponds containing water and sediment together with
flora and fauna from established natural ponds. Mesocosms are used to assess
the fate and effect of chemicals on natural aquatic systems and this new
development enables Huntingdon to offer a total service in this complex area
of environmental study.
o Industrial Chemicals: Chemicals impact all of our lives in many ways,
although we are frequently unaware of their presence in our environment.
Huntingdon is the world market leader in these regulatory assessment
programmes, both for new chemicals entering the market and also for the
re-examination of the safety of existing chemicals. Retrospective studies
are a major growth area in the testing of industrial chemicals, where
currently marketed chemicals are increasingly subjected to detailed
reappraisal. The company is involved in testing a broad range of chemicals
encountered in industry, the home and the environment, including paints,
adhesives, dyes, photographic chemicals, solvents, detergents, flame
retardants and many others. Part of this work provides the necessary
labelling information for many domestic and industrial products and assures
consumers that products they are regularly exposed to are safe in normal
conditions. Regulatory authorities the world over demand stringent testing
before chemicals can be transported, to assess safety levels and crisis
response actions if the public or the environment are
exposed.
o Other areas: Huntingdon has been involved in the development and testing of
a number of novel foodstuffs, artificial sweeteners and flavourings over
the past decade. Today we see the arrival of exciting new developments
like "nutraceuticals", these are foods which provide a clear clinical
benefit, such as the lowering of cholesterol levels. Huntingdon anticipates
that demand for testing in this area will increase rapidly, once the
regulatory authorities have established the appropriate legislative
framework. Similarly, public awareness of genetically modified foods is
extremely high, as is the need to reassure consumers and the marketplace
with appropriate regulatory controls. These new developments and associated
regulations can be expected to drive further business opportunities for the
company in this fast changing industry.Huntingdon plays an increasing
role in the development of new veterinary medicines and other health
products for both farm and companion animals. Safety, tolerability and
efficacy assessments are carried out in a similar way to tests on human
medicines. In food producing animals studies must be conducted to
determine what happens to the compound inside the body but also assessments
are made on residues in milk, dairy products, meat and eggs. Specialised
facilities are now in place, together with regulatory expertise, which will
allow the company to increase it's share in this expanding market.
The legislation governing pre-clinical research and safety testing insists that
the majority of this essential work involves the use of animals. This is the
case at Huntingdon Life Sciences, however as noted above the company is
committed to the scientific principles of the 3 Rs - Reduction, Refinement and
Replacement of animals in research. Huntingdon does not undertake research on
cosmetics and voluntarily relinquished its licence to undertake evaluations of
cosmetics using animals in the late 1980s and has pioneered various in-vitro
techniques using cell cultures as an alternative to animal testing. The
replacement of animal studies by reliable in vitro techniques has been a key
objective at Huntingdon for many years. Huntingdon is at the heart of industry
moves towards alternative techniques, for example participating in validation
trials for the European Centre for the Validation of Alternative Methods
(ECVAM), being an active member of the In Vitro Toxicology Platform (IVTIP) and
supporting the Fund for the Replacement of Animals in Medical Experiments
(FRAME).
<PAGE>
GEOGRAPHIC MARKETS
The figures below show the percentage of total orders of Huntingdon from the
geographical areas which it services from laboratories in the UK and the USA.
The table shows the analysis for the 12 months ended December 31, 1997 and the
12 months ended December 31, 1998.
% of Orders from each Geographic area
1997 1998
---------- ---------
Europe................................. 43 38
Japan .............................. 26 20
United States......................... 24 34
Rest of the World..................... 7 8
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Total.................................. 100% 100%
---------- ---------
Orders were down 13% in Europe and 26% in Japan whereas a 37% improvement was
seen in orders from the US. The improvement in the US reflects in part the
introduction of new services and facilities at the Princeton site, the lower
reliance upon Pharmaceutical clients and in addition the success of the Group in
the targeting of new Biopharmaceutical clients. In Europe and Japan, the
additional comfort required by Pharmaceutical clients slowed their return as
clients. In Europe this trend was compounded by mergers of clients and their
consideration of the role of outsourcing whilst in Japan the trend was affected
by both the overall economic situation and the fact that allegations of
malpractice were directed more toward studies conducted on behalf of Japanese
clients.
CUSTOMERS AND SERVICE MARKETS
Huntingdon typically performs a number of contracts simultaneously for each of
its major clients among whom are included most of the world's leading companies
in pharmaceuticals, biotechnology, agrochemicals and industrial chemicals.
However, the companies for which work is conducted and the volume of work
performed for any one company change from year to year and Huntingdon is not
dependent on any single client.
Pharmaceutical Business
Huntingdon's primary market is pre-clinical outsourcing for the pharmaceutical
industry and its place in the development cycle and details of developments in
this market are highlighted below.
- ----------------------- ------------------------------ -----------------
DRUG DISCOVERY DEVELOPMENT MFG.
- ----------------------- ------------------------------- -----------------
PRE-CLINICAL CLINICAL
Chemical Synthesis Phase I Phase II Phase III Phase IV Sales
Toxicology
Screening & Safety Safety Efficacy LT Efficacy
-----------------------------
& side effects NON-CLINICAL
--------------------------------------------------
o Management believes that about R & D expenditure of pharmaceutical companies
is approximately $40 billion. Of this 25% is expenditure in Huntingdon's
core business area of pre-clinical research. Huntingdon believes that 10-15%
of this is outsourced, which means that the company is today competing in a
$1-1.5 billion market. This market is growing as a result of R&D expenditure
increasing by 10% annually, outsourced R&D growing by 9%, a 50% increase in
the number of projects in the R&D pipeline over 5 years and an 8% increase
in the number of preclinical compounds and a 12% growth in U.S. IND
applications.
<PAGE>
o The Biotech industry has become a significant source of business for
Huntingdon, accounting for approximately 13% of the company's orders in
1998. The number of drugs produced by the biotechnology industry which
require FDA approval has grown substantially over the past decade. Many
biotechnology companies have strategically chosen to outsource major
areas of R&D and utilize providers such as Huntingdon to perform these
services.
Huntingdon has worked with almost all of the world's major pharmaceutical
companies. Many of these customers have come to regard Huntingdon as an
extension of their own resources, and the more closely the company is integrated
with customers the more efficient the service becomes. Huntingdon's objective is
to help these customers make appropriate and timely decisions and so help them
to complete their development programmes effectively and efficiently. Advice
from scientific experts within the company, given in the light of long
experience, and effective programme management, can optimise drug development
within the strict requirements of the regulatory authorities.
Huntingdon conducts studies on a broad range of new therapeutic agents, from
small molecules to large monoclonal antibodies, the product of biopharmaceutical
research. The pharmaceutical market is dynamic and over recent years the pattern
of drug development has changed markedly. New techniques including high
throughput screening, combinatorial chemistry and genomics are dramatically
increasing the productivity of drug discovery. This will increase the focus on
the early stage development process, including Huntingdon's work to identify
those compounds which have the greatest likelihood of being both safe and
effective. Our customers are dependent on selecting the most appropriate
compounds from this process for their own business success and society is
excited by the potential they hold for improving our ability to treat disease.
Major pharmaceutical companies often have the resources to conduct most of their
own non-clinical testing programmes and historically have tended to only
commission individual studies from contract research organisations like
Huntingdon. However, in the light of these dynamic changes in the industry,
growing numbers of companies find that it makes strategic sense to concentrate
on their main area of research expertise - the drug discovery process. The need
for toxicity and safety assessment studies is driven and governed by regulatory
requirements and so it is well suited to being out-sourced. This provides a
growing opportunity for Huntingdon. There is also a trend to out-source the
management of larger programmes of work, not only individual studies as was the
case in the past. Increasingly Huntingdon is becoming more closely involved with
customers in designing development strategies geared to specific clinical
end-points and in the management of whole programmes. This is leading towards
true partnerships with customers, where Huntingdon is playing a meaningful role
in supporting and adding value to a customer's drug development efforts. Beyond
the established major pharmaceutical companies, the new biopharmaceutical and
other start-up companies typically do not have the resources to undertake
non-clinical studies themselves and increasingly rely totally upon contract
organisations like Huntingdon. This sector of the market is growing fast and
indications are that it will be an important part of the company's business over
the coming years, it already accounts for some 14% of revenues.
Restructuring and rationalisation of the pharma industry means that more and
more projects are being outsourced. Increasing legislative requirements have
extended development times and made careful project management increasingly
important. To address this situation integrated packages are being developed to
manage multidisciplinary development programmes. Involvement in such integrated
projects is a long term objective of Huntingdon Life Sciences, but one-off
studies will probably remain an essential part of the business for the
foreseeable future.
In the pharma and biopharmaceutical areas, the company has set itself the
following objectives:
o Strengthen emphasis on "Early Phase" development services
o Develop new services to fill certain gaps that have been identified
o Build relationships which will strengthen the client portfolio.
Huntingdon offers a complete portfolio of non-clinical services throughout the
drug development process, supporting customers around the world from facilities
in both the UK and the US. The company has recently developed several
innovative joint venture relationships with independent
Clinical Research Organisations to offer Phase I and IIa clinical trials, so
extending it's portfolio of integrated services. This will further strengthen
Huntingdon's ability to be the full service, early development partner to our
pharmaceutical and biopharmaceutical customers.
In the longer term, Huntingdon Life Sciences plans to optimise early development
in pharmaceuticals, extending the process back to interface with the drug
discovery and development areas, while at the same time consolidating their
already very strong position in non-clinical research and providing continuity
through the rest of the non-clinical development and testing process.
Non-pharmaceutical Business
Huntingdon has historically generated one third to one half of its revenues from
safety and efficacy testing of compounds for the agrochemical, industrial
chemical, veterinary and food industries. The work involved bears many
similarities and often uses many of the same facilities, equipment, and
scientific disciplines that are employed in pre-clinical testing of
pharmaceutical compounds. Huntingdon's business in these areas is again driven
by regulatory requirements. The company's services address safety concerns
surrounding a diverse range of products, spanning such areas as agricultural
fertilizers and pesticides, veterinary medicines, chemicals used in the
manufacture of pharmaceutical intermediates and photocopier toners, manufactured
foodstuffs, household products and even medical devices themselves. Many market
segments included in these broad areas of business have the potential for
substantial growth in coming years, as a result of :
o Increasing scrutiny of any compound which is used in the manufacture of
products the public is exposed to, either infrequently or on a day-to-day
basis.
o More stringent regulations affecting compounds which have the potential to
adversely effect the environment, e.g. biocides and endocrine disrupters.
o Introduction of new testing requirements to `high volume chemical products'
in the U.S.
o Growth in concerns over food safety, e.g. additives and genetically
modified foods, and the introduction of `nutraceuticals'.
Agrochemicals: The agricultural chemical market has changed markedly over the
past few years. Five years ago it was driven by the requirements of individual
national regulatory authorities and was therefore very diverse and fragmented.
Now much of the legislation has been consolidated and simplified throughout the
EU. This has reduced the number of individual studies performed, but at the same
time means that more integrated programmes are required. This gives Huntingdon's
scientists the opportunity to guide the customer through this complex regulatory
process and also to manage the whole project. The company is currently project
managing five major integrated programmes on behalf of customers, evaluating
toxicity and environmental impact and conducting field trials which run for
several years. Huntingdon is widely perceived as being a full-capability
laboratory for this segment and so the front runner in this area of contract
research.
At least 50% of current work in this area is in environmental studies, where for
example, tests on the air we breathe are of increasing importance. The effects
of exhaust emissions on the atmosphere have been studied over the past 20 years
and the company is recognised as a world leader in inhalation testing.
New research facilities are being developed and exploited, such as the mesocosms
being developed at the Huntingdon site. These have evolved from being laboratory
tools into important indicators of the effects of pollutants on a complete
biosphere, including all of the animal and plant life involved, and work in this
area is increasingly being demanded by regulatory authorities.
Industrial Chemicals: Huntingdon has a significant profile with the chemical
industry world-wide, frequently working with major consortia and trade groups.
Revenue from the industrial chemical business sector has doubled over the past 5
years and during 1998 the company worked with over 250 client companies.
Huntingdon is often involved in complete programmes including safety,
environmental and analytical studies, coupled with regulatory services and
dossier submissions presented to Governments around the world.
A further example of the work carried out by the company is the development of
substitutes for ozone-depleting chlorofluorocarbon agents (CFCs) used as
propellants and in refrigeration. Over the past two decades, Huntingdon has been
involved in testing nearly all of the new agents developed to replace these
substances.The reappraisal of existing chemicals involving additional testing is
being increasingly demanded, an example of this is the High Production Volume
Right To Know ( HPV RTK ) programme in the US. This is being driven by a
collaboration of the environmentalist lobby ( the Environmental Defence Fund ),
the Environmental Protection Association and the Chemical Manufacturers
Association. The initiative demands that a set of toxicology and environmental
data be submitted, over a five year period, on a list of 2800 high volume
chemicals. This is now being broadened to 4000 chemicals worldwide, through
various international programmes. With Huntingdon's extensive experience in
industrial chemical regulatory programmes, the company is perhaps uniquely
positioned to provide a `one stop shop' for manufacturers and consortia offering
regulatory consultancy, testing and programme management and significant
business is expected as a result.
In the Industrial Chemicals areas, Huntingdon Life Sciences has set itself clear
objectives:
o Capitalise on the existing leadership position
o Fully exploit current skills in Programme Management in order to secure more
major projects
o Strengthen the services and facilities to support growing business
opportunities
o Develop business in the U.S.A. and Far East markets.
Veterinary Medicines: Animal health product testing, both for farm and companion
animals, is a rapidly growing business area for Huntingdon. Specialized
facilities are now in place, together with the regulatory expertise, to take
advantage of a prime opportunity to expand share in this niche market.
Foodstuffs: Huntingdon has been involved in the development of a number of novel
foodstuffs over the past decade. As the exciting new science of "nutraceuticals"
develops - foods which provide a clear human health benefit, such as lowering of
cholesterol levels it's anticipated that this demand will increase rapidly.
Service Markets
The table below shows the percentage of total orders for each market area of
Huntingdon's business for the 12 months ended December 31, 1997 and the 12
months ended December 31, 1998:
1997 1998
---------- ---------
Pharmaceutical...................... 45 43
Biopharmaceutical................... 11 13
Agrochemical........................ 27 26
Chemical and Other Industries....... 17 18
---------- ---------
Total............................... 100% 100%
---------- ---------
Orders in 1998 continued to be adversely affected by the allegations of
malpractice made in 1997. In addition financial uncertainty prior to the
injection of new funding in September 1998 also led to the delay in placing, and
in some cases the loss, of new orders.
This continues to most effect Pharmaceutical clients, who place a higher
proportion of longer term studies and who are subject more to both regulatory
and public scrutiny. Huntingdon believes that its fall in orders from certain
pharmaceutical study sponsors based in Europe was also partly due to their
internal considerations, in the periods immediately following their merger, of
their R & D management processes and priorities.
<PAGE>
As noted earlier, a recovery in orders began to occur in the second half of 1998
and it was particularly pleasing to note that this recovery included the receipt
of a number of key orders from pharmaceutical clients who had stopped using
Huntingdon in the prior 18 months .
The agrochemical and chemical sectors also undertook inspections and examined
Huntingdon's procedures but, in general individual study sponsors reached their
conclusion to continue to sponsor studies at Huntingdon more quickly than the
pharmaceutical sector. Thus, although orders from agrochemicals fell, the orders
from the chemical sector remained at 1997 levels.
The key to the full recovery of orders is considered by management to be study
sponsors' confidence in Huntingdon's enhanced training, audit practices, and the
management processes of control
Huntingdon's largest client accounts for under 5% of its total orders. In the UK
the largest 10 clients contributed under 30% of orders and in the USA the 10
largest clients provided approximately 68% of orders.
COMPETITION
Huntingdon is the second largest world-wide provider of pre-clinical safety
testing services behind Covance. Other competitors are smaller and more regional
and/or specialized in their presence, including ClinTrials BioResearch Inc and
BioReliance Corporation. Huntingdon's other major competitors are the research
and development divisions of large companies who perform their own safety
assessments in-house.
Competitors also comply with GLP guidelines and they are able to undertake the
more routine type of toxicology and pathology studies. Accordingly, competition
for these types of studies is particularly price sensitive. Within toxicology
and pathology there are also certain particularly demanding studies for which
few CROs have either the scientific credibility or experience. Pricing for these
studies is competitive but relatively less so. It is believed that the final
determinant of study awards is quality and reliability in delivering reports on
time to clients. This is particularly true in the case of the more complex
scientific studies in which Management believes Huntingdon has a strong
reputation. Furthermore, customers are increasingly demanding outstanding
chemistry based analytical services partly as an adjunct to the toxicology and
pathology studies and Management believes it is a world leader in these
services. Huntingdon also competes with the in-house research and development
divisions within larger pharmaceutical companies who sometimes have a preference
to conduct their own safety assessments.
Other factors enhancing competitiveness generally include the quality of the
facilities provided and the reputation and standing of its scientific staff, as
well as the acceptance by regulatory bodies of Huntingdon's findings. With the
need for quality in mind, many staff possess qualifications of post-graduate
degree or equivalent standards upon joining the group, and staff are encouraged
to pursue formal qualifications related to their work in order to further
strengthen their knowledge and capabilities.
<PAGE>
GOVERNMENT SUPERVISION OF OPERATIONS
Supervisory regimes
Since the services provided by Huntingdon are used to support pharmaceutical,
biotechnological, chemical or agrochemical product approval applications, its
laboratories are subject to both formal and informal inspections by appropriate
regulatory and supervisory authorities, as well as by representatives from
client companies. Huntingdon is regularly inspected by US, Japan and UK
governmental agencies because of the number and complexities of the studies it
undertakes. In 1979, the US FDA promulgated the GLP regulations, defining the
standards under which biological safety evaluations are to be conducted. Other
governmental agencies such as the EPA, JMOHW, JMAFF, and UK Department of
Health, have introduced compliance monitoring programs with similar GLP
standards. Huntingdon has had over 30 such inspection visits and audits since
1985.
Huntingdon's operations in the UK are regulated by the Animals (Scientific
Procedures) Act 1986. This legislation, administered by the UK Home Office,
provides for the control of scientific procedures carried out on living
vertebrate animals and regulation of the animals' environment. Personal licences
(Huntingdon has approximately 300 licensees) are issued by the UK Home Office to
personnel who are competent to perform regulated procedures and each program of
work must be authorised in advance by a Project Licensee. Premises where
procedures are carried out must also be formally designated by the UK Home
Office. Consultations and inspections are regularly undertaken in order to
ensure continued compliance with regulatory and legislative requirements.
Typically, Huntingdon has 18 such inspections annually.
Huntingdon's laboratory in the USA is subject to the USDA's Animal Welfare
Regulations (Title 9, Code of Federal Regulations, Subchapter A). The laboratory
is regularly inspected by USDA officials for compliance with these regulations.
Compliance is assured through an Institutional Animal Care and Use Committee,
comprising staff from a broad range of disciplines within Huntingdon and
including external representation. Furthermore, laboratories in the USA are
expected by the USDA to be certified by an independent and internationally
recognised organisation, the Association for Assessment and Accreditation of
Laboratory Animal Care (AAALAC).
At each of its research centres Huntingdon ensures the availability of suitably
experienced and qualified veterinary staff backed by a 24 hour call out system.
COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
Whilst Huntingdon is obliged in the conduct of its business to comply with
certain environmental regulations, compliance with such regulations does not
impact significantly on its earnings or competitive position. Management
believes that its operations are currently in material compliance with all
applicable environmental regulations.
OTHER INFORMATION PERTAINING TO THE COMPANY
Human Resources
Huntingdon's most important resource is it's people, they have created the
company's knowledge base, it's expertise and it's excellent scientific
reputation. Scientists from the company are represented at the highest levels in
several UK and international committees on safety and toxicity testing. Several
staff members are considered leaders in their respective fields, frequently
lecture at scientific seminars and regularly publish articles in scientific
journals. This recognition has resulted in frequent assignments from clients for
consultation services in addition to the range of specialised services provided.
Some of Huntingdon's staff serve by invitation or election on a number of
scientific and industrial advisory panels and groups of certain organisations
and agencies such as the FDA, the EPA and UK Department of Health, and the WHO.
To ensure that this experience and expertise is transmitted throughout the
organisation, training programmes are maintained, for example, Huntingdon's
Introductory and Advanced Graduate Training Programs to train graduate staff in
all phases of toxicology. Also, in conjunction with the Institute of Animal
Technology, Huntingdon maintains what it believes to be one of the largest
animal technician training programmes in the world. Huntingdon employs
approximately 300 licensed personnel.
<PAGE>
The table below shows employment has decreased throughout the Group as a result
of reduced activity levels:
Employees at December 31
1997 998
UK ................................. 1,436 1,189
USA................................. 208 193
Japan................................ 9 10
-------------- -------------
1,653 1,392
-------------- -------------
Whilst staffing levels reduced during the year, excess capacity remained and in
December, 1998 the Company announced a cost reduction programme that would
include the alignment of staff resources with current revenues. The programme
which commenced in January 1999 anticipates the reduction of approximately 150
positions and will leave the group with approximately 1,250 staff. The whole
operation is integrated internationally to optimise the services provided. As
part of the rejuvenation process, human resources will be carefully studied,
with staff benefits tied to company performance.
Management and Labour Relations
Huntingdon's labour force is non-union and there has never been any disruption
of the business through strikes or other employee action. Huntingdon regularly
reviews its pay and benefits packages and believes that its labour relations,
policies and practices and management structure are appropriate to support its
competitive position.
Research and Development
In addition to experience gained through research activities performed for
clients, Huntingdon engages in research in order to respond to the changing
needs of clients and to maintain competitiveness within the industries in which
it operates. Most of the research undertaken, however, is an inherent part of
the research carried out on behalf of clients in completing studies and as such
it is not identified separately.
Know-how and Patents
Huntingdon believes that its proprietary know-how plays an important role in the
success of its business. Where Huntingdon considers it appropriate, steps are
taken to protect its know-how through confidentiality agreements and protection
through registration of title or use. Huntingdon has no patents, trade-marks,
licenses, franchises or concessions which are material and upon which any of the
services offered is dependent.
Quality Assurance
Huntingdon maintains extensive quality assurance programs, designed to ensure
that all testing programs meet client requirements, as well as all relevant
codes, standards and regulations. Based on a Master Schedule periodic
inspections are conducted as testing programs are performed to assure adherence
to project specifications or protocols and final reports are extensively
inspected to ensure consistency with data collected. Huntingdon's quality
assurance programs are controlled by a formally constituted Quality Board, a
Quality Monitoring Committee and Quality Groups.
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTIES
Huntingdon's head office is situated within the research centre at Huntingdon.
The following table shows the location of the facilities of Huntingdon,
approximate size and the principal activities conducted at such facilities each
of which is freehold:
<TABLE>
<CAPTION>
Location Laboratories Size Principal Activities
and Offices
<S> <C> <C> <C>
Huntingdon, England 612,000 sq.ft. 74 acres Laboratories, animal accommodation and
offices
Near Princeton, NJ, USA 180,000 sq.ft. 53.5 acres Laboratories, animal accommodation and offices
Near Diss, England 250,000 sq.ft. 28 acres Laboratories, animal accommodation and
offices
Wilmslow, England 92,000 sq.ft 38 acres Currently unutilised
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
Huntingdon is party to certain legal actions arising out of the normal course of
business. In Management's opinion none of these actions will have a material
effect on the Huntingdon's operations or financial condition. No form of
proceedings has, to Huntingdon's knowledge, been brought or instigated against
Huntingdon by any governmental agency.
ITEM 4. CONTROL OF REGISTRANT
The Company is not owned or controlled directly or indirectly by any other
corporation or government. As of April 16, 1999 the total amounts of the
Company's ordinary shares held by persons who have reported beneficial ownership
of more than ten percent of such ordinary shares, and by the officers and
directors of the Company as a group were as follows:
<TABLE>
<CAPTION>
Name of Shareholder Number of Ordinary Shares Owned Percentage Holding
<S> <C> <C>
UBS UK Holding Ltd. and PDFM Ltd. group 51,706,751 17.77
Stephens Group Inc 36,000,000 12.37
Quilcap Corp and Quilcap International Corp 34,157,333 11.74
Officers and Directors of the Company as a group
Mr A Baker 11,000,000 3.77
Others 1,017,768 less than 1%
<FN>
Mr Baker's shares are registered in the name of Focused Healthcare Partners.
The Company knows of no arrangements the operation of which may at a subsequent
date result in a change in the control of Company.
</FN>
</TABLE>
<PAGE>
ITEM 5. NATURE OF TRADING MARKET
The Company's Ordinary Shares are listed on the London Stock Exchange Ltd under
the Stock Exchange Automated Quotation symbol "HTD." ADSs each of which
evidences five Ordinary Shares and which in turn are evidenced by ADRs, are
listed on the New York Stock Exchange, Inc. ("NYSE") also under the symbol
"HTD".
The Bank of New York is the depositary for the Ordinary Shares represented by
ADSs. As at December 31, 1998, there were 182 recorded holders of ADSs. It is
believed that, at such date, 39,274,200 of the Company's total issued share
capital of 291,010,294 Ordinary Shares were held in the US and were represented
by 7,854,840 ADSs. The remaining Ordinary Shares were, as at such date, held in
the UK in the form of Ordinary Shares for which there were 2,273 recorded
holders. The high and low quarterly sales prices (in pounds sterling) of the
Company's Ordinary Shares on the London Stock Exchange from January 1, 1996 to
December 31, 1998 were as follows:
HIGH SALES LOW SALES
QUARTER ENDED PRICE PRICE
------------------ ----------------
(pound) (pound)
March 31, 1996................... 0.76 0.63
June 30, 1996.................... 1.01 0.78
September 30, 1996............... 0.965 0.73
December 31, 1996................ 1.04 0.91
March 31, 1997................... 1.21 0.875
June 30, 1997.................... 1.175 0.61
September 30, 1997............... 0.635 0.43
December 31, 1997................ 0.685 0.44
March 31, 1998................... 0.465 0.425
June 30, 1998.................... 0.43 0.175
September 30, 1998............... 0.20 0.1275
December 31, 1998................ 0.135 0.105
The high and low quarterly sales prices (in US dollars) of the Company's ADSs,
as evidenced by ADRs, on the NYSE from January 1, 1996 to December 31, 1998 were
as follows:
HIGH SALES LOW SALES
QUARTER ENDED PRICE PRICE
------------------ ----------------
$ $
March 31, 1996.......................... 6.125 4.375
June 30, 1996........................... 8.125 5.750
September 30, 1996...................... 7.50 5.50
December 31, 1996....................... 8.5 7.25
March 31, 1997.......................... 9.875 6.875
June 30, 1997........................... 9.375 4.75
September 30, 1997...................... 5.00 3.4375
December 31, 1997....................... 5.375 3.3125
March 31, 1998.......................... 3.9375 3.4375
June 30, 1998........................... 3.75 1.6250
September 30, 1998...................... 1.6875 0.9375
December 31, 1998....................... 1.4375 0.8125
<PAGE>
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There are currently no UK exchange control restrictions on remittances of
dividends on the Company's Ordinary Shares or on the conduct of Huntingdon's
operations. There are no limitations imposed by UK law or by the Memorandum and
Articles of Association of the Company on the right of non-resident or foreign
owners to hold or vote the Ordinary Shares of the Company and, except as
discussed below under "Taxation," there are not believed to be any UK laws,
decrees or regulations that affect payments, to non-resident holders of Ordinary
Shares.
ITEM 7. TAXATION
Taxation of Dividends
When paying a dividend on Ordinary Shares, the Company is liable to deduct a
withholding tax of 15% of the gross dividend in respect of a US resident
individual or corporate holder of an Ordinary Share or ADS (whose holding is not
effectively connected with a fixed base in the UK through which independent
services are performed in the UK or with a permanent establishment in the UK).
Such tax credits and withholding tax may be reduced in the case of a corporation
controlling directly or indirectly 10% or more of the voting shares of the
Company. The gross dividend paid to any such US resident will be treated as
dividend income for US Federal income tax purposes. Such dividends will not be
eligible for the dividend exclusion allowed to US corporations under certain
circumstances. However, the 15% withholding tax will be treated as foreign
income tax eligible, subject to certain limitations, for credit against such
holder's US Federal income tax.
Taxation of Capital Gains
UK capital gains tax (or for companies, corporation tax on capital gains)
generally applies only to individuals and companies resident in the UK and is
currently levied at an individual's effective income tax rate of either 20%, 23%
or 40%, depending upon the level of the individual's income. The applicable rate
for companies is generally 31%, but it is reduced in certain circumstances. US
resident holders of Ordinary Shares or ADSs will not be liable for UK capital
gains tax unless their holding in the Company is connected with a trade carried
on through a branch or agency in the UK. However, US resident holders of
Ordinary Shares or ADSs will generally be liable for taxation of capital gains
upon a disposition of such Ordinary Shares or ADSs under US Federal income tax
laws.
Estate and Gift Tax
The current Estate and Gift Tax Convention (the "Convention") between the UK and
the US generally relieves from UK inheritance tax the transfer of Ordinary
Shares or of ADSs where the shareholder or holder of the ADSs making the
transfer is domiciled for the purposes of the Convention in the US, and is not a
national of the UK. This will not apply if the Ordinary Shares or ADSs are part
of the business related to the fixed base in the UK of a person providing
independent personal services. If no relief is given under the Convention,
inheritance tax may, in general terms, be charged upon the value of the transfer
made on the death of an individual or within the 7 years of his death, subject
to any applicable exemptions and reliefs. In the unusual case where Ordinary
Shares or ADSs are subject to both UK inheritance tax and US gift or estate tax,
the Convention generally provides for tax paid in the UK to be credited against
tax payable in the US based on priority rules set forth in the Convention.
Stamp Duty
No stamp duty will be payable in the UK on the acquisition of ADSs by persons
purchasing such ADSs or on any subsequent transfer of an ADS, provided that the
ADRs evidencing such ADSs remain at all times outside the UK. The issue of
Ordinary Shares by the Company to the depositary of the Company's ADSs (the
"depositary") for the purpose of issuing ADRs, or a transfer of the underlying
Ordinary Shares to the depositary, are subject to a Stamp Duty Reserve Tax at
the rate of 1.5%, calculated on the issue price or the value of the
consideration for the transfer or the market value, depending on the
circumstances of the transaction.
In the case of a transfer of the underlying Ordinary Shares to the Depositary, a
separate ad valorem stamp duty at the rate of 1.5% will be charged, but in such
circumstances credit will be given for the Stamp Duty Reserve Tax due. Any
transfer of the underlying Ordinary Shares other than to the depositary will
require the purchaser to pay a 0.5% ad valorem stamp duty.
<PAGE>
ITEM 8. SELECTED FINANCIAL DATA
The following financial information has been prepared under the principles which
together make up US GAAP. These financial statements have been reviewed by
independent auditors
Additional profit and loss information for 1996, 1997 and 1998 can be found on
pages F2 - F24 as required by the Securities Exchange Act of 1934 in relation to
this report. Further, balance sheet information is similarly available as at
December 31, 1997 and as at December 31, 1998.
<TABLE>
<CAPTION>
12 Months Ended 3 Months Ended 12 Months ended
September 30 December 31 December 31
------------ ----------- -----------
1994 1995 1995 1996 1997 1998
(AMOUNTS IN STERLING THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
<S> <C> <C> <C> <C> <C> <C>
Revenues 162,489 81,877 14,285 73,564 63,689 52,616
Net Income/(loss) (58,646) (31,538) (3,001) 7,871 (2,882) (24,437)
Operating profit/(loss) 4,528 7,196 1,397 11,799 (5,188) (18,005)
from continuing
operations
Earnings/(loss) per(pound)(0.595)(pound)(0.316) (pound)(0.028) (pound)0.073 (pound)(0.026) (pound)(0.138)
share - basic (A)
</TABLE>
<TABLE>
<CAPTION>
As at September 30 As at December 31
------------------------- -----------------------------------------
1994 1995 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
(AMOUNTS IN STERLING THOUSANDS)
BALANCE SHEET
<S> <C> <C> <C> <C> <C> <C>
Total Assets 134,918 62,704 103,771 108,924 112,461 110,137
Long-term debt 33,441 50,377 42,654 33,691 54,688
9,576
Shareholders' equity 34,812 3,283 6,601 14,586 17,362 13,311
<FN>
(A) Based upon an average of 177,199,772 (1997: 112,935,450;
1995: 108,492,218; 1995, 99,865,393; 1994, 98,545,843) Ordinary
Shares outstanding.
See page (i) for information relating to exchange rates.
</FN>
</TABLE>
<PAGE>
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Huntingdon is a leading CRO which provides an extensive range of pre-clinical
and non-clinical services to the pharmaceutical, agrochemical and industrial
chemical industries. The Group provides those services under contracts which may
range from one day to three years, income from these contracts is recognised on
the basis of work done and variable costs are matched with such income.
Contracts are generally terminable upon notice by the client with the client
being responsible for reimbursing Huntingdon for the value of work done to the
date of cancellation plus the value of work required to wind down a study on an
orderly basis.
The Group's business is characterised by high fixed costs, in particular staff
and facility related costs. Such a high proportion creates favourable conditions
for the Group as excess capacity is utilised but, during periods of declining
revenue, careful planning is required to reduce costs without impairing revenue
generating activities.
RESULTS OF OPERATIONS
12 months ended December 31, 1998 compared with the 12 months ended December 31,
1997.
Beginning mid 1997, orders and backlog declined sharply following the
allegations of malpractice and mistreatment of animals. This continued to have
an impact in 1998, but by the end of the year (after the refinancing noted
below) client confidence began to return and a modest increase in order volume
was being experienced. Although full year 1998 new orders were 3% lower than
1997, the year-end backlog was up 7% from 1997 and 12% ahead of the August 1998
level.
The revenue decline in 1998 was more dramatic than the fall in orders due to the
long term nature of many of the contracts under which Huntingdon does business,
and reflected the steep reduction in orders in 1997. Revenues at (pound)52.6
million in 1998 were 17% down from 1997 revenue of (pound)63.7 million. The
Company's operating capacity, which had increased modestly in 1997 before the
full impact of the order rate decline was felt, was reduced throughout the year
through natural attrition and the closure of the Wilmslow Research Centre.
However, new management believed that further reductions were appropriate to
align staffing with the reduction in revenues which the Company had experienced,
and in December 1998 a cost reduction programme was announced. This included the
elimination of approximately 150 positions and the rationalisation of
capabilities within the UK. This programme is intended to reduce the total cost
base by approximately (pound)6 million per annum.
Overall operating costs (before exceptional items) in 1998 were up (pound)0.7m
to (pound)65.9m (1% up on 1997) and losses prior to exceptional items and
interest increased from (pound)1.5m to (pound)13.3m.
Exceptional losses during the year were(pound)14.9 million (1997:(pound)1.4
million). These arose from
(i) Closure of the Group 's UK site at Wilmslow and write down of related
assets. Redundancy and related costs amount to (pound)0.3 million and asset
write down (pound)2.9 million.
(ii)The December 1998 cost reduction programme designed to rationalise
capabilities in the UK. The cost of this programme is (pound)3.5 million
including asset write offs of (pound)0.5 million.
(iii) The write off of the unamortised balance of the goodwill arising on the
acquisition of businesses in 1995 of (pound)7.3 million. Following the
decline in revenues and the successful integration of the businesses this no
longer has any intrinsic value
(iv) A review of asset values in the UK resulting in accelerated depreciation of
(pound)0.9million.
Net interest expense rose by (pound)1.9 million (51%) to (pound)5.5 million in
1998. In part this arose from the increase in net bank debt during 1997 and a
further increase in the first eight months of 1998. (At March, 31 1997 net bank
debt was (pound)13.5 million and peaked in August 1998 at approximately
(pound)25 million). In addition the need to review the facility in February 1998
and August 1998, coupled with the complete renegotiation of the facility in
September 1998, led to charges of (pound)1.2 million in respect of the facility
during 1998 (1997: (pound)0.1 million).
<PAGE>
Taxation relief on losses at (pound)9.0 million represent relief at 27% versus
the UK statutory rate of 31%. This reduction arises primarily from the lack of
relief on the write off of goodwill.
Overall the net loss at (pound)24.4 million is (pound)21.5 million higher than
the net loss of (pound)2.9 million reported in 1997. Net loss per share has
risen from 2.6p for 1997 to 13.8p for 1998.
UK GAAP Reconciliation
The Group reports primarily in UK GAAP as it is incorporated in the UK and the
majority of its operations and assets are based in the UK. These financial
statements are presented in US GAAP in order to provide additional information
to the Group's US investors.
A reconciliation between the results announced in the UK (under UK GAAP) to
those presented in these financial statements is shown below:
1997 1998
(pound)'000 (pound)'000
Net loss per UK GAAP (5,312) (24,863 )
Recognition of pension costs (247) (676)
Goodwill (194) (7,342 )
Revaluation reserve (119) -
Deferred taxation 2,990 8,444
--------------
---------------
Net loss per US GAAP (2,882) (24,437)
--------------- --------------
The principal differences arise as follows
(i) Deferred Income Taxes:- Under UK GAAP, a provision for deferred taxes is not
required on timing differences that are not expected to result in a tax
liability in the future. US GAAP requires that a deferred tax provision is
made for all significant timing differences, using the liability method.
(ii)Goodwill:- Under UK GAAP, purchased goodwill has been written off directly
to reserves. US GAAP requires that goodwill is capitalised, and written off
over its useful life to the profit and loss account. In subsequent years,
goodwill carried forward is assessed based on its fair value and any
permanent impairment is written off at the time it is identified.
(iii) Pension Cost. Under UK GAAP, the pension costs charged to the profit and
loss account are calculated in accordance with SSAP24. Under US GAAP, the
pension costs charged to the profit and loss account are calculated in
accordance with FAS87.
12 months ended December 31, 1997 compared with the 12 months ended December 31,
1996.
Huntingdon's revenues declined(pound)9.9 million (13%) to(pound)63.7 million
in the 12 months ended December 31, 1997 from(pound)73.6 million in the
previous year.
Following the allegations of malpractice made in the UK and USA study starts
were lower than expected due to both delay and cancellation of studies and due
to a significant reduction in orders for new studies.
Historically the business has been subject to study sponsors occasionally
requesting study delays, deferrals or postponements. However, in the past the
study sponsor was often able to bring forward an alternative test material from
its research pipeline and, on occasions Huntingdon also had the flexibility to
bring forward a study from its backlog. However, during 1997, due primarily to
the allegations, study sponsors were unwilling to authorise early initiation of
their studies and as a result delays, deferrals and postponements had a bigger
impact on revenues than in previous years.
Total orders in 1997 at (pound)58.5 million compare with (pound)76.4 million in
1996, a decrease of 24%. Huntingdon's results announced for the 3 months ended
March 31, 1997 were comparable with the strong first quarter in the prior year.
However , as a result of the impact of the allegations there followed a sudden
and significant fall in orders which, setting aside July 1997, didn't show any
recovery until the fourth quarter 1997.
Costs (excluding exceptional items) increased from (pound)61.8 million in 1996
to (pound)65.2 million in 1997, or by 5.5%. This increase included half a year's
operation at the Wilmslow site and also the costs of staffing up the new
chemistry facility at Princeton ready for operation in June 1997. As costs
largely comprise fixed expenditure on payroll, facilities and infrastructure, in
the short term a fall in revenue has a direct impact on profitability. The
operating loss (before exceptional items) was (pound)1.5 million in 1997
compared to a profit of (pound)11.8 million in 1996.
Exceptional losses during the year were (pound)3.5 million and related to
resolving issues arising from the allegations of malpractice. The exceptional
gain of (pound)2.1 million in 1997 represents Huntingdon's share, after
provision for costs and liabilities, of the expected cash distribution from the
joint administrators of the Travers Morgan Group to secured and unsecured
creditors.
Overall the net loss at(pound)2.8 million compared to a net profit of
(pound)7.9 million in 1996. Net loss per share was 2.6p (1996 earnings per
share 7.3p).
LIQUIDITY & CAPITAL RESOURCES
The poor trading results put a heavy strain on cash resources. Despite receipt
of (pound)2.2 million from the administrators of Travers Morgan, other
improvements in working capital of (pound)0.6 million and a refund of (pound)1
million UK corporation tax, cash absorbed by operations totalled (pound)9.5
million in 1998. This utilised the Company's available facilities.
The Company's bankers provided extra facilities of (pound)5 million and a
bridging facility of (pound)1 million in the first nine months of 1998 however
these facilities, in line with the other bank debts of the Company, were
repayable on demand. Given the medium to long term element of many of the
Company's activities and the reluctance of clients to place new work until the
Company's finances were stabilised, the Company required a substantial injection
of finance to both initially restore confidence and then to fund operations
during the period until the Company returned to profitability.
On September 2, 1998 a Group of new investors subscribed (pound)15 million for
120 million ordinary shares whilst existing shareholders and institutional
investors took up a further 57 million shares, contributing (pound)7.1 million.
After expenses of (pound)1.7 million, the issue of shares raised (pound)20.4
million. On the same date the Company's bankers agreed to confirm and fix the
Company's facilities at (pound)24.5 million until August 31, 2000. Accordingly
bank debt is now shown within liabilities repayable after more than one year.
As at December 31, 1998 the bank facility is fully drawn down. Interest is
payable in quarterly breaks at"LIBOR" plus 1.75 per cent per annum in respect of
drawings up to (pound)19,500,000 and LIBOR plus 1 per cent in respect of
drawings over (pound)19,500,000.The interest rate payable at December 31, 1998
is 8.422 per cent on (pound)19,500,000 and 7.672 per cent on (pound)5,000,000.
Of the (pound)20.4 million injected, (pound)13.3 million remained in hand on
short term deposit as at December 31,1998. The (pound)7.1 million of funds
absorbed were utilised as follows:
(pound)'million
Operating loss excluding exceptionals and depreciation 2.5
Exceptional items 0.8
Interest and bank charges paid 2.6
Bank bridging loan repaid 0.4
Non bank loans repaid 0.5
Capital expenditure 0.7
Working capital movements (0.4)
---------------
7.1
---------------
<PAGE>
The remainder of the Company's long term finance is provided by Convertible
Capital Bonds repayable in 2006. Bonds totalling $50 million were issued in 1991
and remained outstanding as at December 31, 1998. The Bonds carry interest at
7.5%, payable at six-monthly breaks in March and September. The conversion rate,
which is based upon a fixed rate of exchange of (pound)1.00=US $1.6825 is 242.3
pence per Ordinary Share and is subject to adjustment in certain circumstances.
In addition (pound)3.3 million of the consideration payable for the purchase of
the Wilmslow Research Centre (acquired in 1997) remained outstanding as at
December 31, 1998. This debt bears no interest and although (pound)2 million is
repayable in quarterly instalments in 1999 and (pound)1.3 million is repayable
in 2000, the full amount is classed as due within one year as the Company's
intention is to sell the site. Such a disposal would render the debt repayable
upon demand.
Cash available for capital expenditure during the year was limited and additions
to fixed assets were only (pound)2.4 million. This expenditure was prioritised
toward improvements in data capture systems and animal welfare enhancements.
YEAR 2000
The Group utilises software and related computer technologies in the provision
of services to clients. These technologies are an essential part of its
operations and since 1996 the Group has been implementing a strategy to replace
its computer infrastructure, software applications and equipment to ensure that
all critical services and controls will operate efficiently, on and after
January 1, 2000.
In the UK the strategy is being executed under the guidance of a Year 2000
Committee, currently chaired by the Finance Director. This Committee comprises
representatives from all areas of the Group's UK operations and reports back on
a regular basis to both executive management and the Board of Directors. In the
US the strategy is being executed by local management reporting into the US
president, who in turn reports back on a regular basis to executive management
in the UK and hence to the Board of Directors.
State of readiness
The strategy is broken down into a number of key phases. These are as follows:-
o Confirmatory audit of all software, electronic and electrical equipment.
o Questionnaires sent to all known suppliers of software, electronic
and electrical equipment for information on status of Year 2000
compliance supported by supplier audits where appropriate.
o Assessment of all software, electronic and electrical equipment to identify
those critical to the business.
o Testing of items identified as critical to the business for Year 2000
compliance, where practical.
o Corrective actions to ensure items are Year 2000 compliant, including
contingency plans where appropriate.
The confirmatory audit is intended to cover all of the Group's software,
electronic and electrical equipment including computer related hardware, network
equipment, computer related software (internally and externally written)
telephones, scientific instrumentation and other equipment (including
environmental control systems). Thisaudit together with the subsequent
assessment of risks to the business through failure of critical systems or
equipment is substantially complete and testing is underway.
Most of the major software systems supporting the Group's business were
identified and assessed last year. Where the systems in use were not Year 2000
compliant corrective actions, including the implementation of new software
packages, are underway.
In addition to the questioning and auditing of software, electronic and
electrical equipment suppliers, the Group is conducting an assessment of other
material third party relationships for Year 2000 compliance. These third parties
include utility companies and specific product suppliers, such as animal feed
and laboratory consumables suppliers. These suppliers are being requested to
provide the details of their Year 2000 compliance programme. In addition
contingency plans are being formulated where there is a high risk of disruption
to the Group's business or where there is an impact on animal welfare due to a
Year 2000 problem at these suppliers.
While the Group is taking steps to raise awareness of the Year 2000 issue among
its customers, the Group does not believe it is appropriate to require customers
to certify their Year 2000 compliance. For the fiscal year ended December 31,
1998 the Group had no single customer which accounted for more than 5% of its
net revenues.
Cost of Year 2000 project
Since 1996 the Group has incurred costs relating to the Year 2000 project and
expects to continue incurring such costs through to the end of 2000. These costs
fall into two categories, amounts that are or will be expensed as incurred (such
as payroll costs of individuals working on the project, the costs of external
consultants assisting on the project but not engaged on major software projects
due to be capitalised, and the write off of the book value of non Year 2000
compliant assets) and amounts that will be capitalised and depreciated over the
useful lives of the associated assets (the purchase price of new hardware,
software and other equipment acquired to replace existing hardware, software and
other equipment that is not Year 2000 compliant).
The Group currently estimates that the amounts that have or will be expensed as
incurred over the three year period to December 31, 2000 will total between
(pound)850,000 and (pound)950,000 of these amounts a total of (pound)10,000 has
been incurred and expensed in the year to December 31, 1998. The amounts that
will be capitalised will be primarily incurred in the two years to December 31,
1999 are estimated at (pound)2,100,000 of this (pound)275,000 has been incurred
in the year to December 31, 1998.
Risk of Year 2000 problems
The Group has identified the following major potential risks resulting from Year
2000 problems. All would result in disruption to existing and future studies and
have an adverse impact on the health and well being of animals. The subsequent
impact on business and cash flow could have a material adverse effect on the
Group's financial condition.
o The loss of power and utility services
o The inability to obtain timely and sufficient laboratory supplies and animal
feed
o The failure or malfunction of computer hardware, software and technology
embedded in scientific and other equipment.
In addition major disruption to customers' business due to Year 2000 problems
could have a major impact on the Group's cashflows and financial condition
Contingency Plans
The Group has developed or is in the process of developing contingency plans for
processes and supplies that are critical to its operations and that are
dependent on computer software, hardware and embedded technology, where it is
not possible to confirm that the underlying technology is Year 2000 compliant,
or where it is not possible to upgrade the technology to Year 2000 compliance.
Contingency plans include the utilisation of back-up generators for power
supplies; identifying alternative suppliers for reagents, animal feed and other
supplies or stock piling supplies where appropriate; and increased manning over
the new year to operate systems manually in the case of failure.
Those plans not yet in place will be developed on a case by case basis with a
target completion date of June 30, 1999. Contingency plans themselves, however,
are subject to variables and uncertainties and therefore there can be no
assurance that the Group will correctly anticipate the level, impact or duration
of non compliance of computer hardware, software, systems or customers or
suppliers/service providers or that its contingency plans will be sufficient to
mitigate the impact of non-compliance. Thus, there can be no assurance that the
Year 2000 problem, even after giving effect to the implementation of applicable
contingency plans, will not occur and that such an occurrence could leave a
material adverse impact on the Group's business, financial condition, results of
operations and cashflows.
EXCHANGE RATE FLUCTUATIONS AND EXCHANGE CONTROLS
In 1998 following the slight strengthening of sterling against the US dollar,
net liabilities denominated in US dollars (mainly $50 million Bonds) have
decreased in value on consolidation to sterling. This does not affect the
cashflow of Huntingdon but has decreased the reported loss before tax,
accounting largely for the unrealised gain on exchange of (pound)0.3 million
reported in these results. This compares with an exchange loss in 1997 of
(pound)1.1 million.
Interest on the Bonds is payable half-yearly (in March and September) in US
dollars and the impact of fluctuations in the exchange rate between sterling and
US dollars is offset by US dollar denominated revenues receivable by Huntingdon.
Although reported results have been affected by conversion into sterling of the
Bonds on consolidation and there may be an impact in the future, the Directors
have decided not to hedge against this exposure. Such a hedge might impact upon
Huntingdon's cash flow compared with movements on the Bonds which do not affect
cash flow in the medium term.
Huntingdon operates on a worldwide basis and generally invoices its clients in
the currency of the country in which it operates. Thus, for the most part,
exposure to exchange rate fluctuations is limited as sales are denominated in
the same currency as costs. Trading exposures to currency fluctuations do occur
as a result of certain sales contracts, performed in the UK for US clients,
which are denominated in US dollars and contribute approximately 14% of total
revenues. Huntingdon has not experienced difficulty in transferring funds to and
receiving funds remitted from those countries outside the US or UK in which it
operates and Management expects this situation to continue.
Whilst the UK has not at this time entered the European Monetary Union, the
Company has ascertained that its financial systems are capable of dealing with
Euro denominated transactions. In addition upgrades which are currently underway
(to ensure that the financial systems are Year 2000 compliant) will ensure that
the Company, if ever required to do so, will be able to report in Euro's.
<PAGE>
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
The Articles of Association of the Company provide that, unless and until
otherwise determined by ordinary resolution passed at a general meeting of the
Company, the directors shall be not less than two in number and there shall be
no maximum number of directors. The Company may by ordinary resolution passed at
a general meeting of the Company appoint any person to be a director, either to
fill a casual vacancy or as an addition to the existing board of directors. Any
director appointed by the board of directors holds office only until the next
following general meeting and shall then be eligible for re-appointment but he
is not taken into account in determining the directors or the number who are to
retire by rotation at such meeting. At every annual general meeting one third of
the directors (being those who do not wish to be re-appointed or who have been
the longest in office since their last appointment) must retire from office.
Directors so retiring may be removed from office by resolution of the
shareholders. The Board appointed A H Baker, B Cass, F W Bonner and J T
Griffiths as Directors on September 2, 1998, September 17, 1998, September 17,
1998 and April 16, 1999 respectively. M Sandford, C M Macdonald, C F Cliffe, LO
Rice and R E H Slater resigned as Directors on April 16, 1999, January 31, 1999,
December 31, 1998, September 2, 1998 and 15 May, 1998 respectively. The table
below sets forth certain information with respect to the directors and executive
officers of the Company as at April 16, 1999:
Name Office Held Appointed
Andrew H Baker Director 1998
Chairman of the Board 1998
Brian Cass Director 1998
Managing Director/Chief Operating Officer 1998
Frank W Bonner Director 1998
Director of Science and Technology 1998
John Caldwell Director 1997
Julian T Griffiths Director 1999
Finance Director 1999
Roger A. Pinnington Director 1994
Susan G Hide Secretary 1998
No director or executive officer has a family relationship with any other
director or executive officer.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
In the 12 months ended December 31, 1998 the aggregate compensation of the
executive directors and officers as a group, paid or accrued, was
(pound)1,065,147.
The services of Mr Baker are provided through a management services agreement
with Focused Healthcare Partners ("FHP"), the vehicle through which Mr Baker
provides his services. The agreement provides for a minimum notice of
termination by the Company of twelve months.
Mr Cass has a service contract providing for a minimum notice of termination by
the Company of two years, following an initial fixed period of twelve months.
The contract provides for liquidated damages amounting to two years' basic
salary and an amount equal to twice the annual average of bonuses, if any,
received during the two financial years of the Company immediately preceding a
change of control of the Company (as defined in the service contract) in the
event of termination in certain circumstances. The Board has determined that
both the period of notice required for termination of Mr Cass' contract and the
change of control provisions are warranted by Mr Cass' value to the Company.
Dr Bonner and Mr Griffiths each have service contracts providing for a minimum
notice of termination by the Company of twelve months.
The services of Mr Pinnington are provided through a consultancy agreement with
Harford Consultancy Services Ltd ("Harford") a company owned and operated by Mr
Pinnington. The agreement provides for a notice of termination by the Company
of one month. Messrs Baker, Cass, Griffiths and Pinnington and Dr Bonner
retire at the Annual General Meeting but will offer themselves for re-election.
The Company operates a discretionary bonus plan for executive directors
and key managers of Huntingdon based upon improvements to operating
income and achievement of pre-defined targets. Bonus awards to directors and
officers are administered by the Remuneration Committee. The Committee
believes that the discretionary bonus payments to Mr Cliffe in 1996 and to Mr
Rice, Prof.Caldwell and Mr Baker in 1998 reflects their respective
contribution to the development of Huntingdon. No bonus awards were made in
respect of 1997.
The following table shows the remuneration of Directors in the 12 Months ended
December 31, 1998, December 31, 1997, and December 31, 1996;
<TABLE>
<CAPTION>
Name of Director 1996 1997 Salary/Fee Pension Other Other 1998
- ---------------- ---- ---- ---------- ------- ------ ----- ----
payments
12 Months 12 Months Contributions Benefits 12 Months
--------- --------- ------------- -------- ---------
(pound) (pound) (pound) (pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C> <C>
Mr A H Baker (i), (iii) - - 50,000 - 60,000 19,231 129,231
Mr F W Bonner (i) - - 40,444 2,022 - - 42,466
Mr B Cass (i) - - 46,695 15,565 11,207 73,467
Mr C F Cliffe (iii) 261,858 238,877 187,200 25,200 250,000 17,500 479,900
Dr C M Macdonald - 3,787 98,000 9,000 - 9,000 116,000
Mr M Sandford - 63,679 70,000 7,700 9,000 86,700
Mr R A Pinnington 86,936 86,768 57,096 - - 10,320 67,416
Prof. J Caldwell (iii) - 2,000 20,000 - 9,000 - 29,000
Mr L O Rice (iii) 20,000 20,000 13,467 - 20,000 - 33,467
Mr R E H Slater (ii) 20,000 20,000 7,500 - - - 7,500
<FN>
(i) From appointment
(ii) In addition, professional fees amounting to (pound)Nil (12 months ended
December 31, 1997(pound)40,954 ; 12 months ended September 30, 1996:
(pound)58,608) were paid to Simmons & Simmons, the firm in which Mr
Slater is a partner, in
respect of the period ended May 15, 1998.
(iii) The other payments to Mr Rice, Prof. Caldwell and Mr Baker are bonuses.
The other payment to Mr Cliffe is in respect of the termination of his
employment.
</FN>
</TABLE>
The following table shows the pensions benefits (excluding additional voluntary
contributions and inflation) earned by Directors in the Huntingdon Scheme in the
12 months ended December 31, 1998:
<TABLE>
<CAPTION>
Name of Director Increase in accrued pension Transfer value of Accumulated total accrued pension
during the year increase (i) at year-end (ii)
(pound) (pound) (pound)
<S> <C> <C> <C>
Mr C F Cliffe 3,001 31,668 16,790
Dr C M Macdonald 2,491 32,160 5,633
Mr M Sandford 1,549 9,733 7,975
<FN>
(i) Calculated in accordance with Actuarial Guidance Note GN11
(ii) Payable annually on retirement
</FN>
</TABLE>
<PAGE>
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM THE REGISTRANT
The Unapproved Share Option Plan. On April 8, 1983, the Company adopted the
Unapproved Share Option Plan (the "Unapproved Plan") pursuant to which options
to acquire Ordinary Shares may be granted to any person who is required to
devote substantially the whole of his time (being not less than 25 hours per
week) to serve as a Director or employee of the Company or one of its
subsidiaries. The maximum number of Ordinary Shares which may be issued under
the Unapproved Plan according to the rules thereof is 10% of the issued share
capital of the Company from time to time, less options outstanding under the
Approved Plan from time to time.
An option granted pursuant to the Unapproved Plan may be exercised two years
after the grant in respect of not more than 50% of the Ordinary Shares subject
to the option. An option may be exercised in full between three and seven years
after the grant in respect of the unexercised balance of the Ordinary Shares
subject to the option. Options may be exercised earlier in certain specified
circumstances, including a change in control of 25% or more of the outstanding
Ordinary Shares of the Company. The Approved Management Share Option Plan. On
January 29, 1985, the Company adopted a second share option plan, the Approved
Management Share Option Plan (the "Approved Plan"), which has been approved by
the Board of Inland Revenue (the "Inland Revenue") pursuant to the Finance Act
1984. The rules of the Approved Plan broadly follow those of the Unapproved
Plan, except that an option may be exercised, subject to certain exceptions,
only between three and ten years after it is granted. Pursuant to the Approved
Plan, options to acquire Ordinary Shares may be granted to any Director or
employee of the Company whose terms of employment require him to work for at
least thirty-seven and one-half hours per week. Approval of the Approved Plan by
the Inland Revenue means that important personal tax concessions are available
to participants who reside in the U.K. The maximum number of Ordinary Shares
which may be issued under the Approved Plan according to the rules thereof is
10% of the issued share capital from time to time, less options outstanding
under the Unapproved Plan from time to time. Both the Unapproved Plan and the
Approved Plan terminated on December 31, 1997 with respect to the grant of new
options. Options outstanding at that date are not affected by such termination.
The grant of options under both the Unapproved Plan and the Approved Plan was a
matter for the discretion of the Board of Directors of the Company. The
consideration payable to the Company for the grant of an option to acquire
Ordinary Shares was the sum of (pound)1. The exercise price per share at which
an option may be exercised is equal to the average of the middle market
quotations on the International Stock Exchange of the United Kingdom and
Republic of Ireland Ltd. for the Ordinary Shares on the five dealing days prior
to the date of grant or, if no established market in the Ordinary Shares exists,
the fair value of an Ordinary share as determined by the Board. Generally, an
option may not be exercised unless at the date of exercise the participant is
then, and has been continuously since the grant of the option, in the full-time
employ of the Company. This rule, however, is subject to alteration in specific
cases at the discretion of the Board.
Other share options
At the Extraordinary General Meeting held on September 2, 1998 the Shareholders
approved a new option scheme and a separate Option Agreement with Mr Baker:
(a)The Huntingdon Life Sciences Group Unapproved Share Option Scheme (the
Unapproved Share Option Scheme) , under which 8,500,000 Founder Options had been
granted but not relinquished or exercised as at December 31, 1998 at an option
price of 12.5p per Ordinary Share. The Options may be exercised from the third
anniversary of the date of the grant subject to the share price reaching the
following pre-determined targets for a period of seven consecutive dealing days
at any time after January 1, 1999.
Target price per share Proportion of options exercisable
25p 25%
50p 50%
75p 75%
100p 100%
<PAGE>
Options, other than Founder Options, are available for grant under this Scheme
and are generally exercisable between the third and tenth anniversary of the
date of grant subject to the attainment of performance related conditions.
All Options lapse on the tenth anniversary of the date of the option grant.
(b) An Option Agreement under which Andrew Baker was granted Options over
5,000,000 Ordinary Shares of 5p in the Company, the principal terms of which
are the same as those applicable to the Founder Options referred to above.
Any US subsidiary of the Company, which received the services in respect of
which an option was granted, will be entitled to a deduction in an amount equal
to the compensation taxable to the optionee, in computing its U.S. Federal
income tax. Generally this is in the calendar year in which the optionee is
deemed to have received such compensation.
Under the terms of the various share option arrangements the following options
to purchase Ordinary Shares in the Company have been granted (net of expired
options) but not exercised as of April 16, 1999:
(i) The Unapproved Share Option Plan
Date of Grant Number of shares Option Price Expiry Date
allocated
- --------------------- ------------------- ------------------ ----- ------------
December 18, 1995 189,550 (pound)0.77 December 17, 2002
November 21, 1996 140,000 (pound)0.95 November 20, 2003
November 21, 1996 60,000 $1.60 November 20, 2003
December 1, 1997 100,000 (pound)0.50 November 30, 2004
December 31, 1997 1,097,570 (pound)0.465 December 30, 2004
December 31, 1997 680,000 $0.77 December 30, 2004
(ii) The Approved Management Share Option Plan
Date of Grant Number of shares Option Price Expiry Date
allocated
- ----------------------------------------- ------------------ ----- ------------
February 13, 1995 302,500 (pound)0.49 February 12, 2005
December 11, 1995 795,000 (pound)0.78 December 10, 2005
December 11, 1995 130,000 $1.19 December 10, 2005
December 18, 1995 171,450 (pound)0.77 December 17, 2005
November 21, 1996 565,000 (pound)0.95 November 20, 2006
December 31, 1997 580,000 (pound)0.465 December 30, 2007
<PAGE>
(iii) The Unapproved Share Option Scheme and Mr. Baker's Option Agreement
Date of Grant Number of shares Option Price Expiry Date
allocated
- ------------------------------------------- ------------------ ----- ---------
September 2, 1998 5,000,000 (pound)0.125 September 1, 2008
December 3, 1998 7,000,000 (pound)0.125 December 2, 2008
December 31, 1998 1,000,000 (pound)0.125 December 30,2008
March 29, 1999 2,000,000 (pound)0.1925 March 28, 2009
In the period since options to acquire shares have been capable of being
exercised to April 16, 1999, options for 3,798,856 shares have been exercised
and the shares issued. The total number of options held by Directors and
Officers as a group as at April 16, 1999 is 11,100,000.
The following table shows the number of share options held by Directors as at
April 16, 1999:
<TABLE>
<CAPTION>
Date of Grant Number Granted Exercise Price Date First Exercisable Expiry Date
- ------------- -------------- -------------- ---------------------- -----------
<S> <C> <C> <C> <C>
A H Baker
- ---------
September 2,1998 5,000,000 (pound)0.125 September 2, 2001 September 1,2008
F W Bonner
- ----------
December 31, 1998 500,000 (pound)0.125 December 31, 2001 December 30, 2008
December 1, 1997 100,000 (pound)0.50 December 1, 1999 November 30, 2004
B Cass
- ------
December 3, 1998 5,000,000 (pound)0.125 December 3, 2001 December 2, 2008
J T Griffiths
- -------------
March 29, 1999 500,000 (pound)0.1925 March 29, 2002 March 28, 2009
</TABLE>
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
There have been no material transactions during the 3 years prior to the date of
this report to which any director or officer or 10% shareholder was a party.
There is no outstanding indebtedness to the Company by any director or officer
or 10% shareholder.
<PAGE>
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
Not applicable.
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES.
At an Extraordinary General Meeting on September 2, 1998 shareholders approved a
subscription of 120,000,000 shares and a placing and open offer of 57,003,431
shares at 12.5 pence . The shares not taken up by existing qualifying
shareholders were placed by Kleinwort Benson Securities Limited with
institutional investors in the UK. These transactions raised (pound)20.39M net
of expenses. The issue discount before expenses was 36 per cent as compared with
19.5 pence per share, being the London Stock Exchange middle market price at the
time the issue price was agreed. However, the issue price before expenses
represented a 6 per cent discount to the price of the Company's ADR's on the New
York Stock Exchange at the time that the price was agreed. Dealings commenced in
these new Ordinary shares on 3 September, 1998 and the discount at that time was
11 per cent as compared with the then prevailing middle market price of 14p on
the London Stock Exchange.
On May 15, 1998, at the Annual General Meeting, the directors were empowered by
Special Resolution of the Shareholders to allot Ordinary Shares pursuant to
Section 95 of the Companies Act 1985 as if Section 89 (1) of that Act did not
apply. As a result the directors are authorised to issue shares, within the
general authority granted, other than pro-rata to existing shareholders. Such
power is limited to the allotment of Ordinary Shares (a) in connection with a
rights issue in favour of Ordinary shareholders of the Company (so allowing the
Company to make alternative arrangements for shareholders in overseas
jurisdictions to whom shares cannot be offered without compliance with onerous
securities legislation) or (b) without restriction for cash up to an aggregate
nominal amount of (pound)285,017 (equal to 5,700,340 Ordinary Shares of 5 pence
each). This power expires on the conclusion of the next Annual General Meeting
of the Company.
On September 2, 1998, at the Extraordinary General Meeting, the directors were
empowered by Special Resolution of the Shareholders to allot Ordinary Shares
pursuant to Section 95 of the Companies Act 1985 as if Section 89 (1) of that
Act did not apply. As a result the directors were authorised to issue shares,
within the authority granted, other than pro-rata to existing shareholders. Such
power is limited to the allotment of Ordinary Shares in connection with the
Subscription, Placing and Open Offer and the Option Agreement up to an aggregate
nominal amount of (pound)9,100,172 (equal to 182,003,431 Ordinary Shares of 5
pence each). This power is in addition to the power granted at the Annual
General Meeting on May 15, 1998 and expires at the conclusion of the next Annual
General Meeting of the Company.
PART IV
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
See Item 19 for a list of financial statements filed under Item 18.
<PAGE>
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statements
Page
Report of Independent Auditors................................ F-1
Consolidated Income Statements .............................. F-2
Consolidated Balance Sheets .................................. F-3
Consolidated Statement of Changes in Shareholders' Equity..... F-4
Consolidated Statement of Cash Flows.......................... F-5
Notes to the Consolidated Financial Statements................ F-6
(b) Exhibit No. Description of Exhibit
1.1 -- An agreement dated August 7, 1998 between, inter
alia, the Company, Huntingdon Life Sciences Limited,
Huntingdon Life Sciences Inc. and National
Westminster Bank PLC replacing the facilities
agreement dated November 1, 1995 relating to a
revolving loan facility of(pound)24,500,000
1.2 -- A bridging facility being made available by
National Westminster Bank PLC in favour of the
Company and
Huntingdon Life Sciences Limited.
1.3 -- An agreement between the Company, Huntingdon Life
Sciences Limited, Huntingdon Life Sciences Inc. and
various banks replacing the third intercreditor
agreement between the parties dated March 17,1998.
1.4 -- Third Supplemental Deed dated August 7, 1998 between
the Company and National Westminster Bank PLC.
1.5 -- Third Supplemental Deed dated **** between Huntingdon
Life Sciences Inc. and National Westminster Bank PLC.
1.6 -- Third Supplemental Deed dated August 7, 1998 between
Huntingdon Life Sciences Ltd and National Westminster
Bank PLC.
2.1 -- Deed of variation dated **** to the Service
Contract dated March 15, 1993 between the Company and
Mr C F Cliffe.
2.2 -- Service Contract dated August 7, 1998 between
Huntingdon Life Sciences Ltd and Mr M Sandford.
2.3 -- Service Contract dated August 7, 1998 between
Huntingdon Life Sciences Ltd and Dr C M Macdonald.
2.4 -- Deed of variation dated August 7, 1998 to the
Contract dated March 20, 1995 as amended on
December 23, 1995 between the Company, Harford
Consultancy Services Limited and Mr R Pinnington.
2.5 -- A letter of appointment dated August 7, 1998 between
the Company and Professor J Caldwell.
2.6 -- A Management Services Agreement dated August 7, 1998
between the Company and Focused Healthcare Partners.
2.7 -- A Deed of Undertaking between the Company and Andrew
Baker.
2.8 -- Service Contract dated *** between the Company and
Mr B Cass.
2.9 -- Service Contract dated *** between the Company and
Mr J Griffiths.
2.10 -- Service Contract dated *** between the Company and
Dr F Bonner.
3.1 -- An agreement between the Company, the Directors and
various investors dated August 10, 1998 under which
the investors agree to subscribe for, collectively,
120,000,000 New Shares.
3.2 -- An agreement between the Company and Kleinwort Benson
Limited dated August 10, 1998, under which Kleinwort
Benson Limited agreed to subscribe or to procure
subscribers for those New Shares not taken up by the
Company's shareholders under the Open Offer, with
letter dated September 1, 1998 confirming certain
alterations.
3.3 -- A Deed of Variation dated August 6, 1998 between
Ciba-Geigy plc, Huntingdon Life Sciences Limited and
the Company supplemental to an agreement dated
March 14, 1997.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Annual Report to be signed on its behalf
by the undersigned, thereunto duly authorised.
HUNTINGDON LIFE SCIENCES GROUP plc
(Registrant)
By: /s/ Brian Cass
Name: Brian Cass
Title: Managing Director/Chief Operating Officer
Date: April 30, 1999
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Huntingdon Life Sciences Group plc
We have audited the accompanying consolidated balance sheets of Huntingdon Life
Sciences Group plc and subsidiaries as of December 31, 1998 and December 31,
1997 and the related consolidated statements of income, changes in shareholders'
equity and cash flows for the years ended December 31, 1998, 1997 and 1996.
These financial statements and the financial statements schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Huntingdon Life
Sciences Group plc and subsidiaries as of December 31, 1998 and 1997 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1998, 1997 and 1996 in conformity with generally accepted
accounting principles.
Arthur Andersen
Chartered Accountants
Cambridge
England
April 30, 1999
<PAGE>
<TABLE>
Consolidated Income Statements
<CAPTION>
Year Ended December, 31
1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Revenues 73,564 63,689 52,616
Cost of sales 53,867 56,136 56,739
------------ ------------ ------------
Gross profit/(loss) 19,697 7,553 (4,123)
Selling and administrative expenses 7,898 9,069 9,200
Exceptional loss - 3,549 14,911
------------ ------------ ------------
Operating profit/(loss) 11,799 (5,065) (28,234)
Interest income 400 546 375
Interest expense (4,428) (4,197) (5,882)
Other income 2,319 1,001 321
------------ ------------ ------------
Income/(loss) before income taxes ----------- (7,715 ) (33,420 )
10,090
Income taxes (2,219) 4,833 8,983
============ ============ ============
Net income/(loss) 7,871 (2,882) (24,437 )
============ ============ ============
Earnings/(loss) per share
-basic (pound)0.073 (pound)(0.026) (pound)(0.138)
-diluted (pound)0.060 - -
(000) (000) (000)
Weighted average shares outstanding
-basic 108,492 112,935 177,200
-diluted 118,983 - -
<FN>
The accompanying notes are an integral part of these Consolidated Income Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
December, 31
1997 1998
(pound)'000 (pound)'000
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents 443 14,080
Accounts receivable net of allowance
for uncollectible amounts of(pound)111,000 7,300 7,791
(1997 (pound)75,000)
Amounts recoverable on contracts 4,318 4,060
Inventories 1,272 1,137
Prepaid expenses and other 3,461 1,441
Income taxes recoverable 435 -
Deferred income taxes 202 873
------------ ------------
Total current assets 17,431 29,382
------------ ------------
Property, Plant and Equipment:
Cost 130,339 132,552
Less accumulated depreciation and amortisation 46,621 57,136
------------ ------------
83,718 75,416
------------ ------------
Goodwill
Cost 7,752 7,752
Less accumulated amortisation 410 7,752
------------ ------------
7,342 -
------------ ------------
Investments 154 154
Unamortised costs of raising long term debt 1,015 882
Deferred income taxes 2,801 4,303
============ ============
Total Assets 112,461 110,137
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade payables, accrued expenses and
accrued payroll and benefits 10,957 11,826
Short term debt 20,035 4,116
Fees invoiced in advance 7,847 8,340
------------ ------------
Total current liabilities 38,839 24,282
------------ ------------
Long term debt 33,691 54,688
------------ ------------
Other long term liabilities 1,013 2,571
------------ ------------
------------ ------------
Deferred income taxes 21,556 15,285
------------ ------------
Shareholders' Equity: 5p Ordinary Shares;
Authorised-at December 31, 1998 400,000,000
(1997, 140,000,000);
Issued and outstanding-at 31 December, 1998 291,010,294
(1997, 114,006,863) 5,700 14,550
Share premium 13,672 25,100
Retained earnings (2,010) (26,339)
------------ ------------
Total Shareholders' Equity 17,362 13,311
------------ ------------
============ ============
Total Liabilities and Shareholders' Equity 112,461 110,137
============ ============
<FN>
The accompanying notes are an integral part of these Consolidated Balance Sheets
</FN>
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Changes in Shareholders' Equity
<CAPTION>
Ordinary Share Retained
Shares Premium Earnings Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Balance, December, 31, 1995 5,421 32,845 (31,665) 6,601
Net income for year - - 7,871 7,871
Exercise of Share Options 8 106 - 114
Transfers - (24,558) 24,558 -
-------------- ----------- ----------- -----------
Balance, December, 31, 1996 5,429 8,393 764 14,586
Net income for year - - (2,882) (2,882)
Exercise of Share Options 1 9 - 10
Issue of shares 270 5,378 - 5,648
Transfers - (108) 108 -
-------------- ----------- ----------- -----------
Balance, December, 31, 1997 5,700 13,672 (2,010) 17,362
Net income for year - - (24,437) (24,437)
Issue of shares 8,850 11,536 - 20,386
Transfers - (108) 108 -
============== =========== =========== ===========
Balance, December, 31, 1998 14,550 25,100 (26,339) 13,311
============== =========== =========== ===========
<FN>
The authorised share capital of the Company as at December 31, 1995, December
31, 1996 and December 31, 1997 was (pound)7,000,000, comprising 140,000,000
ordinary shares of 5p each. This was increased in 1998 to (pound)20,000,000
comprising 400,000,000 ordinary shares of 5p each.
The share premium account is not distributable.
The accompanying notes are an integral part of this Consolidated Statement of
Changes in Shareholders' Equity.
</FN>
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
Year Ended December, 31
1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
----- ----- -----
<S> <C> <C> <C>
Operating Activities:
Net income/(loss) 7,871 (2,882) (24,437)
Adjustments to reconcile net income to
net cash provided by
operating activities
Depreciation and amortisation 5,370 6,126 17,991
Amortisation of loan costs 215 201 133
Deferred income taxes 445 (3,113) (8,444)
Provision for losses on accounts receivable (80) 1 36
Profit on sale of property, plant and equipment (225) (83) -
Changes in operating assets and liabilities
net of effects from purchase of
subsidiary companies during year:
(Increase)/decrease in accounts receivable
and prepaid expenses (870) 4,739 2,186
Decrease in inventories 138 38 135
Increase/(decrease) in accounts payable
and accrued expenses 3,309 (2,982) 869
salaries and wages and income taxes
(Decrease)/increase in fees invoiced in advance (175) (1,468) 493
(Decrease)/increase in other liabilities (2,265) 808 1,558
Net cash provided by operating activities
------------ ------------ ------------
Investing activities: 13,733 1,385 (9,480)
------------ ------------ ------------
Purchase of subsidiaries net of cash acquired (1,904) - -
Purchase of property, plant and equipment (7,639) (14,501) (2,419)
Proceeds from sale of property, plant and equipment 304 205 5
Purchase of investments (56) - -
------------ ------------ ------------
Net cash used in investing activities (9,295) (14,296) (2,414)
------------ ------------ ------------
Financing activities:
Proceeds from issue of ordinary shares 114 5,658 20,386
Proceeds from long term borrowings - 3,800 5,205
Repayments of long term borrowings (1,532) (32) (551)
Proceeds from short term borrowings - - 747
------------ ------------ ------------
Net cash used by financing activities (1,418) 9,426 25,787
------------ ------------ ------------
Effect of exchange rate changes on cash
and cash equivalents (2,529) 891 (256)
------------ ------------ ------------
(Decrease)/increase in cash and cash equivalents(B) 491 (2,594) 13,637
Cash and cash equivalents at beginning of year(B) 2,546 3,037 443
------------ ------------ ------------
Cash and cash equivalents at end of year(B) 3,037 443 14,080
------------ ------------ ------------
(A) Supplementary disclosures:
Interest received 377 421 335
Interest paid (3,889) (4,434) (5,717)
Income taxes (paid)/received (625) (98) 974
<FN>
(B) Cash equivalents are deposits with a maturity of 3 months or less when purchased.
The accompanying notes are an integral part of these Consolidated Statements of Cash Flows.
</FN>
</TABLE>
<PAGE>
Notes to the Consolidated Financial Statements
1. Basis of Financial Statements
These financial statements are not the Group's primary financial statements and
do not constitute statutory accounts within the meaning of Section 227 of the
Companies Act 1985 of Great Britain. Such statutory accounts for the years ended
December 31, 1996 and 1997 have been and for the year ended December 31,1998
will be delivered to the Registrar of Companies for England and Wales. The
auditors have issued unqualified audit reports on these accounts.
These financial statements are prepared in conformity with the accounting
principles generally accepted in the United States ("US GAAP"). These US GAAP
statements are prepared solely for the purposes of preparing the Annual Report
on Form 20-F. They are presented in pounds sterling since the United Kingdom is
the country in which the Company is incorporated.
The Group is a leading Contract Research Organisation, offering world-wide
pre-clinical and non-clinical testing for biological safety and efficacy
assessment which is necessary for the development of pharmaceuticals and
chemicals. The company serves the rapidly evolving requirements to perform
safety evaluations on new pharmaceutical compounds and chemical compounds
contained within the products that man uses, eats, and is otherwise exposed to.
In addition it tests the effect of such compounds on the environment and also
performs work on assessing the safety and efficacy of veterinary products.
2. Accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the year ended December 31, 1998 and the preceding
periods presented is set out below:
Basis of consolidation
The consolidated financial statements incorporate the accounts of the Company
and each of its subsidiaries for the year ended December 31, 1998 and the
preceding periods presented except as described in note 3. The results of
subsidiaries acquired or disposed of during any period are included in the
Consolidated Income Statement from , or to, the date on which control passed.
Goodwill arising on consolidation
Goodwill, being the excess of the purchase consideration for subsidiary
companies acquired over the fair values ascribed to their tangible net assets at
the date of acquisition, is amortized over its expected useful life which is 40
years. In subsequent years, goodwill carried forward is assessed based on its
fair value and any permanent impairment is written-off at the time it is
identified.
Investments
In the Group's financial statements, investments in associated undertakings are
accounted for using the equity method. The Consolidated Income Statement
includes the Group's share of the undertaking's profits or losses while the
Group's share of the net assets of the associated undertakings is shown in the
Consolidated Balance Sheet.
Depreciation
The cost of depreciable assets is written off in equal monthly instalments over
their expected useful lives as follows:
Freehold buildings and facilities 15 - 50 years
Plant and equipment 5 - 15 years
Vehicles 5 years
Computer software 5 years
<PAGE>
2. Accounting policies continued
Taxation
The current charge for income taxes is calculated in accordance with the
relevant tax regulations applicable to each entity in the Group. Deferred income
taxes are recognised for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. The effect on deferred tax
assets and liabilities of a change in tax rates is recognised in income in the
period that includes the enactment date. Deferred tax assets are recognised in
full subject to a valuation allowance that reduces the amount recognised to that
which is more likely than not to be realised.
Inventories
Inventories are valued at the lower of cost, on a FIFO basis, or net realisable
value after making due allowances for any obsolete items.
Revenue recognition
Revenues comprise the invoiced value of sales and services, exclusive of VAT or
sales taxes, adjusted for fees invoiced in advance and in arrears. Where the
group invoices clients over a contract period, amounts are credited to the
Consolidated Income Statement only as earned. Billings in advance of work
performed are recorded as fees invoiced in advance and included in current
liabilities, while billings in arrears of work performed are included in current
assets as amounts recoverable on contracts.
Profit on contracts is taken as the work is carried out. The profit is
calculated to reflect the proportion of the work performed, by recording revenue
and related costs as contract activity progresses. Revenue is calculated as that
proportion of total contract value which costs incurred to date bear to total
expected costs for that contract. Full provision is made for losses on contracts
when they are first foreseen.
Foreign currencies
Assets, liabilities, revenues and costs denominated in foreign currencies are
recorded at the rates of exchange ruling at the dates of the transactions;
monetary assets and liabilities at the balance sheet date are translated at
period end rates of exchange. All exchange differences thus arising are reported
as part of the profit or loss for the period, with the exception of differences
on foreign currency borrowings, to the extent that they are used to finance or
provide a hedge against foreign equity investments, which are taken directly to
reserves together with the exchange difference on the carrying amount of the
related investment.
On consolidation, the assets and liabilities of overseas subsidiaries are
translated at the period end rates of exchange, and the revenues and costs are
translated at monthly average rates of exchange. Translation adjustments where
material are included as a separate component of stockholders' equity in the
consolidated financial statements.
Leased assets
Assets held under the terms of finance leases are included in tangible fixed
assets and are depreciated in accordance with the Group's policy. Obligations
for future lease payments, less attributable finance charges are shown within
liabilities and are analysed between amounts falling due within and after one
year. Operating lease rentals are charged to the Consolidated Income Statement
as incurred.
Pension costs
Contributions to defined contribution plans are charged to income in the period
in which they accrue. Current service costs for defined benefit plans are also
accrued in the period to which they relate. Prior service costs, if any,
resulting from amendments to the plans are recognised and amortised over the
remaining period of service of such employees.
<PAGE>
Accounting policies continued
Costs of raising long-term debt
The costs of raising long term finance are capitalised as an asset and are
amortised, using the effective interest method, over the term of the loan. The
carrying amount is increased by the finance cost in respect of the accounting
period and reduced by repayments made in the period. Convertible debt is
reported as a liability unless conversion actually occurred. The costs of
raising finance are recognised in the Profit and Loss Account over the term of
the loans at a constant rate on the carrying amount.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the results of operations during the reporting periods. Although these estimates
are based upon management's best knowledge of current events and actions, actual
results could differ from those estimates.
New accounting standards
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued the Statement of Position
("SOP98-5"), "Reporting on the Costs of Start-up Activities", which generally
requires that costs for start-up activities and organisations be expensed as
incurred. SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998 and initial adoption is required to be
reflected as a cumulative effect of accounting change. The Group believes that
its statements are already in compliance with SOP 98-5.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued. SFAS No. 133 establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded on the balance
sheet either as an asset or liability and be measured at its fair value. The
statement requires that changes in the derivative's fair value be recognised in
the current period unless specific hedge accounting criteria are met. Specific
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and requires
that a company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting.
SFAS No. 133 will be adopted after June 15, 1999. A company may also implement
the statement as of the beginning of any fiscal quarter after issuance, however,
SFAS No. 1333 cannot be applied retroactively. The Group has not yet determined
the timing of or method of adoption of SFAS No. 133. The Group does not use
deriviative financial instruments and does not engage in significant hedging
activities. Accordingly, the Group believes that the Statement will not have a
significant effect on its consolidated financial statements.
3. Accounting policy in respect of the Travers Morgan Group ("TM")
Joint administrators were appointed to TM, on December 15, 1994. Upon granting
of the administration order, control of the realisation of the assets and
settlement of liabilities passed from the Company to the Administrator.
Accordingly the residual assets and liabilities of TM have not been included in
the Consolidated Balance Sheet at December 31, 1996, December 31, 1997 and
December 31, 1998. In addition, as full provision was made for the losses of TM
at September 30, 1994 the results of TM have not been included in the
Consolidated Profit and Loss Account for the 12 months ended December 31, 1996,
December 31, 1997 and December 31, 1998.
4. Segmental analysis
During the 12 months ended December 31, 1996, December 1997 and December 31,
1998 the Group operated from within two geographical markets, the United Kingdom
and the United States. The Group has had one continuing activity, Contact
Research, throughout this period. All disclosure therefore refers to continuing
activities.
1996 1997 1998
(pound)000's (pound)000's (pound)000's
Revenues from customers
Europe 37,877 29,603 20,843
United States 16,573 16,546 15,236
Far East 19,114 17,540 16,537
------------ ------------- -------------
73,564 63,689 52,616
------------ ------------- -------------
Geographical segment information is as follows:
US UK Total
(pound)000's (pound)000's (pound)000's
1998 Revenues 8,019 44,597 52,616
Operating loss (2,636) (25,598) (28,234)
Indentifiable assets (A) 11,325 83,696 95,021
Depreciation & amortisation 865 17,106 17,991
Capital expenditure 705 1,714 2,419
1997 Revenues 9,189 54,500 63,689
Operating loss (1,100) (3,965) (5,065)
Indentifiable assets (A) 8,335 102,514 110,849
Depreciation & amortization 688 5,438 6,126
Capital expenditure 1,850 12,651 14,501
1996 Revenues 9,922 63,642 73,564
Operating profit/(loss) (338) 12,137 11,799
Indentifiable assets (A) 7,389 97,138 104,527
Depreciation & amortization 517 4,853 5,370
Capital expenditure 1,364 6,275 7,639
(A) Indentifiable assets exclude cash and cash equivalents, investments and
unamortised costs of raising long term debt as follows.
1996 1997 1998
(pound)000's (pound)000's (pound)000's
Identifiable assets 104,527 110,849 95,021
Cash and cash equivalents 3,037 443 14,080
Investments 130 154 154
Unamortised costs of debt 1,230 1,015 882
============ ============ ==========
Total assets 108,924 112,461 110,137
============ ============ ==========
<PAGE>
<TABLE>
5. Exceptional loss
<CAPTION>
1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Restructuring costs - - (3,682)
Recovery of bad debt (included in other income) - 2,100 -
Costs of responding to allegations - (3,549) -
Goodwill written off - - (7,342)
Write down of carrying value of Wilmslow - - (2,887)
------------ ------------ -------------
- (1,449) (14,911)
------------ ------------ -------------
</TABLE>
During the year the Group's UK site at Wilmslow has been closed and assets
written down to net realisable value. Redundancy and related costs have been
classified as restructuring costs.
In addition in December 1998 the Group announced a cost reduction programme
designed to rationalise capabilities in the UK and align staff resources with
current revenues. The programme which commenced in January 1999 anticipates the
reduction of approximately 150 positions. Associated costs are included in
restructuring costs.
Following the decline in revenues and the renaming and successful integration of
the businesses acquired in 1995 into the Huntingdon group, the unamortised
balance of the goodwill acquired at that time, (pound)7,342,000, has no longer
any intrinsic value and has therefore been written off.
Finally a review of asset values has led to the accelerated depreciation of
certain assets in the UK. These costs are included in restructuring costs.
Amortisation of goodwill has no tax effect and the depreciation included within
exceptional items of (pound)4,240,000 has reduced deferred tax liabilities by
(pound)1,314,000. The other costs incurred will be available for offset against
future trading profits.
In 1997, Group operations in Huntingdon, UK and near Princeton, USA were alleged
to have tolerated malpractice in its conduct of studies and in the welfare and
care of animals for use in research. Further, in the USA the Group settled an
employment matter. The exceptional loss for 1997 included study costs,
management time, legal and professional fees
The exceptional gain in 1997 represented the expected dividend, net of costs to
be incurred, from the administration of the Travers Morgan Group of companies.
In 1994 these companies were placed in administration and the Group wrote off
its investment, providing (pound)11.6 million against the amounts receivable
from Travers Morgan Limited. Following discussions with the joint administrators
the Group believed that the provision was excessive and accordingly released
(pound)2.1 million.
<PAGE>
6. Interest payable and similar charges
1996 1997 1998
(pound)000's (pound)000's (pound)000's
Bank overdraft interest 275 283 184
Interest on loans
- repayable within 5 years 1,655 1,500 2,028
Bond interest 2,382 2,243 2,265
Amortisation of Bonds issue costs 108 108 108
Cost of raising finance - - 1,208
Finance charges on capitalised leases 6 15 11
Other 2 48 -
Exchange loss - - 78
--------- ---------- -----------
4,428 4,197 5,882
--------- ---------- -----------
<TABLE>
7. Other income/(expense)
<CAPTION>
1996 1997 1998
(pound)000's (pound)000's (pound)000's
<S> <C> <C> <C>
Exceptional bad debt recovery (see note 5) - 2,100 -
Exchange gain/(loss) on translation of Capital Bond 2,319 (1,099) 321
---------- --------- ------------
2,319 1,001 321
---------- --------- ------------
</TABLE>
8. Income taxes
<TABLE>
The credit/(charge) for the year comprises
<CAPTION>
1996 1997 1998
12 months 12 months 12 months
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
UK tax calculated at 31% (1996 : 33%) (1,774) 1,843 539
Deferred taxation (445) 2,990 8,444
------------ -------- ---------
(2,219) 4,833 8,983
------------ -------- ---------
</TABLE>
<PAGE>
8. Income taxes (continued)
A reconciliation between the UK corporation tax rate and the effective rate of
income tax expense to income/(loss) before income taxes for the 12 months ended
December 31, 1998, December 31, 1997 and December 31, 1996 is shown below.
% of Income before Income Taxes
1996 1997 1998
% % %
UK statutory rate 33 31 31
Effect of non taxation of goodwill and
exceptional bad debt recovery (4) 8 (7)
Increase/(decrease) in taxes arising
from effect of foreign earnings (1) 4 1
Exchange loss/ gain not taxable (8) (4) -
Effect of reduction in UK tax rate on
deferred tax - 18 -
Prior year adjustments - 7 2
Permanent differences 2 (1) -
------- ------- -----
Effective tax rate 22 63 27
------- ------- -----
The analysis of the deferred taxation assets and liabilities is as follows:
<TABLE>
<CAPTION>
1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Accelerated tax depreciation:
UK 22,418 22,265 19,875
Operating loss carried forward:
UK (235) (1,795) (6,126)
US Federal (242) (1,462) (2,584)
US State (43) (258) (456)
Other temporary differences
UK (232) (197) (600)
------------ ------------- ------------
21,666 18,553 10,109
------------ ------------- ------------
Analysed as
Long term liabilities 22,428 21,556 15,285
Short term liabilities 13 - -
Short term assets (245) (202) (873)
Long term assets (530) (2,801) (4,303)
------------ ------------- ------------
21,666 18,553 10,109
------------ ------------- ------------
</TABLE>
No account has been taken in the above for contingent deferred tax assets on the
Group's properties where the tax base costs of those assets exceeds their book
value as there is no intention to dispose of any of the Group's properties. In
addition no account is taken of the benefits of capital losses incurred in prior
years as the Group would be required to make a capital gain before such losses
could be utilised.
9. Dividends
No dividends were paid or proposed in the 12 months ended December 31, 1998, the
12 months ended December 31,1997 and the 12 months ended December 31, 1996.
10. (Loss) / earnings per share
(Loss)/earnings per share are based on the loss for the year of
(pound)24,437,000 (1997: loss (pound)2,882,000, 1996:profit (pound)7,871,000)
and a weighted average of 177,199,772 (1997:112,935,450, 1996:108,492,218)
Ordinary Shares issued during each period.
The potential dilution, which could arise from outstanding share options and the
Bonds in 1997 and 1998, is not disclosed as any adjustments would be
anti-dilutive. In 1996 the diluted EPS was (pound)0.060 and was calculated as
follows:
<TABLE>
<CAPTION>
(pound)'000 '000
<S> <C> <C> <C>
Earnings as stated 7,871 Shares in issue at
Interest and exchange effects 63 start of period 108,411
of Bonds Issues in year 81
----------
Taxation on interest (787) Basic EPS shares in issue 108,492
----------
Adjusted earnings 7,151 Effect of Bonds 9,586
----------
Effect of Options 905
----------
Diluted EPS shares in issue 118,983
----------
</TABLE>
11. Commitment to pension funds
The Company operates the Huntingdon Life Sciences Pension and Life Assurance
Scheme (the Huntingdon Scheme) a funded pension scheme providing benefits, based
on final pensionable salary, for Group employees in the UK. The assets of the
Huntingdon Scheme are held in an independent trust and contributions to the
Huntingdon Scheme are determined by a qualified actuary based on a triennial
valuation. The most recent valuation was at January 1, 1997 using the Defined
Accrued Benefit Funding Method. The assumptions which have the most significant
effect on the results of the valuation are those relating to the rate of return
on investments and the rates of increases in salaries and pensions. For the
purposes of the valuation it was assumed that the investment returns would be
9.0% per annum, that salary increases would average 6.5% per annum and that
present and future pensions would increase at an average of 4.5% per annum.
Appropriate assumptions, consequent upon a decision to close the Huntingdon
Scheme to new entrants from April 5, 1997, were also made. The market value of
the Huntingdon Scheme's assets as at January 1, 1997 was (pound)40,500,000; the
actuarial value of which represented 120.5% of the projected liabilities of the
Huntingdon Scheme. The surplus is being applied to abate the funding over the
period to the next actuarial valuation. The Company elected to stop
contributions for the period October 1, 1997 through September 30, 1998 and the
Trustees reduced the employees contribution to 0% for this period. The average
Company contribution for the period from October 1, 1998 to December 31, 1998
was 10.5% of pensionable salaries and the contribution of qualifying employees
was 4%.
As noted below, the Group operates a number of defined contribution pension
plans covering employees in the UK, US and one Director. The pension charge for
the year ended December 31, 1998 in respect of such Plans was (pound)278,000
(1997: (pound)229,000) and has been charged to the profit and loss account.
On April 6,1997 the Company established a defined contribution Group Personal
Pension Plan for Group employees in the UK. Company contributions match the
minimum contribution of employees at 5% of basic salary. A defined contribution
scheme is available for employees in the US. Company contributions match the
contributions of employees up to a maximum of 3% of basic salary at a rate of
50% of the employee contributions.
<PAGE>
11. Commitment to pension funds (continued)
The following table sets forth the funded status in respect of the HLS scheme.
Amounts are as determined by the actuaries to the plans.
<TABLE>
<CAPTION>
1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Projected benefit obligation ("PBO") (40,362) (59,303) (59,747)
Plan assets at market value 43,147 55,085 59,500
------------ ------------ -------------
Plan assets (less than)/in excess of PBO 2,785 (4,218) (247)
Unrecognised net gain/(loss) from past experience (1,480) 5,176 (1,081)
Unrecognised prior service cost 270 210 150
Unrecognised net liability/(asset) at transition (1,185) (1,027) (869)
Adjustment to recognise minimum liability - (461) -
------------ ------------ -------------
(Unfunded accrued pension cost)/prepaid pension cost 390 (320) (2,047)
------------ ------------ -------------
Change in plan assets
Fair value of assets at beginning of year 43,147 55,085
Actual return on plan assets 6,929 5,432
Employer contributions 1,609 297
Member contributions 400 106
Benefit payments 3,000 (1,420)
------------ -------------
Fair value of assets at end of year 55,085 59,500
------------ -------------
Change in benefits obligation
Projected benefit obligation at beginning of year 40,362 59,303
Service cost 2,469 3,135
Interest cost 3,229 4,151
Actuarial gains/(losses) 9,843 (5,528)
Member contributions 400 106
Benefit payments 3,000 (1,420)
------------ -------------
Projected benefit obligation at end of year 59,303 59,747
------------ -------------
Net periodic cost included the following: 1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
Service cost (excluding employee contributions) 1,636 2,469 3,135
Interest cost on PBO 2,770 3,229 4,151
Actual return on plan assets (3,545) (6,929) (5,432)
Asset gain/(loss) 292 3,187 729
Amortisation of prior service cost 60 60 60
Amortisation of transition asset (158) (158) (158)
------------- ------------ ------------
Net periodic pension expense 1,055 1,858 2,485
------------- ------------ ------------
The major assumptions used in calculating
the pension expense were:
1996 1997 1998
Discount rate 8.00% 7.00% 6.25%
Rate of increase of future compensation 6.50% 6.00% 4.75%
Long-term rate of return on plan assets 8.50% 8.50% 7.50%
<FN>
The Net Asset at Transition, Prior Service Cost and Net Gain subject to
amortisation have been amortised on a straight line basis over periods of 15
years, 10 years and 10 years respectively.
</FN>
</TABLE>
12. Tangible fixed assets
<TABLE>
<CAPTION>
Assets in Plant,
Freehold the course of equipment
property construction and vehicles Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Cost
At December 31, 1995 59,250 6,444 44,544 110,238
Exchange adjustments (234) - (174) (408)
Additions 4,944 (2,601) 5,296 7,639
Reclassifications 277 - 399 676
Disposals (644) - (1,421) (2,065)
------------- ------------ ------------ ------------
At December 31, 1996 63,593 3,843 48,644 116,080
Exchange adjustments 88 32 85 205
Additions 3,707 (249) 11,043 14,501
Disposals (213) - (234) (447)
------------- ------------ ------------ ------------
At December 31, 1997 67,175 3,626 59,538 130,339
Exchange adjustments (26) (12) (48) (86)
Additions 1,206 (1,039) 2,252 2,419
Disposals - - (120) (120)
------------- ------------ ------------ ------------
At December 31, 1998 68,355 2,575 61,622 132,552
------------- ------------ ------------ ------------
Depreciation
At December 31, 1995 11,892 - 25,242 37,134
Exchange adjustments (1) - (6) (7)
Charge for year 1,394 - 3,782 5,176
Reclassifications 2,099 - (1,423) 676
Disposals (644) - (1,342) (1,986)
------------- ------------ ------------ ------------
At December 31, 1996 14,740 - 26,253 40,993
Exchange adjustments 5 - 16 21
Charge for the year 1,497 - 4,435 5,932
Disposals (94) - (231) (325)
------------- ------------ ------------ ------------
At December 31, 1997 16,148 - 30,473 46,621
Exchange adjustments - - (19) (19)
Charge for the year 3,042 - 7,607 10,649
Disposals - - (115) (115)
------------- ------------ ------------ ------------
At December 31, 1998 19,190 - 37,946 57,136
------------- ------------ ------------ ------------
Net book value:
At 31 December, 1996 48,853 3,843 22,391 75,087
At 31 December, 1997 51,027 3,626 29,065 83,718
At 31 December, 1998 49,165 2,575 23,676 75,416
</TABLE>
<PAGE>
12. Tangible fixed assets continued
The net book value of assets held under finance leases and included above is as
follows:
<TABLE>
<CAPTION>
Cost Depreciation Net book
value
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
At December 31, 1996 120 24 96
At December 31, 1997 120 64 56
At December 31, 1998 325 134 191
</TABLE>
13. Goodwill
<TABLE>
<CAPTION>
1997 1998
(pound)'000 (pound)'000
<S> <C> <C>
Cost: 7,752 7,752
----- -----
Accumulated amortisation
Balance at beginning of period 216 410
Charge in year 194 7,342
Balance at end of period 410 7,752
--- -----
14. Inventories
1997 1998
(pound)'000 (pound)'000
Materials and Supplies 1,272 1,137
----- -----
</TABLE>
15. Debt
1997 1998
(pound)'000 (pound)'000
Bank overdrafts and loans falling
due within one year:
Bank loans 19,500 747
Non bank loans 500 3,300
Finance leases 35 69
--------------- ---------------
20,035 4,116
--------------- ---------------
Loans - amounts falling due after
more than one year:
Bank loans - 24,500
Non bank loans 3,300 -
Finance leases 18 136
Convertible Capital Bonds 30,373 30,052
--------------- ---------------
33,691 54,688
--------------- ---------------
<PAGE>
15 Debt (continued)
The bank loans are secured by guarantees from the Company, Huntingdon Life
Sciences Ltd., and Huntingdon Life Sciences Inc., together with charges over the
assets of those Companies. The non-bank loan is secured by charges over the
assets of the Wilmslow Research Centre, acquired in March 1997.
Loans repayable after one year, excluding the Bonds (see below) are all
denominated in Sterling and represent the following:
<TABLE>
<CAPTION>
1997 1998
(pound)'000 (pound)'000
<S> <C> <C>
Outstanding element of the consideration for the purchase of Wilmslow
Research Centre, repayable on sale of the site and bears no interest. 3,800 3,300
Bank loan repayable on August 31, 2000. - 24,500
The interest rate is "LIBOR" plus 1.75 per cent per annum in respect of
drawings up to (pound)19,500,000 and LIBOR plus 1 per cent in respect of
drawings over (pound)19,500,000.The interest rate payable at December 31, 1998
is 8.422 per cent on (pound)19,500,000 and 7.672 per cent on (pound)5,000,000
----------------- -----------------
3,800 27,800
Repayable within one year (500) (3,300)
================= =================
Long term debt 3,300 24,500
================= =================
</TABLE>
The above loans and the Group's long term obligations under finance leases
are repayable as follows:
Obligation
under
Loans Finance leases Total
(pound)'000 (pound)'000 (pound)'000
2000 24,500 40 24,540
2001 - 40 40
2002 - 40 40
2003 - 16 16
================= ================= =================
24,500 136 24,636
================= ================= =================
On August 12, 1991, an issue of US $50,000,000 7 1/2% Convertible Capital
Bonds, 2006, ("the Bonds"), was made by a subsidiary company, HIH Capital Ltd.
The Bonds are guaranteed on a subordinated basis by the Company, and are
convertible by the holders into Redeemable Preference Shares of HIH Capital
Ltd., which in turn are immediately exchangeable for Ordinary Shares of 5 pence
each in the Company. The conversion rate, which is based upon the paid-up value
of the Redeemable Preference Shares and a fixed rate of exchange of
(pound)1.00=US $1.6825, is 242.3 pence per Ordinary Share (1997: 310 pence) and
is subject to adjustment in certain circumstances. At this conversion rate the
number of Ordinary Shares to be issued on conversion and exchange of each unit
of US $1,000 comprised in a Bond would be 245 (1997: 191). The proceeds of the
Bonds issue of US $47,300,000 were passed to the Company by HIH Capital Ltd., in
consideration for the issue of US $50,000,000 Debenture, on terms similar to
those of the Bonds. The (pound)1,590,000 costs of issuing the Bonds are
amortised over the life of the Bonds and together with the interest payable are
charged to the Consolidated Income Statement using the effective interest
method.
<PAGE>
15 Debt (continued)
Fair value of financial instruments
Cash and cash equivalents are held on short term deposit at commercial rates.
Long term loans are offered to the Company at fair rates of interest for similar
debt. Accordingly the carrying values approximate to the fair value. The
Convertible Capital Bond is however a negotiable instrument and the fair value
is the quoted market price. The estimated fair value of the Bond is as follows:
1997 1998
(pound)'000 (pound)'000
Carrying Amount 30,373 30,052
Fair value 23,691 24,793
16. Share capital
At an Extraordinary General Meeting on September 2, 1998 shareholders approved a
subscription of 120,000,000 and a placing and open offer of 57,003,431 shares at
12.5 pence . The shares not taken up by existing qualifying shareholders were
placed by Kleinwort Benson Securities Limited with institutional investors in
the UK.. These transactions raised (pound)20.39M net of expenses. The issue
discount before expenses was 36 per cent as compared with 19.5 pence per share,
being the London Stock Exchange middle market price at the time the issue price
was agreed. However, the issue price net of expenses represented a 6 per cent
discount to the price of the Company's ADR's on the New York Stock Exchange at
the time that the price was agreed. Dealings commenced in these new Ordinary
shares on 3 September, 1998 and the discount at that time was 4 per cent as
compared with the then prevailing middle market price on the London Stock
Exchange.
17. Share option plans
A description of the Company's Share option plans is given in Item 12 - Options
to purchase Securities from the Registrant, of this report 20-F. Under the terms
of the plans the following Options to purchase Ordinary Shares of 5p in the
Company have been granted but not relinquished or exercised as at December 31,
1998.
Date of grant Number of shares Option price
Outstanding
UNAPPROVED SHARE OPTION PLAN
December 18, 1995 189,550 (pound)0.77
November 21,1996 140,000 (pound)0.95
November 21,1996 60,000 $1.60
December 1, 1997 100,000 (pound)0.50
December 31, 1997 1,097,570 (pound)0.465
December 31, 1997 685,000 $0.77
APPROVED MANAGEMENT SHARE OPTION PLAN
February 13, 1995 307,500 (pound)0.49
December 11, 1995 810,000 (pound)0.78
December 11, 1995 130,000 $1.19
December 18, 1995 171,450 (pound)0.77
November 21,1996 575,000 (pound)0.95
December 31, 1997 590,000 (pound)0.465
<PAGE>
17. Share option plans (continued)
Other share options
At the Extraordinary General Meeting held on September 2, 1998 the Shareholders
approved a new option scheme and a separate Option Agreement with Mr Baker:
(a) The Huntingdon Life Sciences Group Unapproved Share Option Scheme, under
which 8,500,000 Founder Options had been granted but not relinquished or
exercised as at December 31, 1998 at an option price of 12.5p per Ordinary
Share. The Options may be exercised from the third anniversary of the date of
the grant subject to the share price reaching the following pre-determined
targets for a period of seven consecutive dealing days at any time after January
1, 1999.
Target price per share Proportion of options exercisable
25p 25%
50p 50%
75p 75%
100p 100%
Options lapse on the tenth anniversary.
(b) An Option Agreement under which Andrew Baker was granted Options over
5,000,000 Ordinary Shares of 5p in the Company, the principal terms of which
are the same as those applicable to the Founder Options referred to above.
The following table sets forth certain information relative to the changes to
options outstanding in the periods presented:
<TABLE>
<CAPTION>
Option Price
----------------------------
Share Option Approved Other Dollars Sterling
Plan Plan Options per Share per Share
<S> <C> <C> <C> <C> <C>
Outstanding at January 1, 1996 723,300 4,549,025 - 1.15 - 0.49 - 3.57
1.19
Granted 1,525,000 1,015,000 - 1.46 - 1.60 0.72 - 0.95
Options exercised - (163,250) - 1.15 0.49 - 0.78
Rescinded - (1,002,000) - 1.19 0.49 - 3.57
---------------- ---------------- -------------- ------------ ------------
Outstanding at December 31, 1996 2,248,300 4,398,775 - 1.15 - 0.49 - 0.95
1.60
Granted 3,050,020 650,000 - 0.77 0.465
-0.49 3.57
Options exercised (12,500) - - - 0.77
Rescinded (1,808,750) (1,407,075) - 1.19 - 0.49 -0.95
1.60
---------------- ---------------- -------------- ------------ ------------
Outstanding at December 31, 1997 3,477,070 3,641,700 - 0.77 - 0.465 -0.95
1.60
Granted - - 13,500,000 - 0.125
Rescinded (1,204,950) (1,057,750) - 0.77 - 0.465 -0.95
1.60
----------------
---------------- ---------------- -------------- ------------ ------------
2,272,120 2,583,950 13,500,000 0.77-1.60 0.125-0.95
---------------- ---------------- -------------- ------------ ------------
</TABLE>
<PAGE>
17. Share option plans (continued)
A summary of the status of the Company's option plans for the years ended
December 31, 1996, December 31, 1997 and December 31, 1998 and changes during
the years then ended is presented in the table and narrative below:
<TABLE>
Years ended
<CAPTION>
December 31, 1996 December 31, 1997 December 31, 1998
-------------------- ----------------- -----------------
Shares Wtd Avg. Shares Wtd Avg. Shares Wtd Avg.
Ex Price Ex Price Ex Price
(000) (000) (000)
---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at start of period 5,272(pound)0.71 6,647 (pound) 0.80 7,119 (pound)0.60
Granted 2,540(pound)1.17 3,700 (pound) 0.47 13,500 (pound)0.13
Exercised 163(pound)0.70 12 (pound) 0.77 - -
Forfeited - - - - - -
Expired - - - - - -
Cancelled 1,002(pound)1.28 3,216 (pound) 0.86 (2,263) (pound)0.53
----------- ---------- ---------- ----------- ---------- ------------
Outstanding at end of period 6,647(pound)0.80 7,119 (pound) 0.60 18,356 0.26
----------- ---------- ---------- ----------- ---------- ------------
Exercisable at end of year - - -
Weighted average fair value of (pound)0.94 (pound)0.30 (pound)0.08
options granted
</TABLE>
The 18,356,070 options outstanding at December 31, 1998 have an exercise price
between (pound)0.125 and (pound)0.95, with a weighted average exercise price of
(pound)0.26 and a weighted average remaining contractual life of 9.3 years.
1,437,050 of these options are exercisable. The 13,500,000 options granted in
1998 have an exercise price of (pound)0.125 and a weighted average remaining
contractual life of 9.85 years.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for the option grants in 1997 and 1998 respectively: risk-free
interest rates of 6.27 and 4.94 percent; expected dividend yields of 0.00
percent; expected life of 7.0 years for the Option Plan or 10.0 years for the
Management Plan; expected volatility of 54.7 and 57.4 percent.
The Company accounts for share options under APB Opinion No. 25, under which no
compensation cost has been recognised. Had compensation cost for stock options
awarded under the plans been determined consistent with FASB Statement No. 123,
the Company's net income and earnings per share would have been restated as
follows:
<TABLE>
<CAPTION>
Twelve Months Ended Twelve Months Ended Twelve Months Ended
December 31, 1996 December 31, 1997 December 31, 1998
------------------------- ------------------------- ------------------------
<S> <C> <C> <C> <C>
Net(loss)/income: As Reported 7,871 (2,882) (24,437)
Restated 7,380 (4,046) (23,930)
Basic EPS: As Reported (pound)0.073 (pound)(0.026) (pound)(0.138)
Restated (pound)0.068 (pound)(0.036) (pound)(0.135)
Diluted EPS: As Reported (pound)0.060 - -
Restated (pound)0.056 - -
</TABLE>
As at December 31, 1998, the Company may grant options in respect of 21,162,859
shares in aggregate under the plans.
18. Commitments
Future capital expenditure authorised by management was (pound)1,210,000.
Operating lease payments were as follows
1996 1997 1998
(pound)'000 (pound)'000 (pound)'000
Hire of plant and equipment 104 124 142
Other operating leases 462 354 354
The Group has commitments payable under operating leases as follows:
Plant and machinery
Year ended December 31 (pound)'000
1999 193
2000 142
2001 121
2002 13
19. Allowance for uncollectable accounts
<TABLE>
<CAPTION>
Balance at Charged to Accounts Balance at
beginning of costs and written end of
period expenses off period
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Allowance for uncollectable
accounts deducted from trade
debtors
December 31, 1996 154 - 80 74
December 31, 1997 74 1 - 75
December 31, 1998 75 42 6 111
</TABLE>
<PAGE>
20. Unaudited Quarterly Financial information
The Group has not submitted US GAAP quarterly informatiom during the 12 months
ended 31, December, 1997 and 31 December, 1998. The following represents the UK
GAAP filings together with a reconciliation for each year to US GAAP.
<TABLE>
<CAPTION>
Year ended 31 December, 1998 Quarter Ended
March 31, June 30, September 30, December 31, Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C> <C>
Revenues 13,428 13,051 13,063 13,074 52,616
Cost of sales 14,308 13,988 13,930 13,837 56,063
-----------------------------------------------------------------------
Gross loss (880) (937) (867) (763) (3,447)
Selling and administrative expenses (2,123) (2,097) (2,152) (2,828) (9,200)
Exceptional items - - - (4,682) (4,682)
-----------------------------------------------------------------------
Operating loss (3,003) (3,034) (3,019) (8,273) (17,329)
Exceptional loss - - - (2,887) (2,887)
Interest expense (1,561) (1,108) (1,595) (1,243) (5,507)
Other income/(expense) 554 (248) 433 (418) 321
-----------------------------------------------------------------------
Income before taxes (4,010) (4,390) (4,181) (12,821) (25,402)
Taxes - 500 - 39 539
=======================================================================
Net loss (4,010) (3,890) (4,181) (12,782) (24,863)
=======================================================================
Loss per share (pound)(0.035) (pound)(0.034) (pound)(0.025)(pound)(0.044)(pound)(0.144)
Average shares outstanding
in period 114,006,863 114,006,863 166,524,365 291,010,294 177,199,772
Restatement to US GAAP (pound)'000
Net loss per UK GAAP (24,863 )
Recognition of pension costs (676)
Goodwill (7,342 )
Deferred taxation 8,444
--------------
Net loss per US GAAP (24,437)
--------------
</TABLE>
<PAGE>
20. Unaudited Quarterly Financial information (continued)
<TABLE>
<CAPTION>
Quarter Ended
Year ended 31 December, 1997 March 31, June 30, September 30, December 31, Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C> <C>
Revenues 17,242 17,234 15,309 13,904 63,689
Cost of sales 13,148 14,244 13,846 14,651 55,889
-------------------------------------------------------------------------
Gross profit/(loss) 4,094 2,990 1,463 (747) 7,800
Selling and administrative costs 2,081 1,876 2,498 2,301 8,756
Exceptional items 1,097 719 1,733 3,549
-------------------------------------------------------------------------
Operating profit/(loss) 2,013 17 (1,754) (4,781) (4,505)
Exceptional gain - - - 2,100 2,100
Interest expense (878) (889) (931) (953) (3,651)
Other income/(expense) (972) 361 (787) 299 (1,099)
-------------------------------------------------------------------------
Income before taxes 163 (511) (3,472) (3,335) (7,155)
Taxes (284) 324 751 1,052 1,843
=========================================================================
Net loss (121) (187) (2,721) (2,283) (5,312)
=========================================================================
Loss per share (pound)(0.011) (pound)(0.016) (pound)(0.023) (pound)(0.200) (pound)(0.047)
Average shares outstanding
in period to date 111,314,555 114,006,863 114,006,863 114,006,863 112,935,450
Restatement to US GAAP ((pound)000)
Net loss per UK GAAP (5,312)
Recognition of pension costs (247)
Non-recognition of revaluation reserve (119)
Goodwill (194)
Deferred taxation 2,990
--------------
Net loss per US GAAP (2,882 )
--------------
</TABLE>
DATED 20TH APRIL 1998
HUNTINGDON LIFE SCIENCES LIMITED
(as mortgagor)
- and -
NATIONAL WESTMINSTER BANK Plc
(as agent)
EQUIPMENT MORTGAGE
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 0171 246 7000
Fax. 0171 246 7777
Ref TJF/GP/58993/BF0316896.02
<PAGE>
TABLE OF CONTENTS
Clause Heading Page No
1. DEFINITIONS AND INTERPRETATION......................................2
2. COVENANTS TO PAY....................................................3
3. MORTGAGES, ASSIGNMENTS AND FIXED CHARGES............................4
4. NEGATIVE PLEDGE.....................................................5
5. FURTHER ASSURANCE...................................................5
6. REPRESENTATIONS BY THE MORTGAGOR....................................6
7. INSURANCE...........................................................6
8. UNDERTAKINGS BY THE MORTGAGOR.......................................7
9. ENFORCEMENT.........................................................9
10. REMEDIES...........................................................10
11. APPOINTMENT OF RECEIVER............................................11
12. POWER OF ATTORNEY..................................................13
13. PROTECTION OF PURCHASERS...........................................14
14. CONSOLIDATION OF ACCOUNTS AND SET-OFF..............................14
15. CURRENCY...........................................................15
16. APPLICATION........................................................15
17. NOTICES............................................................15
18. NEW ACCOUNTS.......................................................16
19. REMEDIES CUMULATIVE ETC............................................16
20. PROVISIONS SEVERABLE...............................................17
21. THE AGENT'S DISCRETION.............................................17
22. AMENDMENTS.........................................................17
23. LAW................................................................17
24. ASSIGNMENT.........................................................18
SCHEDULE - THE EQUIPMENT............................................19
<PAGE>
THIS EQUIPMENT MORTGAGE is made on 20th April 1998
BETWEEN:
1. HUNTINGDON LIFE SCIENCES LIMITED, a company incorporated under the
laws of England and Wales with registered number 1815730 having its
registered office at Woolley Road, Alconbury, Huntingdon, PE17 5HS
(the "Mortgagor"); and
2. NATIONAL WESTMINSTER BANK Plc of 3rd Floor, Juno Court, 25 Prescot
Street, London, E1 8BB as agent and trustee for the Secured Parties
(the "Agent").
WHEREAS:
(A) By a facilities agreement (the "Facilities Agreement") dated 1st
November 1995 made between (1) the Mortgagor (2) Huntingdon Life
Sciences Group Plc, (3) Huntingdon Life Sciences Inc, (together the
"Borrowers") (4) the Banks (as defined therein) and the Agent (as
amended by a letter dated 21st November 1995), the Banks agreed to
make available certain facilities to the Borrowers on the terms set
out therein.
(B) By a guarantee dated 1st November 1995 from the Mortgagor to the
Agent (as agent and trustee for the Secured Parties) (as amended by
supplemental deeds dated 20th January 1998 and 26th February 1998)
(the "Guarantee"), the Mortgagor guaranteed the obligations and
liabilities of the Borrowers to the Agent, the Banks and the
Overdraft Bank (as defined below).
(C) Pursuant to a New Facility Letter dated 17th March 1998 (the "New
Facility Letter") from the Agent as overdraft bank (the "Overdraft
Bank") in respect of the new overdraft facility being provided
thereunder, the Mortgagor has agreed to execute this Mortgage to
secure the further performance by the Mortgagor of its obligations
to the Overdraft Bank, the Agent and the Banks under the Facilities
Agreement, the New Facility Letter and the Guarantee by charging
the Equipment on the terms set out herein.
NOW THIS DEED WITNESSETH as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Mortgage, unless the context otherwise requires or unless
otherwise defined or provided for in this Mortgage, words and
expressions shall have the same meanings as is attributed to them
under the Facilities Agreement and the New Facility Letter. In
addition, the following words and expressions shall have the
respective meanings ascribed to them:
"Facility Rate" means the rate of interest specified in Clause
6.1.3 of the New Facility Letter and calculated as provided
therein.
"Documents" means all logbooks, maintenance records, record books,
manuals, handbooks, drawings, technical data and all other
documents from time to time of the Mortgagor relating to the
Mortgaged Property.
"Equipment" means the equipment listed in the Schedule together
with any replacements or substitutes for such containers and other
equipment.
"Insurances" means all insurances and all policies and contracts of
insurance effected or procured by the Mortgagor or the Agent from
time to time in respect of the Equipment (whether in accordance
with Clause 7 or otherwise) and all claims and all moneys payable
thereunder (including any return of premium in respect thereof).
"Mortgaged Property" means all and any of the Equipment, Documents,
and the Insurances and any other property, assets or income
assigned by way of mortgage or charged to the Agent under or
pursuant to this Mortgage.
"Receiver" means any receiver appointed pursuant to this Mortgage.
"Secured Obligations" means all moneys now or at any time hereafter
becoming due or owing by the Mortgagor to the Secured Parties on
any account and all liabilities, actual or contingent, now existing
or hereinafter incurred by the Mortgagor to the Secured Parties
(whether due, owing or incurred by the Mortgagor alone or jointly
with any other person and whether as principal or surety).
"Secured Parties" means all and each of the Overdraft Bank, the
Agent and the Banks.
1.2 In this Mortgage (unless otherwise provided):
(a) references to Clauses and Schedules are to be construed
as references to the Clauses of, and Schedules to, this
Mortgage as amended or varied from time to time and
references to sub-Clauses shall unless otherwise
specifically stated be construed as references to the
sub-Clauses of the Clause in which the reference
appears and references to this Mortgage include its
Schedules;
(b) references to any document or agreement are to be
construed as references to such document or agreement
as is in force for the time being and as amended,
varied, novated or supplemented from time to time;
(c) words importing the singular shall include the plural
and vice versa;
(d) references to a person shall be construed so as to
include that person's assigns or transferees or
successors in title and shall be construed as including
references to an individual, firm, partnership, joint
venture, company, corporation, unincorporated body of
persons or any state or any agency thereof;
(e) references to any statute or statutory provision
include any statute or statutory provision which
amends, extends, consolidates or replaces the same, or
which has been amended, extended, consolidated or
replaced by the same, and shall include any orders,
regulations, instruments or other subordinate
legislation made under the relevant statute;
(f) the words "other" and "otherwise" shall not be
construed ejusdem generis with any foregoing words
where a wider construction is possible; and
(g) the words "including" and "in particular" shall be
construed as being by way of illustration or emphasis
only and shall not be construed as, nor shall they take
effect as, limiting the generality of any foregoing
words.
2. COVENANTS TO PAY
2.1 The Mortgagor hereby covenants with the Agent and each of the
other Secured Parties that it will on demand pay and discharge
each of the Secured Obligations when due to the Agent and the
other Secured Parties.
2.2 A certificate signed by an officer of the Agent or other Secured
Party (as the case may be) as to the money and liabilities for the
time being due or incurred to the Agent or any other Secured Party
from or by the Mortgagor shall for all purposes (in the absence of
manifest error) be conclusive evidence against and binding on the
Mortgagor.
3. MORTGAGES, ASSIGNMENTS AND FIXED CHARGES
3.1 The Mortgagor, as continuing security for the full payment and
discharge on demand of the Secured Obligations, hereby assigns
with full title guarantee absolutely to the Agent (as agent
and trustee for the Secured Parties):
(a) the Equipment and the Documents;
(b) all right, title, benefit and interest of the Mortgagor
(present, future, actual or contingent) in and to all
Insurances; and
(c) all right, title, benefit and interest of the Mortgagor
(present, future, actual or contingent) in and to all
warranties and other claims under or in connection with
the sale to and purchase by the Mortgagor of the
Equipment and/or its condition and repair and all
contracts and agreements relating thereto.
3.2 The Mortgagor and to the intent that the security hereby created
shall rank as a continuing security for the full payment and
discharge on demand of the Secured Obligations hereby charges with
full title guarantee to the Agent (as agent and trustee for the
Secured Parties) by way of fixed charge all its property, rights,
interests and other assets expressed to be assigned to the Agent
pursuant to Clause 3.1 above if and to the extent that such
assignments shall be or become ineffective but without prejudice to
any such assignments as shall continue to be effective.
3.3 The security constituted by or pursuant to this Mortgage shall be
in addition to and shall be independent of every bill, note,
guarantee, mortgage, pledge or other security which the Agent or
any other Secured Party may at any time hold in respect of any of
the Secured Obligations and it is hereby declared that no prior
security held by the Agent or any other Secured Party over the
Mortgaged Property or any part thereof shall merge in the security
created hereby or pursuant hereto.
4. NEGATIVE PLEDGE
The Mortgagor hereby covenants that, without the prior written
consent of the Agent, it shall not nor shall it agree or purport
to:
(a) create or permit to subsist any Encumbrance whether in
any such case ranking in priority to or pari passu with
or after the security created by this Mortgage over the
whole or any part of the Mortgaged Property; or
(b) sell, assign, transfer, or otherwise dispose of,
whether by means of one or a number of transactions
related or not and whether at one time or over a period
of time, the whole or any part of the Mortgaged
Property or any interest therein; or
(c) lease, sub-lease, hire, lend or otherwise part with the
possession or operational control of all or any of the
Equipment; or
(d) do or permit to be done any act or thing which might
jeopardise the rights of the Agent in the Mortgaged
Property or any part thereof and will not omit or allow
the omission of any act which might prevent the rights
of the Agent in the Mortgaged Property or any part
thereof from being exercised. In particular, the
Mortgagor covenants that it shall obtain and effect and
keep effective all permissions, licences and permits
which may from time to time be required in connection
with the Mortgaged Property.
5. FURTHER ASSURANCE
The Mortgagor shall from time to time, at the request of the Agent
or any Receiver and at the Mortgagor's cost, execute in favour of
the Agent, or as it may direct, such further or other legal
assignments, transfers, mortgages, charges or other documents as in
any such case the Agent or any Receiver shall reasonably stipulate
over the Mortgaged Property for the purpose of more effectively
providing security to the Agent for the payment or discharge of the
Secured Obligations. The obligations of the Mortgagor under this
Clause shall be in addition to and not in substitution for the
covenants for further assurance deemed to be included herein by
virtue of the Law of Property (Miscellaneous Provisions) Act 1994.
6. REPRESENTATIONS BY THE MORTGAGOR
The Mortgagor hereby represents and warrants to the Agent that at
the date of this Mortgage the Mortgagor is the sole legal and
beneficial owner of the Mortgaged Property and that the Mortgaged
Property is free from all Encumbrances.
7. INSURANCE
7.1 The Mortgagor covenants and agrees with the Agent that, at all
times during the subsistence of the security constituted by or
pursuant to this Mortgage, the Mortgagor will (as its own cost and
expense) cause the Equipment to be insured and to be kept insured
with such insurers, in such amounts and on such terms as the Agent
reasonably requires to a value not less than the full replacement
value of the Equipment and against any liability for death or
injury to any person and any loss or damage to any property
howsoever caused or arising.
7.2 The Mortgagor further covenants and agrees with the Agent that,
during the continuance of this Mortgage, the Mortgagor shall:
(a) fully and promptly comply with all the terms,
covenants, undertakings and conditions of each policy
of insurance relating to any part of the Equipment and
will not do, consent, agree to, suffer or permit any
act or omission which may invalidate any policy of
insurance relating to any part of the Equipment or
render the same unenforceable in whole or in part;
(b) ensure that the Agent is included on each policy of
insurance relating to any part of the Equipment as an
additional insured with no operational interests in the
Equipment with the effect that the provisions of each
policy of insurance, except the limits on liability,
shall operate as if there were a separate policy with
and covering each insured and so that the insurance
provided for the Agent under the policy is not
invalidated by any act or omission on the part of the
Mortgagor or its servants or agents;
(c) ensure that all Insurances contain a clause to the
effect that the policy may not be terminated, cancelled
or materially altered unless at least 30 days prior
notice of the intended termination, cancellation or
alteration has been given to the Agent;
(d) hold all slips, cover notes and contracts and policies
of insurance relating to the Equipment to the order of
the Agent and shall, on the request of the Agent,
deliver the originals or copies thereof to the Agent;
(e) duly and punctually pay all premiums and other moneys
due and payable under all such insurances as aforesaid
and promptly upon request by the Agent produce to the
Agent the premium receipts or other evidence of payment
thereof; and
(f) not terminate, cancel or amend any insurance without
the prior written consent of the Agent (such consent
not to be unreasonably withheld).
7.3 If the Mortgagor fails to procure that insurance is effected,
renewed or maintained in accordance with the provisions of this
Clause 7, the Agent shall be entitled, but not bound, to do so
either in its own name or in its name and that of the Mortgagor
jointly or in the name of the Mortgagor with an endorsement of the
Agent's interest. The moneys expended by the Agent on so effecting,
renewing or maintaining any such insurance shall be reimbursed by
the Mortgagor to the Agent on demand and until so reimbursed shall
carry interest at the Facility Rate
7.4 All claims and moneys received or receivable under any such
insurances as aforesaid shall at the direction of the Agent be
applied either in making good the loss or damage in respect of
which the same has been received or in or towards the discharge of
the Secured Obligations.
8. UNDERTAKINGS BY THE MORTGAGOR
8.1 The Mortgagor hereby covenants with the Agent that until discharge
of the security hereby created:
(a) the Mortgagor shall, at its own expense, keep the
Equipment and all parts of the same in good operational
repair and condition in all respects, and to that end
(but without limiting the generality of the foregoing)
shall carry out all necessary maintenance, overhauls,
replacements and repairs to the Equipment and all such
parts;
(b) the Mortgagor shall, at its own expense, comply with
all provisions having the force of law affecting the
Equipment or any of them or any parts thereof and shall
maintain the same in such condition so as to comply
with all laws and regulations of any country to or from
which any of the Equipment is operated or to whose
jurisdiction any of the Equipment is subject;
(c) the Mortgagor shall not knowingly employ or suffer the
employment of any of the Equipment for any illegal or
unlawful purpose;
(d) the Mortgagor shall keep accurate, complete and current
records complying with the requirements of any
applicable regulations from time to time in force and
with the recommendations of the manufacturers or
supplier of the Equipment and of parts of the same of
the location, use and condition of the Equipment and
shall upon request provide full written details thereof
to the Agent;
(e) the Agent shall have the right (through agents or
otherwise) at any time upon reasonable notice to
inspect the Equipment and the records to be kept in
accordance with Clause 8.1(d);
(f) the Mortgagor shall do all acts and things the Agent
may reasonably require to protect the Agent's interest
in the Mortgaged Property against the claims of any
other person and shall at its own cost, if requested by
the Agent, affix to each item of Equipment in a
prominent position a durable nameplate containing the
following legend:
"This [description of Equipment] is the subject of a
mortgage in favour of * dated *"
and the Mortgagor shall not remove or obscure such
nameplates and shall not permit such nameplates to be
removed or obscured and shall as soon as practicable
replace any nameplate which is removed, becomes
detached or is or becomes obscured.
8.2 the Mortgagor shall indemnify and keep the Agent indemnified
against and on demand reimburse the Agent for:
(a) all costs and expenses of operating, insuring,
maintaining and repairing the Mortgaged Property;
(b) all damages, liabilities, claims, costs and expenses
whatsoever (including financial or consequential loss)
which may at any time be made or claimed by the
Mortgagor or by any employee, servant, agent or
sub-contractor of the Mortgagor or by any third party
or parties or by their respective dependants arising
directly or indirectly out of the possession,
management, storage, operation, control, use, leasing,
maintenance and/or repair of any of the Equipment; and
(c) any losses, damages or expenses which, consequent upon
a judgment being obtained or enforced in respect of
the non-payment by the Mortgagor of any amount secured
by this Mortgage, arises or results from any variation
between the date of the said amount becoming due (or
the date of the said judgment being obtained as the
case may be) and the date of actual payment thereof in
the rates of exchange between the currency in which
such amount was due and the currency in which such
judgment was obtained and this indemnity granted from
time to time and shall continue in full force and
effect notwithstanding any judgment in favour of the
Agent.
8.3 The Mortgagor shall pay to the Agent on demand all moneys
whatsoever which the Agent shall expend, be put to or become liable
for in or about the protection or maintenance of the security
created by this Mortgage, or in or about the exercise of its powers
hereunder and shall indemnify the Agent (and as a separate covenant
any Receiver or Receivers appointed by it) against all existing and
future rents, taxes, rates, duties, fees, renewal fees, charges,
assessments, impositions and outgoings whatsoever (whether imposed
by deed or statute or otherwise and whether in the nature of
capital or revenue and even though of a wholly novel character)
which now or at any time during the continuance of the security
constituted by or pursuant to this Mortgage are properly payable in
respect of the Mortgaged Property or any part thereof or by the
owner or occupier thereof.
8.4 If any such sums as are referred to in Clause 8.3 shall be paid by
the Agent (or any Receiver or Receivers) the same shall be
reimbursed by the Mortgagor to the Agent on demand and until so
reimbursed shall bear interest at the Facility Rate.
9. ENFORCEMENT
9.1 At any time after the Agent shall have duly served notice on the
Mortgagor demanding payment or discharge by the Mortgagor of all or
any of the Secured Obligations, in whole or in part, or if
requested by the Mortgagor or after an application to the court has
been made for an administration order in relation to the Mortgagor,
the Agent may exercise without further notice and without any of
the restrictions contained in section 103 of the Law of Property
Act 1925 (whether or not it shall have appointed a Receiver) all
the powers conferred on mortgagees by the Law of Property Act 1925
and all the powers and discretions conferred by this Mortgage.
9.2 The restriction on the right of consolidating mortgage securities
contained in section 93 of the Law of Property Act 1925 shall not
apply to this Mortgage.
9.3 So far as permitted by law, neither the Agent nor any Receiver
shall, by reason of it or any Receiver entering into possession of
any part of the Mortgaged Property when entitled so to do,
be liable to account as mortgagee in possession or be liable for
any loss or realisation or for any default or omission for which
a mortgagee in possession might be liable.
10. REMEDIES
After the security hereby created has become enforceable, the Agent
shall be entitled as and when it may see fit:
(a) to take possession of all or any part of the Mortgaged
Property and to enter upon any premises where the
Mortgaged Property or any part thereof may be located,
and, where necessary for so taking possession, to
sever any of the Equipment which may have become a
fixture, PROVIDED THAT, so far as permitted by law,
neither the Agent nor any Receiver shall, by reason
of it or any Receiver entering into possession of
any part of the Mortgaged Property when entitled so to
do, be liable for any loss or realisation or for any
default or omission for which a mortgagee in possession
might be liable;
(b) to sell, call in, collect and convert into money the
Mortgaged Property or any part thereof; to repair and
keep in repair the Equipment and to insure the
Equipment against loss or damage, against such risks
and in such sums and in such manner as the Agent shall
think fit;
(c) to lease, sub-lease, enter into hire and hire-purchase,
conditional sale and other similar agreements or
otherwise deal with any or all of the Equipment on such
terms at such rents and generally upon such conditions
and stipulations as the Agent considers fit;
(d) to settle, arrange, compromise or submit to arbitration
any accounts, claims, questions or disputes whatsoever
which may arise in connection with the Mortgaged
Property or in any way relating to this security and
execute receipts, releases or other discharges in
relation thereto and to bring, take, defend,
compromise, submit to arbitration or discontinue any
actions, suits or proceedings whatsoever civil or
criminal in relation to the Mortgaged Property;
(e) to appoint a receiver of all or any part of the
Mortgaged Property upon such terms as to remuneration
and otherwise as the Agent shall deem fit;
(f) to recover from the Mortgagor on demand all reasonable
costs, charges, expenses incurred or payments made by
the Agent in connection with the execution,
registration or perfection of this Mortgage or the
exercise of any right contained in this Mortgage or in
connection with the enforcement of this Mortgage; and
(g) to execute and do all such acts, deeds and things as to
the Agent acting reasonably may appear necessary or
proper for or in relation to any of the purposes
aforesaid.
11. APPOINTMENT OF RECEIVER
11.1 At any time after the Agent shall have served notice on the
Mortgagor demanding the payment or discharge by the Mortgagor of
all or any of the Secured Obligations, in whole or in part, or if
requested by the Mortgagor or after the application to the court
for an administration order in relation to the Mortgagor under the
Insolvency Act 1986, the Agent may appoint one or more persons to
be a Receiver or Receivers of the Mortgaged Property or any part
thereof.
11.2 Subject to section 45 of the Insolvency Act 1986, the Agent may:
(a) remove any Receiver previously appointed hereunder; and
(b) appoint another person or other persons as Receiver or
Receivers, either in the place of a Receiver so removed
or who has otherwise ceased to act or to act jointly
with a Receiver or Receivers previously appointed
hereunder.
11.3 If at any time and by virtue of any such appointment(s) any two or
more persons shall hold office as Receivers of the same assets or
income, each one of such Receivers shall be entitled (unless the
contrary shall be stated in any of the deed(s) or other
instrument(s) appointing them) to exercise all the powers and
discretions hereby conferred on Receivers individually and to the
exclusion of the other or others of them.
11.4 Every such appointment or removal, and every delegation,
appointment or removal by the Agent in the exercise of any right to
delegate its powers or to remove delegates herein contained, may be
made in writing under the hand of any manager or other officer of
the Agent.
11.5 Every Receiver shall have:
(a) all the powers conferred by the Law of Property Act
1925 on mortgagees in possession and receivers
appointed under that Act;
(b) power in the name or on behalf and at the cost of the
Mortgagor to exercise all the powers and rights of an
absolute owner and do or omit to do anything which the
Mortgagor itself could do and to exercise all powers
conferred on the Agent under this Mortgage; and
(c) all the powers specified in Schedule 1 of the Insolvency Act
1986.
11.6 In making any sale or other disposal of any of the Mortgaged
Property in the exercise of their respective powers the Receiver or
the Agent may require any consideration (without prejudice to its
obligations under applicable law) and may accept, as and by way of
consideration for such sale or other disposal, cash, shares, loan
capital or other obligations, including without limitation
consideration fluctuating according to or dependent upon profit or
turnover and consideration the amount whereof is to be determined
by a third party. Any such consideration may be receivable in a
lump sum or by instalments.
11.7 All moneys received by any Receiver appointed under this Mortgage
shall be applied in the following order:
(a) in the payment of the costs, charges and expenses of
and incidental to the Receiver's appointment and the
payment of his remuneration;
(b) in the payment and discharge of any outgoings paid and
liabilities incurred by the Receiver in the exercise of
any of the powers of the Receiver;
(c) in providing for the matters (other than the
remuneration of the Receiver) specified in the first
three paragraphs of section 109(8) of the Law of
Property Act 1925;
(d) in or towards payment of any debts or claims which are
required by law to be paid in preference to the Secured
Obligations but only to the extent to which such debts
or claims have such preference;
(e) in or towards the satisfaction of the Secured
Obligations in accordance with the terms of this
Mortgage; and any surplus shall be paid to the
Mortgagor or other person entitled thereto.
The provisions of this Clause and Clause 11.9 shall take effect as
and by way of variation and extension to the provisions of the said
section 109(8), which provisions as so varied and extended shall be
deemed incorporated herein.
11.8 Every Receiver shall be the agent of the Mortgagor which shall be
solely responsible for his acts and defaults and for the payment of
his remuneration, costs, charges and expenses.
11.9 Every Receiver shall be entitled to remuneration for his services
at a reasonable rate to be fixed by agreement between him and the
Agent (or, failing such agreement, to be conclusively fixed by the
Agent) commensurate with the work and responsibilities involved
upon the basis of charging from time to time adopted in accordance
with his current practice or the current practice of his firm and
without being limited to the maximum rate specified in section
109(6) of the Law of Property Act 1925.
12. POWER OF ATTORNEY
12.1 The Mortgagor hereby irrevocably appoints the following, namely:
(a) the Agent;
(b) each and every person to whom the Agent shall from time
to time have delegated the exercise of the power of
attorney conferred by this Clause; and
(c) any Receiver appointed hereunder and for the time being
holding office as such;
jointly and also severally to be its attorney or attorneys and in
its name and otherwise on its behalf to do all acts and things and
to sign, seal, execute, deliver, perfect and do all deeds,
instruments, documents, acts and things which may be required for
carrying out any obligation imposed on the Mortgagor by or pursuant
to this Mortgage (including but not limited to the obligations of
the Mortgagor under Clause 5 (Further Assurance) and the statutory
covenant referred to in such Clause), for carrying any sale, lease
or other dealing by the Agent or such Receiver into effect, for
getting in the Mortgaged Property, and generally for enabling the
Agent and the Receiver to exercise the respective powers conferred
on them by or pursuant to this Mortgage or by law. The Agent shall
have full power to delegate the power conferred on it by this
Clause, but no such delegation shall preclude the subsequent
exercise of such power by the Agent itself or preclude the Agent
from making a subsequent delegation thereof to some other person;
any such delegation may be revoked by the Agent at any time.
12.2 The power of attorney hereby granted is as regards the Agent, its
delegates and any such Receiver (and as the Mortgagor hereby
acknowledges) granted irrevocably and for value as part of the
security constituted by this Mortgage to secure proprietary
interests in and the performance of obligations owed to the
respective donees within the meaning of the Powers of Attorney Act
1971.
13. PROTECTION OF PURCHASERS
No purchaser or other person dealing with the Agent or its delegate
or any Receiver appointed hereunder shall be bound to see or
inquire whether the right of the Agent or such Receiver to exercise
any of its or his powers has arisen or become exercisable or be
concerned with notice to the contrary, or be concerned to see
whether any such delegation by the Agent shall have lapsed for any
reason or been revoked.
14. CONSOLIDATION OF ACCOUNTS AND SET-OFF
In addition to any general lien or similar rights to which they may
be entitled by operation of law, each Secured Party shall have the
right at any time and without notice to the Mortgagor to set off or
transfer any sum or sums standing to the credit of any accounts of
the Mortgagor with such Secured Party (whether current or otherwise
or subject to notice) in or towards satisfaction of the liability
of the Mortgagor to such Secured Party hereunder on any other
account or in any other respect. The liabilities referred to in
this Clause may be actual, contingent, primary, collateral, several
or joint liabilities, and the accounts, sums and liabilities
referred to in this Clause may be denominated in any currency.
15. CURRENCY
For the purpose of or pending the discharge of any of the Secured
Obligations the Agent may, in its sole discretion, convert any
moneys received, recovered or realised in any currency under this
Mortgage (including the proceeds of any previous conversion under
this Clause) from their existing currency of denomination into any
other currency at such rate or rates of exchange and at such time
as the Agent thinks fit.
16. APPLICATION
The Mortgagor shall have no rights in respect of the application by
the Secured Parties of any sums received, recovered or realised by
the Agent under this Mortgage.
17. NOTICES
17.1 Without prejudice to any other method of service of notices and
communications provided by law, a demand or notice under this
Mortgage shall be in writing signed by an officer or agent of the
Agent and may be served on the Mortgagor by hand, by post, by
facsimile transmission or by telex at the address set out above.
17.2 A notice or demand by the Agent or any Bank shall be deemed
received the day after posting if sent by first class post, or if
sent by telex or facsimile transmission shall be deemed received at
the time of despatch (or if sent outside working hours the next
day).
17.3 Any notice given to the Agent shall be deemed to have been given
only on actual receipt.
18. NEW ACCOUNTS
If the Agent or any other of the other Secured Parties receives or
is deemed to be affected by notice whether actual or constructive
of any subsequent charge or other interest affecting any part of
the Mortgaged Property and/or the proceeds of sale thereof, then
the Secured Parties may open a new account or accounts with the
Mortgagor. If the Secured Parties do not open a new account or
accounts they shall nevertheless be treated as if they had done so
at the time when the notice was, or was deemed to be, received and
as from that time all payments made to the Secured Parties shall be
credited or be treated as having been credited to the new account
or accounts and shall not operate to reduce the amount for which
this Mortgage is security.
19. REMEDIES CUMULATIVE ETC.
19.1 The rights, powers and remedies provided in this Mortgage are
cumulative and are not, nor are they to be construed as, exclusive
of any rights, powers or remedies provided by law or otherwise.
19.2 No failure on the part of the Agent to exercise, or delay on its
part in exercising, any of its respective rights, powers and
remedies provided by this Mortgage or by law (collectively the
"Rights") shall operate as a waiver thereof, nor shall any single
or partial waiver of any of the Rights preclude any further or
other exercise of that one of the Rights concerned or the exercise
of any other of the Rights.
19.3 The Mortgagor hereby agrees to indemnify the Agent and any Receiver
against all losses, actions, claims, costs, charges, expenses and
liabilities incurred by the Agent and by any Receiver (including
any substitute delegate attorney as aforesaid) in relation to this
Mortgage or the Secured Obligations (including, without limitation,
the reasonable costs, charges and expenses incurred in the carrying
of this Mortgage into effect or in the exercise of any of the
rights, remedies and powers conferred hereby or in the perfection
or enforcement of the security constituted hereby or pursuant
hereto or in the perfection or enforcement of any other security
for or guarantee in respect of the Secured Obligations) or
occasioned by any breach by the Mortgagor any of its covenants or
obligations under this Mortgage. The Mortgagor shall so indemnify
the Agent and any Receiver on demand and shall pay interest on the
sum demanded at the Facility Rate any sum so demanded together with
any interest, shall be a charge upon the Mortgaged Property in
addition to the moneys hereby secured.
20. PROVISIONS SEVERABLE
Every provision contained in this Mortgage shall be severable and
distinct from every other such provision and if at any time any one
or more of such provisions is or becomes invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining such provisions shall not in any way be affected thereby.
21. THE AGENT'S DISCRETION
21.1 Any liberty or power which may be exercised or any determination
which may be made hereunder by the Agent may be exercised or made
in the absolute and unfettered discretion of the Agent which shall
not be under any obligation to give reasons therefor.
21.2 A certificate by an officer of the Agent (a) as to the amount for
the time being due to the Agent and the other Secured Parties and
(b) as to any sums payable to the Agent hereunder shall (save in
the case of manifest error) be conclusive and binding upon the
Mortgagor for all purposes.
22. AMENDMENTS
No amendments or waiver of any provision of this Mortgage and no
consent to any departure by the Mortgagor therefrom shall in any
event be effective unless the same shall be in writing and signed
or approved in writing by the Agent, and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
23. LAW
This Mortgage is governed by and shall be construed in accordance
with English law.
24. ASSIGNMENT
If the Secured Parties or any of them sell, assign or transfer any
of their respective Secured Obligations the Secured Parties shall
have a full and unfettered right to assign or otherwise transfer
the whole or any part of the benefit of this Mortgage to secure
such Secured Obligations and the expression the "Agent" wherever
used herein shall be deemed to include the assignees and other
successors, whether immediate or derivative, of the Agent, who
shall be entitled to enforce and proceed upon this Mortgage in the
same manner as if named herein. The Agent shall be entitled to
disclose any information concerning the Mortgagor to any such
assignee or other successor or any participant or proposed
assignee, successor or participant.
IN WITNESS whereof the Mortgagor has executed this Mortgage as a deed and the
Agent has executed this Mortgage under hand with the intention that it be
delivered on the day and year first before written.
<PAGE>
SCHEDULE
THE EQUIPMENT
<PAGE>
EXECUTED AS A Deed by )
HUNTINGDON LIFE )
SCIENCES LIMITED ) Director
acting by )
and by ) Director/Secretary
SIGNED for and on behalf of )
NATIONAL WESTMINSTER )
BANK Plc )
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Security Agreement") dated as of April 30,
1998 between HUNTINGDON LIFE SCIENCES INC., a Delaware corporation (the
"Company"), and NATIONAL WESTMINSTER BANK PLC (the "Agent"), as collateral agent
for (i) the banks parties to the Facilities Agreement referred to below (the
"Facility Banks") and (ii) itself, as Overdraft Bank under the New Facility
Letter referred to below (in such capacity, the "Overdraft Bank").
W I T N E S S E T H:
WHEREAS, the Company, Huntingdon Life Sciences Limited, Huntington Life
Sciences Group plc, the Facility Banks and the Agent have entered into a
Facilities Agreement, dated as of November 1, 1995 (as amended, modified,
supplemented or extended from time to time, the "Facilities Agreement") pursuant
to which the Facility Banks have agreed to make certain facilities available to
the Company, Huntingdon Life Sciences Limited and Huntington Life Sciences Group
plc;
WHEREAS, in connection with the Facilities Agreement, the Company
executed and delivered (i) a Guarantee dated as of November 1, 1995 (as amended,
modified, supplemented or extended from time to time, the "Guarantee") in favor
of the Agent for the benefit of the Facility Banks and (ii) a Mortgage, Security
Agreement and Fixture Filing dated as of January 20, 1998 (as amended, modified,
supplemented and extended from time to time, the "Mortgage") in favor of the
Agent for the benefit of the Facility Banks; and
WHEREAS, pursuant to a New Facility Letter dated as of March 17, 1998
(as amended, modified, supplemented and extended from time to time, the "New
Facility Letter") from the Agent, as Overdraft Bank in respect of the new
overdraft facility provided for therein, the Company has agreed to execute and
deliver this Security Agreement to secure its obligations under the Facilities
Agreement, the Guarantee and the New Facility Letter;
NOW, THEREFORE, in consideration of the foregoing, the Company hereby
agrees with the Agent, for the benefit of the Facility Banks and the Overdraft
Bank (the Agent, the Facility Banks and the Overdraft Bank are collectively
referred to herein as the "Secured Parties"), as follows:
SECTION 1. Definitions. Unless otherwise indicated, capitalized
terms used herein and not defined herein shall have the respective meanings
given to them in the Facilities Agreement.
SECTION 2. Grant of Security. The Company hereby assigns, pledges,
transfers and grants to the Agent, for the benefit of the Secured Parties, a
continuing security interest in, and a lien upon, all of the Company's right,
title and interest in, to and under, the following:
(a) The Company's demand deposit account (account number 191 10015)
with The First National Bank of Maryland (the "Pledged Account") and all monies
and credit balances from time to time held in the Pledged Account;
(b) The equipment and property described on Exhibit A hereto, together
with all replacements and subsequent replacements thereof (collectively, the
"Equipment"); and
(c) Any and all proceeds of any of the foregoing.
The property referred to and described in (a), (b) and (c) of this
Section 2 is hereinafter collectively referred to as the "Collateral".
- -----------
SECTION 3. Security for Obligations. This Security Agreement secures
the payment of all obligations and liabilities now or hereafter existing of (i)
the Company, Huntingdon Life Sciences Limited and Huntingdon Life Sciences Group
plc to the Agent and the Facility Banks under the Facilities Agreement and the
related documents referred to therein, (ii) the Company to the Agent and the
Facilities Banks under the Guarantee, and (iii) the Company, Huntingdon Life
Sciences Limited and Huntingdon Life Sciences Group plc under the New Facility
Letter and (iv) all other liabilities and obligations of whatever nature of the
Company, Huntingdon Life Sciences Limited and/or Huntingdon Life Sciences Group
plc now or hereafter owed to any one or more of the Secured Parties, such
obligations and liabilities set forth in clauses (i), (ii), (iii) and (iv) are
collectively referred to herein as the "Secured Obligations").
SECTION 4. Covenants.
(a) The Company agrees that from time to time, at its own cost and
expense, the Company will promptly execute and deliver and will cause to be
executed and delivered all further instruments and documents, including, without
limitation, financing and continuation statements, and will take all further
action and will cause all further action to be taken, that the Agent may
reasonably request in order to create, preserve, perfect and protect the
security interest in the Collateral or to enable the Agent to exercise and
enforce its rights and remedies hereunder or to preserve, perfect and protect
the Company's right, title and interest in and to the Collateral.
(b) The Company hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, and take all such
further action and execute all such further documents and instruments as may be
necessary or desirable in order to create, preserve, perfect and protect the
security interest in the Collateral without the signature of the Company where
permitted by law.
(c) The Company will at all times keep accurate and complete books and
records with respect to the Collateral and agrees that the Agent or its
representative shall have the right at any time and from time to time, upon
reasonable advance notice, to call at the Company's place of business during
normal business hours to inspect and examine the books and records of the
Company relating to the Collateral and to make extracts therefrom and copies
thereof.
(d) The Company hereby covenants with the Agent and each of the other
Secured Parties that it will pay and discharge each of the Secured Obligations
owed by the Company when due to the Agent and the other Secured Parties.
(e) A certificate signed by an officer of the Agent or other Secured
Party (as the case may be) as to the money and liabilities for the time being
due or incurred to the Agent or any other Secured Party, as shown on the books
and records of the Agent or such Secured Party, from or by the Company shall for
all purposes (in the absence of manifest error) be conclusive evidence against
and binding on the Company.
(f) The Company hereby covenants that, without the prior written
consent of the Agent, it shall not nor shall it agree to purport to:
(i) create or permit to exist any lien, security interest or
encumbrance, whether in any such case ranking in priority to or pari passu with
or after the security interest created by this Security Agreement over the whole
or any part of the Collateral, other than liens in favor of mechanics or
materialsmen or for taxes not yet due and payable or which are being contested
in good faith by appropriate proceedings and for which reserves have been
established in accordance with generally accepted accounting principles; or
(ii) sell, assign, transfer, lease, sub-lease, hire, or
otherwise dispose of, whether by means of one or a number of transactions
related or not and whether at one time or over a period of time, the whole or
any part of the Collateral or any interest therein; or
(iii) do or permit to be done any act or thing which might
jeopardize the rights of the Agent in the Collateral or any part thereof and
will not omit or allow the omission of any act which might prevent the rights of
the Agent in the Collateral or any part thereof from being exercised. In
particular, the Company covenants that it shall obtain and effect and keep
effective all permits, licenses and approvals which may from time to time be
required in connection with the Collateral.
(g) The Company covenants and agrees with the Agent that, at all times
during the subsistence of the security interest constituted by or pursuant to
this Security Agreement, the Company will (at its own cost and expense) cause
the Equipment to be insured and to be kept insured with such insurers, in such
amounts and on such terms as maintained by similarly situated companies using
similar items of Equipment in the conduct of their business, but in any event in
an amount not less than the full replacement value thereof.
(h) The Company further covenants and agrees with the Agent that,
during the continuance of this Security Agreement, the Company shall:
(i) fully and promptly comply with all the terms, covenants,
undertakings and conditions of each policy of insurance relating to any part of
the Equipment and will not do, consent, agree to, suffer or permit any act or
omission which may invalidate any policy of insurance relating to any part of
the Equipment or render the same unenforceable in whole or in part;
(ii) ensure that the Agent is included (A) on each policy of liability
insurance relating to any part of the Equipment as an additional insured with no
operational interests in the Equipment with the effect that the provisions of
each policy of insurance, except the limits on liability, shall operate as if
there were a separate policy with and covering each insured and so that the
insurance provided for the Agent under the policy is not invalidated by any act
or omission on the part of the Company or its servants or agents and (B) on each
policy of property damage insurance relating to any part of the Equipment as a
loss payee;
(iii) ensure that all insurance contains a clause to the effect that
the policy may not be terminated, cancelled or materially altered unless at
least 30 days prior notice of the intended termination, cancellation or
alteration has been given to the Agent;
(iv) hold all slips, cover notes and contracts and policies of
insurance relating to the Equipment to the order of the Agent and shall, on the
request of the Agent, deliver the originals or copies thereof to the Agent;
(v) duly and punctually pay all premiums and other moneys due and
payable under all such insurance as aforesaid and promptly upon request by the
Agent provide to the Agent the premium receipts or other evidence of payment
thereof; and
(vi) not terminate or cancel any insurance without the prior delivery
to the Agent of evidence of such replacement insurance coverage in respect of
the Equipment satisfying the requirements set forth herein.
(i) If the Company fails to obtain and maintain insurance coverage in
accordance with the provisions hereof, the Agent shall be entitled, but not
bound, to do so either in its own name or in its name and that of the Company
jointly or in the name of the Company with an endorsement of the Agent's
interest. All amounts expended by the Agent on so obtaining or maintaining any
such insurance shall be reimbursed by the Company to the Agent on demand and
shall carry interest at the Facility Rate from the date such amounts are paid by
the Agent to but not including the date such amounts are repaid in full by the
Company.
(j) All claims and moneys received or receivable under any such
insurance coverage as aforesaid shall at the option of the Company be applied
either in making good the loss or damage in respect of which the same has been
received or in or towards the discharge of the Secured Obligations prior to the
occurrence of an Event of Default (as defined below). Upon the occurrence and
during the continuation of an Event of Default, all claims and moneys received
or receivable under such insurance coverage shall be applied by the Agent in
discharge of the Secured Obligations.
(k) The Company hereby covenants with the Agent that until discharge of
the security interest hereby created:
(i) the Company shall, at its own expense, keep the Equipment and all
parts of the same in good operational repair and condition in all respects, and
to that end (but without limiting the generality of the foregoing) shall carry
out all necessary maintenance, overhauls, replacements and repairs to the
Equipment and all such parts;
(ii) the Company shall, at its own expense, comply with all provisions
having the force of law affecting the Equipment or any of them or any parts
thereof and shall maintain the same in such condition so as to comply with all
laws and regulations of any jurisdiction in which any of the Equipment is
operated or to which any of the Equipment is subject;
(iii) the Company shall not knowingly employ or suffer the employment
of any of the Equipment for any illegal or unlawful purpose;
(iv) the Company shall do all acts and things the Agent may reasonably
require to protect the Agent's interest in the Equipment against the claims of
any other person.
(l) The Company shall indemnify and keep the Agent indemnified against
and on demand reimburse the Agent for:
(i) all reasonable costs and expenses of operating, insuring,
maintaining and repairing the Equipment actually incurred by the Agent;
(ii) all damages, liabilities, claims, reasonable costs and expenses
whatsoever (including financial or consequential loss) which may at any time be
made or claimed by the Company or by an employee, servant, agent or
sub-contractor of the Company or by any third party or parties or by their
respective dependants arising directly or indirectly out of the possession,
management, storage, operation, control, use, leasing, maintenance and/or repair
of any of the Equipment; and
(iii) all losses, damages or expenses which, consequent upon a judgment
being obtained or enforced in respect of the non-payment by the Company of any
amount secured by this Security Agreement, arise or result from any variation
between the date of the said amount becoming due (or the date of the said
judgment being obtained as the case may be) and the date of actual payment
thereof in the rates of exchange between the currency in which such amount was
due and the currency in which such judgment was obtained and this indemnity
granted from time to time shall continue in full force and effect
notwithstanding any judgment in favor of the Agent.
(m) The Company shall pay to the Agent on demand all moneys whatsoever
which the Agent shall expend, be put to or become liable for in or about the
protection or maintenance of the security interest created by this Security
Agreement, or in or about the exercise of its powers hereunder and shall
indemnify the Agent against all existing and future taxes, rates, duties, fees,
charges, assessments, impositions and outgoings whatsoever (whether imposed by
deed or statute or otherwise and whether in the nature of capital or revenue and
even though of a wholly novel character) which now or at any time during the
continuance of the security interest constituted by or pursuant to this Security
Agreement are properly payable in respect of the Collateral or any part thereof.
(n) If any such sums as are referred to in Section 4(m) shall be paid
by the Agent, the same shall be reimbursed by the Company to the Agent on demand
and shall bear interest at the Facility Rate from the date such amounts are paid
by the Agent to but not including the date such amounts are repaid in full by
the Company.
(o) With respect to any amount that the Company is required to pay by
reason of any provision hereunder, including, without limitation, Sections 4(i),
(l), (m) and (n), the Agent shall submit to the Company relevant documentation
to substantiate the requested payment.
(p) Notwithstanding anything herein to the contrary, the Company shall
not be liable for any amounts set forth in Sections 4(l) through (n) hereof
which result from the gross negligence or wilful misconduct of the Agent.
(q) The Company agrees that until discharge of the Security Interest
created herein, the Company shall not establish or maintain any deposit accounts
other than the Pledged Account. The Company further covenants and agrees that it
shall cause all receivables, payments or proceeds from the operation of the
Company's business of any kind whatsoever to be paid directly to, or to be
deposited into, the Pledged Account. Prior to the occurrence of an Event of
Default (as defined below), the Company shall have the right to direct
withdrawals and disbursements from the Pledged Account in the ordinary course of
its business, as set forth in the account letter among the Company, the Agent
and The First National Bank of Maryland, a copy of which is attached hereto as
Exhibit B. For so long as no Event of Default has occurred, the Company shall
have the right to direct the investment of funds in the Pledged Account in the
following investments (collectively, "Permitted Investments") having a maturity
of 90 days or less, as determined by the Company: (i) direct obligations of the
United States and (ii) interest-bearing obligations of any domestic bank having
a short-term credit rating of at least A-1 by Standard and Poors Ratings Group
and at least P-1 by Moody's Investors Service, Inc.; provided that the Company
may make such investments only if the investment certificates are held in the
Pledged Account.
SECTION 5. Representations and Warranties.
(a) This Security Agreement has been duly authorized by all necessary
action of the Company, and validly and duly executed and delivered to the Agent.
This Security Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
(b) All of the Equipment is, and each replacement or substitution
thereof and any and all proceeds thereof will be, located at the Company's place
of business and chief executive office at Mettlers Road, East Millstone, New
Jersey 08875-2360.
(c) The Company is the legal and beneficial owner of each item of the
Collateral, free and clear of any lien or encumbrance, except for the security
interest created under this Security Agreement. No effective financing statement
or other similar instrument covering any part of the Collateral is on file in
any recording office, except as may have been filed in favor of the Agent,
relating to this Security Agreement.
(d) The Company has possession and exclusive control of the Equipment.
(e) The Company has no deposit accounts other than the Pledged Account
and the accounts set forth on Exhibit B.
(f) Upon filing of UCC-1 forms appropriately completed in Somerset
County, New Jersey, all filings and other action necessary to perfect the
security interest over the Equipment shall have been taken. This Security
Agreement creates a valid, perfected first priority security interest in the
Collateral securing the payment of the Secured Obligations.
SECTION 6. Agent Appointed Attorney-in-Fact. The Company hereby
irrevocably appoints the Agent the Company's attorney-in-fact, with full
authority in the place and stead of the Company and in the name of the Company
or otherwise, from time to time after the occurrence and during the continuation
of an event of default as defined in the Facilities Agreement or an event of
default as defined in the New Facility Letter or any failure by the Company to
keep or perform any covenant or undertaking hereunder which failure shall remain
uncured for three days after the Company's receipt of a notice thereof (each, an
"Event of Default"), to take any action, to execute any instruments and to
exercise any rights, privileges, options, elections or powers of the Company
pertaining or relating to the Collateral which the Agent may deem necessary or
desirable to preserve and enforce its security interest in the Collateral and
otherwise to accomplish the purposes of this Security Agreement. The Agent shall
not have any duty to take any such action, to execute any such instrument, to
exercise any such rights, privileges, options, including, without limitation,
termination options, elections or powers or to sell or otherwise to realize upon
any of the Collateral, as hereinafter authorized, and the Agent shall not be
responsible for any failure to do so or delay in so doing.
SECTION 7. Agent May Perform. If the Company fails to perform any
agreement contained herein, the Agent may (but shall not be obligated to) itself
perform, or cause performance of, such agreement. The Company shall reimburse
the Agent on demand for any amounts paid or any expenses incurred by the Agent
in good faith in connection therewith, and shall carry interest at the Facility
Rate from the date such amounts are paid by the Agent to but not including the
date on which such amounts are repaid in full by the Company.
SECTION 8. Agent's Duties. The powers conferred on the Agent hereunder
are solely to protect its interest in the Collateral for the benefit of the
Secured Parties and shall not impose any duty upon it to exercise any such
powers. Except as expressly provided herein, the Agent shall have no duty to
take any steps to preserve the security interest granted hereby.
SECTION 9. Realization upon Collateral. If an Event of Default shall
occur and be continuing, the Agent may, and at the request of the Secured
Parties shall, for the benefit of the Secured Parties, (i) take any and all
action necessary or appropriate to collect any and all amounts payable under or
with respect to the Collateral, (ii) apply any and all amounts in the Pledged
Account to the Secured Obligations in accordance with Section 9 hereof, (iii)
take possession of the Collateral forthwith or at any time thereafter, in which
case the Company shall marshal and deliver the Collateral to the Agent at such
time and place as the Agent may reasonably specify, and (iv) sell the whole or,
from time to time, any part of the Collateral, by private or public sale, in
such order or otherwise in such manner as the Secured Parties may elect in their
sole discretion. The Agent shall have, with respect to the Collateral, in
addition to any other rights and remedies which may be available to it at law or
in equity or pursuant to this Security Agreement or any other contract or
agreement, all rights and remedies of a secured party under any applicable
version of the Uniform Commercial Code of the relevant jurisdictions relating to
the Collateral, and it is expressly agreed that if the Agent should proceed to
dispose of or utilize the Collateral, or any part thereof, in accordance with
the provisions of said versions of the Uniform Commercial Code, ten days' notice
by the Agent to the Company shall be deemed to be reasonable notice under any
such provision requiring such notice. Any sale of Collateral by the Agent may be
made on such terms as the Secured Parties may specify, without assuming any
credit risk and without any obligation to advertise or give notice of any kind
other than that necessary under applicable law. The Agent and the Secured
Parties shall incur no liability as a result of the sale of the Collateral, or
any part thereof, at any private or public sale. The Company hereby waives, to
the extent permitted by applicable law, any claims against the Agent and the
Secured Parties arising by reason of the fact that the price at which Collateral
may have been sold at such a private sale was less than the price which might
have been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Agent accepts the first offer received and does
not offer such Collateral to more than one possible purchaser. In exercising its
rights under this Section 9, the Agent will act in a commercially reasonable
manner.
SECTION 10. Application of Proceeds. The Agent shall apply the proceeds
of any realization upon or sale of the whole or any part of the Collateral after
deducting all reasonable costs and expenses of collection, retaking, handling,
storage, preparation, sale and delivery (including, without limitation,
reasonable counsel's fees and expenses) incurred by it in connection with such
realization or sale to the payment of the Secured Obligations. Any surplus of
such payments or cash proceeds held by the Agent and remaining after payment in
full of all the Secured Obligations shall be paid over to the Company, and the
Company shall remain in all respects liable to the Agent, the Facility Banks and
the Overdraft Bank for any unrecovered balance owing to them.
SECTION 11. Waiver of Stays, etc. To the fullest extent that the
Company may lawfully so agree, the Company agrees that it will not at any time
plead, claim or take the benefit of any appraisement, valuation, stay,
extension, moratorium or redemption law now or hereafter in force to prevent or
delay the enforcement of this Security Agreement or the absolute sale of any
portion of or all of the Collateral or the possession thereof by any purchaser
at any sale under this Security Agreement, and the Company, for itself and all
who may claim under the Company, as far as the Company now or hereafter lawfully
may do so, hereby waives the benefit of all such laws.
SECTION 12. Amendments, etc. No amendment, modification or
waiver of any provision of this Security Agreement, nor consent to any departure
by the Company therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Agent with the consent of the Secured Parties
(or all of the Facility Banks, to the extent required pursuant to the Facilities
Agreement), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 13. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including telex, telecopier or similar writing) and shall be given to such
party at its address or telex or telecopier number set forth in the Facilities
Agreement or such other address or telex or telecopier number as such party may
hereafter specify by notice to the other party.
SECTION 14. Continuing Security Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the later of (i) the termination of the commitments
under the Facilities Agreement and the commitments under the New Facility Letter
or (ii) the payment in full of the Secured Obligations (other than
indemnification obligations as to which a claim has not been asserted at this
time), (b) be binding upon the Company and its successors and assigns and (c)
inure to the benefit of the Agent, each of the Secured Parties and their
respective successors, transferees and assigns. Upon the later of (i) the
termination of the commitments under the Facilities Agreement and the
commitments under the New Facility Letter or (ii) the payment in full of the
Secured Obligations (other than indemnification obligations as to which a claim
has not been asserted at such time), the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Company. Upon any
such termination and the payment in full of the Secured Obligations (other than
indemnification obligations as to which a claim has not been asserted at such
time), the Agent will, at the expense of the Company, execute and deliver to the
Company such documents as the Company shall reasonably request to evidence such
termination.
SECTION 15. No Waiver; Cumulative Remedies. No failure on the part of
the Agent to exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy by the Agent preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All rights, powers and remedies hereunder are cumulative and are not exclusive
of any other rights, powers and remedies provided by law.
SECTION 16. Responsibility of the Agent.
(a) By accepting the benefits hereof, each Secured Party hereby
irrevocably designates and appoints, subject to Section 16(e) hereof, the Agent
as Agent under this Security Agreement, to take such action on its behalf under
the provisions of this Security Agreement and to exercise such powers and
perform such duties as are expressly delegated to such Agent by the terms of
this Security Agreement, together with such other powers as are reasonably
incidental thereto.
(b) By accepting the benefits hereof, each Secured Party agrees that
(i) neither the Agent, nor any of its directors, officers or employees or agents
shall be liable for any action taken or omitted to be taken by them hereunder,
except for their own gross negligence or willful misconduct, (ii) the Agent
shall not be responsible to the Secured Parties for any statements, warranties
or representations herein, the Facilities Agreement or the related documents
referred to therein, the New Facility Letter, the Guarantee, the Mortgage or any
other documents contemplated thereby, (collectively, the "Financing Documents")
or the value, condition, priority, ownership or sufficiency of the Collateral or
the legality, validity or enforceability of any of the Financing Documents, nor
shall the Agent be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements provided for
in the Financing Documents, (iii) the Agent shall not have any obligation to
determine whether there has occurred any Event of Default or potential Event of
Default, under any Financing Documents, and the Agent shall not be charged with
knowledge of the happening of any event of default or potential event of default
unless it shall have been notified thereof in writing by the Company or a
Secured Party, and (iv) the Agent shall be entitled to rely upon any notice,
consent, certificate, statement or other document believed by it to be genuine
and correct and to have been signed and sent by the proper person or persons
and, in respect of legal matters, upon the opinion of counsel selected by it.
The Agent may seek instructions from the Secured Parties as to the exercise of
its rights, powers and remedies. If the Agent shall be instructed by the Secured
Parties to take any action hereunder, the Agent may, before taking such action,
require that the Secured Parties indemnify the Agent, in a manner reasonably
satisfactory to the Agent, for any liability which the Agent may incur in taking
such action.
(c) Nothing in this Security Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Security Agreement or any Collateral except as expressly set
forth herein or therein. With respect to the credit extended by it, the Agent
shall have the same rights and powers under the Financing Documents as any other
Secured Party and may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company as if it were not the Agent.
(d) The Secured Parties shall indemnify the Agent (to the extent not
reimbursed by the Company, but without limiting the obligations of the Company)
ratably in accordance with their respective interests in the Collateral, for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Security Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
of any such other documents, provided that no Secured Party shall be liable for
any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent.
(e) The Agent may resign (effective upon appointment of a successor) at
any time by giving written notice thereof to the Secured Parties and the
Company. Upon any such resignation, the Secured Parties shall within 30 days
after the Agent shall have given notice of its resignation, appoint a successor
to the Agent, which decision of the Secured Parties shall be binding upon all of
the Secured Parties. Provided no Event of Default has occurred and is
continuing, any successor Agent which is not a party to the Facilities Agreement
shall be approved by the Company, which approval shall not be unreasonably
withheld or delayed. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and upon the transfer of the Collateral to the successor Agent, the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Security
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Security Agreement.
SECTION 17. GOVERNING LAW; WAIVER OF JURY TRIAL; SEVERABILITY. THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF. THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND EXPRESSLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ENFORCING OR DEFENDING ANY RIGHTS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY ACKNOWLEDGES THAT THE
PROVISIONS OF THIS SECTION 17 HAVE BEEN BARGAINED FOR AND THAT IT HAS BEEN
REPRESENTED BY COUNSEL IN CONNECTION THEREWITH. Any provision of this Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
[signatures begin on next page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
HUNTINGDON LIFE SCIENCES INC.
By:______________________________
Name:
Title:
NATIONAL WESTMINSTER BANK PLC,
as Agent
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT A
Description of Equipment
Description Cost
($000's)
HPLC systems 210
2 x APOI 365 MS/MS systems 550
X-Ray bone densitometer 95
----
855
----
<PAGE>
EXHIBIT B
Pledged Account Letter
<PAGE>
April 30, 1998
The First National Bank of Maryland
25 South Charles Street, 22nd Floor
Mail Code 101-515
Baltimore, MD 21201
Attention: Ronald C. Lapointe
Re: Huntingdon Life Sciences Inc.
Gentlemen:
Huntingdon Life Sciences Inc. (the "Company") and National Westminster
Bank plc hereby give you notice that, pursuant to a Security Agreement dated as
of April 30, 1998 between the Company and National Westminster Bank plc, as
agent on behalf of the Secured Parties named therein (in such capacity, the
"Agent")(the "Security Agreement"), the Company has granted to the Agent a
security interest in, all of the right, title and interest of the Company in and
to its demand deposit account with you under account number 191 10015 (the
"Pledged Account") together with all monies, credit balances and certificates,
instruments and other documents evidencing permitted investments held therein to
secure the payment and performance by the Company, Huntingdon Life Sciences,
Limited and Huntingdon Life Sciences Group plc of the Secured Obligations (as
defined in the Security Agreement). It is not necessary that you be familiar
with the terms of the Security Agreement or any related document. You
acknowledge the Agent's security interest in, and lien on, the Pledged Account
and the monies on deposit therein, granted to the Agent by the Company under the
Security Agreement. You agree to act as the agent for the Agent to maintain
possession and control of the Pledged Account in accordance with the terms set
forth herein.
The Company shall be entitled to use the Pledged Account, subject to
your applicable rules, until your receipt from the Agent of notice indicating
that an Event of Default has occurred and is continuing under the Security
Agreement. The Company hereby agrees that, upon your receipt from the Agent of
notice indicating that an Event of Default has occurred and is continuing under
the Security Agreement, as set forth herein, all right, title and interest of
the Company in the Pledged Account shall immediately terminate and you may
refuse to honor any checks, ACH debits, wire transfer instructions, or any other
items which the Company causes to be presented against the Pledged Account after
your receipt of such notice. Upon written notice to you from the Agent that an
Event of Default has occurred and is continuing under the Security Agreement,
you shall not permit any further disbursements from the Pledged Account and
shall immediately transfer all collected funds in the Pledged Account to the
Agent, subject to your set-off and banker's liens rights described below.
You are hereby authorized to follow your usual procedure in the event
the Pledged Account or any checks, drafts or other orders for payment of money
should be or become the subject of any writ, levy, order, attachment,
garnishment or other similar judicial or regulatory order or process ("Order")
and neither the Company nor the Agent shall assert any claim against you for
following your usual procedures in response to any such Order.
Notwithstanding any other provisions in this Agreement, in the event of
the commencement of a case pursuant to The United States Bankruptcy Code, filed
by or against the Company, or in the event of the commencement of any similar
case under state law providing for the relief of debtors or the protection of
creditors by or against the Company, you may act as you deem necessary to comply
with all applicable provisions of governing statutes and court orders and
neither the Company nor the Agent shall assert any claim against you for so
doing.
You acknowledge receipt of the foregoing instructions and, in
connection therewith, hereby confirm that you have not received notice from any
other person of any assignment of or security interest in the Pledged Account.
You agree that all notices to be sent to you with respect to the Pledged Account
shall be addressed as set forth below or such other address as you may specify
in writing:
The First National Bank of Maryland
25 South Charles Street, 22nd Floor
Mail Code 101-515
Baltimore, Maryland 21201
Attention: Ronald C. Lapointe
with a copy to:
The First National Bank of Maryland
25 South Charles Street, 22nd Floor
Mail Code 101-850
Baltimore, Maryland 21201
Attention: Kenneth F. Krach, Esq.
You agree to provide duplicate monthly statements to the Agent in
accordance with your usual and customary procedures showing all deposits into,
and all disbursements made from, the Pledged Account for the period covered by
such monthly statements. All such duplicate statements shall be provided to the
Agent at the same time such monthly statements are provided to the Company and
shall be addressed as set forth below or such other address as the Agent may
specify by written notice to you:
National Westminster Bank plc,
as Agent
3rd Floor, Juno Court
25 Prescot Street
London, England E1 8BB
Attention:
Each of the Company and the Agent acknowledges that you shall have no
obligation, responsibility or liability to verify the accuracy of any
disbursement request or other instrument or writing delivered to you in
connection with the Pledged Account, whether such request is permitted under the
Security Agreement, the Company's use of the proceeds thereof or whether there
exists an Event of Default under the Security Agreement and that you are
entitled to rely on the certificates, notices, instruments and other writings
presented to you in connection therewith. In no event shall you be liable for
any consequential, special, punitive or indirect loss or damage which the Agent
or the Company may incur or suffer in connection with this Agreement.
The invalidity, illegality or unenforceability or any provision of this
Agreement shall not affect the validity, legality or enforceability of any of
the other provisions of this Agreement which shall remain effective.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF MARYLAND. YOU, THE COMPANY AND THE AGENT SPECIFICALLY
WAIVE THE RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATED
TO THE PLEDGED ACCOUNT, THIS AGREEMENT OR YOUR PERFORMANCE HEREUNDER.
The Company hereby releases you and all of your directors, officers,
agents, attorneys or employees (collectively, the "Depository Bank Parties")
from any claim, demand, loss, or liability, the Company may have or bring,
becoming due, arising under, out of, as a result of, in connection with or
related to, this Agreement or your performance and the performance of the
Depository Bank Parties hereunder, provided such claim, demand, loss, liability,
or expense has not directly resulted from the gross negligence or willful
misconduct of you or the Depository Bank Parties. The Company hereby agrees to
pay, indemnify and hold you and the Depository Bank Parties harmless from and
against any and all labilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, legal fees) become due,
arising under, out of, as a result of, in connection with or related to this
Agreement or the performance of you and the Depository Bank Parties hereunder,
provided such claim, demand, loss, liability, or expenses is not directly
resulting from the gross negligence or willful misconduct of you or the
Depository Bank Parties.
The Agent hereby releases you and the Depository Bank Parties from any
claim, demand, loss, or liability, the Agent may have or bring, becoming due,
arising under, out of, as a result of, in connection with or related to, this
Agreement or the performance of you and the Depository Bank Parties hereunder,
provided such claim, demand, loss, liability, or expense has not directly
resulted from the gross negligence or willful misconduct of you or the
Depository Bank Parties. The Agent hereby agrees to fully reimburse you for: (i)
any check, ACH credit or other item which is returned unpaid and the proceeds of
which were received by the Agent hereunder; and (ii) any check, ACH credit or
other item, the proceeds of which were received by the Agent hereunder and which
a Court of competent jurisdiction subsequently holds to have been subject to any
Order, or orders the proceeds returned to or on behalf of the Company. The
Agent's obligations of payment hereunder shall survive the bankruptcy or
insolvency of the Company and upon such bankruptcy or insolvency, you need not
demand payment from the Company or seek to offset any amounts in the Pledged
Account or any other accounts the Company maintains with your prior to demanding
payment from the Agent, even if the Company then has sufficient funds in deposit
with you to pay such amounts.
This Agreement may be terminated at any time by you upon fifteen (15)
days written notice to the Company and the Agent, after which fifteen (15) day
period all of your obligations hereunder shall be terminated, except that you
shall hold sums then remaining in the Pledged Account as a mere bailee pending
(a) your receipt of the mutual instruction of the Agent and the Company to
transfer the same to a successor depository, or (b) your receipt of an order of
a court of competent jurisdiction directing transfer the same. Notwithstanding
the foregoing, the indemnifications and reimbursements provided herein shall
survive this Agreement and shall remain in full force and effect until all
applicable periods of latches or statute of limitation shall expire on any claim
related hereto.
This letter agreement may be executed in two or more counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one and the same letter agreement.
NATIONAL WESTMINSTER BANK PLC
By:
Name:
Title:
HUNTINGDON LIFE SCIENCES INC.
By:
Name:
Title:
Accepted and Agreed this
30th day of April, 1998
THE FIRST NATIONAL BANK OF MARYLAND
By:
Name:
Title:
CONFORMED COPY
DATED 7th August 1998
HUNTINGDON LIFE SCIENCES GROUP plc
- and -
HUNTINGDON LIFE SCIENCES LIMITED
- and -
HUNTINGDON LIFE SCIENCES INC.
- and -
THE BANKS
- and -
NATIONAL WESTMINSTER BANK Plc
as Agent
FACILITIES AGREEMENT
(to replace the facilities agreement dated 1st November 1995)
relating to a revolving loan facility of (pound)24,500,000
WILDE SAPTE
---
LONDON
<PAGE>
TABLE OF CONTENTS
Clause Heading Page Number
1. DEFINITIONS AND INTERPRETATION................................1
1.1 Definitions...................................................1
1.2 Clause Headings..............................................10
1.3 Interpretation...............................................10
2. CONDITIONS PRECEDENT.........................................11
3. FACILITIES...................................................11
3.1 Facilities...................................................11
3.2 Obligations Several..........................................12
3.3 Rights Several...............................................12
4. PURPOSE......................................................12
4.1 Purpose of the Revolving Credit Facility.....................12
4.2 Undertaking by the Parent....................................12
4.3 No Liability.................................................12
5. DRAWDOWN AND PARTICIPATIONS..................................13
5.1 Drawdown under the Revolving Credit Facility.................13
5.2 Drawdown.....................................................13
5.3 Participations and Payments..................................14
5.4 Repayment of Existing Facility...............................14
5.5 Confirmation.................................................14
6. INTEREST.....................................................15
6.1 Interest Rate................................................15
6.2 Interest Periods.............................................15
6.3 Default Interest.............................................15
6.4 Calculation and Payment of Interest..........................16
6.5 Agent's Determination........................................16
6.6 Adjustment to Margin.........................................16
7. REPAYMENT AND REDUCTION......................................16
7.1 Repayment....................................................16
7.2 Prepayment...................................................17
7.3 Mandatory Prepayment on Wilmslow Disposal
and other Disposals..........................................17
7.4 Cancellation.................................................17
8. CHANGES IN CIRCUMSTANCES.....................................18
8.1 Illegality...................................................18
8.2 Increased Costs..............................................18
8.3 Market disruption............................................19
8.4 Mitigation...................................................21
8.5 Certificates.................................................21
9. PAYMENTS.....................................................21
9.1 Time and Place...............................................21
9.2 Business Days................................................22
9.3 Indemnity and Breakage Costs.................................22
9.4 Grossing-up..................................................22
9.5 Prepayment Right.............................................24
9.6 Accounts as Evidence.........................................24
9.7 Currency of Account..........................................25
9.8 Borrowers' Payments..........................................25
9.9 Banks' Payments..............................................25
9.10 Appropriation................................................25
10. SECURITY.....................................................26
11. REPRESENTATIONS AND WARRANTIES...............................26
11.1 Acknowledgement of Reliance..................................26
11.2 Representations and Warranties...............................26
11.3 Repetition...................................................29
12. UNDERTAKINGS.................................................29
12.1 Information Undertakings.....................................29
12.2 Positive Covenants...........................................31
12.3 Negative Covenants...........................................32
13. DEFAULT......................................................34
13.1 Defaults.....................................................34
13.2 Acceleration etc.............................................36
13.3 Acceleration of Existing Facilities, Existing Ancillary
Facilities or Bridging Facility ........................ 37
13.4 Appointment of receiver etc..................................37
14. SET-OFF AND PRO RATA PAYMENTS AND DEPOSIT ACCOUNT............37
14.1 Set-Off......................................................37
14.2 Deposit Account..............................................37
14.3 Pro Rata Sharing.............................................38
15. THE AGENT AND THE BANKS......................................39
15.1 Appointment and Duties.......................................39
15.2 Payments and Information Received............................39
15.3 Defaults.....................................................40
15.4 Assumptions..................................................40
15.5 Legal Proceedings............................................40
15.6 No Liability.................................................40
15.7 Credit Decisions.............................................40
15.8 Advisers.....................................................41
15.9 Relationship with Banks......................................41
15.10 Agent's position as a Bank...................................41
15.11 Indemnity....................................................41
15.12 Resignation..................................................42
15.13 Change of Office.............................................42
15.14 Scope of Duties..............................................42
15.15 Consents.....................................................42
15.16 Evidence.....................................................43
15.17 Security.....................................................43
16. FEES AND EXPENSES............................................43
16.1 Expenses.....................................................43
16.2 Agency Fees..................................................44
16.3 Non-Utilisation Fee..........................................44
16.4 Participation Fee............................................44
16.5 Documentary Taxes Indemnity..................................44
16.6 VAT..........................................................44
17. SEVERABILITY, WAIVERS, REMEDIES CUMULATIVE...................45
17.1 Severance....................................................45
17.2 Waivers......................................................45
18. NOTICES......................................................45
18.1 Method.......................................................45
18.2 Delivery.....................................................45
18.3 Addresses....................................................46
18.4 Deemed Receipt...............................................46
18.5 Notices to the Banks.........................................46
19. ASSIGNMENTS AND TRANSFERS....................................46
19.1 Benefit of Agreement.........................................46
19.2 Assignments and Transfers by the Borrowers...................47
19.3 Assignments and Transfers by Banks...........................47
19.4 Disclosure of Information....................................48
20. CURRENCY INDEMNITY...........................................48
20.2 General......................................................49
21. PRIORITIES...................................................49
21.1 Priority Order...............................................49
21.2 Co-Operation.................................................49
22. ANNOUNCEMENTS................................................49
23. CONFLICT.....................................................50
24. LAW AND JURISDICTION.........................................50
24.1 Law..........................................................50
24.2 Jurisdiction.................................................50
SCHEDULE 1 - THE BANKS.....................................................52
SCHEDULE 2 - DRAWDOWN NOTICE...............................................53
SCHEDULE 3 - MANDATORY COST RATE...........................................54
SCHEDULE 4 - FORM OF TRANSFER CERTIFICATE..................................56
SCHEDULE 5 - EXISTING SECURITY.............................................60
SCHEDULE 6 - CONDITIONS PRECEDENT..........................................61
SCHEDULE 7 - PARTICIPATION IN RISK SHARING.................................62
<PAGE>
THIS AGREEMENT is made on the 7th day of August 1998
BY:
(1) HUNTINGDON LIFE SCIENCES GROUP Plc, a company incorporated under the laws of
England and Wales with registered number 502370 having its registered office
at Woolley Road, Alconbury, Huntingdon, Cambridgeshire PE18 6ES (the
"Parent");
(2) HUNTINGDON LIFE sciences LIMITED, a company incorporated under the
laws of England and Wales with registered number 01815730 having
its registered office at Woolley Road, Alconbury, Huntingdon,
Cambridgeshire PE18 6ES ("HLSL");
(3) HUNTINGDON LIFE SCIENCES INC., a company incorporated under the
laws of the State of Delaware, USA having its registered office at
9 East Loockerman Street, City of Dover, County of Kent, State of
Delaware, United States of America ("HLS");
(4) THE BANKS as defined below; and
(5) NATIONAL WESTMINSTER BANK Plc, of 3rd Floor, Juno Court, 24
Prescott Street, London E1 8BB as the Agent (as such term is more
particularly defined below).
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement the following expressions shall have the
following meanings (except where the context otherwise requires):
"Accounts" means the audited consolidated annual report and
accounts of the Parent and its Subsidiaries together with the
relative directors' report and auditors' report.
"Agent" means National Westminster Bank Plc in its capacity as
agent and trustee for the Banks and each successor Agent appointed
from time to time under Clause 15.12.
"Auditors" means Arthur Andersen or such other firm of chartered
accountants of internationally recognised standing as shall have
been appointed as auditors of the Parent and its Subsidiaries.
"Available Commitment" means, in relation to a Bank, its Commitment
less its Participation in all outstanding Revolving Advances.
"Available Revolving Credit Facility" means the aggregate of the
Available Commitments of the Banks.
"Banks" means each of the banks and financial institutions listed
in Schedule 1, their respective successors and each Bank Transferee
and "Bank" shall be construed accordingly.
"Bank Transferee" has the meaning attributed thereto in Clause 19.
"Borrowers" means all and each of the Parent, HLSL, HLS and
"Borrower" shall be construed accordingly as the context requires.
"Bridging Facility" means a bridging facility of (pound)1,000,000
being provided by NatWest pursuant to the terms of a letter
addressed to the Borrowers of even date herewith.
"Business Day" means a day on which banks and foreign exchange
markets are open in London for the transaction of business of the
nature required by this Agreement.
"Capital Expenditure" has the meaning given thereto by the
established accounting policies of the Group in relation to its
cashflow statements as at the date hereof.
"Ciba Geigy Agreement" means the agreement referred to in paragraph
(d) of the definition of Permitted Indebtedness and the security
relating thereto.
"Certified Copy" means, in relation to any document, a copy of such
document bearing the endorsement "Certified a true, complete and
accurate copy of the original, which has not been amended otherwise
than by a document, a Certified Copy of which is attached hereto"
signed and dated by a duly authorised officer of the company in
question.
"Change" means the introduction, implementation, repeal, withdrawal
or change in, or in the interpretation or application of, (a) any
law, regulation, practice or concession, or (b) any directive,
requirement, request or guidance (whether or not having the force
of law but if not having the force of law, one which applies
generally to a class or category of financial institutions of which
that Bank forms part and compliance with which is in accordance
with the general practice of those financial institutions) of the
European Community, any central bank including the European Central
Bank, or any other fiscal, monetary, regulatory or other authority
which has jurisdiction over that Bank and which in any case is not
known as at the date of this Agreement.
"Charging Group" means each of the Borrowers and each and every
member of the Group that has executed a Security Document.
"Circular" means the circular to be issued by the Parent relating
to the Placings.
"Comerica" means Comerica Bank.
"Commitment" means, in relation to each Bank, the principal amount
described as such set opposite its name in Schedule 1 or under the
"Amount of Commitment Transferred" in the Schedule to any relevant
Transfer Certificate, in each case as reduced or cancelled under
the terms of this Agreement.
"Commitment Percentage" means in relation to each Bank the
percentage specified against its name in Column 3 of Schedule 1.
"Commitment Period" means the period starting on the date hereof
and ending on 30th August 2000.
"Company System" means each item of equipment and the software
programmes used by the Group in the course of its business, which
is material for the purposes of the Group's business.
"Conditions Precedent" means each of the conditions set out in
Schedule 6 and referred to in Clause 2.
"Default" means any of the events specified in Clause 13.1.
"Default Occurrence" means any event, occurrence or omission which
with the passing of time, giving of notice or satisfaction of any
other condition would be a Default.
"Deposit Account" means the deposit account in the name of the
Parent with the Agent into which the Transaction Proceeds are to be
paid.
"DKB" means Dresdner Kleinwort Benson.
"Disposal" means a sale, transfer or other disposal (including by
way of lease or loan) by a person of all or part of its business or
assets.
"Disposal Proceeds" means, in respect of a Disposal by a member of
the Group, the gross consideration received by the Group for that
Disposal less all costs and expenses directly incurred (including
any VAT chargeable) in respect of that Disposal.
"Dormant Subsidiary" means, at any given time, a company within the
Group which is at such time dormant within the meaning of section
250(3) of the Companies Act 1985 the value of whose assets does not
exceed in aggregate (pound)5,000.
"Drawdown Date" means any date, being a Business Day, on which a
Revolving Advance is made, or is proposed to be made pursuant to a
Drawdown Notice.
"Drawdown Notice" means a notice substantially in the form set out
in Schedule 2.
"Encumbrance" means any mortgage, charge, assignment by way of
security, pledge, hypothecation, lien, right of set-off, retention
of title provision, trust or flawed asset arrangement (for the
purpose of, or which has the effect of, granting security) or any
other security interest of any kind whatsoever, or any agreement,
whether conditional or otherwise, to create any of the same, but
excluding any agreement to sell or otherwise dispose of any asset
on terms whereby such asset is or may be leased to or re-acquired
or acquired by any Group Company.
"Environment" means all or any of the following media; air, land
(including buildings and any other structures or erections in, on
or under it and any soil and anything below the surface of land),
land covered with water and water (including sea, ground and
surface water).
"Environmental Claim" means any written notice from any regulatory
authority or government agency, alleging any breach, contravention
or violation of any Environmental Law by any member of the Group
(other than the TMG Companies) or the existence of any liability
arising from any such breach, contravention or violation including,
without limitation, liability to conduct, pay for or for damages in
respect of any clean-up, remediation, administrative cost or charge
or expense, damage to the Environment or any natural resource,
property loss or damage, personal injury or any penalty attaching
or relating to the presence, emission, release or leak of any
Hazardous Material in or to the Environment.
"Environmental Law" means all statutes, treaties and conventions,
directives and regulations whether of a criminal, civil or
administrative nature, and the rules of Common Law, relating to or
concerning:
(a) pollution or contamination of the Environment;
(b) harm, whether actual or potential to ecological systems;
(c) the generation, manufacture, processing, distribution,
use (including abuse), treatment, storage, disposal,
transport or handling of Hazardous Materials; and
(d) the emission, leak, release or discharge into the
Environment of noise, vibration, dust, fumes, gas,
odours, smoke, steam, effluvia, heat, light, radiation
(of any kind), infection, electricity or any Hazardous
Material and any matter or thing capable of
constituting a nuisance or an actionable tort of any
kind in respect of such matters.
"Existing Ancillary Facilities" means the Terminable Indemnity
Facility and the Forex Facility made available to the Parent and
HLSL pursuant to a facility letter dated 7th September 1997 (as
amended).
"Existing Facilities" means the sterling Revolving Credit Facility
of (pound)19,500,000 made available to the Borrowers by the Banks
pursuant to the facilities agreement dated 1st November 1995 and
the overdraft facility of (pound)5,000,000 made available by
National Westminster Bank Plc as overdraft bank pursuant to
facility letters dated 26th February 1998 and 17th March 1998 (as
varied and amended from time to time).
"Existing Facilities Outstandings" means at any time the aggregate
of all amounts outstanding under the Existing Facilities.
"Finance Lease" means any lease, hire agreement, credit sale
agreement, purchase agreement, conditional sale agreement or
instalment sale and purchase agreement which should be treated in
accordance with SSAP 21 (or any successor thereto) as a finance
lease or in the same way as a finance lease.
"Final Repayment Date" means 31st August 2000.
"Financial Year" in relation to a company has the meaning ascribed
to such expression by section 223 of the Companies Act 1985.
"Financing Documents" means this Agreement and the Security
provided that any reference to the expression "Financing Documents"
contained in the Security shall be construed as a reference to this
Agreement and the Security.
"First Drawdown Date" means the date on which the Parent first
draws down a Revolving Advance under this Agreement.
"FNBM" means The First National Bank of Maryland.
"GAAP" means, means accounting principles, concepts, bases and
policies generally adopted and accepted in England.
"Group" means the Parent and each Subsidiary of the Parent from
time to time during the Security Period and Group Company shall be
construed accordingly.
"Hazardous Materials" means any element or substance, whether
natural or artificial, and whether consisting of gas, liquid, solid
or vapour, whether on its own or in any combination with any other
element or substance, which is listed, identified, defined or
determined by any Environmental Law to be harmful to mankind or any
living organism or damaging to the Environment.
"Headroom" means, with respect to the Revolving Credit Facility,
the difference (if any) between the Revolving Credit Facility Limit
and the Revolving Loan at any time (including, in calculating the
amount of the Revolving Loan on any Interest Date, any Revolving
Advance proposed to be drawn on such Interest Date for the purpose
of repaying in whole or in part one or more maturing Revolving
Advances in aggregate in the same or a greater amount).
"Indebtedness" means , in relation to any person, its obligation
(whether present or future, actual or contingent, as principal or
surety) for the payment or repayment of money (whether in respect
of interest, principal or otherwise) incurred in respect of:
(a) moneys borrowed or raised;
(b) any bond, note, loan stock, debenture or similar
instrument;
(c) any acceptance credit, bill discounting, note purchase,
factoring or documentary credit facility;
(d) any Finance Lease;
(e) any bond, stand-by letter of credit or other similar
instrument issued in connection with any indebtedness
of the type referred to in any other paragraph of this
definition;
(f) any interest rate or currency swap agreement or any
other hedging or derivatives instrument or agreement;
or
(g) any guarantee, indemnity or similar insurance against
financial loss given in respect of the obligation of
any person in respect of any indebtedness of the type
referred to in this definition.
For the avoidance of doubt Indebtedness does not include credit
incurred in the ordinary course of trading.
"Investor Placing" means the raising by the Parent of new equity by
means of a subscription by the Investors for 120,000,000 ordinary
shares of 5 pence each in the Parent in order to raise
(pound)15,000,000 (gross).
"Investor Placing Agreement" means the agreement of even date
herewith between the Parent, the directors of the Parent and
certain investors documenting the Investor Placing.
"Investors" means the persons defined as the "Subcribers" for the
purposes of the Investor Placing Agreement or such other persons
who may replace or join the foregoing as parties to the Investor
Placing Agreement.
"Interest Date" means the last day of an Interest Period.
"Interest Period" means each period determined in accordance with
Clause 6.2 for the purpose of calculating interest on Revolving
Advances or overdue amounts respectively.
"Lending Office" means, in relation to each Bank, the lending
office details of which are set out in Schedule 1 of the relative
Transfer Certificate or such other lending office through which its
Commitment is maintained and through which its Participation is
made and maintained under this Agreement.
"LIBOR" means, in relation to a Revolving Advance or other sum and
in relation to a particular Interest Period:
(a) the rate of the offered quotation for Sterling deposits
for a period comparable to that Interest Period which
appears on the display designated as "Page 3750" on the
Telerate Service (or such other page or service as may
replace it for the purpose of displaying London
interbank offered rates of prime banks for Sterling
deposits) at or about 11.00 a.m. on the first day of
that Interest Period; or
(b) if no such display rate is available, the rate per
annum (rounded upwards to four decimal places) (as
quoted to the Agent at its request) at which NatWest
was offering deposits in Sterling in an amount
comparable with that Revolving Advance or other sum, as
the case may be, to leading banks in the London
interbank market for a period equal to that Interest
Period at or about 11.00 a.m. on the first day of that
Interest Period.
"Majority Banks" means a group of Banks whose Commitments comprise
at least 662/3 per cent. of the Total Commitments.
"Mandatory Cost Rate" means, the rate determined in accordance with
Schedule 3.
"Margin" means, (i) 1.75 per cent. per annum in respect of drawings
up to (pound)19,500,000 in aggregate under the Revolving Credit
Facility; and (ii) subject to Clause 6.6, 1.0 per cent. per annum
in respect of that portion of the drawings which for the time being
are in excess of (pound)19,500,000 in aggregate under the Revolving
Credit Facility.
"Material Adverse Effect" means a material adverse effect on the
business, assets or financial condition of the Group taken as a
whole which affects the ability of the Borrowers taken as a whole
to perform their payment obligations under the Financing Documents.
"NatWest Obligations" means (pound)100,000 of the monies from time
to time owing to NatWest by the Parent under the Revolving Loan
together with all moneys owing to NatWest in respect of the
Existing Ancillary Facilities.
"NatWest" means National Westminster Bank Plc.
"Net Proceeds" means in relation to the Security the net proceeds
of sale or other realisation of the assets subject to the Security
after discharge of all direct costs incurred in such sale or
realisation, the discharge of any prior ranking claims and, where
appropriate, all costs, charges, fees and expenses of any receiver
or similar officer appointed pursuant to the Security.
"New Jersey Mortgage" means the mortgage over the New Jersey
Property dated 16th January 1998.
"New Jersey Property" means the land and buildings owned by HLS
known as Mettlers Road, East Millstone, NJ 08877, United States of
America as recorded with the County Clerk of Somerset County as
Lots 11.01, 11.02 and 11.03 in Block 512, Township of Franklyn,
Somerset County, New Jersey.
"Non-Material Subsidiary" means at any given time, a company within
the Group the value of whose assets does not exceed (pound)200,000.
"Outstandings" means in relation to each Bank, at the time of a
distribution of the Net Proceeds, the amount owing to that Bank by
all the Borrowers under this Agreement in respect of the Priority
Obligations.
"Participation" means, in relation to a Bank and a Revolving
Advance, the part of such Revolving Advance or the Revolving Loan,
as the case may be, made available or to be made available by such
Bank and thereafter the part of such Advance or the Revolving Loan,
as the case may be, owing to such Bank from time to time.
"Participation Percentage" means, at any time, in relation to the
Banks the percentage of their participation in the risk incurred by
the Overdraft Bank under the Overdraft Facility as set out in
Schedule 7 of this Agreement.
"Permitted Encumbrance" means:
(i) any Encumbrance constituted or evidenced by any of the
Financing Documents;
(ii) any rights of set-off or liens arising in the ordinary
course of business;
(iii) any arrangements for retention of title to goods
arising in the ordinary course of business;
(iv) Encumbrances existing as at the date hereof;
(v) any Encumbrance which the Banks have at any time in
writing agreed shall be a Permitted Encumbrance;
(vi) any Encumbrance over goods or documents of title to
goods or negotiable instruments in respect thereof
created in support of any documentary credit or letter
of credit transaction entered into by a company within
the Group in the ordinary course of its trading
activities;
(vii) in the case of a company becoming a member of the Group
after the date hereof, any Encumbrance existing over the
assets of that member of the Group at the time it became
a member of the Group provided that (a)the principal
amount secured thereby is not increased, (b) such
Encumbrance is not created in contemplation of or in
connection with its becoming a member of the Group,
(c) such Encumbrance is discharged within 180 days after
such company becoming a member of the Group, and (d) no
other member of the Group has provided any guarantee,
support or other financial accommodation in relation to
the amount secured thereby;
(viii) any Encumbrance existing over any assets acquired by
any member of the Group at the time of acquisition,
provided that (a) the principal amount secured thereby
is not increased, (b) such Encumbrance is not created
in contemplation of or in connection with the
acquisition of such asset by any member of the Group,
and (c) such Encumbrance is discharged within 180 days
after the asset is required by such member of the
Group;
(ix) any Encumbrance arising out of the right of a clearing
bank to combine or consolidate any accounts or to
set-off or transfer any sum or sums standing to the
credit of any account in or towards satisfaction of any
present or future liabilities to that clearing bank;
and
(x) in the case of HLS, Encumbrances for taxes, assessments
or governmental charges or levies not yet delinquent or
which are being actively contested in good faith by
appropriate proceedings and, where the obligation
secured by such Encumbrance is not more than 60 days
overdue, Encumbrances placed on the property of HLS or
any Subsidiary of it securing claims of mechanics or
suppliers arising in the ordinary course of business.
"Permitted Indebtedness" means:
(a) Indebtedness under any Financing Document;
(b) Indebtedness existing at the date of this Agreement of the
Group Companies;
(c) Indebtedness of any Group Company to another Group Company;
(d) without limitation to (b) above, Indebtedness owing
under an asset purchase agreement dated 14th March 1997
between Ciba Geigy plc, the Parent and HLSL;
(e) Indebtedness incurred with the consent of the Agent
acting on the instructions of the Majority Banks;
(f) Indebtedness under Finance Leases in an aggregate
principal amount of up to (pound)750,000 in each
Financial Year of the Group; and
(g) any Indebtedness which refinances any Indebtedness
referred to in (a), (b), (c), (d), (e) or (f) up to the
amount then outstanding above.
"Placings" mean the Investor Placing and the Shareholder Placing.
"Priority Obligations" means all moneys owing, obligations and
other liabilities of the Borrowers to the Banks and the Agent under
the Revolving Credit Facility.
"Qualifying Bank" means an institution which is a bank as defined
by section 840A of the Income and Corporation Taxes Act 1988.
"Revolving Advance" means each revolving advance drawn down under
the Revolving Credit Facility or, as the case may be, the
outstanding principal amount of each such revolving advance.
"Revolving Credit Facility" means the Revolving Credit Facility
referred to in Clause 3.1.1.
"Revolving Credit Facility Limit" means, subject to Clauses 7.3 and
7.4, (pound)24,500,000.
"Revolving Loan" means, at any time, the aggregate of all Revolving
Advances outstanding at that time.
"Security" means the documents listed in Schedule 5 together with
any other guarantees and documents creating security executed and
delivered on or before or after the date hereof by any member of
the Group securing the obligations and liabilities of any of the
Borrowers and the other members of the Group under this Agreement
and the Existing Ancillary Facilities (and Security Documents shall
be defined accordingly).
"Security Period" means the period starting on the date hereof and
ending on the date on which all of the obligations and liabilities
of the members of the Group under each of this Agreement and the
Security are discharged in full and none of the Agent and the Banks
has any continuing obligation in relation to the Revolving Credit
Facility and the Existing Ancillary Facilities.
"Shareholder Placing" means the raising by the Parent of new equity
by means of a placing and open offer of 57,003,431 ordinary shares
of 5 pence each in the Parent in order to raise not less than
(pound)7,000,000 (gross).
"Shareholder Placing Agreement" means the agreement of even date
herewith between the Parent and DKB relating to the Shareholder
Placing.
"Shareholders" means certain institutional shareholders of the
Parent.
"SSAP" together with a number means the statement of standard
accounting practice issued by the Institute of Chartered
Accountants for application in England and Wales and identified by
reference to that number.
"Sterling", "Pounds" and "(pound)" means the lawful currency for
the time being of the United Kingdom.
"Subsidiary" has the meaning ascribed to it by section 736 of the
Companies Act 1985 and "Subsidiaries" shall be construed
accordingly.
"Tax" includes all present and future taxes, charges, imposts,
duties, levies, deductions, withholdings of any kind whatsoever, or
any amount payable on account of or as security for any of the
foregoing, by whomsoever on whomsoever and wherever imposed,
levied, collected, withheld or accrued, together with any
penalties, additions, fines, surcharges or interest relating
thereto and "Taxes" and "Taxation" shall be construed accordingly.
"TMG Companies" means, but only for so long as Travers Morgan
Limited, (a company incorporated in England and Wales with
registered number 2232567) is in administration or liquidation, all
and each of Travers Morgan Limited, and each of its Subsidiaries as
at the date of this Agreement and "TMG Company" shall be construed
accordingly.
"Total Commitments" means the aggregate of the Banks' Commitments.
"Transaction Proceeds" means the monies (net of costs) raised by
the Parent pursuant to the Placings.
"Transfer Certificate" means a transfer certificate in
substantially the form set out in Schedule 4.
"VAT" means value added tax as provided for in the Value Added Tax
Act 1994 and legislation (whether delegated or otherwise)
supplemental to that Act or in any primary or secondary legislation
promulgated by the European Community or any official body or
agency of the European Community, and any tax similar or equivalent
to value added tax imposed by any country other than the United
Kingdom and any similar Tax or any turnover Tax replacing or
introduced in addition to any of the same.
"Wilmslow Disposal" means the Disposal of the Wilmslow Property.
"Wilmslow Property" means the property situated at Wilmslow, near
Manchester and owned by HLSL.
1.2 Clause Headings
Clause headings are for convenience of reference only and shall not
affect the construction of this Agreement.
1.3 Interpretation
In this Agreement, unless the context otherwise requires:
(a) references to this Agreement include the Schedules;
(b) references to Clauses and Schedules are to be construed
as references to the Clauses of, and Schedules to, this
Agreement as amended from time to time;
(c) references to any person shall be construed so as to
include that person's permitted assigns, transferees or
successors in title;
(d) references to statutes and other legislation shall
include all re-enactments and amendments thereof;
(e) references to (or to any specified provisions of) any
Financing Document or any other document shall be
construed as references to such Financing Document,
that provision or that document as amended or novated
or supplemented, as the case may be, from time to time;
(f) references to a document being in the "agreed form"
means that document the form and content of which has
been approved by the Agent and which has been endorsed
on it the words "in an agreed form" and is initialled
on behalf of or by the Agent and the Parent;
(g) accounting terms shall be construed so as to be
consistent with GAAP;
(h) references to the singular shall include the plural and
vice versa and references by way of male, female or
neuter pronoun shall include references to all genders;
(i) the words "including" and "in particular" shall be
construed as being by way of illustration or emphasis
only and shall not be construed as, nor shall they take
effect as, limiting the generality of any foregoing
words;
(j) unless otherwise stated herein the obligations and
liabilities of the Borrowers herein are the joint and
several obligations and liabilities of the Borrowers;
and
(k) references to working capital purposes or requirements
or similar expressions shall include without limitation
Capital Expenditure and the payment or repayment of any
other amount payable under the Financing Documents, the
Bridging Facility, the Existing Facilities
and the Existing Ancillary Facilities.
2. CONDITIONS PRECEDENT
2.1 Notwithstanding any other term of this Agreement, none of the Agent
and the Banks shall be under any obligation to make the Revolving
Credit Facility available to the Borrowers unless the Agent has
notified the Parent and the Banks that it has received all the
documents and items listed in Schedule 6.
2.2 The Agent on receipt of all the documents listed in Schedule 6
shall as soon as practicable acknowledge to the Borrowers that such
documents have been received and, accordingly, subject to the
satisfaction of the Conditions Precedent referred to in paragraph
(ii), (iii) and (iv) of Schedule 6 and the applicable conditions
precedent set out in Clause 5.2.1(b), (c) and (d), the Revolving
Credit Facility is available for drawing.
3. FACILITIES
3.1. Facilities
3.1.1 Subject to the terms and conditions of this Agreement the Banks
agree to make available to the Parent, a sterling revolving credit
facility in the maximum principal amount of (pound)24,500,000.
3.1.2 For the avoidance of doubt, it is hereby declared that,
notwithstanding any other provision of this Agreement:
(i) the aggregate of the Revolving Advances shall not, at
any time, exceed the Total Commitments; and
(ii) no Bank shall be obliged to lend more than its Commitment.
3.2 Obligations Several
3.2.1 The obligations of the Banks under this Agreement are several.
3.2.2 The failure of a Bank to carry out its obligations hereunder shall
not relieve any other party hereto of any of its obligations
hereunder.
3.2.3 None of the Banks shall be responsible for the obligations of any
others hereunder.
3.3 Rights Several
3.3.1 Without prejudice to the provisions of this Agreement relating to
or requiring action by all or any of the Banks, the rights of each
of the Banks and the Agent are several and all amounts due, and
obligations owed, to each of them are separate and independent
debts or, as the case may be, obligations.
3.3.2 Each Bank and the Agent may, except as otherwise stated in this
Agreement, separately enforce its rights hereunder.
3.4 Existing Ancillary Facilities
NatWest agrees to continue to provide the Existing Ancillary
Facilities on the same terms and conditions which apply thereto on
the date hereof save that the same may only be withdrawn or
cancelled or required to be repaid in accordance with the
provisions of Clause 13.2.
4. PURPOSE
4.1 Purpose of the Revolving Credit Facility
The proceeds of the Revolving Credit Facility shall be used:
(i) to repay the Existing Facilities Outstandings; and thereafter
(ii) for the general working capital purposes of the Group.
4.2 Undertaking by the Parent
The Parent undertakes that it will use the Revolving Credit
Facility only as permitted by this Clause 4.
4.3 No Liability
Neither the Agent nor any of Banks shall be concerned as to the use
or application of the proceeds of the Revolving Credit Facility.
5. DRAWDOWN AND PARTICIPATIONS
5.1 Drawdown under the Revolving Credit Facility
5.1.1 Revolving Advances shall be made to the Parent at any time during
the Commitment Period when requested by the Parent by means of a
Drawdown Notice in accordance with Clause 5.3. At the close of
business on the last day of the Commitment Period, the Commitment
of each Bank shall be automatically cancelled.
5.1.2 Revolving Advances shall be drawn in Sterling and shall be in an
amount of at least (pound)1,000,000 and be an integral multiple of,
(pound)500,000, or, if less, the amount of the Available Revolving
Credit Facility.
5.1.3 No more than 8 Revolving Advances shall be outstanding at any
one time.
5.1.4 No Revolving Advance shall be made if the making of that Revolving
Advance would result in the Revolving Loan exceeding the Total
Commitments.
5.2 Drawdown
5.2.1 Whenever the Parent wishes a Revolving Advance to be made, it shall
give a Drawdown Notice to the Agent to be received not later than
11.00 a.m. (London time) two (2) Business Days prior to, the
relative Drawdown Date PROVIDED THAT notwithstanding any other
provision of this Agreement (save for Clause 5.2.5), no Drawdown
Notice may be served in respect of a Revolving Advance and no
Revolving Advance will be made:
(a) unless the Conditions Precedent shall have been satisfied; or
(b) if a Default or, a Default Occurrence, has occurred and
is continuing unremedied and unwaived by the Agent
acting on the instructions of the Majority Banks or if
a Default would occur on the making of such Revolving
Advance; or
(c) unless the representations and warranties deemed to be
repeated pursuant to Clause 11.3 are, or will be, true
and accurate in all material respects on the date on
which the relative Drawdown Notice is served and on the
relative Drawdown Date; or
(d) in respect of a Revolving Advance, if the making of
such Revolving Advance would cause the amount of the
Revolving Loan to be greater than the Revolving Credit
Facility Limit.
5.2.2 Subject always to the other terms of this Agreement, a Drawdown
Notice shall be irrevocable and the Parent shall be obliged to
borrow in accordance with its terms.
5.2.3 Revolving Advances shall be made only on a Business Day falling
before the end of the Commitment Period.
5.2.4 Promptly upon receipt of the same, the Agent shall notify the Banks
of its receipt of a Drawdown Notice.
5.2.5 Clauses 5.2.1(b) and (c) shall not apply in the case of the first
drawdown under the Revolving Facility to the extent used to repay
the Existing Facility Outstandings or any other drawdown in respect
of a Revolving Advance used to repay in whole or in part one or
more maturing Revolving Advances in aggregate in the same or a
greater amount.
5.3 Participations and Payments
5.3.1 Subject always to the other terms of this Agreement, each Bank
acting through its Lending Office, agrees to contribute its
Participation in each Revolving Advance in the amount of its
Participation being that proportion which its undrawn Commitment
bears to the undrawn part of the Total Commitments on the relative
Drawdown Date.
5.3.2 Subject to receiving written notification from the Agent of the
terms of a Drawdown Notice, each Bank shall on the relative
Drawdown Date make available to the Agent to such account as the
Agent may have previously specified for this purpose, not later
than 11.00 a.m. (London time) on such date in immediately available
funds, an amount in Sterling equal to its Participation in the
requested Revolving Advance.
5.4 Repayment of Existing Facilities
5.4.1 The Borrowers hereby irrevocably instruct the Agent and the Agent
agrees to apply such part of the Transaction Proceeds as is
necessary to repay the Bridging Facility in full.
5.4.2 The repayment of the Bridging Facility shall be made on the date of
receipt by the Agent of the Transaction Proceeds.
5.4.3 No indemnity payment, breakage costs, prepayment or cancellation
fees or other amounts shall be payable in respect of any repayment
in accordance with this Clause 5.4 other than pursuant to a side
letter dated today's date between the Parent and the Agent.
5.4.4 On and with effect from the date of repayment of the Bridging
Facility, the Bridging Facility shall be terminated and be
cancelled.
5.4.5 The repayment of the Existing Facilities Outstandings by means of
the drawing of the first Revolving Advance on any date shall be
permitted notwithstanding that the repayment would not otherwise be
permitted but for this Clause 5.
5.4.6 On and with effect from the date of repayment of the Existing
Facilities Outstandings, the Existing Facilities shall be
terminated and cancelled.
5.4.7 The Existing Facilities are hereby amended to the extent necessary
to give effect to this Clause 5.4.
5.5 Confirmation
The Banks warrant and undertake to each of the Borrowers that apart
from this Revolving Credit Facility, the Existing Ancillary
Facilities, the Existing Facilities and the Bridging Facility are
the only lending facilities which are made available to the Group
by the Banks as at the date hereof.
6. INTEREST
6.1 Interest Rate
Interest shall accrue on each Revolving Advance in respect of each
Interest Period at the rate, in each case, determined by the Agent
to be the aggregate of:
(i) the Margin;
(ii) LIBOR; and
(iii) Mandatory Cost Rate.
6.2 Interest Periods
6.2.1 The Parent shall select an Interest Period for a Revolving Advance
in the relevant Drawdown Notice. Interest Periods in respect of a
Revolving Advance may be of one or three months' duration or such
other period as the Banks (acting reasonably) may agree with the
Parent.
6.2.2 No Interest Period shall extend beyond Final Repayment Date and if
an Interest Period purports so to do, it shall nevertheless expire
on Final Repayment Date.
6.2.3 Any Interest Period which commences on the last Business Day in a
month or on a Business Day for which there is no numerically
corresponding day in the month in which that Interest Period is to
end, shall (subject to Clause 6.2.4) end on the last Business Day
in that later month.
6.2.4 Any Interest Period which would otherwise end on a day which is not
a Business Day, shall end on the next succeeding Business Day or,
if that day falls in the following month, on the immediately
preceding Business Day.
6.3 Default Interest
6.3.1 If a Borrower fails to pay any sum payable under any Financing
Document on the due date, such Borrower shall pay default interest
on such sum (or, as the case may be, the amount thereof for the
time being due and unpaid) to the Agent for the account of the
Agent or the Banks, as the case may be, from the due date to the
date of actual payment in full calculated by reference to
successive Interest Periods (each of such duration as the Agent
may from time to time select (but not shorter than one week) and
the first beginning on the relative due date) at the
rate per annum being the aggregate of:
(i) 1 per cent. per annum;
(ii) the Margin;
(iii) LIBOR; and
(iv) the Mandatory Cost Rate.
6.3.2 So long as the default continues, such rate shall be recalculated
in accordance with the provisions of this Clause 6.3 on the last
day of each such Interest Period and unpaid interest then payable
but unpaid under this Clause shall if not paid be compounded at the
end of each Interest Period.
6.4 Calculation and Payment of Interest
6.4.1 Promptly following the beginning of each Interest Period, the Agent
will notify the relative Borrower of the rate and amount of
interest payable for such Interest Period (but in the case of such
interest calculated under Clause 6.3, any such notification need
not be made more frequently than weekly). Such notification shall
set out in reasonable detail the basis of computation of the amount
of interest so payable.
6.4.2 Interest due from the relative Borrower to any of the Agent and the
Banks under this Agreement shall:
(i) accrue from day to day at the appropriate rate calculated
under this Clause 6;
(ii) except as otherwise provided in this Agreement, be paid
by the relative Borrower to the Agent for the account
of the Banks or the Agent, as the case may be, in
arrear on each Interest Date, save that in the case of
any Interest Period which is for longer than 3 months,
the relative Borrower shall pay interest at the end of
each 3 month period during such period and on the
relative Interest Date;
(iii) be calculated on the basis of the actual number of days
elapsed and a 365 day year; and
(iv) be payable after as well as before judgment.
6.5 Agent's Determination
The determination by the Agent of any interest payable under any of
Clauses 6.1 and 6.3 shall constitute prima facie evidence of the
amount payable by the relative Borrower.
6.6 Adjustment to Margin
The Margin of 1% per annum applicable to drawings in excess of
(pound)19,500,000 shall only apply for so long as there remains
standing to the credit of the Deposit Account the sum of at least
(pound)5,000,000. For each pound by which the amount standing to
the credit of the Deposit Account is reduced below (pound)5,000,000
the Margin shall be increased to 2% per annum in respect of an
equivalent amount of drawings in excess of (pound)19,500,000.
7. REPAYMENT
7.1 Repayment of the Revolving Loan
7.1.1 Subject to the terms of this Agreement, the Parent shall repay each
Revolving Advance in full on the relevant Interest Date by means of
a payment to the Agent (for the account of the Banks).
7.1.2 Subject to the terms of this Agreement, any amounts repaid under
this Agreement may be re-borrowed.
7.1.3 If all or part of an existing Revolving Advance is to be repaid
from the proceeds of all or part of a new Revolving Advance, then
as between each Bank and the Borrower, the amount to be repaid by
the Borrower shall be set off against the amount to be advanced by
that Bank in relation to the new Revolving Advance and the party to
whom the smaller amount is to be paid shall pay to the other party
a sum equal to the difference between the two amounts.
7.1.4 For the avoidance of doubt the Revolving Loan shall be repaid by
the Borrower in full on the Final Repayment Date.
7.2 Prepayment
Subject to Clauses 7.3, 8 and 9 the Borrower may not prepay any
Revolving Advance before the end of its Interest Period.
7.3 Mandatory Prepayment on Wilmslow Disposal and other Disposals
7.3.1 On completion of the Wilmslow Disposal the Parent shall procure
that there is paid into its current account with NatWest the net
proceeds of sale received by HLSL of the Wilmslow Property after
deduction only of any amounts owing under the Ciba Geigy Agreement
and the direct costs (including any VAT) incurred in relation to
such sale (the "Net Wilmslow Proceeds").
7.3.2 On completion of any Disposals or series of connected Disposals in
respect of which the Disposal Proceeds exceed (pound)50,000 the
Parent shall procure that there is paid into its current account
with NatWest the Disposal Proceeds.
7.3.3 If there is sufficient Headroom in the Revolving Credit Facility
the Revolving Credit Limit shall be reduced by an amount equivalent
to the Net Wilmslow Proceeds or the relevant Disposal Proceeds (as
the case may be). To the extent that there is not sufficient
Headroom the Revolving Credit Limit shall be reduced by an amount
equivalent to the Net Wilmslow Proceeds or the relevant Disposal
Proceeds (as the case may be) on the next Interest Date. Any such
reduction shall reduce each Bank's Commitment rateably.
7.4 Cancellation
7.4.1 The Parent may, by giving the Agent not less than 2 Business Days'
prior notice, cancel all or part of the Available Revolving Credit
Facility (but if in part, in a minimum amount of (pound)1,000,000
and an integral multiples of (pound)500,000).
7.4.2 Any notice of cancellation shall be irrevocable and shall specify
the date on which the cancellation shall take effect and the amount
of the cancellation. The Agent shall promptly notify the Banks of
receipt of any such notice.
7.4.3 The Parent may not borrow any part of the Revolving Credit Facility
which has been cancelled. Any cancellation shall reduce each Bank's
Commitment rateably.
7.4.4 The Parent may not cancel all or part of the Revolving Credit
Facility except as expressly provided in this Agreement.
8. CHANGES IN CIRCUMSTANCES
8.1 Illegality
If by reason of a Change it is or becomes illegal for a Bank to
maintain its Commitment or to continue to make available or fund
its Participation in any Revolving Advance, then:
(a) that Bank shall notify the Agent and the Parent; and
(b) (i) the Commitment of that Bank shall be cancelled
immediately; and
(ii) the Parent shall prepay to the Agent (for
the account of that Bank) that Bank's
Participation in all Revolving Advances
(together with accrued interest on the
amount prepaid and all other amounts owing
to that Bank under this Agreement) within 5
Business Days of demand by that Bank (or,
if permitted by the relevant law, on the
next Interest Date of the relevant
Revolving Advances).
Any such prepayment under paragraph (b)(ii) above shall be subject
to Clause 9.3.
8.2 Increased Costs
8.2.1 If, after the date of this Agreement, a Change occurs which causes
an Increased Cost (as defined in Clause 8.2.3) to a Bank (or any
company of which that Bank is a Subsidiary) then the Parent shall
pay (as additional interest) to the Agent (for the account of that
Bank) within 5 Business Days of demand all amounts which that Bank
certifies to be necessary to compensate that Bank (or any company
of which that Bank is a Subsidiary) for the Increased Cost.
8.2.2 Any demand made under Clause 8.2.1 shall be made by the relevant
Bank through the Agent and shall set out in reasonable detail so
far as is practicable the basis of computation of the Increased
Cost.
8.2.3 In this Clause 8.2:
"Increased Cost" means any cost to, or reduction in the amount
payable to, or reduction in the return on capital or regulatory
capital achieved by, a Bank (or any company of which that Bank is a
Subsidiary) to the extent that it arises, directly or indirectly,
as a result of the Change and is attributable to the Commitment or
Participation in any Revolving Advance of that Bank or the funding
of that Bank's Participation in any Revolving Advance:
(a) any Tax Liability (other than Tax on Overall Net Income)
incurred by that Bank;
(b) any changes in the basis or timing of Taxation (other
than Tax on Overall Net Income) of that Bank in
relation to its Commitment or Participation in any
Revolving Advance or to the funding of that Bank's
Participation in any Revolving Advance;
(c) the cost to that Bank (or any company of which that Bank is a
Subsidiary) of complying with, or the reduction in the amount
payable to or reduction in the return on capital or regulatory
capital achieved by that Bank (or any company of which that
Bank is a Subsidiary) as a result of complying with, any
capital adequacy or similar requirements howsoever arising,
including as a result of an increase in the amount of capital
to be allocated to the Revolving Credit Facility or of a
change to the weighting of that Bank's
Commitment or Participation in any Revolving Advance; and
(d) the cost to that Bank of complying with any reserve,
cash ratio, special deposit or liquidity requirements
(or any other similar requirements).
"Tax Liability" means, in respect of any person:
(a) any liability or any increase in the liability of that
person to make any payment of or in respect of Tax;
(b) the loss of any relief, allowance, deduction or credit
in respect of Tax which would otherwise have been
available to that person;
(c) the setting off against income, profits or gains or
against any Tax liability of any relief, allowance,
deduction or credit in respect of Tax which would
otherwise have been available to that person; and
(d) the loss or setting off against any Tax liability of a
right to repayment of Tax which would otherwise have
been available to that person.
For the purposes of this definition of "Tax Liability", any
question of whether or not any relief, allowance, deduction, credit
or right to repayment of Tax has been lost or set off, and if so,
the date on which that loss or set-off took place, shall be
conclusively determined by the relevant person's auditors.
"Tax on Overall Net Income" means, in relation to a Bank, Tax
(other than Tax deducted or withheld from any payment) imposed on
the net profits of that Bank by the jurisdiction in which its
Lending Office or its head office is situated.
8.2.4 The Parent shall not be obliged to make a payment in respect of an
Increased Cost under this Clause 8.2 to the extent that the
Increased Cost has been compensated for by the payment of Mandatory
Cost Rate or the operation of Clause 9.4 (or would be so
compensated but for the operation of Clause 9.4.4 or Clause 19).
8.2.5 If the Parent is required to pay any amount to a Bank under this
Clause 8.2, then, without prejudice to that obligation and so
long as the circumstances giving rise to the relevant Increased
Cost are continuing and subject to the Parent giving the
Agent and that Bank not less than 10 Business Days' prior notice
(which shall be irrevocable), the Parent may prepay all, but not
part, of that Bank's Participation in the Revolving Loan together
with accrued interest on the amount prepaid. Any such prepayment
shall be subject to Clause 9.3. On any such prepayment the
Commitment of the relevant Bank shall be automatically cancelled.
8.3 Market disruption
8.3.1 If, in relation to an Revolving Advance and a particular Interest
Period:
(a) the Agent determines that, because of circumstances
affecting the London interbank market generally,
reasonable and adequate means do not exist for
ascertaining LIBOR for that Revolving Advance for that
Interest Period; or
(b) the Agent has been notified by a group of Banks whose
Commitments together exceed 50 per cent. of the Total
Commitments that in their opinion:
(i) matching deposits may not be available to
them in the London interbank market in the
ordinary course of business to fund their
Participations in that Revolving Advance
for that Interest Period; or
(ii) the cost to them of obtaining matching
deposits in the London interbank market
would be in excess of LIBOR for that
Interest Period,
the Agent shall promptly notify the Parent and the Banks of that
event (such notice being a "market disruption notice").
8.3.2 If a market disruption notice applies to a proposed Revolving
Advance, that Revolving Advance shall not be made. Instead, the
Agent and the Borrowers shall immediately enter into negotiations
for a period of not more than 30 Business Days with a view to
agreeing a substitute basis for calculating the interest rate for
the Revolving Advance or for funding the Revolving Advance
(whether in Sterling or another currency). Any substitute basis
agreed by the Agent (with the consent of all the Banks) and the
Borrowers shall take effect in accordance with its terms
and be binding on all the Parties. This Clause 8.3.2 shall not
apply in respect of a proposed Revolving Advance used to repay one
or more maturing Revolving Advances in aggregate in the same
amount or a greater amount and Clause 8.3.3 shall apply instead.
8.3.3 If a market disruption notice applies to an outstanding Revolving
Advance, then:
(a) the Agent and the Parent shall immediately enter into
negotiations for a period of not more that 30 Business
Days with a view to agreeing a substitute basis for
calculating the rate of interest for the Revolving
Advance or for funding the Revolving Advance (whether
in Sterling or another currency);
(b) any substitute basis agreed under Clause 8.3.3(a) by
the Agent (with the consent of all the Banks) and the
Parent shall take effect in accordance with its terms
and be binding on all the Parties;
(c) if no substitute basis is agreed under Clause 8.3.3(a),
then, subject to Clause 8.3.4, each Bank shall (through the
Agent) certify before the last day of the Interest Period to
which the market disruption notice relates a substitute
basis for maintaining its Participation in the Revolving
Advance which shall reflect the cost to the Bank of funding
its Participation in the Revolving Advance from whatever
sources it reasonably selects plus the Margin and
(if applicable) Mandatory Cost Rate; and
(d) each substitute basis so certified shall be binding on
the Parent and the certifying Bank and treated as part
of this Agreement.
8.3.4 If no substitute basis is agreed under Clause 8.3.3(a), then, so
long as the circumstances giving rise to the market disruption
notice continue and subject to the Parent giving the Agent and the
Banks not less than 10 days' prior notice (which shall be
irrevocable), the Parent may prepay the Revolving Advance to which
the market disruption notice applies together with accrued interest
on the amount prepaid. Any such prepayment shall be subject to
Clause 9.3.
8.3.5 If circumstances which gave or would give rise to the service of a
market disruption notice cease, the original basis for calculating
LIBOR will again apply.
8.4 Mitigation
8.4.1 If any circumstances arise in respect of any Bank which would, or
upon the giving of notice would, result in the operation of Clause
8.1, 8.2, 8.3 or 9.4 to the detriment of the Parent, then that Bank
shall:
(a) promptly upon becoming aware of those circumstances and their
results, notify the Agent and the Parent; and
(b) in consultation with the Agent and the Parent, take
reasonable steps to mitigate the effects of those
circumstances (including changing its Lending Office or
consulting with the Parent with a view to transferring some
or all of its rights and obligations under this Agreement to
another bank or other financial institution acceptable to
the Parent) in a manner which will avoid the circumstances in
question and on terms reasonably acceptable to the Agent, the\
Parent and thatBank,
provided that no Bank shall be obliged to take any steps which in
its reasonable opinion would or might have an adverse effect on its
business or financial condition or the management of its Tax
affairs or cause it to incur any material additional costs or
expenses.
8.4.2 Nothing in this Clause 8.4 shall limit, reduce, affect or otherwise
qualify the rights of any Bank or the obligations of the Parent
under Clauses 8.1, 8.2, 8.3 and 9.4 other than as expressly
provided.
8.4.3 Each Bank undertakes to notify the Parent as soon as is reasonably
practical of any matter of which the Bank becomes aware which would
or might reasonably be expected to give rise to any obligation or
liability on the part of the Parent under this Clause 8.
8.5 Certificates
The certificate or notification of the Agent or, as the case may
be, the relevant Bank as to any of the matters in relation to which
this Clause 8 provides for a certificate or notification to be
given shall be in reasonable detail and shall be prima facie
evidence of the contents thereof.
9. PAYMENTS
9.1 Time and Place
All payments to be made by the Borrowers in relation to this
Agreement shall be made on the due date in immediately available
funds in Sterling by no later than 12.00 noon (London time) to the
appropriate account in London of the Agent which account shall have
been previously specified by the Agent.
9.2 Business Days
If, but for this Clause, any sum would become due for payment under
this Agreement on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day PROVIDED THAT if
the next succeeding Business Day falls in the next calendar month,
then such payment shall be made on the immediately preceding
Business Day.
9.3 Indemnity and Breakage Costs
9.3.1 Each Borrower agrees to indemnify each Bank on demand against any
loss or expense (including, but not limited to any loss or expense
sustained or incurred or to be sustained or incurred by any Bank in
liquidating or employing deposits acquired or contracted for to
effect or maintain its Participation in the Revolving Loan or any
part thereof other than any loss of Margin) which such Bank has
sustained or incurred as a consequence of any of:
(i) a Revolving Advance not being made, following the
service of a Drawdown Notice by reason of the
non-fulfilment of any of the Conditions Precedent or
otherwise (save as may arise as a result of the failure
of such Bank to comply with its obligations hereunder);
(ii) a failure of the Borrowers to make payment on the due
date of any sum due under this Agreement; and
(iii) the repayment of the Revolving Loan or the termination
of the Revolving Credit Facility pursuant to Clause 13.
9.3.2 If any prepayment or repayment is made otherwise than on an
Interest Date, each Borrower shall on demand pay to the Agent, for
the account of the Banks, such additional amount (not being an
amount to which the indemnity in Clause 9.3.1 applies) as the
Agent may certify is necessary to compensate the Banks or any of
them for any loss or expense on account of funds borrowed,
contracted for or utilised to fund the amounts so repaid or
prepaid. Any certifications issued by the Agent pursuant to this
Clause shall be in reasonable detail and constitute
prima facie evidence of the contents thereof.
9.4 Grossing-Up
9.4.1 Subject to Clause 9.4.2, all sums payable to any of the Agent and
the Banks by a Borrower pursuant to or in connection with any of
the Financing Documents shall be paid in full without any set-off
or counterclaim whatsoever and free and clear of all deductions or
withholdings whatsoever save only as may be required by law.
9.4.2 If any deduction or withholding is required by law in respect of
any payment due to any of the Agent and the Banks pursuant to or in
connection with any of the Financing Documents, the relative
Borrower shall:
(a) ensure or procure that the deduction or withholding is
made and that it does not exceed the minimum legal
requirement therefor;
(b) pay, or procure the payment of, the full amount
deducted or withheld to the relevant Taxation or other
authority in accordance with the applicable law;
(c) (i) subject to Clause 9.4.4 increase the payment in
respect of which the deduction or withholding is
required so that the net amount received by the
payee (which expression when used in this Clause
9.4.2 shall mean the Agent or any Bank) after
the deduction or withholding (and after taking
account of any further deduction or withholding
which is required to be made as a consequence
of the increase) shall be equal to the amount
which the payee would have been entitled to
receive in the absence of any requirement
to make any deductions or withholdings; or
(ii) subject to Clause 9.4.4. if the payment is to be
made by any other Borrower, pay directly to the
payee such sum (a "compensating sum") as will,
after taking into account any deduction or
withholding which the relative Borrower is
obliged to make from the compensating sum,
enable the payee to receive, on the due date for
payment, a net sum equal to the sum which the
payee would have received in the absence of any
obligation to make any deductions or
withholdings; and
(d) as soon as reasonably practicable deliver or procure
the delivery to the relative payee of receipts or other
documentation reasonably satisfactory to the payee
evidencing each of the deductions or withholdings which
has been made.
9.4.3 If the Agent is obliged to make any deduction or withholding from any
payment to any of the Banks (an "agency payment") which represents an
amount or amounts received by the Agent from any Borrower under any of
the Financing Documents, the relative Borrower shall pay directly to
the relative Bank such sum (an "agency compensating sum") as will,
after taking into account any deduction or withholding which the
relative Borrower is obliged to make from the agency compensating sum,
enable such Bank to receive, on the due date for payment of the agency
payment, an amount equal to the agency payment which such Bank would
have received in the absence of any obligation to make any deductions
or withholdings.
9.4.4 The Borrowers shall not be required to pay an additional amount
under this Clause 9.4 if the payment in respect of which the
deduction or withholding is required is a payment of interest on a
Revolving Advance and:
(a) at the time the Revolving Advance was made, the Bank
making the relevant Revolving Advance was not a
Qualifying Bank otherwise than as a consequence of a
Change occurring after the date of this Agreement (and
the obligation to deduct or withhold would not have
arisen if the Advance had been made by a Qualifying
Bank); or
(b) at the time when the interest is paid, the Bank to which
the relevant payment is made is not beneficially entitled
to it or, being beneficially entitled to it, the Bank is
not within the charge to United Kingdom corporation tax as
respects it otherwise than as a consequence of a Change
occurring after the date of this Agreement(and the
obligation to deduct or withhold would not have arisen if
the Bank had been beneficially entitled to the interest
and had been within the charge to United Kingdom
corporation tax as respects it).
9.4.5 (a) If any of the Banks determines, in its absolute discretion
acting in good faith, that it has received, realised,
utilised and retained a Tax benefit by reason of any
deduction or withholding in respect of which a Borrower
has made an increased payment or paid a compensating sum
or an agency compensating sum under Clause 9.4, such Bank
shall, provided that the Agent and each Bank has received
all amounts which are then due and payable by the Borrowers
under any of the Financing Documents, pay to such Borrower
(to the extent that such Bank can do so without prejudicing
the amount of such benefit or repayment and the right of
such Bank, to obtain any other benefit, relief or allowance
which may be available to it) such amount, if any, as such
Bank, in its absolute discretion shall in good faith
determine, will leave such Bank in no worse position than it
would have been in if the deduction
or withholding had not been required PROVIDED THAT:
(i) each Bank shall have an absolute discretion
as to the time at which and the order and
manner in which it realises or utilises any
Tax benefit and shall not be obliged to
arrange its business or its Tax affairs in
any particular way in order to be eligible
for any credit or refund or similar
benefit;
(ii) no Bank shall be obliged to disclose any
information regarding its business, Tax
affairs or Tax computations;
(iii) if a Bank has made a payment to a Borrower pursuant to
this Clause 9.4.5 on account of any Tax benefit and it
subsequently transpires that such Bank did not receive
that Tax benefit, or received a lesser Tax benefit, the
relative Borrower shall, on demand, pay to such Bank
such sum not exceeding the amount of the said payment
made by it to the Borrower as the relative Bank may
determine as being necessary to restore its after-Tax
position to that which it would have been had no
adjustment under this Clause (iii) been necessary.
(b) No Bank shall be obliged to make any payment under this
Clause 9.4.5 if, by doing so, it would contravene the
terms of any applicable law or any notice, direction or
requirement of any governmental or regulatory authority
(whether or not having the force of law).
9.5 Prepayment Right
If a Borrower is required to make an increased payment for the
account of a Bank under Clause 9.4.2 or 9.4.3 (but only so long as
such requirement exists), subject to giving the Agent and such Bank
not less than 10 Business Days' prior written notice (which shall
be irrevocable), the relative Borrower may prepay such Bank's
Participation in the Revolving Credit Facility together with
accrued interest thereon PROVIDED THAT any such prepayment shall be
subject to the provisions of Clause 9.3 above. On any such
prepayment the Commitment of the relevant Bank will be cancelled
and reduced to zero.
9.6 Accounts as Evidence
Each Bank shall maintain in accordance with its usual practice an
account or accounts, which account or accounts shall, in the
absence of manifest error, as between the Borrowers and such Bank
be prima facie evidence of the amounts from time to time advanced
by, owing to, paid and repaid to such Bank under this Agreement.
9.7 Currency of Account
All payments to be made by a Borrower in respect of a Revolving
Advance, whether of interest or principal, shall be made in
Sterling. All payments to be made under any indemnity or
reimbursement provision of this Agreement relating to costs, losses
and expenses shall be paid in Sterling.
9.8 Borrowers' Payments
9.8.1 The Agent may assume that each Borrower will make all payments due
from it under this Agreement on the due date and the Agent may, in
reliance upon such assumption, make available to each Bank on any
payment date an amount equal to such Bank's pro-rata share of such
assumed payment.
9.8.2 If a Borrower does not in fact make such payment to the Agent, each
Bank shall forthwith on demand by the Agent repay to the Agent the
amount made available to such Bank (together with interest thereon
at the rate determined by the Agent as being its cost of funding
such payment).
9.9 Banks' Payments
9.9.1 The Agent may assume that each Bank has made its Participation in a
Revolving Advance available to the Agent on the relative Drawdown
Date and the Agent may in reliance upon such assumption, make
available to the Parent a corresponding amount.
9.9.2 If such corresponding amount is not in fact made available to the
Agent by such Bank, the Agent shall be entitled to recover such
corresponding amount (together with interest thereon at the rate
determined by the Agent as being its cost of funds in the
circumstances) on demand from the relative Borrower.
9.9.3 Where the Agent has made available an amount to a Borrower in
reliance upon the assumption contained in Clause 9.9.1 but a Bank
has not made its Participation in the relevant Revolving Advance
available to the Agent then, unless that Bank notified the Agent in
writing prior to the relevant Drawdown Date that it would not be
making its Participation in such Revolving Advance available, that
Bank shall:
(a) if the relative Borrower does not refund the
corresponding amount to the Agent within three (3)
Business Days, reimburse the Agent for such amount
(together with interest thereon at the rate determined
by the Agent as being its cost of funds in the
circumstances) on demand; and
(b) indemnify the Agent from and against all losses, costs,
charges and expenses which the Agent may incur or
sustain by reason of that Bank not having made its
Participation in the relevant Revolving Advance
available.
9.10 Appropriation
If the Parent shall pay a sum in relation to the Revolving Credit
Facility which is less than the total amount due and payable under
this Agreement on the day on which such sum is paid the Parent
hereby waives any rights it may have to make any appropriation
thereof as between any amounts so due and payable and the sum so
paid shall be applied in or towards satisfaction of principal,
interest, fees and other sums which are due or overdue for payment
on that day in such order as the Banks may determine PROVIDED THAT
each Bank shall receive its pro-rata share of any such sum.
10. SECURITY
Subject to Clause 14 the obligations and liabilities of the
Borrowers to the Agent and each Bank under this Agreement shall be
secured by the interests and rights granted in favour of the Agent
as trustee for itself and the Banks under the Security.
11. REPRESENTATIONS AND WARRANTIES
11.1 Acknowledgement of Reliance
Each Borrower hereby acknowledges that the Agent and each Bank has
entered into this Agreement and accepted the security granted in
favour of the Agent under the Security in full reliance on the
representations and warranties made or deemed to be made and
repeated under this Clause 11.
11.2 Representations and Warranties
The Parent hereby represents and warrants to each of the Banks and
the Agent that save as disclosed in the Circular or in paragraphs
5, 6, 7 and 8 of Schedule 4 to the Investor Placing Agreement:
(a) Status: each member of the Charging Group is a limited
company incorporated under the laws of England and
Wales or, in the case of HLS, under the laws of the
State of Delaware, USA and it possesses the capacity to
sue and be sued in its own name and has the power to
carry on its business and to own its property and other
assets;
(b) Powers and authority: each member of the Charging Group
has power to execute, deliver and perform its
obligations under the Financing Documents to which it
is a party and to carry out the transactions
contemplated by such Financing Documents and all
necessary corporate, shareholder and other action has
been or will be taken to authorise the execution,
delivery and performance of the same;
(c) Binding obligations: the obligations of each member of
the Charging Group under the Financing Documents to
which it is a party, constitute its legal, valid and
binding obligations and are in full force and effect;
(d) Contraventions: the execution,delivery and performance
by each member of the Charging Group of the Financing
Documents to which it is a party does not:
(i) contravene any applicable law or regulation
or any order of any governmental or other
official authority, body or agency or any
judgment, order or decree of any court
having jurisdiction over it where such
contravention would have a Material Adverse
Effect;
(ii) conflict with, or result in any breach of
any of the terms of, or constitute a
default under, any agreement or other
instrument to which it is a party or any
licence or other authorisation to which it
is subject or by which it or any of its
property is bound other than the Existing
Facility where such conflict, breach or
default would have a Material Adverse
Effect; or
(iii) contravene or conflict with the provisions
of its Memorandum and Articles of
Association (or, in the case of HLS, its
certificate of incorporation and by-laws);
(e) Insolvency: (other than in respect of a solvent winding-up,
dissolution or re-organisation previously notified to the
Agent in writing) no member of the Group (other than the
TMG Companies any Non-Material Subsidiary and any Dormant
Subsidiary) has taken any action nor, to the best of the
knowledge, information or belief of the Parent have any
steps been taken or legal proceedings started or
threatened against it for winding-up, dissolution or
re-organisation, the enforcement of any Encumbrance over
its assets or for the appointment of a receiver,
administrative receiver, or administrator, trustee or
similar officer of it or of any material part or all of its
assets or revenues;
(f) No default: after the First Drawdown Date each member of
the Group(other than the TMG Companies any Non-Material
Subsidiary and any Dormant Subsidiary) is not (nor would be
with any of the giving of notice, lapse of time,
determination of materiality and other condition) in breach
of or in default under any deed, instrument or any agreement
to which it is a party (other than the Ciba Geigy
Agreement) or which is binding on it or any of its assets
to an extent or in a manner which has a Material Adverse
Effect;
(g) Litigation: save as disclosed in writing to the Agent prior
to the date hereof, no action, litigation, arbitration or
administrative proceeding has been served on or, to the best
of the knowledge, information or belief of the Parent is
pending or threatened against any member of the Group
(other than the TMG Companies any Non-Material
Subsidiary and any Dormant Subsidiary) which is reasonably
likely to be adversely determined and if so adversely
determined would have a Material Adverse Effect and nor is
there subsisting any unsatisfied judgment or award given
against any of them by any court, board of
arbitration or other body which has not been disclosed in
writing to the Agent which would have a Material Adverse
Effect;
(h) Accounts:
(i) each of the latest Accounts required to be
delivered pursuant to Clause 12.1(a) is
prepared in accordance with GAAP and gives
a true and fair view of the financial
position of the Parent as at the date to
which the same were prepared and for the
period then ended;
(ii) each set of management accounts required to
be delivered under Clause 12.1(b) shows
with reasonable accuracy in all material
respects the financial condition of the
member of the Group in respect of which
they were prepared during the period to
which they relate; and
(iii) all material liabilities (contingent or
otherwise) which should have been fully
disclosed or reserved against in such
management accounts, were so disclosed or
reserved against therein;
(i) Encumbrances: no Encumbrance (other than Permitted
Encumbrances) exists over all or any part of the
present or future revenues or assets of any member of
the Group (other than the TMG Companies, any Dormant
Subsidiary or any Non-Material Subsidiary) which would
have a Material Adverse Effect;
(j) Authorisations: all material licences, consents, exemptions,
clearances, filings, registrations and authorisations which
are or may be necessary to enable each member of the
Charging Group to perform its obligations under the
Financing Documents to which it is a party and the
fulfilment of the transactions contemplated by such
documents and for the proper conduct of its business or
which are required in connection with the execution,
delivery, validity, enforceability or admissibility in
evidence of the Financing Documents are in full force
and effect save where the absence of any of the same would
not have a Material Adverse Effect;
(k) No Encumbrances created: the execution of the Financing
Documents by the members of the Charging Group and the
exercise of each of their respective rights and the
performance of each of their respective
obligations thereunder will not result in the creation of
any Encumbrance (other than a Permitted Encumbrance) over
or in respect of any of their present or future revenues,
assets or undertakings save where the creation of such
encumbrance would not have a Material Adverse Effect;
(l) Taxes: each of the members of the Group (other than the
TMG Companies, each Non-Material Subsidiary and each
Dormant Subsidiary) has complied in all material
respects with all Taxation laws in all jurisdictions in
which it is subject to Taxation where non-compliance
would have a Material Adverse Effect;
(m) Environmental law: to the best of its knowledge and
belief each of the members of the Group save for the
TMG Companies is currently complying with and has at
all times complied with Environmental Law, every
consent, authorisation, licence or approval required by
each such member of the Group save for the TMG
Companies (including those required under or pursuant
to any Environmental Law) in connection ith the
conduct of their respective business and the ownership,
use, exploitation or occupation of their respective
property and assets has been obtained and is in full
force and effect, there has been no default in the
observance of the conditions and restrictions (if any)
imposed in, or in connection with, any of the same save
where any such non-compliance, breach or default would
not have a Material Adverse Effect and, to the
knowledge of the officers of the Parent, no
circumstances have arisen (i) which would entitle any
person to revoke, suspend, amend, vary, withdraw or
refuse to amend any of the same or (ii) which has
given rise to an Environmental Claim against
any such member of the Group (save for any TMG Company)
in either case which would have a Material Adverse
Effect having regard to the cost to such member of the
Group of meeting such Environmental Claim; and
(n) Year 2000: it will have used all reasonable endeavours
to ensure that the Company System will have been
produced, tested and amended in such a manner on or
before 31st December 1999 which will ensure that:
(i) a change of, reference to or use of a date
before, on or after 31st December 1999 in
the operation of the Company System,
whether alone or in conjunction with each
other Company System, will not have a
Material Adverse Effect; and
(ii) the inclusion of a date or dates before, on
or after 31st December 1999 in the date
information exchanged with any item of
equipment and software programme which is
not a Company System but with which that
Company System routinely exchanges date
information in the course of its business
will not have Material Adverse Effect,
and without prejudice to the generality of (i) and (ii)
above, each Company System will, in responding to
two-digit date input and providing date output, resolve
any ambiguity as to century in a manner which is
consistent, clearly defined and apparent to the user.
11.3 Repetition
The representations and warranties set out in Clause 11.2 shall
survive the execution of this Agreement and (save for the
representations and warranties made under Clauses 11.2(d)(i) and
(ii), (e), (i), (k), (l), and (m) and save in relation to matters
to which the Agent acting on the instructions of the Majority Banks
shall have consented) shall be deemed to be repeated by the Parent
on each Drawdown Date and each Interest Date as if made with
reference to the facts and circumstances existing at that time
PROVIDED THAT the wording in second set of brackets in Clause
11.2(f) shall not apply when such representation and warranty is
deemed to be so repeated.
12. UNDERTAKINGS
12.1 Information Undertakings
The Parent hereby undertakes and agrees with the Agent and each
Bank that throughout the Security Period that other than as the
Agent acting on the instructions of the Majority Banks may consent
it shall:
(a) Accounts: as soon as the same become available, but in
any event within 120 days after the end of each of its
Financial Years, deliver to the Agent for distribution
to the Banks, copies in sufficient numbers for all of
them of the Accounts;
(b) Management Accounts: as soon as the same become
available, but in any event within 35 days after the
end of each period of one month during each Financial
Year of the Parent, deliver to the Agent for
distribution to the Banks, copies in sufficient numbers
for all of them of monthly management accounts (on a
consolidated and non-consolidated basis) of the Group
for such period to include:
(i) a statement of profit and loss;
(ii) a balance sheet;
(iii) a cashflow statement;
(iv) a commentary comparing where appropriate
all such information with the estimates,
forecasts and projections in the cashflow
forecasts provided to the Banks in relation
to such period;
(c) Interim Accounts: as soon as they become available but
in any event within 60 days after the end of each
successive period of 3 months during each of its
Financial Years, deliver to the Agent for distribution
to the Banks, its quarterly accounts, interim statement
and preliminary announcement;
(d) Other Information: furnish to the Agent such
information, documents and records about the business,
financial condition, operations and prospects of any
member of the Group as the Agent may from time to time
reasonably require;
(e) GAAP: ensure that all Accounts and other financial
information submitted to the Agent have been prepared
in accordance with GAAP;
(f) Shareholder documents: deliver to the Agent in
sufficient copies for all of the Banks all documents
despatched by it to its shareholders or creditors
generally at the same time that they are so despatched;
and
(g) Default, litigation, etc: on becoming aware of the same
promptly notify the Agent of:
(i) any Default and any Default Occurrence;
(ii) any litigation, arbitration or
administrative proceeding commenced against
any member of the Group (other than a TMG
Company or a Dormant Subsidiary) in respect
of which the potential liability for such
member of the Group is in excess of
(pound)500,000; and
(iii) any Encumbrance (other than a Permitted
Encumbrance) attaching to the assets or
revenues of any member of the Group.
(h) Cashflow: provide the Agent (when it provides the Agent
with the monthly management accounts) rolling cashflow
forecasts in respect of the Group relating to the 3
month period starting on that date (the need for these
to be reviewed by the Agent 3 months after the date of
this Agreement);
(i) Annual budget: provide the Agent with sufficient copies
for all of the Banks of the Group's budget for 1999 by
31st January 1999; and
(j) Plans and Projections: provide the Agent with
sufficient copies for all of the Banks or any strategy
papers, plans or projections relating to any proposed
Disposals to be made by the Group within 14 days of
such papers being approved by the board of the relevant
Group Company.
12.2 Positive Covenants
The Parent hereby undertakes and agrees with the Agent and each
Bank that, throughout the Security Period, it shall and it shall
procure that each of the companies in the Group (other than the TMG
Companies and in the case of (a), (b) and (c) below, Non-Material
Subsidiaries or Dormant Subsidiaries) shall unless the Agent
(acting on the instructions of the Majority Banks) shall otherwise
agree:
(a) Further documents: at the request of the Agent subject
to Clause 14.2 execute or procure the execution of all
such documents as are in the opinion of the Agent
(acting reasonably), necessary to ensure that the Agent
and the Banks obtain the full benefit of their rights
and benefits under the Financing Documents;
(b) Insurance: comply with all its obligations relating to
insurances contained in the Security and without
limitation to the foregoing maintain insurances in
respect of such assets and in such amounts as are
reasonable with regard to the size of its business and
the value of its assets;
(c) Authorisations: at all times comply with all laws and
regulations applicable to it and which are necessary in
relation to the conduct of its business generally and obtain,
effect and maintain in full force and effect all governmental
and other regulatory consents, licences, exemptions,
clearances, filings, registrations and authorisations
required for (i) the conduct of its business generally where
the non-compliance with or absence of which would have a
Material Adverse Effect and (ii) the validity, enforceability
or, as the case may be, admissibility in evidence of the
Financing Documents;
(d) Environmental Compliance: use all reasonable endeavours to
comply with all requirements of Environmental Law applicable
to each such company (including without limitation, obtaining
and maintaining in full force and effect all consents,
authorisations, licences or approvals required from time to
time in connection with the conduct of its business and the
ownership, use, exploitation or occupation of its property
and assets) save where any non-acceptance, breach of default
would not have a Material Adverse Effect and promptly notify
the Agent of (i) any Environmental Claim which has been made
or threatened against any member of the Group or (to the
knowledge of the Parent) against any occupier of any property
owned or leased by any member of the Group or of any
circumstance that arises which might give rise to
any such Environmental Claim and (ii) any revocation,
suspension, amendment, variation, withdrawal or refusal to
grant any consent, authorisation, licence or approval,
which in the case of either (i) or (ii) would give rise to
an Environmental Claim against any such member
of the Group which would have a Material Adverse Effect; and
(e) Payment of US taxes: in respect of HLS only, will pay all
taxes in the USA which if not paid would result in the
taxation authorities in the USA having a prior claim over
the New Jersey Property or the proceeds of sale thereof
ahead of the Banks, provided that if HLS wants to dispute
the payment of any tax levied against it the Banks
shall allow the non payment of the relevant taxes subject to
HLS first paying an amount equivalent to the amount of the
taxes into a separate deposit account with FNBM which cannot
be reduced or used by HLS until the conclusion of the
dispute with the relevant taxing authority. Provided that no
reduction of any sums in such deposit account by
reason of any application by FNBM in accordance with this
Agreement (whether by way of set-off, consolidation or
combination of accounts or enforcement of Security or
otherwise) shall give rise to a default
under the provisions of this Clause 12.2(e).
12.3 Negative Covenants
The Parent hereby undertakes with the Agent and each Bank that
during the Security Period it shall not and the Parent shall
procure that none of the companies in the Group (other than the TMG
Companies, the Dormant Subsidiaries and, in respect of (b), (c) and
(d) the Non-Material Subsidiaries) shall unless the Agent (acting
on the instructions of the Banks) otherwise agrees:
(a) Negative pledges: other than Permitted Encumbrances,
create or permit to subsist any Encumbrance over any of
its undertaking and assets from time to time where the
same would have a Material Adverse Effect;
(b) Change of business: make any change in its business as
at present conducted, which would result in a
substantial change in the nature of the business
carried on by the Group as a whole or carry on any
other business which is substantial in relation to the
business of the Group as at present conducted;
(c) Mergers: merge or consolidate with any other person
other than a member of the Charging Group;
(d) Disposals: make a Disposal other than:
(i) in the ordinary course of its trading
activities; or
(ii) where the proceeds of the Disposal are used
within a reasonable period to purchase an
asset to replace the asset the subject of
that Disposal; or
(iii) where the Disposal is of obsolete assets; or
(iv) where the Disposal is of a kind referred to in
Clause 7.3; or
(v) where the Disposal is made by a Group Company
to a member of the Charging Group; or
(vi) a Disposal on arm's length terms where the
aggregate value of the assets which are the
subject of a Disposal by Members of the Group
(other than in accordance with paragraphs
(i), (ii), (iii), (iv) and (v) above) in any
Financial Year of the Parent does not exceed
(pound)500,000. For the purposes of this
paragraph, the value of any asset
shall be the greater of its book value and the
consideration received for it;
where such Disposal would have a Material Adverse Effect
(e) Indebtedness: incur any indebtedness other than
Permitted Indebtedness where to do so would have a
Material Adverse Effect;
(f) Dividends: in respect of the Parent, make, pay or
declare before 31st August 2000 any dividend or other
distribution in relation to any shares forming part of
its issued share capital;
(g) Acquisitions: acquire any business of, or shares or
securities of, any company (other than a Group Company)
other than where:
(i) the aggregate of the consideration payable
for, and Indebtedness assumed by members of
the Group in connection with all such
acquisitions made by members of the Group
in any Financial Year of the Parent does
not exceed (pound)100,000; and
(ii) promptly on such acquisition:
(A) if the acquisition is of a business, the
business and assets of the business become
subject to the Existing Security; or
(B) if the acquisition is of shares comprising
more than 50 per cent. of the issued share
capital of a company, subject to any legal or
contractual prohibition or limitation on the
giving of any guarantee and debenture (or its
equivalent under relevant law), that company
executes a guarantee and debenture (or the
equivalent documents (in a form approved by
the Agent) under the laws of the jurisdiction
of that company's incorporation) and delivers
the same to the Agent;
(h) Capital Expenditure:
no member of the Group shall incur any Capital
Expenditure if it would result in the aggregate Capital
Expenditure incurred by the Group in any period set out
in Column A below exceeding the amount set out opposite
such period in Column B below:
Column A Column B
Period Amount ((pound)m)
1st July 1998 to 31st December 1998 4
1st July 1998 to 30th June 1999 8
1st July 1998 to 31st December 1999 12
1st July 1998 to 30th June 2000 16
(i) Deposit Account: withdraw any monies from the Deposit
Account other than for the Group's general working capital
requirements. For the avoidance of doubt the restriction
contained in this Clause 12.3(i) will prevent the Parent
from transferring any monies standing to the credit of the
Deposit Account into any account in the name of, or on
behalf of, any Group Company with another bank or financial
institution (other than FNBM where such monies are to be used
by HLS for its general working capital requirements). For the
avoidance of doubt the provisions of this Clause 12.3(i) will
not prevent the transfer of any such monies to another
account of a Borrower with the Agent for that Borrower's
general working capital requirements.
13. DEFAULT
13.1 Defaults
There shall be a Default if:
(a) Non Payment: any amount payable under this Agreement in
respect of principal, interest or the Participation Fee
referred to in Clause 16.4 is not paid by the relative
Borrower at the place at which it is expressed to be
payable and within 3 Business Days of the due date; or
(b) Other defaults: except where such failure has been disclosed
in the Circular or in paragraphs 5, 6, 7 and 8 of Schedule 4
to the Investor Placing Agreement any member of the Charging
Group fails to comply with any of its obligations and
undertakings under any of the Financing Documents (other
than the obligations and undertakings referred to in the
foregoing Clause 13.1(a)) which failure (other than
any breach of the provisions of Clause 12.3) would have a
Material Adverse Effect and, if such failure is capable of
remedy, such Default is not remedied within 15 Business Days
after notice of such failure has been given by the Parent
to the Agent or (if earlier) within 15 Business Days, of the
Agent becoming aware of such failure and giving
notice thereof to the Parent; or
(c) Breach of representation or warranty: any representation,
warranty or statement made or deemed to be repeated by any
member of the Charging Group under this Agreement or in any
notice, certificate or statement of fact referred to in or
delivered under this Agreement is or proves to have been
incorrect when made or deemed to have been repeated and
such incorrectness would result in a Material Adverse Effect
and if the subject matter of such incorrectness is capable
of correction it is not corrected within 15 Business Days
after notice of the breach in question has been given by the
Parent to the Agent or (if earlier) within 15 Business Days
of the Agent becoming aware of the breach and
giving notice thereof to the Parent; or
(d) Financing Documents: subject to Clauses 13.4 and 14.2
any of the Financing Documents is not or ceases to be
in full force and effect or the validity or
enforceability of any of the terms of any of the
Financing Documents shall be contested by any of the
members of the Group; or
(e) Cross-default: any Indebtedness (other than under the
Existing Ancillary Facilities or, the Existing
Facilities or the Bridging Facility) of any of the
members of the Group (other than the TMG Companies or
any Dormant Company) in aggregate in excess of
(pound)1,000,000:
(i) is declared to be or otherwise becomes due and payable
prior to its specified maturity; or
(ii) is not paid when due or within any applicable grace
period;
(f) Attachments or distress: a creditor or encumbrancer
attaches or takes possession of, or a distress,
execution, sequestration or other process is levied or
enforced upon or sued out against, any part of the
undertaking and assets of any of the members of the
Group other than the TMG Companies or any Dormant
Company (having a value of at least (pound)500,000)
which would have a Material Adverse Effect and the same
is not discharged or terminated within 21 days of
commencement; or
(g) Inability to pay debts: any of the members of the Group
(other than the TMG Companies any Non-Material Subsidiary or
any Dormant Subsidiary):
(i) suspends payment of its debts generally or is
unable or admits its inability to pay its debts
as they fall due; or
(ii) commences negotiations with its creditors
generally with a view to the general
readjustment or rescheduling of all or part
of its Indebtedness which it would
otherwise not be able to pay as it falls
due; or
(iii) proposes or enters into any composition or
other arrangement for the benefit of its
creditors generally or any class of
creditors; or
(iv) takes any steps to wind-up or dissolve
itself or file any petition or action for
relief under any bankruptcy, insolvency or
moratorium law; or
(h) Insolvency proceedings: any proceedings are started for the
winding-up dissolution or reorganisation (otherwise than
while solvent and on terms previously approved in writing
by the Banks) of any Group Company (other than the TMG
Companies, any Non-Material Subsidiary or any Dormant
Subsidiary) except where such a winding-up petition is
discharged within 21 days of its presentation or a receiver,
administrative receiver, trustee, supervisor or similar
officer is appointed in respect of any Group Company
(other than the TMG Companies, any Non-Material Subsidiary
or any Dormant Subsidiary) or any material part of its
revenues and assets;
(i) Adjudication or appointment: any adjudication, order
or, as the case may be, appointment is made under or in
relation to any of the proceedings referred to in
Clause 13.1(h); or
(j) Administrators: a petition is presented for an
administration order to be made in relation to any
Group Company (other than any TMG Company, Non-Material
Subsidiary or Dormant Subsidiary) which is not
withdrawn within 2 Business Days of its presentation
provided that such 2 Business Days grace period shall
not apply if the Court abridges the notice period
required pursuant to Rule 2.7 of the Insolvency Rules
1986; or
(k) Analogous proceedings: any event occurs or proceeding
is taken with respect to any member of the Group (other
than a TMG Company a Non-Material Subsidiary or a
Dormant Subsidiary) in any jurisdiction to which it is
subject which has an effect equivalent or similar to
any of the events mentioned in Clauses 13.1(h), (i) or
(j) and which would result in a Material Adverse
Effect; or
(l) Cessation of business: any of the members of the Group
(other than the TMG Companies, any Non-Material Subsidiary
or any Dormant Subsidiary) suspends, ceases or threatens to
suspend or cease to carry on its business or sells, transfers
or otherwise disposes of in any one transaction or series of
transactions the whole or any substantial part of its assets
other than to a member of the Charging Group without the
prior written consent of the Banks where the same would
result in a Material Adverse Effect; or
(m) Change of control: a person other than any of the
Investors (whether alone or together with any
associated person or persons) becomes the beneficial
owner of the issued share capital of the Parent
carrying a right to exercise more than 50 per cent. of
the votes at a general meeting of the Parent (for the
purposes of this Clause "associated person" is a person
who is "acting in concert" (as defined in the City Code
on Takeovers and Mergers) with that person,
PROVIDED that any action taken pursuant to or in
connection with the Ciba Geigy Agreement shall not be a
Default unless the same results in a Default under
sub-Clauses (g)-(k) above.
13.2 Acceleration etc.
At any time when any Default remains unremedied and unwaived the
Agent may with the agreement of the Majority Banks by notice to the
Parent cancel the Revolving Credit Facility in whole or in part
and:
(i) require the Borrowers immediately to repay the
Revolving Loan and repay or provide cash cover for
contingent liabilities under the Existing Ancillary
Facilities together with accrued interest thereon and
immediately to pay all other sums payable under this
Agreement, whereupon the same shall become immediately
due and payable; or
(ii) place the Revolving Loan and the Existing Ancillary
Facilities on demand, whereupon the same and all other
sums payable hereunder shall become repayable on demand
made by the Agent on the instructions of the Majority
Banks.
Upon the service of any such notice by the Agent the Banks'
obligations shall be terminated and each of the Banks' Commitments
shall be cancelled and reduced to zero.
13.3 Acceleration of Existing Facilities, Existing Ancillary Facilities
or Bridging Facility
During the period between the date of this Agreement and the First
Drawdown Date, the Banks shall not make demand for any amount
outstanding under the Existing Facilities, the Existing Ancillary
Facilities or the Bridging Facility unless (i) a Default remains
unremedied and unwaived hereunder or (ii) either of the Investor
Placing Agreement and the Shareholder Placing Agreement is
terminated by any party thereto or (iii) either of the Investor
Placing Agreement or the Shareholder Placing Agreement fails to
become unconditional in accordance with its respective terms by 4th
September 1998 or such later date as may be agreed for completion
in accordance with its respective terms.
13.4 Appointment of receiver etc
Notwithstanding any of the provisions in the Security neither the
Agent nor the Banks shall be entitled to appoint an administrative
or other receiver or similar officer over the whole or any part of
the property, assets and undertaking of any member of the Charging
Group, or otherwise to enforce the Security, unless there has been
a Default and a demand has been made by the Agent pursuant to
Clause 13.2.
14. SET-OFF AND PRO-RATA PAYMENTS AND DEPOSIT ACCOUNT
14.1 Set-Off
Each Borrower hereby authorises the Agent and each Bank to apply
any credit balance on any account of the relative Borrower with any
of the Agent and the Banks (subject to Clause 14.2) in satisfaction
of any sum due and payable by such Borrower pursuant to the terms
of the Financing Documents. For this purpose each of the Agent and
the Banks is authorised to purchase at its spot rate of exchange
with the monies standing to the credit of any such account such
other currencies as may be necessary to effect such application.
14.2 Deposit Account
14.2.1 Notwithstanding any of the provisions in any of the Security but
subject to Clause 14.2.3 the Agent or FNBM (as the case may be)
shall only be entitled to apply (whether by way of set-off
consolidation or combination of accounts, enforcement of Security
or otherwise) any monies standing to the credit of the Deposit
Account, (or (a) HLS's account with FNBM or (b) any account of a
Borrower with the Agent where such monies have been transferred
from the Deposit Account for the general working capital
requirements of HLS or any other Borrower (as the case may be) or
(c) in the case of monies immediately required to meet payroll
expenditure in the U.S.A. in an account with any other bank or
financial institution) against any liabilities of the Borrowers to
the Banks under the Financing Documents after either (i) the Agent
has made demand for repayment in accordance with Clause 13.2
and has appointed receivers (or in the case of HLS a similar
officer) to the whole or substantially the whole of the property,
assets and undertaking of any of the Borrowers or (ii) an
administrator has been appointed to any of the Borrowers.
14.2.2 When a Default is outstanding the Agent shall have the right to
refuse to allow any withdrawal from the Deposit Account and FNBM
or the Agent shall have the right to refuse to allow withdrawals
of monies transferred to HLS's account or any
account of a Borrower with the Agent from the Deposit Account if
(acting reasonably) the Agent or FNBM (as the case may be) is of
the view that such withdrawal is not being made in the ordinary
course of business to fund bona fide payments required for the
working capital purposes of the Group. Neither the Agent nor FNBM
shall otherwise have the right to restrict any transfer or
withdrawal from the Deposit Account or of monies transferred to
FNBM or any Borrower's account with the Agent from the Deposit
Account in any such case for the general working capital
requirements of the Group.
14.2.3 If any Borrower has defaulted in making any payment due under this
Agreement in respect of interest payable or fees, the Agent is
hereby irrevocably authorised to transfer from the Deposit Account
an amount equivalent to such unpaid amount in satisfaction thereof.
14.2.4 The Agent shall pay interest on the Deposit Account at the best
available rates that it can reasonably obtain for such amounts and
periods as the Parent may specify.
14.3 Pro Rata Sharing
14.3.1 If any Bank (the "Sharing Bank") shall at any time obtain (whether
by way of voluntary or involuntary payment right of set-off, or
otherwise) a proportion in respect of its Participation in the
Revolving Credit Facility which is greater than the proportion
obtained by the Bank or Banks respectively obtaining the smallest
proportion of its Participation in the Revolving Credit Facility,
including a nil receipt, (the amount so obtained by the Sharing
Bank which represents such excess being herein called the "excess
amount") then:
(i) the Sharing Bank shall promptly pay to the Agent, for
the account of the Banks, an amount equal to the excess
amount, whereupon the Agent shall notify the relative
Borrower of such amount and its receipt by the Agent;
(ii) the Agent shall treat such payment as if it were a
payment by the relative Borrower on account of sums
owed to the Banks; and
(iii) as between the Parent and the Sharing Bank the excess
amount shall be treated as not having been paid, while
as between the relative Parent and each Bank it shall
be treated as having been paid to the extent any monies
are received by such Bank.
If, because of the liquidation of any Borrower, or for any other
reason affecting any Borrower, the provisions of Clause (iii) above
cannot be given effect to as between the Banks on the one hand and
the relative Borrower on the other hand then, as between the Banks,
the Sharing Bank shall be treated as having purchased from each
other Bank an amount of the Revolving Loan owed by the relative
Borrower to that Bank which is equal to that part of the excess
amount which is paid to that Bank and the Sharing Bank shall,
accordingly, be entitled to receive all dividends and other
payments received by that Bank in respect of that part of the
Revolving Loan deemed to have been purchased by it.
14.3.2 Each Bank shall forthwith notify the Agent of any such receipt or
recovery by it other than by payment through the Agent.
14.3.3 If any excess amount subsequently has to be wholly or partly
refunded to a Borrower by any Sharing Bank which has paid an
amount equal thereto to the Agent under Clause 14.3.1, each Bank
to which any part of that amount was distributed shall on request
from the Sharing Bank repay to the Sharing Bank such Bank's pro
rata share of the amount which has to be so refunded by the Sharing
Bank. Each Bank shall on request supply to the Agent such
information as the Agent may from time to time request for the
purpose of this Clause 14.3. Notwithstanding the foregoing
provisions of this Clause 14.3, no Sharing Bank shall be obliged to
share any excess amount which it receives or recovers pursuant to
legal proceedings taken by it to recover any sums owing to it
under this Agreement with any other party which has a legal right
to, but does not, either join in such proceedings or commence and
diligently pursue separate proceedings to enforce its rights in the
same or another court, unless the proceedings instituted by the
Sharing Bank are instituted by it without prior notice having been
given to such party through the Agent and an opportunity to such
party to join in such proceedings.
14.3.4 Nothing in this Agreement shall oblige the Agent or any Bank to
apply any credit balance or other benefit received from any
Borrower against the liabilities of the relative Borrower under
this Agreement in priority to any other liabilities of the relative
Borrower to the Agent or that Bank.
15. THE AGENT AND THE BANKS
15.1 Appointment and Duties
15.1.1 Each Bank hereby irrevocably appoints the Agent to act as its agent
in connection with the administration of the Revolving Credit
Facility and to act as its agent and trustee in connection with the
Security and for such purposes irrevocably authorises the Agent to
take such action and to exercise and carry out all the discretions,
authorities, rights, powers and duties as are specifically
delegated to the Agent in this Agreement and each Security Document
together with such powers and discretions as are incidental
thereto.
15.1.2 The Agent shall have no duties or responsibilities except those
expressly set out in the Financing Documents. As to any matters
not expressly provided for by this Agreement, save in respect of
the Security, the Agent shall, subject to the provisions hereof or
thereof, act hereunder or thereunder or in connection herewith or
therewith in accordance with the instructions of the Banks (but in
the absence of any such instructions shall not be obliged to act)
and any such instructions and any action taken by the Agent in
accordance therewith shall be binding upon all the Banks.
15.2 Payments and Information Received
15.2.1 The Agent will promptly account to the Lending Office of each Bank
for such Bank's due proportion of all sums received by the Agent
for such Bank's account, whether by way of repayment or prepayment
of principal or payment of interest, fees or otherwise. The Agent
shall provide the Banks with all information and copies of all
notices which by the terms of this Agreement are to be provided or
given to the Banks. The Agent may retain for its own use and
benefit (and shall not be liable to account to any of the Banks
for all or any part of) any sums received by it by way of agency
or management or arrangement fees or by way of reimbursement
of expenses incurred by it.
15.2.2 The Agent shall maintain a memorandum account showing the principal
amount of each Revolving Advance for the time being outstanding
under this Agreement and the amount of each Bank's Participation in
the Revolving Credit Facility from time to time.
15.2.3 Each Bank confirms in favour of the Agent that unless it notifies
the Agent to the contrary it shall be the beneficial owner of any
interest paid to it under this Agreement.
15.3 Defaults
The Agent shall not be obliged to take any steps to ascertain
whether any Default (other than a default in repayment of principal
or in payment of interest, fees or other sums due pursuant to this
Agreement) or Default Occurrence has happened or exists and, until
the Agent shall have received express notice to the contrary from
any Borrower or any Bank, the Agent shall be entitled to assume
that no Default (other than as aforesaid) or Default Occurrence has
happened or exists. Upon receipt of such notice the Agent shall
promptly inform the Banks.
15.4 Assumptions
The Agent shall be entitled to rely on any communication or
document believed by it to be genuine and correct and to have been
communicated or signed by the person by whom it purports to be
communicated or signed and shall not be liable to any of the
parties to this Agreement for any of the consequences of such
reliance.
15.5 Legal Proceedings
The Agent shall not be obliged to take or commence any legal action
or proceeding against any Borrower or any other person arising out
of or in connection with the Financing Documents until it shall
have been indemnified or secured to its satisfaction against any
and all costs, claims and expenses (including, but not limited to,
any costs award which may be made against it as a result of any
such legal action or proceeding not being successful) which it may
expend or incur in such legal action or proceeding.
15.6 No Liability
Neither the Agent nor any of its directors, employees or agents
shall be liable to the Banks for any action taken or omitted to be
taken by it or any of them under or in connection with the
Financing Documents unless caused by its or their gross negligence
or wilful misconduct. The Agent shall not be responsible to the
Banks for any statements, representations or warranties in the
Financing Documents or for any information supplied or provided or
hereafter to be supplied or provided to any of the Banks by the
Agent, in respect of the Borrowers or any other person or for any
other matter relating to the Revolving Credit Facility, the
Security or for the execution, effectiveness, genuineness,
validity, enforceability or sufficiency of such documents or any of
the other documents referred to herein or therein or for the
recoverability of all or any of the Advances or any of the other
sums to become due and payable pursuant hereto.
15.7 Credit Decisions
15.7.1 Each Bank acknowledges that it has, independently and without
reliance on the Agent and based on such documents and information
as it deemed appropriate, made its own analysis of the transaction
contemplated by, and reached its own decision to enter into, this
Agreement and made its own investigation of the financial condition
and affairs of each of the Borrowers and any surety for the
Borrowers' obligations and its own appraisal of the
creditworthiness of the Borrowers and any surety for the Borrower's
obligations.
15.7.2 Save as specifically provided herein, the Agent shall not be under
any duty or obligation, either initially or on a continuing basis,
to provide any Bank with any credit information or other
information with respect to the financial condition of any of the
Borrowers or which is otherwise relevant to the Revolving Credit
Facility.
15.7.3 Each Bank further acknowledges and confirms that it will,
independently and without reliance on the Agent and based on such
documents and information as it shall deem appropriate at the time,
make its own decisions in taking or not taking action under the
Financing Documents.
15.8 Advisers
The Agent shall be entitled to obtain and rely on the advice of any
professional advisers selected by it given in connection with the
Financing Documents or any of the matters contemplated hereby or
thereby, and shall not be liable to any of the Banks for any of the
consequences of such reliance.
15.9 Relationship with Banks
15.9.1 In performing its functions and duties under this Agreement, the
Agent shall act solely as the agent for the Banks and save as
expressly provided herein and in the Security shall not be deemed
to be acting as trustee for any Bank and shall not assume or be
deemed to have assumed any obligation as agent or trustee for, or
any relationship of agency or trust with any Borrower.
15.9.2 Neither the Agent nor any Bank shall be under any liability or
responsibility of any kind to any Borrower or any of the other
Banks arising out of or in relation to any failure or delay in
performance or breach by any other Bank or Banks or, as the case
may be, any Borrower of any of its or their respective obligations
pursuant to the Financing Documents.
15.10 Agent's position as a Bank
With respect to its own Participation in the Revolving Credit
Facility, the Agent shall have the same rights and powers under and
in respect of the Financing Documents as though it were not also
acting as agent for the Banks. The Agent may, without liability to
account, accept deposits from, lend money to and generally engage
in any kind of banking or trust business with or for any of the
Borrowers as if it were not the agent or the trustee for the Banks
under any Financing Document.
15.11 Indemnity
The Banks agree to indemnify the Agent (to the extent not
reimbursed by the Borrowers) rateably according to the Banks'
respective Participations in the Revolving Credit Facility (or, if
no Revolving Advance shall then be outstanding, their respective
Commitments) from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (except
in respect of any agency, management or other fee due to the Agent)
which may be imposed on, incurred by or asserted against the Agent
in its capacity as agent or trustee for the Banks or in any way
relating to or arising out of the Financing Documents or any action
taken or omitted by the Agent in enforcing or preserving the rights
of the Banks under the Financing Documents, provided that no Bank
shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross
negligence or wilful misconduct.
15.12 Resignation
15.12.1 Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving to the
Parent and each of the Banks not less than 60 days' notice of its
intention to do so. Upon receipt of such notice of resignation the
Banks shall appoint as successor Agent any bank or financial
institution selected by the Parent and the Banks which is willing
and able to act as such agent for the Banks.
15.12.2 If no such successor Agent selected by the Parent and the Banks
shall have accepted such appointment within 20 days after the
Agent's giving of notice of resignation then the Banks after
consultation with the Parent shall have the right to appoint such a
successor Agent.
15.12.3 If no such successor Agent shall have been so appointed by the
Banks and shall have accepted such appointment within 40 days after
the Agent's giving of notice of resignation then the resigning
Agent may, after consultation with the Parent, appoint as its
successor any reputable and experienced bank or other financial
institution with an office in London.
15.12.4 Any such appointment shall take effect upon notice thereof (which
notice shall specify the bank in London to which payments shall be
made thereafter) being given to the Parent and each Bank.
Thereafter, the resigning Agent shall be discharged from any
further obligation under the Financing Documents and its successor
and each of the other parties hereto and thereto shall have the
same rights and obligations inter se as they would have had if
such successor had been a party to the Financing Documents in
place of the resigning Agent. The resigning Agent shall make over
to its successor all such records as its successor requires to
carry out its duties.
15.13 Change of Office
The Agent may from time to time in its sole discretion by written
notice to the Parent and each Bank designate a different office in
the United Kingdom from which its duties as the Agent will
thereafter be performed.
15.14 Scope of Duties
The Agent may grant waivers, vary the terms of the Financing
Documents and do or omit to do all such acts and things in
connection therewith as may (unless otherwise provided hereunder)
be authorised in writing by the Majority Banks. Any such waiver,
variation, act or omission so authorised and effected by the Agent
shall be binding on all the Banks and the Agent shall be under no
liability whatsoever in respect of any such waiver, consent,
variation, act or omission. Except with the prior written agreement
of all the Banks, nothing in this Clause shall authorise (as
between the Agent and the Banks) (i) any change in the rate at
which any interest on the Revolving Loan is payable under this
Agreement, (ii) any extension of the date for, or alteration in the
amount or currency of, the payment of any principal, interest, fees
or any other amount payable under this Agreement, (iii) any
increase in any Bank's Commitment, (iv) any variation of Clauses 6,
7 or 13 and this Clause 15 or (vi) any provision of this Agreement
which requires the consent of all the Banks.
15.15 Consents
The Agent may at any time upon the application and at the cost of
the Parent and without any consent of any of the Banks (only if and
so far as in its reasonable opinion the interests of the Banks
shall not be materially prejudiced thereby) give any consent,
approval or licence required of the Agent under the terms of this
Agreement, save where this Agreement expressly requires that such
consent, approval or licence should be given only with the approval
of, or on the instructions of, the Banks.
15.16 Evidence
The Agent may accept a certificate signed by any director or the
secretary of the Parent as to any fact or matter on which the Agent
may need or wish to be satisfied as sufficient evidence thereof and
a like certificate that any assets in the opinion of the person so
certifying have a particular value or produce a particular income
or are suitable for a particular purpose as sufficient evidence
that they have that value or produce that income or are so suitable
and the Agent shall not be bound in any such case to call for
further evidence or be responsible for any loss that may be
occasioned by its failing to do so.
15.17 Security
15.17.1 The Agent shall accept without investigation, requisition or
objection such title as any person may have to the undertaking,
property and assets which are subject to the Security and shall
not be bound or concerned to examine or enquire into nor be liable
for any defect or failure in the title of any person whether such
defect or failure was known to the Agent or might have been
discovered upon examination or enquiry and whether capable of
remedy or not nor for any failure on the part of the Agent to give
notice to any third party of the Security to which it is party
or otherwise perfect or register the security thereby created.
15.17.2 The Agent shall hold the benefit of the Security upon trust for
itself and the Banks.
15.17.3 Each of the Banks hereby confirms and agrees that it does not wish
to be registered in accordance with Rule 146 of the Land
Registration Rules 1925 as the joint proprietor of any mortgage or
charge created pursuant to any Financing Document and accordingly
authorises the Agent to hold such mortgage or charge in its sole
name as agent and trustee for the Banks and hereby requests H.M.
Land Registry to register the Agent as the sole proprietor of any
such mortgage or charge.
16. FEES AND EXPENSES
16.1 Expenses
The Borrowers shall, on demand, pay all reasonable expenses
(including, but not limited to, legal, valuation and accounting
fees and, in relation to (i) and (ii) below, to the extent the same
are reasonable) and any VAT thereon incurred by:
(i) the Agent and the Banks in connection with the granting
of any release, waiver or consent or in connection with
any variation of any Financing Document; and
(ii) the Agent and the Banks in enforcing, perfecting,
protecting or preserving (or attempting so to do) any
of their rights, or in suing for or recovering any sum
due from any of the Borrowers or any other person under
any Financing Document.
16.2 Agency Fees
The Parent shall pay to the Agent agency fees of (pound)4,000 per
annum payable in advance on the First Drawdown Date and on the
first anniversary of the First Drawdown Date. In addition the
Parent shall pay a fee of (pound)250 for each drawdown or renewal
of a Revolving Advance such fee to be payable annually in arrear
within 7 days of receipt by the Parent of an invoice for such fees.
16.3 Non-Utilisation Fee
The Parent shall pay a commitment fee to the Agent for the account
of the Banks (pro-rata to their undrawn Commitment) at the rate of
0.25 per cent. per annum on the difference between (i) the Total
Commitments and (ii) the average aggregate during the period in
question of the amount of all Revolving Advances outstanding during
that period. Such fee shall accrue day to day on the basis of a 365
day year and the number of days elapsed in respect of each
successive period of 6 months from the First Drawdown Date and
shall be paid in arrear on the first Business Day after the end of
each such period and on the date when the Total Commitments are
reduced to zero.
16.4 Participation Fee
16.4.1 On the First Drawdown Date the Parent shall pay the Agent (on
behalf of the Banks) a participation fee of (pound)122,500 to be
shared between the Banks in accordance with their Commitment
Percentages. If for any period a Bank is in breach of an obligation
to fund a Revolving Advance hereunder, the participation fee shall
not accrue to such Bank during such period.
16.4.2 On the first anniversary of the First Drawdown Date the Parent
shall pay the Agent (on behalf of the Banks) a further
participation fee of (pound)127,500 to be shared between the Banks
in accordance with the Commitment Percentages.
16.5 Documentary Taxes Indemnity
All stamp, documentary, registration or other like duties or Taxes,
including any penalties, additions, fines, surcharges or interest
relating thereto, (other than any arising from any assignment or
transfer by a Bank pursuant to Clause 19.3) which are imposed or
chargeable on or in connection with any of this Agreement and the
Security shall be paid by the Borrowers PROVIDED THAT the Agent
shall be entitled but not obliged to pay any such duties or Taxes
(whether or not they are its primary responsibility), whereupon the
Borrowers shall on demand indemnify the Agent against those duties
or Taxes and against any costs and expenses so incurred by the
Agent in discharging them.
16.6 VAT
16.6.1 All payments made by the Borrowers under the Financing Documents
are calculated without regard to Value Added Tax. If any such
payment constitutes the whole or any part of the consideration for
a taxable or deemed taxable supply (whether that supply is taxable
pursuant to the exercise of an option or otherwise) by the Agent or
a Bank, the amount of that payment shall be increased by an amount
equal to the amount of Value Added Tax which is chargeable in
respect of the taxable supply in question.
16.6.2 No payment or other consideration to be made or furnished by the
Agent or a Bank, to the Borrowers pursuant to or in connection with
the Financing Documents or any transaction or document contemplated
therein may be increased or added to by reference to (or as a
result of any increase in the rate of) any Value Added Tax which
shall be or may become chargeable in respect of any taxable supply.
17. SEVERABILITY, WAIVERS, REMEDIES CUMULATIVE
17.1 Severance
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 neither the legality, validity or enforceability
of the remaining provisions hereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
17.2 Waivers
No failure to exercise, nor any delay in exercising, on the part of
the Agent or any Banks, any right or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right or remedy prevent any further or other exercise thereof
or the exercise of any other right or remedy. The rights and
remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
18. NOTICES
18.1 Method
Each communication to be made hereunder shall be made in writing
but, unless otherwise stated, may be made by facsimile transmission
or letter.
18.2 Delivery
Any communication (including any notice to be made or given
hereunder) or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless the one has by 15
days' written notice to the other specified another address) be
made or delivered to that other person, in the case of the
Borrowers and the Agent at the respective addresses given in Clause
18.3, in the case of the Banks at the respective addresses given in
Schedule 1 or, as the case may be, the Schedule of the relative
Transfer Certificate.
18.3 Addresses
The addresses referred to in Clause 18.2 above are:
(A) the Borrowers:
c/o Huntingdon Life Sciences Group PLC
Woolley Road
Alconbury
Huntingdon
Cambridgeshire PE17 5HF
Attention: The Company Secretary and the Finance Director
Fax: (01480) 892195
(B) the Agent:
National Westminster Bank Plc
3rd Floor
Juno Court
24 Prescott Street
London E1 8BB
Attention: Head of NWM Agency Group
Fax: (0171) 714 6167
18.4 Deemed Receipt
Any notice given by the Agent or a Borrower shall be deemed to have
been received:
(a) if sent by facsimile transmission, one Business Day after the
day it was transmitted;
(b) in the case of a written notice lodged by hand, at the time of
actual delivery; or
(c) if posted, on the second Business Day following the day
on which it was properly despatched by first class mail
postage prepaid.
18.5 Notices to the Banks
Any notice to be given by a Borrower to the Banks or any of them
may be given by serving such notice on the Agent together with a
written instruction that such notice is to be treated as notice to
one or more specified Banks. In the absence of such written
instructions it shall be deemed to be a notice to the Agent alone.
19. ASSIGNMENTS AND TRANSFERS
19.1 Benefit of Agreement
This Agreement shall be binding upon and enure to the benefit of
each party hereto and its successors and assigns.
19.2 Assignments and Transfers by the Borrowers
No Borrower shall be entitled to assign or transfer all or any of
its rights, benefits and obligations under this Agreement.
19.3 Assignments and Transfers by Banks
19.3.1 Any Bank may at any time (after the First Drawdown Date (but not
otherwise)) transfer in accordance with Clause 19.3.3 below all but
not part only of its rights, benefits and obligations under any of
the Financing Documents to any person.
19.3.2 If any Bank assigns all of its rights and benefits under any of the
Financing Documents in accordance with Clause 19.3.1 above, then,
unless and until the assignee has confirmed to the Agent, the other
Banks and the Borrowers that it shall be under the same obligations
towards each of them as it would have been under if it had been a
party hereto as a Bank, the Agent, the other Banks and the
Borrowers shall not be obliged to recognise such assignee as having
the rights against each of them which it would have had if it had
been such a party hereto.
19.3.3 If any Bank (the "Existing Bank") wishes to transfer all of its
Commitment or Participation in the Revolving Credit Facility to
another bank, financial institution or other person or entity (the
"Bank Transferee"), such transfer may be effected by way of a
novation by the delivery to, and the execution by, the Agent of a
duly completed Transfer Certificate.
19.3.4 On the date specified in the Transfer Certificate:
(i) to the extent that in the Transfer Certificate the
Existing Bank seeks to transfer its Commitment or
Participation in the Revolving Credit Facility, the
Borrowers and the Existing Bank shall each be released
from further obligations to each other under this
Agreement and their respective rights against each
other shall be cancelled (such rights and obligations
being referred to in this Clause 19.3.4 as "Discharged
Rights and Obligations");
(ii) the Borrowers and the Bank Transferee shall each assume
obligations towards each other and/or acquire rights
against each other which differ from the Discharged
Rights and Obligations only insofar as the Borrowers
and the Bank Transferee have assumed and/or acquired
the same in place of the Borrowers and the Existing
Bank;
(iii) the Agent, the Borrowers, the Bank Transferee and the
other Banks shall acquire the same rights and assume
the same obligations among themselves as they would
have acquired and assumed had the Bank Transferee been
a party hereunder as a Bank with the rights and/or the
obligations acquired or assumed by it as a result of
the transfer; and
(iv) a proportion of the Existing Bank's rights under the
Security, equal to the proportion of the Existing
Bank's rights under this Agreement being transferred,
shall automatically be transferred to the Bank
Transferee.
19.3.5 The Agent will promptly complete Transfer Certificates on request
by an Existing Bank and upon payment by such Existing Bank of a
(pound)750 fee to the Agent. Each Borrower and each of the Banks
hereby irrevocably authorise the Agent to execute any duly
completed Transfer Certificate on its behalf provided that such
authorisation does not extend to the execution of a Transfer
Certificate on behalf of either the Existing Bank or the Bank
Transferee named therein.
19.3.6 The Agent shall promptly notify the Parent of the receipt and
execution on its behalf by the Agent of any Transfer Certificate.
19.3.7 The Borrowers shall be under no obligation to pay any greater
amount under this Agreement following an assignment or transfer by
a Bank of any of its rights or obligations pursuant to the
foregoing provisions of this Clause 19 if such greater amount would
not have been payable but for the assignment or transfer.
19.3.8 When a Bank assigns or transfers part of its rights and benefits
hereunder it shall assign or transfer, as the case may be, the same
percentage of its rights and benefits in relation to each Facility.
19.4 Disclosure of Information
The Agent and the Banks may disclose any information furnished or
made available to them hereunder by the Borrowers to each other,
their professional advisers and to any actual or potential
assignee, transferee or sub-participant subject to the condition
(except where such information is available in the public domain)
that each of the same executes in favour of the Parent a written
confidentiality undertaking agreeing to keep confidential any such
information.
20. CURRENCY INDEMNITY
20.1 Any payment made to or for the account of or received by the Agent
or any Bank in respect of any moneys or liabilities due, arising or
incurred by the Borrowers to the Agent or any Bank in a currency
(the "Currency of Payment") other than the currency in which the
payment should have been made under this Agreement (the "Currency
of Obligation") in whatever circumstances (including as a result of
a judgment against the Borrowers) and for whatever reason shall
constitute a discharge to the Borrowers only to the extent of the
Currency of Obligation amount which the Agent or that Bank, as the
case may be, is able on the date of receipt of such payment (or if
such date of receipt is not a Business Day, on the next succeeding
Business Day) to purchase with the Currency of Payment amount at
its spot rate of exchange (as conclusively determined by the Agent
or that Bank) in the London foreign exchange market.
20.2 If the amount of the Currency of Obligation which the Agent or that
Bank is so able to purchase falls short of the amount originally
due to the Agent or that Bank, as the case may be, under this
Agreement, then the Borrowers shall immediately on demand indemnify
the Agent or that Bank, as the case may be, against any loss or
damage arising as a result of that shortfall by paying to the Agent
or that Bank, as the case may be, that amount in the Currency of
Obligation certified by the Agent or that Bank, as the case may be,
as necessary so to indemnify it.
20.2 General
20.2.1 Each indemnity in this Clause 20 shall constitute a separate and
independent obligation from the other obligations contained in this
Agreement, shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted from
time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum or sums
in respect of amounts due under this Agreement or under any such
judgment or order.
20.2.2 The certificate of the Agent or the relevant Bank as to the amount
of any loss or damage sustained or incurred by it shall be
conclusive and binding on the Borrowers except for any manifest
error.
21. PRIORITIES
21.1 Priority Order
21.1.1 It is hereby agreed by and between the parties to this Agreement
that on enforcement of the Security the Net Proceeds shall be
applied:
(i) first, in discharge of the Priority Obligations; and
(ii) second, in discharge of the NatWest Obligations.
21.1.2 The Security is a continuing security and the ranking of the
Priority Obligations and the NatWest Obligations as provided for in
this Agreement shall not be affected by any fluctuation in the
amounts from time to time of the Priority Obligations or the
NatWest Obligations or by the existence at any time of a credit
balance on any current or other accounts.
21.1.3 For the avoidance of doubt it is confirmed that the moneys owing
and obligations and other liabilities of the Borrowers to the Banks
and the Agent under this Agreement in respect of the Priority
Obligations shall rank pari passu in all respects and that on
enforcement the Net Proceeds shall be shared between the Banks pro
rata on the basis of their respective Participation Percentages.
21.2 Co-Operation
The Agent and the Banks shall co-operate to ensure that any moneys
in the hands of a receiver appointed pursuant to any of the
Security are distributed in a manner consistent with the provisions
of this Agreement.
22. ANNOUNCEMENTS
Without the consent of the Agent (acting on behalf of all of the
Banks), none of the parties to this Agreement shall make any
statement or public announcement to the press or other media in
connection with any matters referred to in this Agreement, save for
any such announcement or disclosure that may be required by law or
recognised Stock Exchange Rules or is contained in the Circular, or
in respect of information is in the public domain.
23. CONFLICT
23.1 If and to the extent of any conflict between the provisions of this
Agreement and those of any other Financing Document, the terms of
this Agreement shall prevail.
23.2 For the avoidance of doubt, principal interest and other amounts
outstanding hereunder may only be demanded in accordance with the
terms of this Agreement.
23.3 Any consent which may have been given in relation to any Financing
Document other than this Agreement shall remain in full force and
effect.
23.4 For the avoidance of doubt, the Agent and the Banks confirm that
any breach of Clause 6 of the guarantee and debenture between the
Agent and the Parent as a result of the payment of the Transaction
Proceeds into the Deposit Account is hereby waived.
23.5 The Agent and HLS agree that they shall within 21 days of the
signing of this Agreement execute such instruments or agreements
supplemental to such of the Security Documents to which HLS is a
party which are existing as at the date of this Agreement as are
necessary in order to limit the Agent's or the Banks' rights,
remedies and powers under those Security Documents in accordance
with, and so as to reflect, the provisions of this Agreement. For
the avoidance of doubt the failure by HLS to execute such
instruments or agreements within such 21 day period shall not be a
Default or a Default Occurence.
23.6 For the avoidance of doubt, subject to the provisions of Clause
13.3, the Existing Facilities shall continue to be provided in
accordance with their terms until the First Drawdown Date.
24. LAW AND JURISDICTION
24.1 Law
This Agreement shall be governed by, and construed in all respects
in accordance with, English law.
24.2 Jurisdiction
24.2.1 The courts of England shall have jurisdiction to settle any
disputes which may arise out of or in connection with this
Agreement.
24.2.2 Subject to the following proviso Clause 24.2.1 is for the benefit
of the Agent and the Banks only and is without prejudice to the
right of the Agent and each Bank to bring any proceedings relating
to this Agreement in any other court which has jurisdiction.
PROVIDED THAT the Borrowers may bring proceedings against any Bank
in any court of the jurisdiction in which it is incorporated or has
its main place of business.
24.2.3 For the purposes of this Agreement each Borrower and each Bank hereby:
(i) waives any objections on the grounds of venue or forum
non conveniens or any similar grounds; and
(ii) consents to service of process by mail or in any other
manner permitted by the relevant law.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed on the date set out above.
<PAGE>
SCHEDULE 1
THE BANKS
Bank and Lending Commitment (pound) Commitment
Office Percentage
1. National Westminster Bank Plc 12,224,998 49.898
Address for Notices
King's Cross House
11th Floor, Phase I
200 Pentonville Road
London N1 9HL
Attention: Steve Hamilton
Telephone: (0171) 239 8327
Fax: (0171) 239 8945
2. The First National Bank 6,971,324 28.454
of Maryland
Address for Notices
25 South Charles Street
14th Floor
Baltimore
MD 21201
United States of America
Attention: Ronald C Lapointe
Telephone (410) 244 4089
Fax: (410) 244 4295
3. Comerica Bank 5,303,678 21.648
Address for Notices
PO Box 75000
Detroit
MI 48275-3329
United States of America
Attention: Henry J Hajdas
Telephone: (313) 222 6360
Fax: (313) 222 5706
<PAGE>
SCHEDULE 2
DRAWDOWN NOTICE
To: National Westminster Bank Plc
3rd Floor
Juno Court
25 Prescott Street
London E1 8BB
Date
Dear Sirs,
Facilities Agreement dated [*] August 1998 made between Huntingdon Life Sciences
Group plc, Huntingdon Life Sciences Limited, Huntingdon Life Sciences Inc.,
certain banks and you as agent (the "Facilities Agreement").
We hereby give you notice of the following proposed borrowing of a Revolving
Advance under the Facilities Agreement. Words and expressions defined therein
shall have the same meanings when used herein.
1. Facility:
2. Amount of Revolving Advance:
4. Purpose:
5. Proposed Drawdown Date:
6. Duration of Interest Period:
7. Payment Instructions:
SIGNED
For and on behalf of
HUNTINGDON LIFE SCIENCES GROUP plc
<PAGE>
SCHEDULE 3
MANDATORY COST RATE
The Mandatory Cost Rate is an addition to the interest rate on a Revolving
Advance to compensate the Banks for the cost attributable to a Revolving Advance
resulting from the imposition from time to time under or pursuant to the Bank of
England Act 1988 (the "Act") and/or by the Bank of England and/or the Financial
Services Authority (the "FSA") (or other United Kingdom governmental authorities
or agencies) of a requirement to place Special Deposits (whether interest
bearing or not) with the Bank of England and/or pay fees to the FSA calculated
by reference to liabilities used to fund the Revolving Advance.
The Mandatory Cost Rate shall be the rate determined by the Agent to be equal to
the arithmetic means (rounded upward, if necessary, to 4 decimal places) as the
rate resulting from the application of the following formula:
[OBJECT OMITTED]
where, in each case, on the day of application of a formula:
X is the percentage of Eligible Liabilities (in excess of any stated
minimum) by reference to which the Agent is required under or
pursuant to the Act to maintain cash ratio deposits with the Bank
of England;
F is the rate of charge equal to the average of the respective rates
of charge notified to the Agent by each Bank as being payable by
that Bank to the FSA pursuant to paragraph 2.02 or 2.03 (as the
case may be) of the Fees Regulations (but where, for this purpose,
the figures at paragraph 2.02b and 2.03b of the Fees Regulations
shall be deemed to be zero) and expressed in pounds per (pound)1
million of the Fee Base of that Bank;
L is the BBA Sterling LIBOR rate quoted at or about 11.00 a.m.
(London time) on Telerate (now at page 3750) on that day;
S is the level of interest bearing Special Deposits, expressed as a
percentage of Eligible Liabilities, which the Agent is required to
maintain by the Bank of England (or other United Kingdom
governmental authorities or agencies); and
D is the percentage rate per annum payable by the Bank of England to the
Agent on Special Deposits.
(X, L, S and D shall be expressed in the formula as numbers and not as
percentages, e.g. if X = 0.15% and L = 7%, XL will be calculated as 0.15 x 7 and
not as 0.15% x 7%. A negative result obtained from subtracting D from L shall be
counted as zero.).
Each Bank shall supply such information and in such detail as the Agent may
require for the purposes of calculating the above formulae. If any Bank fails to
notify any rate or figures to the Agent, the Mandatory Cost Rate shall be
determined on the basis of the rate(s) or figure(s) notified to the Agent by the
remaining Bank(s).
The Mandatory Cost Rate attributable to an Revolving Advance or other sum for
any period shall be calculated at or about 11.00 a.m. (London time) on the first
day of that period for the duration of that period.
The determination of the Mandatory Cost Rate in relation to any period shall, in
the absence of manifest error, be conclusive and binding on the Parties to this
Agreement.
If there is any change in circumstance (including the imposition of alternative
or additional requirements) which in the reasonable opinion of the Agent renders
or will render the above formula (or any element of the formula, or any defined
term used in the formula) inappropriate or inapplicable, the Agent (following
consultation with the Borrower and the Majority Banks) shall be entitled to vary
the same by giving notice to the Parties to this Agreement. Any such variation
shall, in the absence of manifest error, be conclusive and binding on the
Parties to this Agreement and shall apply from the date specified in such
notice.
For the purposes of this Schedule:
"Eligible Liabilities" and "Special Deposits" have the meanings given to those
terms under or pursuant to the Act or by the Bank of England (as may be
appropriate), on the day of the application of the formula.
"Fee Base" has the meaning given to that term for the purposes of, and shall be
calculated in accordance with, the Fees Regulations.
"Fees Regulations" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1998; or
(b) such regulations as from time to time may be in force, relating to
the payment of fees for banking supervision in respect of periods
subsequent to 31st March 1999.
<PAGE>
SCHEDULE 4
FORM OF TRANSFER CERTIFICATE
TRANSFER CERTIFICATE
To: National Westminster Bank Plc
and the other parties
to the Facilities Agreement (as defined below)
This transfer certificate ("Transfer Certificate") relates to a Revolving Loan
Agreement dated [ ] August 1998 and made by (1) Huntingdon Life Sciences Group
plc (2) Huntingdon Life Sciences Limited, (3) Huntingdon Life Sciences Inc, (4)
the Banks and (5) National Westminster Bank Plc as Agent (the "Facilities
Agreement" which term shall include any amendments or supplements thereto).
Terms defined in the Facilities Agreement shall, unless otherwise defined, have
the same meanings when used in this Transfer Certificate.
I. *[Details of Existing Bank] (the "Existing Bank"):
1. confirms that to the extent that details appear in the
Schedule to this Transfer Certificate under the
headings "Existing Bank's Commitment" and
"Participation in the Facilities", those details
accurately summarise its Commitment and its
Participation in the Facilities all or part of which is
to be transferred; and
2. requests [Details of Bank Transferee] (the "Bank
Transferee") to accept and procure, in accordance with
Clause 19 of the Facilities Agreement, the substitution
for the Existing Bank of the Bank Transferee in respect
of the amount specified in the Schedule hereto of its
Commitment and its Participation in the Facilities by
signing this Transfer Certificate.
II. The Bank Transferee hereby requests each of the Borrowers, the
Banks and the Agent to accept this executed Transfer Certificate as
being delivered under and for the purposes of Clause 19 of the
Facilities Agreement so as to take effect in accordance with the
terms of that Clause on [date of transfer] being the date on or
before which an executed copy of this Transfer Certificate is
delivered to the Agent.
III. The Bank Transferee:
1. confirms that it has received a copy of the Facilities
Agreement together with such other documents and information
as it has requested in connection with this transaction;
2. confirms that it has not relied and will not rely on
the Existing Bank to check or enquire on its behalf
into the legality, validity, effectiveness, adequacy,
accuracy or completeness of any such documents or
information; and
3. agrees that it has not relied and will not rely on any
of the Existing Bank, the Agent and the Banks to assess
or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status
or nature of any of the Borrowers or any other party to
the Security.
IV. The Bank Transferee undertakes with the Existing Bank and each of
the other parties to the Facilities Agreement that it will perform,
in accordance with their terms, all those obligations which, by the
terms of the Facilities Agreement, will be assumed by it upon
delivery of the executed copy of this Transfer Certificate to the
Agent.
V. On execution of this Transfer Certificate by the Agent on their
behalf, the Borrowers and the Banks accept the Bank Transferee as a
party to the Facilities Agreement in substitution for the Existing
Bank with respect to all those rights and obligations which, by the
terms of the Facilities Agreement, will be assumed by the Bank
Transferee after delivery of the executed copy of this transfer
Certificate to the Agent.
VI. None of the Existing Bank, the Banks and the Agent:
1. makes any representation or warranty or assumes any
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of any of the
Financing Documents; or
2. assumes any responsibility for the financial condition
of any of the Borrowers or any other party to any of
the Financing Documents or any other document or for
the performance and observance by the Borrowers or any
other party to the Facilities Agreement or any other
document of its or their obligations and any and all
conditions and warranties, whether express or implied
by law or otherwise, are excluded.
VII. The Bank Transferee confirms that its Lending Office and address
for notices for the purposes of the Facilities Agreement are as set
out in the Schedule hereto.
VIII. The Existing Bank hereby gives notice to the Bank Transferee (and
the Bank Transferee hereby acknowledges and agrees with the
Existing Bank) that the Existing Bank is under no obligation to
re-purchase (or in any other manner to assume, undertake or
discharge any obligation or liability in relation to) the
transferred Commitment and Participation at any time after this
Transfer Certificate shall have taken effect.
IX. Following the date upon which this Transfer Certificate shall have
taken effect, without limiting the provisions hereof, each of the
Bank Transferee and the Existing Bank hereby acknowledges and
confirms to the other that in relation to the relative Commitment
and Participation (or part thereof) variations, amendments
or alterations to any of the terms of any of the Financing
Documents arising in connection with any renegotiation or
rescheduling of the obligations hereunder shall apply to and be
binding on the Bank Transferee alone.
X. This Transfer Certificate shall be construed in accordance with,
and governed by, English law.
*[Bank Transferee]
By:..........................
(Duly Authorised)
*[Existing Bank]
By:..........................
(Duly Authorised)
The Agent on behalf of itself and all other parties to the Facilities Agreement.
By:..........................
(Duly Authorised)
Dated:
<PAGE>
THE SCHEDULE
Existing Bank's Commitment Amount of Commitment Transferred
Participation in the Facilities Amount of Participation Transferred
[Bank Transferee]
Lending Office Address for notices
* *
Attention: *
Telex: *
Answerback: *
<PAGE>
<TABLE>
SCHEDULE 5
EXISTING SECURITY
<CAPTION>
Document Executed by Date
<S> <C> <C>
1. Guarantee and Debenture in favour of the Agent as amended by a Parent 1.11.95
Supplemental Deed dated 20th January 1998 and a Supplemental Deed
dated 26th February 1998
2. Guarantee and Debenture in favour of the Agent as amended by a HLSL
21.11.95 Supplemental Deed dated 20th January 1998 and a Supplemental
Deed dated 26th February 1998
3. Guarantee in favour of the Agent as amended by a Supplemental Deed HLS 21.11.95
dated 20th January 1998 and a Supplemental Deed dated 26th
February 1998
4. Security Agreement in favour of the Agent as amended by a HLS 21.11.95
Supplemental Deed dated 20th January 1998 and a Supplemental Deed
dated 26th February 1998
5. Mortgage in favour of the Agent over the New Jersey Property as HLS
16.01.98 amended by a Supplemental Deed dated 26th February 1998
6. Equipment Mortgage in favour of the Agent HLSL 20.04.98
7. Security Agreement incorporating an Equipment Mortgage and a HLS 30.04.98
Charge over an Operating Account in favour of the Agent
</TABLE>
<PAGE>
SCHEDULE 6
CONDITIONS PRECEDENT
The Revolving Credit Facility shall be made available to the Borrowers when:
(i) the Agent has received the following in form and substance satisfactory
to it:
(a) copies, each certified to be true, complete and
up-to-date copies, of resolutions of each of the
relevant Borrower's boards of directors authorising the
acceptance and execution of this Agreement and in the
case of the Parent unanimously supporting, approving
and recommending the Placings to the shareholders of
the Parent;
(b) certified copies of the Investor Placing Agreement and the
Shareholder Placing Agreement duly executed by the parties
thereto; and
(c) a certified copy of the Circular.
(ii) the Transaction Proceeds are received by the Agent in the Deposit Account;
(iii) the Agent has received (on behalf of the Banks) the Participation Fee
referred to in Clause 16.4.1;
(iv) NatWest has received repayment in full and on a permanent basis of
all Indebtedness outstanding in respect of the Bridging Facility.
<PAGE>
SCHEDULE 7
PARTICIPATION IN RISK SHARING
Bank Participation Percentage
National Westminster Bank Plc 49.693%
Comerica 21.648%
The First National Bank of Maryland 28.454%
<PAGE>
The Borrowers
SIGNED by )
)
for and on behalf of ) CHRISTOPHER CLIFFE
HUNTINGDON LIFE SCIENCES )
GROUP HOLDINGS plc )
SIGNED by )
)
for and on behalf of ) CHRISTOPHER CLIFFE
HUNTINGDON LIFE SCIENCES )
LIMITED )
SIGNED by )
) CHRISTOPHER CLIFFE
for and on behalf of )
HUNTINGDON LIFE SCIENCES INC.)
The Agent
SIGNED by )
)
for and on behalf of ) S J HAMILTON
NATIONAL WESTMINSTER )
BANK Plc )
The Banks
SIGNED by )
)
for and on behalf of ) S J HAMILTON
NATIONAL WESTMINSTER )
BANK Plc )
SIGNED by )
)
for and on behalf of ) RONALD LAPOINTE
THE FIRST NATIONAL BANK OF )
MARYLAND )
SIGNED by )
) HENRY HADJAS
for and on behalf of )
COMERICA BANK )
CONFORMED COPY
To: Huntingdon Life Sciences Group plc
Huntingdon Life Sciences Limited and
c/o Woolley Road
Alconbury
Huntingdon
Cambridgeshire PE17 5HS
7 August 1998
Dear Sirs,
Bridging Facility to be made available by National Westminster Bank Plc (the
"Overdraft Bank") in favour of (1) Huntingdon Life Sciences Group plc (the
"Parent") and (2) Huntingdon Life Sciences Limited ("HLSL") (together the
"Borrowers")
National Westminster Bank Plc in its capacity as Overdraft Bank under this
Letter is pleased to advise you that with the authority of the Banks it is
prepared to offer the Borrowers the bridging facility referred to in Paragraph 2
of this Letter (the "Bridging Facility") on the terms and conditions contained
herein.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Letter capitalised expressions shall, unless otherwise
defined, have the same meanings given to them in the Facilities
Agreement and the following expressions shall have the following
meanings:
"Business Day" means a day (other than a Saturday) on which banks
are open in the City of London for the transaction of Business;
"Circular" means the circular to be issued by the Parent relating
to the Placings;
"DKB" means Dresdner Kleinwort Benson;
"Existing Overdraft Facilities" means the overdraft facility of
(pound)5,000,000 made available to the Borrowers by the Overdraft
Bank pursuant to the terms of the Original Overdraft Facility
Letter and the Second Overdraft Facility Letter;
"Expiry Date" means 2 September 1998 or such other date as the
parties hereto may agree;
"Facilities Agreement" means the facilities agreement dated 1st
November 1995 between the Borrowers, the Banks and National
Westminster Bank Plc as agent as amended by a letter dated 21st
November 1995, by the Original Overdraft Letter and by the
Amendment Agreement;
"Intercreditor Agreement" means the fourth intercreditor agreement
to be entered into by each of the Borrowers, the Overdraft Bank,
the Agent and the Banks to record the priority of the Overdraft
Bank with respect to the amounts loaned to the Borrowers by means
of the Bridging Facility;.
"Investor Placing" means the raising by the Parent of new equity by
means of a subscription by certain investors for 120,000,000
ordinary shares of 5 pence each in the Parent in order to raise
(pound)15,000,000 (gross);
"Investor Placing Agreement" means the agreement of even date
herewith between the Parent and the investors documenting the
Investor Placing;
"New Facilities Agreement" means the New Facilities Agreement of
even date herewith between National Westminster Bank Plc as Agent,
the Banks and the Borrowers;
"Original Overdraft Letter" means the letter dated 26th February
1998 from the Overdraft Bank to the Borrowers;
"Placings" mean the Investor Placing and the Shareholder Placing;
"Resolutions" mean the resolutions of the shareholders of the
Parent set out in the notice of EGM which is to be sent out with
the Circular;
"Second Overdraft Facility letter" means the facility letter dated
17th March 1998 from the Overdraft Bank to the Borrowers;
"Shareholder Placing" means the raising by the Parent of new equity
by means of a placing and open offer of 57,003,431 ordinary shares
of 5 pence each in the Parent in order to raise not less than
(pound)7,000,000 (gross);
"Shareholder Placing Agreement" means the agreement of even date
herewith between the Parent and DKB relating to the Shareholder
Placing;
"Transaction Proceeds" means the monies (net of costs) raised by
the Parent pursuant to the Placings.
1.2 Interpretation
In this Letter, unless the context otherwise requires:
(a) references to any persons shall be construed so as to
include that person's assigns, transferees or
successors in title;
(b) references to any document (or any specified provisions
of any document) shall be construed as references to
such document or that provision as amended or novated
or supplemented or replaced, as the case may be, from
time to time;
(c) references to the singular shall include the plural and
vice versa and references by way of male, female or
neuter pronoun shall include references to all genders;
and
(d) references to paragraphs are to be construed as
references to the paragraphs of this Letter as amended
or varied from time to time.
2. BRIDGING FACILITY
2.1 Subject to Paragraph 4 the Overdraft Bank agrees to make available
to the Borrowers from the date of this letter an aggregate
principal amount of (pound)1,000,000 by way of sterling overdraft
on the Borrowers' current accounts with the Overdraft Bank.
2.2 No drawing shall be made under the Bridging Facility unless the
existing Overdraft Facilities are drawn down in full at the time of
such drawing.
2.3 The Bridging Facility is in addition to the Existing Overdraft
Facilities.
3. PURPOSE
The Borrowers shall utilise the Bridging Facility for the purposes
of their general corporate purposes.
4. CONDITIONS PRECEDENT TO THE BRIDGING FACILITY
The Bridging Facility shall be made available to the Borrowers when
the Overdraft Bank has received the following in form and substance
satisfactory to it:
(a) the enclosed copy of this Letter with the endorsed acceptance duly
signed on
behalf of each of the Borrowers;
(b) copies, each certified to be true, complete and
up-to-date copies, of resolutions of each of the
relevant Borrower's boards of directors authorising the
acceptance and execution of this Letter, the New
Facilities Agreement and the Intercreditor Agreement
and unanimously supporting, approving and recommending
the Placings to the shareholders of the Parent;
(c) the Intercreditor Agreement, the New Facilities
Agreement, the Investor Placing Agreement and the
Shareholder Placing Agreement duly executed by the
parties thereto;
(d) a certified copy of the Circular;
(e) a copy of the most up to date financial model of the
Investors for the Group; and
(f) a certified copy of a letter addressed to the Parent
and/ or DKB from N M Rothschilds & Sons Limited
confirming the terms on which they hold funds for the
purpose of meeting the Investors obligations under the
Investor Placing Agreement.
5. REPAYMENT ON DEMAND
The Overdraft Bank may with the prior written consent of all the
Banks terminate the Bridging Facility at any time in accordance
with Clause 13.3 of the New Facilities Agreement and make demand
for repayment of all sums (including accrued interest) owing under
the Bridging Facility. In any event, the Bridging Facility shall be
repaid from the Transaction Proceeds.
6. GENERAL TERMS IN RELATION TO THE BRIDGING FACILITY
6.1 Interest
6.1.1 Amount
Interest shall accrue and be calculated in respect of the amount
outstanding under the Bridging Facility on the basis of the number
of days elapsed and a 365-day year, at a rate equal to the base
rate of the Overdraft Bank from time to time plus 3.0 per cent. per
annum.
6.1.2 Default interest
Interest on any sum payable in respect of the Bridging Facility
which is not paid when due shall be charged at 4.0 per cent. per
annum above the Overdraft Bank's base rate from time to time.
6.1.3 Payment of interest
Interest calculated in accordance with Paragraph 6.1.1 shall be
payable in arrears and shall be paid by the Borrowers to the
Overdraft Bank on the expiry or termination of the Bridging
Facility. Default interest calculated in accordance with Paragraph
6.1.2 shall be payable (both before and after judgment) in arrears
and shall be debited to the Parent's current account with the
Overdraft Bank and compounded on the usual monthly charging days of
the Overdraft Bank.
6.1.4 Determination of interest
The statement of the Overdraft Bank as to the rate or amount of
interest payable pursuant to any provision of this Letter in
respect of the Bridging Facility shall be conclusive in the absence
of manifest error.
6.2 Further Assurance
The Borrowers each undertake to perform, execute and deliver such
documents as the Overdraft Bank may reasonably require to implement
the purposes of and perfect the Bridging Facility, any security or
any of the transactions contemplated by this Letter.
6.3. Payments
6.3.1 No withholdings
All payments by the Borrowers under the Bridging Facility are to be
made in immediately available funds free and clear of and without
any withholding or deduction for any and all present or future
taxes, duties, levies, fees or other charges and without any
set-off or counter-claim whatsoever.
6.3.2 Grossing-up
If any deduction or withholding is required in respect of any sum
payable under the Bridging Facility, the Borrowers shall increase
the sum so that the net amount received by the Overdraft Bank after
the deduction or withholding (and after the payment of any tax or
additional tax which is due as a consequence of the increase) shall
be equal to the amount which the Overdraft Bank would have been
entitled to receive in the absence of any requirement to make that
deduction or withholding.
6.3.3 Authority to debit account
The Borrowers irrevocably authorise the Overdraft Bank to debit
from time to time to any account the Borrowers may have with the
Overdraft Bank all or any amounts due to the Overdraft Bank in
connection with the Bridging Facility.
6.4. Set-off
Each of the Borrowers authorise the Overdraft Bank:
(a) to apply any credit balance on any of its accounts with
any of the Banks (by set-off, combination or otherwise)
in satisfaction of any sum due and payable and unpaid
in relation to the Bridging Facility or otherwise under
this Letter; and
(b) to purchase with the moneys standing to the credit of
any such account such other currencies as may be
necessary to effect such application.
6.5 Joint and Several Liability
The obligations of each of the Borrowers to the Overdraft Bank, the
Agent and the Banks under this Letter shall be joint and several.
7. UNDERTAKINGS TO THE BANKS
7.1 The Borrowers undertake with the Overdraft Bank, and the Banks that:
(a) they will continue to provide the Banks with such
further financial information, documents and records
about the financial condition, operations and prospects
of the Group as the Agent may reasonably require
including individual profit and loss statements,
balance sheets and Cash Flow Forecasts in respect of
each Borrower as requested;
(b) they will use their best endeavours provide the Banks
with such information in respect of the Investors and
the Investor Placing as the Agent reasonably requires
and keep the Agent informed of the timetable of the
Investor Placing and any changes to that timetable;
(c) they will provide the Banks with such information as
the Agent reasonably requires in respect of the
Shareholder Placing.
8. COSTS
The Borrowers agree and undertake that they will be responsible for
and will pay on demand on a full indemnity basis all proper and
reasonable costs, charges and expenses incurred by the Banks, the
Agent and/or the Overdraft Bank in connection with this Letter and
the matters contemplated hereunder including without limitation
reasonable legal fees.
9. SUCCESSORS
The agreement evidenced by this Letter shall enure to the benefit
of the Overdraft Bank, the Agent and the Banks and their successors
and permitted assigns from time to time including, without
limitation, any entity with which the Overdraft Bank, the Agent or
the Banks may merge or amalgamate or by which they may be absorbed
or to which they may transfer all or any part of their undertaking
or assets, and any change in the constitution of any of the
Overdraft Bank, the Agent or the Banks or any such merger,
amalgamation, absorption or transfer shall not prejudice or affect
any of their rights under this Letter in any respect. Neither the
Overdraft Bank nor the Borrowers may assign or transfer any of
their rights, benefits or obligations under this Letter.
10. DEMAND OR NOTICE
Any demand or notice on any of the Borrowers under this Letter in
relation to the Bridging Facility shall be made in writing signed
by an officer of the Overdraft Bank and served either by personal
delivery on any officer of the Borrowers at any place or by post or
by hand delivery addressed to its registered office or its place of
business last known to the Overdraft Bank or by facsimile or telex
using the relevant number last known to the Overdraft Bank. Service
by post on the Borrowers shall be deemed to be effective on the
next business day after the date of posting and notwithstanding
that it be returned undelivered. Service by facsimile or telex on
the Borrowers shall be deemed to be effective on despatch. Any
notice to the Overdraft Bank, under this Letter in relation to the
Bridging Facility shall be made to the Overdraft Bank's branch at
the address stated at the head of this Letter or such other address
as may be notified by the Overdraft Bank from time to time.
11. SEVERANCE
If at any time any provision of this Letter is or becomes invalid,
illegal or unenforceable in any respect under any law of any
jurisdiction, the validity, legality and enforceability of the
remaining provisions of this Letter and the validity, legality and
enforceability of those provisions under the law of other
jurisdictions shall not in any way be affected or impaired thereby.
12. PROPER LAW
This Letter shall be governed by and construed in accordance with
the laws of England and the Borrowers submit to the non-exclusive
jurisdiction of the English courts.
13. PERIOD OF OFFER
The Borrowers must confirm their acceptance of the terms and
conditions contained in this Letter by signing the acceptance on
the enclosed duplicate of this Letter and returning it to the
Overdraft Bank together with the documents signed by the Borrowers
referred to in Paragraph 4 within 2 Business Days of the date of
this Letter. If this offer is not so accepted within that period,
it shall lapse.
Yours faithfully
S.J. HAMILTON
......................................
for and on behalf of
NATIONAL WESTMINSTER BANK PLC
(as Overdraft Bank)
CHRISTOPHER CLIFFE
................................................
Signed by Director
for and on behalf of
HUNTINGDON LIFE SCIENCES GROUP PLC
duly authorised by a board resolution dated 6 August 1998
We acknowledge receipt of the original of this Letter dated 7 August 1998 of
which this is a true copy and accept the terms and conditions thereof.
CHRISTOPHER CLIFFE
................................................
Signed by Director
for and on behalf of
HUNTINGDON LIFE SCIENCES LIMITED
duly authorised by a board resolution dated 6 August 1998
We acknowledge receipt of the original of this Letter dated 7 August 1998 of
which this is a true copy and accept the terms and conditions thereof.
CONFORMED COPY
DATED 7th AUGUST 1998
NATIONAL WESTMINSTER BANK Plc
(as Agent)
- and -
NATIONAL WESTMINSTER BANK Plc
(as a Bank)
- and -
THE FIRST NATIONAL BANK OF MARYLAND
(as a Bank)
- and -
COMERICA BANK
(as a Bank)
- and
HUNTINGDON LIFE SCIENCES GROUP plc
HUNTINGDON LIFE SCIENCES LIMITED
- and -
HUNTINGDON LIFE SCIENCES, INC.
------------------------------
FOURTH INTERCREDITOR AGREEMENT
replacing the third Intercreditor
Agreement
between the same parties dated 17th
March 1998
-------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Clause Heading Page Number
1. INTERPRETATION.................................2
2. PRIORITIES.....................................5
3. RISK-SHARING BY FNBM...........................6
4. RISK-SHARING BY FNBM AND COMERICA..............8
6. CO-OPERATION..................................10
7. NO OBLIGATIONS TO BORROWERS...................10
9. COUNTERPARTS..................................11
10. LAW AND JURISDICTION..........................11
SCHEDULE 1 Participation in Risk-Sharing...............12
SCHEDULE 2 Security....................................13
<PAGE>
THIS AGREEMENT is made the 7th day of August 1998
BETWEEN:
(1) NATIONAL WESTMINSTER BANK Plc of 3rd Floor, Juno Court, 25 Prescot
Street, London E1 8BB (as Agent) (the "Agent");
(2) NATIONAL WESTMINSTER BANK Plc of Phase 2, King's Cross House, 200
Pentonville Road, London N1 9HL (as a Bank) ("NatWest");
(3) THE FIRST NATIONAL BANK OF MARYLAND of 26 South Charles Street,
Baltimore, MD21201, United States of America (as a Bank) ("FNBM");
(4) COMERICA BANK (as a Bank) ("Comercia");
(5) HUNTINGDON LIFE SCIENCES GROUP plc a company incorporated in England and
Wales with registered number 502370 of Woolley Road, Alconbury,
Huntingdon, Cambridgeshire PE17 5HS ("the Parent");
(6) HUNTINGDON LIFE SCIENCES LIMITED a company incorporated in England and
Wales with registered number 1815730 of Woolley Road, Alconbury,
Huntingdon, Cambridgeshire PE17 5HS ("HLSL"); and
(7) HUNTINGDON LIFE SCIENCES, INC. a company incorporated under the
laws of the State of Delaware, USA, having its registered office at
9 East Loockerman Street, City of Dover, County of Kent, State of
Delaware, United States of America ("HLS").
WHEREAS:
(A) By a facilities agreement dated 1st November 1995 between the
Borrowers (1), the Banks (as defined therein) (2) and the Agent (3)
as subsequently amended (the "Facilities Agreement") the Banks made
available to the Borrowers certain facilities.
(B) By various security agreements and guarantees and debentures the
Borrowers granted security over their respective assets in favour
of the Agent as continuing security for their obligations under the
Facilities Agreement.
(C) By a facility letter dated 17th March 1998 (the "New Facility Letter")
addressed to the Borrowers, NatWest in its capacity as the Overdraft Bank
thereunder agreed to provide the First New Overdraft Facility and the
Second New Overdraft Facility to the Parent and HLSL on the terms and
conditions set out therein and FNBM and NatWest in their capacity as
Banks agreed to share the risk incurred by NatWest as Overdraft Bank in
providing the First New Overdraft Facility and FNBM, NatWest and
Comerica in their capacity as Banks agreed to share the risk incurred
on the terms and conditions as set out herein.
(D) By supplemental deeds dated 26th February 1998 the Borrowers have
extended the security created by the documents referred to in
Recital B to cover all of the obligations and liabilities of the
Borrowers to the Banks howsoever incurred.
(E) By a facility letter of today's date (the "Bridging Facility
Letter") addressed to the Borrowers, NatWest in its capacity as the
Overdraft Bank has agreed to provide the Bridging Facility to the
Parent and HLSL on the terms and conditions set out therein and
FNBM, Coamerica and NatWest in their capacity as Banks have agreed
to grant super priority to the Overdraft Bank with respect to the
amount outstanding at any time under the Bridging Facility.
NOW THIS AGREEMENT WITNESSES as follows:
1. INTERPRETATION
1.1 In this Agreement (including the Recitals), unless the context
otherwise requires or unless otherwise defined or provided for in
this Agreement, words and expressions shall have the same meanings
as are attributable to them under the Facilities Agreement. In
addition the following words and expressions shall have the
respective meanings ascribed to them:
"Bridging Facility" means the (pound)1,000,000 bridging facility to
be provided by the Overdraft Bank by means of an overdraft on the
current accounts of the Parent and HLSL at the Overdraft Bank;
"First New Overdraft Facility" bears the same meaning as in the New
Overdraft Document;
"First New Overdraft Outstandings" means at any time the aggregate
amount outstanding by way of overdraft under the First New
Overdraft Facility;
"First Participation Percentage" means, at any time, in relation to
NatWest and FNBM the percentage of their participation in the risk
incurred by NatWest under the First New Overdraft Facility as set
out in Column 2 of Schedule 1;
"First Super Priority Obligations" means all moneys owing,
obligations and other liabilities of the Parent and HLSL to the
Overdraft Bank under the Bridging Facility;
"Junior Obligations" means the NatWest Obligations;
"NatWest Facility Document" means a facility letter dated 10th
September 1997 (as amended by a letter dated 26th February 1998)
from NatWest to HLSL and the Parent in respect of overdraft, forex
daytime exposure and terminable indemnity facilities in an
aggregate amount of (pound)995,000;
"NatWest Obligations" means the (pound)100,000 (plus interest
thereon) owing by the Parent and/or HLSL to NatWest in respect of
the Residual Overdraft together with all moneys owing to NatWest in
respect of the terminable indemnity forex and daylight exposure
Facilities made available under the NatWest Facility Document;
"Net Proceeds" means in relation to the Security the net proceeds
of sale or other realisation of the assets subject to the Security
after discharge of all direct costs incurred in such sale or
realisation, the discharge of any prior ranking claims and, where
appropriate, all costs, charges, fees and expenses of any receiver
appointed pursuant to the Security;
"New Overdraft Document" means the facility letter dated 17th March
1998 from NatWest as Overdraft Bank to the Borrowers;
"Outstandings" means in relation to each Bank, at the time of a
distribution of the Net Proceeds, the amount owing to that Bank by
all the Borrowers under the Facilities Agreement, and in respect of
NatWest and FNBM also under the First New Overdraft Facility (and
in calculating the Outstandings in respect of FNBM, the Agent will
take into account FNBM's liability to NatWest under the risk
sharing provisions contained in Clause 3 of this Agreement);
"Priority Obligations" means all moneys owing, obligations and
other liabilities of the Borrowers to the Banks and the Agent
pursuant to the Facilities Agreement and under the First New
Overdraft Facility;
"Residual Overdraft" means the residual overdraft facility provided
under the NatWest Facility Document;
"Second New Overdraft Facility" bears the same meaning as in the New
Overdraft Document;
"Second New Overdraft Outstandings" means at any time the aggregate
amount outstanding by way of overdraft under the Second New
Overdraft Facility;
"Second Participation Percentage" means at any time, in relation to
NatWest, FNBM and Comerica the percentage of their participation in
the risk incurred by NatWest under the Second New Overdraft
Facility as set out in Column 3 of Schedule 1;
"Security" means all the security executed by the Borrowers in
favour of the Agent as security trustee for the Secured Parties
details of which are listed in Schedule 2 to this Agreement
together with any further security so created by the Borrowers or
any of them;
"Sharing Percentages" means in relation to each Bank a percentage
calculated using the following formula:
A = B x 100
C
A = Sharing Percentage of the Bank in question B = Outstandings of
the Bank in question C = Total Outstandings; and
"Super Priority Obligations" means all moneys owing, obligations
and other liabilities of the Borrowers to the Overdraft Bank and
the Banks under the Second New Overdraft Facility; and
"Total Outstandings" means, at the time of a distribution of the
Net Proceeds, the aggregate amount owing to all the Banks by the
Borrowers under the Facilities Agreement and the First New
Overdraft Facility.
1.2 Interpretation
In this Agreement, unless the context otherwise requires:
(a) references to any persons shall be construed so as to
include that person's assigns, transferees or successors in title;
(b) references to any document (or any specified provisions
of any document) shall be construed as references to
such document or that provision as amended or novated
or supplemented or replaced, as the case may be, from
time to time;
(c) references to the singular shall include the plural and
vice versa and references by way of male, female or
neuter pronoun shall include references to all genders;
and
(d) references to Clauses and Schedules are to be construed
as references to the Clauses of, and Schedules to, this
Agreement as amended or varied from time to time.
2. PRIORITIES
2.1 It is hereby agreed by and between the parties to this Agreement
that on enforcement of the Security the Net Proceeds shall be
applied:
(i) first, in discharge of the First Super Priority Obligations;
(ii) second, in discharge of the Super Priority Obligations;
(iii) third, in discharge of the Priority Obligations; and
(iv) fourth, in discharge of the Junior Obligations.
2.2 The Security is a continuing security and the ranking of the First
Super Priority Obligations, Super Priority Obligations, the
Priority Obligations and the Junior Obligations as provided for in
this Agreement shall not be affected by any fluctuation in the
amounts from time to time of the First Super Priority Obligations,
Super Priority Obligations, the Priority Obligations or the Junior
Obligations or by the existence at any time of a credit balance on
any current or other accounts.
2.3 The moneys owing and obligations and other liabilities of the
Overdraft Borrowers to the Banks in respect of the Second New
Overdraft Facility shall rank pari passu in all respects so that on
enforcement the Net Proceeds shall be shared between the Banks pro
rata on the basis of their respective Second Participation
Percentages.
2.4 For the avoidance of doubt it is confirmed that the moneys owing
and obligations and other liabilities of the Borrowers to the Banks
and the Agent under the Facilities Agreement and of the Overdraft
Borrowers to NatWest and FNBM in respect of the First New Overdraft
Facility shall rank pari passu in all respects and that on
enforcement, after payment of the First Super Priority Obligations
and the Super Priority Obligations, the Net Proceeds shall be
shared between the Banks pro rata on the basis of their respective
Sharing Percentages.
2.5 In the event of the Group making any early repayment of the
Facilities or of amounts due under the New Facility Letter whether
by voluntary repayment from cashflow or from the sale of any assets
such reduction will be applied in accordance with the priorities
set out in Clause 2.1 as if they were Net Proceeds.
3. RISK-SHARING BY FNBM
3.1.1 FNBM hereby irrevocably and unconditionally agrees and undertakes to
NatWest to indemnify NatWest and to keep NatWest fully and effectively
indemnified on demand and free of any set-off, counterclaim or other
deductions against all losses, liabilities, costs, charges and
expenses which NatWest at any time incurs or suffers arising out
of or in connection with the provision of the First New
Overdraft Facility (including for the avoidance of doubt the First
New Overdraft Outstandings) (other than in respect of gross negligence
or wilful misconduct on the part of NatWest) (the "Liabilities")
PROVIDED THAT FNBM shall only be obliged to indemnify NatWest under
this Clause to the extent of an amount equivalent to
its First Participation Percentage of the Liabilities.
3.1.2 A certificate of an officer of NatWest as to the amount of the
Liabilities shall, save in the case of manifest error, be binding
on FNBM.
3.1.3 NatWest shall not be obliged to take any action to recover the
Liabilities from the Borrowers before making demand for
indemnification against FNBM under this Clause 3.1.
3.2 COUNTER-INDEMNITY BY THE BORROWERS
3.2.1 Each of the Borrowers hereby unconditionally and irrevocably, and
jointly and severally, agree and undertake to each of NatWest and
FNBM as follows:
(a) to indemnify NatWest and FNBM and to keep NatWest and FNBM fully
and effectively indemnified against all actions, proceedings,
claims, damages, demands, losses, liabilities, costs, charges
and expenses (including, for the avoidance of doubt, any such
arising under any of the indemnities given by FNBM to NatWest
under Clause 3.1) which are at any time brought or preferred
against NatWest and/or FNBM or which either or both of them
at any time incurs arising out of or in
connection with the provision of the First New Overdraft Facility;
(b) to pay NatWest and FNBM on demand free of all set-off, counterclaim or
other deductions of any nature whatsoever all payments, losses, costs
and expenses suffered or incurred or arising in relation to the First
New Overdraft Facility together with interest thereon calculated in
accordance with the provisions of and at the rate specified in
Paragraph 6.1.1 of the New Facility Letter which interest shall accrue
and be payable as from the date on which such payments, losses, costs
and expenses are paid or incurred by NatWest and/or FNBM without the
necessity for any demand being first made for payment thereof; and
(c) that until all obligations, indebtedness or liabilities (whether
actual or contingent) of the Borrowers to both NatWest and FNBM have
been fully and effectively discharged the Borrowers shall not be
entitled to share in any security held or money received by NatWest
and/or FNBM on account of the same or to stand in the place of NatWest
and/or FNBM in respect of any such security or money or take any step
to enforce any right or claim against the Borrowers in respect of any
monies paid by the Borrowers to NatWest and/or FNBM or exercise any
right of surety in competition with NatWest and/or FNBM and that the
obligations of the Borrowers under this Clause 3.2.1 shall not be
discharged nor shall the liability of the Borrowers hereunder be
affected or reduced by reason of any failure of or irregularity,
defect or informality in any security nor by any legal limitation, bar
or restriction, disability, incapacity or want of any borrowing powers
of the Borrowers or want of authority of any director, manager,
official or other person appearing to be acting for the Borrowers in
any matter in respect of the monies or liabilities hereby secured or
by any supervening matters rendering the performance of the
obligations of the Borrowers illegal in any jurisdiction and such
monies or liabilities will be recoverable by the NatWest and FNBM from
the Borrowers as sole or as principal debtors.
3.2.2 For the avoidance of doubt the Borrowers shall not be obliged to
pay under the indemnity contained in Clause 3.2.1 any more than
they would have had to pay had they made payment in full of all
sums owing in respect of the First New Overdraft Facility and any
costs and expenses attributable to the collection of the same.
4. RISK-SHARING BY FNBM AND COMERICA
4.1.1 Each of FNBM and Comerica severally hereby irrevocably and
unconditionally agrees and undertakes to NatWest to indemnify
NatWest and to keep NatWest fully and effectively indemnified
on demand and free of any set-off, counterclaim or other
deductions against all losses, liabilities, costs, charges and
expenses which NatWest at any time incurs or suffers arising
out of or in connection with the provision of the Second New
Overdraft Facility (including for the avoidance of doubt the
Second New Overdraft Outstandings) (other than in respect of gross
negligence or wilful misconduct on the part of NatWest)
(the "Liabilities") PROVIDED THAT FNBM and Comerica shall only be
obliged to indemnify NatWest under this Clause to the extent
of an amount equivalent to their respective Second
Participation Percentage of the Liabilities.
4.1.2 A certificate of an officer of NatWest as to the amount of the
Liabilities shall, save in the case of manifest error, be binding
on FNBM and Comerica.
4.1.3 NatWest shall not be obliged to take any action to recover the
Liabilities from the Borrowers before making demand for
indemnification against FNBM and Comerica under this Clause 4.1.
4.2 COUNTER-INDEMNITY BY THE BORROWERS
4.2.1 Subject to Clause 4.2.2 each of the Borrowers hereby
unconditionally and irrevocably, and jointly and severally, agree
and undertake to each of NatWest, Comerica and FNBM as follows:
(a) to indemnify NatWest, Comerica and FNBM and to keep NatWest, Comerica
and FNBM fully and effectively indemnified against all actions,
proceedings, claims, damages, demands, losses, liabilities, costs,
charges and expenses (including, for the avoidance of doubt, any such
arising under any of the indemnities given by FNBM, Comerica to
NatWest under Clause 4.1) which are at any time brought or preferred
against NatWest and/or Comerica and/or FNBM or which any or all of
them at any time incurs arising out of or in connection with the
provision of the Second New Overdraft Facility;
(b) to pay NatWest, Comerica and FNBM on demand free of all set-off,
counterclaim or other deductions of any nature whatsoever all
payments, losses, costs and expenses suffered or incurred or arising
in relation to the Second New Overdraft Facility together with
interest thereon calculated in accordance with the provisions of and
at the rate specified in Paragraph 6.1.1 of the New Facility Letter
which interest shall accrue and be payable as from the date on which
such payments, losses, costs and expenses are paid or incurred by
NatWest and/or Comerica and/or FNBM without the necessity for any
demand being first made for payment thereof; and
(c) that until all obligations, indebtedness or liabilities (whether actual
or contingent) of the Borrowers to each of NatWest, Comerica and FNBM
have been fully and effectively discharged the Borrowers shall not be
entitled to share in any security held or money received by NatWest
and/or Comerica and/or FNBM on account of the same or to stand in the
place of NatWest and/or Comerica and/or FNBM in respect of any such
security or money or take any step to enforce any right or claim against
the Borrowers in respect of any monies paid by the Borrowers to NatWest
and/or Comerica and/or FNBM or exercise any right of surety in
competition with NatWest and/or Comerica and/or FNBM and that the
obligations of the Borrowers under this Clause 4.2.1 shall not be
discharged nor shall the liability of the Borrowers hereunder be
affected or reduced by reason of any failure of or irregularity,
defect or informality in any security nor by any legal limitation,
bar or restriction, disability, incapacity or want of any borrowing
powers of the Borrowers or want of authority of any director, manager,
official or other person appearing to be acting for the Borrowers in
any matter in respect of the monies or liabilities hereby secured or
by any supervening matters rendering the performance of the obligations
of the Borrowers illegal in any jurisdiction and such monies or
liabilities will be recoverable by the NatWest and Comerica and FNBM
from the Borrowers as sole or as principal debtors.
4.2.2 For the avoidance of doubt the Borrowers shall not be obliged to
pay under the indemnity contained in Clause 4.2.1 any more than
they would have had to pay had they made payment in full of all
sums owing in respect of the Second New Overdraft Facility and any
costs and expenses attributable to the collection of the same.
5. MAKING DEMAND
Each of the Banks hereby agrees with the other Bank that NatWest in
its capacity as Agent and as Overdraft Bank shall not and shall not
be obliged to make any demand for repayment of the Facilities or
the Overdraft Facilities or the Bridging Facility without having
obtained the prior written authority of all of the Banks.
6. CO-OPERATION
The Agent and the Banks shall co-operate to ensure that any moneys
in the hands of a receiver appointed pursuant to any of the
Security are distributed in a manner consistent with the provisions
of this Agreement.
7. NO OBLIGATIONS TO BORROWERS
7.1 The Borrowers join in this Agreement to acknowledge the arrangements
made between the Banks and the Agent in this Agreement and to give the
indemnities set out in Clauses 3.2 and 4.2 but shall have no rights
under this Agreement.
7.2 Nothing in this Agreement shall as between the Borrowers on the one hand
and the Banks on the other hand affect or prejudice any rights or
remedies under the Security.
8. REPLACEMENT
This Agreement supersedes and replaces the Intercreditor Agreements
dated 17th March 1998 and 26th February 1998 except that the
provisions of Clause 3 of the latter agreement remain in force.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
10. LAW AND JURISDICTION
This Agreement shall be governed by, and construed in all respects
in accordance with English law.
IN WITNESS whereof the parties hereto causes this Agreement to be duly executed
on the date set out above.
<PAGE>
SCHEDULE 1
Participation in Risk-Sharing
Bank First Participation Percentage Second Participation Percentage
NatWest 71.429% 47.619%
FNBM 28.571% 28.571%
Comerica -- 23.810%
<PAGE>
<TABLE>
SCHEDULE 2
Security
<CAPTION>
Document Executed by Date
<S> <C> <C>
1. Guarantee and Debenture in favour of the Agent as amended by a Parent 1.11.95
Supplemental Deed dated 20th January 1998 and a Supplemental Deed
dated 26th February 1998
2. Guarantee and Debenture in favour of the Agent as amended by a HLSL
21.11.95 Supplemental Deed dated 20th January 1998 and a Supplemental
Deed dated 26th February 1998
3. Guarantee in favour of the Agent as amended by a Supplemental Deed HLS 21.11.95
dated 20th January 1998 and a Supplemental Deed dated 26th
February 1998
4. Security Agreement in favour of the Agent as amended by a HLS 21.11.95
Supplemental Deed dated 20th January 1998 and a Supplemental Deed
dated 26th February 1998
5. Mortgage in favour of the Agent over the New Jersey Property as HLS
16.01.98 amended by a Supplemental Deed dated 26th February 1998
6. Equipment Mortgage in favour of the Agent HLSL 20.04.98
7. Security Agreement incorporating an Equipment Mortgage and a HLS 30.04.98
Charge over an Operating Account in favour of the Agent
</TABLE>
<PAGE>
SIGNED by ) S J HAMILTON
S J HAMILTON )
for and on behalf of NATIONAL WESTMINSTER BANK Plc )
(as Agent) )
SIGNED by ) S J HAMILTON
S J HAMILTON )
for and on behalf of NATIONAL WESTMINSTER BANK Plc )
(as a Bank) )
SIGNED by ) RONALD LAPOINTE
RONALD LAPOINTE )
for and on behalf of THE FIRST NATIONAL BANK OF )
MARYLAND (as a Bank) )
SIGNED by ) HENRY HADJAS
HENRY HADJAS )
for and on behalf of COMERICA BANK (as a Bank) )
)
SIGNED by ) CHRISTOPHER CLIFFE
CHRISTOPHER CLIFFE )
for and on behalf of HUNTINGDON LIFE SCIENCES GROUP )
plc )
SIGNED by ) CHRISTOPHER CLIFFE
CHRISTOPHER CLIFFE )
for and on behalf of HUNTINGDON LIFE SCIENCES )
LIMITED )
SIGNED by ) CHRISTOPHER CLIFFE
CHRISTOPHER CLIFFE )
for and on behalf of HUNTINGDON LIFE SCIENCES, INC. )
)
THIS THIRD SUPPLEMENTAL DEED is made this 7th day of August 1998
BETWEEN:-
1. HUNTINGDON LIFE SCIENCES GROUP PLC, a Company incorporated under the
laws of England and Wales with registered number 502370 of Woolley
Road, Alconbury, Huntingdon, Cambridgeshire PE18 6ES ("the Chargor");
and
2. NATIONAL WESTMINSTER BANK PLC of 3rd Floor, Juno Court, 24 Prescott
Street, London E1 8BB as agent and trustee for the Secured Parties
(the "Agent" which expression shall include all successor agents
appointed from time to time).
WHEREAS
(A) By a Facilities Agreement of even date herewith made between the
Chargor (1), Huntingdon Life Sciences Limited (2), Huntingdon Life
Sciences Inc. (3), the Secured Parties (therein called the "Banks")
(4) and the Agent (5) ("the Facilities Agreement"), the Banks agreed
to make available to the Borrowers (as therein defined) certain
facilities in substitution for the Existing Facilities (as therein
defined);
(B) The Existing Facilities, the Existing Ancillary Facilities and the
Bridging Facility (as defined in the Facilities Agreement) are the
only facilities which immediately prior to the signing of this Deed
were available to the Borrowers from the Banks or any or them (alone
or jointly with any other person);
(C) This Deed is supplemental to a Guarantee and Debenture dated 1st
November 1995 between the parties hereto (as amended and supplemented
by Supplemental Deeds dated 20th January 1998 and 26th February 1998,
together hereinafter referred to as "the Debenture")
NOW THIS DEED WITNESSETH as follows:-
1 (a) In this Deed (including the recitals), unless the context
otherwise requires or unless otherwise defined or provided
for in this Deed, words and expressions shall have the same
meanings as are attributable to them under the Debenture and
the Facilities Agreement; and
(b) Clause 2.1 of the Debenture shall be amended by the
insertion of the words "when and to the extent that they fall
due for payment" after the words "that it will".
2. The right of the Agent to give notice and to take possession
and appoint a Receiver pursuant to Clause 7.1 of the Debenture
shall be exercisable only in accordance with Clause 13.4 of
the Facilities Agreement.
3. The provisions of Clause 7.2 of the Debenture shall, subject
to Clause 8 below, have effect only if, following a breach of
Clause 12.3(a) of the Facilities Agreement which constitutes
a Default under Clause 13.1(b) thereof or following a Default
described in Clause 13.1(f) thereof, the Agent gives notice
pursuant to Clause 13.2 of the Facilities Agreement and a
Receiver or Receivers are appointed over the whole of the
property, assets and undertaking of any of the Borrowers.
4. The Agent may only serve notice and exercise its rights under
Clause 10.1 of the Debenture if it has given notice in
accordance with Clause 13.2 of the Facilities Agreement.
5. The Agent may only serve notice and exercise its rights under
Clause 11.1 of the Debenture after notice has been given in
accordance with Clause 13.2 of the Facilities Agreement OR,
in the case of an application to the Court for an
administration order, only in the circumstances described in
Clause 13.1(j) of the Facilities Agreement.
6. Without prejudice to any set-off pursuant to insolvency
legislation and notwithstanding any other provisions of the
Debenture or this Deed, neither the Agent nor the Secured
Parties (or any of them) shall have(i) any right whether
under Clause 14 of the Debenture or otherwise
howsoever to combine, consolidate, set off or transfer
(save for a transfer pursuant to Clause 14.2.3 of the
Facilities Agreement) any sums from time to time standing
to the credit of the Deposit Account or (ii) any rights or
remedies over such sums save for the exercise of the
Agent's rights under the Debenture in accordance with the
provisions of Clause 8 below.
7. The provisions of Clause 23 of the Debenture shall be subject
to any provisions inconsistent therewith in the Facilities
Agreement, which latter provisions shall prevail.
8. Notwithstanding any of the provisions of this Deed or the
Debenture:-
(a) none of the rights, powers and remedies granted to the
Agent pursuant to the Debenture shall be exercisable in
relation to the sums from time to time standing to the
credit of the Deposit Account; and
(b) the Chargor shall be entitled at all times to withdraw
monies from the Deposit Account for the general working
capital requirements of the Group, subject only to
Clause 14.2.2 of the Facilities Agreement;
unless (i) the Agent has made a demand for payment pursuant
to Clause 13.2 of the Facilities Agreement and has appointed
a Receiver or Receivers over the whole of the property,
assets and undertaking of any of the Borrowers pursuant to
Clause 11.1 of the Debenture as amended hereby OR (ii) an
administration order has been made in relation to any of the
Borrowers pursuant to section 8 of the Insolvency Act 1986
(or any statutory modification or re-enactment thereof from
time to time in force).
9. In the event of any inconsistency between the provisions
hereof and the provisions of the Facilities Agreement the
latter shall prevail.
10. Subject to the provisions hereof the Debenture shall continue
in full force and effect.
11. This Deed shall be governed by and construed and interpreted
in accordance with English law.
12. Every provision contained in this Deed shall be severable and
distinct from every other such provision and if at any time
any one or more of such provisions is or becomes invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining such provisions shall not in
any way be affected thereby.
13. This Deed may be executed in any number of counterparts and
all such counterparts shall be deemed to constitute one and
the same instrument.
IN WITNESS whereof the Chargor and the Agent have signed this Deed as a deed
with the intention that it be delivered the day and year first before written.
Signed as a Deed by )
HUNTINGDON LIFE SCIENCES GROUP PLC )
acting by two Directors or one Director )
and its Secretary )
Signed as a Deed for and on behalf of )
NATIONAL WESTMINSTER BANK PLC
Deed of Variation
between
Huntingdon Life Sciences Limited
as the Company
and
Huntingdon Life Sciences Group plc
and
Christopher Cliffe
as the Director
<PAGE>
THIS DEED is dated the 7th day of August 1998 and made
BETWEEN:
(1) Hungtindon Life Sciences Limited ("the Company"), registered in England
and Wales and having its registered office at Wooley Road, Alconbury,
Huntingdon, Cambs PE17 5HS;
(2) Huntingdon Life Sciences Group plc ("HSLG plc") registered in England
and Wales and having its registered office at Wooley Road, Alconbury,
Huntingdon, Cambs PE17 5HS; and
(3) Christopher Cliffe ("the Director") of Delamere, Cutler's Green, Thaxted,
Dunmow, Essex CM6 2PZ.
BACKGROUND
The Director is currently employed by the Company and is entering into this
Agreement to vary his existing service agreement with the Company such that his
employment with the Company will terminate by mutual consent on 31 December
1998. For the avoidance of doubt, in respect of matters to which this Deed
relates it will supersede his existing terms and conditions of employment, but
otherwise the existing terms and conditions will remain unchanged.
For the mutual considerations contained in this Agreement and the attached
compromise agreement taken together THE PARTIES AGREE THAT:
1. This agreement is expressly conditional on the completion of the cash
subscription and open offer for new shares in HLSG plc in September
1998.
2. Unless the context otherwise requires in this Agreement the following
words and phrases have the following meanings given below:
(A) "Associated Company" means any holding company (as defined in
section 736 of the Companies Act 1985) of the Company and any
company of which the Company, any such holding company, or any
subsidiary (as defined in section 736 of the Companies Act
1985) of the Company or any such holding company, holds or
controls more than 20% in nominal value of the equity share
capital;
(B) "Group" means the Company and any Associated Company and
"Group Company' shall be construed accordingly; and
(C) :Service Contract" means the contract of employment entered
into by the Director and the Company dated 15 March 1993 (as
amended on 31 May 1994, 05 October 1994, 10 March 1995 and 05
March 1997);
3. It is hereby agreed that the employment of the Director with the
Company will terminate on 31 December 1998 with immediate effect and
without any notice or further payment (save as specified below) from
the Company or any Group Company. The Director will continue to receive
his salary and other contractual benefits until that date.
4. It is agreed that, whilst the Director will remain in employment until
31 December 1998, the Company may, at its discretion, assign to the
Director some or none of the duties under his Service Contract and may
require the Director not to attend at the Company's premises for some
or none of the period. Such instructions from the Company shall not
constitute a breach of the Service Contract.
5. The Company agrees to give further consideration to ways in which the
Director will be given financial incentives to maximize the
profitability of the Company and/or any Group Company and the value of
its assets during the period until the termination of his employment.
6. As soon as is reasonably practicable and, in any event, within 14 days
of the termination of employment of the Director on the date referred
to in paragraph 3 above, both parties will enter into a comprising
agreement in the form attached hereto. Under the terms of that
agreement The Company will pay to the Director the sum of
(pound)250,000 )less such tax and national insurance as is properly
deductible therefrom) which the parties acknowledge is in consideration
for the variation in the rights of the Director under the terms of the
Service Contract and loss of employment.
7. The Director hereby confirms that he has, as at the date of this
Agreement, taken independent legal advice on the implications of
signing a compromise agreement in the attached form.
8. It is hereby agreed that all provisions in the Service Agreement, the
agreement between the Director and HLSG plc dated 31 May 1994, and the
agreement made between the Company, the Director and HLSG plc dated 10
March 1995 relating to payments to the Director on a change of control
are hereby deleted with immediate effect.
9. The Director will, immediately upon termination of his employment, sign
and date a letter resigning all directorships he holds in the Company
or any Group Company with immediate effect in the form attached hereto.
Should the Director fail to do so within seven days of the date of
termination of employment the Company is hereby irrevocably authorised
to appoint a person in his name and on his behalf to execute any
documents and to do all things requisite to give effect thereto.
10. The Company agrees that it will consult with the Director prior to any
announcement being made within the Group or externally concerning the
termination of his employment.
11. The Director acknowledges that he has not and will not receive any
payment from the Company or any Group Company in respect of his loss of
office as director of the Company or any Group Company as contemplated
by paragraph 9 above.
12. This Deed shall be governed by and interpreted in accordance with the
English Law.
IN WITNESS whereof this Deed has been entered into the day and year first before
written.
SIGNED by (Director) )
and (Secretary) )
and thereby executed by HUNTINGDON )
LIFE SCIENCES LIMITED )
as its Deed )
SIGNED by (Director) )
and (Secretary) )
and thereby executed by HUNTINGDON )
LIFE SCIENCES GROUP PLC )
as its Deed )
SIGNED AS A DEED AND DELIVERED )
By the said CHRISTOPHER FREDERICK )
CLIFFE )
In the presence of
Name:
Address:
Occupation:
<PAGE>
WITHOUT PREJUDICE
SUBJECT TO CONTRACT
DRAFT COMPROMISE AGREEMENT
This Agreement is made the [insert date of completion] between Huntingdon Life
Sciences Limited (the "Company") and Christopher Cliffe ("the Employee").
1. Following the termination of the employment of the Employee with the
Company on 31 December 1998 the Company will within 14 days of the
later of (a) the date of this Agreement; and (b) the Employee's
compliance with paragraph 3 below pay to the Employee the sum of
(pound)250,000 (less such income tax and national insurance if any as
the Company is obliged by law to deduct and less any outstanding sums
owed by the Employee to the Company for example by way of loan) by way
of compensation for loss of employment.
2. The Employee hereby agrees to be responsible of the payment of any
tax in respect of the sum payable under paragraph 1 (other than for
the avoidance of doubt, any tax withheld by the Company in paying
the sum to the Employee) and the Employee hereby agrees to
indemnify the Company and any other company in the group of
companies of which the Company is a member ("group Company") and
keep the Company and all other Group Companies indemnified on a
continuing basis against any claim or demand which is made against
the Company and/or any Group Company in respect of any liability of
the Company and/or any Group Company to deduct an amount if tax or
an amount in respect of tax from the payment made under this
Agreement, including any interest or penalties imposed in connection
therewith and including, but without prejudice to the generality
of the foregoing, any claim or demand made in respect of United
Kingdom Income Tax or PAYE.
3. Before payment under paragraph 1 is made the Employee shall return to
the Company any remaining property belonging to the Company which has
been in his possession or under his control, including (without
limitation) the facsimile machine, credit card, keys, and other
documents (whether confidential or not) or any other property in his
possession or under his control by reason of his employment with the
Company (and any copies of any of the foregoing) and the Company shall
not unreasonably withhold its confirmation that all such property has
been returned.
4. The arrangements et out in this Agreement are in full and final
settlement of all or any claims, costs, expenses or rights of
action of any kind whatsoever or howsoever arising (whether arising
under common law, statute or otherwise and whether arising in the
United Kingdom or in any other country in the world and including,
but not limited to, any claims under the Equal Pay Act 1970, Sex
Discrimination Act 1975,Race Relations Act 1976, Trade Union
and Labour Relations (Consolidation) Act 1992, Employment Rights
Act 1996, Disability Discrimination Act 1995 or in respect of
which a Conciliation Officer is authorised to act or any claims
arising under any directive or other legislation applicable in
the United Kingdom by virtue of the United Kingdom's membership of
the European Union which the Employee has or may have against the
Company or any Group Company or against any employee, agent or
office of the Company or Group Company and whether arising directly
or indirectly out of or in connection with the Employee's contract
of employment with the Company and any collateral contracts with any
Group Company, their termination or otherwise.
5. The Employee hereby confirms that he continues to be bound by the terms
of the restrictions contained in clause 9 of his contract of employment
with the Company.
6. The Employee acknowledges that by reason of his continuing obligations
of confidentiality he is obliged to keep the circumstances surrounding
the termination of his employment and the terms of this Agreement
confidential, but that nothing in this Agreement shall prevent either
party from disclosing information as required by law or any
self-regulatory organisation or in order to take professional advice or
as ordered by a court of competent jurisdiction.
7. The Employee hereby warrants that he has not at any time committed a
repudiatory breach of his contract of employment which would entitle
the Company to terminate his employment without notice.
8. The Employee has received independent advice from [insert name of
adviser] acting in [his/her] capacity as a qualified lawyer in the firm
of [insert name of firm] who holds a current practising certificate as
to the terms and effect of this Agreement and in particular its effect
on the ability of the Employee to pursue his rights before an
employment tribunal. There was in force when [adviser] gave the advice
referred to in this paragraph a contract of insurance, or an indemnity
provided for members of a profession or professional body covering the
risk of a claim by the Employee in respect of loss arising in
consequence of this advice.
9. This Agreement satisfies the conditions for regulating compromise
agreements under the Sex Discrimination Act 1975, Race Relations Act
1976, Trade Union and Labour Relations (Consolidation) Act 1992, the
Employment Rights Act 1996 and the Disability Discrimination Act 1995.
10. [Adviser] by signing this letter confirms to the Company that, to the
best of [his/her] knowledge and belief, the statements set out in
paragraphs 7 and 8 are correct.
11. The Employee shall on the date of his signature to this Agreement
resign as a director of the Company and all other Group Companies in
which he holds directorship in the form attached hereto.
This Agreement although marked "Without Prejudice" will upon signature by all of
the parties be treated as an open document evidencing an agreement binding on
the parties.
Signed.......................................
For and on behalf of the Company
Dated .......................................
Signed.......................................
The Employee
Dated .......................................
Signed.......................................
[Adviser]
Dated .......................................
<PAGE>
To the Board of Directors
Huntingdon Life Sciences Group plc
Huntingdon Life Sciences Ltd
[insert names of other Group Companies in which directorships are held]
Dear Sirs
Huntingdon Life Sciences Group plc
Huntingdon Research Centre ltd
[insert names of other Group Companies in which directorships are held]
I hereby resign from the office of Director of the above companies with
immediate effect, and I acknowledge and confirm that I have no claim of
whatsoever kind outstanding for compensation or otherwise against the above
companies, their servants, officers, agents or employees in respect of the
termination of my directorships.
Yours faithfully
SIGNED and DELIVERED as a DEED )
By CHRISTOPHER FREDERICK )
CLIFFE )
In the presence of )
Conditional upon completion of
the cash subscription, placing
and open offer to be made by
Huntingdon Life Sciences Group Plc
in August/September 1998
DATED 1998
(1) HUNTINGDON LIFE SCIENCES
LIMITED
- and -
(2) MARTYN SANDFORD
------------------------------------
SERVICE AGREEMENT
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Telephone: 0171 203 5000
Ref: DJSG/GXW/25407/3
<PAGE>
CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION..............................1
2. TERM OF EMPLOYMENT..........................................2
3. DUTIES......................................................2
4. GRATUITIES AND CODES OF CONDUCT.............................3
5. REMUNERATION................................................3
6. PENSION SCHEME..............................................4
7. OTHER BENEFITS..............................................4
8. COMPANY CAR.................................................6
9. EXPENSES....................................................6
10. HOLIDAYS....................................................6
11. ILLNESS.....................................................6
12. RESTRICTIONS DURING EMPLOYMENT..............................7
13. INTELLECTUAL PROPERTY.......................................8
14. CONFIDENTIALITY............................................10
15. TERMINATION OF EMPLOYMENT..................................11
16. SUSPENSION.................................................12
17. RESIGNATION AND RETURN OF COMPANY PROPERTY.................13
18. RECONSTRUCTION OR AMALGAMATION.............................13
19. RESTRICTIONS...............................................13
20. SEVERABILITY...............................................16
21. NOTICES....................................................16
22. STATUTORY INFORMATION......................................17
23. MISCELLANEOUS..............................................17
SCHEDULE............................................................18
<PAGE>
T H I S A G R E E M E N T is made on 1998
B E T W E E N :
(1) HUNTINGDON LIFE SCIENCES LIMITED whose registered office is at Woolley
Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Company");
and
(2) MARTYN SANDFORD of [ ] (the "Executive").
IT IS AGREED that the Company shall employ the Executive and the Executive shall
serve the Company as Finance Director, UK Operations, of Huntingdon Life
Sciences Group plc on the following terms and subject to the following
conditions (the "Agreement"):
<PAGE>
1. DEFINITIONS AND INTERPRETATION
(1) In this Agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Parent
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Parent or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below)
"Board" the board of directors for the time being of the
Parent ;
"Group" means the Parent and Associated Companies for the
time being and "Group Company" means any one of
them;
"Parent" means Huntingdon Life Sciences Group
plc or any other company which is
for the time being the ultimate
holding company of the Company
within the meaning of s736 of the
Companies Act 1985;
"Subsidiary" means a Subsidiary within the meaning of s736 of
the Companies Act 1985;
"Working Day" means a day other than a Saturday, Sunday or bank
or other public holiday in England.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
(3) The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this Agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
(5) Where appropriate, references to the Executive include his personal
representatives.
2. TERM OF EMPLOYMENT
(1) The employment of the Executive shall be deemed to have commenced on 1
July 1994 and (subject to termination as provided in clauses 11(2) and
15 below) shall be for an indefinite period terminable by either party
giving to the other 12 months notice in writing.
(2) Notwithstanding clause 2(1) above the employment of the Executive shall
automatically terminate on the day when the Executive reaches age 65 or
the normal retiring age applicable to directors of the Group from time
to time.
(3) The Executive represents and warrants that he is not bound by or
subject to any court order, agreement, arrangement or undertaking which
in any way restricts or prohibits him from entering into this Agreement
or performing his duties under it.
3. DUTIES
(1) The Executive shall during his employment under this Agreement:
(a) perform the duties and exercise the powers which the Board may
from time to time properly assign to him in his capacity as
Finance Director of UK Operations or in connection with the
conduct and management of the business of the Company or the
business of any Group Company (including serving on the board
of such Group Company or on any other executive body or any
committee of such a company); and
(b) do all in his power to promote, develop and protect the
business of the Company and any Group Company and at all times
and in all respects conform to and comply with the proper and
reasonable directions and regulations of the Board.
(2) The Executive shall give to the Board such information regarding the
affairs of the Parent and, where relevant, the Group as it shall
require, and in any event, report regularly and keep the Board
informed.
(3) The Executive's normal place of work shall be the Company's offices at
Huntingdon but the Executive shall work in any place within the United
Kingdom which the Board may require and he may be required to travel
abroad when required by the Company for the proper performance of his
duties.
(4) If the Company requires the Executive to work permanently at a place
which necessitates a move from his present home address the Company
will reimburse the Executive for all removal expenses directly and
reasonably incurred as a result of the Company's requirement in
accordance with the Company's relocation policy, as from time to time
in force.
4. GRATUITIES AND CODES OF CONDUCT
(1) Other than routine hospitality and corporate gifts of nominal value
received in the ordinary course of business, the Executive shall not
directly or indirectly accept any commission, rebate, discount or
gratuity in cash or in kind from any person who has or is having a
business relationship with any Group Company.
(2) The Executive shall comply (and procure that his spouse and minor
children shall comply) with all applicable rules and regulations of the
London Stock Exchange, the New York Stock Exchange, the US Securities
Exchange Commission, and any codes of conduct adopted by the Group
concerning dealings in securities for the time being in force and any
other relevant regulatory authority.
5. REMUNERATION
(1) The Company shall pay to the Executive a salary at the rate of
(pound)70,000 gross per year inclusive of any directors' fees payable
to him.
(2) The Executive's salary shall accrue from day to day and be payable by
equal monthly instalments in arrears on the 20th day of each month.
(3) The Executive's salary shall be reviewed once in every year. The
undertaking of a salary review does not confer a contractual right
(whether express or implied) to any increase in salary and the
Executive acknowledges that any salary increase is at the discretion of
the Company.
(4) Notwithstanding anything to the contrary in the Company's Articles of
Association the salary in (1) above shall be inclusive of any fees to
which the Executive may be entitled as a director of the Company or any
Group Company and the Executive shall waive his right to any such fee.
(5) The Company may, in its absolute discretion, pay to the Executive a
bonus of such amount payable at such time(s) as may from time to time
be determined by the Board.
6. PENSION SCHEME
(1) The Company currently operates a contributory pension scheme the
Huntingdon Life Sciences Pension and Life Assurance Scheme of which the
Executive Section shall be applicable to the Executive (the "Pension
Scheme"). The Executive has received an outline description of the
terms of the Pension Scheme in the form of [the member's explanatory
booklet]. The full terms are set out in the trust deeds and rules
governing the Pension Scheme and includes the Company's right to
wind-up the Pension Scheme. Copies of those documents are available to
the Executive on request.
(2) The Executive is entitled to remain a member of the Pension Scheme
subject to its terms. The Company shall deduct from the Executive's
salary any contributions payable by him from time to time to the
Pension Scheme or any other pension scheme of the Group of which he
becomes a member.
7. OTHER BENEFITS
(1) The Executive is entitled to membership of the following schemes (each
referred to below as an "insurance scheme"):
(a) a salary continuance on long-term disability
insurance scheme applicable to employees in the
Executive's category generally providing such cover
for the Executive as the Company may from time to
time notify to him;
(b) a life insurance scheme under which a lump sum benefit
shall be payable on the Executive's death while the Agreement
continues; the benefit of which shall be paid to such dependants
of the Executive or other beneficiary as the trustees of the
scheme select at their discretion, after considering any
beneficiaries identified by the Executive in any expression of his
wishes delivered to the trustees before his death. The benefit is
equal to 4 times the Executive's basic annual salary at his death
but basic annual salary for this purpose shall not exceed the
allowable maximum (earnings cap);
(c) a personal accident insurance applicable to employees
in the Executive's category generally scheme
providing such cover for the Executive as the Company
may from time to time notify to him.
(2) Benefits under any insurance scheme shall be subject to the rules of
the scheme(s) and the terms of any applicable insurance policy and are
conditional upon the Executive complying with and satisfying any
applicable requirements of the insurers. Copies of these rules and
policies and particulars of the requirements shall be provided to the
Executive on request. Provided that the Company shall have complied
with and satisfied with any requirements of the insurers applicable to
it, (but without prejudice to the Company's rights pursuant to clause
7(4) below) the Company shall not have any liability to pay any benefit
to the Executive under any insurance scheme unless it receives payment
of the benefit from the insurer under the scheme.
(3) Any insurance scheme which is provided for the Executive is also
subject to the Company's right to alter the cover provided or any term
of the scheme or to cease to provide (without replacement) the scheme
at any time if in the reasonable opinion of the Board the state of
health of the Executive is or becomes such that the Company is unable
to insure the benefits under the scheme at the normal premiums
applicable to a person of the Executive's age.
(4) The provision of any insurance scheme does not in any way prevent the
Company from lawfully terminating this Agreement in accordance with the
provisions in clause 15 even if to do so would deprive the Executive of
membership of or cover under any such scheme.
8. COMPANY CAR
The Company shall provide the Executive with a non-pensionable car
allowance of (pound)750.00 gross per month.
9. EXPENSES
The Company shall reimburse or procure that the Executive is reimbursed
all reasonable travelling hotel and other expenses wholly and
necessarily incurred by him in the performance of his duties under this
Agreement on production of appropriate receipts and other evidence of
expenditure as required by the Company.
10. HOLIDAYS
(1) The Executive shall (in addition to the usual public and bank holidays)
be entitled to 25 Working Days holiday in each holiday year (as
specified by the Company) to be taken at a time or times agreed between
the Executive and the Company.
(2) Holiday entitlement in one year cannot be carried forward to any
subsequent holiday years except by prior arrangement with the Company.
(3) In the holiday year in which employment commences or terminates holiday
shall accrue on a pro rata basis (excluding fractions of days). If on
the termination of the employment the Executive has exceeded his
accrued holiday entitlement the excess may be deducted from any sums
owing to him. If the Executive has accrued holiday owing to him the
Company may at its discretion require the Executive to take the
outstanding holiday during any notice period or make a payment in lieu
instead.
(4) If under clause 16 the Executive is not required to attend the office
during any period of notice, he will not accrue holiday during that
period. If the Executive's employment is terminated without notice, the
Executive will not be entitled to holiday pay for holiday which would
have accrued during the notice period had the Executive continued to be
employed or at work (whichever is applicable) throughout that time.
11. ILLNESS
(1) The Executive shall continue to be paid during sickness absence (such
payment to be inclusive of any statutory sick pay or social security
benefits to which he may be entitled) for a total of up to 26 weeks in
any 12 consecutive calendar months.
(2) Thereafter the Executive shall continue to be paid salary at the
discretion of the Company but so that the Company may terminate the
employment of the Executive at any time after the end of the 26th week
of absence in any 12 consecutive calendar months by giving to the
Executive not less than 3 months' notice in writing.
(3) If the Executive is incapable of performing his duties by reason of
injury sustained wholly or partly as a result of negligence, nuisance
or breach of any statutory duty on the part of a third party and the
Executive recovers an amount by way of compensation for loss of
earnings from that third party, he shall pay to the Company a sum equal
to the amount recovered or, if less, the amount paid to him by the
Company under clause 11(1) and/or (2) above in respect of the relevant
period of absence as a result of that injury.
(4) The Company shall be entitled to require the Executive to undergo
examinations by a medical adviser appointed or approved by the Company
and the Executive authorises the medical adviser and/or will provide
such consents as are necessary to disclose to the Company the results
of such examinations.
12. RESTRICTIONS DURING EMPLOYMENT
(1) During the continuance of his employment under this Agreement the
Executive shall unless prevented by incapacity devote his whole time
and attention to the business of the Company and the Group and shall
not without the prior written consent of the Board:
(a) engage in any other business (other than charity or other
unpaid work in the nature of a hobby which does not detract
from the Executive's performance of his duties); or
(b) be concerned or interested in any other business of a similar
nature to or competitive with that carried on by the Company
or any Group Company; or
(c) solicit the custom of, canvass, approach or deal with, in
competition with the Company or any Group Company, any person
(including any company, firm, organisation or other entity) to
whom the Company or any Group Company supplies services or
with whom the Company or any Group Company is in negotiations
or discussions regarding the possible supply of services; or
(d) discourage any such person referred to in clause 12 (1) (c)
above from conducting or continuing to conduct business with
the Company or any Group Company on the best terms available
to the Company or any Group Company; or
(e) induce or attempt to induce any director or senior employee of
the Company or any Group Company and with whom the Executive
has material dealings in the course of his employment, to
leave the employment of the Company or any Group Company
provided that nothing in this clause shall preclude the Executive from
holding or being otherwise interested in any shares or other securities
of any company which is quoted on any recognised investment exchange
(as defined by section 207(1) Financial Services Act 1986) so long as
the interest of the Executive in such shares or other securities does
not extend to more than 5% of the total amount of such shares or
securities.
(2) If during his employment under this Agreement the Executive shall cease
to be a director of the Parent (otherwise than by reason of his death,
resignation or disqualification pursuant to the articles of association
of the Parent or by statute or court order or under clause 15(2) below)
his employment shall continue and the terms of this Agreement (other
than those relating to the holding of office of director) shall
continue in full force and effect and the Executive shall have no
claims against the Parent or the Company in respect of his ceasing to
be a director.
13. INTELLECTUAL PROPERTY
(1) If the Executive makes, or if the Executive participates in making, any
invention, any design (whether registerable or not), or any work in
which copyright and/or database right subsists and which relates to or
is useful in connection with the business of the Company, the Parent or
of any Associated Company the Executive shall disclose it to the
Company immediately, whether or not it is the property of the Company
and:-
(a) in the case of an invention give the Company full particulars
of the invention together with all information, data (in all
forms and in all media), drawings and models, embodying or
relating to the invention, irrespective of the nature of the
invention or when it was made; and
(b) in the case of designs or copyright works, a copy of all such designs
and works;
and, in addition, the Company may call for the same to be
delivered forthwith to an authorised representative at any
time.
(2) If an invention made by the Executive is the property of the Company
under Section 39 Patents Act 1977 the Executive shall execute all
documents and do all things which may be necessary or desirable for
obtaining the best possible patent, utility model or similar protection
for the invention ("Protection") in territories specified by the
Company and the Executive hereby assigns to the Company with full title
guarantee all his or her rights to the invention and all applications
for Protection and to the grant of Protection in respect of that
invention and shall execute all documents and do all such things as may
be necessary or desirable for perfecting the assignment and obtaining
registration of it in all territories in the name of the Company.
(3) Notwithstanding clause 13(2) the Company shall not be under any
obligation to apply for Protection in respect of any invention made by
the Executive.
(4) If any invention is the property of the Executive under Section 39
Patents Act 1977 and relates to or is useful in connection with the
business or any product or service of the Company, the Parent or of any
Associated Company the Executive shall not grant a licence or execute
an assignment in respect of that invention to any other person without
first offering to grant a licence or execute an assignment for the
benefit of the Company on terms no less favourable than those offered
to the third party, and the Company shall have fifteen working days in
which to accept or reject the offer.
(5) If during the course of his or her work for the Company (whether in the
course of normal duties or not and whether or not during normal working
hours) the Executive makes, or participates in the making of any design
(whether registrable or not) or any work in which copyright and/or
database right subsists the Executive hereby assigns to the Company
with full title guarantee and, where appropriate, by way of future
assignment, all such rights for the full term thereof throughout the
world, provided that the assignment shall not extend to those designs
or works which are created by the Executive wholly outside his or her
normal working hours and wholly unconcerned with his or her service
under this Agreement.
(6) In the case of designs and copyright which are registrable anywhere in
the world the Executive shall execute all documents and do all things
which are necessary or desirable for obtaining the best possible
registration in respect of such rights in territories specified by the
Company and shall assign to the Company such rights as are not already
held by the Company in all subsequent registrations and applications
for registration.
(7) The Executive hereby irrevocably appoints the Company to be the
Executive's attorney in his or her name and on his or her behalf to
sign or execute any document or do anything and generally to use the
Executive's name for the purpose of giving to the Company the full
benefit of the provisions of this clause 13 and in favour of any third
party a certificate in writing signed by any director or the secretary
of the Company that any document or act falls within the authority
conferred by this clause shall be conclusive evidence that that is the
case.
(8) The Executive waives all moral rights (whether arising under Chapter IV
of the Copyright Designs and Patents Act 1988 or otherwise, to the
extent permissible under the relevant legislation in each jurisdiction)
in works to which clause 13(5) applies.
(9) The Executive warrants that he or she is not bound by any legally
enforceable obligations owed to persons other than the Company which
would prevent the Executive from complying with the terms of this
Agreement and the Executive shall not without proper licence use any
inventions or information in breach of rights owed to or held by
persons other than the Company or copy or adapt copyright works or
designs owned by persons other than the Company.
(10) All the provisions of this clause 13 shall survive termination of the
Executive's employment insofar as they relate to inventions,
information, designs and works in which copyright and/or database right
subsists which were created before termination.
14. CONFIDENTIALITY
(1) The Executive shall not (except in the proper performance of his
duties) during or after his employment has ended divulge to any person
or otherwise make use of (and shall use his best endeavours to prevent
the publication or disclosure of) any trade secret or secret research
process or any confidential information concerning the business or
finances of the Company or any Group Company or any of their dealings
transactions or affairs or any trade secret or secret research process
or any such confidential information concerning any of their suppliers,
agents, distributors or clients.
(2) Confidential information includes, but is not limited to: any
information of a secret, confidential or private nature, in any form,
concerning the business, accounts, finances, customer lists, research
projects, pricing and/or discount policy, future business strategy,
marketing, tenders, price sensitive information, employees and
officers, formulae, processors, working methods, inventions,
intellectual property and other plans and strategy of the Company and
any Group Company or any of its or their respective clients.
(3) The restrictions in clauses 14 (1) and 14 (2) shall not apply to
information which:
(i) comes into the public domain otherwise than by a breach by the
Executive of his obligations under this Agreement; or
(ii) is disclosed to the Executive by a third party who has not
received it directly or indirectly from the Company or any
Group Company; or
(iii) must be disclosed by any applicable law or the requirements of
a relevant regulatory authority, to the extent of such
required disclosure.
15. TERMINATION OF EMPLOYMENT
(1) The Company may at any time and in its absolute discretion (whether or
not any notice of termination has been given by the Company or the
Executive under clause 2(1) above) terminate the Agreement with
immediate effect and make a payment in lieu of notice.
(2) The employment of the Executive may be terminated by the Company
without notice or payment in lieu of notice if:
(a) the Executive is guilty of any serious misconduct or any other
conduct which affects or is likely to affect prejudicially the
interests of the Company or any Group Company to which he is
required to render services under this Agreement; or
(b) fails or neglects efficiently and diligently to discharge his
duties in any material respect or commits any serious or
material repeated breach or non-observance by the Executive of
any of the provisions contained in this Agreement; or
(c) the Executive has an interim receiving order made against him,
becomes bankrupt or makes any composition or enters into any
deed of arrangement with his creditors in circumstances which
would have a material adverse effect on the Company, the Group
or their respective reputations; or
(d) the Executive is convicted of any arrestable criminal offence
(other than an offence under road traffic legislation in the
United Kingdom or elsewhere for which a fine or non-custodial
penalty is imposed) in circumstances which would have a
material adverse effect on the Company, the Group or their
respective reputations; or
(e) the Executive is disqualified from holding office in another
company by reason of an order of a court of competent
jurisdiction; or
(f) the Executive shall become of unsound mind or become a patient
under the Mental Health Act 1983; or
(g) the Executive is convicted of an offence under the Companies
Securities (Insider Dealing) Act 1985 or under any other
present or future statutory enactment or regulations relating
to insider dealings under English or New York law; or
(h) otherwise than:
i) at the request of the Company; or
ii) in circumstances which a reasonable director,
properly advised, would regard as requiring his
resignation
the Executive ceases to be a director of the Company.
16. SUSPENSION
(1) The Company may suspend the Executive at any time on full pay to allow
the Company to investigate any complaint made against the Executive in
relation to his employment with the Company provided that the fact of
the suspension will only be disclosed to employees of the Company or
any Group Company who are involved in the investigation and/or to whom
such disclosure may, in the reasonable opinion of the Company be
necessary for genuine operational reasons.
(2) During any period of notice of termination (whether given by the
Company or the Executive) the Company shall be under no obligation to
assign any duties to the Executive or to provide any work for him and
shall be entitled to exclude him from its premises, provided that this
shall not affect the Executive's entitlement to receive his normal
salary and other contractual benefits other than that the Executive
will cease to accrue holiday during any such period.
17. RESIGNATION AND RETURN OF COMPANY PROPERTY
(1) Upon the termination by whatever means of this Agreement the Executive
shall:
(a) immediately resign from his office as a director of the
Company and from such offices held by him in any Group Company
without claim for compensation; and
(b) immediately deliver to the Company all credit cards
motor-cars, keys, computer media and other property in
whatever form, of or relating to the business of the Company
or of any Group Company which may be in his possession or
under his power or control.
(c) immediately deliver to the Company all details which must be
provided under clause 13 above together with all material in
whatever form which describes or embodies the concepts or
designs which are so disclosed.
(2) If the Executive fails to comply with clause 17(1) the Company is
hereby irrevocably authorised to appoint some person in his name and on
his behalf to sign and complete any documents or do any thing necessary
to give effect to this clause.
(3) The Executive shall not without the consent of the Company at any time
after the termination of this Agreement represent himself still to be
connected with the Company or any Group Company.
18. RECONSTRUCTION OR AMALGAMATION
If the employment of the Executive under this agreement is terminated
by reason of the liquidation of the Company for the purpose of
reconstruction or amalgamation and the Executive is offered employment
with any concern or undertaking resulting from the reconstruction or
amalgamation on terms and conditions not less favourable than the terms
of this Agreement then the Executive shall have no claim against the
Company or any Group Company in respect of the termination of his
employment under this Agreement.
19. RESTRICTIONS
(1) Definitions
In this clause:
(a) "Termination Date" means the date on which the employment
terminates;
(b) "Person" includes any company, firm, organisation or other
entity;
(b) "Area" means any country in the world where on the
Termination Date the Company was
supplying services
(c) "Business" means any business carried on by the Company or any
Group Company which relates to the provision of pre-clinical,
early clinical and/or non-clinical biological safety
evaluation services to the pharmaceutical and biotechnology,
agrochemical and other chemical industries;
(d) "Client" means any Person to whom the Company or a Group
Company supplied during the 6 months preceding the Termination
Date and with whom at any time during such period the
Executive was actively involved in the course of his
employment;
(d) "Prospective Client" means any Person with whom the Company or
a Group Company had negotiations or discussions regarding the
possible supply of services during the 6 months immediately
preceding the Termination Date and with whom at any time
during such period the Executive was actively involved in the
course of his employment.
(2) The Executive covenants with the Company and as trustee for each
Group Company that in the event of the Executive terminating his
employment:
(1) Non-competition
the Executive shall not for a period of 6 months from the
Termination Date directly or indirectly be interested or
concerned in any business which is carried on in the Area and
which is competitive or likely to be competitive with the
Business being carried on at the Termination Date and with
which the Executive was actively involved during the 6 month
period ending on the Termination Date.
For this purpose, the Executive is concerned in a business if:
(a) he carries it on as principal or agent; or
(b) he is a partner, director, employee, secondee,
consultant or agent in, of or to any Person who
carries on the business; or
(c) subject to clause 12(1) above, he has any direct or
indirect financial interest (as shareholder or
otherwise) in any Person who carries on the business.
(2) Non-solicitation
the Executive shall not for a period of 6 months from the
Termination Date in the Area directly or indirectly:
(a) canvass or solicit business for services similar to
those being provided by the Company or a Group
Company as at the Termination Date from any Client or
Prospective Client;
(b) seek to do business or deal with any Client or
Prospective Client in respect of services similar to
those being provided by the Company or a Group
Company as at the Termination Date; or
(c) canvass or solicit business from any supplier of the
Company or a Group Company with whom the Executive
was actively involved during the 6 months ending on
the Termination Date or persuade such supplier to
cease to supply, or to restrict or vary the terms of
supply to the Company or a Group Company or otherwise
interfere with the relationship between such a
supplier and the Company or a Group Company.
(3) Non-poaching
the Executive shall not for a period of 6 months after the
Termination Date directly or indirectly induce or attempt to
induce any senior employee of the Company or a Group Company
who is engaged in any business activity carried on by the
Company or a Group Company at the Termination Date and with
whom the Executive during the 6 months ending on the
Termination Date had material dealings in the course of his
employment, to leave the employment of the Company or a Group
Company (whether or not this would be a breach of contract by
that employee for the purposes of being involved in or engaged
in the types of business referred to in sub-clauses 2(1)(a)
and (b) above).
(3) The restrictions in this clause are considered by the parties to be
reasonable and the validity of each sub-clause shall not be affected if
any of the others is invalid. If any of the restrictions is void but
would be valid if some part of the restriction were deleted, the
restriction in question shall apply with such modification as may be
necessary to make it valid.
(4) The Executive acknowledges that the provisions of this clause are no
more extensive than is reasonable to protect the Company or the Group.
(5) If the Executive is suspended from work under the provisions of clause
16, the Company may, at its sole discretion, agree that the period of
time during which the non-competition restriction contained in clause
19(2)(1) is enforceable, starts to run from the date of the suspension
and not from the Termination Date.
20. SEVERABILITY
If any of the provisions of this Agreement become invalid or
unenforceable for any reason by virtue of applicable law the remaining
provisions shall continue in full force and effect and the Company and
the Executive hereby undertake to use all reasonable endeavours to
replace any legally invalid or unenforceable provision with a provision
which will promise to the parties (as far as practicable) the same
commercial results as well intended or contemplated by the original
provision.
21. NOTICES
(1) Any notice required or permitted to be given under this Agreement shall
be given in writing delivered personally or sent by first class post
pre-paid recorded delivery (air mail if overseas) or by facsimile to
the party due to receive such notice at, in the case of the Company,
its registered office from time to time (and marked for the attention
of the Company Secretary) and, in the case of the Executive, his
address as set out in this Agreement (or such address as he may have
notified to the Company in accordance with this clause).
(2) Any notice delivered personally shall be deemed to be received when
delivered to the address provided in this Agreement and any notice sent
by pre-paid recorded delivery post shall be deemed (in the absence of
evidence of earlier receipt) to be received 2 days after posting and in
proving the time of despatch it shall be sufficient to show that the
envelope containing such notice was properly addressed, stamped and
posted. A notice sent by facsimile shall be deemed to have been
received on receipt by the sender of confirmation in the transmission
report that the facsimile had been sent.
22. STATUTORY INFORMATION
(1) The Schedule to this Agreement sets out information required to be
given to the Executive by the Employment Rights Act 1996.
23. MISCELLANEOUS
(1) This Agreement is governed by and shall be construed in accordance
with the laws of England.
(2) The parties to this Agreement submit to the exclusive jurisdiction
of the English courts.
(3) This Agreement contains the entire understanding between the parties
and supersedes all previous agreements and arrangements (if any)
relating to the employment of the Executive by the Company (which shall
be deemed to have been terminated by mutual consent).
(4) The Executive authorises the Company to deduct from any remuneration
payable to the Executive under this Agreement any sums due from him to
the Company or any Group Company including the cost of repairing any
damage to Company or any Group Company property caused by the
Executive.
THIS AGREEMENT has been executed as a DEED and is intended to be and is hereby
delivered on the date on page 1.
<PAGE>
SCHEDULE
STATEMENT OF PARTICULARS PURSUANT TO THE
EMPLOYMENT RIGHTS ACT 1996
<PAGE>
1. The Executive's period of continued employment commenced on 1 July
1994. A period of employment with a previous employer does not count as
part of the Executive's continuous employment with the Company.
2. A contracting-out certificate is in force in respect of this employment
3. There is no formal disciplinary or grievance procedure applicable to
this position. Any grievance which the Executive wishes to exercise or
any disciplinary action taken by the Company will be dealt with by the
Chairman. If the Executive is dissatisfied with any decision he can
within 5 working days of that decision appeal to the Board whose
decision shall be final and binding. For the avoidance of doubt any
disciplinary or grievance procedure does not form part of the service
agreement.
4. The Executive is under no obligation to work overseas for periods
exceeding 1 month.
5. The Company is not a party to any collective agreement which affects the
Executive's employment.
Executed as a Deed by
HUNTINGDON LIFE SCIENCES
LIMITED ................................
Director
................................
Director/Company Secretary
<PAGE>
Signed as a Deed by
MARTYN SANDFORD
in the presence of: .................................
.................................
Signature of Witness
.................................
Name of Witness
.................................
Address
.................................
Occupation
Conditional upon completion of
the cash subscription, placing
and open offer to be made by
Huntingdon Life Sciences Group Plc
in August/September 1998
DATED 1998
(1) HUNTINGDON LIFE SCIENCES
LIMITED
- and -
(2) DR CAMERON MACKAY
MACDONALD
------------------------------------
SERVICE AGREEMENT
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Telephone: 0171 203 5000
Ref: DJSG/GXW/25407/3
<PAGE>
CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION.................................1
2. TERM OF EMPLOYMENT.............................................2
3. DUTIES.........................................................2
4. GRATUITIES AND CODES OF CONDUCT................................3
5. REMUNERATION...................................................3
6. PENSION SCHEME.................................................4
7. OTHER BENEFITS.................................................4
8. COMPANY CAR....................................................6
9. EXPENSES.......................................................6
10. HOLIDAYS.......................................................6
11. ILLNESS........................................................6
12. RESTRICTIONS DURING EMPLOYMENT.................................7
13. INTELLECTUAL PROPERTY..........................................8
14. CONFIDENTIALITY...............................................10
15. TERMINATION OF EMPLOYMENT.....................................11
16. SUSPENSION....................................................12
17. RESIGNATION AND RETURN OF COMPANY PROPERTY....................13
18. RECONSTRUCTION OR AMALGAMATION................................13
19. RESTRICTIONS..................................................13
20. SEVERABILITY..................................................16
21. NOTICES.......................................................16
22. STATUTORY INFORMATION.........................................17
23. MISCELLANEOUS.................................................17
SCHEDULE...............................................................18
<PAGE>
T H I S A G R E E M E N T is made on 1998
B E T W E E N :
(1) HUNTINGDON LIFE SCIENCES LIMITED whose registered office is at Woolley
Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Company");
and
(2) DR CAMERON MACKAY MACDONALD of[
] (the "Executive").
IT IS AGREED that the Company shall employ the Executive and the Executive shall
serve the Company as Strategic Development Director of Huntingdon Life Sciences
Group plc on the following terms and subject to the following conditions (the
"Agreement"):
<PAGE>
1. DEFINITIONS AND INTERPRETATION
(1) In this Agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Parent
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Parent or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below)
"Board" the board of directors for the time being of
the Parent ;
"Group" means the Parent and Associated Companies
for the time being and "Group Company"
means any one of them;
"Parent" means Huntingdon Life Sciences Group
plc or any other company which is
for the time being the ultimate
holding company of the Company
within the meaning of s736 of the
Companies Act 1985;
"Subsidiary" means a Subsidiary within the meaning
of s736 of the Companies Act 1985;
"Working Day" means a day other than a Saturday, Sunday
or bank or other public holiday in England.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
(3) The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this Agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
(5) Where appropriate, references to the Executive include his personal
representatives.
2. TERM OF EMPLOYMENT
(1) The employment of the Executive shall be deemed to have commenced on 1
November 1996 and (subject to termination as provided in clauses 11(2)
and 15 below) shall be for an indefinite period terminable by either
party giving to the other 12 months notice in writing.
(2) Notwithstanding clause 2(1) above the employment of the Executive shall
automatically terminate on the day when the Executive reaches age 65 or
the normal retiring age applicable to directors of the Group from time
to time.
(3) The Executive represents and warrants that he is not bound by or
subject to any court order, agreement, arrangement or undertaking which
in any way restricts or prohibits him from entering into this Agreement
or performing his duties under it.
3. DUTIES
(1) The Executive shall during his employment under this Agreement:
(a) perform the duties and exercise the powers which the Board may
from time to time properly assign to him in his capacity as
Strategic Development Director or in connection with the
conduct and management of the business of the Company or the
business of any Group Company (including serving on the board
of such Group Company or on any other executive body or any
committee of such a company); and
(b) do all in his power to promote, develop and protect the
business of the Company and any Group Company and at all times
and in all respects conform to and comply with the proper and
reasonable directions and regulations of the Board.
(2) The Executive shall give to the Board such information regarding the
affairs of the Parent and, where relevant, the Group as it shall
require, and in any event, report regularly and keep the Board
informed.
(3) The Executive's normal place of work shall be the Company's offices at
Huntingdon but the Executive shall work in any place within the United
Kingdom which the Board may require and he may be required to travel
abroad when required by the Company for the proper performance of his
duties.
(4) If the Company requires the Executive to work permanently at a place
which necessitates a move from his present home address the Company
will reimburse the Executive for all removal expenses directly and
reasonably incurred as a result of the Company's requirement in
accordance with the Company's relocation policy, as from time to time
in force.
4. GRATUITIES AND CODES OF CONDUCT
(1) Other than routine hospitality and corporate gifts of nominal value
received in the ordinary course of business, the Executive shall not
directly or indirectly accept any commission, rebate, discount or
gratuity in cash or in kind from any person who has or is having a
business relationship with any Group Company.
(2) The Executive shall comply (and procure that his spouse and minor
children shall comply) with all applicable rules and regulations of the
London Stock Exchange, the New York Stock Exchange, the US Securities
Exchange Commission, and any codes of conduct adopted by the Group
concerning dealings in securities for the time being in force and any
other relevant regulatory authority.
5. REMUNERATION
(1) The Company shall pay to the Executive a salary at the rate of
(pound)98,000 gross per year inclusive of any directors'fees payable
to him.
(2) The Executive's salary shall accrue from day to day and be payable by
equal monthly instalments in arrears on the 20th day of each month.
(3) The Executive's salary shall be reviewed once in every year. The
undertaking of a salary review does not confer a contractual right
(whether express or implied) to any increase in salary and the
Executive acknowledges that any salary increase is at the discretion of
the Company.
(4) Notwithstanding anything to the contrary in the Company's Articles of
Association the salary in (1) above shall be inclusive of any fees to
which the Executive may be entitled as a director of the Company or any
Group Company and the Executive shall waive his right to any such fee.
(5) The Company may, in its absolute discretion, pay to the Executive a
bonus of such amount payable at such time(s) as may from time to time
be determined by the Board.
6. PENSION SCHEME
(1) The Company currently operates a contributory pension scheme the
Huntingdon Life Sciences Pension and Life Assurance Scheme of which the
Executive Section shall be applicable to the Executive (the "Pension
Scheme"). The Executive has received an outline description of the
terms of the Pension Scheme in the form of [the member's explanatory
booklet]. The full terms are set out in the trust deeds and rules
governing the Pension Scheme and includes the Company's right to
wind-up the Pension Scheme. Copies of those documents are available to
the Executive on request.
(2) The Executive is entitled to remain a member of the Pension Scheme
subject to its terms. The Company shall deduct from the Executive's
salary any contributions payable by him from time to time to the
Pension Scheme or any other pension scheme of the Group of which he
becomes a member.
7. OTHER BENEFITS
(1) The Executive is entitled to membership of the following schemes (each
referred to below as an "insurance scheme"):
(a) a salary continuance on long-term disability
insurance scheme applicable to employees in the
Executive's category generally providing such cover
for the Executive as the Company may from time to
time notify to him;
(b) a life insurance scheme under which a lump sum
benefit shall be payable on the Executive's death
while the Agreement continues; the benefit of which
shall be paid to such dependants of the Executive
or other beneficiary as the trustees of the scheme
select at their discretion, after considering any
beneficiaries identified by the Executive in any
expression of his wishes delivered to the trustees
before his death. The benefit is equal to 4 times
the Executive's basic annual salary at his death but
basic annual salary for this purpose shall not
exceed the allowable maximum (earnings cap);
(c) a personal accident insurance applicable to employees
in the Executive's category generally scheme
providing such cover for the Executive as the Company
may from time to time notify to him.
(2) Benefits under any insurance scheme shall be subject to the rules of
the scheme(s) and the terms of any applicable insurance policy and are
conditional upon the Executive complying with and satisfying any
applicable requirements of the insurers. Copies of these rules and
policies and particulars of the requirements shall be provided to the
Executive on request. Provided that the Company shall have complied
with and satisfied with any requirements of the insurers applicable to
it, (but without prejudice to the Company's rights pursuant to clause
7(4) below) the Company shall not have any liability to pay any benefit
to the Executive under any insurance scheme unless it receives payment
of the benefit from the insurer under the scheme.
(3) Any insurance scheme which is provided for the Executive is also
subject to the Company's right to alter the cover provided or any term
of the scheme or to cease to provide (without replacement) the scheme
at any time if in the reasonable opinion of the Board the state of
health of the Executive is or becomes such that the Company is unable
to insure the benefits under the scheme at the normal premiums
applicable to a person of the Executive's age.
(4) The provision of any insurance scheme does not in any way prevent the
Company from lawfully terminating this Agreement in accordance with the
provisions in clause 15 even if to do so would deprive the Executive of
membership of or cover under any such scheme.
8. COMPANY CAR
The Company shall provide the Executive with a non-pensionable car
allowance of (pound)750.00 gross per month.
9. EXPENSES
The Company shall reimburse or procure that the Executive is reimbursed
all reasonable travelling hotel and other expenses wholly and
necessarily incurred by him in the performance of his duties under this
Agreement on production of appropriate receipts and other evidence of
expenditure as required by the Company.
10. HOLIDAYS
(1) The Executive shall (in addition to the usual public and bank holidays)
be entitled to 25 Working Days holiday in each holiday year (as
specified by the Company) to be taken at a time or times agreed between
the Executive and the Company.
(2) Holiday entitlement in one year cannot be carried forward to any
subsequent holiday years except by prior arrangement with the Company.
(3) In the holiday year in which employment commences or terminates holiday
shall accrue on a pro rata basis (excluding fractions of days). If on
the termination of the employment the Executive has exceeded his
accrued holiday entitlement the excess may be deducted from any sums
owing to him. If the Executive has accrued holiday owing to him the
Company may at its discretion require the Executive to take the
outstanding holiday during any notice period or make a payment in lieu
instead.
(4) If under clause 16 the Executive is not required to attend the office
during any period of notice, he will not accrue holiday during that
period. If the Executive's employment is terminated without notice, the
Executive will not be entitled to holiday pay for holiday which would
have accrued during the notice period had the Executive continued to be
employed or at work (whichever is applicable) throughout that time.
11. ILLNESS
(1) The Executive shall continue to be paid during sickness absence (such
payment to be inclusive of any statutory sick pay or social security
benefits to which he may be entitled) for a total of up to 26 weeks in
any 12 consecutive calendar months.
(2) Thereafter the Executive shall continue to be paid salary at the
discretion of the Company but so that the Company may terminate the
employment of the Executive at any time after the end of the 26th week
of absence in any 12 consecutive calendar months by giving to the
Executive not less than 3 months' notice in writing.
(3) If the Executive is incapable of performing his duties by reason of
injury sustained wholly or partly as a result of negligence, nuisance
or breach of any statutory duty on the part of a third party and the
Executive recovers an amount by way of compensation for loss of
earnings from that third party, he shall pay to the Company a sum equal
to the amount recovered or, if less, the amount paid to him by the
Company under clause 11(1) and/or (2) above in respect of the relevant
period of absence as a result of that injury.
(4) The Company shall be entitled to require the Executive to undergo
examinations by a medical adviser appointed or approved by the Company
and the Executive authorises the medical adviser and/or will provide
such consents as are necessary to disclose to the Company the results
of such examinations.
12. RESTRICTIONS DURING EMPLOYMENT
(1) During the continuance of his employment under this Agreement the
Executive shall unless prevented by incapacity devote his whole time
and attention to the business of the Company and the Group and shall
not without the prior written consent of the Board:
(a) engage in any other business (other than charity or other
unpaid work in the nature of a hobby which does not detract
from the Executive's performance of his duties); or
(b) be concerned or interested in any other business of a similar
nature to or competitive with that carried on by the Company
or any Group Company; or
(c) solicit the custom of, canvass, approach or deal with, in
competition with the Company or any Group Company, any person
(including any company, firm, organisation or other entity) to
whom the Company or any Group Company supplies services or
with whom the Company or any Group Company is in negotiations
or discussions regarding the possible supply of services; or
(d) discourage any such person referred to in clause 12 (1) (c)
above from conducting or continuing to conduct business with
the Company or any Group Company on the best terms available
to the Company or any Group Company; or
(e) induce or attempt to induce any director or senior employee of
the Company or any Group Company and with whom the Executive
has material dealings in the course of his employment, to
leave the employment of the Company or any Group Company
provided that nothing in this clause shall preclude the Executive from
holding or being otherwise interested in any shares or other securities
of any company which is quoted on any recognised investment exchange
(as defined by section 207(1) Financial Services Act 1986) so long as
the interest of the Executive in such shares or other securities does
not extend to more than 5% of the total amount of such shares or
securities.
(2) If during his employment under this Agreement the Executive shall cease
to be a director of the Parent (otherwise than by reason of his death,
resignation or disqualification pursuant to the articles of association
of the Parent or by statute or court order or under clause 15(2) below)
his employment shall continue and the terms of this Agreement (other
than those relating to the holding of office of director) shall
continue in full force and effect and the Executive shall have no
claims against the Parent or the Company in respect of his ceasing to
be a director.
13. INTELLECTUAL PROPERTY
(1) If the Executive makes, or if the Executive participates in making, any
invention, any design (whether registerable or not), or any work in
which copyright and/or database right subsists and which relates to or
is useful in connection with the business of the Company, the Parent or
of any Associated Company the Executive shall disclose it to the
Company immediately, whether or not it is the property of the Company
and:-
(a) in the case of an invention give the Company full particulars
of the invention together with all information, data (in all
forms and in all media), drawings and models, embodying or
relating to the invention, irrespective of the nature of the
invention or when it was made; and
(b) in the case of designs or copyright works, a copy of all
such designs and works;
and, in addition, the Company may call for the same to be
delivered forthwith to an authorised representative at any
time.
(2) If an invention made by the Executive is the property of the Company
under Section 39 Patents Act 1977 the Executive shall execute all
documents and do all things which may be necessary or desirable for
obtaining the best possible patent, utility model or similar protection
for the invention ("Protection") in territories specified by the
Company and the Executive hereby assigns to the Company with full title
guarantee all his or her rights to the invention and all applications
for Protection and to the grant of Protection in respect of that
invention and shall execute all documents and do all such things as may
be necessary or desirable for perfecting the assignment and obtaining
registration of it in all territories in the name of the Company.
(3) Notwithstanding clause 13(2) the Company shall not be under any
obligation to apply for Protection in respect of any invention made by
the Executive.
(4) If any invention is the property of the Executive under Section 39
Patents Act 1977 and relates to or is useful in connection with the
business or any product or service of the Company, the Parent or of any
Associated Company the Executive shall not grant a licence or execute
an assignment in respect of that invention to any other person without
first offering to grant a licence or execute an assignment for the
benefit of the Company on terms no less favourable than those offered
to the third party, and the Company shall have fifteen working days in
which to accept or reject the offer.
(5) If during the course of his or her work for the Company (whether in the
course of normal duties or not and whether or not during normal working
hours) the Executive makes, or participates in the making of any design
(whether registrable or not) or any work in which copyright and/or
database right subsists the Executive hereby assigns to the Company
with full title guarantee and, where appropriate, by way of future
assignment, all such rights for the full term thereof throughout the
world, provided that the assignment shall not extend to those designs
or works which are created by the Executive wholly outside his or her
normal working hours and wholly unconcerned with his or her service
under this Agreement.
(6) In the case of designs and copyright which are registrable anywhere in
the world the Executive shall execute all documents and do all things
which are necessary or desirable for obtaining the best possible
registration in respect of such rights in territories specified by the
Company and shall assign to the Company such rights as are not already
held by the Company in all subsequent registrations and applications
for registration.
(7) The Executive hereby irrevocably appoints the Company to be the
Executive's attorney in his or her name and on his or her behalf to
sign or execute any document or do anything and generally to use the
Executive's name for the purpose of giving to the Company the full
benefit of the provisions of this clause 13 and in favour of any third
party a certificate in writing signed by any director or the secretary
of the Company that any document or act falls within the authority
conferred by this clause shall be conclusive evidence that that is the
case.
(8) The Executive waives all moral rights (whether arising under Chapter IV
of the Copyright Designs and Patents Act 1988 or otherwise, to the
extent permissible under the relevant legislation in each jurisdiction)
in works to which clause 13(5) applies.
(9) The Executive warrants that he is not bound by any legally enforceable
obligations owed to persons other than the Company which would prevent
the Executive from complying with the terms of this Agreement and the
Executive shall not without proper licence use any inventions or
information in breach of rights owed to or held by persons other than
the Company or copy or adapt copyright works or designs owned by
persons other than the Company.
(10) All the provisions of this clause 13 shall survive termination of the
Executive's employment insofar as they relate to inventions,
information, designs and works in which copyright and/or database right
subsists which were created before termination.
14. CONFIDENTIALITY
(1) The Executive shall not (except in the proper performance of his
duties) during or after his employment has ended divulge to any person
or otherwise make use of (and shall use his best endeavours to prevent
the publication or disclosure of) any trade secret or secret research
process or any confidential information concerning the business or
finances of the Company or any Group Company or any of their dealings
transactions or affairs or any trade secret or secret research process
or any such confidential information concerning any of their suppliers,
agents, distributors or clients.
(2) Confidential information includes, but is not limited to: any
information of a secret, confidential or private nature, in any form,
concerning the business, accounts, finances, customer lists, research
projects, pricing and/or discount policy, future business strategy,
marketing, tenders, price sensitive information, employees and
officers, formulae, processors, working methods, inventions,
intellectual property and other plans and strategy of the Company and
any Group Company or any of its or their respective clients.
(3) The restrictions in clauses 14 (1) and 14 (2) shall not apply to
information which:
(i) comes into the public domain otherwise than by a breach by
the Executive of his obligations under this Agreement; or
(ii) is disclosed to the Executive by a third party who has not
received it directly or indirectly from the Company or any
Group Company; or
(iii) must be disclosed by any applicable law or the requirements of
a relevant regulatory authority, to the extent of such
required disclosure.
15. TERMINATION OF EMPLOYMENT
(1) The Company may at any time and in its absolute discretion (whether or
not any notice of termination has been given by the Company or the
Executive under clause 2(1) above) terminate the Agreement with
immediate effect and make a payment in lieu of notice.
(2) The employment of the Executive may be terminated by the Company
without notice or payment in lieu of notice if:
(a) the Executive is guilty of any serious misconduct or any other
conduct which affects or is likely to affect prejudicially the
interests of the Company or any Group Company to which he is
required to render services under this Agreement; or
(b) fails or neglects efficiently and diligently to discharge his
duties in any material respect or commits any serious or
material repeated breach or non-observance by the Executive of
any of the provisions contained in this Agreement; or
(c) the Executive has an interim receiving order made against him,
becomes bankrupt or makes any composition or enters into any
deed of arrangement with his creditors in circumstances which
would have a material adverse effect on the Company, the Group
or their respective reputations; or
(d) the Executive is convicted of any arrestable criminal offence
(other than an offence under road traffic legislation in the
United Kingdom or elsewhere for which a fine or non-custodial
penalty is imposed) in circumstances which would have a
material adverse effect on the Company, the Group or their
respective reputations; or
(e) the Executive is disqualified from holding office in another
company by reason of an order of a court of competent
jurisdiction; or
(f) the Executive shall become of unsound mind or become a patient
under the Mental Health Act 1983; or
(g) the Executive is convicted of an offence under the Companies
Securities (Insider Dealing) Act 1985 or under any other
present or future statutory enactment or regulations relating
to insider dealings under English or New York law; or
(h) otherwise than:
i) at the request of the Company; or
ii) in circumstances which a reasonable director,
properly advised, would regard as requiring his
resignation
the Executive ceases to be a director of the Parent.
16. SUSPENSION
(1) The Company may suspend the Executive at any time on full pay to allow
the Company to investigate any complaint made against the Executive in
relation to his employment with the Company provided that the fact of
the suspension will only be disclosed to employees of the Company or
any Group Company who are involved in the investigation and/or to whom
such disclosure may, in the reasonable opinion of the Company be
necessary for genuine operational reasons.
(2) During any period of notice of termination (whether given by the
Company or the Executive) the Company shall be under no obligation to
assign any duties to the Executive or to provide any work for him and
shall be entitled to exclude him from its premises, provided that this
shall not affect the Executive's entitlement to receive his normal
salary and other contractual benefits other than that the Executive
will cease to accrue holiday during any such period.
17. RESIGNATION AND RETURN OF COMPANY PROPERTY
(1) Upon the termination by whatever means of this Agreement the Executive
shall:
(a) immediately resign from his office as a director of the Parent
and from such offices held by him in any Group Company without
claim for compensation; and
(b) immediately deliver to the Company all credit cards
motor-cars, keys, computer media and other property in
whatever form, of or relating to the business of the Company
or of any Group Company which may be in his possession or
under his power or control.
(c) immediately deliver to the Company all details which must be
provided under clause 13 above together with all material in
whatever form which describes or embodies the concepts or
designs which are so disclosed.
(2) If the Executive fails to comply with clause 17(1) the Company is
hereby irrevocably authorised to appoint some person in his name and on
his behalf to sign and complete any documents or do any thing necessary
to give effect to this clause.
(3) The Executive shall not without the consent of the Parent at any time
after the termination of this Agreement represent himself still to be
connected with the Company or any Group Company.
18. RECONSTRUCTION OR AMALGAMATION
If the employment of the Executive under this agreement is terminated
by reason of the liquidation of the Company for the purpose of
reconstruction or amalgamation and the Executive is offered employment
with any concern or undertaking resulting from the reconstruction or
amalgamation on terms and conditions not less favourable than the terms
of this Agreement then the Executive shall have no claim against the
Company or any Group Company in respect of the termination of his
employment under this Agreement.
19. RESTRICTIONS
(1) Definitions
In this clause:
(a) "Termination Date" means the date on which the employment
terminates;
(b) "Person" includes any company, firm, organisation or other
entity;
(b) "Area" means any country in the world where on the
Termination Date the Company was supplying services
(c) "Business" means any business carried on by the Company or any
Group Company which relates to the provision of pre-clinical,
early clinical and/or non-clinical biological safety
evaluation services to the pharmaceutical and biotechnology,
agrochemical and other chemical industries;
(d) "Client" means any Person to whom the Company or a Group
Company supplied during the 6 months preceding the Termination
Date and with whom at any time during such period the
Executive was actively involved in the course of his
employment;
(d) "Prospective Client" means any Person with whom the Company or
a Group Company had negotiations or discussions regarding the
possible supply of services during the 6 months immediately
preceding the Termination Date and with whom at any time
during such period the Executive was actively involved in the
course of his employment.
(2) The Executive covenants with the Company and as trustee for each Group
Company that in the event of the Executive terminating his employment:
(1) Non-competition
the Executive shall not for a period of 6 months from the
Termination Date directly or indirectly be interested or
concerned in any business which is carried on in the Area and
which is competitive or likely to be competitive with the
Business being carried on at the Termination Date and with
which the Executive was actively involved during the 6 month
period ending on the Termination Date.
For this purpose, the Executive is concerned in a business if:
(a) he carries it on as principal or agent; or
(b) he is a partner, director, employee, secondee,
consultant or agent in, of or to any Person who
carries on the business; or
(c) subject to clause 12(1) above, he has any direct or
indirect financial interest (as shareholder or
otherwise) in any Person who carries on the business.
(2) Non-solicitation
the Executive shall not for a period of 6 months from the
Termination Date in the Area directly or indirectly:
(a) canvass or solicit business for services similar to
those being provided by the Company or a Group
Company as at the Termination Date from any Client or
Prospective Client;
(b) seek to do business or deal with any Client or
Prospective Client in respect of services similar to
those being provided by the Company or a Group
Company as at the Termination Date; or
(c) canvass or solicit business from any supplier of the
Company or a Group Company with whom the Executive
was actively involved during the 6 months ending on
the Termination Date or persuade such supplier to
cease to supply, or to restrict or vary the terms of
supply to the Company or a Group Company or otherwise
interfere with the relationship between such a
supplier and the Company or a Group Company.
(3) Non-poaching
the Executive shall not for a period of 6 months after the
Termination Date directly or indirectly induce or attempt to
induce any senior employee of the Company or a Group Company
who is engaged in any business activity carried on by the
Company or a Group Company at the Termination Date and with
whom the Executive during the 6 months ending on the
Termination Date had material dealings in the course of his
employment, to leave the employment of the Company or a Group
Company (whether or not this would be a breach of contract by
that employee for the purposes of being involved in or engaged
in the types of business referred to in sub-clause 2(1)
above).
(3) The restrictions in this clause are considered by the parties to be
reasonable and the validity of each sub-clause shall not be affected if
any of the others is invalid. If any of the restrictions is void but
would be valid if some part of the restriction were deleted, the
restriction in question shall apply with such modification as may be
necessary to make it valid.
(4) The Executive acknowledges that the provisions of this clause are no
more extensive than is reasonable to protect the Company or the Group.
(5) If the Executive is suspended from work under the provisions of clause
16, the Company may, at its sole discretion, agree that the period of
time during which the non-competition restriction contained in clause
19(2)(1) is enforceable, starts to run from the date of the suspension
and not from the Termination Date.
20. SEVERABILITY
If any of the provisions of this Agreement become invalid or
unenforceable for any reason by virtue of applicable law the remaining
provisions shall continue in full force and effect and the Company and
the Executive hereby undertake to use all reasonable endeavours to
replace any legally invalid or unenforceable provision with a provision
which will promise to the parties (as far as practicable) the same
commercial results as were intended or contemplated by the original
provision.
21. NOTICES
(1) Any notice required or permitted to be given under this Agreement shall
be given in writing delivered personally or sent by first class post
pre-paid recorded delivery (air mail if overseas) or by facsimile to
the party due to receive such notice at, in the case of the Company,
its registered office from time to time (and marked for the attention
of the Company Secretary) and, in the case of the Executive, his
address as set out in this Agreement (or such address as he may have
notified to the Company).
(2) Any notice delivered personally shall be deemed to be received when
delivered to the address provided in this Agreement and any notice sent
by pre-paid recorded delivery post shall be deemed (in the absence of
evidence of earlier receipt) to be received 2 days after posting and in
proving the time of despatch it shall be sufficient to show that the
envelope containing such notice was properly addressed, stamped and
posted. A notice sent by facsimile shall be deemed to have been
received on receipt by the sender of confirmation in the transmission
report that the facsimile had been sent.
22. STATUTORY INFORMATION
(1) The Schedule to this Agreement sets out information required to be
given to the Executive by the Employment Rights Act 1996.
23. MISCELLANEOUS
(1) This Agreement is governed by and shall be construed in accordance with
the laws of England.
(2) The parties to this Agreement submit to the exclusive jurisdiction of
the English courts.
(3) This Agreement contains the entire understanding between the parties
and supersedes all previous agreements and arrangements (if any)
relating to the employment of the Executive by the Company (which shall
be deemed to have been terminated by mutual consent).
(4) The Executive authorises the Company to deduct from any remuneration
payable to the Executive under this Agreement any sums due from him to
the Company or any Group Company including the cost of repairing any
damage to Company or any Group Company property caused by the
Executive.
THIS AGREEMENT has been executed as a DEED and is intended to be and is hereby
delivered on the date on page 1.
<PAGE>
SCHEDULE
STATEMENT OF PARTICULARS PURSUANT TO THE
EMPLOYMENT RIGHTS ACT 1996
<PAGE>
1. The Executive's period of continued employment commenced on 1 November
1996. A period of employment with a previous employer does not count as
part of the Executive's continuous employment with the Company.
2. A contracting-out certificate is in force in respect of this employment
3. There is no formal disciplinary or grievance procedure applicable to
this position. Any grievance which the Executive wishes to exercise or
any disciplinary action taken by the Company will be dealt with by the
Chairman. If the Executive is dissatisfied with any decision he can
within 5 working days of that decision appeal to the Board whose
decision shall be final and binding. For the avoidance of doubt any
disciplinary or grievance procedure does not form part of the service
agreement.
4. The Executive is under no obligation to work overseas for periods exceeding 1
month.
5. The Company is not a party to any collective agreement which affects
the Executive's employment.
Executed as a Deed by
HUNTINGDON LIFE SCIENCES
LIMITED ................................
Director
................................
Director/Company Secretary
Signed as a Deed by
DR CAMERON MACKAY MACDONALD
in the presence of: .................................
.................................
Signature of Witness
.................................
Name of Witness
.................................
Address
.................................
Occupation
Conditional upon completion of
the cash subscription, placing
and open offer to be made by
Huntingdon Life Sciences Group Plc
in August/September 1998
DATED 1998
HUNTINGDON LIFE SCIENCES GROUP PLC
and
HARFORD CONSULTANCY SERVICES LIMITED
and
ROGER PINNINGTON
DEED OF VARIATION
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Tel: 0171 203 5000
<PAGE>
THIS AGREEMENT is made on the day of 1998
B E T W E E N:
1. HUNTINGDON LIFE SCIENCES GROUP PLC whose registered office is at
Woolley Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the
"Company"); and
2. HARFORD CONSULTANCY SERVICES LIMITED [whose registered office is at 15
Lennox Gardens Mews, London SW1X ODP] (the "Consultant"); and
3. ROGER PINNINGTON of [ ] ("Mr Pinnington")
AND IS SUPPLEMENTAL to:-
<PAGE>
1. A consultancy agreement dated 20 March 1995 between the Company
(formerly Huntingdon International Holdings plc) and the Consultant
(the "Consultancy Agreement"); and
2. An agreement dated 20 March 1995 between the Company (formerly
Huntingdon International Holdings plc) and Mr Pinnington (the
"Supplemental Agreement"); and
3. An agreement dated 23 December 1995 between the Company (formerly
Huntingdon International Holdings plc) and the Consultant (the
"Variation Agreement").
<PAGE>
WHEREAS
<PAGE>
1. The Consultant is currently providing the services of Mr Pinnington to
the Company and the Group (as defined below) and the parties wish to
record the terms of a variation agreed between them in respect of the
Consultancy Agreement, the Supplemental Agreement and the Variation
Agreement.
IT IS AGREED as follows:
<PAGE>
1. The terms of this agreement shall have effect from [ ] 1998
("Effective Date").
2. The period of notice required in order for either the Company or the
Consultant to terminate the Consultancy Agreement shall be one month's
written notice, given at any time after the Effective Date and clause
2.2 of the Consultancy Agreement shall be amended accordingly.
3. The duties of Mr Pinnington as set out in clause 3 of the Consultancy
Agreement shall cease to apply and the duties of Mr Pinnington shall be
as follows:
3.1 Mr Pinnington will act as a non-executive director of the Company;
3.2 Mr Pinnington will be subject to the normal duties and
responsibilities of a director at law and will be expected to
comply with the principles of good corporate governance and
guidelines issued from time to time by the Institute of
Directors;
3.3 Mr Pinnington will be required to attend all board meetings of
the Company and where relevant, other Group Companies and will
be required to make himself available for consultation of the
affairs of the Company and, where relevant, other Group
Companies;
3.4 Mr Pinnington will be required to sit on any committees on which
he is elected to sit by the Board;
3.5 Mr Pinnington will be expected to bring an objectivity and
independence of view to the discussions of the Board and
assist the Board in maintaining high standards of financial
probity.
<PAGE>
4. The Consultant shall make Mr Pinnington available to carry out his
duties at all reasonable times and, in any event, for a minimum of the
equivalent of 1 working day each month, together with any additional
time which may be required for committee business. The Company will
give to the Consultant reasonable prior notification of the time, date
and venue of all meetings of the Board and of any committees to which
Mr Pinnington is elected, unless their circumstances do not otherwise
permit.
5. The Consultant shall procure that Mr Pinnington attends the Company's
premises, when reasonably requested to do so by the Company, in order
properly to perform his duties.
6. Clause 4 of the Consultancy Agreement shall cease to apply and in place
of the sums provided for in such clause 4, the Company shall pay
to the Consultant a fee of (pound)20,000 plus VAT per annum in respect
of the services of Mr Pinnington, which fee will accrue from day to
day and which will be payable monthly in arrears, within 30 days after
receipt of an appropriate VAT invoice from the Consultant. The
Consultant and Mr Pinnington confirm, by their signatures to this
agreement, that they have no claim against the Company or any Group
Company arising out of clause 4 of the Consultancy Agreement and, to
the extent that any such claim exists, both the Consultant and Mr
Pinnington irrevocably waive such claim and release the Company and/or
any Group Company from any liability whatsoever in respect of it.
7. Clause 5 of the Consultancy Agreement shall cease to have effect and
the Consultant and Mr Pinnington confirm, by their signatures to this
agreement, that they have no claim against the Company or any Group
Company arising out of clause 5 of the Consultancy Agreement and, to
the extent that any such claim exists, both the Consultant and Mr
Pinnington irrevocably waive such claim and release the Company and/or
any Group Company from any liability whatsoever in respect of it.
8. Clause 7 of the Consultancy Agreement shall continue for so long as any
lease under which a motor car is provided to the Consultant and which
is in effect as at the Effective Date remains in full force and effect
but so that the Company's obligations pursuant to clause 7 of the
Consultancy Agreement will cease immediately upon termination of this
agreement for whatever reason.
9. Other than as varied by this agreement, all terms and conditions of the
Consultancy Agreement shall remain in full force and effect.
10. All terms and conditions of the Supplemental Agreement shall remain in
full force and effect.
11. All terms and conditions of the Variation Agreement shall cease to have
effect. The Consultant and Mr Pinnington, by their signatures to this
agreement, confirm that they have no claim against the Company or any
Group Company arising out of the Variation Agreement and, to the extent
that any such claim exists, irrevocably waive such claim and release
the Company and/or any Group Company from any liability whatsoever in
respect of it.
13. SEVERENCE
The various provisions of this agreement are severable and if any
provision is held to be invalid or unenforceable by a court of
competent jurisdiction then such invalidity or unenforceability shall
not affect the remaining provisions of this agreement.
14. ASSIGNMENT AND DELEGATION
The Consultant shall not assign this agreement to any person; nor shall
the Consultant sub-contract or delegate to any person any of the
Consultant's obligations under it.
15. GOVERNING LAW
15.1 This agreement shall be governed by and construed in accordance with
English law.
15.2 The parties agree that the courts of England are to have exclusive
jurisdiction to settle any dispute which may arise out of or in
connection with this agreement and submit to the jurisdiction of those
courts.
16. NOTICES
16.1 Any notice or other document to be served under this agreement may be
delivered or sent by first class post or telex or facsimile process to
the party to be served at its registered office (in the case of the
Company marked for the attention of the Company Secretary) for the time
being.
16.2 Unless the contrary is proved, any such notice or other document shall
be deemed to have been served:
(a) if delivered, at the time of delivery;
(b) if posted, at 10.00am on the second Working Day after it was
put into the post; or
(c) if sent by telex or facsimile process, at the expiration of
two hours after the time of despatch, if despatched before
3.00pm on any Working Day, and in any other case at 10.00am on
the Working Day following the date of despatch.
16.3 In proving such service it shall be sufficient to prove that delivery
was made or that the envelope containing such notice or other document
was properly addressed and posted as a pre-paid first class letter or
that the telex or facsimile message was properly addressed and
despatched as the case may be.
17. DEFINITIONS AND INTERPRETATION
17.1 In this agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Company
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Company or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below)
"Board" the board of directors for the time being
of the Company;
"Group" means the Company and its subsidiaries
and Associated Companies for the time
being and "Group Company"
means any one of them;
"Subsidiary" means a Subsidiary within the meaning
of s736 of the Companies Act 1985;
"Working Day" means a day other than a Saturday,
Sunday or bank or other
public holiday in England;
17.2 Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
17.3 The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
17.4 References in this Agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
17.5 Where appropriate, references to the Executive include his personal
representatives.
<PAGE>
IN WITNESS of which this agreement has been executed and delivered the day and
year first above written.
EXECUTED as a DEED by )
HUNTINGDON LIFE SCIENCES )
GROUP PLC acting by )
two directors and/or one director )
and the secretary )
...............................
Director
...............................
Director/Secretary
EXECUTED as a DEED by )
HARFORD CONSULTANCY )
SERVICES LTD acting by )
two directors and/or one director )
and the secretary )
...............................
Director
...............................
Director/Secretary
<PAGE>
EXECUTED as a DEED by )
ROGER A PINNINGTON )
in the presence of: )
...............................
Signature of Witness
...............................
Address
................................
Occupation
Professor John Caldwell
40 Clarence Gate Gardens
London NW1 6BA
7 August 1998
Dear John
HUNTINGDON LIFE SCIENCES GROUP PLC (the "Company")
I am delighted that you have agreed to continue in your appointment as a
non-executive director of the Company and I am now writing to confirm the
arrangements which will exist between you and the Company during the continuance
of your appointment.
1. Duties
Although they are not specifically mentioned, you will of course be
subject to the normal duties and responsibilities of a director at law
and will be expected to comply with the principles of good corporate
governance and guidelines issued from time to time by the Institute of
Directors.
You will be required, in your role as non-executive director, to attend
all board meetings of the Company and, where relevant, other companies
within the Huntingdon Group ("Group"). You will also be required to
make yourself available for consultation on the affairs of the Company
and, where relevant, the Group, and to sit on any of the Company's
Remuneration, Audit and/or Nomination committees if so elected by the
Company's board of directors ("Board")
As an independent director, we will expect you to bring an objectivity
and independence of view to our discussions and to the help the Board
to provide the Company with effective leadership, as well as ensuring
the continuing effectiveness of the management team and high standards
of financial probity.
You will be given reasonable prior notification of the time, date and
venue of all meetings of the Board and committees to which you are
elected, unless circumstances do not otherwise permit.
You will also be expected to attend the Company's premises when
relevant, but otherwise it is up to you where you carry out your duties
from.
We expect that this appointment will require you to devote a minimum of
the equivalent of one working day each month to the Group's business,
together with any additional time which may be required for committee
business.
2. Term
Subject to the provisions for early termination set out below, your
appointment will continue unless and until terminated by either you or
the Company not less than 3 months' written notice.
3. Fee
For your services, the Company will pay you a fee, which will accrue
from day to day, of (pound)20,000 plus VAT (if applicable) per annum,
payable monthly in arrears. This fee will be reviewed annually by the
remuneration committee of the Company. Any increase in the fee awarded
as a result of such review will be entirely at the discretion of the
Company and, if awarded, will take effect from the month immediately
following the review date.
In addition to the above fee, you will be reimbursed for all out of
pocket expenses which you may incur in providing services to the
Company and for which appropriate valid receipts are provided, to the
satisfaction of the Company.
For the avoidance of doubt, any fees payable to you will cease to be
payable immediately in the event of your ceasing to be a non-executive
director of the Company, for whatever reason.
4. Confidentiality
I must ask that, unless previously authorised by the Board, you will
not at any time during this appointment nor at any time after its
termination disclose to any person or persons, or use for your own
purposes or for any purposes other than those of the Company or the
Group, any confidential information acquired by you in the course of
your duties and relating to, the Company or the Group. I must also ask
that you will use your best endeavours to prevent unauthorised
disclosure or publication or use of such confidential information.
Nothing in the above paragraph is intended to prevent the disclosure by
you of any confidential information which has come into the public
domain, otherwise than as a result of your failure to comply with
confidentiality provisions of this agreement.
<PAGE>
5. Conflicts of interest
You must disclose to the Board any conflict of interest arising out of
your appointment.
You will be expected to refrain, except with the prior consent of the
Company, from accepting appointments to the position of director or
consultant of any company or firm employed in the business of providing
pre-clinical, early clinical and/or non-clinical biological safety
evaluation services to the pharmaceutical and biotechnology,
agrochemical and other chemical industries whilst you are a
non-executive director of the Company.
6. Compliance
You must comply with the model code on directors' dealing's in respect
of listed securities published by the London Stock Exchange Ltd,
together with any rules and regulations of the London Stock Exchange
Ltd, the New York Stock Exchange and the US Securities Exchange
Commission. You must familiarise yourself with and comply with all
codes of conduct and regulatory rules that apply to the Company and the
Group, for the time being and from time to time.
7. Termination
Your appointment is always subject to the Articles of Association of
the Company. In addition, the Company will be entitled to terminate
this appointment by summary notice in writing in any circumstances
which the Company reasonably considers justify such termination
including, without limitation, if you:
(i) become incapable, in the reasonable opinion of the Company, of
properly performing your duties, having been given due warning
by the Company and having failed to remedy the situation to
the satisfaction of the Company within a reasonable period
from the date of such warning;
(ii) have a bankruptcy order made against you or enter into a
voluntary arrangement within the meaning of section 253
Insolvency Act 1986, as amended from time to time;
(iii) became prohibited from being a company director at any time
that you hold office as a Director of any Group Company; or
(iv) otherwise than at the request of the Board, or with its
express consent, resign as a Director of the Company.
(v) are guilty of serious misconduct or wilful and persistent
neglect of your obligations under this appointment;
(vi) are convicted of any arrestable criminal offence (other than
an offence under road traffic legislation in the United
Kingdom or elsewhere for which a fine or non-custodial penalty
is imposed) in circumstances which would have a material
adverse effect on the Company, the Group or their respective
reputations;
(vii) in the reasonable opinion of the Board act in such a way as to
seriously jeopardise the business of the Company and/or the
Group.
You will not be entitled to any compensation for loss of office.
You will not, at any time after the termination of your appointment represent
yourself or allow yourself to be held out or presented in anyway as connected
with or interested in the business of any Group Company, unless you remain a
Director of such company.
Nothing in this paragraph 7 will prevent you from resigning as a Director with
immediate effect if you reasonably consider that the Board persists, after you
have clearly expressed your objection in writing, in a course of action which
you consider to be contrary to the Company's interests or likely to expose you
to personal liability. Any resignation in these circumstances will not give rise
to a claim by either party for termination without adequate notice.
Please confirm your agreement to the terms and conditions of this appointment by
signing the enclosed duplicate letter and returning it to me.
Yours sincerely
For and on behalf of
Huntingdon Life Sciences Group Plc
<PAGE>
TO BE TYPED ON DUPLICATE
I confirm my acceptance of the terms and conditions of this appointment.
Signed ....................................
Professor John Caldwell
Date ....................................
Conditional upon completion of
the cash subscription, placing
and open offer to be made by
Huntingdon Life Sciences Group Plc
in August/September 1998
DATED 7th August 1998
HUNTINGDON LIFE SCIENCES
GROUP PLC
- and -
FHP HOLDINGS LIMITED
-------------------------------------
MANAGEMENT SERVICES AGREEMENT
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Ref: DJSG/GXW/25407/3
Tel: 0171 203 5000
<PAGE>
THIS AGREEMENT is made on 1998
BETWEEN:
(1) HUNTINGDON LIFE SCIENCES GROUP PLC whose registered office is at
Woolley Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the
"Company"); and
(2) FHP HOLDINGS LIMITED of First Floor, Euro Canadian Centre, Marlborough
Street, Nassau, Bahamas (the "Consultant").
IT IS AGREED as follows:
A. The Consultant is engaged in business offering consultancy services in
relation to healthcare ancillary services and has considerable skill,
knowledge and experience in that field.
B. In reliance upon that skill, knowledge and experience, the Company
wishes to engage the Consultant to provide the services of the
Executive in relation to the Business (as such terms are defined below)
on the terms set out in this agreement.
<PAGE>
1. DEFINITIONS AND INTERPRETATION
(1) In this agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Company
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Company or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below)
"Board" the board of directors for the time being of
the Company;
"Business" the provision of pre-clinical, early
clinical and non-clinical biological safety
evaluation services to the pharmaceutical,
biotechnology, agrochemical and other chemical
industries;
"Commencement Date" 1998
"Executive" Andrew Baker
"Group" means the Company and its subsidiaries and
Associated Companies for the time being and
"Group Company" means any one of them;
"Intellectual Property" all inventions (whether
patentable or not) patents, utility
models, designs (both registered or
unregistered), copyright, database
right, trade and service marks (both
registered and unregistered)
together with all rights to the
grant of and applications for the
same and including all similar or
analogous rights throughout the
world and all future rights of such
nature;
"Services" means including but not limited to,
the planning and development for the
benefit of the Company and the Group
of (a) a future business strategy,
(b) shareholder and business
relations, (c) business
opportunities, (d) a financing
strategy, (e) the co-ordination and
overview of the Group's operating
management team together with all
normal duties of a reasonable
executive director who is chairman
of a listed public limited company;
"Subsidiary" means a Subsidiary within the meaning of s736
of the Companies Act 1985;
"Working Day" means a day other than a Saturday, Sunday or
bank or other public holiday in England.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
(3) The headings in this agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
2. TERM
(1) This agreement shall commence with effect from the Commencement Date
and shall continue unless and until terminated by either the Company or
the Consultant giving to the other not less than 12 months notice in
writing, at any time, subject to earlier termination as provided below.
3. SERVICES
(1) With effect from the Commencement Date, the Consultant shall provide
the Services to the Company and the Group and such other services
consistent with the Services as the Company may reasonably require of
the Consultant from time to time.
(2) The Consultant shall provide the Services through the Executive.
(3) The Consultant shall procure that the Executive will make
himself available to the Company for a minimum of 100 (one
hundred) days per year and at such locations and times as may be
agreed between the Company and the Executive.
(4) The Consultant shall procure that the Executive will:
o comply with all reasonable directions from time to time given
to him in connection with the provision of the Services and
shall keep the Company and the Board regularly informed and
shall give to the Company and the Board such information
regarding the provision of the Services as the Company and/or
the Board may reasonably require;
o comply (and procure that his spouse and minor children comply)
with all applicable rules and regulations of the London Stock
Exchange, the New York Stock Exchange, the US Securities
Exchange Commission and any codes of conduct of the Group for
the time being in force and of any other relevant regulatory
authority.
o not directly or indirectly during the currency of this
agreement be employed by or perform any services for or be
interested in any manner in any other business which is or may
be competitive with the Company or the Group except with the
consent in writing of the Company or as holder or beneficial
owner (for investment purposes only) of any class of
securities in a company if those securities are listed or
dealt in on a recognised investment exchange (as defined by
section 207 (1) Finance Services Act 1986) and where the
Consultant and the Executive (together with the Executive's
spouse, children, parents and parents' issue) together neither
hold nor are beneficially interested in more than five per
cent of that class.
o keep the Company reasonably informed of his whereabouts and
telephone number or other means by which the Executive can be
contacted easily at short notice.
(5) The Consultant will ensure that the Executive completes and will be
responsible for completing the Services including returning all
drawings, designs, plans, documents, paper, models, materials, disks or
any other property, in whatever format, belonging to the Company, the
Group and/or clients of the Company or the Group. The Consultant will
also provide all details and complete all documentation and procure
that the Executive provides all details and completes all documentation
which may be necessary to comply with clause 8 below.
4. DUTIES OF THE CONSULTANT
(1) The Consultant shall procure that the Executive will:
o perform the Services with due diligence and in a safe and
competent manner and acquaint himself with and comply with any
working practice's rules or procedures applicable to others
(whether independent contractors or employees of the Company
or of the Group) at any location where the Executive is
performing the Services (whether or not at the Company's
premises);
o act in and use his best endeavours to protect and promote the
interests of the Company and, where consistent with them, the
Group, in accordance with the general policy and directions of
the Company;
o provide the full benefit of his knowledge, expertise and skill
in connection with the provision of the Services and devote
his full time, attention and abilities to the Company and the
Group at such times as the Executive is required to provide
the Services pursuant to clause 2(3).
<PAGE>
5. FEE
(1) The Company shall pay a fee to the Consultant at a rate of
(pound)150,000 per annum (plus VAT if appropriate) upon production of a
valid invoice in accordance with clause 5(2) below (the "Fee") .
(2) The Consultant shall invoice the Company on the last day of each
calendar month for the Fee incurred in respect of that month. The
Company shall pay the invoice within 30 days of receipt.
6. EXPENSES
(1) The Company shall, in addition to payment of the fee, reimburse the
Consultant, on production of such vouchers or other evidence as the
Company may reasonably require, any reasonable travelling, other
expenses which are reasonably and properly incurred by the Executive in
the course of providing the Services.
(2) The amount of any expenses shall be included by the Consultant in
its invoices submitted at the end of each month and the Company
shall reimburse the Consultant within 30 days of receipt of the invoice.
7. CONFIDENTIAL INFORMATION
(1) The Consultant undertakes to the Company that throughout the period of
and after the termination of this agreement it shall treat as secret
and confidential and shall procure that the Executive shall treat as
secret and confidential any information which may be received by the
Consultant, all work performed by the Executive in the course of
providing the Services which comes to the knowledge of the Consultant
and/or the Executive in the course of or in connection with the
provision of the Services (the "Information").
(2) The Consultant also undertakes, and shall procure that the Executive
shall, not at any time nor for any reason disclose or permit to be
disclosed to any person or otherwise make use of or permit to be made
use of the Information other than for the purpose of providing the
Services to the Company and/or the Group.
(3) The restrictions contained in clauses 7(1) and 7(2) above shall cease
to apply to any Information which:
(a) may come into the public domain otherwise than by breach of
the Consultant or the Executive of the obligations set
out in this clause; or
(b) is disclosed to the Consultant or the Executive by a third
party who has not received it either directly or indirectly
from the Company; or
(c) must be disclosed by any applicable law, to the extent of
such required disclosure.
(4) In respect of Information divulged to the Consultant or the Executive
in the course of or for the purpose of performing services on behalf of
the Company or the Group for third parties, the Consultant shall comply
and shall procure that the Executive shall comply with the terms of all
undertakings given by the Company to such third parties as if such
undertaking were made by the Consultant and the Executive. The Company
shall give to the Consultant a copy of each such undertaking, which
shall be signed by the Company and the Consultant for the purpose of
identification.
8. INTELLECTUAL PROPERTY
(1) In consideration of the payment of one pound ((pound)1) receipt of
which the Consultant hereby acknowledges:-
(a) If the Consultant or the Executive makes or participates in
making any invention or any design (whether registerable or
not) or any work in which copyright and/or design right
subsists, in connection with the provision of the Services,
and which relates to or is useful in connection with the
Business and/or the business of the Group, the Consultant
shall disclose such invention, design or work to the Company
immediately. In the case of such an invention the Consultant
shall give the Company full particulars of the invention
together with all information, data (in all forms and in all
media) drawings and models embodying or relating to the
invention and in the case of designs and copyright works, a
copy of all such designs and works.
(b) All rights in Intellectual Property which may be created by
each of the Consultant and the Executive in the course of
providing the Services shall be the sole and exclusive
property of the Company and the Consultant hereby assigns and
shall procure that the Executive shall assign all such
Intellectual Property to the Company by way of present and
future assignment with full title guarantee.
(c) In the case of registerable rights the Consultant shall if
requested by the Company execute and shall procure that the
Executive executes all documents and do all things which may
be necessary or desirable for obtaining the best possible
registerable protection in territories specified by the
Company, and in respect of all Intellectual Property the
Consultant shall execute and shall procure that the Executive
executes all documents and do all such things as may be
necessary or desirable for perfecting assignment of
Intellectual Property under clause 8(2) above.
(d) The Consultant hereby irrevocably appoints the Company to be
its attorney in its name and on its behalf to sign, execute
any instrument or do anything and generally to use its name
for the purpose of giving to the Company and/or the Group the
full benefit of the provisions of this clause and in favour of
any third party a certificate in writing signed by any
director or the secretary of the Company that any instrument
or act falls within the authority conferred by this clause
shall be conclusive evidence that such is the case.
9. TERMINATION
(1) Without prejudice to any remedy it may have against the Consultant for
breach or non-performance of any provision of this agreement the
Company may by written notice to the Consultant terminate this
agreement with immediate effect if:
(a) the Consultant or the Executive is in material breach of any
of the terms of this agreement;
(b) the Consultant is in breach of clause 3(2) of this agreement
being at any time unable to provide the services of the
Executive, provided that if the Executive is incapacitated by
reason of sickness or injury the Company shall not terminate
this agreement until the Executive has been so incapacitated
for a continuous period of 26 weeks;
(c) the Consultant or the Executive is guilty of serious
misconduct or wilful and persistent neglect of their
respective obligations under this agreement;
(d) any order shall be made or effective resolution passed for
liquidation, winding up or dissolution of the Consultant
(otherwise than for the purpose of reconstruction or
amalgamation on terms approved by the Company);
(e) the Executive becomes bankrupt or makes any composition or
enters into any deed of arrangement with his creditors in
circumstances which would have a material adverse effect on
the Company, the Group or their respective reputations;
(f) the Executive is convicted of any arrestable criminal offence
(other than an offence under road traffic legislation in the
United Kingdom or elsewhere for which a fine or non-custodial
penalty is imposed) in circumstances which would have a
material adverse effect on the Company, the Group or their
respective reputations;
(g) the Executive is convicted of an offence under the Companies
Securities (Insider Dealing) Act 1985 or under any other
present or future statutory enactment or regulations relating
to insider dealings under English or New York law;
(h) the Executive ceases to be employed by or to have a
substantial interest in the Consultant;
(i) the Executive and/or the Consultant, in the reasonable opinion
of the Company, act in such a way as to seriously jeopardise
the business of the Company and/or the Group.
(2) Upon termination of this agreement for whatever reason the Consultant
shall deliver and shall procure that the Executive delivers to the
Company all books, documents, papers, materials and other property (in
whatever format) relating to the Business, and/or the business of the
Group or the clients of the Company or the Group which may then be in
its or the Executive's possession or under its or his power or control.
(3) The Company may at any time and in its absolute discretion (whether or
not any notice of termination has been given by the Company or the
Consultant under clause 2(1) above) terminate this agreement with
immediate effect by making a payment in lieu of notice.
10. POST-TERMINATION RESTRICTIONS
(1) Definitions
In this clause:
(a) "Termination Date" means the date on which the employment
terminates;
(b) "Person" includes any company, firm, organisation or other
entity;
(c) "Area" means any country in the world where on the
Termination Date the Company was supplying services;
(d) "Business" means any business carried on by the Company or any
Group Company which relates to the provision of pre-clinical,
early clinical and/or non-clinical biological safety
evaluation services to the pharmaceutical and biotechnology,
agrochemical and other chemical industries;
(e) "Client" means any Person to whom the Company or a Group
Company supplied during the 6 months preceding the Termination
Date and with whom at any time during such period the
Consultant was actively involved;
(f) "Prospective Client" means any Person with whom the Company or
a Group Company had negotiations or discussions regarding the
possible supply of services during the 6 months immediately
preceding the Termination Date and with whom at any time
during such period the Consultant was actively involved.
(2) The Consultant covenants with the Company that it shall not at any time
during the continuance of this agreement or for a period of 6 months
after the termination of it solicit or endeavour to solicit whether
directly or indirectly any senior employee of the Company or a Group
Company to leave and with whom at any time during the period of 6
months prior to such termination the Consultant was actively involved
(whether in breach of the terms of their contract or not).
(3) The Consultant covenants with the Company that it shall not for a
period of six months from the Termination Date in the Area:
(a) canvass or solicit business for services similar to those
being provided by the Company or a Group Company as at the
Termination Date from any Client or Prospective Client;
(b) seek to do business or deal with any Client or Prospective
Client in respect of services similar to those being provided
by the Company or a Group Company as at the Termination Date;
or
(c) canvass or solicit business from any supplier of the Company
or a Group Company with whom the Consultant was actively
involved during the 6 months ending on the Termination Date or
persuade such supplier to cease to supply, or to restrict or
vary the terms of supply to the Company or a Group Company or
otherwise interfere with the relationship between such a
supplier and the Company or a Group Company.
(4) The Consultant shall not for a period of 6 months from the termination
of this agreement directly or indirectly be interested or concerned in
any business which is carried on in the Area and which is competitive
or likely to be competitive with the Business being carried on at the
Termination Date and with which the Consultant was actively involved
during the 6 month period ending on the Termination Date.
For this purpose, the Consultant is concerned in a business if:
(a) he carries it on as principal or agent; or
(b) he is a partner, director, employee, secondee, consultant or
agent in, of or to any Person who carries on the business; or
(c) he has any direct or indirect financial interest (as
shareholder or otherwise) in any Person who carries on the
business.
11. NO EMPLOYMENT OR PARTNERSHIP
(1) Nothing contained in this agreement shall be construed or have effect
as constituting any relationship of employer and employee or partners
or any other fiduciary relationship between the Company and the
Consultant or between the Company and the Executive.
(2) The Consultant shall be responsible for the payment of any remuneration
payable to and benefits provided for the Executive under his contract
of employment or otherwise including any National Insurance, income tax
and any other form of taxation or social security cost in respect of
his remuneration or benefits. The Consultant shall indemnify the
Company and/or any Group Company in respect of any such payment,
including any interest or penalties imposed on the Company or the Group
in respect of any payments made to the Company under this agreement.
12. WARRANTIES
The Consultant warrants to the Company that:
(a) the Consultant employs the Executive and has available to it
the exclusive use of his services; and
(b) the provision of the Services shall not:-
(i) infringe the Intellectual Property of any third party; or
(ii) involve the use of information in breach of obligations
owed to or rights held by any third party; and
(c) the Company will not infringe the Intellectual Property of any
third party by the Company exercising all of the rights of the
owner of the Intellectual Property assigned by the Consultant
to the Company under this agreement; and
(d) Neither the Consultant nor the Executive is bound by any
legally enforceable obligations owed to persons other than the
Company which would prevent either the Consultant or the
Executive from complying with the terms of this agreement.
13. SEVERABILITY
If any of the provisions of this agreement become invalid or
unenforceable for any reason by virtue of applicable law the remaining
provisions shall continue in full force and effect and the Company and
the Executive hereby undertake to use all reasonable endeavours to
replace any legally invalid or unenforceable provision with a provision
which will promise to the parties (as far as practicable) the same
commercial results as well intended or contemplated by the original
provision.
14. PREVIOUS AGREEMENTS
With effect from the Commencement Date, all other agreements and
arrangements between the Consultant or the Executive and the Company
relating to the provision of Services by the Consultant or the
Executive shall cease to have effect.
15. GRATUITIES
The Consultant shall not, and shall procure that the Executive shall
not, directly or indirectly accept any commission, discount, gratuity
or other benefit from any person who has or is likely to have a
business relationship with the Company and/or the Group.
16. GOVERNING LAW
(1) This agreement shall be governed by and construed in accordance with English
law.
(2) The parties agree that the courts of England are to have exclusive
jurisdiction to settle any dispute which may arise out of or in
connection with this agreement and submit to the jurisdiction of those
courts.
17. NOTICES
(1) Any notice or other document to be served under this agreement
may be delivered or sent by first class post or telex or
facsimile process to the party to be served at its registered office
for the time being.
(2) Unless the contrary is proved, any such notice or other document shall
be deemed to have been served:
(a) if delivered, at the time of delivery;
(b) if posted, at 10.00am on the second Working Day after it was
put into the post; or
(c) if sent by telex or facsimile process, at the expiration of
two hours after the time of despatch, if despatched before
3.00pm on any Working Day, and in any other case at 10.00am on
the Working Day following the date of despatch.
(3) In proving such service it shall be sufficient to prove that delivery
was made or that the envelope containing such notice or other document
was properly addressed and posted as a pre-paid first class letter or
that the telex or facsimile message was properly addressed and
despatched as the case may be.
AS WITNESS the hands of the duly authorised representatives of the Company and
of the Consultant on the date first mentioned on page one.
SIGNED by CHRISTOPHER CLIFFE on behalf of HUNTINGDON )
LIFE SCIENCES GROUP PLC )
in the presence of:- )
)
)
SIGNED by IAN WILLIAMSON )
on behalf of FHP HOLDINGS )
LIMITED in the presence of:- )
Conditional upon completion of
the cash subscription, placing
and open offer to be made by
Huntingdon Life Sciences Group Plc
in August/September 1998
DATED 7th August 1998
HUNTINGDON LIFE SCIENCES
GROUP PLC
- and -
ANDREW BAKER
-------------------------------------
EXECUTIVE'S UNDERTAKING
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Ref: DJSG/GXW/25407/3
Tel: 0171 203 5000
<PAGE>
3\050898\\GXW|LZM2001.D
THIS AGREEMENT is made on 1998
<PAGE>
BETWEEN:
(1) HUNTINGDON LIFE SCIENCES GROUP PLC whose registered office is at
Woolley Road, Alconbury, Huntingdon, Cambridgeshire, PE17 5HS (the
"Company"); and
(2) ANDREW BAKER of [
] (the "Executive")
which agreement is entered into in consideration (a) of the Company entering
into an agreement with Focused Healthcare Partnership (the "Consultancy
Agreement") today for the provision of consultancy services (the "Services") and
(b) of the payment to the Executive of one pound ((pound)1) receipt of which the
Executive hereby acknowledges.
IT IS AGREED as follows:-
1 DEFINITIONS AND INTERPRETATION
(1) In this agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Company
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Company or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below);
"Board" means the board of directors of the Company
for the time being;
"Group" means the Company and its subsidiaries and
Associated Companies for the time being and
"Group Company" means any one of them;
"Intellectual Property" all inventions (whether
patentable or not) patents, utility
models, designs (both registered or
unregistered), copyright, database
right, trade and service marks (both
registered or unregistered) together
with all rights to the grant of and
applications for the same and
including all similar or analogous
rights throughout the world and all
future rights of such nature;
"Subsidiary" means a Subsidiary within the meaning of
Section 736 Companies Act 1985, as amended.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment
of it.
(3) The headings in this agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
(5) Where appropriate, references to the Executive include his personal
representatives.
2 CONFIDENTIALITY
2.1 The Executive is aware that in the course of providing the
Services he will have access to and be entrusted with
information in respect of the business financing, dealings,
transactions, research methods and processes, technical
know-how and affairs of the Company, the Group, and of clients
of the Company and of the Group, all of which information is
or may be confidential.
2.2 The Executive undertakes to the Company that throughout the
term of the Consultancy Agreement and after the termination of
the Consultancy Agreement the Executive shall treat all
information which may be created by him or which may be
received by him in the course of providing the Services in
confidence and shall not disclose such information to any
person or use such information other than for the purpose of
providing the Services PROVIDED THAT the above obligations
shall not apply to information which:-
2.2.1 comes into the public domain otherwise than
by the breach of the Executive's obligations
under this agreement; or
2.2.2 is disclosed to the Executive by a third
party who has not received it directly or
indirectly from the Company or any other
Group Company; or
2.2.3 must be disclosed by any applicable law, to
the extent of such required disclosure.
2.3 In respect of information received by the Executive in the
course of or for the purpose of performing services to third
parties, the Executive shall comply with the terms of all
undertakings given by the Company and/or any Group Company to
such third parties as if such undertaking were given by the
Executive. The Company shall give to the Executive a copy of
each such undertaking which shall be signed by the Company and
the Executive for the purpose of identification.
3 INTELLECTUAL PROPERTY
3.1 If the Executive makes or participates in making any invention
or any design (whether registerable or not) or any work in
which copyright or database right subsists, in the course of
providing the Services, and which relates to or is useful in
connection with the business of the Company, any Group Company
or an Associated Company, the Executive shall disclose such
invention, design or work to the Company immediately. In the
case of such an invention the Executive shall give the Company
full particulars of the invention together with all
information, data (in all forms and in all media) drawings and
models embodying or relating to the invention and in the case
of designs and copyright works, a copy of all such designs and
works.
3.2 All rights in Intellectual Property which may be created by
the Executive in the course of providing the Services shall be
the sole and exclusive property of the Company and the
Executive hereby assigns all such Intellectual Property to the
Company by way of present and future assignment with full
title guarantee.
3.3 To the extent permissible by law, the Executive waives any
moral rights which he may have in respect of works of which he
is an author if such works are created in the course of
providing the Services.
3.4 In the case of registerable rights the Executive shall if
requested by the Company execute all documents and do all
things which may be necessary or desirable for obtaining the
best possible registerable protection in territories specified
by the Company, and in respect of all Intellectual Property
the Executive shall execute all documents and do all such
things as may be necessary or desirable for perfecting
assignment of such Intellectual Property under clause 3.2
above.
3.5 The Executive hereby irrevocably appoints the Company to be
his attorney in his name to sign, execute any instrument or do
anything and generally to use his/her name for the purpose of
giving to the Company the full benefit of the provisions of
this clause and in favour of any third party a certificate in
writing signed by any director or the secretary of the Company
that any instrument or act falls within the authority
conferred by this clause shall be conclusive evidence that
such is the case.
4 OBLIGATIONS OF THE EXECUTIVE
4.1 During the continuance of the Consultancy Agreement the Executive
undertakes that he will:
4.1.1 not without the prior consent of the Company be
concerned or interested in any business which
competes or conflicts with the business of the
Company or any Group Company and in respect of which
the Services are being provided;
4.1.2 disclose to the Board any interest he has which
competes or conflicts or which might give rise to a
conflict of interest with the business of the Company
or any Group Company;
4.1.3 not participate in any discussion or decision of the
Board which relates to any matter in respect of which
the Executive has a competing or conflicting
interest;
4.1.4 at all times conduct himself in the best interest of
the Company and the Group, including but not limited
to bringing to the attention of the Board any
opportunity which comes to his attention and which he
recognises might assist in the further development of
the business of the Company and/or the Group.
5 POST-TERMINATION RESTRICTIONS
5.1 Definitions
In this clause:
5.1.1 "Termination Date" means the date on which the employment
terminates;
5.1.2 "Person" includes any company, firm, organisation or other
entity;
5.1.3 "Area" means any country in the world where on the Termination
Date the Company was supplying services;
5.1.4 "Business" means any business carried on by the Company or any
Group Company which relates to the provision of pre-clinical,
early clinical and/or non-clinical biological safety
evaluation services to the pharmaceutical and biotechnology,
agrochemical and other chemical industries;
5.1.5 "Client" means any Person to whom the Company or a Group
Company supplied during the 6 months preceding the Termination
Date and with whom at any time during such period the
Executive was actively involved in the course of his
engagement;
5.1.6 "Prospective Client" means any Person with whom the Company or
a Group Company had negotiations or discussions regarding the
possible supply of services during the 6 months immediately
preceding the Termination Date and with whom at any time
during such period the Executive was actively involved in the
course of his engagement.
5.2 The Executive covenants with the Company that it shall not at any time
during the continuance of the Consultancy Agreement or for a period of
6 months after the termination of it solicit or endeavour to solicit
whether directly or indirectly any senior employee of the Company or a
Group Company to leave and with whom at any time during the period of 6
months prior to such termination the Executive was actively involved
(whether in breach of the terms of their contract or not).
5.3 The Executive covenants with the Company that it shall not for a period
of six months from the Termination Date in the Area:
(a) canvass or solicit business for services similar to those
being provided by the Company or a Group Company as at the
Termination Date from any Client or Prospective Client;
(b) seek to do business or deal with any Client or Prospective
Client in respect of services similar to those being provided
by the Company or a Group Company as at the Termination Date;
or
(c) canvass or solicit business from any supplier of the Company
or a Group Company with whom the Executive was actively
involved during the 6 months ending on the Termination Date or
persuade such supplier to cease to supply, or to restrict or
vary the terms of supply to the Company or a Group Company or
otherwise interfere with the relationship between such a
supplier and the Company or a Group Company.
5.4 The Executive shall not for a period of 6 months from the termination
of this agreement directly or indirectly be interested or concerned in
any business which is carried on in the Area and which is competitive
or likely to be competitive with the Business being carried on at the
Termination Date and with which the Executive was actively involved
during the 6 month period ending on the Termination Date.
For this purpose, the Executive is concerned in a business if:
(a) he carries it on as principal or agent; or
(b) he is a partner, director, employee, secondee, consultant or
agent in, of or to any Person who carries on the business; or
(c) he has any direct or indirect financial interest (as
shareholder or otherwise) in any Person who carries on the
business.
6 WARRANTY
6.1 The Executive warrants to the Company that:
6.1.1 the provision of the Services shall not:-
6.1.1.1 infringe the Intellectual Property of any
third party;
6.1.1.2 involve the use of information in breach of
obligations owed to or rights held by any third
party;
6.1.2 the Company will not infringe the Intellectual
Property of any third party by exercising all of the
rights of the owner of the Intellectual Property
assigned by the Executive to the Company under this
agreement.
6.1.3 The Executive is not bound by any legally enforceable
obligations owed to persons other than the Company or
the Group which would prevent the Executive from
complying with the terms of this agreement.
6 SEVERABILITY
If any of the provisions of this agreement become invalid or
unenforceable for any reason by virtue of applicable law the remaining
provisions shall continue in full force and effect and the Company and
the Executive hereby undertake to use all reasonable endeavours to
replace any legally invalid or unenforceable provision with a provision
which will promise to the parties (as far as practicable) the same
commercial results as well intended or contemplated y the original
provision.
7 RETURN OF PROPERTY
7.1 The Executive shall deliver to the Company on request or on
termination of the Consultancy Agreement all drawings,
designs, plans, documents, paper models, materials, disks or
any other property (in whatever format) belonging to the
Company, the Group and/or parties contracting with the Company
and/or the Group which may be acquired, be in the possession
of, or be created by the Executive in the course of providing
the Services.
7.2 The Executive shall, immediately on termination of the
Consultancy Agreement, provide to the Company all details
required to be disclosed pursuant to clause 3 together with
all material in whatever form which describes or embodies the
concepts or designs which are so disclosed.
8 LAW
This agreement shall be construed in accordance with and governed by
English law.
SIGNED by CHRISTOPHER CLIFFE )
on behalf of HUNTINGDON LIFE )
SCIENCES GROUP PLC )
in the presence of:- )
SIGNED by ANDREW BAKER )
on behalf of FOCUSED )
HEALTHCARE PARTNERSHIP )
in the presence of:- )
SIGNED by ANDREW BAKER )
in the presence of:- )
DATED 29 April 1999
(1) HUNTINGDON LIFE SCIENCES
LIMITED
- and -
(2) BRIAN CASS
------------------------------------
SERVICE AGREEMENT
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Telephone: 0171 203 5000
Ref: DJSG/GXW/25407/4
<PAGE>
CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION.......................... 1
2. TERM OF EMPLOYMENT...................................... 2
3. DUTIES.................................................. 2
4. HOURS OF WORK........................................... 3
5. PLACE OF WORK........................................... 4
7. REMUNERATION............................................ 4
8. PENSION SCHEME.......................................... 5
9. OTHER BENEFITS.......................................... 5
10. COMPANY CAR............................................. 7
12. RELOCATION EXPENSES..................................... 7
13. HOLIDAYS................................................ 7
14. ILLNESS................................................. 8
15. RESTRICTIONS DURING EMPLOYMENT.......................... 9
16. INTELLECTUAL PROPERTY................................... 10
17. CONFIDENTIALITY......................................... 12
18. TERMINATION OF EMPLOYMENT............................... 13
19. SUSPENSION.............................................. 14
20. RESIGNATION AND RETURN OF COMPANY PROPERTY.............. 15
21. RECONSTRUCTION OR AMALGAMATION.......................... 15
22. CHANGE OF CONTROL....................................... 15
23. RESTRICTIONS............................................ 16
24. SEVERABILITY............................................ 18
25. NOTICES................................................. 19
26. STATUTORY INFORMATION................................... 19
27. MISCELLANEOUS........................................... 19
SCHEDULE......................................................... 20
<PAGE>
T H I S A G R E E M E N T is made on 29 April, 1999
B E T W E E N :
(1) HUNTINGDON LIFE SCIENCES LIMITED whose registered office is at Woolley
Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Company");
and
(2) BRIAN CASS of Timberthwaite, Sharow Cross, Nr Ripon, North Yorkshire HG4 5BQ
(the "Executive").
IT IS AGREED that the Company shall employ the Executive and the Executive shall
serve the Company as Managing Director of the Group on the following terms and
subject to the following conditions (the "Agreement"):
1. DEFINITIONS AND INTERPRETATION
(1) In this Agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Company
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Company or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below);
"Board" the board of directors for the time being
of the Holding Company;
"Commencement Date" the date on which employment commenced, as
specified in clause 2(1);
"Group" means the Company, the Holding
Company and any Subsidiaries and
Associated Companies of the Company
and/or the Holding Company for the
time being and "Group Company" means
any one of them;
"Holding Company" means Huntingdon Life Sciences Group Plc;
"Subsidiary" means a Subsidiary within the meaning of
s736 of the Companies Act 1985;
"Working Day" means a day other than a Saturday, Sunday
or bank or other public holiday in England.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
(3) The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this Agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
(5) Where appropriate, references to the Executive include his personal
representatives.
2. TERM OF EMPLOYMENT
(1) The employment of the Executive commenced on 9 September 1998 and
(subject to termination as provided in clause 18 below) shall be for an
initial fixed period of 12 months until 8 September 1999, after which
date it shall continue until terminated by either party giving to the
other not less than 2 years' notice in writing such notice not to be
served until after the expiry of the initial 12 month fixed period.
(2) Notwithstanding clause 2(1) above the employment of the Executive shall
automatically terminate on the day when the Executive reaches age 65 or
the normal retiring age applicable to directors of the Group from time
to time.
(3) The Executive represents and warrants that he is not bound by or
subject to any court order, agreement, arrangement or undertaking which
in any way restricts or prohibits him from entering into this Agreement
or performing his duties under it.
3. DUTIES
(1) The Executive shall during his employment under this Agreement:
(a) conduct the general management of the business of the Group
and perform the duties and exercise the powers which the Board
may from time to time properly assign to him in his capacity
as Managing Director or in connection with the conduct and
management of the business of the Company, the Holding Company
or of the business of any other Group Company (including
serving on the board of such Group Company or on any other
executive body or any committee of such a company);
(b) assist the Chairman of the Holding Company with the planning
and development for the benefit of the Company, the Holding
Company and the Group of (a) a future business strategy, (b)
shareholder and business relations, (c) business
opportunities, (d) a financing strategy, (e) the co-ordination
and overview of the Group's operating management team; and
(c) do all in his power, but without incurring personal
expenditure, to promote, develop and protect the business of
the Company, the Holding Company and any other Group Company
and at all times and in all respects conform to and comply
with the proper and reasonable directions and regulations of
the Board.
(2) The Executive shall give to the Board such information regarding the
affairs of the Company, the Holding Company and, where relevant, the
Group as it shall require, and in any event, report regularly and keep
the Board informed.
4. HOURS OF WORK
(1) The Executive shall be required to perform his duties during the
Company's normal office hours of 8.30am to 5.00pm, and during such
additional hours as may be necessary for the proper performance of his
duties. No additional pay or time-off will be permitted in respect of
hours worked outside normal office hours.
(2) In accordance with the Working Time Regulations 1998 ("Regulations"),
the Executive's average working time, including overtime, shall not
exceed 48 hours for each seven day period in any reference period
subject to the Executive's right to opt-out of the 48 hour maximum by
his entering into a separate agreement with the Company.
(3) Working time, for the purposes of the Regulations, means any time
during which the Executive is working at the disposal of the Company
and carrying out duties on behalf of the Company, the Holding Company
and/or the Group, but shall not include travel to and from work,
travelling time whilst in work including international travel, or
entertaining of clients and/or suppliers outside of office hours, meal
breaks or other rest breaks.
5. PLACE OF WORK
(1) The Executive's normal place of work shall be the Company's offices at
Huntingdon but the Executive shall work in any place within the United
Kingdom which the Board may reasonably require and he may be reasonably
required to travel abroad when required by the Group for the proper
performance of his duties.
(2) If the Company requires the Executive to work permanently at a place
which necessitates a move from his present home address the Company
will reimburse the Executive for all expenses directly and reasonably
incurred as a result of the Company's requirement in accordance with
clause 12 of this Agreement.
6. GRATUITIES AND CODES OF CONDUCT
(1) Other than routine hospitality and corporate gifts of nominal value
received in the ordinary course of business, the Executive shall not
directly or indirectly accept any commission, rebate, discount or
gratuity in cash or in kind from any person who has or is having a
business relationship with any Group Company.
(2) The Executive shall comply (and use his best endeavours to procure that
his spouse and minor children, step-children or any dependents shall
comply) with all applicable rules and regulations of the London Stock
Exchange Limited, the New York Stock Exchange, the US Securities
Exchange Commission, and any codes of conduct adopted by the Group
concerning dealings in securities for the time being in force and any
other relevant regulatory authority.
7. REMUNERATION
(1) The Company shall pay to the Executive a basic annual salary at the
rate of(pound)150,000 gross inclusive of any directors' fees
payable to him.
(2) The Executive's basic annual salary shall accrue from day to day and
be payable by equal monthly instalments in arrears on
the 20th day of each month.
(3) The Executive's basic annual salary shall be reviewed once in every
year. The undertaking of a salary review does not confer a contractual
right (whether express or implied) to any increase in salary and the
Executive acknowledges that any salary increase is at the discretion of
the Company.
(4) Notwithstanding anything to the contrary in the Articles of Association
of the Company, the Holding Company or any other Group Company, the
salary in clause 7(1) above shall be inclusive of any fees to which the
Executive may be entitled as a director of the Company, the Holding
Company or any other Group Company and the Executive shall waive his
right to any such fee.
(5) The Company may, in its absolute descretion, pay to the Executive
a bonus of such amount and at such time(s) as may from
time to time be determined by the Board.
8. PENSION SCHEME
(1) The Company shall pay contributions (equivalent to 33 per cent. of the
Executive's basic annual salary from time to time) to such pension
arrangements as the Executive may reasonably require whether under an
Inland Revenue approved and/or unapproved scheme and whether funded
and/or unfunded, and as may be agreed between the Executive and Andrew
Baker as Chairman of the Holding Company.
(2) The Executive shall provide to the Company such information relating to
his pension arrangements as the Company may reasonably require from
time to time.
9. OTHER BENEFITS
(1) The Executive is entitled to membership, at the Company's expense,
of the following schemes (each referred to below as an
"insurance scheme"):
(a) a salary continuance on long-term disability
insurance scheme applicable to employees in the
Executive's category generally from time to time;
(b) a life insurance scheme under which a lump sum
benefit shall be payable on the Executive's death
while the Agreement continues, the benefit of which
shall be paid to such dependants of the Executive or
other beneficiary as the trustees of the scheme
select at their discretion, after considering any
beneficiaries identified by the Executive in any
expression of his wishes delivered to the trustees
before his death. The benefit is equal to 4 times the
Executive's basic annual salary at his death;
(c) a personal accident insurance scheme, applicable to
employees in the Executive's category generally time
to time;
(d) a medical expenses insurance scheme providing such
cover for the Executive and the Executive's spouse as
the Company may from time to time notify to him, but
so that the minimum level of cover to be provided by
the Company shall be BUPA Scale A, and the Executive
shall not be responsible for payment of any excess
premium in respect of such cover over and above
standard rates.
(2) Benefits under any insurance scheme shall be subject to the rules of
the scheme and the terms of any applicable insurance policy and are
conditional upon the Executive complying with and satisfying any
applicable requirements of the insurers. Copies of these rules and
policies and particulars of the requirements shall be provided to the
Executive on request. Provided that the Company shall have complied
with and satisfied any requirements of the insurers applicable to it,
(but without prejudice to the Company's rights pursuant to clause 9(3)
below) the Company shall not have any liability to pay any benefit to
the Executive under any insurance scheme unless it receives payment of
the benefit from the insurer under the scheme.
(3) Subject to sub-clause (4) the provision of any insurance scheme does
not in any way prevent the Company from lawfully terminating this
Agreement in accordance with the provisions in clause 18 even if to do
so would deprive the Executive of membership of or cover under any such
scheme.
(4) The Company shall not terminate this Agreement solely by reason of the
Executive's incapacity if to do so would be to deprive the Executive of
benefits under any insurance scheme provided pursuant to clause
9(1)(a). The Company shall, however, at any time during which the
Executive qualifies for benefits under such scheme, be entitled to
appoint a permanent replacement for the Executive, and require him to
resign as a statutory director of any Group Company with immediate
effect, without any liability whatsoever to the Executive. Nothing in
this sub-clause shall prevent the Company from requiring the Executive
to resign as an employee of the Company, with immediate effect, without
any claim against the Company or any Group Company in respect of such
resignation, in the event that the Executive is able to recover
sufficiently to resume his duties under this Agreement at any time
after a permanent replacement for him has been appointed in accordance
with the provisions of this clause 9(4).
10. COMPANY CAR
(1) The Company shall provide the Executive with a non-pensionable
car allowance of(pound)1,000 gross per month, together with
reimbursement of petrol or other fuel attributable to:
(a) the Executive's duties under this Agreement; and
(b) the Executive's private use.
11. EXPENSES
(1) The Company shall reimburse or procure that the Executive is reimbursed
all reasonable travelling hotel and other expenses wholly and
necessarily incurred by him in the performance of his duties under this
Agreement on production of appropriate receipts and other evidence of
expenditure as required by the Company.
12. RELOCATION EXPENSES
(1) To assist with the relocation of the Executive's duties, the Company
will pay to the Executive a disturbance allowance of (pound)2,000 gross
per month for a period of up to 3 years from the Commencement Date
("Relocation Period"). The allowance is intended to cover (a) the cost
incurred by the Executive in securing temporary accommodation for the 3
year period, (b) travelling expenses to and from his normal place of
work and (c) reimbursement of expenses relating to miscellaneous items
in connection with such temporary relocation.
(2) If the Executive secures permanent accommodation prior to the expiry of
the Relocation Period, the Executive will be entitled to a sum
equivalent to such relocation allowance in respect of any unexpired
part of the Relocation Period to cover the costs of permanent
relocation.
(3) The Company shall have no obligation to pay any relocation expenses
after the expiry of the Relocation Period.
(4) The Executive will be liable for payment of any income tax arising in
respect of the relocation allowance referred to in this clause 12 to
the extent that the allowance exceeds the Inland Revenue's Extra
Statutory Concession from time to time relating to relocation expenses.
13. HOLIDAYS
(1) The Executive shall (in addition to the usual public and bank holidays)
be entitled to 25 Working Days holiday in each holiday year (as
specified by the Company) to be taken at a time or times agreed between
the Executive and the Company.
(2) Holiday entitlement in one year cannot be carried forward to any
subsequent holiday years except by prior arrangement with
the Company.
(3) In the holiday year in which employment commences or terminates holiday
shall accrue on a pro rata basis. If on the termination of the
employment the Executive has exceeded his accrued holiday entitlement
the excess may be deducted from any sums owing to him. If the Executive
has accrued holiday owing to him the Company may at its discretion
require the Executive to take the outstanding holiday during any notice
period or make a payment in lieu instead.
(4) If under clause 19 the Executive is not required to attend the office
during any period of notice, he will not accrue holiday during that
period, over and above the minimum required under the Regulations.
14. ILLNESS
(1) The Executive shall continue to be paid during sickness absence (such
payment to be inclusive of any statutory sick pay or social security
benefits to which he may be entitled) for a total of up to 26 weeks in
any 12 consecutive calendar months.
(2) Thereafter the Executive shall continue to be paid salary at the
discretion of the Company.
(3) If the Executive is incapable of performing his duties by reason of
injury sustained wholly or partly as a result of negligence, nuisance
or breach of any statutory duty on the part of a third party and the
Executive recovers an amount by way of compensation for loss of
earnings from that third party, he shall pay to the Company a sum equal
to the amount recovered or, if less, the amount paid to him by the
Company under clause 14(1) and/or (2) above in respect of the relevant
period of absence as a result of that injury.
(4) The Company shall be entitled to require the Executive to undergo
examinations by a medical adviser appointed or approved by the Company
and the Executive authorises the medical adviser and/or will provide
such consents as are necessary to disclose to the Company the results
of such examinations.
15. RESTRICTIONS DURING EMPLOYMENT
(1) During the continuance of his employment under this Agreement the
Executive shall unless prevented by incapacity devote his whole time
and attention to the business of the Company, the Holding Company and
the Group and shall not without the prior written consent of the Board:
(a) engage in any other business (other than charity or other
unpaid work in the nature of a hobby which does not detract
from the Executive's performance of his duties); or
(b) be concerned or interested in any other business of a similar
nature to or competitive with that carried on by the Company,
the Holding Company or any other Group Company; or
(c) solicit the custom of, canvass, approach or deal with, in
competition with the Company, the Holding Company or any other
Group Company, any person (including any company, firm,
organisation or other entity) to whom the Company, the Holding
Company or any other Group Company supplies services or with
whom the Company, the Holding Company or any other Group
Company is in negotiations or discussions regarding the
possible supply of services; or
(d) discourage any such person referred to in clause 15 (1) (c)
above from conducting or continuing to conduct business with
the Company, the Holding Company or any other Group Company on
the best terms available to the Company, the Holding Company
or any other Group Company; or
(e) induce or attempt to induce any director or senior employee of
the Company, the Holding Company or any other Group Company
and with whom the Executive has material dealings in the
course of his employment, to leave the employment of the
Company, the Holding Company or any other Group Company
provided that nothing in this clause shall preclude the Executive from
holding or being otherwise interested in any shares or other securities
of any company which is quoted on any recognised investment exchange
(as defined by section 207(1) Financial Services Act 1986) so long as
the interest of the Executive in such shares or other securities does
not extend to more than 5% of the total amount of such shares or
securities.
(2) If during his employment under this Agreement the Executive shall cease
to be a director of the Company and/or the Holding Company (otherwise
than by reason of his death, resignation or disqualification pursuant
to the articles of association of the Company and/or the Holding
Company or by statute or court order or under clause 18(2) below) his
employment shall continue and the terms of this Agreement (other than
those relating to the holding of office of director) shall continue in
full force and effect and the Executive shall have no claims against
the Company or the Holding Company in respect of his ceasing to be a
director.
16. INTELLECTUAL PROPERTY
(1) If the Executive makes, or if the Executive participates in making, any
invention, any design (whether registerable or not), or any work in
which copyright and/or database right subsists and which relates to or
is useful in connection with the business of the Company, the Holding
Company or of any other Group Company the Executive shall disclose it
to the Company immediately, whether or not it is the property of the
Company and:-
(a) in the case of an invention give the Company full particulars
of the invention together with all information, data (in all
forms and in all media), drawings and models, embodying or
relating to the invention, irrespective of the nature of the
invention or when it was made; and
(b) in the case of designs or copyright works, a copy of all such
designs and works;
and, in addition, the Company may call for the same to be delivered
forthwith to an authorised representative at any time.
(2) If an invention made by the Executive is the property of the Company
under Section 39 Patents Act 1977 the Executive shall, at the expense
of the Company, execute all documents and do all things which may be
necessary or desirable for obtaining the best possible patent, utility
model or similar protection for the invention ("Protection") in
territories specified by the Company and the Executive hereby assigns
to the Company with full title guarantee all his or her rights to the
invention and all applications for Protection and to the grant of
Protection in respect of that invention and shall execute all documents
and do all such things as may be necessary or desirable for perfecting
the assignment and obtaining registration of it in all territories in
the name of the Company.
(3) Notwithstanding clause 16(2) the Company shall not be under any
obligation to apply for Protection in respect of any
invention made by the Executive.
(4) If any invention is the property of the Executive under Section 39
Patents Act 1977 and relates to or is useful in connection with the
business or any product or service of the Company, the Holding Company
or of any other Group Company the Executive shall not grant a licence
or execute an assignment in respect of that invention to any other
person without first offering to grant a licence or execute an
assignment for the benefit of the Company on terms no less favourable
than those offered to the third party, and the Company shall have
fifteen working days in which to accept or reject the offer.
(5) If during the course of his work for the Company (whether in the course
of normal duties or not and whether or not during normal working hours)
the Executive makes, or participates in the making of any design
(whether registrable or not) or any work in which copyright and/or
database right subsists the Executive hereby assigns to the Company
with full title guarantee and, where appropriate, by way of future
assignment, all such rights for the full term thereof throughout the
world, provided that the assignment shall not extend to those designs
or works which are created by the Executive wholly outside his or her
normal working hours and wholly unconcerned with his or her service
under this Agreement.
(6) In the case of designs and copyright which are registrable anywhere in
the world the Executive shall, at the expense of the Company, execute
all documents and do all things which are necessary or desirable for
obtaining the best possible registration in respect of such rights in
territories specified by the Company and shall assign to the Company
such rights as are not already held by the Company in all subsequent
registrations and applications for registration.
(7) The Executive hereby irrevocably appoints the Company to be the
Executive's attorney in his or her name and on his or her behalf to
sign or execute any document or do anything and generally to use the
Executive's name for the purpose of giving to the Company the full
benefit of the provisions of this clause 16 and in favour of any third
party a certificate in writing signed by any director or the secretary
of the Company that any document or act falls within the authority
conferred by this clause shall be conclusive evidence that that is the
case.
(8) The Executive waives all moral rights (whether arising under Chapter IV
of the Copyright Designs and Patents Act 1988 or otherwise, to the
extent permissible under the relevant legislation in each jurisdiction)
in works to which clause 16(5) applies.
(9) The Executive warrants that he is not bound by any legally enforceable
obligations owed to persons other than the Company which would prevent
the Executive from complying with the terms of this Agreement and the
Executive shall not without proper licence use any inventions or
information in breach of rights owed to or held by persons other than
the Company or copy or adapt copyright works or designs owned by
persons other than the Company.
(10) All the provisions of this clause 16 shall survive termination of the
Executive's employment insofar as they relate to inventions,
information, designs and works in which copyright and/or database right
subsists which were created before termination.
17. CONFIDENTIALITY
(1) The Executive shall not (except in the proper performance of his
duties) during or after his employment has ended divulge to any person
or otherwise make use of (and shall use his best endeavours to prevent
the publication or disclosure of) any trade secret or secret research
process or any confidential information concerning the business or
finances of the Company, the Holding Company or any other Group Company
or any of their dealings transactions or affairs or any trade secret or
secret research process or any such confidential information concerning
any of their suppliers, agents, distributors or clients.
(2) Confidential information includes, but is not limited to: any
information of a secret, confidential or private nature, in any form,
concerning the business, accounts, finances, customer lists, research
projects, pricing and/or discount policy, future business strategy,
marketing, tenders, price sensitive information, employees and
officers, formulae, processors, working methods, inventions,
intellectual property and other plans and strategy of the Company, the
Holding Company and any other Group Company or any of its or their
respective clients.
(3) The restrictions in clauses 17 (1) and 17 (2) shall not apply to
information which:
(i) comes into the public domain otherwise than by a breach by
the Executive of his obligations under this Agreement; or
(ii) is disclosed to the Executive by a third party who has not
received it directly or indirectly from the Company or any
Group Company; or
(iii) must be disclosed by any applicable law or the requirements of
a relevant regulatory authority, to the extent of such
required disclosure.
18. TERMINATION OF EMPLOYMENT
(1) The Company may at any time and in its absolute discretion (whether or
not any notice of termination has been given by the Company or the
Executive under clause 2(1) above) terminate the Agreement with
immediate effect and make a payment in lieu of notice.
(2) The employment of the Executive may be terminated by the Company
without notice or payment in lieu of notice if:
(a) the Executive is guilty of any serious misconduct or any other
conduct which affects or is likely to affect prejudicially the
interests of the Company, or any Group Company to which he is
required to render services under this Agreement; or
(b) the Executive fails or neglects efficiently and diligently to
discharge his duties in any material respect or commits any
repeated breach or non-observance of any of the provisions
contained in this Agreement which is either not capable of
remedy or is not remedied after notice from the Company
specifying the breach and requiring its remedy; or
(c) a period of 3 months has elapsed from the Executive having a
bankruptcy order made against him, or entering into any
voluntary arrangement within the meaning of section 253
Insolvency Act 1986 ("Insolvency") in circumstances which
would have a material adverse effect on the Company, the Group
or their respective reputations and the Executive has, within
that period, failed to remedy the Insolvency; or
(d) the Executive is convicted of any arrestable criminal offence
(other than an offence under road traffic legislation in the
United Kingdom or elsewhere for which a fine or non-custodial
penalty is imposed) in circumstances which would have a
material adverse effect on the Company, the Group or their
respective reputations; or
(e) the Executive is disqualified from holding office in another
company by reason of an order of a court of competent
jurisdiction; or
(f) the Executive is convicted of an offence under the Companies
Securities (Insider Dealing) Act 1985 or under any other
present or future statutory enactment or regulations relating
to insider dealings under English or New York law or is in
breach of the model codes on directors' dealings in listed
securities, securities dealt on the Alternative Investment
Market or the OFEX trading facility published by the London
Stock Exchange Limited; or
(g) otherwise than:
i) at the request of the Company including, but not
limited to, any request pursuant to clause 9(4) of this
Agreement; or
ii) in circumstances which a reasonable director, properly
advised, would regard as requiring his resignation
the Executive ceases to be a director of the Company and/or
the Holding Company.
(3) Subject to the provisions of clause 9(4) of this Agreement, the
employment of the Executive may be terminated by the Company on not
less than three months notice (or with immediate effect by making a
payment in lieu) if the Executive shall become of unsound mind or
become a patient under the Mental Health Act 1983.
19. SUSPENSION
(1) The Company may suspend the Executive at any time on full pay to allow
the Company to investigate any complaint made against the Executive in
relation to his employment with the Company provided that the fact of
the suspension will only be disclosed to employees of the Company or
any Group Company who are involved in the investigation and/or to whom
such disclosure may, in the reasonable opinion of the Company, be
necessary for genuine operational reasons.
(2) During any period of notice of termination (whether given by the
Company or the Executive) the Company shall be under no obligation to
assign any duties to the Executive or to provide any work for him and
shall be entitled to exclude him from its premises, provided that this
shall not affect the Executive's entitlement to receive his normal
salary and other contractual benefits other than that the Executive
will cease to accrue holiday during any such period, subject to any
entitlement under the Regulations. The Executive will, during any such
period of suspension, continue to be bound by his obligations under
this Agreement, so far as is consistent with such suspension.
20. RESIGNATION AND RETURN OF COMPANY PROPERTY
(1) Upon the termination by whatever means of this Agreement the
Executive shall:
(a) immediately resign from his office as a director of the
Company and the Holding Company and from such other offices
held by him in any Group Company without claim for
compensation; and
(b) immediately deliver to the Company all credit cards, keys,
computer media and other property in whatever form, of or
relating to the business of the Company or of any Group
Company, which may be in his possession or under his power or
control; and
(c) immediately deliver to the Company all details which must be
provided under clause 14 above together with all material in
whatever form which describes or embodies the concepts or
designs which are so disclosed.
(2) If the Executive fails to comply with clause 20(1) the Company is
hereby irrevocably authorised to appoint some person in his name and on
his behalf to sign and complete any documents or do any thing necessary
to give effect to this clause.
(3) The Executive shall not without the consent of the Company at any time
after the termination of this Agreement represent himself still to be
connected with the Company or any Group Company.
21. RECONSTRUCTION OR AMALGAMATION
If the employment of the Executive under this Agreement is terminated
by reason of the liquidation of the Company for the purpose of
reconstruction or amalgamation and the Executive is offered employment
with any concern or undertaking resulting from the reconstruction or
amalgamation on terms and conditions not less favourable than the terms
of this Agreement, which the Executive unreasonably refuses, then the
Executive shall have no claim against the Company or any Group Company
in respect of the termination of his employment under this Agreement.
22. CHANGE OF CONTROL
(1) If there is a Change of Control of the Holding Company, and within the
6 months following the Change of Control the Executive is dismissed,
otherwise than under clause 18, or is constructively dismissed by the
Company, or voluntarily resigns, the Company shall pay to the Executive
and the Executive agrees to accept, as liquidated damages in full and
final settlement of all claims arising from such dismissal or
resignation, the sum which is equal to:
(a) 2 years' gross basic salary as at the date of termination; and
(b) an amount equal to twice the annual average of bonuses, if
any, received by the Executive pursuant to clause 7(5) of this
Agreement during the two financial years of the Company
immediately preceding the Change of Control.
(2) This payment will be subject to deduction of income tax and National
Insurance contributions as appropriate, without any reduction for
mitigation or early payment. The Company shall make such payment within
seven days of the date of such termination.
(3) The parties agree that the payment referred to in clause 22(1) is a
genuine pre-estimate of the loss which would be incurred by the
Executive on termination of his employment in circumstances where there
has been a Change of Control.
(4) "Change of Control" for the purposes of this clause 22 means the direct
or indirect beneficial ownership of more than 30 per cent. of the
Holding Company's issued voting share capital being acquired by any
single person or group of persons acting in concert.
23. RESTRICTIONS
(1) Definitions
In this clause:
(a) "Termination Date" means the date on which the employment
terminates;
(b) "Person" includes any company, firm, organisation or other
entity;
(c) "Area" means any country in the world where on the Termination
Date the Company, the Holding Company and/or any other Group
Company was supplying services;
(d) "Business" means any business carried on by the Company, the
Holding Company or any Group Company which relates to the
provision of pre-clinical, early clinical and/or non-clinical
biological safety evaluation services to the pharmaceutical
and biotechnology, agrochemical and other chemical industries;
(b) "Client" means any Person to whom the Company, the Holding
Company or any Group Company supplied services during the 6
months preceding the Termination Date and with whom at any
time during such period the Executive was actively involved in
the course of his employment within the 12 month period
following the Commencement Date but excluding any Person who
was a client of the Executive prior to the Commencement Date
and was introduced by the Executive to the Company;
(d) "Prospective Client" means any Person with whom the Company,
the Holding Company or any Group Company had negotiations or
discussions regarding the possible supply of services during
the 6 months immediately preceding the Termination Date and
with whom at any time during such period the Executive was
actively involved in the course of his employment but
excluding any Person who was a client of the Executive prior
to the Commencement Date and was introduced by the Executive
to the Company.
(2) The Executive covenants with the Company and as trustee for
each Group Company that in the event of the Executive
terminating his employment:
(1) Non-solicitation
the Executive shall not for a period of 6 months from the
Termination Date in the Area directly or indirectly:
(a) canvass or solicit business for services similar to
those being provided by the Company, the Holding
Company or any Group Company as at the Termination
Date from any Client or Prospective Client;
(b) seek to do business or deal with any Client or
Prospective Client in respect of services similar to
those being provided by the Company, the Holding
Company or any Group Company as at the Termination
Date; or
(c) canvass or solicit business from any supplier of the
Company, the Holding Company or any Group Company
with whom the Executive was actively involved during
the 6 months ending on the Termination Date or
persuade such supplier to cease to supply, or to
restrict or vary the terms of supply to the Company,
the Holding Company or any Group Company or otherwise
interfere with the relationship between such a
supplier and the Company, the Holding Company or any
Group Company.
(2) Non-poaching
the Executive shall not for a period of 6 months after the
Termination Date directly or indirectly induce or attempt to
induce any senior employee of the Company, the Holding Company
or any Group Company who is engaged in any business activity
carried on by the Company, the Holding Company or any Group
Company at the Termination Date and with whom the Executive
during the 6 months ending on the Termination Date had
material dealings in the course of his employment, to leave
the employment of the Company, the Holding Company or any
Group Company (whether or not this would be a breach of
contract by that employee).
(3) The restrictions in this clause 23 are considered by the parties to be
reasonable and the validity of each sub-clause shall not be affected if
any of the others is invalid. If any of the restrictions is void but
would be valid if some part of the restriction were deleted, the
restriction in question shall apply with such modification as may be
necessary to make it valid.
(4) The Executive acknowledges that the provisions of this clause are
no more extensive than is reasonable to protect the
Company or the Group.
(5) If the Executive is suspended from work under the provisions of clause
19, the Company may, at its sole discretion, agree that the period of
time during which the restrictions contained in clause 23 are
enforceable starts to run from the date of the suspension and not from
the Termination Date.
24. SEVERABILITY
While the provisions of this Agreement are considered by the parties to
be reasonable in all the circumstances, it is agreed that if any part
or parts of it is or are adjudged to go beyond what is reasonable in
all the circumstances but would be adjudged reasonable if any part or
parts of it were deleted, restricted or limited, the relevant part or
parts shall apply with such deletions, restrictions or limitations as
may be required in the particular case.
25. NOTICES
(1) Any notice required or permitted to be given under this Agreement shall
be given in writing delivered personally or sent by first class post
pre-paid recorded delivery (air mail if overseas) or by facsimile to
the party due to receive such notice at, in the case of the Company,
its registered office from time to time (and marked for the attention
of the Company Secretary) and, in the case of the Executive, his
address as set out in this Agreement (or such address as he may have
notified to the Company).
(2) Any notice delivered personally shall be deemed to be received when
delivered to the address provided in this Agreement and any notice sent
by pre-paid recorded delivery post shall be deemed (in the absence of
evidence of earlier receipt) to be received 2 days after posting and in
proving the time of despatch it shall be sufficient to show that the
envelope containing such notice was properly addressed, stamped and
posted. A notice sent by facsimile shall be deemed to have been
received on receipt by the sender of confirmation in the transmission
report that the facsimile had been sent.
26. STATUTORY INFORMATION
(1) The Schedule to this Agreement sets out information required to be
given to the Executive by the Employment Rights Act 1996.
27. MISCELLANEOUS
(1) This Agreement is governed by and shall be construed in accordance
with the laws of England.
(2) The parties to this Agreement submit to the non-exclusive jurisdiction
of the English courts.
(3) This Agreement contains the entire understanding between the parties
and supersedes all previous agreements and arrangements (if any)
relating to the employment of the Executive by the Group (which shall
be deemed to have been terminated by mutual consent).
(4) The Executive authorises the Company to deduct from any remuneration
payable to the Executive under this Agreement any sums due from him to
the Company or any Group Company including the cost of repairing any
damage to Company or any Group Company property caused by the
Executive.
THIS AGREEMENT has been executed as a DEED and is intended to be and is hereby
delivered on the date on page 1.
<PAGE>
SCHEDULE
STATEMENT OF PARTICULARS PURSUANT TO THE
EMPLOYMENT RIGHTS ACT 1996
1. The Executive's period of continued employment commenced on 9 September
1998. A period of employment with a previous employer does not count as
part of the Executive's continuous employment with the Company.
2. A contracting-out certificate is in force in respect of this employment.
3. There is no formal disciplinary or grievance procedure applicable to
this position. Any grievance which the Executive wishes to exercise or
any disciplinary action taken by the Company will be dealt with by the
Chairman of the Holding Company. If the Executive is dissatisfied with
any decision he can within 5 working days of that decision appeal to
the Board whose decision shall be final and binding. For the avoidance
of doubt any disciplinary or grievance procedure does not form part of
the service agreement.
4. The Executive is under no obligation to work overseas for periods
exceeding 1 month.
5. The Company is not a party to any collective agreement which affects
the Executive's employment.
Executed as a Deed by
HUNTINGDON LIFE SCIENCES
LIMITED ................................
Director
................................
Director/Company Secretary
Signed as a Deed by
BRIAN CASS
in the presence of: .................................
.................................
Signature of Witness
.................................
Name of Witness
.................................
Address
.............................
Occupation
DATED 29 April 1999
(1) HUNTINGDON LIFE SCIENCES
LIMITED
- and -
(2) JULIAN TORQUIL GRIFFITHS
------------------------------------
SERVICE AGREEMENT
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Telephone: 0171 203 5000
Ref: DJSG/GXW/37971/1
<PAGE>
CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION............................... 1
2. TERM OF EMPLOYMENT........................................... 2
3. DUTIES....................................................... 2
4. PLACE OF WORK AND RELOCATION................................. 3
5. GRATUITIES AND CODES OF CONDUCT.............................. 4
6. REMUNERATION................................................. 4
7. PENSION SCHEME............................................... 5
8. OTHER BENEFITS............................................... 6
9. COMPANY CAR.................................................. 7
10. EXPENSES..................................................... 7
11. HOLIDAYS..................................................... 7
12. ILLNESS...................................................... 8
13. RESTRICTIONS DURING EMPLOYMENT............................... 8
14. INTELLECTUAL PROPERTY........................................ 10
15. CONFIDENTIALITY.............................................. 12
16. TERMINATION OF EMPLOYMENT.................................... 13
17. SUSPENSION................................................... 14
18. RESIGNATION AND RETURN OF COMPANY PROPERTY................... 14
19. RECONSTRUCTION OR AMALGAMATION............................... 15
20. RESTRICTIONS................................................. 15
21. SEVERABILITY................................................. 18
22. NOTICES...................................................... 18
23. STATUTORY INFORMATION........................................ 18
24. MISCELLANEOUS................................................ 19
SCHEDULE.............................................................. 20
<PAGE>
T H I S A G R E E M E N T is made on 29 April 1999
B E T W E E N :
(1) HUNTINGDON LIFE SCIENCES LIMITED whose registered office is at Woolley
Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Company");
and
(2) JULIAN TORQUIL GRIFFITHS of Cobb Hill House, Tang Road, High Birstwith,
North Yorkshire, HG3 2JR (the "Executive").
IT IS AGREED that the Company shall employ the Executive and the Executive shall
serve the Company as Finance Director of the Group on the following terms and
subject to the following conditions (the "Agreement"):
1. DEFINITIONS AND INTERPRETATION
(1) In this Agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a
Subsidiary of the Company
but whose issued equity
share capital (as defined
in s744 of the Companies
Act 1985) is owned as to at
least 20% by the Company or
one of its Subsidiaries;
and
(b) a Subsidiary (as defined below)
"Board" the board of directors for the time being
of the Holding Company;
"Group" means the Company, the Holding
Company and any Subsidiaries and
Associated Companies of the Company
and/or the Holding Company for the
time being and "Group Company" means
any one of them;
"Holding Company" means Huntingdon Life Sciences Group Plc;
"Subsidiary" means a Subsidiary within the meaning
of s736 of the Companies Act 1985;
"Working Day" means a day other than a Saturday, Sunday
or bank or other public holiday in England.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
(3) The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this Agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
(5) Where appropriate, references to the Executive include his personal
representatives.
2. TERM OF EMPLOYMENT
(1) The employment of the Executive commenced on 1 February 1999 and
(subject to termination as provided in clause 16 below) shall be for an
indefinite period terminable by the Executive by giving to the Company
6 months' notice in writing and by the Company by giving to the
Executive 12 months' notice in writing.
(2) Notwithstanding clause 2(1) above the employment of the Executive shall
automatically terminate on the day when the Executive reaches age 65 or
the normal retiring age applicable to directors of the Group from time
to time.
(3) The Executive represents and warrants that he is not bound by or
subject to any court order, agreement, arrangement or undertaking which
in any way restricts or prohibits him from entering into this Agreement
or performing his duties under it.
3. DUTIES
(1) The Executive shall during his employment under this Agreement:
(a) perform the duties and exercise the powers which the Board may
from time to time properly assign to him in his capacity as
Finance Director of the Group or in connection with the
conduct and management of the business of the Company, the
Holding Company or the business of any other Group Company
(including serving on the board of such Group Company or on
any other executive body or any committee of such a company);
and
(b) do all in his power to promote, develop and protect the
business of the Company, the Holding Company and any other
Group Company and at all times and in all respects conform to
and comply with the proper and reasonable directions and
regulations of the Board.
(2) The Executive shall give to the Board such information regarding the
affairs of the Company and the Holding Company and, where relevant, the
Group as it shall require, and in any event, report regularly and keep
the Board informed.
(3) The Executive shall be required to perform his duties during the
Company's normal office hours of 8.30am to 5.00pm, and during such
additional hours as may be necessary for the proper performance of his
duties. No additional pay or time-off will be permitted in respect of
hours worked outside normal office hours.
(4) In accordance with the Working Time Regulations 1998 ("Regulations"),
the Executive's average working time, including overtime, shall not
exceed 48 hours for each seven day period in any reference period
subject to the Executive's right to opt-out of the 48 hour maximum by
his entering into a separate agreement with the Company.
(5) Working time, for the purposes of the Regulations, means any time
during which the Executive is working at the disposal of the Company
and carrying out duties on behalf of the Company, the Holding Company
and/or Group, but shall not include travel to and from work, travelling
time whilst in work including international travel, or entertaining of
clients and/or suppliers outside of office hours, meal breaks or other
rest breaks.
4. PLACE OF WORK AND RELOCATION
(1) The Executive's normal place of work shall be the Company's offices at
Huntingdon but the Executive shall work in any place within the United
Kingdom which the Board may require and he may be required to travel
abroad when required by the Company for the proper performance of his
duties.
(2) If the Company requires the Executive to work permanently at a place
which necessitates a move from his present home address the Company
will reimburse the Executive for such removal and relocation expenses
as are directly and reasonably incurred as a result of the Company's
requirement up to a maximum of (pound)10,000 gross.
(3) If the Executive gives notice to terminate his employment within 12
months of any relocation for which the Company has reimbursed the
Executive his expenses in accordance with clause 4 (2) of this
Agreement, the Company may request repayment of up to 75% of the
relocation expenses reimbursed.
(4) If the Executive gives notice to terminate his employment within 24
months of any relocation for which the Company has reimbursed the
Executive his expenses in accordance with clause 4 (2) of this
Agreement, the Company may request repayment of up to 50% of the
relocation expenses reimbursed.
(5) The Executive, by his signature to this Agreement, authorises the
Company to deduct any relocation expenses to be repaid under clause
4(3) or 4(4) from any sums due to the Executive on termination of
employment. Should such sum be insufficient the Executive agrees to
repay the relocation expenses as a debt owing to the Company.
(6) The Executive will be liable for payment of any income tax arising in
respect of the relocation expenses, referred to in this clause 4, to
the extent that the amount exceeds the Inland Revenue Extra Statutory
Concession from time to time relating to relocation expenses.
5. GRATUITIES AND CODES OF CONDUCT
(1) Other than routine hospitality and corporate gifts of nominal value
received in the ordinary course of business, the Executive shall not
directly or indirectly accept any commission, rebate, discount or
gratuity in cash or in kind from any person who has or is having a
business relationship with any Group Company.
(2) The Executive shall comply (and procure that his spouse and minor
children or step-children or any dependents shall comply) with all
applicable rules and regulations of the London Stock Exchange, the New
York Stock Exchange, the US Securities Exchange Commission, and any
codes of conduct adopted by the Group concerning dealings in securities
for the time being in force and any other relevant regulatory
authority.
6. REMUNERATION
(1) The Company shall pay to the Executive a salary at the rate of
(pound)80,000 gross per year.
(2) The Executive's salary shall accrue from day to day and be payable by
equal monthly instalments in arrears on the 20th day of each month.
(3) The Executive's salary shall be reviewed once in every year of the
term. The undertaking of a salary review does not confer a contractual
right (whether express or implied) to any increase in salary and the
Executive acknowledges that any salary increase is at the discretion of
the Company.
(4) Notwithstanding anything to the contrary in the Company's Articles of
Association the salary in 6 (1) above shall be inclusive of any fees to
which the Executive may be entitled as a director of the Company or any
Group Company and the Executive shall waive his right to any such fee.
(5) The Company may, in its absolute discretion, pay to the Executive a
bonus of such amount payable at such time(s) as may from time to time
be determined by the Board.
(6) The Executive shall subject to the rules of the scheme, as amended or
varied from time to time at the Group's discretion and at the absolute
discretion of the Holding Company's Remuneration Committee, be entitled
to participate in the Huntingdon Life Sciences Group Unapproved Share
Option Scheme for the time being in force and in accordance with the
scheme rules. The Executive shall not be entitled to any compensation
for the loss of this right or loss of any benefit granted pursuant to
the scheme on termination of this Agreement.
7. PENSION SCHEME
(1) It is the Company's intention to establish a final salary pension
scheme in which the Executive will be entitled to participate whilst an
employee of the Company.
(2) It is the Company's intention, if such a scheme is established, to pay
such contributions to such scheme, during the term of this Agreement,
as would provide retirement benefits for the Executive at age 60 of
1/60th of final pensionable salary for each year or part year of
service with the Company, subject to the other terms and conditions of
such scheme.
(3) In the event of such a scheme not being established within six months
of the Executive starting employment with the Company, the Company
agrees, whilst the Executive remains an employee of the Company, to
contribute at a rate of 20% of the Executive's basic salary, as set out
in clause 6(1), to a personal pension scheme selected by the Executive.
(4) Contributions under clauses 7(2) or 7(3) will be backdated to the
commencement of the Executive's employment.
8. OTHER BENEFITS
(1) The Executive is entitled to membership of the following schemes (each
referred to below as an "insurance scheme"):
(a) a salary continuance on long-term disability
insurance scheme applicable to employees in the
Executive's category generally providing such cover
for the Executive as the Company may from time to
time notify to him;
(b) a life insurance scheme under which a lump sum benefit
shall be payable on the Executive's death while the Agreement
continues; the benefit of which shall be paid to such
dependants of the Executive or other beneficiary as the
trustees of the scheme select at their discretion, after
considering any beneficiaries identified by the
Executive in any expression of his wishes delivered to the
trustees before his death. The benefit is equal to 4 times
the Executive's basic annual salary at his death but basic
annual salary for this purpose shall not exceed the allowable
maximum earnings cap;
(c) a personal accident insurance scheme applicable to
employees in the Executive's category generally
providing such cover for the Executive as the Company
may from time to time notify to him;
(d) a medical expenses insurance scheme providing such
cover for the Executive and the Executive's spouse
and children under the age of 18 years as the Company
may from time to time notify to him.
(2) Benefits under any insurance scheme shall be subject to the rules of
the scheme(s) and the terms of any applicable insurance policy and are
conditional upon the Executive complying with and satisfying any
applicable requirements of the insurers. Copies of these rules and
policies and particulars of the requirements shall be provided to the
Executive on request. Provided that the Company shall have complied
with and satisfied any requirements of the insurers applicable to it,
(but without prejudice to the Company's rights pursuant to clause 8(4)
below) the Company shall not have any liability to pay any benefit to
the Executive under any insurance scheme unless it receives payment of
the benefit from the insurer under the scheme.
(3) Any insurance scheme which is provided for the Executive is also
subject to the Company's right to alter the cover provided or any term
of the scheme or to cease to provide (without replacement) the scheme
at any time if in the reasonable opinion of the Board the state of
health of the Executive is or becomes such that the Company is unable
to insure the benefits under the scheme at the normal premiums
applicable to a person of the Executive's age.
(4) The provision of any insurance scheme does not in any way prevent the
Company from lawfully terminating this Agreement in accordance with the
provisions in clause 16 even if to do so would deprive the Executive of
membership of or cover under any such scheme.
9. COMPANY CAR
(1) The Company shall provide the Executive with a non-pensionable car
allowance of (pound)750.00 gross per month, together with reimbursement
of petrol or other fuel attributable to:
(a) the Executive's duties under this Agreement and;
(b) the Executive's private use.
10. EXPENSES
(1) The Company shall reimburse or procure that the Executive is reimbursed
all reasonable travelling hotel and other expenses wholly and
necessarily incurred by him in the performance of his duties under this
Agreement on production of appropriate receipts and other evidence of
expenditure as required by the Company.
11. HOLIDAYS
(1) The Executive shall (in addition to the usual public and bank holidays)
be entitled to 25 Working Days holiday in each holiday year (as
specified by the Company) to be taken at a time or times agreed between
the Executive and the Company. The Executive's holiday entitlement set
out in this clause includes the Executive's statutory minimum holiday
entitlement under the Regulations.
(2) Holiday entitlement in one holiday year cannot normally be carried
forward to any subsequent holiday years. Holiday entitlement over and
above the statutory minimum set out in the Regulations may in
exceptional circumstances be carried over to a subsequent holiday year,
by prior arrangement with the Company.
(3) In the holiday year in which employment commences or terminates holiday
shall accrue on a pro rata basis. If on the termination of his
employment the Executive has exceeded his accrued holiday entitlement
the excess may be deducted from any sums owing to him. If the Executive
has accrued holiday owing to him the Company may at its discretion
require the Executive to take the outstanding holiday during any notice
period or make a payment in lieu instead.
(4) If under clause 17 the Executive is not required to attend the office
during any period of notice, he will not accrue holiday during that
period over and above the minimum required under the Regulations. If
the Executive's employment is terminated without notice, and/or if the
Executive resigns without working the required notice period as set out
in this Agreement, the Executive will not be entitled to pay in lieu of
accrued untaken holiday which will accrue during the notice period had
he continued to be employed at work throughout that time, subject to
the Regulations.
12. ILLNESS
(1) The Executive shall continue to be paid during sickness absence (such
payment to be inclusive of any statutory sick pay or social security
benefits to which he may be entitled) for a total of up to 26 weeks in
any 12 consecutive calendar months.
(2) Thereafter the Executive shall continue to be paid salary at the
discretion of the Company.
(3) If the Executive is incapable of performing his duties by reason of
injury sustained wholly or partly as a result of negligence, nuisance
or breach of any statutory duty on the part of a third party and the
Executive recovers an amount by way of compensation for loss of
earnings from that third party, he shall pay to the Company a sum equal
to the amount recovered or, if less, the amount paid to him by the
Company under clause 12(1) and/or (2) above in respect of the relevant
period of absence as a result of that injury.
(4) The Company shall be entitled to require the Executive to undergo
examinations by a medical adviser appointed or approved by the Company
and the Executive authorises the medical adviser and/or will provide
such consents as are necessary to disclose to the Company the results
of such examinations.
13. RESTRICTIONS DURING EMPLOYMENT
(1) During the continuance of his employment under this Agreement the
Executive shall unless prevented by incapacity devote his whole time
and attention to the business of the Company, the Holding Company and
the Group and shall not without the prior written consent of the Board:
(a) engage in any other business (other than charity or other
unpaid work in the nature of a hobby which does not detract
from the Executive's performance of his duties); or
(b) be concerned or interested in any other business of a similar
nature to or competitive with that carried on by the Company,
the Holding Company or any other Group Company; or
(c) solicit the custom of, canvass, approach or deal with, in
competition with the Company, the Holding Company or any other
Group Company, any person (including any company, firm,
organisation or other entity) to whom the Company, the Holding
Company or any other Group Company supplies services or with
whom the Company, the Holding Company or any Group Company is
in negotiations or discussions regarding the possible supply
of services; or
(d) discourage any such person referred to in clause 13 (1) (c)
above from conducting or continuing to conduct business with
the Company, the Holding Company or any other Group Company on
the best terms available to the Company, the Holding Company
or any other Group Company; or
(e) induce or attempt to induce any director or senior employee of
the Company, the Holding Company or any other Group Company
and with whom the Executive has material dealings in the
course of his employment, to leave the employment of the
Company, the Holding Company or any other Group Company
provided that nothing in this clause shall preclude the Executive from
holding or being otherwise interested in any shares or other securities
of any company which is quoted on any recognised investment exchange
(as defined by section 207(1) Financial Services Act 1986) so long as
the interest of the Executive in such shares or other securities does
not extend to more than 5% of the total amount of such shares or
securities.
(2) If during his employment under this Agreement the Executive shall cease
to be a director of the Holding Company and/or the Company (otherwise
than by reason of his death, resignation or disqualification pursuant
to the articles of association of the Holding Company and/or the
Company or by statute or court order or under clause 16(2) below) his
employment shall continue and the terms of this Agreement (other than
those relating to the holding of office of director) shall continue in
full force and effect and the Executive shall have no claims against
the Holding Company or the Company in respect of his ceasing to be a
director.
14. INTELLECTUAL PROPERTY
(1) If the Executive makes, or if the Executive participates in making, any
invention, any design (whether registerable or not), or any work in
which copyright and/or database right subsists and which relates to or
is useful in connection with the business of the Company, the Holding
Company or of any other Group Company the Executive shall disclose it
to the Company immediately, whether or not it is the property of the
Company and:-
(a) in the case of an invention give the Company full particulars
of the invention together with all information, data (in all
forms and in all media), drawings and models, embodying or
relating to the invention, irrespective of the nature of the
invention or when it was made; and
(b) in the case of designs or copyright works, a copy of all
such designs and works;
and, in addition, the Company may call for the same to be
delivered forthwith to an authorised representative at any
time.
(2) If an invention made by the Executive is the property of the Company
under Section 39 Patents Act 1977 the Executive shall execute all
documents and do all things which may be necessary or desirable for
obtaining the best possible patent, utility model or similar protection
for the invention ("Protection") in territories specified by the
Company and the Executive hereby assigns to the Company with full title
guarantee all his or her rights to the invention and all applications
for Protection and to the grant of Protection in respect of that
invention and shall execute all documents and do all such things as may
be necessary or desirable for perfecting the assignment and obtaining
registration of it in all territories in the name of the Company.
(3) Notwithstanding clause 14(2) the Company shall not be under any
obligation to apply for Protection in respect of any invention made by
the Executive.
(4) If any invention is the property of the Executive under Section 39
Patents Act 1977 and relates to or is useful in connection with the
business or any product or service of the Company, the Holding Company
or of any other Group Company the Executive shall not grant a licence
or execute an assignment in respect of that invention to any other
person without first offering to grant a licence or execute an
assignment for the benefit of the Company on terms no less favourable
than those offered to the third party, and the Company shall have
fifteen working days in which to accept or reject the offer.
(5) If during the course of his work for the Company (whether in the course
of normal duties or not and whether or not during normal working hours)
the Executive makes, or participates in the making of any design
(whether registrable or not) or any work in which copyright and/or
database right subsists the Executive hereby assigns to the Company
with full title guarantee and, where appropriate, by way of future
assignment, all such rights for the full term thereof throughout the
world, provided that the assignment shall not extend to those designs
or works which are created by the Executive wholly outside his or her
normal working hours and wholly unconcerned with his or her service
under this Agreement.
(6) In the case of designs and copyright which are registrable anywhere in
the world the Executive shall execute all documents and do all things
which are necessary or desirable for obtaining the best possible
registration in respect of such rights in territories specified by the
Company and shall assign to the Company such rights as are not already
held by the Company in all subsequent registrations and applications
for registration.
(7) The Executive hereby irrevocably appoints the Company to be the
Executive's attorney in his or her name and on his or her behalf to
sign or execute any document or do anything and generally to use the
Executive's name for the purpose of giving to the Company the full
benefit of the provisions of this clause 14 and in favour of any third
party a certificate in writing signed by any director or the secretary
of the Company that any document or act falls within the authority
conferred by this clause shall be conclusive evidence that is the case.
(8) The Executive waives all moral rights (whether arising under Chapter IV
of the Copyright Designs and Patents Act 1988 or otherwise, to the
extent permissible under the relevant legislation in each jurisdiction)
in works to which clause 14(5) applies.
(9) The Executive warrants that he is not bound by any legally enforceable
obligations owed to persons other than the Company which would prevent
the Executive from complying with the terms of this Agreement and the
Executive shall not without proper licence use any inventions or
information in breach of rights owed to or held by persons other than
the Company or copy or adapt copyright works or designs owned by
persons other than the Company.
(10) All the provisions of this clause 14 shall survive termination of the
Executive's employment insofar as they relate to inventions,
information, designs and works in which copyright and/or database right
subsists which were created before termination.
15. CONFIDENTIALITY
(1) The Executive shall not (except in the proper performance of his
duties) during or after his employment has ended divulge to any person
or otherwise make use of (and shall use his best endeavours to prevent
the publication or disclosure of) any trade secret or secret research
process or any confidential information concerning the business or
finances of the Company, the Holding Company or any other Group Company
or any of their dealings transactions or affairs or any trade secret or
secret research process or any such confidential information concerning
any of their suppliers, agents, distributors or clients.
(2) Confidential information includes, but is not limited to: any
information of a secret, confidential or private nature, in any form,
concerning the business, accounts, finances, customer lists, research
projects, pricing and/or discount policy, future business strategy,
marketing, tenders, price sensitive information, employees and
officers, formulae, processors, working methods, inventions,
intellectual property and other plans and strategy of the Company, the
Holding Company and any other Group Company or any of its or their
respective clients.
(3) The restrictions in clauses 15 (1) and 15 (2) shall not apply to
information which:
(i) comes into the public domain otherwise than by a breach by
the Executive of his obligations under this Agreement; or
(ii) is disclosed to the Executive by a third party who has not
received it directly or indirectly from the Company or any
Group Company; or
(iii) must be disclosed by any applicable law or the requirements of
a relevant regulatory authority, to the extent of such
required disclosure.
16. TERMINATION OF EMPLOYMENT
(1) The Company may at any time and in its absolute discretion (whether or
not any notice of termination has been given by the Company or the
Executive under clause 2(1) above) terminate the Agreement with
immediate effect and make a payment in lieu of notice equivalent to the
Executive's net basic salary referred to in clause 6(1) at the then
applicable rate for all or any unexpired part of the notice period.
(2) The employment of the Executive may be terminated by the Company
without notice or payment in lieu of notice if:
(a) the Executive is guilty of any serious misconduct or any other
conduct which affects or is likely to affect prejudicially the
interests of the Company, the Holding Company or any other
Group Company to which he is required to render services under
this Agreement; or
(b) the Executive fails or neglects efficiently and diligently to
discharge his duties in any material respect or commits any
serious or material repeated breach or non-observance of any
of the provisions contained in this Agreement; or
(c) the Executive has an interim receiving order made against him,
becomes bankrupt or makes any composition or enters into any
deed of arrangement with his creditors in circumstances which
would have a material adverse effect on the Company, the
Holding Company, the Group or their respective reputations; or
(d) the Executive is convicted of any arrestable criminal offence
(other than an offence under road traffic legislation in the
United Kingdom or elsewhere for which a fine or non-custodial
penalty is imposed) in circumstances which would have a
material adverse effect on the Company, the Holding Company,
the Group or their respective reputations; or
(e) the Executive is disqualified from holding office in another
company by reason of an order of a court of competent
jurisdiction; or
(f) the Executive becomes of unsound mind or becomes a patient
under the Mental Health Act 1983; or
(g) the Executive is convicted of an offence under the Criminal
Justice Act 1993 in relation to insider dealings or under any
other present or future statutory enactment or regulations
relating to insider dealings under English or New York law; or
(h) otherwise than:
i) at the request of the Company; or
ii) in circumstances which a reasonable director,
properly advised, would regard as requiring his
resignation
the Executive ceases to be a director of the Company and/or
the Holding Company.
17. SUSPENSION
(1) The Company may suspend the Executive at any time on full pay to allow
the Company to investigate any complaint made against the Executive in
relation to his employment with the Company provided that the fact of
the suspension will only be disclosed to employees of the Company or
any Group Company who are involved in the investigation and/or to whom
such disclosure may, in the reasonable opinion of the Company, be
necessary for genuine operational reasons.
(2) During any period of notice of termination (which is required to be
given under the terms of this Agreement by the Company or the
Executive) the Company shall be under no obligation to assign any
duties to the Executive or to provide any work for him and shall be
entitled to exclude him from its premises, provided that this shall not
affect the Executive's entitlement to receive his normal salary and
other contractual benefits other than that the Executive will cease to
accrue holiday during any such period over and above the minimum
required by the Regulations.
18. RESIGNATION AND RETURN OF COMPANY PROPERTY
(1) Upon the termination by whatever means of this Agreement the Executive
shall:
(a) immediately resign from his office as a director of the
Company, the Holding Company, and from any other offices held
by him in any Group Company without claim for compensation;
and
(b) immediately deliver to the Company all credit cards
motor-cars, keys, computer media and other property in
whatever form, of or relating to the business of the Company,
the Holding Company or of any other Group Company which may be
in his possession or under his power or control; and
(c) immediately deliver to the Company all details which must be
provided under clause 14 above together with all material in
whatever form which describes or embodies the concepts or
designs which are so disclosed.
(2) If the Executive fails to comply with clause 18(1) the Company is
hereby irrevocably authorised to appoint some person in his name and on
his behalf to sign and complete any documents or do any thing necessary
to give effect to this clause.
(3) The Executive shall not, without the consent of the Company, at any
time after the termination of this Agreement represent himself still to
be connected with the Company, the Holding Company or any other Group
Company.
19. RECONSTRUCTION OR AMALGAMATION
If the employment of the Executive under this agreement is terminated
by reason of the liquidation of the Company for the purpose of
reconstruction or amalgamation and the Executive is offered employment
with any concern or undertaking resulting from the reconstruction or
amalgamation on terms and conditions not less favourable than the terms
of this Agreement then the Executive shall have no claim against the
Company or any Group Company in respect of the termination of his
employment under this Agreement.
20. RESTRICTIONS
(1) Definitions
In this clause:
(a) "Termination Date" means the date on which the employment
terminates;
(b) "Person" includes any company, firm, organisation or other
entity;
(c) "Area" means any country in the world where on the Termination
Date the Company, the Holding Company and/or any other Group
Company was supplying services;
(d) "Business" means any business carried on by the Company, the
Holding Company or any other Group Company which relates to
the provision of pre-clinical, early clinical and/or
non-clinical biological safety evaluation services to the
pharmaceutical and biotechnology, agrochemical and other
chemical industries;
(e) "Client" means any Person to whom the Company, the Holding
Company or any other Group Company supplied services during
the 6 months preceding the Termination Date and with whom at
any time during such period the Executive was actively
involved in the course of his employment;
(f) "Prospective Client" means any Person with whom the Company,
the Holding Company or any other Group Company had
negotiations or discussions regarding the possible supply of
services during the 6 months immediately preceding the
Termination Date and with whom at any time during such period
the Executive was actively involved in the course of his
employment.
(2) The Executive covenants with the Company and as trustee for each Group
Company that in the event of the Executive terminating his employment:
(1) Non-competition
the Executive shall not for a period of 6 months from the
Termination Date directly or indirectly be interested or
concerned in any business which is carried on in the Area and
which is competitive or likely to be competitive with the
Business being carried on at the Termination Date and with
which the Executive was actively involved during the 6 month
period ending on the Termination Date.
For this purpose, the Executive is concerned in a business if:
(a) he carries it on as principal or agent; or
(b) he is a partner, director, employee, secondee,
consultant or agent in, of or to any Person who
carries on the business; or
(c) subject to clause 13(1) above, he has any direct or
indirect financial interest (as shareholder or
otherwise) in any Person who carries on the business.
(2) Non-solicitation
the Executive shall not for a period of 6 months from the
Termination Date in the Area directly or indirectly:
(a) canvass or solicit business for services similar to
those being provided by the Company, the Holding
Company or any other Group Company as at the
Termination Date from any Client or Prospective
Client;
(b) seek to do business or deal with any Client or
Prospective Client in respect of services similar to
those being provided by the Company, the Holding
Company or any other Group Company as at the
Termination Date; or
(c) canvass or solicit business from any supplier of
the Company, the Holding Company or any other
Group Company with whom the Executive was actively
involved during the 6 months ending on the
Termination Date or persuade such supplier to cease
to supply, or to restrict or vary the terms of
supply to the Company, the Holding Company or any
other Group Company or otherwise interfere with
the relationship between such a supplier and the
Company, the Holding Company or any other Group
Company.
(3) Non-poaching
the Executive shall not for a period of 6 months after the
Termination Date directly or indirectly induce or attempt to
induce any senior employee of the Company, the Holding Company
or any other Group Company who is engaged in any business
activity carried on by the Company, the Holding Company or any
other Group Company at the Termination Date and with whom the
Executive during the 6 months ending on the Termination Date
had material dealings in the course of his employment, to
leave the employment of the Company, the Holding Company or
any other Group Company (whether or not this would be a breach
of contract by that employee for the purposes of being
involved in or engaged in the types of business referred to in
sub-clause 2(1) above).
(3) The restrictions in this clause are considered by the parties to be
reasonable and the validity of each sub-clause shall not be affected if
any of the others is invalid. If any of the restrictions is void but
would be valid if some part of the restriction were deleted, the
restriction in question shall apply with such modification as may be
necessary to make it valid.
(4) The Executive acknowledges that the provisions of this clause are no
more extensive than is reasonable to protect the Company, the Holding
Company or the Group.
(5) If the Executive is suspended from work under the provisions of clause
17, the Company may, at its sole discretion, agree that the period of
time during which the non-competition restriction contained in clause
20(2)(1) is enforceable, starts to run from the date of the suspension
and not from the Termination Date.
21. SEVERABILITY
If any of the provisions of this Agreement become invalid or
unenforceable for any reason by virtue of applicable law the remaining
provisions shall continue in full force and effect and the Company and
the Executive hereby undertake to use all reasonable endeavours to
replace any legally invalid or unenforceable provision with a provision
which will promise to the parties (as far as practicable) the same
commercial results as were intended or contemplated by the original
provision.
22. NOTICES
(1) Any notice required or permitted to be given under this Agreement shall
be given in writing delivered personally or sent by first class post
pre-paid recorded delivery (air mail if overseas) or by facsimile to
the party due to receive such notice at, in the case of the Company,
its registered office from time to time (and marked for the attention
of the Company Secretary) and, in the case of the Executive, his
address as set out in this Agreement (or such address as he may have
notified to the Company).
(2) Any notice delivered personally shall be deemed to be received when
delivered to the address provided in this Agreement or as subsequently
notified in writing and any notice sent by pre-paid recorded delivery
post shall be deemed (in the absence of evidence of earlier receipt) to
be received 2 days after posting and in proving the time of despatch it
shall be sufficient to show that the envelope containing such notice
was properly addressed, stamped and posted. A notice sent by facsimile
shall be deemed to have been received on receipt by the sender of
confirmation in the transmission report that the facsimile had been
sent.
23. STATUTORY INFORMATION
(1) The Schedule to this Agreement sets out information required to be
given to the Executive by the Employment Rights Act 1996.
24. MISCELLANEOUS
(1) This Agreement is governed by and shall be construed in accordance with
the laws of England.
(2) The parties to this Agreement submit to the exclusive jurisdiction of
the English courts.
(3) This Agreement contains the entire understanding between the parties
and supersedes all previous agreements and arrangements (if any)
relating to the employment of the Executive by the Company (which shall
be deemed to have been terminated by mutual consent).
(4) The Executive authorises the Company to deduct from any remuneration
payable to the Executive under this Agreement any sums due from him to
the Company or any Group Company including the cost of repairing any
damage to Company or any Group Company property caused by the
Executive.
THIS AGREEMENT has been executed as a DEED and is intended to be and is hereby
delivered on the date on page 1.
<PAGE>
SCHEDULE
STATEMENT OF PARTICULARS PURSUANT TO THE
EMPLOYMENT RIGHTS ACT 1996
1. The Executive's period of continued employment commenced on 1 February
1999. A period of employment with a previous employer does not count as
part of the Executive's continuous employment with the Company.
2. A contracting-out certificate is not in force in respect of this employment
3. There is no formal disciplinary or grievance procedure applicable to
this position. Any grievance which the Executive wishes to exercise or
any disciplinary action taken by the Company will be dealt with by the
chairman of the Holding Company. If the Executive is dissatisfied with
any decision he can within 5 working days of that decision appeal to
the Board whose decision shall be final and binding. For the avoidance
of doubt any disciplinary or grievance procedure does not form part of
the service agreement.
4. The Executive is under no obligation to work overseas for periods exceeding
1 month.
5. The Company is not a party to any collective agreement which affects
the Executive's employment.
Executed as a Deed by
HUNTINGDON LIFE SCIENCES
LIMITED ................................
Director
................................
Director/Company Secretary
<PAGE>
Signed as a Deed by
JULIAN TORQUIL GRIFFITHS
in the presence of: .................................
.................................
Signature of Witness
.................................
Name of Witness
.................................
.................................
.................................
Address
.................................
Occupation
DATED 29 April 1999
(1) HUNTINGDON LIFE SCIENCES
LIMITED
- and -
(2) DR FRANK WILLIAM BONNER
------------------------------------
SERVICE AGREEMENT
-------------------------------------
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Telephone: 0171 203 5000
Ref: DJSG/GXW/37971/1
<PAGE>
CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION.................................. 1
2. TERM OF EMPLOYMENT.............................................. 2
3. DUTIES.......................................................... 2
4. PLACE OF WORK AND RELOCATION.................................... 3
5. GRATUITIES AND CODES OF CONDUCT................................. 4
6. REMUNERATION.................................................... 5
7. OTHER BENEFITS.................................................. 5
8. EXPENSES........................................................ 7
9. HOLIDAYS........................................................ 7
10. ILLNESS......................................................... 7
11. RESTRICTIONS DURING EMPLOYMENT.................................. 8
12. INTELLECTUAL PROPERTY........................................... 9
13. CONFIDENTIALITY................................................. 11
14. TERMINATION OF EMPLOYMENT....................................... 12
15. SUSPENSION...................................................... 13
16. RESIGNATION AND RETURN OF COMPANY PROPERTY...................... 14
17. RECONSTRUCTION OR AMALGAMATION.................................. 14
18. RESTRICTIONS.................................................... 15
19. SEVERABILITY.................................................... 17
20. NOTICES......................................................... 18
21. STATUTORY INFORMATION........................................... 18
22. MISCELLANEOUS................................................... 18
SCHEDULE................................................................. 20
<PAGE>
1\230299\\GXW|LZM211.D
T H I S A G R E E M E N T is made on 29 April 1999
B E T W E E N :
(1) HUNTINGDON LIFE SCIENCES LIMITED whose registered office is at Woolley
Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Company");
and
(2) DR FRANK WILLIAM BONNER of 2 Beal Croft, Warkorth, Northumberland,
NE65 0XL (the "Executive").
IT IS AGREED that the Company shall employ the Executive and the Executive shall
serve the Company as Science and Technology Director of the Company and of
Huntingdon Life Sciences Group Plc on the following terms and subject to the
following conditions (the "Agreement"):
1. DEFINITIONS AND INTERPRETATION
(1) In this Agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Associated Company" means:
(a) a company which is not a Subsidiary of the Company
but whose issued equity share capital (as defined in
s744 of the Companies Act 1985) is owned as to at
least 20% by the Company or one of its Subsidiaries;
and
(b) a Subsidiary (as defined below)
"Board" the board of directors for the time being of the Holding
Company;
"Group" means the Company, the Holding Company and any
Subsidiaries and Associated Companies of the Company
and/or the Holding Company for the time being and
"Group Company" means any one of them;
"Holding Company" means Huntingdon Life Sciences Group Plc;
"Subsidiary" means a Subsidiary within the meaning of
s736 of the Companies Act 1985;
"Working Day" means a day other than a Saturday, Sunday or bank or
other public holiday in England.
(2) Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
(3) The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
(4) References in this Agreement to a person include a body corporate and
an incorporated association of persons and references to a company
include any body corporate.
(5) Where appropriate, references to the Executive include his personal
representatives.
2. TERM OF EMPLOYMENT
(1) The employment of the Executive commenced on 17 September 1998 and
(subject to termination as provided in clause 14 below) shall be for an
indefinite period terminable by the Executive by giving to the Company
6 months' notice in writing and by the Company by giving to the
Executive 12 months' notice in writing.
(2) Notwithstanding clause 2(1) above the employment of the Executive shall
automatically terminate on the day when the Executive reaches age 65 or
the normal retiring age applicable to directors of the Group from time
to time.
(3) The Executive represents and warrants that he is not bound by or
subject to any court order, agreement, arrangement or undertaking which
in any way restricts or prohibits him from entering into this Agreement
or performing his duties under it.
3. DUTIES
(1) The Executive shall during his employment under this Agreement:
(a) perform the duties and exercise the powers which the Board may
from time to time properly assign to him in his capacity as
Science and Technology Director or in connection with the
conduct and management of the business of the Company, the
Holding Company or the business of any other Group Company
(including serving on the board of such Group Company or on
any other executive body or any committee of such a company);
and
(b) do all in his power to promote, develop and protect the
business of the Company, the Holding Company and any other
Group Company and at all times and in all respects conform to
and comply with the proper and reasonable directions and
regulations of the Board.
(2) The Executive shall give to the Board such information regarding the
affairs of the Company, the Holding Company and, where relevant, the
Group as it shall require, and in any event, report regularly and keep
the Board informed.
(3) The Executive shall be required to perform his duties during the
Company's normal office hours of 8.30am to 5.00pm, and during such
additional hours as may be necessary for the proper performance of his
duties. No additional pay or time-off will be permitted in respect of
hours worked outside normal office hours.
(4) In accordance with the Working Time Regulations 1998 ("Regulations"),
the Executive's average working time, including overtime, shall not
exceed 48 hours for each seven day period in any reference period
subject to the Executive's right to opt-out of the 48 hour maximum by
his entering into a separate agreement with the Company.
(5) Working time, for the purposes of the Regulations, means any time
during which the Executive is working at the disposal of the Company
and carrying out duties on behalf of the Company, the Holding Company
and/or the Group, but shall not include travel to and from work,
travelling time whilst in work including international travel, or
entertaining of clients and/or suppliers outside of office hours, meal
breaks or other rest breaks.
4. PLACE OF WORK AND RELOCATION
(1) The Executive's normal place of work shall be the Company's offices at
Huntingdon but the Executive shall work in any place within the United
Kingdom which the Board may require and he may be required to travel
abroad when required by the Company for the proper performance of his
duties.
(2) If the Company requires the Executive to work permanently at a place
which necessitates a move from his present home address the Company
will reimburse the Executive for such removal and relocation expenses
as are directly and reasonably incurred as a result of the Company's
requirement up to a maximum of (pound)8,000 gross.
(3) If the Executive gives notice to terminate his employment within 12
months of any relocation for which the Company has reimbursed the
Executive his expenses in accordance with clause 4 (2) of this
Agreement, the Company may request repayment of the full amount of
relocation expenses reimbursed.
(4) If the Executive gives notice to terminate his employment between 12
and 24 months of any relocation for which the Company has reimbursed
the Executive his expenses in accordance with clause 4 (2) of this
Agreement, the Company may request repayment of up to 50% of the
relocation expenses reimbursed reducing by one twelfth for each month
after the twelfth month following completion.
(5) The Executive, by his signature to this Agreement, authorises the
Company to deduct any relocation expenses to be repaid under clause
4(3) or 4(4) from any sums due to the Executive on termination of
employment. Should such sum be insufficient the Executive agrees to
repay the relocation expenses as a debt owing to the Company.
(6) The Executive will be liable for payment of any income tax arising in
respect of the relocation expenses, referred to in this clause 4, to
the extent that the amount exceeds the Inland Revenue Extra Statutory
Concession from time to time relating to relocation expenses.
5. GRATUITIES AND CODES OF CONDUCT
(1) Other than routine hospitality and corporate gifts of nominal value
received in the ordinary course of business, the Executive shall not
directly or indirectly accept any commission, rebate, discount or
gratuity in cash or in kind from any person who has or is having a
business relationship with any Group Company.
(2) The Executive shall comply (and procure that his spouse and minor
children, step-children or any dependents shall comply) with all
applicable rules and regulations of the London Stock Exchange, the New
York Stock Exchange, the US Securities Exchange Commission, and any
codes of conduct adopted by the Group concerning dealings in securities
for the time being in force and any other relevant regulatory
authority.
6. REMUNERATION
(1) The Company shall pay to the Executive a salary at the rate of
(pound)140,000 gross per year.
(2) The Executive's salary shall accrue from day to day and be payable
by equal monthly instalments in arrears on the 20th day
of each month.
(3) The Executive's salary shall be reviewed once in every year of the
term. The undertaking of a salary review does not confer a contractual
right (whether express or implied) to any increase in salary and the
Executive acknowledges that any salary increase is at the discretion of
the Company.
(4) Notwithstanding anything to the contrary in the Company's Articles of
Association the salary in 6 (1) above shall be inclusive of any fees to
which the Executive may be entitled as a director of the Company or any
Group Company and the Executive shall waive his right to any such fee.
(5) The Company may, in its absolute discretion, pay to the Executive a
bonus of such amount payable at such time(s) as may from
time to time be determined by the Board.
(6) The Executive shall subject to the rules of the scheme, as amended or
varied from time to time at the Group's discretion and at the absolute
discretion of the Holding Company's Remuneration Committee, be entitled
to participate in the Huntingdon Life Sciences Group Unapproved Share
Option Scheme for the time being in force and in accordance with the
scheme rules. The Executive shall not be entitled to any compensation
for the loss of this right or loss of any benefit granted pursuant to
the scheme on termination of this Agreement.
7. OTHER BENEFITS
(1) The Executive is entitled to membership of the following schemes (each
referred to below as an "insurance scheme"):
(a) a salary continuance on long-term disability
insurance scheme applicable to employees in the
Executive's category generally providing such cover
for the Executive as the Company may from time to
time notify to him;
(b) a life insurance scheme under which a lump sum
benefit shall be payable on the Executive's death
while the Agreement continues; the benefit of which
shall be paid to such dependants of the Executive or
other beneficiary as the trustees of the scheme
select at their discretion, after considering any
beneficiaries identified by the Executive in any
expression of his wishes delivered to the trustees
before his death. The benefit is equal to 4 times the
Executive's basic annual salary at his death but
basic annual salary for this purpose shall not exceed
the allowable maximum earnings cap;
(c) a personal accident insurance scheme applicable to
employees in the Executive's category generally
providing such cover for the Executive as the Company
may from time to time notify to him;
(d) a medical expenses insurance scheme providing such
cover for the Executive and the Executive's spouse
and children under the age of 18 years as the Company
may from time to time notify to him.
(2) Benefits under any insurance scheme shall be subject to the rules of
the scheme(s) and the terms of any applicable insurance policy and are
conditional upon the Executive complying with and satisfying any
applicable requirements of the insurers. Copies of these rules and
policies and particulars of the requirements shall be provided to the
Executive on request. Provided that the Company shall have complied
with and satisfied any requirements of the insurers applicable to it,
(but without prejudice to the Company's rights pursuant to clause 7(4)
below) the Company shall not have any liability to pay any benefit to
the Executive under any insurance scheme unless it receives payment of
the benefit from the insurer under the scheme.
(3) Any insurance scheme which is provided for the Executive is also
subject to the Company's right to alter the cover provided or any term
of the scheme or to cease to provide (without replacement) the scheme
at any time if in the reasonable opinion of the Board the state of
health of the Executive is or becomes such that the Company is unable
to insure the benefits under the scheme at the normal premiums
applicable to a person of the Executive's age.
(4) The provision of any insurance scheme does not in any way prevent the
Company from lawfully terminating this Agreement in accordance with the
provisions in clause 14 even if to do so would deprive the Executive of
membership of or cover under any such scheme.
8. EXPENSES
The Company shall reimburse or procure that the Executive is reimbursed
all reasonable travelling hotel and other expenses wholly and
necessarily incurred by him in the performance of his duties under this
Agreement on production of appropriate receipts and other evidence of
expenditure as required by the Company.
9. HOLIDAYS
(1) The Executive shall (in addition to the usual public and bank holidays)
be entitled to 25 Working Days holiday in each holiday year (as
specified by the Company) to be taken at a time or times agreed between
the Executive and the Company. The Executive's holiday entitlement set
out in this clause includes the Executive's statutory minimum holiday
entitlement under the Regulations.
(2) Holiday entitlement in one holiday year cannot normally be carried
forward to any subsequent holiday years. Holiday entitlement over and
above the statutory minimum set out in the Regulations may in
exceptional circumstances be carried over to a subsequent holiday year,
by prior arrangement with the Company.
(3) In the holiday year in which employment commences or terminates holiday
shall accrue on a pro rata basis. If on the termination of his
employment the Executive has exceeded his accrued holiday entitlement
the excess may be deducted from any sums owing to him. If the Executive
has accrued holiday owing to him the Company may at its discretion
require the Executive to take the outstanding holiday during any notice
period or make a payment in lieu instead.
(4) If under clause 15 the Executive is not required to attend the office
during any period of notice, he will not accrue holiday during that
period over and above the minimum required under the Regulations. If
the Executive's employment is terminated without notice and/or if the
Executive resigns without working the required notice period as set out
in this Agreement, the Executive will not be entitled to pay in lieu of
accrued untaken holiday which will accrue during the notice period had
he continued to be employed at work throughout that time, subject to
the Regulations.
10. ILLNESS
(1) The Executive shall continue to be paid during sickness absence (such
payment to be inclusive of any statutory sick pay or social security
benefits to which he may be entitled) for a total of up to 26 weeks in
any 12 consecutive calendar months.
(2) Thereafter the Executive shall continue to be paid salary at the
discretion of the Company.
(3) If the Executive is incapable of performing his duties by reason of
injury sustained wholly or partly as a result of negligence, nuisance
or breach of any statutory duty on the part of a third party and the
Executive recovers an amount by way of compensation for loss of
earnings from that third party, he shall pay to the Company a sum equal
to the amount recovered or, if less, the amount paid to him by the
Company under clause 10(1) and/or (2) above in respect of the relevant
period of absence as a result of that injury.
(4) The Company shall be entitled to require the Executive to undergo
examinations by a medical adviser appointed or approved by the Company
and the Executive authorises the medical adviser and/or will provide
such consents as are necessary to disclose to the Company the results
of such examinations.
11. RESTRICTIONS DURING EMPLOYMENT
(1) During the continuance of his employment under this Agreement the
Executive shall unless prevented by incapacity devote his whole time
and attention to the business of the Company, the Holding Company and
the Group and shall not without the prior written consent of the Board:
(a) engage in any other business (other than charity or other
unpaid work in the nature of a hobby which does not detract
from the Executive's performance of his duties and his
non-executive directorship in Endocrine Pharmaceuticals
Limited); or
(b) be concerned or interested in any other business of a similar
nature to or competitive with that carried on by the Company,
the Holding Company or any other Group Company; or
(c) solicit the custom of, canvass, approach or deal with, in
competition with the Company, the Holding Company or any other
Group Company, any person (including any company, firm,
organisation or other entity) to whom the Company, the Holding
Company or any other Group Company supplies services or with
whom the Company, the Holding Company or any other Group
Company is in negotiations or discussions regarding the
possible supply of services; or
(d) discourage any such person referred to in clause 11 (1) (c)
above from conducting or continuing to conduct business with
the Company, the Holding Company or any other Group Company on
the best terms available to the Company, the Holding Company
or any other Group Company; or
(e) induce or attempt to induce any director or senior employee of
the Company, the Holding Company or any other Group Company
and with whom the Executive has material dealings in the
course of his employment, to leave the employment of the
Company, the Holding Company or any other Group Company
provided that nothing in this clause shall preclude the Executive from
holding or being otherwise interested in any shares or other securities
of any company which is quoted on any recognised investment exchange
(as defined by section 207(1) Financial Services Act 1986) so long as
the interest of the Executive in such shares or other securities does
not extend to more than 5% of the total amount of such shares or
securities.
(2) If during his employment under this Agreement the Executive shall cease
to be a director of the Holding Company and/or the Company (otherwise
than by reason of his death, resignation or disqualification pursuant
to the articles of association of the Holding Company and/or the
Company or by statute or court order or under clause 14(2) below) his
employment shall continue and the terms of this Agreement (other than
those relating to the holding of office of director) shall continue in
full force and effect and the Executive shall have no claims against
the Company or the Holding Company in respect of his ceasing to be a
director.
12. INTELLECTUAL PROPERTY
(1) If the Executive makes, or if the Executive participates in making, any
invention, any design (whether registerable or not), or any work in
which copyright and/or database right subsists and which relates to or
is useful in connection with the business of the Company, the Holding
Company or of any other Group Company the Executive shall disclose it
to the Company immediately, whether or not it is the property of the
Company and:-
(a) in the case of an invention give the Company full particulars
of the invention together with all information, data (in all
forms and in all media), drawings and models, embodying or
relating to the invention, irrespective of the nature of the
invention or when it was made; and
(b) in the case of designs or copyright works, a copy of all such
designs and works;
and, in addition, the Company may call for the same to be
delivered forthwith to an authorised representative at any
time.
(2) If an invention made by the Executive is the property of the Company
under Section 39 Patents Act 1977 the Executive shall execute all
documents and do all things which may be necessary or desirable for
obtaining the best possible patent, utility model or similar protection
for the invention ("Protection") in territories specified by the
Company and the Executive hereby assigns to the Company with full title
guarantee all his or her rights to the invention and all applications
for Protection and to the grant of Protection in respect of that
invention and shall execute all documents and do all such things as may
be necessary or desirable for perfecting the assignment and obtaining
registration of it in all territories in the name of the Company.
(3) Notwithstanding clause 12(2) the Company shall not be under any
obligation to apply for Protection in respect of any
invention made by the Executive.
(4) If any invention is the property of the Executive under Section 39
Patents Act 1977 and relates to or is useful in connection with the
business or any product or service of the Company, the Holding Company
or of any other Group Company the Executive shall not grant a licence
or execute an assignment in respect of that invention to any other
person without first offering to grant a licence or execute an
assignment for the benefit of the Company on terms no less favourable
than those offered to the third party, and the Company shall have
fifteen working days in which to accept or reject the offer.
(5) If during the course of his or her work for the Company (whether in the
course of normal duties or not and whether or not during normal working
hours) the Executive makes, or participates in the making of any design
(whether registrable or not) or any work in which copyright and/or
database right subsists the Executive hereby assigns to the Company
with full title guarantee and, where appropriate, by way of future
assignment, all such rights for the full term thereof throughout the
world, provided that the assignment shall not extend to those designs
or works which are created by the Executive wholly outside his or her
normal working hours and wholly unconcerned with his or her service
under this Agreement.
(6) In the case of designs and copyright which are registrable anywhere in
the world the Executive shall execute all documents and do all things
which are necessary or desirable for obtaining the best possible
registration in respect of such rights in territories specified by the
Company and shall assign to the Company such rights as are not already
held by the Company in all subsequent registrations and applications
for registration.
(7) The Executive hereby irrevocably appoints the Company to be the
Executive's attorney in his or her name and on his or her behalf to
sign or execute any document or do anything and generally to use the
Executive's name for the purpose of giving to the Company the full
benefit of the provisions of this clause 12 and in favour of any third
party a certificate in writing signed by any director or the secretary
of the Company that any document or act falls within the authority
conferred by this clause shall be conclusive evidence that is the case.
(8) The Executive waives all moral rights (whether arising under Chapter IV
of the Copyright Designs and Patents Act 1988 or otherwise, to the
extent permissible under the relevant legislation in each jurisdiction)
in works to which clause 12(5) applies.
(9) The Executive warrants that he is not bound by any legally enforceable
obligations owed to persons other than the Company which would prevent
the Executive from complying with the terms of this Agreement and the
Executive shall not without proper licence use any inventions or
information in breach of rights owed to or held by persons other than
the Company or copy or adapt copyright works or designs owned by
persons other than the Company.
(10) All the provisions of this clause 12 shall survive termination of the
Executive's employment insofar as they relate to inventions,
information, designs and works in which copyright and/or database right
subsists which were created before termination.
13. CONFIDENTIALITY
(1) The Executive shall not (except in the proper performance of his
duties) during or after his employment has ended divulge to any person
or otherwise make use of (and shall use his best endeavours to prevent
the publication or disclosure of) any trade secret or secret research
process or any confidential information concerning the business or
finances of the Company, the Holding Company or any other Group Company
or any of their dealings transactions or affairs or any trade secret or
secret research process or any such confidential information concerning
any of their suppliers, agents, distributors or clients.
(2) Confidential information includes, but is not limited to: any
information of a secret, confidential or private nature, in any form,
concerning the business, accounts, finances, customer lists, research
projects, pricing and/or discount policy, future business strategy,
marketing, tenders, price sensitive information, employees and
officers, formulae, processors, working methods, inventions,
intellectual property and other plans and strategy of the Company, the
Holding Company and any other Group Company or any of its or their
respective clients.
(3) The restrictions in clauses 13 (1) and 13 (2) shall not apply to
information which:
(i) comes into the public domain otherwise than by a breach by
the Executive of his obligations under this Agreement; or
(ii) is disclosed to the Executive by a third party who has not
received it directly or indirectly from the Company or any
Group Company; or
(iii) must be disclosed by any applicable law or the requirements of
a relevant regulatory authority, to the extent of such
required disclosure.
14. TERMINATION OF EMPLOYMENT
(1) The Company may at any time and in its absolute discretion (whether or
not any notice of termination has been given by the Company or the
Executive under clause 2(1) above) terminate the Agreement with
immediate effect and make a payment in lieu of notice equivalent to the
Executive's net basic salary referred to in clause 6(1) at the then
applicable rate for all or any unexpired part of the notice period.
(2) The employment of the Executive may be terminated by the Company
without notice or payment in lieu of notice if:
(a) the Executive is guilty of any serious misconduct or any other
conduct which affects or is likely to affect prejudicially the
interests of the Company, the Holding Company or any other
Group Company to which he is required to render services under
this Agreement; or
(b) fails or neglects efficiently and diligently to discharge his
duties in any material respect or commits any serious or
material repeated breach or non-observance by the Executive of
any of the provisions contained in this Agreement; or
(c) the Executive has an interim receiving order made against him,
becomes bankrupt or makes any composition or enters into any
deed of arrangement with his creditors in circumstances which
would have a material adverse effect on the Company, the
Holding Company, the Group or their respective reputations; or
(d) the Executive is convicted of any arrestable criminal offence
(other than an offence under road traffic legislation in the
United Kingdom or elsewhere for which a fine or non-custodial
penalty is imposed) in circumstances which would have a
material adverse effect on the Company, the Holding Company,
the Group or their respective reputations; or
(e) the Executive is disqualified from holding office in another
company by reason of an order of a court of competent
jurisdiction; or
(f) the Executive shall become of unsound mind or become a patient
under the Mental Health Act 1983; or
(g) the Executive is convicted of an offence under the Criminal
Justice Act 1993 in relation to insider dealings or under any
other present or future statutory enactment or regulations
relating to insider dealings under English or New York law; or
(h) otherwise than:
i) at the request of the Company; or
ii) in circumstances which a reasonable director,
properly advised, would regard as requiring his
resignation
the Executive ceases to be a director of the Company and/or
the Holding Company.
15. SUSPENSION
(1) The Company may suspend the Executive at any time on full pay to allow
the Company to investigate any complaint made against the Executive in
relation to his employment with the Company provided that the fact of
the suspension will only be disclosed to employees of the Company or
any Group Company who are involved in the investigation and/or to whom
such disclosure may, in the reasonable opinion of the Company be
necessary for genuine operational reasons.
(2) During any period of notice of termination (which is required to be
given under the terms of this Agreement by the Company or the
Executive) the Company shall be under no obligation to assign any
duties to the Executive or to provide any work for him and shall be
entitled to exclude him from its premises, provided that this shall not
affect the Executive's entitlement to receive his normal salary and
other contractual benefits other than that the Executive will cease to
accrue holiday during any such period over and above the minimum
required by the Regulations.
16. RESIGNATION AND RETURN OF COMPANY PROPERTY
(1) Upon the termination by whatever means of this Agreement the Executive
shall:
(a) immediately resign from his office as a director of the
Company, the Holding Company and from any other offices held
by him in any Group Company without claim for compensation;
and
(b) immediately deliver to the Company all credit cards
motor-cars, keys, computer media and other property in
whatever form, of or relating to the business of the Company,
the Holding Company or of any other Group Company which may be
in his possession or under his power or control; and
(c) immediately deliver to the Company all details which must be
provided under clause 12 above together with all material in
whatever form which describes or embodies the concepts or
designs which are so disclosed.
(2) If the Executive fails to comply with clause 16(1) the Company is
hereby irrevocably authorised to appoint some person in his name and on
his behalf to sign and complete any documents or do any thing necessary
to give effect to this clause.
(3) The Executive shall not, without the consent of the Company, at any
time after the termination of this Agreement represent himself still to
be connected with the Company, the Holding Company or any other Group
Company.
17. RECONSTRUCTION OR AMALGAMATION
If the employment of the Executive under this agreement is terminated
by reason of the liquidation of the Company for the purpose of
reconstruction or amalgamation and the Executive is offered employment
with any concern or undertaking resulting from the reconstruction or
amalgamation on terms and conditions not less favourable than the terms
of this Agreement then the Executive shall have no claim against the
Company or any Group Company in respect of the termination of his
employment under this Agreement.
18. RESTRICTIONS
(1) Definitions
In this clause:
(a) "Termination Date" means the date on which the employment
terminates;
(b) "Person" includes any company, firm, organisation or other
entity;
(c) "Area" means any country in the world where on the Termination
Date the Company, the Holding Company and/or any other Group
Company was supplying services;
(d) "Business" means any business carried on by the Company, the
Holding Company or any other Group Company which relates to
the provision of pre-clinical, early clinical and/or
non-clinical biological safety evaluation and research
services to the pharmaceutical and biotechnology, agrochemical
and other chemical industries;
(e) "Client" means any Person to whom the Company, the Holding
Company or any other Group Company supplied during the 6
months preceding the Termination Date and with whom at any
time during such period the Executive was actively involved in
the course of his employment;
(f) "Prospective Client" means any Person with whom the Company,
the Holding Company or any other Group Company had
negotiations or discussions regarding the possible supply of
services during the 6 months immediately preceding the
Termination Date and with whom at any time during such period
the Executive was actively involved in the course of his
employment.
(2) The Executive covenants with the Company and as trustee for
each Group Company that in the event of the Executive
terminating his employment:
(1) Non-competition
the Executive shall not for a period of 6 months from the
Termination Date directly or indirectly be interested or
concerned in any business which is carried on in the Area and
which is competitive or likely to be competitive with the
Business being carried on at the Termination Date and with
which the Executive was actively involved during the 6 month
period ending on the Termination Date, but so that nothing in
this clause 18(2)(1) will prevent the Executive from accepting
employment with, on an in-house basis only, any
pharmaceutical, biotechnological, agrochemical or other
chemical company.
For this purpose, the Executive is concerned in a business if:
(a) he carries it on as principal or agent; or
(b) he is a partner, director, employee, secondee,
consultant or agent in, of or to any Person who
carries on the business; or
(c) subject to clause 11(1) above, he has any direct or
indirect financial interest (as shareholder or
otherwise) in any Person who carries on the business.
(2) Non-solicitation
the Executive shall not for a period of 6 months from the
Termination Date in the Area directly or indirectly:
(a) canvass or solicit business for services similar to
those being provided by the Company, the Holding
Company or any other Group Company as at the
Termination Date from any Client or Prospective
Client;
(b) seek to do business or deal with any Client or
Prospective Client in respect of services similar to
those being provided by the Company, the Holding
Company or any other Group Company as at the
Termination Date; or
<PAGE>
canvass or solicit business from any supplier of the Company,
the Holding Company or any other Group Company with
whom the Executive was actively involved during the 6
months ending on the Termination Date or persuade
such supplier to cease to supply, or to restrict or
vary the terms of supply to the Company, the Holding
Company or any other Group Company or otherwise
interfere with the relationship between such a
supplier and the Company, the Holding Company or any
other Group Company.
<PAGE>
Non-poaching
the Executive shall not for a period of 6 months after the
Termination Date directly or indirectly induce or attempt to
induce any senior employee of the Company, the Holding Company
or any other Group Company who is engaged in any business
activity carried on by the Company, the Holding Company or any
other Group Company at the Termination Date and with whom the
Executive during the 6 months ending on the Termination Date
had material dealings in the course of his employment, to
leave the employment of the Company, the Holding Company or
any other Group Company (whether or not this would be a breach
of contract by that employee for the purposes of being
involved in or engaged in the types of business referred to in
sub-clause 2(1) above).
(3) The restrictions in this clause are considered by the parties to be
reasonable and the validity of each sub-clause shall not be affected if
any of the others is invalid. If any of the restrictions is void but
would be valid if some part of the restriction were deleted, the
restriction in question shall apply with such modification as may be
necessary to make it valid.
(4) The Executive acknowledges that the provisions of this clause are
no more extensive than is reasonable to protect the
Company, the Holding Company or the Group.
(5) If the Executive is suspended from work under the provisions of clause
15, the Company may, at its sole discretion, agree that the period of
time during which the non-competition restriction contained in clause
18(2)(1) is enforceable, starts to run from the date of the suspension
and not from the Termination Date.
19. SEVERABILITY
If any of the provisions of this Agreement become invalid or
unenforceable for any reason by virtue of applicable law the remaining
provisions shall continue in full force and effect and the Company and
the Executive hereby undertake to use all reasonable endeavours to
replace any legally invalid or unenforceable provision with a provision
which will promise to the parties (as far as practicable) the same
commercial results as were intended or contemplated by the original
provision.
20. NOTICES
(1) Any notice required or permitted to be given under this Agreement shall
be given in writing delivered personally or sent by first class post
pre-paid recorded delivery (air mail if overseas) or by facsimile to
the party due to receive such notice at, in the case of the Company,
its registered office from time to time (and marked for the attention
of the Company Secretary) and, in the case of the Executive, his
address as set out in this Agreement (or such address as he may have
notified to the Company).
(2) Any notice delivered personally shall be deemed to be received when
delivered to the address provided in this Agreement or as subsequently
notified in writing and any notice sent by pre-paid recorded delivery
post shall be deemed (in the absence of evidence of earlier receipt) to
be received 2 days after posting and in proving the time of despatch it
shall be sufficient to show that the envelope containing such notice
was properly addressed, stamped and posted. A notice sent by facsimile
shall be deemed to have been received on receipt by the sender of
confirmation in the transmission report that the facsimile had been
sent.
21. STATUTORY INFORMATION
(1) The Schedule to this Agreement sets out information required to be
given to the Executive by the Employment Rights Act 1996.
22. MISCELLANEOUS
(1) This Agreement is governed by and shall be construed in accordance
with the laws of England.
(2) The parties to this Agreement submit to the exclusive jurisdiction
of the English courts.
(3) This Agreement contains the entire understanding between the parties
and supersedes all previous agreements and arrangements (if any)
relating to the employment of the Executive by the Company (which shall
be deemed to have been terminated by mutual consent).
(4) The Executive authorises the Company to deduct from any remuneration
payable to the Executive under this Agreement any sums due from him to
the Company or any Group Company including the cost of repairing any
damage to Company or any Group Company property caused by the
Executive.
THIS AGREEMENT has been executed as a DEED and is intended to be and is hereby
delivered on the date on page 1.
<PAGE>
SCHEDULE
STATEMENT OF PARTICULARS PURSUANT TO THE
EMPLOYMENT RIGHTS ACT 1996
1. The Executive's period of continued employment commenced on 3 November
1997. A period of employment with a previous employer does not count as
part of the Executive's continuous employment with the Company.
2. A contracting-out certificate is not in force in respect of this employment.
3. There is no formal disciplinary or grievance procedure applicable to
this position. Any grievance which the Executive wishes to exercise or
any disciplinary action taken by the Company will be dealt with by the
chairman of the Holding Company. If the Executive is dissatisfied with
any decision he can within 5 working days of that decision appeal to
the Board whose decision shall be final and binding. For the avoidance
of doubt any disciplinary or grievance procedure does not form part of
the service agreement.
4. The Executive is under no obligation to work overseas for periods exceeding
1 month.
5. The Company is not a party to any collective agreement which affects the
Executive's employment.
Executed as a Deed by
HUNTINGDON LIFE SCIENCES
LIMITED ................................
Director
................................
Director/Company Secretary
<PAGE>
Signed as a Deed by
DR FRANK WILLIAM BONNER
in the presence of: .................................
.................................
Signature of Witness
.................................
Name of Witness
.................................
.................................
.................................
Address
.................................
Occupation
CONFORMED COPY
<PAGE>
Dated 10 August 1998
(1) HUNTINGDON LIFE SCIENCES GROUP PLC
(2) THE DIRECTORS NAMED HEREIN
(3) THE SUBSCRIBERS NAMED HEREIN
SUBSCRIPTION AGREEMENT
Charles Russell
8-10 New Fetter Lane
London
EC4A 1RS
Ref: SG/25407/3
<PAGE>
THIS AGREEMENT is made the tenth day of August 1998
BETWEEN:-
<PAGE>
1. HUNTINGDON LIFE SCIENCES GROUP PLC the registered office of which is at
Woolley Road, Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the
"Company");
2. The persons whose names and addresses are set out in Schedule 1
(together the "Directors");
3. The persons whose names and addresses are set out in Schedule 2
(together the "Subscribers").
WHEREAS:
<PAGE>
(A) The Company was incorporated under the Companies Act 1948 on 14
December 1951 as a private company limited by shares under company
registration number 502370 with the name of Nutrition Research Co
Limited. Its name was changed to Nutrition Research Unit Limited on 27
May 1959 and to Huntingdon Research Centre plc on 12 April 1983 (when
it was re-registered as a public company) to Huntingdon International
Holdings plc on 28 June 1985 and to Huntingdon Life Sciences Group plc
on 4 April 1997.
(B) Immediately prior to the passing of the resolutions as set out in the
printed Notice of Meeting forming part of the Prospectus (as defined
below), the Company had an authorised share capital of (pound)7,000,000
divided into 140,000,000 ordinary shares of 5p each of which
114,006,863 ordinary shares of 5p each had been allotted and issued
fully paid.
(C) For the purpose of, inter alia, approving this Agreement (to enable the
Panel on Take-overs and Mergers to waive the obligations to which the
Subscribers would otherwise be subject under rule 9 of the Code) and
implementing the Subscription and the Placing, the Company is proposing
to convene the EGM (as defined below) at which the Resolutions (as
defined below) shall be proposed.
(D) The Directors are all the directors of the Company at the date hereof.
(E) In reliance upon the Documents, the Accounts, the Interim Results, any
Approved Document, any Supplementary Prospectus, any other information
published or otherwise made public by the Company, the various
warranties, covenants, indemnities, undertakings and other terms and
conditions contained herein (but upon nothing else as between the
Company, the Directors and the Subscribers), the Subscribers have
agreed to subscribe for the Subscription Shares at the Subscription
Price on the terms and subject to the conditions of this Agreement.
<PAGE>
NOW IT IS HEREBY AGREED as follows:-
1. Interpretation
1.1 In this Agreement (including the Recitals and the Schedules) the
following words and expressions shall have the respective meanings set
out below:-
"Accounts" the audited balance sheet of each Group
Company as at 31 December 1997 and the audited
profit and loss account and cash flow statement
of each Group Company for the financial
year ended on 31 December 1997, including
in the case of the Company the audited
consolidated balance sheet as at that date
and audited consolidated profit and loss
account for that year, and all notes
thereto and the directors' and auditors'
reports;
"Accountants" Arthur Andersen of Betjeman House, 104
Hills Road, Cambridge, CB2 1LH;
"Act" the Companies Act 1985 as amended;
"Admission" the admission of the
Subscription Shares and the
Placing Shares to the
Official List of the London
Stock Exchange becoming
effective in accordance
with Rule 7.1 of the
Listing Rules;
"Application Form" the application form for use by Qualifying
Shareholders (as defined in the Placing
Agreement) in connection with the Placing,
in the agreed form (Document A);
"Approved Document" has the meaning attributed to it in the
Responsibility Statements;
"Banks" National Westminster Bank plc, Comerica Bank Inc.
and First National Bank of Maryland Inc.;
"Board" the Board of Directors of the Company or a duly
authorised committee thereof;
"Bridging Agreement" the agreement
between the Company,
Huntingdon Life Sciences
Limited ("HLSL") and
National Westminster Bank
Plc regarding a bridging
facility in the agreed form
(Document B);
"Business Day" any day on which clearing banks in the
City of London are open for business;
"Code" the City Code on Take-overs and Mergers;
"Directors" the Executive Directors and Non-Executive
Directors;
"Documents" the Prospectus, Application Form, Proxy
and the Press Announcement;
"Dresdner Kleinwort Benson" Kleinwort Benson Limited of 20
Fenchurch Street,
London EC3P 3DB;
"EGM" the Extraordinary General Meeting of the
Company to be convened for 2 September
1998 at which the Resolutions are to be
proposed, and any adjourned meeting
thereof;
"Executive Directors" those persons whose names and addresses
are set out in Part A of Schedule 1;
"Existing Facility" has the meaning attributed to it in the New
Facility;
"Facility Documents" the Existing Facility, the New Facility,
the Security, the
Security Deed, the Bridging Agreement and
the FOREX Agreement;
"FHP Consultancy Agreement" the
consultancy agreement to be
between the Company and
Focused Healthcare
Partnership Limited and the
undertaking between Mr
Baker and the Company, both
in the agreed form
(Documents C);
"FOREX Agreement" the Existing Ancillary Facilities as defined
in the New Facility, in the agreed form
(Document D);
"FSA" the Financial Services Act 1986 as
amended, including any regulations made
pursuant thereto;
"Group" the Company and its subsidiary undertakings (but
not, for the avoidance of doubt, any
associated undertakings);
"Group Company" any company in the Group;
"Interim Results" the unaudited
consolidated balance sheet
of the Group as at 30 June
1998 together with the
unaudited consolidated
profit and loss account of
the Group for the 6 months
ended on 30 June 1998;
"Listing Rules" the listing rules made by the London Stock
Exchange under Section 142 of the FSA and
in force at the date of this Agreement;
"London Stock Exchange" the London Stock Exchange Limited;
"Mr Baker" Andrew Baker c/o;
"Nat West Letter" the letter from National Westminster Bank
Plc to the Subscribers in the agreed form
(Document E) confirming that conditional
only on the satisfaction of Conditions
Precedent (ii)and (iii) in Schedule 6 to
the New Facility the facility of
(pound)24,500,000 will be advanced to the
Company on the date of that letter;
"New Facility" the facility agreement between the
Company (i) HLSL (2 Huntingdon Life
Sciences Inc. ("HLS")(3) Bankers (4) and
National Westminster Bank Plc as agent (5)
in the agreed form (Document F);
"Non-Executive Directors" those persons whose names and addresses
are set out in Part B of Schedule 1;
"Ciba Geigy Agreement" the Deed
of Variation between the
Company and Ciba Geigy plc
rescheduling payment of
monies due to Ciba Geigy
plc and waiving breaches by
the Company in the agreed
form (Document G);
"Option Agreement" the agreement between Mr Baker and the
Company in the agreed form (Document H)
regarding options over Ordinary Shares
to be granted to Mr Baker by the
Company on substantially the same terms
as apply to the Unapproved Option Scheme;
"Ordinary Shares" the ordinary shares of 5p each in the
capital of the Company;
"Placing" the placing and open offer of the
Placing Shares
pursuant to the terms of and subject to
the conditions to the Placing Agreement;
"Placing Agreement" the placing and open offer agreement
between the Company
and Dresdner Kleinwort Benson in the
agreed form (Document I);
"Placing Shares" the new Ordinar Shares to be issued by the
Company pursuant to the Placing Agreement;
"Powers of Attorney" the powers of attorney given by each of
the Directors in
the agreed form (Document J);
"Press Announcement" means the press announcement in the agreed
form (Document K) giving details
inter alia, of the Subscription and the
Placing;
"Properties" the properties, including all of the
properties used by the Group for the
purposes of its business, details of all
of which are set out in paragraph 8 of
Part VI of the Prospectus;
"Proposals" the Proposals as defined in the Prospectus;
"Prospectus" the prospectus relating, inter alia, to
the Company, the Subscription, the Placing
and the Resolutions in the agreed form
(Document L);
"Proxy" the form of proxy in the agreed form
(Document M) for use by shareholders
in connection with the EGM;
"Resolutions" the resolutions set out in the notice of
EGM in the Prospectus;
"Responsibility Statements" the responsibility statements to be given
by the Directors in the agreed form
(Document N);
"Security" has the meaning attributed to it in the New
Facility;
"Security Deeds" the two deeds in the agreed form (Documents
0) varying the Guarantee and Debenture dated
1 November 1995 included in the definition
of the Security and entered into on the
date hereof;
"Service Agreements" the service agreements to be between M
Sandford and C Macdonald and the Company,
respectively, in the agreed form (Documents P);
"Specified Event" an event occurring or matter arising on or
after the date hereof and before Admission
which if it had occurred or arisen before the
date hereof would have rendered any of the
Warranties untrue or incorrect in any
respect which is material in the context
of the Group or the Subscription or the
Placing;
"Subscription Price" 12 1/2 pence per Ordinary Share;
"Subscription Shares" the 120,000,000 new Ordinary Shares which
are to be allotted and issued by the
Company to the Subscribers pursuant to this
Agreement;
"subsidiary undertaking have the meanings ascribed to them
or parent undertaking" by Section 258 of the Act;
"Supplementary Prospectus" means any supplementary
prospectus prepared for the purposes of
Section 147 of the FSA and the Listing
Rules;
"Taxation/Tax" includes all forms of taxation, duties,
imposts, contributions, charges, sums and
levies (including without limitation
social security contributions and
withholding taxes) whatsoever and whenever
imposed, by a Taxation Authority and
whether or not it is primarily payable by
the Company or any other person, and all
amounts recoverable by a Taxation
Authority as if they were Taxation and
all charges, interest, fines, penalties
and surcharges incidental, or relating to
the same;
"Taxation Authority" the Inland
Revenue, H M Customs &
Excise, the United States
Internal Revenue Service
and any other governmental
department or agency or
office whether in the
United Kingdom, the United
States or elsewhere having
authority or jurisdiction
in relation to Taxation
matters;
"Unapproved Option Scheme" the Huntingdon Unapproved Share Option
Scheme proposed to
be adopted pursuant to Resolution 4;
"Unapproved Option Scheme the rules of the Unapproved Option
Rules" Scheme in the agreed form (Document Q);
"US Subscribers" the Subscribers other than Andrew
Stafford-Deitsch and Gordon Grender;
"VAT" United Kingdom value added tax;
"Verification Notes" the verification notes in the agreed form
Document R) incorporating the answers to the
verification questions in the notes
confirming the factual information
contained in the Prospectus as being
accurate or not misleading and the
statements of opinion or belief as being
reasonably formed, held or deduced and
copies of documents cited in response to
such queries;
"Warranties" the warranties, covenants and undertakings
contained in Clause 10 and Schedule 5;
"Working Capital Report" the report
on the consolidated
cashflow and working
capital projections of the
Group for the period
commencing 1 July 1998 and
ending 31 December 1999 in
the agreed form (Document
S).
1.2 Any reference to a document being "in the agreed form" means in the
form of the draft or proof of the document signed for the purpose of
identification by Charles Russell (on behalf of the Subscribers) and
Simmons and Simmons (on behalf of the other parties to this Agreement).
A complete list of documents in the agreed form is set out in Schedule
3.
1.3 The Interpretation Act 1978 shall apply to this Agreement in the
same way as it applies to an enactment.
1.4 References in this Agreement to Recitals, Clauses, sub-clauses and
Schedules are to the Recitals, Clauses, sub-clauses of and Schedules to
this Agreement.
1.5 Any provision of this Agreement which is expressed to bind more than
one person shall save where stated otherwise bind them severally.
1.6 headings are included in this Agreement for convenience only and shall
be disregarded in its interpretation.
1.7 Reference in any form to the knowledge and/or information and/or belief
and/or awareness of any person (whether corporate or otherwise) or
words to similar effect shall be deemed to include any knowledge,
information, belief or awareness which any such person would have had
if he or it, or (if corporate) its directors, officers and employees
had made due and careful enquiries (including for the avoidance of
doubt due and careful enquiries of all relevant advisers) and taking
into consideration the responsibilities of such person or (if
corporate) its directors, officers and employees in respect of the
contents of the Documents.
1.8 References in this Agreement to the word "material" shall be deemed to
mean a serious adverse change or serious adverse changes in the context
of the Group (including but not limited to its condition (financial or
otherwise), business, prospects, net worth or results of operations) or
the Subscription or the Placing or if such matter gives rise to a
readily quantifiable financial liability, the word "material" shall be
deemed to mean an adverse change or changes to the condition (financial
or otherwise), business, prospects, net worth or results of operations
which may give rise to a liability or aggregate liability of any member
or members of the Group of (pound)1.5 million or more.
1.9 References to statutes or statutory provisions include references to
any orders or regulations made thereunder and references to any
statute, provision, order or regulation as amended, modified,
re-enacted or replaced from time to time whether before or after the
date hereof and to any previous statute, statutory provision, order or
regulation amended, modified, re-enacted or replaced by such statute,
provision, order or regulation.
1.10 References to the Subscribers shall, when made in respect of any
rights, duties or obligations of any nature due to the Subscribers, be
deemed to include reference to Mr Baker in his own capacity and as
trustee for Focused Healthcare Partnership Limited.
2. Conditions
2.1 The obligations of the Subscribers under this Agreement are conditional
upon:-
2.1.1 the Documents having been approved on behalf of the London Stock
Exchange, the Panel on Takeovers and Mergers having approved
the Prospectus and agreeing, subject to the passing of Resolution
1 on a poll of independent shareholders, to waive any obligations
of the Subscribers to make a general offer to shareholders of the
Company under Rule 9 of the Code, in each case prior to the
publication of the Documents and such approval and waiver not
being withdrawn prior to this Agreement becoming otherwise
unconditional in all respects;
2.1.2 two copies of the Prospectus being delivered to the
Registrar of Companies for registration in accordance with
Section 149 of the FSA;
2.1.3 the submission (signed where appropriate by each of the
Directors) to the London Stock Exchange of all documents
specified by the Listing Rules for the purposes of Section
154 of the FSA in accordance with the Listing Rules and the
London Stock Exchange approving the contents of such
documents or authorising the issue of such documents without
such approval by not later than 10 August 1998, or such
later date as the Subscribers may agree and in any event
before the document concerned is issued;
2.1.4 the FHP Consultancy Agreement, the Placing Agreement, the Option
Agreement, and the Service Agreements becoming unconditional
in all respects other than as regards completion of this
Agreement, and the Company or HLSL or HLS or any of the members
of the Group which are party thereto not having varied or agreed
to vary any of the terms, or having exercised or omitted
to exercise any of its rights or benefits under any of such
documents or any of the Facility Documents or the Ciba Geigy
Agreement (including, but without limitation, consenting to,
agreeing or waiving the exercise or omission to exercise by any
party to any of such documents or any of the Facility Documents
or the Ciba Geigy Agreement of any of its rights, benefits or
obligations under any of such documents or any of the Facility
Documents or the Ciba Geigy Agreement) and the Unapproved Option
Scheme Rules and the Approved Option Scheme Rules not having been
varied, without in any such case the prior written consent of the
Subscribers;
2.1.5 the receipt by Mr Baker on behalf of the Subscribers of the NatWest
Letter;
2.1.6 the passing of all of the Resolutions without amendments
(save with the prior written consent of the Subscribers) on
or by 2 September 1998 (or such later date as the
Subscribers may agree);
2.1.7 the fulfilment by the Directors and the Company of their
respective obligations under Clauses 3 and 4 and their
respective obligations under Clauses 5.3, 5.5, 7.2, 8, 9,
10.4 and 13.4 in accordance with their term and in any event
on or before Admission, or in any such case such later time
or date as the Subscribers may agree;
2.1.8 none of the Warranties being untrue or inaccurate in any
material respect at the date hereof and no fact or
circumstances having arisen and nothing having been done or
omitted to be done (together an "Event") which
(i) would render any of such Warranties untrue or
inaccurate in any material respect if they were
repeated as at Admission or at any time on or
after 28 August 1998 up to and including
Admission; or
(ii) would entitle or would have entitled (with the
giving of notice and/or lapse of time and/or the
satisfaction of any other condition and/or
compliance with any other formality) the Banks or
any of them:-
(a) to require repayment before its stated maturity of any
amounts from time to time outstanding under, or to refuse
the making of an advance or drawdown or otherwise to make
available funds under, the Existing Facility or the
Bridging Agreement or the FOREX Agreement (save for any
Event which relates solely to the FOREX Agreement and which
(i) does not give rise to a breach of any other warranty,
condition or term of this Agreement, (ii) is not a default
and would not entitle the Banks or any of them to exercise
their rights, remedies or powers under the Existing
Facility or the Bridging Facility, and (iii) is not a
Default or Default Occurrence under the New Facility; or
(b) to enforce any of the Security; or
(iii) which would be a Default or Default Occurrence (as
defined in the New Facility) under the New
Facility (or would be if any advance had been made
thereunder and remained outstanding);
2.1.9 any Supplementary Prospectus being approved by the London
Stock Exchange and published in accordance with the Listing
Rules and Clause 3 before the condition contained in
sub-clause 2.1.11 shall have been satisfied;
2.1.10 the delivery by the Company and the Executive Directors to
the Subscribers of a certificate in the form set out in
Schedule 6 on 3rd September 1998 not later than 5.00pm (or
such later time or date as the Subscribers may agree);
2.1.11 Admission occurring on or before 4 September 1998 (or such
later date as the Subscribers may agree); or
2.1.12 if any demand shall be made by any of the Banks for payment or
repayment of any sums from time to time owing to the Banks or
any of them pursuant to the Existing Facility or the Bridging
Agreement or the FOREX Agreement save for any such demand in
respect solely of the FOREX Agreement and which (i) does not
give rise to a breach of any other warranty, condition or term of
this Agreement, (ii) is not a default and would not entitle
the Banks or any of them to exercise their rights, remedies or
powers under the ExistingFacility or the Bridg in Facility,
and (iii) is not a Default or Default Occurrence under the New
Facility.
PROVIDED THAT each of the parties to this Agreement shall perform its
respective obligations under this Agreement until such time (if any) as
any of such conditions shall have become incapable of being fulfilled
whereupon the provisions of Clause 2.3 shall apply.
2.2 The Company, each of the Directors and the Subscribers will
respectively use all reasonable endeavours to procure the fulfilment of
the conditions set out in Clause 2.1 by the times and dates stated
therein (or such later time and/or date as the Subscribers may agree)
and undertake to provide such information, supply such documents, pay
such fees, give such undertakings and do all such acts and things as
may be required by the London Stock Exchange to enable Admission to
occur and shall notify each other party forthwith of any information of
which they are or become aware at any time until this Agreement becomes
unconditional in all respects which could or does indicate that any of
the said conditions is not, or may not be, capable of being satisfied.
2.3 If any of the conditions set out in Clause 2.1 is not fulfilled, or
waived by the Subscribers, by the time and/or date specified therein
(or such later time and/or date as the Subscribers may agree) or, where
no time and/or date is specified, before the condition contained in
Clause 2.1.11 shall have been satisfied, this Agreement shall cease and
determine and no party to this Agreement will have any claim against
any other party to this Agreement for costs, damages, compensation or
otherwise except that:-
2.3.1 such termination shall be without prejudice to any accrued
rights or obligations of any party under this Agreement;
2.3.2 the Company shall pay the reasonable costs and expenses
(including VAT) properly incurred of the Subscribers in
direct connection with the Proposals up to a maximum
aggregate sum of (pound)500,000, unless such conditions have
not been fulfilled as a direct result of the default by the
Subscribers under this Agreement (which for the avoidance of
doubt shall not include the exercise of any right the
Subscribers may have under this Agreement); and
2.3.3 the provisions of Clauses 10, 11, 13 and 18 to 20 shall
remain in full force and effect.
3. Listing Application
3.1 The Company shall procure the delivery to the London Stock Exchange or
true copies of each of all documents in the appropriate numbers and
(where relevant) signed by the appropriate persons or certified as true
in accordance with and as required pursuant to paragraph 7.5 of the
Listing Rules.
3.2 Not later than 9.00am on the day of the consideration of the
application for Admission, the Company shall procure the delivery to
the London Stock Exchange of payment of the appropriate listing fees in
accordance with paragraph 7.7 of the Listing Rules.
3.3 The Company shall procure compliance with the obligations imposed upon
it by the Act, Part IV of the FSA and the Listing Rules in respect of
or by reason of the matters contemplated by this Agreement including
but without limitation:-
3.3.1 the filing of all original and copy documents and forms at the
Companies Registry;
3.3.2 the making available for inspection at the offices of
Simmons & Simmons at 21 Wilson Street EC2M 2TX for a period
of not less than 14 days following the issue of the
Prospectus of the documents required to be made available
for inspection by the Company by paragraph 8.22 of the
Listing Rules and pursuant to the Code;
3.3.3 the making available free of charge, of sufficient copies of
the Prospectus in accordance with the requirements of the
Listing Rules; and
3.3.4 the delivery, as soon as practicable after the consideration
of the application for Admission and in any event no later
than five business days after they become available, to the
London Stock Exchange, of any relevant documents which are
required by paragraph 7.8 of the Listing Rules.
3.4 The Company shall procure for Dresdner Kleinwort Benson all such
information and documents as they may reasonably require to enable the
Company to discharge its obligations and Dresdner Kleinwort Benson to
discharge its obligations as Sponsor and Kleinwort Benson Securities
Limited to discharge its obligations as stockbroker, to the Company in
relation to the matters contemplated by this Agreement.
3.5 Notwithstanding the rights of the Subscribers pursuant to Clause 2,
where after publication of the Prospectus but before Admission there is
a significant change affecting any matter required to be included, or a
significant new matter arises which would have been required to be
included, in the Prospectus by section 146 of the FSA or by the Listing
Rules, any Director who becomes aware of such change or matter shall
forthwith notify the other Directors and the Subscribers and the
Directors shall forthwith:-
3.5.1 disclose the change or matter to Dresdner Kleinwort Benson in
writing; and
3.5.2 prepare and, through Dresdner Kleinwort Benson, deliver on
behalf of the Company to the London Stock Exchange for
approval a Supplementary Prospectus containing details of
the change or matter in a form complying with Section 146 of
the FSA and the Listing Rules and agreed upon by the
Subscribers and the Company.
3.6 Forthwith on receipt of appropriate evidence of approval by the London
Stock Exchange of the Supplementary Prospectus or of the authorisation
of their issue without such approval, the Company shall procure its
registration at the Companies Registry.
4. Announcement and Publication
The Company will procure:-
4.1 as soon as practicable after 8.00am on the date hereof release the
Press Announcement to the press and the London Stock Exchange; and
4.2 on or before close of business on the date hereof post copies of the
Documents to the shareholders of the Company.
5. Subscription
5.1 On the terms of and subject to the conditions of this Agreement and
relying on the warranties, covenants, indemnities and undertakings
contained herein the Subscribers (or, in the case of Mr Baker at Mr
Baker's discretion Focused Healthcare Partnership Limited ("FHP") or,
in the case of any Subscriber which is an investment manager any fund
managed by such Subscriber) will subscribe in full in cash for such
number of the Subscription Shares as are set opposite their names in
the third column of Schedule 2 at the Subscription Price ("Subscription
Cash") which price the Subscribers will procure to be paid or pay on or
by Admission.
5.2 The Subscription Shares will be subscribed free from all liens charges
and encumbrances of any nature whatsoever.
5.3 The Directors undertake with the Subscribers that they will on or
before 7.30 am on the date of Admission allot the Subscription Shares
at the Subscription Price to the Subscribers, or to such nominees as
they may direct or also, in the case of Mr Baker to FHP or also in the
case of any Subscriber which is an investment manager any fund managed
by such Subscriber, conditionally only on satisfaction of the condition
in Clause 2.1.11 on terms that, upon such allotment becoming
unconditional, such shares shall be fully paid and shall rank pari
passu in all respects with and be identical to the Ordinary Shares in
issue including the right to receive all dividends and other
distributions declared, made or paid after the date of Admission.
Forthwith after such allotment the Company shall provide the
Subscribers and Dresdner Kleinwort Benson with certified copies of the
Board resolution allotting the Subscription Shares.
5.4 Each Subscriber severally warrants and undertakes to the Company that
the Subscription Cash due from him is, upon this Agreement coming into
effect, held by N.M. Rothschild & Sons Limited solely for the purpose
of paying the Subscription Cash pursuant to the terms of this
Agreement, subject only to this Agreement becoming unconditional and
not being terminated.
5.5 The Directors undertake that, subject to the passing of all of the
Resolutions, prior to Admission a board meeting of the Company shall be
held at which, conditional upon Admission:
5.5.1 the FHP Consultancy Agreement, the Option Agreement and the
Service Agreement shall be executed and entered into by the
Company;
5.5.2 Mr Baker shall be appointed a director of the Company and shall
be appointed Executive Chairman;
5.5.3 Mr L Rice shall resign as a director of the Company;
5.5.4 the Subscription Shares and the Placing Shares shall be
allotted and issued in accordance with the terms of this
Agreement and the Placing Agreement (respectively); and
5.5.5 the Unapproved Option Scheme shall be adopted by the Company.
5.6 Each US Subscriber acknowledges and agrees that the Subscription Shares
have not been registered under the United States Securities Act of 1933
(the "1933 Act") or the securities laws of any state of the United
States, and are being offered and sold to the US Subscribers pursuant
to an exemption from registration contained in Regulation D under the
1933 Act and applicable state law (and not pursuant to Regulation S
under the 1933 Act). Consequently, the Subscription Shares to be issued
to the US Subscribers shall be "restricted shares" as that term is
defined in Rule 144 under the 1933 Act, and each US Subscriber
understands and agrees that the Subscription Shares to be issued to the
US Subscribers cannot be offered, sold, delivered, transferred or
otherwise disposed of except pursuant to a registration statement under
the 1933 Act and applicable state law or in accordance with an opinion
of counsel acceptable to the Company that said transaction is exempt
from registration under the 1933 Act and applicable state law. Each
share certificate (including any successor share certificate) shall
bear a legend as set forth below:
Form of Legend
These shares have not been registered under the United States
Securities Act of 1933, as amended (the "1933 Act") or the securities
laws of any state of the United States. Consequently, these shares
cannot be offered, sold, delivered, transferred or otherwise disposed
of except pursuant to a registration statement under the 1933 Act and
applicable state law or in accordance with an opinion of counsel
acceptable to the Company that said transaction is exempt from
registration under the 1933 Act and applicable state law. The Company
shall not be required to register any purported sale, delivery,
transfer, or other disposition that is contrary to the terms of this
legend.
6. Registration
Upon Admission, the Directors shall procure that the Company will
deliver to the Subscribers or as they may direct the definitive share
certificates in the names of the Subscribers or also, in the case of Mr
Baker FHP or also in the case of any Subscriber which is an investment
manager any fund managed by such Subscriber or of such nominees of the
Subscribers as the Subscribers shall specify and in such denominations
as the Subscribers shall specify in respect of the Subscription Shares.
7. Company's and Directors' Further Obligations
7.1 Forthwith on the execution of this Agreement the Company
will deliver to the Subscribers:-
7.1.1 one copy of the final form of the Prospectus signed by
each Director (or his duly authorised attorney);
7.1.2 one executed copy of each Power of Attorney and of
each Responsibility Statement;
7.1.3 one copy of the Verification Notes and the answers,
annexures and all supporting documentation thereto signed
by each Director; and
7.1.4 one original signed copy of the New Facility and the
Security Deed;
7.2 The Directors and the Company undertake to the Subscribers that,
pending this Agreement becoming unconditional in all respects and
subject to letters of confidentiality substantially in the form as
executed by Mr Baker and the financial advisers to the Subscribers in
connection with the Proposals being executed and binding, they will on
request provide to the Subscribers, their accountants, solicitors and
other professional advisers authorised by the Subscribers such
facilities and information relating to the Group and its affairs,
including access to its books and records, as the Subscribers may
reasonably from time to time require and will consult with the
Subscribers, or such representatives and advisers as are designated by
them for this purpose, with respect to any action which may materially
affect the business, assets, trading profits or prospects of the Group
taken as a whole.
8. Fees and Expenses
The Company hereby undertakes that it will pay all of its costs,
charges and expenses (plus any VAT thereon) of and incidental to the
Proposals including in particular (but without limiting the foregoing)
the application for Admission, the costs of printing and distributing
the Prospectus, the fees of the London Stock Exchange and all
accountancy, legal and other professional fees and expenses in
connection with the Proposals (including the legal fees of Wragge & Co
in advising the Executive Directors on their personal positions) up to
but not exceeding (without the prior written consent of the
Subscribers) an aggregate of (pound)1.8 million.
9. Announcements
9.1 Save as expressly contemplated hereunder, neither the Company nor any
Director shall make or despatch any public announcement or
communication concerning the Group or in connection with the
Subscription or the Placing which is or may be material in relation to
the Group, the Subscription or the Placing or the issue of the
Subscription Shares between the date of this Agreement and the date of
Admission (both dates inclusive) without the prior written consent of
Mr Baker as to the content, timing and manner of making or despatch
thereof (such consent not to be unreasonably withheld or delayed). This
restriction does not apply to a normal trade announcement or any
announcement or communication required by law, regulation, the Code or
the London Stock Exchange in respect of which it was not practicable in
the circumstances, having made all reasonable efforts, to obtain such
prior written consent.
9.2 The Company and each of the Executive Directors shall use all
reasonable endeavours to procure that each Group Company and employees
of each Group Company and advisers to and agents of the Company observe
the restriction set out in Clause 9.1 as if they were parties hereto.
10. Warranties and Undertakings by the Company and Undertakings by the
Directors
10.1 The Company warrants to the Subscribers that the warranties set out in
Schedule 5 are at the date hereof, and that warranty 23.2 will be as at
Admission true and accurate.
10.2 For the purpose of Clause 10.1, each of the warranties shall be
qualified to the extent of the facts or information fairly disclosed in
the documents listed in Schedule 4.
10.3 The warranties given in Clause 10.1 and Schedule 5 shall remain in full
force and effect notwithstanding the completion of the Subscription and
all other matters and arrangements referred to in or contemplated by
this Agreement.
10.4 Each of the Company and the Directors severally undertake to the
Subscribers insofar as they are able:
10.4.1 not to cause and to use all reasonable endeavours not
to permit any Specified Event;
10.4.2 to give notice to the Subscribers of any breach of the
Warranties or any other provision of this Agreement, or of
the occurrence of any Specified Event, which shall come to
his or its knowledge prior to Admission.
10.5 The liability of the Company in respect of any claim in connection with
any of the Warranties ("Relevant Claim") shall, save where the
liability in question arises as a result of fraud on the part of any
Group Company or any Group Company's respective directors, officers,
employees or agents or where the liability in question relates to a
matter which has been deliberately concealed or withheld by any Group
Company or any such person, be limited as follows:-
10.5.1 the aggregate liability of the Company in respect of this
Agreement shall be limited to (pound)15,000,000 (together
with all costs, expenses and interest incurred or suffered
by any of the Subscribers in connection therewith);
10.5.2 the Company shall not be liable in respect of a Relevant
Claim unless:-
(a) the liability of the Company in respect of that
Relevant Claim (ignoring any liability for costs,
expenses and interest) exceeds (pound)25,000;
(b) the aggregate liability of the Company in respect
of all Relevant Claims (excluding any for which
liability is excluded by sub-paragraph 10.5.2(a))
exceeds (pound)250,000 in which case the Company's
liability shall be the whole sum due and not just
the excess over (pound)250,000;
10.5.3 the Company shall have no liability in respect of any
Relevant Claim unless the Subscribers or any of them
shall have given notice in writing to the Company of
such claim (giving, to the extent reasonably practicable,
reasonable details of the claim or matter in respect of
which such claim is made) such notice to be given not
later than whichever is the later of (a) the date nine
months after the date of this Agreement and (b) the date one
month after the publication of the consolidated accounts
of the Group for the year ending 31 December 1998;
10.5.4 all and any liability of the Company in respect of any
Relevant Claim notified to it in accordance with paragraph
10.5.3 shall (if such Relevant Claim has not previously been
satisfied, settled or withdrawn) be extinguished on the
expiry of nine months from the date of such notification of
the Relevant Claim unless the Subscribers or any of them
shall within such period have issued and validly served on
the Company proceedings in respect of such Relevant Claim;
10.5.5 the Company shall not be liable in respect of any Relevant
Claim to the extent that the loss giving rise to the claim
is unconditionally and finally recovered by the Company from
another person other than a member of the Group or any
associated undertaking of the Group or any of the directors,
officers, or employees of a Group Company or associated
undertaking of the Company;
10.5.6 the Company shall not be liable in respect of any
Relevant Claim to the extent that the subject of the
claim has been or is made good or is otherwise
compensated without cost to the Subscribers (or any of them)
or any Group Company or associated undertaking of the
Company or any of the directors, officers, or employees
of a Group Company or associated undertaking of the
Company and should the Company pay to or for the benefit
of any Subscriber an amount in respect of any Relevant
Claim and any other Subscriber subsequently receives
from any other person any payment in respect of the
matter giving rise to the Relevant Claim, the Subscribers
shall thereupon pay to the Company and amount equal
to the payment received. The Subscriber's shall not be
entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of
the same loss;
10.5.7 the Subscribers confirm that the Company shall not be liable
in respect of any Relevant Claim to the extent of the
Subscriber's actual knowledge, as a result of the review of
any written information, of any matter which would give rise
to a Relevant Claim.
11. Indemnities
11.1 Subject to Clause 11.2 the Company undertakes to the Subscribers, to
keep each and every Subscriber indemnified against all losses, claims,
demands, damages, costs, charges, expenses or liabilities (or actions,
proceedings or investigations in respect thereof) which such Subscriber
may suffer or incur or which may be made against such Subscriber or
which arise directly or indirectly, out of or in connection with:-
11.1.1 the issue and/or publication of the Documents and/or any
other documents relating to the Subscription which have been
authorised by or on behalf of the Company;
11.1.2 any breach or alleged breach by the Company or any of the
Directors of this Agreement;
11.1.3 the failure or alleged failure by the Company or any of the
Directors to comply with any legal, statutory or regulatory
requirement in relation to the Placing, the Subscription the
allotment and/or issue of any Placing Shares or Subscription
Shares and any transaction or matter referred to in the
Documents
together with the properly incurred costs and expenses of such
Subscriber in enforcing its rights under this Clause 11.
11.2 The obligations of the Company under clause 11.1 shall not apply to any
liabilities, actions, costs, charges, expenses, claims or losses
suffered by a Subscriber to the extent that they are finally judicially
determined by a court of competent jurisdiction or are agreed by the
Subscribers to have arisen from or in relation to any breach by the
Subscribers of their obligations under this Agreement or under any
statutory or regulatory requirement or arise from the negligence or
wilful default of any Subscriber.
11.3 All sums payable to any Subscriber under this clause 11 shall be paid
free and clear of all deductions or withholdings unless the deduction
or withholding is required by law, in which event the person making
payment shall pay such additional amount as shall be required to ensure
that the net amount received by the Subscriber will equal the full
amount which would have been received by it had no such deduction or
withholding been made. If the Inland Revenue or any other taxing
authority in any jurisdiction brings into any charge to Tax (or into
any computation of income, profits or gains for the purposes of any
charge to Tax) any sum payable to any Subscriber under this Clause 11
then the amount so payable shall be grossed up by such amount as will
ensure that after deduction of the Taxation so chargeable there shall
remain a sum equal to the amount that would otherwise be payable
(additional payments being made on demand as may be necessary).
12. Representations and Warranties and Undertakings by the Subscribers
12.1 For the purposes of establishing the entitlement of the US Subscribers
to purchase Subscription Shares pursuant to an exemption under the 1933
Act and applicable state law, each of the US Subscribers severally
represents and warrants as follows:
12.1.1 The US Subscriber has had access to and reviewed the
Prospectus and such financial and other information
regarding the Company as the US Subscriber deems necessary
in respect of his or its decision to acquire Subscription
Shares. The US Subscriber has had an opportunity to
ask questions and receive answers concerning such
matters as he deems relevant. The US Subscriber has
reviewed the risk factors in the Prospectus, and
acknowledges that an investment in the Company's shares
is a high risk investment. Nothing in this Clause 12.1.1
shall impair or qualify the full force and effect of the
representations warranties and other provisions of
this Agreement and the Subscribers reliance thereon or
rights thereunder.
12.1.2 The US Subscriber is an accredited investor within
the meaning of Regulation D under the 1933 Act, and has
such knowledge and experience in financial and business
matters as to be capable of evaluating the merits
and risks of an investment in Subscription Shares and
is able to bear the economic risk of such investment.
If the US Subscriber is not an individual it has not
been formed for purposes of making this investment.
If the US Subscriber is an individual, he has specialised
knowledge and experience relating to the Company's industry.
12.1.3 As an acquirer in an intended private placement of
Subscription Shares that have not been registered under the
Act, the US Subscriber is acquiring Subscription Shares
solely for his or its own account and Subscription Shares
are not being acquired by US Subscribers with a view to any
resale, distribution, transfer or other disposition thereof
in violation of the 1933 Act.
12.1.4 If the US Subscriber is an individual, he is resident in the
State indicated below next to his name. If the US Subscriber
is an entity, it is incorporated in the state indicated next
to its name and has its head office in the state indicated
next to its name.
US Subscriber State of Residence/Inc./Hdqtrs.
Stephens Group Inc - Arkansas/Arkansas
Quilcap Corp. - Delaware/New York
Oracle Partners L.P. - Delaware/New York
Sidney Knafel New York - -
Rodman Moorhead III New York - -
Andrew Baker New Jersey - -
Kirby Cramer Washington - -
12.2 Each US Subscriber acknowledges and agrees that the Subscription Shares
issued to it or him may only be resold, transferred or otherwise
disposed of pursuant to a registration statement under the 1933 Act and
applicable state law or in accordance with an opinion of counsel
satisfactory to the Company that said transaction is exempt from
registration under the 1933 Act and applicable state law.
12.3 Each Subscriber severally warrants to the Company that he has full
power and authority to enter into and perform his obligations under
this Agreement which will constitute binding obligations on such
Subscriber in accordance with its terms upon coming into effect.
12.4 Each Subscriber that holds Ordinary Shares or Huntingdon ADSs (as
defined in the Prospectus) undertakes not to vote at the EGM in respect
of Resolution 1 and not to accept any Placing Shares which may be
offered to such Subscriber under the Open Offer (as defined in the
Prospectus).
12.5 Each of Andrew Stafford-Deitsch and Gordon Grender severally represent
and warrant to the Company that he is not a US Person as defined in
Regulation S of the Securities and Exchange Commission.
12.6 The Company shall not be entitled to rescind this Agreement for any
reason.
13. Obligations to the Subscribers
13.1 The obligations of the Company to the Subscribers shall be binding on
its successors.
13.2 Subject to Clause 10.5, any liability to the Subscribers hereunder may
in whole or in part be released, compounded or compromised and time or
indulgence may be given by the Subscribers as regards any person under
such liability without prejudicing the Subscribers' rights against any
other person under the same or a similar liability.
13.3 Subject to Clause 10.5, no neglect, delay or indulgence on the part of
any Relevant Person (as the case may be) in enforcing the Warranties or
the indemnities set out in this Agreement or in enforcing any other
term or condition of this Agreement shall be construed as a waiver
thereof and no single or partial exercise of any right or remedy under
this Agreement will preclude or restrict the further exercise or
enforcement of any such right or remedy. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any
other rights and remedies (whether provided by law or otherwise).
13.4 Each of the Directors hereby agrees that, if and to the extent that he
incurs any liability under this Agreement, he will not seek any
contribution or seek to recover any sum from the Company or any other
member of the Group or any of their officers or employees in respect of
such liability, provided that this shall not preclude a Director from
recovering under any insurance policy maintained by the Company for his
benefit pursuant to Section 310 of the Act.
13.5 The Company and the Directors confirm that, in addition to any remedy
or right of action available under this Agreement, the Subscribers
shall be entitled (as allottees of new Ordinary Shares or otherwise) to
the same remedies and rights of action against the Company and/or the
Directors to the same extent as any other person acquiring any Ordinary
Shares on the basis of the Documents and as referred to in Recital (E),
but not otherwise.
14. Time of the Essence
Any time, date or period referred to in any provision of this Agreement
may be extended by agreement between the parties but as regards any
time, date or period originally fixed or any time, date or period so
extended time shall be of the essence.
15. Notices
15.1 Any notice or other communication required to be given or served under
or in connection with this Agreement shall be in writing and shall be
sufficiently given or served if delivered or sent:-
15.1.1 in the case of the Company to its registered office for the
time being marked "For the urgent attention of the Company
Secretary";
15.1.2 in the case of any Director to his address stated in Part A
or Part B of Schedule 1 or to such other address as may be
notified in writing for the purposes of this Agreement to
the party giving or service the notice or other
communication;
15.1.3 in the case of the Subscribers to Mr Baker marked "For the
urgent attention of Mr Baker".
15.2 Any such notice or other communication shall be delivered by hand or
sent by fax or pre-paid first class post. If sent by fax such notice or
communication shall conclusively be deemed to have been given or served
at the time of despatch, (provided that a confirmatory copy of such
notice is sent by post in accordance with this Clause 15.2). If sent by
post such notice or communication shall conclusively be deemed to have
been received 48 hours from the time of posting or, if to an overseas
address 5 Business Days from the time of posting.
15.3 Any notice given by the Subscribers under Clause 2.2 may also be given
by Mr Baker to any Director either personally or by telephone (to be
confirmed immediately in writing) and shall have immediate effect.
16. Counterparts
This Agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same instrument. This Agreement
shall be of no effect unless and until at least one counterpart has
been signed by or on behalf of each party.
17. Whole Agreement and Variation
This Agreement contains the whole agreement between the parties
relating to the subject matter of this Agreement and no variation of
this Agreement shall be effective unless signed by or on behalf of the
parties to this Agreement.
<PAGE>
18. Invalidity
If any provision in this Agreement shall be held to be illegal, invalid
or unenforceable, in whole or in part, under any enactment or rule of
law, such provision or part shall to that extent be deemed not to form
part of this Agreement but the legality, validity and enforceability of
the remainder of this Agreement shall not be affected.
19. Authority to Deliver
The signature or sealing of this document by or on behalf of a party
shall constitute an authority to the solicitors, or any agent or
employee of the solicitors acting for that party in connection with
this document, to date and deliver it as a deed on behalf of that
party.
20. Governing Law and Submission to Jurisdiction
20.1 This Agreement shall be governed by and construed in accordance with
English law.
20.2 All the parties irrevocably agree that the courts of England are to
have exclusive jurisdiction to settle any disputes which may arise out
of or in connection with this Agreement.
IN WITNESS whereof this Agreement has been duly executed by or on behalf of the
Subscribers and executed and delivered as a deed by the Company and each of the
Directors, the day and year first before written.
<PAGE>
SCHEDULE 1
Part A
The Executive Directors
Name Address
Christopher Frederick Cliffe ) Huntingdon Life Sciences Group plc
Martyn Sandford ) Woolley Road
Dr Cameron MacKay Macdonald ) Alconbury
Huntingdon PE18 6ES
Part B
The Non-Executive Directors
Name Address
Roger Adrian Pinnington ) Huntingdon Life Sciences Group plc
Professor John Caldwell ) Woolley Road
Ladislas Oscar Rice ) Alconbury
Huntingdon PE18 6ES
<PAGE>
<TABLE>
SCHEDULE 2
The Subscribers
<CAPTION>
Name Address Subscription Aggregate
Shares Subscription
Price
(pound)
<S> <C> <C> <C>
Andrew Baker Focused Healthcare 12,000,000 1,500,000
Partnership Limited
c/o New World Trust Corp
Rue de la Pelisserie
Case Postale 3501
1211 Geneva 3
Switzerland
Stephens Group, Inc 111 Center Street 36,000,000 4,500,000
Little Rock
Arkensas 72201
USA
Quilcap Corp. 375 Park Ave 27,333,333 3,416,667
Suite 1404
New York
New York 10952
USA
Oracle Partners LP 712 Fifth Ave 23,333,333 2,916,667
45th Floor
New York
New York 10019
USA
Sidney Knafel 126 E 56th Street 8,000,000 1,000,000
New York
New York 10022
USA
Rodman Moorhead III E.M. Warburg Pincer 4,666,667 583,333
& Lowe
456 Lexington Avenue
New York
USA
Kirby Cramer Keystone Capital 4,666,667 583,333
2420 Carillon Point
Kirkcrome
Washington 83033
USA
Andrew Stafford Deitsch The Old Surgery 2,000,000 250,000
Ingatestone
Essex CM7 9DU
Gordon Grender The Old Surgery 2,000,000 250,000
Ingatestone
Essex CM7 9DH
</TABLE>
<PAGE>
SCHEDULE 3
Documents in the agreed form
Document Marked
Application Form A
Bridging Agreement B
FHP Consultancy Agreement C
FOREX Agreement D
Nat West Letter E
New Facility F
Ciba Geigy Agreement G
Option Agreement H
Placing Agreement I
Powers of Attorney J
Press Announcement K
Prospectus L
Proxy M
Responsibility Statements N
Security Deeds O
Service Agreements P
Unapproved Option
Scheme Rules Q
Verification Notes R
Working Capital Report S
<PAGE>
SCHEDULE 4
Clause 10 Documents
1. The Prospectus and all documents referred to Part VI of the Prospectus.
2. The Ciba Geigy Agreement.
3. The Arthur Andersen Working Capital Report including transmittal
letter.
4. All Documents named in Schedule 3.
5. The Phase I Environmental Assessment of Pharmaco LSR at Eye, Suffolk,
England dated May 1994 as carried out by Environmental Resources
Management.
6. The Environmental Review dated January 1998 in respect of the
Huntingdon Research Centre at Woolley Road, Alconbury, Huntingdon,
Cambridgeshire as prepared by Aspinwall & Company.
7. The Environmental Review of the Stamford Lodge, Wilmslow, Cheshire
dated January 1997 as carried out by Aspinwall & Company.
8. The Phase I Environmental Site Assessment Report of Pharmaco LSR at
Mettlers Road, East Millstone, New Jersey, USA dated August 30, 1995 as
prepared for Aspinwall & Company.
9. Arthur Andersen Working Capital Comfort Letter in connection with the
Working Capital Statement by Huntingdon Life Sciences Group plc.
10. Arthur Andersen letter in relation to significant changes in financial
position.
11. Arthur Andersen letter re statement of indebtedness.
<PAGE>
SCHEDULE 5
Warranties
Accuracy and contents of documents
1. All information (other than relating to the Subscribers, their
immediate families and persons, trusts and companies connected
with the Subscribers) contained in the Press Announcement and in
the Prospectus and in the other public filings of the Company
including filings with the United States Securities and Exchange
Commission (together the "Public Filings") is in accordance with
the facts and all statements of fact contained in the Press
Announcement, in the Prospectus and the Public Filings is true
and accurate and not misleading. The Company is current
and timely in its Public Filings.
2. All forecasts, estimates and expressions of opinion, intention or
expectation made by the Company or the Directors and contained in the
Press Announcement and/or in the Prospectus are fair and honestly
given, expressed or held, have been made after due and careful enquiry
and consideration, are fairly based on facts which are within the
knowledge of each relevant Group Company and the Directors and are made
on reasonable grounds.
3. There are no facts or considerations known or which could on reasonable
enquiry have been known to any Group Company or any of the Directors
which are not disclosed in the Press Announcement or in the Prospectus
which by their omission would or might reasonably be considered to:
3.1 materially affect the import of the information contained
therein; or
3.2 make any statement therein (whether of fact or
opinion) false or misleading; or
3.3 invalidate or materially qualify any assumption made
in support of any statement therein (whether of fact or
opinion); or
3.4 be material for disclosure to a reasonable purchaser of
Subscription Shares.
4. The Prospectus contains all such information as, having regard to the
matters referred to in section 146 of the FSA, investors and their
professional advisers would reasonably require, and reasonably expect
to find in the Prospectus, for the purpose of making an informed
assessment of the assets and liabilities, financial position, profits
and losses and prospects of the Group and of the rights attaching to
the Placing Shares and the Subscription Shares.
5. The Prospectus contains all particulars and information required by,
and the issue of the Subscription Shares and the issue and
publication of the Prospectus complies in all respects with, the
Act, the FSA, the Listing Rules, the rules and regulations of
the London Stock Exchange, the New York Stock Exchange, the United
States Securities and Exchange Commission, the Code all other
relevant laws and regulations in the United Kingdom and elsewhere
and all agreements to which any member of the Group is a party or
by which any member of the Group is bound and, without
limiting the generality of the foregoing, there are no matters
other than those disclosed in the Prospectus or otherwise disclosed
in writing to the London Stock Exchange and the Subscribers which
the Executive Directors are aware should be taken into account by
the London Stock Exchange in considering the application for Admission.
6. All statements made or approved by the Company in connection with any
application to the London Stock Exchange for certain information to be
omitted from the Prospectus are true and accurate and are not
misleading and there are no facts which have not been disclosed to the
London Stock Exchange in connection therewith which by their omission
make any such statements misleading or are material for disclosure in
connection therewith.
7. All statements of fact contained in any document or announcement
issued or made by or on behalf of the Company to its shareholders,
or the press since 31 December 1997 were when made, and save to
the extent corrected in the Prospectus, remain true and
accurate and not misleading and all forecasts and estimates and
all statements of opinion, intention and expectation contained
therein were made on reasonable grounds after due and proper
consideration and, having regard to all information then
available to the Company and the Directors, all such forecasts
and estimates have either been met or continue to be based on fair
and reasonable assumptions after due and proper consideration of all
information now known to them and the Company and the Directors
continue to hold the opinions, intentions and expectations therein
expressed after due and proper consideration of all information now
known to them.
8. Verification
The replies to the Verification Notes have been approved by persons
having appropriate knowledge or responsibility to enable them properly
to provide such replies and all such replies have been given in good
faith and are true and accurate and not misleading and the opinions
attributed to the Directors therein are honestly held and are fairly
based on facts within the knowledge of the Directors.
9. Accounts
9.1 The Accounts:
9.1.1 have been prepared in accordance with the Act and (except to
the extent (if any) disclosed therein) generally accepted
accounting principles, practices and standards consistently
applied;
9.1.2 on a consolidated basis give a true and fair view of the
state of affairs of the Group as at the end of, and of their
profits (or losses) and cash flow for the year ended 31
December 1997;
9.1.3 fairly set out the assets, liabilities and reserves of the
Group and either make proper provision for, or where
appropriate in accordance with generally accepted
accounting standards, include a note in respect of all
liabilities or commitments, whether, actual, deferred or
contingent of the
Group as at the relevant dates and in particular, make
adequate provision for, or where appropriate include
proper disclosure, in either case, in accordance with
generally accepted accounting standards, of all
liabilities, whether actual, deferred, contingent or
disputed, of the Group as at relevant dates;
9.2 the Interim Results have been properly compiled on the accounting bases
and assumptions consistent with or not materially different from those
adopted in the preparation of the Accounts and of corresponding interim
results of the Company and its subsidiary undertakings published for
the six-month period ended 30 June 1997. All statements of fact
contained in the Chairman's statement in respect of and accompanying
the Interim Results concerning the financial and trading position and
prospects of the Group were true and accurate and not misleading and
all expressions of opinion, intention or expectation contained in the
Interim Results concerning the financial and trading position and
prospects of the Group were honestly given, expressed or held and have
been the subject of due care and attention and were fairly based on
facts within the knowledge of the Company and the Directors and were
made on reasonable grounds, after due and proper consideration.
10. Post Balance Sheet Events
Since 31 December 1997:
10.1 each Group has carried on its business in the ordinary and usual course;
10.2 there has been no material depletion in the net assets of any Group
Company and there has been no material adverse change in the financial
or trading position or prospects of any Group Company;
10.3 no Group Company has acquired or disposed of or agreed to acquire or to
dispose of any business, company or asset which is material for
disclosure;
10.4 other than those sums received from the joint administrator of Travers
Morgan Group plc and except as disclosed in the Prospectus, no
dividends or other distributions have been declared, made or paid by
any Group Company; and
10.5 no Group Company has incurred any material liability for taxation of
whatsoever nature otherwise than in the ordinary course of business.
<PAGE>
11. Working Capital
All information requested from the Company and the Directors by the
Accountants for the purposes of the Working Capital Report was, when
provided, true and accurate and no information has been withheld the
absence of which would make misleading any of the information provided.
The Working Capital Report which has been reported on by the
Accountants has been prepared with all due care and attention by the
Company and the Directors in accordance with the accounting policies
normally adopted by the Group and on the basis of the assumptions set
out in the Working Capital Report and such assumptions are fair and
reasonable and are based on beliefs reasonably and honestly held and
there are no facts known or which could on reasonable enquiry have been
known to any Group Company or the Directors which have not been taken
into account in the preparation of the Working Capital Report and which
could reasonably be expected to have an effect on the Working Capital
Report.
12. Acceleration of indebtedness
No circumstances have arisen, or to the best of the knowledge,
information and belief of the Executive Directors and any Group
Company, may arise such that any person is, or will, or would with the
giving of notice and/or lapse of time and/or the satisfaction of any
other condition and/or compliance with any other formality become
entitled to require payment before its stated maturity of, or security
for, any indebtedness in the nature of borrowing or any guarantee
thereof or any mortgage, security grant or interest of any Group
Company which has not been satisfied in full and no person to whom any
indebtedness in the nature of borrowing of any Group Company which is
payable on demand is owed has demanded or to the best of the knowledge
information and belief of the Directors and any Group Company presently
proposes to demand payment of, or security for, the same, and there is
no reason to suppose that any overdraft facility of and Group Company
will be, or is likely to be, withdrawn.
13. Property
13.1 The Properties are all the properties owned by any Group Company or
occupied by any Group Company for the purpose of its business or in
respect of which the Company has any actual or potential liability
including (without limitation) any potential liability as a tenant or
former tenant of, or guarantor in respect of, any leasehold property,
which is material in the context of the Placing, or the Subscription or
the Group.
13.2 The Company and each Group Company has good and marketable title to all
of the Properties and marketable title to all personal property owned
by each of them, in each case free and clear of any security interests,
liens, encumbrances, equities, claims and other defects that, singly or
in the aggregate, could be material; and any of the Properties held
under lease by the Company or any Group Company are held under valid,
subsisting and enforceable leases, without exceptions that and which
have not been breached in any respect which could be material.
14. Insurances
The Group is insured to adequate levels against all risks commonly
insured against by persons carrying on the same or similar businesses
as those carried on by the Group and against all risks against which
the Group might reasonably be expected to insure in the particular
circumstances of the businesses carried on by each member thereof, all
material insurances are in full force and effect and are not void or
voidable, other than the pending claim in approximately the sum of
(pound)500,000 in respect of physical flood damage on or about April
1998 at the Huntingdon site and the proposed claim for business
interruption in respect of such damage there is no material insurance
claim pending, threatened or outstanding against any member of the
Group and all premiums due in respect of material insurances have been
duly paid.
15. Environmental Matters
Each Group Company has so far as each Group Company is aware at all
times complied with all laws, regulations and orders concerning health
and safety matters, the protection of the environment and the emission,
discharge, leakage, disposal, transportation, spill, release or
threatened release (collectively "Release") of materials in or into the
environment (collectively "Environmental Matters"). Each Group Company
is in possession of all relevant consents, or other authorisations
(together the "Consents") with respect to all Environmental Matters and
has, so far as the Directors and each Group Company is aware, complied
with the conditions therein, and there are, so far as the Directors and
each Group Company is aware, no facts or circumstances entitling a
regulatory agency or other authority to revoke, vary or not renew any
of the Consents; no Group Company is, so far as the Directors and each
Group Company is aware, required to make any material investment under
the terms of any of the Consents or the terms of any relevant
legislation or regulation in order to renew any of the Consents or
maintain the same in full force and effect.
16. For the purposes of this paragraph "Dangerous Substances" means
any natural or artificial substance (whether in the form of a
solid, liquid, gas or vapour) the generation, transportation,
storage, treatment, use or disposal of which (whether
alone or in combination with any other substance) gives rise to a
substantial risk or causing harm to man or to any other living
organism or of causing material damage to the environment or public
health or welfare and "waste" means any waste which is
covered by Part II of the Environmental Protection Act 1990
or any pollutant, contaminant, chemical, or industrial hazardous
or toxic material or waste for which liability or standards of conduct
are imposed under applicable laws, regulations or
orders concerning Environmental Matters.
16.1 So far as each Group Company and the Directors are aware, there has
been no material Release of any Dangerous Substances or waste into the
ground at the Properties, any adjacent or nearby property or into the
atmosphere or into any controlled waters;
16.2 So far as each Group Company and the Directors are aware, there has not
been by any Group Company, or in or on any of the Properties any
illegal generation, use, treatment, recycling, keeping, storage,
discharge, transportation or disposal or other Release of any waste or
Dangerous Substances.
16.3 So far as each Group Company and the Directors are aware, none of the
Group Companies is subject to any judicial, administrative or other
proceeding, order, judgment, decree or settlement alleging or
addressing a violation of or liability under any law, regulation or
order concerning Environmental Matters; and
16.4 None of the Group Companies has received any notice or claim to the
effect that it is or may be liable to any governmental entity or
any other person as a result of the Release or threatened Release
of any Dangerous Substances or waste. None of the Group
Companies has sent or arranged for the disposal of any Dangerous
Substance or waste to any disposal site that (a) is undergoing, or
to the knowledge of the Directors or any Group Company could
reasonably be expected to undergo, remedial action or (b) is
listed or proposed for listing on the National Priorities List
pursuant to laws of the United States of America.
17. Pensions
Save to the extent disclosed in the Accounts, all amounts payable by
any Group Company to the pension schemes disclosed in the Accounts have
been paid in full and all sums for which any Group Company accounts to
such scheme on behalf of its employees have been paid to such scheme
and the scheme remains in operation and effect in accordance with its
terms.
18. Save as disclosed or provided for in the Accounts, no Group Company is
paying or is under any liability (actual or contingent) to pay or
secure (other than by payment of employers' contributions under
national insurance or social security legislation), any pension or
other benefit on retirement, death or disability or the attainment of a
specified age or on the completion of a specified number of years of
service.
19. Corporate Capacity
Each Group Company has been duly incorporated, has full corporate power
and authority to carry on its activities in the ordinary course of its
business, has obtained all licences, permissions, authorisations and
consents required for the carrying on of its business and such
licences, permissions, authorisations and consents are in full force
and effect in all material respects and there are no circumstances
known to the Company or any of the Executive Directors which indicate
that any of such licences, permissions, authorisations or consents may
be revoked or not renewed, in whole or in part, in the ordinary course
of events.
<PAGE>
20. Validity of Agreements
No Group Company nor any Executive Director has any knowledge of the
invalidity of or grounds for rescission, avoidance or repudiation of
any agreement or other transaction to which a Group Company is a party
and which is material to the business or the financial or trading
position or prospects of the Group and no Group Company has received
notice of any intention to terminate or not to renew any such agreement
or repudiate or disclaim any such transaction; for this purpose "any
agreement which is material to the business or the financial position
or prospects of the Company" includes, without limitation, agreements
with suppliers and with clients.
21. Licences and Authorisations
Each Group Company has carried on and is carrying on its business and
operations in accordance with all applicable laws, regulations and
bylaws and all statutory, municipal, governmental, quasi governmental
and regulatory and landlords' and other licences, consents, permits and
authorities necessary or desirable for the carrying on of the
businesses and operations of each Group Company, as previously carried
on and as now carried on, have been obtained and are (or were at the
relevant time) valid and subsisting and all conditions applicable to
any such licence, consent, permit or authority have been and are
complied with.
22. Without prejudice to the generality of paragraph 21:-
22.1 all establishments within the meaning of Section 6 of the
Animals (Scientific Procedures) Act 1986 or that are subject
to or regulated by the Animal Welfare Regulations of the
United States Department of Agriculture ("USDA") that are
owned or operated by any Group Company or on its behalf are
the subject of a valid current Certificate of Designation or
similarly applicable certificate or licence under USDA ("US
Certificate") in the name of a suitably qualified employee
or director;
22.2 all Certificates of Designation as referred to in 22.1
above, correctly identify each premises, building or room in
which scientific procedures within the meaning of the
Animals (Scientific Procedures) Act 1986 or USDA Animal
Welfare Regulations are performed ;
22.3 all regulated procedures within the meaning of the Animals
(Scientific Procedures) Act 1986 performed by or on behalf
of any Group Company are performed in compliance with the
provisions of the Animals (Scientific Procedures) Act 1986
or so far as relevant USDA Animal Welfare Regulations, the
terms of any applicable Certificate of Designation or US
Certificate, project licence, personal licence or other
authorisation required by law and all relevant Group
Companies are in possession of all such project licenses
required for the purposes of the business of such company;
22.4 all animals which are subject to regulated procedures as
referred to in 22.3 above and which are animals specified in
Schedule 2 of the Animals (Scientific Procedures) Act 1986
or USDA Animal Welfare Regulations are bred by or purchased
by a Group Company carrying out such procedures or on whose
behalf such procedures are carried out for the purposes of
such procedures and if bred are so bred at establishments
which are the subject of a valid current Certificate of
Designation as required by the Animals (Scientific
Procedures) Act 1986;
22.5 all 16 conditions imposed on the Group by the UK Home Office
on 24th July 1997 were complied with fully by 30th November
1997 and so far as the Directors and each Group Company is
aware all Group Companies to which they apply have complied
with such conditions continuously and continue to do so at
the date hereof;
22.6 So far as the Directors and each Group Company is aware, all
Group Companies subject to inspection under the Good
Laboratory Practice Regulations 1997 (1997 SI 654) and all
"premises" operated by them to which such Regulations apply
comply in all relevant aspects with the principles of good
laboratory practice as set out in Schedule 1 to such
Regulations ;
22.7 the settlement dated 30 March 1998 between Huntingdon Life
Sciences Inc and USDA is in full force and effect,
Huntingdon Life Sciences Inc is in full compliance therewith
and there are so far as the Directors and each Group Company
is aware no USDA investigations pending or threatened.
23. Defaults
23.1 No event has occurred or is subsisting or to the best of the knowledge,
information and belief of the Executive Directors is about to occur,
which constitutes or results in, or would with the giving of notice
and/or lapse of time and/or the satisfaction of any other condition
and/or compliance with any other formality constitute or result in, a
default or the acceleration or breach of any obligation under any
agreement, instrument or arrangement to which any Group Company is a
party or by which it or any of its properties, revenues or assets are
bound or in the infringement by any Group Company of any intellectual
property rights held by third parties and which would, in any such
case, have a material adverse effect on the business, assets or
prospects of the Group.
23.2 No Default or Default Occurrence (as defined in the New Facility) has
occurred and neither the Company nor the Directors are aware that any
Default or Default Occurrence will or may reasonably be expected to
occur after the date hereof, as a result of or in connection with the
Proposals or otherwise.
<PAGE>
24. Material Contracts
No Group Company is a party to, any contract or arrangement which is
material in the context of the Group, and which:-
24.1 was entered into otherwise than by way of a bargain at
arm's length; or
24.2 is of a loss making nature (that is, likely to result in a
loss to the relevant Group Company on completion of
performance).
25. Insolvency
No Group Company has taken any action nor have any other steps been
taken or legal proceedings started or so far as each Group Company or
the Executive Directors are aware threatened against a Group Company
for its administration, winding-up or provisional winding-up or
dissolution or for it to enter into any arrangement or composition for
the benefit of creditors, or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of
any of its properties, revenues, undertakings or assets nor have any
orders been made for any of the foregoing and no events or
circumstances similar or analogous to any of those referred to in this
paragraph 25 have occurred, subsist or so far as each Group Company or
the Executive Directors are aware are contemplated in any jurisdiction.
26. Litigation/Judgements
No Group Company nor any Director nor any person for whom a Group
Company is or is likely to be liable (vicariously or otherwise) is
engaged or involved in or has during the twelve months prior to the
date hereof been involved in any legal, arbitration or other
proceedings which, individually or collectively, is or are of material
importance to the Group or which could adversely affect the Placing or
the Subscription, no such proceedings are threatened or pending nor, to
the best of the knowledge, information and belief of the Directors and
each Group Company are there circumstances which are likely to give
rise to any such proceedings; for this purpose "other proceedings"
includes any civil or criminal proceedings and any action by any
governmental, public or regulatory authority which did or could result
in public censure or the imposition of any fines, payments or other
liability.
27. There is no outstanding judgement, decree, arbitral award or decision
of any court, tribunal, arbitrator or governmental agency against any
Group Company or against any person for whom any Group Company is
vicariously liable which individually or collectively is or are of
material significance to the Group.
28. Share Capital and Directors
Save as disclosed in the Prospectus, there are in force no options or
other agreements to which any Group Company is party which call for the
issue of, or accord to any person the right to call for the issue of,
any shares or other securities of any Group Company.
29. Following Admission, none of the shareholders of the Company will have
any rights, in their capacity as such, in relation to the Company other
than as set out in the Articles of Association of the Company.
30. The Directors are all the directors of the Company and there is no
other person who is or could be deemed to be a shadow director of the
Company within the meaning of the Act.
31. The Subscription Shares will, upon allotment be free from all claims,
charges, liens, encumbrances and equities whatsoever and will rank pari
passu in all respect with the existing Ordinary Shares including the
right to receive all dividends and other distributions declared made or
paid after the date of Admission.
32. Subject to Admission, and all necessary resolutions of the
Company and of the Directors becoming unconditional in accordance
with their terms, the Company and the Directors have, or will have
power and authority to allot and issue the Subscription Shares and
the Placing Shares and to effect the Subscription and the Placing
in the manner proposed and to enter into and perform this Agreement,
the Placing Agreement and the other agreements and documents
referred to herein to be executed by any of them and all
arrangements relating to the Proposals, without any further
authorisation, sanction or consent by members of the Company or
any class of them or any other person and, subject as aforesaid,
there is no authorisation, approval, consent or licence required
by the Company for the issue of the Subscription Shares
and the Placing Shares, the entry into and performance of this
Agreement, the Placing Agreement and the other agreements and
documents referred to herein to be executed by any of them or to
effect the Proposals which has not been unconditionally and
irrevocably obtained and remains and will at all times remain in full
force and effect.
33. Subject to Admission, the issue of the Subscription Shares and of the
Placing Shares and Admission will not exceed or infringe any
restrictions or the terms of any contract, obligation or commitment by
or binding upon any Group Company or result in the imposition or
variation of any rights or obligations of any Group Company.
34. The facts set out in the Recitals to this Agreement are true and accurate.
35. Intellectual Property
Each Group Company has taken all steps reasonably necessary to protect
all intellectual property rights which are held by or which are used by
each Group Company and which are material to its business; all such
rights which are capable of registration have been registered and all
fees payable in respect of such registration have been paid; each Group
Company has the unencumbered sole legal and beneficial title to all
intellectual property rights which are used in or which are necessary
for carrying on the business of that company, or has a licence to such
rights for their duration, which licence is in full force and effect,
is not subject to a notice of termination, and so far as each Group
Company or the Executive Directors are aware there are no grounds for
terminating such licence; the carrying on of the business of each Group
Company does not,so far as each Group Company or the Directors are
aware, infringe and has not infringed any intellectual property rights
of any third party and so far as each Group Company or the Executive
Directors are aware no third party has the right to bring an action for
passing off or for breach of confidence against any Group Company. For
the purpose of this paragraph "intellectual property rights" means all
inventions (whether patentable or not), patents, utility models,
designs (both registered and unregistered and including rights in semi
conductor topographics), copyright, database right, trade and service
marks (both registered and unregistered) together with all rights to
the grant of and applications for the same, corresponding applications,
re-issues, extensions, divisions and continuations thereof and all
similar or analogous rights throughout the world.
36. Conflicts
The Prospectus contains all information required by the Listing Rules
concerning conflicts of interest between any Group Company and any
Director or any company of which any Director is a director or in which
he has a material interest.
37. Taxation
Each Group Company has, within any applicable time limit, duly made and
filed all returns, reports and forms, given all notices and supplied
all other information required to be made, given or supplied to any
Taxation Authority for periods up to and including 31 December 1997,
and all such returns, notices and information are correct in all
material respects and were made on a proper basis and no Group Company
is involved in any dispute with, or subject to any investigation by,
any Taxation Authority which would be material for disclosure in the
Prospectus and, so far as the Directors are aware, there are no facts
or circumstances which are likely to give rise to any such dispute or
investigation. Each Group Company has paid all Taxes shown as due and
payable on such Tax returns, reports, and forms.
38. All payments made by any Group Company to any person which ought to
have been made under deduction of tax have been so made and the Company
has, where appropriate, duly accounted to the relevant Tax Authority
for such Tax.
39. The Company is, to the extent required, registered for the purposes of
VAT and has complied with the terms of VAT legislation in all material
respects.
40. Since 31 December 1997, no Group Company has incurred any liability in
respect of any Taxation which is material in the context of the Group,
the Subscription or the Placing, other than liabilities arising in the
ordinary course of business of the Company since that date.
41. Each Group Company has properly operated the PAYE system by duly
deducting Tax and National Insurance from all payments from which such
deductions are required to be made and accounting to the Inland Revenue
for all Tax deducted by it and for all Tax chargeable on benefits
provided for employees of the Group or any other person.
42. The Company has not repaid or agreed to repay any share capital since 6
April 1965 or otherwise reduced or agreed to reduce its share capital
of any class or issued any share capital as paid up otherwise than by
the receipt of new consideration.
43. No Group Company has received any written notice of deficiency or
assessment from any Taxing Authority with respect to material
liabilities for Taxes which have not been fully paid or settled, and
there are no suits, claims, or proceedings pending or threatened
against any Group Company.
44. No Group Company is under any contractual obligation to pay any Taxes
of any other person or to indemnify any other person for Taxes.
45. Each Group Company has established adequate reserves that are reflected
on the Accounts for the payment of Taxes occurring through the date
hereof but not yet due.
46. The transfer pricing practices of the Group Companies have not been the
subject to any review or audit by any Taxing Authority and there are no
proceedings pending or threatened against any Group Company with
respect to such transfer pricing practices.
47. Indemnity Claims
To the best of the knowledge, information and belief of the Executive
Directors, there is no matter which might give rise to a claim under
the indemnities contained in Clause 11.
48. Information
All information in the documentation referred to in Schedule 4 is true,
accurate and complete in all material respects and all forecasts and
estimates therein have been made after due and proper consideration,
and represent reasonable expectations honestly held based on facts
known or which on reasonable enquiry should have been known to the
Directors in their capacity as Directors of the Company.
<PAGE>
SCHEDULE 6
Certificate from the Directors and the Company to the Subscribers
[Letterhead of the Company]
To: [ ] 1998
Dear Sirs/Madam
Proposed Subscription (the "Subscription")
We refer to the Subscription and the Subscription Agreement dated [ ] 1998 in
which a draft of this letter appears as Schedule 6 (the "Subscription
Agreement"). Words and expressions defined in the Subscription Agreement have
the same meanings herein.
We confirm that (subject only to the giving of this letter):-
(i) we have complied with our obligations under of the Subscription
Agreement which fall to be performed to date; and
(ii) the London Stock Exchange has agreed to admit the Subscription Shares
and the Placing Shares to the Official List subject only to Admission.
The Company alone confirms that none of the Warranties was breached or was
untrue, inaccurate or misleading when made and none of such warranties or
undertakings would be breached or be untrue, inaccurate or misleading were it to
be repeated by reference to the facts and circumstances subsisting at the date
hereof.
Yours faithfully
.................................
Director
for and on behalf of
Huntingdon Life Sciences Group PLC ...................................
Director
...................................
Director
...................................
Director
<PAGE>
SIGNED AS A DEED by )
CHRISTOPHER FREDERICK CLIFFE )
and SUSAN HIDE )
for and on behalf of ) C.F. Cliffe
HUNTINGDON LIFE SCIENCES GROUP PLC ) .............................
Director
S Hide
.............................
Director/Secretary
SIGNED AND DELIVERED AS A DEED )
by CHRISTOPHER FREDERICK CLIFFE ) C.F. Cliffe
in the presence of:- Scott Leonard-Morgan )
Simmons & Simmons
London
SIGNED AND DELIVERED AS A DEED )
by MARTYN SANDFORD ) M Sandford
in the presence of:- Scott Leonard-Morgan )
Simmons & Simmons
London
SIGNED AND DELIVERED AS A DEED )
by CAMERON MACKAY MACDONALD ) C Macdonald
in the presence of:- Scott Leonard-Morgan )
Simmons & Simmons
London
SIGNED AND DELIVERED AS A DEED )
by ROGER ADRIAN PINNINGTON ) M Sandford
in the presence of:- Scott Leonard-Morgan )
Simmons & Simmons
London
SIGNED AND DELIVERED AS A DEED )
by JOHN CALDWELL ) J Caldwell
in the presence of:- Scott Leonard-Morgan )
Simmons & Simmons
London
SIGNED AND DELIVERED AS A DEED )
by LADISLAS OSCAR RICE ) C.F. Cliffe
in the presence of:- Scott Leonard-Morgan )
Simmons & Simmons
London
SIGNED by ANDREW BAKER ) A Baker
in the presence of:- Adam Dowdney )
Solicitor, EC4
SIGNED by )
for and on behalf of ) A Stafford-Deitsch
STEPHENS GROUP, INC. )
in the presence of:- Adam Dowdney )
Solicitor, EC4
SIGNED by )
for and on behalf of ) P Quillen
QUILCAP CORP. )
in the presence of:- )
SIGNED by )
for and on behalf of ) L Feinberg
ORACLE PARTNERS L.P. )
in the presence of:- )
SIGNED by SIDNEY KNAFEL ) by his attorney
in the presence of:- Adam Dowdney ) A Baker
Solicitor, EC4
SIGNED by RODMAN MOORHEAD III ) by his attorney
in the presence of:- Adam Dowdney) A Baker
Solicitor, EC4
SIGNED by KIRBY CRAMER ) by his attorney
in the presence of:- Adam Dowdney) A Baker
Solicitor, EC4
SIGNED by ANDREW STAFFORD-DEITSCH ) A Stafford-Deitsch
in the presence of:- Adam Dowdney)
Solicitor, EC4
SIGNED by GORDON GRENDER ) G Grender
in the presence of:- Selina Rutherston )
45 Brookville Road
London SW6 7BH
<PAGE>
[Nat West Letter]
To Subscriber
_________ 1998
Dear Sirs,
Facilities Agreement
dated ________________ between [ ],
and [ ] and National Westminster Bank Plc
("the Facilities Agreement")
We confirm that conditional only on the satisfaction of condition precedent [ii]
in Schedule 6 to the Facilities Agreement, the sum of (pound)24,500,000 will be
advanced today as the first Revolving Advance under the Facilities Agreement and
without need for [ ] plc to serve a drawdown notice pursuant to the Facilities
Agreement in relation to such advance to [ ] Plc pursuant to the Facilities
Agreement.
We acknowledge that this letter is required as one of the conditions of
completion of arrangements under which you are today to subscribe for [ ] shares
in [ ] Plc and that you will be completing such arrangement in reliance, inter
alia, on this letter.
Yours faithfully,
----------------------------
For and on behalf of
National Westminster Bank Plc
CONFORMED COPY
THIS AGREEMENT is made on 10 August, 1998
BETWEEN:
(1) HUNTINGDON LIFE SCIENCES GROUP PLC, registered in England and Wales
with number 502370 whose registered office is at Woolley Road,
Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Company"); and
(2) KLEINWORT BENSON LIMITED, a company incorporated in England with
registered number 1767419, whose registered office is at 20 Fenchurch
Street, London EC3P 3DB ("KB").
WHEREAS:
(A) Subject to and as provided by this Agreement, the Company proposes to
issue, pursuant to the Open Offer, on the basis and terms and for the
purposes set out in the Circular, the New Shares to rank pari passu in
all respects with Shares in issue at the date hereof;
(B) on, and subject to, the terms of this agreement, KB has agreed as agent
for and on behalf of the Company:-
(i) to offer the New Shares to Qualifying Holders at the Offer
Price under the Open Offer on the basis of 1 New Share for
every 2 Shares held on the Record Date and otherwise on the
terms and subject to the conditions in the Circular; and
(ii) in respect of any New Shares not taken up under the Open
Offer, to procure (as agent for and on behalf of the Company)
persons to subscribe and, to the extent that it does not do
so, itself to subscribe for, the New Shares at the Offer
Price; and
(C) The Company is proposing to convene an Extraordinary General Meeting at
which resolutions are to be proposed, inter alia, to authorise the
Directors to allot the New Shares.
IT IS AGREED as follows:
1. Definitions and interpretation
In this Agreement (including the recitals and schedules hereto), the following
words and expressions shall have the meanings respectively set opposite them:-
"Accountants" Arthur Andersen & Co.; admission of the
New Shares to the Official List becoming
effective by the making of an announcement in
accordance with paragraph 7.1 of the Listing
Rules;
"Admission Date" the actual date of Admission;
"Affiliate" any company or other undertaking which is
a member of the group (as defined in section
262 of the Companies
Act 1985) of which KB is a member;
"Application Form" the agreed form of application for Shares
under the Open Offer;
"Bank Deeds" has the meaning specified by the
Subscription Agreement;
"Baker Service Agreement" has the meaning specified by the
Subscription Agreement;
"Board" the Company's board of directors or a duly
authorised Committee thereof;
"Brokers" Kleinwort Benson Securities Limited;
"Closing Date" 26th August, 1998;
"Circular" any circular letter in agreed form to the
shareholders and, for information only,
to option holders of the Company, giving
details of the Placing and Open Offer,
comprising a prospectus relating to the
Company and the New Shares and containing a
notice convening the Extraordinary
General Meeting;
"Conditions" the conditions set out in Clause 2.1;
"Dealing Day" any day upon which dealings in domestic
securities may take place on the London
Stock Exchange;
"Directors" the persons named in the Circular as
directors of the
Company and Mr. Andrew Baker;
"Extraordinary General Meeting" the meeting of the Company (notice of which
is set out in the Circular) at which, inter
alia, the Resolutions are to be proposed;
"EGM Date" 28th August, 1998;
"Facilities Agreement" the Facilities Agreement in agreed form
between, inter alia, the Company and National
Westminster Bank plc dated August, 1998;
"FSA" the Financial Services Act 1986;
"Group" the group of which the Company and its
subsidiary undertakings are members;
"Group Member" a member of the Group;
"KB Person" any person being KB, an Affiliate or a
director, officer or an employee of KB or of
an Affiliate;
"Latest Acceptance Time" 3p.m. on 26th August, 1998;
"Listing Rules" the listing rules made by the London Stock
Exchange pursuant to Part IV of the FSA;
"London Stock Exchange" London Stock Exchange Limited;
"New Shares" the total of 57,003,431 Ordinary Shares to
be allotted fully paid or credited as fully
paid pursuant to the Placing and Open Offer;
"Offer Documents" the Circular and the Application Form;
"Offer Price" 12.5 pence per New Share;
"Official List" the Official List of the London Stock
Exchange;
"Open Offer" the invitation (contained in the Circular)
to Qualifying Holders to apply to
subscribe for New Shares on the terms and
subject to the conditions in the Offer
"Ordinary Shares" Dpcuments; ordinary shares of five pence
each in the Company;
"Placees" the persons (including, if applicable,
KB) who are, pursuant to the Placing, to
subscribe for New Shares not taken up under
the Open Offer;
"Placing" the placing (subject to the rights of
Qualifying Holders) of New Shares with
Placees by KB (and, if applicable, the
subscription by KB for any new shares not
taken up under the Open Offer) pursuant
to this Agreement;
"Placing Letters" letters in the agreed form
despatched or to be despatched to
proposed Placees concerning their
commitments to subscribe for New Shares
pursuant to the Placing;
"Placing Sum" (pound)7.1 million, being the sum equal
to the aggregate value at the Offer Price of
the New Shares;
"Press Announcement" the press announcement in the agreed
form giving
details of, inter alia, the Placing and the
Open Offer;
"Proxy Card" the agreed form of proxy for use at the
Extraordinary General Meeting;
"Qualifying Shareholders" the holders of Ordinary Shares
on the register of members of the
Company at the close of business on the
Record Date other than certain overseas
Shareholders who are not entitled to
participate in the Open Offer as set out in
the Circular;
"Record Date" the close of business on 31st July, 1998;
"Receiving Agents" Computershare Services PLC, PO Box 859,
Consort House,
East Street, Bedminster, Bristol BS99 1XZ;
"Resolutions" the resolutions in the agreed form to be
proposed at the Extraordinary General
Meeting (or any adjournment thereof) as set
out in the notice convening the
Extraordinary General Meeting which appears
in the Circular;
"Service Agreements" has the meaning specified by the Subscription
Agreement;
"Shares" means ordinary shares of 5p in the
capital of the Company;
"Subscribers" Focused Healthcare Partnership Limited,
Quilcap Corp., Oracle Partners, L.P.,
Stephens Group Inc., SRK Management
Company, Mr. Kirby Cramer and Mr. Rodman
Moorhead III.
"Subscription Amount" (pound)15 million, being the sum
equal to the aggregate value at the
Subscription Price of the Ordinary Shares
to be allotted and issued by the Company
and the Subscribers pursuant to the
Subscription Agreement;
"Subscription Agreement" means the subscription agreement in agreed
form dated 5th August, 1998 between the
Subscribers and the Company;
"Subscription Price" has the meaning specified by the
Subscription Agreement;
"Supplementary Prospectus" any prospectus to be published by the
Company pursuant to section 147(1) of
the FSA supplementary to the Circular
(or to any previously published prospectus);
"taken up" has the meaning ascribed to it in Clause 4.3;
"Transaction Documents" means the Facilities Agreement, the
Subscription Agreement, the Bank Deeds,
the Baker Service Agreement and the Service
Agreements;
"VAT" value added tax;
"Verification Notes" verification notes prepared for the purpose
of substantiating the accuracy of the
Circular ;
"Warranties" the representations and warranties set out
in Schedule 1 and given by the Company
pursuant to Clause 8; and
"Working Capital Memorandum" the cash flow and
working capital memorandum prepared by the
Company for the period to
31st December, 1999.
In this Agreement (including the Recitals and Schedules):
(A) any reference to a document in "agreed form" means the form
thereof agreed between the Company and KB and initialled on
behalf of each of them for the purpose of identification, in
each case with such amendments as may be agreed between the
Company and KB;
(B) except as otherwise provided or where the context otherwise
requires, "material" and "materially" shall mean material in
the context of the Placing and the Open Offer;
(C) all references to hours of the day shall be to the time as it
is in England;
(D) headings are for convenience only and do not affect the
construction of this Agreement;
(E) reference to Recitals, Clauses or Schedules are, unless
otherwise stated, to the recitals and clauses respectively of,
and schedules to, this Agreement;
(F) words denoting the singular include the plural and vice versa,
words importing gender shall include all genders;
(G) words and expressions defined in the Companies Act 1985 shall
bear the same meaning herein, except as otherwise provided or
where the context otherwise requires;
(H) any statement qualified by the expression "so far as the
Company is aware" or the expression "so far as the Directors
are aware" or any similar expression shall be deemed to
include an additional statement that it has been made after
the Company and the Directors have made all reasonable
enquiries; and
(I) references to any statute or statutory provision
include any re-enactment or modification or extension
thereof (whether before or after the date hereof), any
statutory provision of which a provision referred to is a
re-enactment(whether with or without modification),
and any orders, regulations, instruments or other
subordinate legislation made under the statute or
statutory provision referred to, save that this Clause 1
shall not operate to the extent that it would create or
increase any liability for any party to this Agreement.
2. Conditions
2.1 The obligations of KB under this Agreement are in all respects conditional
on:
(A) satisfaction of each of the conditions precedent to which the
Subscription Agreement is subject, excluding any condition
relating to this Agreement becoming unconditional;
(B) without limitation to the generality of paragraph (A) above,
the Facilities Agreement, the Bank Deed, the Baker Service
Agreement and the Service Agreements becoming unconditional in
all respects except:
(i) for any condition relating to this Agreement becoming unconditional; and
(ii) for receipt by National Westminster Bank plc of the
Transaction Proceeds and for repayment of all
Indebtedness outstanding in respect of the Bridging
Facility (in each case as defined by the Facilities
Agreement);
(C) receipt from NM Rothschild & Sons Limited of a letter
confirming that the Subscription Amount is held by them, or to
their order, in escrow and that release and payment of the
whole of such sum to the Company in accordance with the
Subscription Agreement is subject only to satisfaction of the
conditions precedent to such payment provided by the
Subscription Agreement;
(D) delivery by the Company to KB with effect immediately prior to
Admission of a certificate, signed for and on behalf of the
Company by a Director, in the form set out as Schedule 2;
(E) none of the Transaction Documents having been terminated;
(F) no variation or waiver or agreement not to exercise its rights
under any Transaction Document having been granted or agreed
by the Company without the prior written consent of KB; and
(G) the Resolutions having been passed without amendment (except
as previously agreed in writing by KB);
in each case by 4th September, 1998 (or such later time as KB may agree
with the Company).
2.2 If any of the Conditions is not fulfilled or shall have become
incapable of being fulfilled on or by 4th September, 1998 or such later
date as KB and the Company may agree, the Company shall forthwith make
an announcement to the London Stock Exchange to that effect in a form
agreed by KB and the remaining obligations of each of the parties under
this Agreement shall terminate, other than to the extent provided in
Clause 10.
2.3 The Company shall use all reasonable endeavours to procure that each of
the Conditions is satisfied by 4th September, 1998.
3. Document Delivery
3.1 The Company shall deliver or procure to be delivered to KB immediately
on execution of this Agreement:
(A) certified copies of each of the Transaction Documents executed
by each of the parties thereto;
(B) six copies of the Press Announcement, the Circular and the
Application Form initialled on behalf of the Company;
(C) a copy of the Working Capital Memorandum initialled on behalf of the
Company;
(D) two signed originals of the written verification of the
Accountants to the inclusion in the Circular of the financial
information included in Parts IV and V of that document and
the respective references thereto in the forms and contexts
included in the Circular;
(E) two signed originals of a letter (in a form previously
approved by KB) addressed to KB from the Directors confirming
that working capital available to the Group is sufficient;
(F) four certified copies of signed responsibility letters
addressed to the Company from each Director and a certified
copy of the letter to the Stock Exchange containing the
confirmations required by paragraph 5.5 of the Listing Rules;
(G) (to the extent relied upon in executing any other document to
be delivered to KB pursuant to this Clause 3.1) certified
copies of powers of attorney executed by each Director;
(H) a certified copy of the Verification Notes signed by or on
behalf of each of the persons stated therein as being the
signatories thereto, together with a copy of each supporting
document referred to therein;
(I) a certified copy of the minutes of a meeting of the Board (or of
a duly authorised committee thereof) in the agreed form approving,
inter alia, (i) the Company's execution of this Agreement, (ii) the
making of the Placing and Open Offer by KB on the Company's behalf,
(iii) the Press Announcement and its release by KB in accordance
with this Agreement, (iv) the making of the application to the
London Stock Exchange for Admission; and (v) the Circular,
the Application Form and the Proxy Card and their issue to Qualifying
Holders and (as the case may be) potential Placees; and
(J) a certified copy of the minutes of the meeting of the Board at
which any committee referred to at Clause 3.1((I)) was
appointed.
(K) a copy of the Circular certified by a Director or the
secretary of the company to be a true copy of the original)
bearing evidence of the London Stock Exchange's formal
approval of the Circular as listing particulars pursuant to
the Listing Rules;
(L) a letter from the Company to KB (in a form previously approved
by KB) relating to the declaration required from KB by
paragraph 2.8 of the Listing Rules; and
(M) all such further information and documents (including, without
limitation, all documents specified by paragraph 7.9 of the
Listing Rules) as KB may reasonably require, on or before or
after such date, for the purpose of assisting the Company to
obtain Admission or otherwise to facilitate the Open Offer and
Placing.
3.2 KB may, in its absolute discretion, waive or vary any obligation of the
Company under Clause 3.1 and may extend the time for delivery of any of
the documents referred to therein. Any waiver, variation or extension
may be made subject to such terms as KB may determine in its absolute
discretion.
3.3 The Company undertakes to procure that:
(A) two copies of the Circular shall be delivered by the Company
to the Registrar of Companies in England and Wales for
registration as required by section 149(1) of the FSA;
(B) the Circular (and any Supplementary Prospectus) be published
and copies be made available at the Company Announcements
Office of the London Stock Exchange and elsewhere as required
by Chapter 8 of the Listing Rules;
(C) it will notify the information referred to in paragraph
9.10(j) of Chapter 9 of the Listing Rules to the London Stock
Exchange as required by such paragraph;
(D) the documents stated in the Circular as being available for
inspection shall so be made available; and
(E) it will deal with any change or matter relating to the
Circular referred to in section 147(1) of the FSA which arises
on or after the date of the Circular and prior to Admission in
full compliance with all applicable provisions of Part VI of
the FSA and paragraphs 5.14 to 5.16 of Chapter 5 and paragraph
8.20 of Chapter 8 of the Listing Particulars (subject to
Clauses 9 and 10).
4. The Placing and the Open Offer
4.1 Subject to satisfaction of the Conditions and to the other terms of
this Agreement, KB agrees:
(A) as agent for the Company to make the Open Offer to Qualifying
Shareholders on the terms and subject to the conditions set
out in the Offer Documents;
(B) as agent for the Company to use its reasonable endeavours to
procure persons (other than persons who would, if they were
existing holders of Ordinary Shares, not be Qualifying
Shareholders, unless the Company shall otherwise consent in
writing) to subscribe for the New Shares pursuant to the
Placing to the extent that the New Shares are not taken up
under the Open Offer; and
(C) if any New Shares are not taken up under the Open Offer and
are not otherwise subscribed for pursuant to the Placing,
itself to subscribe for such New Shares,
in each case at the Offer Price free of all expenses and otherwise on
the terms and subject to the conditions set out in the Offer Documents
and this Agreement.
4.2 The Company authorises KB to issue the Press Announcement and subject
to its release to make arrangements for the Placing and, in particular,
for the distribution of the Press Announcement and placing proofs of
the Circular and Placing Letters to such persons as KB shall in its
absolute discretion determine.
4.3 The Company shall, or shall procure that the Receiving Agents shall,
notify KB in writing as soon as reasonably practicable (and in any
event not later than 10.30a.m. on the first Dealing Day after the
Closing Date) of the number of New Shares taken up under the Open
Offer, being those Offer Shares in respect of which valid applications
have been received in accordance with the terms of the Open Offer (and
have not been rejected in accordance with such terms) by the Latest
Acceptance Time accompanied by remittances for the full amount payable
in respect thereof (other than applications, if any, for which the
relevant remittances have been notified to the Receiving Agents by the
Latest Acceptance Time as having been refused by the drawee on
presentation). For the avoidance of doubt, any New Shares which are
taken up for the purpose of this Clause 4.3 but which are comprised in
an Application Form which is at the Latest Acceptance Time, or
thereafter may become subject to verification of identity enquiries by
the Receiving Agents in compliance with the Money Laundering
Regulations 1993 or otherwise shall be treated as taken up for all
purposes of this Agreement.
4.4 KB shall notify the Receiving Agents of the names and registration
details of the Placees and the number of Offer Shares to be subscribed
by each of them pursuant to the Placing as soon as reasonably
practicable after it has been notified, pursuant to Clause 4.3, of the
number of New Shares not taken up and, in any event, by 3.00 p.m. on
the third Dealing Day immediately following the Closing Date and in
default of KB so doing and such default not having being remedied by KB
by 12 midnight on the fifth Dealing Day immediately following the
Closing Date the Company is hereby irrevocably authorised to treat this
Agreement as an application by KB on its terms and subject to the
Conditions for such number of New Shares.
4.5 The Company shall allot the New Shares (if it has not done so
previously) pursuant to a resolution of the Board or of a duly
authorised committee thereof as soon as practicable following the
Closing Date and the satisfaction of each of the Conditions:
(A) in accordance with the terms of the Open Offer, to persons who
have validly applied for New Shares under the Open Offer; and
(B) in accordance with the details notified to the Receiving
Agents pursuant to Clause 4.4, to the Placees and/or (as
appropriate) KB.
4.6 The Company shall deliver to KB a certified copy of the resolution
referred to at Clause 4.5 by 4.00 p.m. on 28th August, 1998.
4.7 Subject to the Conditions and to the Company's compliance with Clauses
4.3, 4.5 and 4.6, KB shall transfer or procure the transfer to the
Company's account with
of the sum equal to the aggregate value at the Offer Price of all New
Shares not taken up under the Open Offer (less any deduction therefrom
made pursuant to Clause 6.6) in cleared funds for value on the
Admission Date.
4.8 On making of the transfer in accordance with Clause 4.7, KB's
obligations under this Agreement shall cease and determine and KB shall
have no further obligations to the Company under this Agreement
(without prejudice to the rights of the Company in respect of any
antecedent breach of this Agreement). Such transfer shall constitute a
complete discharge of the Placees in respect of the amounts payable by
them for their subscription of New Shares pursuant to the Placing.
4.9 The Company shall procure the registration of the persons to whom New
Shares are allotted pursuant to Clause 4.5 as the holders thereof
promptly (without registration fee) and shall procure that definitive
certificates in respect of the New Shares are despatched to such
persons as soon as reasonably practicable and, in any event, not later
than 7th September, 1998 and that, pending such despatch, transfers of
New Shares are certified against the Company's register of members.
4.10 The Company irrevocably appoints KB to act as its agent for the
purposes of the Placing and the Open Offer on terms that KB may
exercise all powers, authorities and discretions on behalf of the
Company which are necessary for or, in the reasonable opinion of KB are
desirable for the purposes of, the Placing and/or the Open Offer.
4.11 The Company confirms that application for Admission has been made to
the London Stock Exchange in accordance with section 143 of the FSA and
the Company undertakes to supply all such information, pay such fees,
give such undertakings, execute such documents and do or procure to be
done all such acts or things as may reasonably be required by the
London Stock Exchange to procure Admission.
4.12 The Company shall give all such assistance and provide all such
information as KB may reasonably require for the making and
implementation of the Placing and Open Offer and will do (or use its
reasonable endeavours to procure to be done) all such things and
execute (or use its reasonable endeavours to procure to be executed)
all documents as may be necessary or desirable in the reasonable
opinion of KB to be done or executed by the Company or by its officers,
employees or agents for the making and implementation of the Placing
and Open Offer.
5. Overseas Shareholders
The Company will, and will use reasonable endeavours to procure that
the Receiving Agents will, observe and comply with the provisions in
respect of overseas shareholders set out in Part III of the Circular
under the heading "Overseas Shareholders" and will not knowingly allot
New Shares to or accept a completed Application Form from any person
who is not a Qualifying Shareholder without the consent of KB, such
consent not to be unreasonably withheld or delayed.
6. Fee, Commissions and Expenses
6.1 The Company shall, whether or not KB's obligations hereunder become
unconditional, pay to KB:
(A) a fee of (pound)750,000 for advisory services in connection
with the Company's raising new capital; and
(B) in respect of KB's services described in Clause 4.1, a
commission of 2 1/4 per cent. of the Placing Sum, of which KB
shall apply a sum of up to 1 1/4 per cent. of the Placing Sum
in payment, on behalf of the Company, to Placees in accordance
with the Placing Letters.
6.2 The amount referred to in Clause 6.1 shall be paid together with VAT,
if any, thereon by the Company for value on the earlier of (i) the
Admission Date and (ii) the date on which the obligations of KB
hereunder cease and determine.
6.3 The fee and commissions set out in Clause 6.1 are payable whether or
not KB shall itself be called upon to subscribe any of the New Shares
pursuant to this Agreement.
6.4 Whether or not KB's obligations under Clause 4 become unconditional or
this Agreement is terminated, the Company will pay all other expenses
of or relating to this Agreement, the Placing, the Open Offer, securing
Admission, the issue of the New Shares and including (but without
limitation) all stamp duty and/or stamp duty reserve tax payable by any
Placee or any other person in respect of his subscription of New Shares
pursuant to the Placing or to the Open Offer, Stock Exchange listing
fees, registrars' and receiving agents' fees, printing, advertising and
distribution costs, the Company's out-of-pocket expenses, the Company's
legal, accountancy, brokerage and other professional fees and expenses
and the out-of-pocket and reasonable legal expenses of KB and all
related VAT, and the Company will forthwith upon request reimburse KB
for any such expenses for which the Company is responsible pursuant to
this Clause but which KB or (in relation to any such stamp duty or
stamp duty reserve tax) any Placee or other person subscribing New
Shares pursuant to the Placing or to the Open Offer may have incurred.
6.5 Where in pursuance of any provision of Clause 6.4 or Clause 7 a sum
is reimbursed to KB the Company shall, in addition, pay to KB:
(A) such amount as equals the VAT for which KB is properly liable
in respect of the costs or expenses referred to at Clause 6.4
or Clause 7 which KB is unable to reclaim as input tax from HM
Customs and Excise by reason of:
(i) such costs or expenses relating to or constituting
part of the consideration for a supply of services by
KB to the Company which is exempt from VAT; or
(ii) such costs or expenses constituting disbursements
incurred by KB as agent of the Company (provided that
KB procures that any appropriate VAT invoices naming
the Company as recipient of the relevant supply are
issued in respect of such items by the person making
the supply); and
(B) on receipt of a VAT invoice such an amount as equals VAT
properly chargeable by KB by reason of such costs or expenses
constituting consideration for a taxable supply of services by
KB to the Company.
6.6 Payment of the fee and commissions in accordance with Clause 6.1 and
reimbursement of expenses in accordance with Clause 6.4 may be made by
deduction thereof at KB's discretion from the amount to be transferred
in respect of any New Shares in accordance with Clause 4.7.
7. Indemnity
7.1 Subject to Clause 7.2, the Company undertakes to KB, for itself and as
agent and trustee on behalf of and for the benefit of each of the other
KB Persons, to keep each and every KB Person indemnified against all
losses, claims, demands, damages, costs, charges, expenses or
liabilities, (or actions proceedings or investigations in respect
thereof) which such KB Person may suffer or incur or which may be made
against such KB Person and which arise, directly or indirectly, out of
or in connection with:
(A) any breach or alleged breach by the Company of this Agreement;
(B) the carrying out or performance by or on behalf of KB of any
of its obligations or services under this Agreement or of any
other action authorised or approved by the Company in
connection with the Placing and/or the Open Offer;
(C) the issue or approval of any investment advertisement (as
defined in the FSA) made with the Company's prior approval in
connection with the Placing and/or the Open Offer;
(D) the release or despatch of the Press Announcement and/or the
Offer Documents and/or any Supplementary Prospectus; or
(E) any failure or alleged failure by the Company or any of the
Directors to comply with any legal, statutory or regulatory
requirement in relation to any of the Placing, the Open Offer,
the allotment and/or issue of the New Shares, the publication
of any of the Offer Documents and any transaction or matters
referred to in the Circular;
together with the properly incurred costs and expenses of such KB
Person in enforcing its rights under this Clause 7.
7.2 The indemnity in Clause 7.1 shall not extend or apply to the extent
that any loss, claim, liability, action, demand, cost or expense
referred to therein:
(A) arises by reason of the negligence or wilful default of any KB
Person or from wilful breach of any KB person's duty or
obligation under any legal statutory or regulatory
requirement; and/or
(B) is suffered or incurred by a KB Person as a result of its
having been required itself to subscribe for New Shares
pursuant to Clause 4.1, unless such loss, claim, liability,
action, demand or expense results from any breach or alleged
breach by the Company of this Agreement (including, for the
avoidance of doubt, the Warranties).
7.3 All sums payable by the Company under this Clause 7 shall be paid free
and clear of all set-off, counterclaims, deductions or withholdings
whatsoever save only as may be required by law. If any such set-offs,
counterclaims, deductions or withholdings are required by law or if the
United Kingdom Inland Revenue or any other taxing authority in any
jurisdiction brings into any charge to taxation (or into any
computation of income, profits or gains for the purposes of any charge
to taxation) any sum payable by the Company under this Clause 7, the
amount so payable shall be grossed up by such amount as will ensure
that after such deduction or withholding or the deduction of such
taxation there shall remain a sum equal to the amount which would
otherwise be payable under this Clause 7 (additional payments being
made by the Company as may be necessary from time to time).
7.4 As soon as reasonably practicable and in any event within 14 days of KB
becoming aware of any action or claim or other matter in respect of
which indemnity may be sought pursuant to this Clause 7, KB shall give
notice and reasonable details thereof to the Company. In such event, KB
shall consult with the Company and keep the Company informed in
relation thereto to the extent reasonable and practicable in the
circumstances subject to any requirement imposed by any insurer of KB
or any Affiliate.
8. Warranties
8.1 The Company represents and warrants to KB in the terms of each of the
Warranties set out in Schedule 1 and acknowledges that KB is entering
into this Agreement in reliance upon each of the Warranties.
8.2 Each of the Warranties shall be construed separately and shall not be
limited or restricted by reference to or inference from the terms of
any other of them or any other term of this Agreement.
8.3 Without prejudice to Clause 10.3, the Warranties shall remain in full
force and effect notwithstanding the completion of the Placing or the
Open Offer.
8.4 The Company undertakes to KB that it shall not do, allow or procure any
act or omission before Admission which would constitute a breach of any
of the Warranties or would make any of them untrue or inaccurate or
misleading if repeated by reference to facts and circumstances
subsisting at any time prior to Admission.
8.5 The Company shall notify KB at any time before Admission forthwith of
any matter of which it becomes aware which causes any of the Warranties
to be untrue or inaccurate or misleading in any respect when made
and/or, if any such Warranty was repeated at any time prior to
Admission by reference to the facts and circumstances then in
existence, would cause it to be untrue or inaccurate or misleading in
any respect.
8.6 The Company hereby acknowledges that neither KB nor any Affiliate has
(except to the extent that such person has expressly, by signature of
the Verification Notes (or by the provision of any specific assurance
or confirmation in respect of specific questions contained therein),
taken responsibility for the accuracy of any part of the Offer
Documents) been requested by the Company to carry out any form of
investigation or verification exercise relating to the accuracy and
fairness of any information contained in the Offer Documents or
otherwise published by or on behalf of the Company in connection with
the Placing or the Open Offer (this acknowledgement is, for the
avoidance of doubt, without prejudice to KB's responsibilities as
sponsor to the Placing and Open Offer and under the rules of the
Securities and Futures Authority). The Company also acknowledges that
the replies to the Verification Notes have been prepared and given by
persons reasonably believed by the Board to have the knowledge and
responsibility to enable them properly to provide such replies and, so
far as the Company is aware, that all such replies have been given in
good faith.
9. Announcements and Agreements
9.1 The Company shall not (and shall procure that each other Group Member)
and KB shall not, in each case without the prior consent in writing of
the other (not to be unreasonably withheld or delayed), between the
date of this Agreement and the date thirty consecutive days after the
Admission Date:-
(A) make any public statement, public announcement or communication
(other than the Offer Documents and the Proxy Card) concerning this
Agreement, the Placing, the Open Offer, the securities of the
Company or any Group Member which is material or in relation to
the market in the Company's issued Ordinary Shares, save as may
strictly be required by law or the rules and regulations of the London
Stock Exchange or any governmental or quasi-governmental
authority or other regulatory body having jurisdiction over the
Company or KB (as the case may be); or
(B) enter into any commitment or agreement or arrangement (other than as
envisaged in this Agreement) or knowingly do or permit to be done any
other act or thing which, in any such case, is material in the context
of the Placing or the Open Offer or in relation to the market in the
Company's issued Ordinary Shares which would give rise to any
obligation for the Company to publish any Supplementary
Prospectus or for the Company or any other Group Member to make any
announcement through or notification to the London Stock Exchange or any
other governmental or quasi-governmental authority or other
regulatory body having jurisdiction over any Group Member or KB or
by virtue of any law to which such Group Member or KB (as the case
may be) is subject or which may (except pursuant to the exercise of
existing subscription rights) involve any increase in, or obligation
(whether contingent or otherwise) to allot any of,
the capital of the Company or any other Group Member, save for the
grant or exercise of options pursuant to an existing share option scheme.
9.2 The Company and KB undertake so far as is reasonably practicable to
consult with the other in relation to any proposed statement,
announcement or communication which either of them is required to make
as stated in Clause 9.1 (including any Supplementary Prospectus) and
which would, save for this requirement, necessitate a consent in
accordance with Clause 9.1 and to take account of the reasonable
representations of the other in determining the terms thereof and the
manner in which it is made.
9.3 The Company undertakes to KB to make all such announcements concerning
the Placing and the Open Offer as shall be necessary to comply with
paragraph 1 of Chapter 9 of the Listing Rules and/or any other
applicable regulatory or statutory requirement. KB may, following
consultation with and after taking into account the reasonable
representations of the Company, make any such announcement if the
Company fails (in the opinion of KB acting in good faith) to fulfil its
obligations under this Clause promptly (but without any obligation for
KB to do so).
10. Termination
10.1 If KB becomes aware, at any time prior to Admission, that:-
(A) the Company is in breach of any of its obligations hereunder
or cannot comply with any such obligation in each case in a
respect which KB regards as material; or
(B) any of the Warranties is or if repeated at any time up to
Admission (by reference to the facts and circumstances then
existing) would be untrue, inaccurate or misleading in any
material respect,
KB shall be entitled in its absolute discretion by notice in writing to
the Company to be delivered prior to Admission forthwith to terminate
its obligations hereunder and the Company shall forthwith make an
announcement to the London Stock Exchange to that effect.
10.2 Cessation of and termination of KB's obligations in accordance with
Clause 2 or this Clause 10 shall be without prejudice to KB's rights
under Clauses 6, 7, 9, 11 and 12 (which Clauses shall continue in full
force and effect for all purposes) and to the rights of each party in
respect of any antecedent breach hereof.
10.3 The representations, warranties and undertakings set out or referred to
in Clause 7 and in Clause 8 shall remain in full force and effect
notwithstanding Admission and/or performance of KB of its obligations
hereunder and shall be in addition to and shall not limit, affect or
prejudice any other right or remedy available to the person in whose
favour such representation, warranty or undertaking is made.
11. Notices
11.1 Any notice to be given under this Agreement shall be in writing for the
attention of the person stated below and served personally or sent by
pre-paid registered mail to the respective addresses shown above or by
facsimile as set out below, or as the party required to receive the
same may otherwise from time to time notify to the other:-
The Company KB
Address: Huntingdon Life Sciences Kleinwort Benson Securities
Group plc Limited
Woolley Road 20 Fenchurch Street
Alconbury London EC3P 3DB
Huntingdon
Cambridgeshire
PE17 5HS
Facsimile: 01480 892195 0171 623 5535
Attn: The Company Secretary Charles Cameron, Director
11.2 Any such notice or communication shall be deemed to have been served:
(A) if delivered, at the time of delivery;
(B) if posted by first class post, at 10.00 a.m. on the second business
day after it was put into the post; and
(C) if sent by facsimile, at the time of effective transmission.
11.3 In proving such service by post it shall be sufficient to prove that
the letter containing the notice or other communication was properly
addressed and delivered or put into the post as a pre-paid registered
letter. In proving effective transmission by facsimile it shall be
sufficient to prove that the facsimile containing such notice or other
communication was sent to the appropriate number and the appropriate
answerback was received at the end of the transmission in respect of
the number of pages comprised in the notice or other communication.
12. Miscellaneous
12.1 The Company undertakes to KB to comply with all material obligations
applicable to it contained or represented in the Transaction Documents
and to execute and/or provide or procure to be executed or provided all
such documents and to do or procure to be done all such other acts and
things as KB may reasonably request for the purpose of the Company
complying with its obligations under this Agreement and/or in order to
cause persons to acquire New Shares which are to be allotted to them
pursuant to the Placing and/or the Open Offer and/or this Agreement
with the entire right, title and interest to and in the New Shares.
12.2 The Company confirms that it has instructed the Receiving Agents to act
as receiving agents in connection with the Placing, the Open Offer and
the Extraordinary General Meeting and to perform the obligations
assigned to them under the Offer Documents and this Agreement and on
terms that monies received in respect of applications under the Open
Offer shall be paid in to a separate account pending the closing of the
Open Offer shall thereupon held to KB's order (provided that KB shall
direct that such monies shall be paid from such account in accordance
with the Offer Documents).
12.3 The Company confirms that, in addition to any remedy or right of action
available under this Agreement, KB shall be entitled (as allottees of
the New Shares or otherwise) to the same remedies and rights of action
against the Company and/or the Directors to the same extent as any
other person acquiring any New Shares on the basis of the Offer
Documents and pursuant to the Open Offer.
12.4 The rights and remedies of each party under this Agreement are without
prejudice to any other rights and remedies available to it. No neglect,
delay or indulgence on the part of any party hereto in enforcing any
term of this Agreement will be construed as a waiver and no single or
partial exercise of any rights or remedy of any party hereto under this
agreement will preclude or restrict the further exercise or enforcement
of any such right or remedy.
12.5 Time shall be of the essence of this Agreement, both as regards the
times, dates and any period mentioned herein and as to any times, dates
and periods which may, by agreement in writing between the parties
hereto, be substituted for them.
12.6 This Agreement may be executed in any number of counterparts and by the
parties hereto on separate counterparts, each of which when executed
shall constituted an original, but all of which shall together
constitute one and the same instrument.
12.7 This Agreement shall be governed by and construed in accordance with the
laws of England.
<PAGE>
IN WITNESS WHEREOF this Agreement has been executed by the duly authorised
signatories of the parties the day and year first above written.
SIGNED BY CHRISTOPHER CLIFFE )
for and on behalf of the )
HUNTINGDON LIFE SCIENCES GROUP PLC ) CHRISTOPHER CLIFFE
in the presence of: )
SCOTT LEONARD MORGAN
..............................................
Name: SCOTT LEONARD MORGAN
Address: SIMMONS & SIMMONS, LONDON
Occupation:
SIGNED BY CHARLES CAMERON )
for and on behalf of )
KLEINWORT BENSON ) CHARLES CAMERON
LIMITED in the presence )
of: )
NIGEL STEVENSON
.............................................
Name: NIGEL STEVENSON
Address: DRESDNER KLEINWORT BENSON, LONDON
Occupation:
<PAGE>
SCHEDULE 1:
Warranties
1. Accuracy of information - Each statement of fact contained in the Press
Announcement and the Circular is true and accurate in all material
respects and is not misleading (by itself or in its context) in any
material respect and each expression of opinion, intention or
expectation (unless expressly attributed to a person other than the
Directors or the Company) (including any forecast or estimate of
dividends), contained in the Press Announcement and the Circular is
fairly based and honestly held by the Directors and has been made on
reasonable grounds after due and careful consideration and there are no
other facts the omission of which would make any such statement of
fact or expression of opinion, intention or expectation false or
misleading in any material aspect.
2. The New Shares - The New Shares will be allotted and issued in accordance
with the Offer Documents free from all encumbrances, claims, liens or
other third party rights of whatsoever nature without any need for any
person to receive a report in respect of any New Shares pursuant to
section 103 of the Companies Act 1985 or to pay any stamp duty reserve
tax in respect thereof. The New Shares will rank pari passu in all
respects with the existing issued Ordinary Shares including (save as
stated in the Circular) the right to participate in all dividends and
other distributions hereafter declared, paid made on or in respect of
such existing Ordinary Shares .
3. Accounts - The audited consolidated balance sheets of the company and
its subsidiaries and the audited consolidated profit and loss account for
the three successive accounting periods ended 30th December 1997,
as set out in the annual report and accounts of the Company for such
periods (including the notes thereon) give a true and fair view of the
state of affairs of the Group as at, and the profits for the
financial year ended at, the end of such periods, as applicable,
make adequate provision for all liabilities, whether actual, deferred,
contingent or disputed, and were prepared in accordance with the
accounting policies stated therein (save to the extent disclosed
therein) in accordance with generally accepted accounting principles
consistently applied and all relevant Statements of Standard Accounting
Practice and Financial Reporting Standards, and comply with each
applicable provision of the Companies Act 1985.
4. Previous announcements - In respect of all announcements made by or on
behalf of the Company to the London Stock Exchange since the date of
publication of the Accounts ("previous announcements"), all statements
of fact contained therein were true and accurate in all material respects
and not misleading in any material respect and all expressions of opinion
or intention or expectation contained therein (unless expressly
or by implication attributed to a person other than the Directors
or the Company) which are material were made on reasonable grounds and
were truly and honestly held by the Directors and were fairly based
and there were no other facts or which could on reasonable enquiry have
been known to the Directors the omission of which would make
any such statement or expression in any of the previous announcements
misleading or which were or might have been material in the
context in which the previous announcements were made and all previous
announcements complied with the Listing Rules.
5. Compliance - The entry into this Agreement and the performance by the
Company of its obligations hereunder or in connection therewith, including
the offer, allotment and issue of the New Shares in accordance with the
Offer Documents and the provisions of this Agreement, are within the
powers of the Company and its Directors without (subject to the
passing of the Resolutions) the need for any further sanction or
consent by the members of the Company or any class of them or any
other person and will comply with all relevant requirements of all
applicable legislation, the Listing Rules and all other applicable
rules and regulations and will not constitute an infringement or
default of any obligation under any agreement to which any Group
Member is a party or by which it or any of them or its or any of their
property is bound (but limited to agreements where such infringement
or default would have a material adverse effect on the financial position
of the Group).
6. Third party authorisations - All authorisations, approvals, consents
and licences required by the Company to enter into and complete this
Agreement have been unconditionally obtained and are in full force and
effect (save for the passing of the Resolution and Admission).
7. Prospectus - The Circular contains all such information as, having
regard to the matters referred to in section 146(3) of the FSA,
investors and their professional advisers would reasonably require, and
reasonably expect to find there, for the purpose of making an informed
assessment of the assets and liabilities, financial position, profits
and losses and prospects of the Company and of the rights attaching to
the New Shares.
8. Working capital and indebtedness - The Working Capital Memorandum and
the statement of indebtedness of the Group, which is set out in the
Circular, have in each case been approved by the Board (or a duly
appointed committee thereof) and have been prepared after due and
careful enquiry and on the bases and assumptions stated in the Working
Capital Memorandum which each Director believes to be reasonable and,
so far as the Directors are aware after making due and careful
enquiries, there are no facts or assumptions not set out in the Working
Capital Memorandum which ought to have been reasonably taken into
account but which have not been taken into account in the preparation
of the Working Capital Memorandum. The statement in relation to the
working capital available to the Group set out in the Circular has been
properly made after due and careful enquiry and has been made after
taking into account all relevant factors.
9. Material changes - since 30th December 1997 the operations of the
Group have been carried on in the ordinary and usual course and there
has been no material change in the financial or trading position or
prospects of the Group save as disclosed by the Company through the
Regulatory News Service of the London Stock Exchange and since
such relevant date no member of the Group has made any material
acquisition or disposal or agreed to make any material acquisition or
disposal of any business, company or material asset other than in the
ordinary course of business nor has it made any material commitments
other than in the ordinary course of business, and no
contracts have been entered into by any Group Member otherwise than in
the ordinary course of business which are material for disclosure.
10. Litigation - Save as disclosed in the Circular no Group Member
nor, so far as the Directors are aware, any person for whom a Group Member
or any of its subsidiaries is or may be vicariously liable is engaged
in any litigation or arbitration proceedings which individually or
collectively may have or have had during the twelve months preceding the
date of this Agreement a significant effect on the financial position of
the Group or are material for disclosure nor, to the best of
the knowledge, information and belief of the Directors (having made all
reasonable enquiries), are there any circumstances which may give
rise to any such legal or arbitration proceedings.
11. Supplementary Prospectus - All statements of fact contained in any
Supplementary Prospectus will be true and accurate in all material
respects and not misleading and all expressions of opinion or
intention contained therein (unless expressly or by implication
attributed to a person other than the Directors or the Company) will be
made on reasonable grounds and will be truly and honestly held by the
Directors and will be fairly based and there will be no other facts
known or which could on reasonable enquiry have been known to the
Directors the omission of which would make any such statement or
expression in any such Supplementary Prospectus misleading or which
will be or might be material. If any Supplementary Prospectus is
published, then the Circular, together with such Supplementary Prospectus,
will contain all such information as, having regard to the matters
referred to in section 146(3) of the FSA, investors and their professional
advisers would reasonably require, and reasonably expect to find there,
for the purpose of making an informed assessment of the assets
and liabilities, financial position, profits and losses and prospects
of the Company and of the rights attaching to the New Shares.
12. Subscription Agreement - No breach of the Subscription Agreement has
occurred prior to Admission that would give any party to the
Subscription Agreement the right to terminate the Subscription
Agreement irrespective of whether any such party either has or has
notified in writing an intention to terminate the Subscription
Agreement.
13. Verification Notes - The replies given by the Company and/or the
Directors to the Verification Notes have been prepared or approved by
persons having appropriate knowledge and responsibility to enable them
properly to provide such replies.
14. Insolvency - Neither the Company nor any of its Subsidiaries has taken
any action, nor have any other steps been taken or legal proceedings
been started or (so far as the Directors are aware) threatened against
the Company or any of its subsidiaries for its or their winding up or
dissolution, or for it or any of them to enter into any arrangement or
composition for the benefit of creditors, or for the appointment of a
receiver, trustee, administrator, administrative receiver or similar
officer of any of them or any of their respective properties, revenues
or assets.
15. Material contracts - All subsisting material contracts entered into
within two years of the date of the Circular (other than contracts
entered into in the ordinary course of business) by the Company or any
of its subsidiaries will be disclosed in the Circular and no material
contracts (other than those so disclosed and those entered into in the
ordinary course of business) will without the written consent of KB be
varied prior to Admission.
16. Repayment of indebtedness - Except as may be disclosed in the Circular,
no event or circumstance has arisen nor, so far as the Company is
aware, is about to arise (including, for the avoidance of doubt,
pursuant to the issue of the New Shares or the entry into of this
Agreement), such that any person is or, with the giving of notice
or the lapse of time, would be entitled to require payment of any
indebtedness in respect of borrowed monies of any Group Member before
its stated maturity or to take any step to enforce any security therefor,
no material repayment of any indebtedness of any Group Member has been
demanded, before its due date for repayment, by reason of any default of
any such Group Member and no person to whom any such indebtedness which
is payable on demand is owed has demanded or threatened to demand
repayment of, or to take any step to enforce any security for, such
indebtedness.
17. Options - Save as disclosed in the Circular, there are in force no
options or other agreements which call for the issue of, or afford to
any person the right to call for the issue of any shares in the
capital, or other securities, of the Company.
<PAGE>
SCHEDULE 2:
Clause 2.1(C) Certificate
[Letterhead of the Company]
The Directors
Kleinwort Benson Securities Limited [ ] 1998
Dear Sirs,
Placing and Open Offer
We refer to Clause 2.1(C) of a placing and open offer agreement between us
relating to the Open Offer dated August, 1998 (the "Placing Agreement"). Words
and expressions defined in the Placing Agreement have the same meanings herein.
We hereby confirm to you that:
(a) each of the Conditions referred to in Clause 2.1 to of the Placing
Agreement has been either fulfilled or waived by you in accordance with
the terms of the Placing Agreement; and
(b) the Company is not aware that any of the Warranties was breached or
untrue or inaccurate or misleading in any material respect at the date
of the Placing Agreement or that there has been any change of
circumstances such that if repeated at the date hereof by reference to
the facts and circumstances subsisting at the date hereof any Warranty
would be breached or untrue or inaccurate or misleading in any material
respect.
Yours faithfully,
......................................
Director, duly authorised,
for and on behalf of Huntingdon Life Sciences Group plc
<PAGE>
CONTENTS
Page
1. Definitions and interpretation 1
2. Conditions 6
3. Document Delivery 7
4. The Placing and the Open Offer 9
5. Overseas Shareholders 12
6. Fee, Commissions and Expenses 12
7. Indemnity 13
8. Warranties 14
9. Announcements and Agreements 15
10. Termination 16
11. Notices 17
12. Miscellaneous 18
SCHEDULE 1: Warranties 21
SCHEDULE 2: Clause 2.1(C) Certificate 25
Agreed form documents:
Application Form
Circular
Completion Board Minutes (see Clause 3.1((I)))
Placing Letters
Press Announcement
Proxy Card
Resolutions
<PAGE>
CONFORMED COPY
DATED 10 August, 1998
HUNTINGDON LIFE SCIENCES GROUP PLC
- and -
KLEINWORT BENSON LIMITED
--------------------------------------------------------------
PLACING AND OPEN
OFFER AGREEMENT
--------------------------------------------------------------
Slaughter and May
35 Basinghall Street
London EC2V 5DB
(ANH/HKG)
DATED 1998
(1) HUNTINGDON LIFE SCIENCES GROUP plc
(2) ANDREW H BAKER
OPTION DEED
Charles Russell
8-10 New Fetter Lane
London EC4A 1RS
Ref: TL/MC/25407/3
<PAGE>
INDEX
(for reference purposes only)
Clause Heading Page No.
1 DEFINITIONS AND INTERPRETATION 1
------------------------------
2 OPTIONS 6
-------
3 EXERCISE AND LAPSE OF OPTIONS 6
-----------------------------
4 PROCEDURE ON THE EXERCISE OF AN OPTION 8
--------------------------------------
5 TAKEOVERS AND LIQUIDATIONS 9
--------------------------
6 VARIATION OF SHARE CAPITAL 11
--------------------------
7 TAXATION 11
--------
8 COSTS 12
-----
9 ASSIGNMENT 12
----------
10 TIME FOR PERFORMANCE 12
--------------------
11 NOTICES 12
-------
12 GOVERNING LAW 12
-------------
13 COUNTERPARTS 13
------------
14 VARIATIONS 13
----------
<PAGE>
THIS DEED is made 1998
BETWEEN:
(1) Huntingdon Life Sciences Group plc whose registered office is at
("the Grantor"); and
(2) ANDREW H BAKER of ("the Grantee")
WHEREAS:
The Grantor has agreed to grant options to the Grantee to subscribe for the
Shares (as hereinafter defined) on the terms and conditions set out in this
Deed.
IT IS HEREBY AGREED:
<PAGE>
1 DEFINITIONS AND INTERPRETATION
1.1 In this Deed the following words and expressions shall (except
where the context otherwise requires) have the following
meanings:-
"Act" the Companies Act 1985;
"Appropriate Period" (i) if the
circumstances in
Clause 5.1 apply
the period of six
months beginning
with the date on
which the person
making the offer
has obtained Control of the
Grantor and any condition subject
to which the offer
is made has been
satisfied;
(ii) if the circumstances in
Clause 5.2 apply
the period of six
months beginning
with the date on
which the Reconstruction
Scheme is sanctioned by the
Court;
(iii) if the circumstances in
Clause 5.3 apply the period during
which the person remains bound or
entitled to acquire any shares
in the Grantor;
"Auditors" the auditors for the time being of the
Grantor appointed pursuant to section
384 of the Act and acting as experts and
not as arbitrators;
"Board" the Board of directors for the time
being of the Grantor or a duly appointed
committee thereof at which a quorum is
present;
"Control" the same meaning as in Section 840
of the Taxes Act and the expression
"controlled" shall be construed
accordingly;
"Dealing Day" a day on which the London Stock Exchange
is open for business;
"Group" the Grantor and company under the
Control of the Grantor;
"London Stock Exchange" the London Stock Exchange Limited;
"Market Value" in respect of any Share on any day
means either:
(a) (when on that day the shares of that
class are listed on the official
list of the London Stock Exchange)
the middle market quotation of such
a Share as derived from the Daily
Official List of the London Stock
Exchange for the Dealing Day
immediately preceding that day; or
(b) in all other cases the market value
of such a Share as determined in
accordance with the provisions of
part VIII of the Taxation of
Chargeable Gains
"Option" a right to subscribe for Shares pursuant to
this Deed and where the context so requires
shall:-
(a) mean as appropriate an 'A' option,
a 'B' Option, a 'C' Option or a 'D'
Option; and
(b) includes New Options granted as
consideration for the release of Old
Options in accordance with Clause 5;
"Price" 12.5 pence per Share;
"Remuneration Committee" the committee consisting wholly or mainly of
non-executive directors of the Grantor and
chaired by a non-executive director;
"Share" an ordinary share of 5p in the capital of the
Grantor;
"Subsisting Option" an Option to the extent that it has not been
exercised, lapsed or cancelled;
"Tax Liability" any liability of
the Grantor or any company
which Controls or is under
the Control of the Grantor
to account for any income
tax National Insurance
contributions or other tax
arising in relation to the
grant, exercise or other
dealing with or in relation
to an Option;
"Taxes Act" the Income and Corporation Taxes Act 1988;
1.2 Any reference in this Deed to any provision of any Act of Parliament or
any subordinate legislation (as defined in the Interpretation Act 1978)
made thereto shall be deemed to be a reference to such Act of
Parliament or subordinate legislation as amended modified or re-enacted
(whether before or after the date hereof) and any reference to any
provision of any such Act or subordinate legislation shall also include
where appropriate any provision of which it is a re-enactment (whether
with or without modification).
1.3 In this Deed words incorporating the masculine gender shall include the
feminine and neuter genders and words incorporating the singular number
shall include the plural and vice versa.
1.4 Unless otherwise stated references to Clauses are references to
Clauses of this Deed.
1.5 The Index and Clause headings are for ease of reference only and shall
not affect the construction or interpretation of this
Deed.
1.6 References to the parties hereto include their respective successors in
title assigns estates and legal personal representatives.
1.7 References to writing shall include typewriting printing lithography
photography telex and facsimile messages and other modes of reproducing
words in a legible and non-transitory form.
2 OPTIONS
The Grantor hereby grants to the Grantee four Options in accordance
with the terms of this Deed to subscribe for 1,250,000 Shares under
each Option at the Price and such Options are hereby designated as an
'A' Option, a 'B' Option, a 'C' Option and a 'D' Option respectively.
3 EXERCISE AND LAPSE OF OPTIONS
3.1 The exercise of an Option shall be subject to the following conditions:
3.1.1 the 'A' Option may be exercised on or after the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 25 pence per Share;
3.1.2 the 'B' Option may be exercised on or after the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 50 pence per Share;
3.1.3 the 'C' Option may be exercised on or after the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 75 pence per Share; and
3.1.4 the 'D' Option may be exercised on or after the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 100 pence per Share
provided that the Market Value of a Share on any Dealing Day before 1st
January 1999 shall be ignored in applying the above conditions and,
subject to Clauses 3.5, 3.6, and 5, an Option shall not be exercisable
before the third anniversary of the date of this Deed. For the
avoidance of doubt an Option shall be exercisable in accordance with
this Deed if the condition under this Clause 3.1 has been previously
satisfied regardless of the Market Value of a Share on the date on
which the Option is exercised.
3.2 Subject to this Clause 3 and Clauses 4 and 5 an Option may be
exercised at any time on or after the third anniversary and
before the tenth anniversary of the date of this Deed.
3.3 An Option shall not be exercisable on or after the tenth anniversary of
the date of this Deed under any circumstances whatsoever and every
Subsisting Option shall lapse on the tenth anniversary of the date of
Deed.
3.4 The right to exercise an Option shall terminate immediately upon the
Grantee ceasing to be a director of the Grantor except
where Clauses 3.5 or 3.6 apply.
3.5 Subject to Clause 3.3 where the Grantee dies his personal
representatives may exercise any unexercised Options held by him within
12 months of the date of death.
3.6 Where the Grantee ceases to be an director of the Grantor:
3.6.1 by reason of injury or disability to the satisfaction of the
Remuneration Committee; or
3.6.2 in any other circumstances the Remuneration Committee in its
absolute discretion decides not later than 30 days after the
date on which the Grantee ceases to be a director of the
Grantor to allow the Grantee to exercise any Subsisting Option
then held by him
any Subsisting Option may be exercised no later than 6 months after the
date of such cessation.
3.7 An Option shall lapse upon the earliest occurrence of any of the
following events insofar as it has not been exercised:
3.7.1 the tenth anniversary of the date of this Deed;
3.7.2 the first anniversary of the Grantee's death;
3.7.3 the expiry of 6 months from the date on which the Grantee
ceases to be an a director of the Grantor where Clause 3.6
applies;
3.7.4 the earliest date upon which the Option is expressed to lapse
under Clause 5;
3.7.5 the Grantee being adjudicated bankrupt.
4 PROCEDURE ON THE EXERCISE OF AN OPTION
4.1 No Option shall be exercisable save in accordance with the then current
Model Code for Securities Transactions by Directors of Listed Companies
issued by the London Stock Exchange.
4.2 An Option may be exercised in whole or in part.
4.3 An Option shall be exercised by the Grantee:-
4.3.1 giving notice in writing to the Grantor in accordance with the
provisions of Clause 11; and
4.3.2 delivering to the Grantor a banker's draft in favour of the
Grantor drawn on a central London clearing bank in respect of
the aggregate Price for the Shares in respect of which the
Option is then exercised.
4.4 Shares shall be allotted and issued pursuant to a notice of exercise
within 42 days of the exercise date. Save for any rights determined by
reference to a date preceding the date of allotment such Shares shall
rank pari passu with the other shares of the same class in issue at the
date of allotment and will be subject to all the provisions of the
Articles of Association of the Grantor relating to voting, dividends,
transfer or otherwise.
4.5 Where relevant, within 28 days after Shares have been allotted pursuant
the exercise of an Option the Grantor shall make application to the
Council of the London Stock Exchange for the admission to the Official
List of the Shares allotted and issued following such exercise.
4.6 This Deed is subject to the condition that in the event of an Grantee
ceasing to be a director of the Grantor or otherwise ceasing to provide
his services to any member of the Group (for whatever reason) he shall
not be entitled to any compensation whatsoever by reason of any
termination or alteration of rights or expectations under this Deed
whether such compensation is claimed by way of damages or breach of
contract or for loss of office or otherwise howsoever. Rights under
this Deed are entirely separate from any right or entitlement he may
have and from his terms or conditions of office and rights under this
Deed shall in no respects whatever affect in any way the Grantee's
rights or entitlement or terms or conditions of any office held by the
Grantee or any agreement under which the Grantee provides his services
to the Grantor.
5 TAKEOVERS AND LIQUIDATIONS
5.1 If any person obtains Control of the Grantor as a result of making a
general offer:
5.1.1 to acquire the whole of the issued ordinary share capital of
the Grantor which is made on a condition such that if it is
satisfied the person making the offer will have Control of the
Grantor; or
5.1.2 to acquire all the shares in the Grantor which are of the same
class as the Shares
then subject to the remaining provisions of this Clause 5 any
Subsisting Option may be exercised within the Appropriate Period and to
the extent that it has not been exercised by the end of the Appropriate
Period the Option shall lapse immediately upon the end of the
Appropriate Period.
5.2 In the event that notice is given to the shareholders of the Grantor of
a resolution to approve (subject to sanction by the Court) a compromise
or arrangement proposed for the purposes of or in connection with a
scheme for the reconstruction of the Grantor or its amalgamation with
any other company or companies pursuant to Section 425 of the Act ("the
Reconstruction Scheme") then the Grantee may serve notice to exercise
his Subsisting Options at any time during the Appropriate Period and to
the extent that an Option has not been exercised by the end of the
Appropriate Period it shall lapse immediately upon the end of the
Appropriate Period.
5.3 If any person becomes bound or entitled to acquire Shares in the
Grantor under Sections 428 to 430F of the Act then any Subsisting
Option may be exercised at any time during the Appropriate Period and
to the extent that it has not been exercised by the end of the
Appropriate Period the Option shall lapse immediately upon the end of
the Appropriate Period.
5.4 If as a result of the events specified in Clauses 5.1 or 5.2 a company
has obtained Control of the Grantor or if a company has become bound or
entitled as mentioned in Clause 5.3 the Board shall seek the agreement
of that other company ("the Acquiring Company") or a company which has
Control over the Acquiring Company and if such agreement is obtained
each unexercised Option ("Old Option") may within the Appropriate
Period applicable to the relevant Clause be released in consideration
of the grant of a new Option ("New Option") to acquire shares in the
Acquiring Company or a company which has Control of the Acquiring
Company which satisfies the following conditions:
5.4.1 it is a right to acquire such number of such shares as has on
acquisition of the New Option an aggregate Market Value equal
to the aggregate Market Value of the Shares subject to the Old
Option on its disposal;
5.4.2 it has a subscription price per share such that the aggregate
price payable on complete exercise equals the aggregate price
which would have been payable on complete exercise of the Old
Option; and
5.4.3 it is otherwise identical in terms to the Old Option.
The New Option shall for all other purposes of this Deed be treated as
having been acquired at the same time as the Old Option in
consideration of the release of which it is granted and where any New
Options are granted pursuant to this Clause 5.4 Clauses 3, 4, 5, and 6
and all definitions in Clause 1.1 as appropriate in those Clauses shall
in relation to the New Options be construed as if references to the
Grantor and to the Shares were references to the company whose share
capital includes shares over which the New Option has been granted and
to the shares in that company. Where in accordance with this Clause 5.4
Old Options are released and New Options granted the New Options shall
not be exercisable in accordance with Clauses 5.1, 5.2 and 5.3 above by
virtue of the event by reason of which the New Options were granted.
5.5 In the event that notice is given to the shareholders of the Grantor of
a resolution to be proposed for the voluntary winding up of the Grantor
the Grantee may serve notice to exercise, his Subsisting Options at any
time up to the passing of the resolution provided that any such notice
to exercise shall only be effective if the resolution is passed. If
such resolution is duly passed all Options shall, to the extent that
they have not been exercised, lapse.
5.6 For the purposes of this Clause 5 other than Clause 5.4 a person shall
be deemed to have obtained Control of a Grantor if he and others acting
in concert with him have together obtained Control of it.
5.7 The exercise of an Option pursuant to the preceding provisions of
this Clause 5 shall be subject to the provisions of Clause 4.
6 VARIATION OF SHARE CAPITAL
In the event of any variation in the share capital of the Grantor by
way of capitalization or rights issue or any consolidation sub-division
or reduction of capital or otherwise by the Grantor the number of
Shares subject to any Option and the Price for each of those Shares
shall be adjusted by the Remuneration Committee subject (except in the
case of a capitalization) to written confirmation by the Auditors that
in their opinion such adjustment is fair and reasonable provided that:
6.1 the aggregate amount payable on the exercise of an Option in
full is not increased; and
6.2 the Price for a Share is not reduced below its nominal value.
7 TAXATION
7.1 If a Tax Liability arises in respect of an Option the Grantor shall be
entitled to deduct to the extent permitted by law such amount(s) from
any payment due to be made by the Grantor or any company which controls
or is controlled by the Grantor to or in respect of the Grantee in
respect of that Option during the same calendar month or other relevant
period in which the event occurs or in any subsequent calendar month or
such relevant period in order to satisfy and discharge the Tax
Liability whether or not such payment is of an income or capital
nature.
7.2 If and to the extent the Tax Liability referred to in Clause 7.1 is of
income tax which exceeds the amount from which deductions in respect
thereof can be made in any one period referred to in Clause 7.1 in
respect of the Grantee, the Grantee shall pay or reimburse the Grantor
for the amount of the excess on demand or within such period as may be
specified in any written notice given by the Grantor.
7.3 Where a Tax Liability arises in respect of the exercise of an Option,
the Board may, without prejudice to the Grantor's rights under Clause
7.1 and Clause 7.2, by written notice to the Grantee nominate as his
bare trustee any person (the "Bare Trustee") to sell such number of
Shares issued upon the exercise of the Option as may be required in
order to discharge the Tax Liability and any other liability (including
costs) connected with the said sale and the Bare Trustee shall pay an
amount equal to the Tax Liability to the Grantor and otherwise
discharge any other said liability to the extent that the net proceeds
from the said sale permit.
8 COSTS
Each of the parties shall bear and pay its own legal accountancy and
other fees and expenses incurred in the preparation and implementation
of this Deed.
9 ASSIGNMENT
This Deed shall be binding upon each party's personal representatives
and successors in title but the benefit of this Deed shall be personal
to the Grantee and shall not be assignable by the Grantee.
10 TIME FOR PERFORMANCE
Any date or period mentioned in any Clause of this Deed (other than any
reference to the tenth anniversary of the date hereof) may be extended
by mutual agreement between the parties.
11 NOTICES
Any notice to be given pursuant to the terms of this Deed shall be
given in writing to the party due to receive such notice (in the case
of a company) at its registered office from time to time or (in the
case of an individual) at his such party's address set out in this Deed
or such other address as may have been notified for the purpose to the
other parties hereto in accordance with this Clause. Notice shall be
delivered personally or sent by first class pre-paid recorded delivery
or registered post (air mail if overseas) or by facsimile transmission
and shall be deemed to be given in the case of delivery personally on
delivery and in the case of posting (in the absence of evidence of
earlier receipt) 48 hours after posting (6 days if sent by air mail)
and in the case of facsimile transmission on completion of the
transmission.
12 GOVERNING LAW
This Deed shall be governed by and construed in accordance with English
Law and the parties hereby submit for all purposes in connection with
this Deed to the exclusive jurisdiction of the English Courts.
13 COUNTERPARTS
This Deed may be executed in any number of counterparts each of which
when executed by one or more of the parties hereto shall constitute an
original but all of which shall constitute one and the same instrument.
14 VARIATIONS
No variation of this Deed shall be valid unless it is in writing and
signed by or on behalf of each of the parties hereto.
THIS DEED has been duly executed by the parties or their duly authorised
representatives
<PAGE>
EXECUTED (but not delivered )
until the date hereof) as a )
deed by Huntingdon Life )
Sciences Group plc acting by )
Director
Director/Secretary
EXECUTED (but not delivered )
until the date hereof) as a )
deed by the said ANDREW H )
BAKER in the presence of: )
Name:
Address:
Occupation:
DATED 1998
THE HUNTINGDON LIFE SCIENCES GROUP
UNAPPROVED SHARE OPTION SCHEME
Charles Russell
8-10 New Fetter Lane
London EC4A 1RS
Ref: TL/MC/25407/3
<PAGE>
INDEX
(for reference purposes only)
Rule Heading Page Number
1. DEFINITIONS AND INTERPRETATION 1
2. GRANT OF OPTIONS 6
3. SCHEME LIMITS 9
4. PERSONAL LIMITS 9
5. EXERCISE AND LAPSE OF OPTIONS 10
6. TAKEOVERS AND LIQUIDATIONS 12
7. VARIATION OF SHARE CAPITAL 13
8. MANNER OF EXERCISE OF OPTIONS 14
9. TAXATION 15
10. ADMINISTRATION AMENDMENT AND TERMINATION 16
SCHEDULE 1 18
- ----------
SCHEDULE 2 20
- ----------
SCHEDULE 3 21
- ----------
<PAGE>
RULES OF THE HUNTINGDON LIFE SCIENCES GROUP
UNAPPROVED SHARE OPTION SCHEME
Adopted on 1998
<PAGE>
1. DEFINITIONS AND INTERPRETATION
1.1 In these Rules the following words and expressions shall (except
where the context otherwise requires) have the following meanings:
"Act" the Companies Act 1985;
"Announcement Date" the date on which the annual or half-yearly
results of the Company are announced;
"Appropriate Period" (i) if the circumstances in Rule 6.1 apply
the period of six months beginning
with the date on which the person
making the offer has obtained
Control of the Company and any
condition subject to which the offer
is made has been satisfied;
(ii) if the circumstances in
Rule 6.2 apply the period of six
months beginning with the date on
which the Reconstruction
Scheme is sanctioned by the Court;
(iii) if the circumstances in
Rule 6.3 apply the period during
which the person remains bound or
entitled to acquire any shares
in the Company;
"Associated Company" the same meaning as in Section 416 of the
Taxes Act;
"Auditors" the auditors for the time being of the
Company appointed pursuant to section 384
of the Act and acting as experts and not as
arbitrators;
"Board" the Board of directors for the time being
of the Company or a duly appointed committee
thereof at which a quorum is present;
"Company" Huntingdon Life Sciences Group plc
(registered in England and Wales number
502370);
"Company Share Schemes" the Scheme
and any other share option
or profit sharing share
scheme of the Company or of
any Associated Company
whether or not approved by
the Inland Revenue;
"Control" the same meaning as in Section 840 of the
Taxes Act and the expression
"controlled" shall be construed accordingly;
"Date of Adoption" 1998 being the date of adoption of this
Scheme by the Company;
"Date of Grant" in relation to any Option means the date on
which the Option is granted or was or is to
be granted under the Scheme;
"Dealing Day" a day on which the London Stock Exchange is
open for business;
"Eligible Participant" (a) an employee who is a director of a
Participating Company who is required
by his contract of employment to devote
substantially the whole of his working
time to the business of the Group; or
(b) any other employee of a
Participating Company who
is required by his contract
of employment to devote
substantially the whole of
his working time to the
business of the Group;
"Expected Retirement Date" the date
on which an Eligible
Participant is expected to
retire in accordance with
the terms of his contract
of employment with a
Participating Company;
"Founder Option" an option granted under Rule 2.1 as
appropriate an 'A' Option, a 'B' Option,
a 'C' Option or a 'D' Option;
"Group" the Company and company under the
Control of the Company;
"London Stock Exchange" the London Stock Exchange Limited;
"Market Value" in respect of any Share on any day means
either:
(a) (when on that day
the shares of that
class are listed
on the official
list of the London
Stock Exchange)
the middle market
quotation of such
a Share as derived
from the Daily
Official List of
the London Stock
Exchange for the
Dealing Day
immediately
preceding that
day; or
(b) in all other cases
the market value
of such a Share as
determined in
accordance with
the provisions of
part VIII of the
Taxation of
Chargeable Gains
Act 1992;
"Option" a right to subscribe for
Shares granted (or to be
granted) in accordance with
these Rules and where the
context so requires shall
include a Founder Option
and New Options granted as
consideration for the
release of Old Options in
accordance with Rule 6;
"Option Agreement" the agreement dated [ ] 1998 and
made between the Company (1) and
Andrew H Baker(2);
"Option Holder" any person who has
been granted an Option or
where the context requires
a person becoming entitled
to an Option in consequence
of the death of an Option
Holder;
"Option Period" in respect of any
Option, other than a
Founder Option the period
between the Date of Grant
and the first date on which
the Option becomes
exercisable in accordance
with the Performance
Conditions set by the
Remuneration Committee
pursuant to Rule 2.7;
"Participating Company" the Company and
any other company of which
the Company has Control and
which is for the time being
authorised by the
Remuneration Committee to
participate in this Scheme;
"Performance Conditions" the conditions imposed by the
Remuneration Committee in respect of
an Option, other than a Founder
Option, pursuant to Rule 2.7;
"Remuneration Committee" the committee
consisting wholly or mainly
of non-executive directors
of the Company and chaired
by a non-executive director
and having formal
responsibility for the
operation of the Scheme;
"Rules" the rules of the Scheme as set out
herein and as amended from time to
time;
"Scheme" the employee share option scheme
constituted and governed by these
Rules as from time to time amended;
"Share" an ordinary share of 5p in the capital
of the Company;
"Subscription Price" the price at which
each Share subject to an
Option may be acquired on
the exercise of that Option
being (subject to Rules 6.4
and 7) in the case of a
Founder Option 12.5 pence
per Share and in every
other case not lower than
the higher of:
(i) the nominal value of a Share; and
(ii) the Market Value of a Share on
the Date of Grant;
"Subsisting Option" an Option to the extent that it has
not been exercised, lapsed or
cancelled;
"Tax Liability" any liability of
the Company or any company
which Controls or is under
the Control of the Company
to account for any income
tax National Insurance
contributions or other tax
arising in relation to the
grant, exercise or other
dealing with or in relation
to an Option;
"Taxes Act" the Income and Corporation Taxes Act
1988;
"Total Remuneration" in relation
to any Eligible Participant
and in any period where
that Eligible Participant
is an employee or officer
of a Participating Company
the remuneration (exclusive
of benefits in kind) paid
or payable to that Eligible
Participant by the
Participating Company and
all Associated Companies of
that Participating Company
in that period; and
"Year of Assessment" a year beginning on any 6 April and
ending on the following 5 April.
1.2 Any reference in these Rules to any provision of any Act of Parliament
or any subordinate legislation made pursuant to any Act of Parliament
shall be deemed to be a reference to such Act of Parliament or
subordinate legislation as amended modified or re-enacted (whether
before or after the date hereof).
1.3 In these Rules words incorporating the masculine gender only include
the feminine and neuter genders and words incorporating the singular
number only include the plural and vice versa.
1.4 Rule headings are for ease of reference only and do not affect the
construction or interpretation of these Rules.
1.5 References to writing shall include typewriting printing lithography
photography and facsimile messages and other modes of reproducing words
in a legible and non-transitory form.
2. GRANT OF OPTIONS
2.1 Subject to the limitations and conditions hereinafter contained, the
Remuneration Committee shall on or as soon as reasonably practicable
after the Date of Adoption grant, without consideration four Options
each at the Subscription Price and over an equal number of Shares as
shall be determined by the Remuneration Committee to such Eligible
Participants selected at its discretion and each such Option shall be
designated as an 'A' Option, a 'B' Option, a 'C' Option and a 'D'
Option respectively provided that no Founder Option shall be granted
after 31 December 1998.
2.2 The exercise of a Founder Option shall be subject to the following
conditions:
2.2.1 the 'A' Option shall become exercisable on the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 25 pence per Share;
2.2.2 the 'B' Option shall become exercisable on the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 50 pence per Share;
2.2.3 the 'C' Option shall become exercisable on the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 75 pence per Share; and
2.2.4 the 'D' Option shall become exercisable on the seventh
consecutive Dealing Day on which, but not until, the Market
Value of a Share is 100 pence per Share
provided that the Market Value of a Share on any Dealing Day before 1st
January 1999 shall be ignored in applying the above conditions and,
subject to Rules 5.4, 5.5, 6, a Founder Option shall not be exercisable
before the third anniversary of a Date of Grant. For the avoidance of
doubt a Founder Option shall be exercisable in accordance with the
rules of this Scheme if the condition applicable to that Founder Option
under this Rule 2.2 has been previously satisfied regardless of the
Market Value of a Share on the date on which the Founder Option is
exercised.
2.3 Subject to Rule 2.1 the limitations and conditions hereinafter
contained and unless prohibited by law the Remuneration Committee on
behalf of the Company may, in its absolute discretion, within a period
of 42 days immediately following an Announcement Date or Date of
Adoption grant without consideration Options to any number of Eligible
Participants provided that:
2.3.1 no Eligible Participant shall be entitled as of right to the
grant of an Option;
2.3.2 no Option may be granted to an Eligible Participant within
2 years preceding his Expected Retirement Date; and
2.3.3 no Option may be granted under this Scheme after the tenth
anniversary of the Date of Adoption.
2.4 An Option shall be granted by a resolution of the Remuneration Committee.
2.5 Notwithstanding the provisions of Rule 2.3 the Remuneration Committee
may grant Options outside the 42 day period mentioned therein in
circumstances which the Remuneration Committee in its absolute
discretion deems sufficiently exceptional to justify the grant of
Options at that time.
2.6 An Option Holder may, within a period of twenty one days immediately
following the Date of Grant renounce by notice in writing to the
Company his Option in respect of all or any part of the Shares subject
of the Option.
2.7 Each Option, other than a Founder Option, shall be granted so that its
exercise shall be subject to such objective conditions ("Performance
Conditions") (not inconsistent with the provisions of the Scheme ) as
the Remuneration Committee may in its absolute discretion think fit
provided that:
2.7.1 such conditions shall be designed to ensure that the exercise
of an Option is made subject to the attainment of a
significant and sustained improvement in the underlying
financial performance of the Company during the Option Period;
2.7.2 such conditions shall not be inconsistent with the provisions
of the Scheme and may be waived or amended if an event occurs
which causes the Remuneration Committee to consider that such
Performance Conditions could not fairly or reasonably be met,
provided that any amended conditions should be neither more
difficult nor easier to satisfy than the original Performance
Conditions were intended to be at the time of their
imposition; and
2.7.3 such conditions shall extend over a continuous period of at least
three years.
2.8 The Remuneration Committee may in its absolute discretion impose
conditions on the grant of an Option, other than a Founder Option,
restricting the number of Shares in respect of which an Option may be
exercised on any one occasion.
2.9 As soon as reasonably practicable after Options have been granted the
Board shall issue an Option certificate substantially in the form set
out in Schedule 2 in respect of each Option which shall specify:
2.9.1 the number of Shares comprised in the Option;
2.9.2 the Date of Grant;
2.9.3 the Subscription Price;
2.9.4 save in the case of a Founder Option, details of the Performance
Conditions; and
2.9.5 the last date upon which notice to exercise the Option may be
given, being not later than the day immediately preceding the
tenth anniversary of the Date of Grant.
2.10 An Option shall be personal to the Option Holder and may not be
transferred, assigned, charged, pledged or otherwise disposed of or
dealt with. Any purported transfer, assignment, charge, pledge or other
disposal or dealing with the Option shall cause the Option to lapse
forthwith and each Option certificate shall carry a statement to this
effect.
3. SCHEME LIMITS
3.1 No Option, other than a Founder Option, shall be granted if immediately
following such grant it would cause the aggregate of the number of
Shares which have been or remain to be issued on the exercise of
Options granted under the Scheme, excluding Founder Options, and the
number of shares of the Company which have been or remain to be issued
pursuant to rights granted under any other Company Share Scheme in the
preceding 10 years but, for the avoidance of doubt, excluding any
rights granted under the Option Agreement, to exceed such number of
shares as represents 10 per cent of the issued ordinary share capital
of the Company immediately prior to the Date of Grant.
3.2 No Option, other than a Founder Option, shall be granted if immediately
following such grant it would cause the aggregate of the number of
Shares which have been or remain to be issued on the exercise of
Options granted under the Scheme, excluding Founder Options, and the
number of shares of the Company which have been or remain to be issued
pursuant to rights granted in the preceding 10 years under any other
share option scheme (other than a savings related share option scheme)
but, for the avoidance of doubt, excluding any rights granted under the
Option Agreement, to exceed such number of shares as represents 5 per
cent of the issued ordinary share capital of the Company immediately
prior to the Date of Grant.
3.3 The aggregate number of Shares that may be the subject of Founder
Options granted under the Scheme and any rights granted under the
Option Agreement shall not exceed 14,550,000 Shares.
4. PERSONAL LIMITS
4.1 Save in the case of a Founder Option, the number of Shares in respect
of which an Option is granted to an Eligible Participant shall be
limited, and the Option shall take effect so and to the extent that the
aggregate Market Value of the Shares he may acquire pursuant to that
Option when added to the aggregate Market Value of Subsisting Options
previously granted under the Scheme (which for the purposes of this
Rule 4.1 shall also include cancelled Options) to him and the aggregate
market value of Shares he may acquire pursuant to any other unexercised
rights obtained under any other Company Share Scheme (other than a
savings related share option scheme or a profit sharing scheme) shall
not exceed or further exceed four times the Eligible Participant's
Total Remuneration for the Year of Assessment current at the Date of
Grant.
4.2 For the purposes of this Rule 4 Market Value of Shares shall mean in
the case of rights granted under other Company Share Schemes the market
value of the shares subject to such rights at the time of the grant of
the right as calculated in accordance with the rules of the relevant
Company Share Scheme.
5. EXERCISE AND LAPSE OF OPTIONS
5.1 Subject to this Rule 5 and Rules 6 and 8 an Option may be exercised at
any time on or after the third anniversary and before
the tenth anniversary of its Date of Grant.
5.2 An Option shall not be exercisable on or after the tenth anniversary of
its Date of Grant under any circumstances whatsoever and every
Subsisting Option shall lapse on the tenth anniversary of its Date of
Grant.
5.3 The right to exercise an Option shall terminate immediately upon the
Option Holder ceasing to be an Eligible Participant except where Rules
5.4 or 5.5 apply .
5.4 Subject to Rule 5.2 where an Option Holder dies his personal
representatives may exercise any unexercised Options held by him within
12 months of the date of death.
5.5 Where an Option Holder ceases to be an Eligible Participant:
5.5.1 by reason of:
5.5.1.1 injury, disability or pregnancy; or
5.5.1.2 redundancy;
5.5.1.3 retirement on or after the Expected Retirement Date;
5.5.1.4 the company by which the Option Holder is employed
ceasing to be a Participating Company; or
5.5.1.5 the transfer of the business in which the
Option Holder is employed to a person other
than a Participating Company; or
5.5.2 where the circumstances are not as described in Rules 5.5.1.1
to 5.5.1.5 and the Remuneration Committee in its absolute
discretion decides not later than 30 days after the date on
which the Option Holder ceases to be an Eligible Participant
to allow that Option Holder to exercise any Subsisting Option
then held by him
any Subsisting Option may be exercised no later than 6 months
after the date of such cessation.
5.6 Save where Rules 5.4, 5.5 or 6 apply the exercise of any Option shall
be conditional upon the relevant Performance Conditions having been
fulfilled to the satisfaction of the Remuneration Committee or in the
case of a Founder Option, subject to the conditions of Rule 2.2.
5.7 The Company shall notify each Option Holder in writing on each occasion
that the accounts of the Company are distributed to its shareholders as
to whether or not the Performance Conditions have been satisfied in
respect of the then immediately preceding 3 year period.
5.8 An Option shall lapse upon the earliest occurrence of any of the following
events insofar as it has not been exercised:
5.8.1 the tenth anniversary of the Date of Grant;
5.8.2 the first anniversary of the Option Holder's death;
5.8.3 the expiry of 6 months from the date on which an Option Holder
ceases to be an Eligible Participant where Rule 5.5 applies;
5.8.4 the earliest date upon which the Option is expressed to lapse
under Rule 6;
5.8.5 the date of an event specified in Rule 2.10; or
5.8.6 the Option Holder being adjudicated bankrupt.
6. TAKEOVERS AND LIQUIDATIONS
6.1 If any person obtains Control of the Company as a result of making a
general offer:
6.1.1 to acquire the whole of the issued ordinary share capital of
the Company which is made on a condition such that if it is
satisfied the person making the offer will have Control of the
Company; or
6.1.2 to acquire all the shares in the Company which are of the same
class as the Shares
then subject to the remaining provisions of this Rule 6 any Subsisting
Option may be exercised within the Appropriate Period and to the extent
that it has not been exercised by the end of the Appropriate Period the
Option shall lapse immediately upon the end of the Appropriate Period.
6.2 In the event that notice is given to the shareholders of the Company of
a resolution to approve (subject to sanction by the Court) a compromise
or arrangement proposed for the purposes of or in connection with a
scheme for the reconstruction of the Company or its amalgamation with
any other company or companies pursuant to Section 425 of the Act ("the
Reconstruction Scheme") then any Option Holder may serve notice to
exercise his Subsisting Options at any time during the Appropriate
Period and to the extent that an Option has not been exercised by the
end of the Appropriate Period it shall lapse immediately upon the end
of the Appropriate Period.
6.3 If any person becomes bound or entitled to acquire Shares in the
Company under Sections 428 to 430F of the Act then any Subsisting
Option may be exercised at any time during the Appropriate Period and
to the extent that it has not been exercised by the end of the
Appropriate Period the Option shall lapse immediately upon the end of
the Appropriate Period.
6.4 If as a result of the events specified in Rules 6.1 or 6.2 a company
has obtained Control of the Company or if a company has become bound or
entitled as mentioned in Rule 6.3 the Board shall seek the agreement of
that other company ("the Acquiring Company") or a company which has
Control over the Acquiring Company and if such agreement is obtained
each unexercised Option ("Old Option") may within the Appropriate
Period applicable to the relevant Rule be released in consideration of
the grant of a new Option ("New Option") to acquire shares in the
Acquiring Company or a company which has Control of the Acquiring
Company which satisfies the following conditions:
6.4.1 it is a right to acquire such number of such shares as has on
acquisition of the New Option an aggregate Market Value equal
to the aggregate Market Value of the Shares subject to the Old
Option on its disposal;
6.4.2 it has a subscription price per share such that the aggregate
price payable on complete exercise equals the aggregate price
which would have been payable on complete exercise of the Old
Option; and
6.4.3 it is otherwise identical in terms to the Old Option.
The New Option shall for all other purposes of this Scheme be treated
as having been acquired at the same time as the Old Option in
consideration of the release of which it is granted and where any New
Options are granted pursuant to this Rule 6.4 Rules 5, 6, 7, 8 and 10
and all definitions in Rule 1 as appropriate in those Rules shall in
relation to the New Options be construed as if references to the
Company and to the Shares were references to the company whose share
capital includes shares over which the New Option has been granted and
to the shares in that company but references to a Participating Company
shall continue to be construed as if references to the Company were
references to Huntingdon Life Sciences Group plc. Where in accordance
with this Rule 6.4 Old Options are released and New Options granted the
New Options shall not be exercisable in accordance with Rules 6.1, 6.2
and 6.3 above by virtue of the event by reason of which the New Options
were granted.
6.5 In the event that notice is given to the shareholders of the Company of
a resolution to be proposed for the voluntary winding up of the Company
any Option Holder may serve notice to exercise, his Subsisting Options
at any time up to the passing of the resolution provided that any such
notice to exercise shall only be effective if the resolution is passed.
If such resolution is duly passed all Options shall, to the extent that
they have not been exercised, lapse.
6.6 For the purposes of this Rule 6 other than Rule 6.4 a person shall be
deemed to have obtained Control of a Company if he and
others acting in concert with him have together obtained Control of it.
6.7 The exercise of an Option pursuant to the preceding provisions of this
Rule 0 shall be subject to the provisions of Rule 8 below.
7. VARIATION OF SHARE CAPITAL
In the event of any variation in the share capital of the Company by
way of capitalization or rights issue or any consolidation sub-division
or reduction of capital or otherwise by the Company the number of
Shares subject to any Option and the Subscription Price for each of
those Shares shall be adjusted by the Remuneration Committee subject
(except in the case of a capitalization) to written confirmation by the
Auditors that in their opinion such adjustment is fair and reasonable
provided that:
7.1 the aggregate amount payable on the exercise of an Option in full
is not increased; and
7.2 the Subscription Price for a Share is not reduced below its
nominal value.
8. MANNER OF EXERCISE OF OPTIONS
8.1 No Option shall be exercisable save in accordance with the then current
Model Code for Securities Transactions by Directors of Listed Companies
issued by the London Stock Exchange.
8.2 Subject to the provisions of Rule 5 and this Rule 8 an Option may be
exercised at any time in whole or in part but not unless the
Remuneration Committee otherwise permits in respect of less than 10 per
cent of the Shares the subject of the Option unless such smaller
percentage represents all the remaining Shares under the Option by the
Option Holder or (as the case may be) his personal representatives
giving a notice of exercise to the Company substantially in the form
set out in Schedule 3 accompanied by the appropriate payment and the
relevant Option certificate and shall be effective on the date of its
receipt by the Company ("exercise date") provided that wherever
relevant the Performance Conditions shall first have been fulfilled to
the satisfaction of the Remuneration Committee.
8.3 No Option shall be capable of being quoted or dealt in on any stock
exchange.
8.4 Shares shall be allotted and issued pursuant to a notice of exercise
within 42 days of the exercise date. Save for any rights determined by
reference to a date preceding the date of allotment such Shares shall
rank pari passu with the other shares of the same class in issue at the
date of allotment and will be subject to all the provisions of the
Articles of Association of the Company relating to voting, dividends,
transfer or otherwise.
8.5 When an Option is exercised only in part the balance shall remain
exercisable on the same terms as originally applied to the whole Option
and a new Option certificate representing the balance shall be issued
by the Company as soon as possible after the partial exercise.
8.6 Where relevant, within 28 days after Shares have been allotted pursuant
the exercise of an Option the Company shall make application to the
Council of the London Stock Exchange for the admission to the Official
List of the Shares allotted and issued following such exercise.
8.7 It shall be a condition of participation in the Scheme that in the
event of an Option Holder ceasing to be an Eligible Participant (for
whatever reason) he shall not be entitled to any compensation
whatsoever by reason of any termination or alteration of rights or
expectations under the Scheme whether such compensation is claimed by
way of damages for wrongful dismissal or breach of contract or for loss
of office or otherwise howsoever. Participation in this Scheme by an
Option Holder is a matter entirely separate from any pension right or
entitlement he may have and from his terms or conditions of employment
and participation in this Scheme shall in no respects whatever affect
in any way an Option Holder's pension rights or entitlement or terms or
conditions of employment.
9. TAXATION
9.1 If a Tax Liability arises in respect of an Option the Company shall be
entitled to deduct to the extent permitted by law such amount(s) from
any payment due to be made by the Company or any company which controls
or is controlled by the Company to or in respect of the Option Holder
in respect of that Option during the same calendar month or other
relevant period in which the event occurs or in any subsequent calendar
month or such relevant period in order to satisfy and discharge the Tax
Liability whether or not such payment is of an income or capital
nature.
9.2 If and to the extent the Tax Liability referred to in Rule 9.1 is of
income tax which exceeds the amount from which deductions in respect
thereof can be made in any one period referred to in Rule 9.1 in
respect of the Option Holder concerned, that Option Holder shall pay or
reimburse the Company for the amount of the excess on demand or within
such period as may be specified in any written notice given by the
Company.
9.3 Where a Tax Liability arises in respect of the exercise of an Option,
the Board may, without prejudice to the Company's rights under Rule 9.1
and Rule 9.2, by written notice to the Option Holder concerned nominate
as his bare trustee any person (the "Bare Trustee") to sell such number
of Shares issued upon the exercise of the Option as may be required in
order to discharge the Tax Liability and any other liability (including
costs) connected with the said sale and the Bare Trustee shall pay an
amount equal to the Tax Liability to the Company and otherwise
discharge any other said liability to the extent that the net proceeds
from the said sale permit.
10. ADMINISTRATION AMENDMENT AND TERMINATION
10.1 The Scheme shall be administered by the Remuneration Committee whose
decision on all disputes shall be final.
10.2 The Board may from time to time make amendments to these Rules provided
that:
10.2.1 no amendment may detrimentally affect an Option
Holder as regards any Subsisting Option held by him
on the date of the amendment being made except with
the consent in writing of (a) in the case of a
Founder Option, the holder of that Founder Option and
(b) in every other case such Option Holders who,
assuming they exercise their Options in full, would
thereby become entitled to not less than three
quarters in nominal amount of all the Shares which
would fall to be allotted upon exercise in full of
all Subsisting Options; and
10.2.2 except with the prior sanction of the Company in general
meeting no such modification or variation shall
extend the class of person eligible for the grant of Options
or alter to the advantage of Option Holders
(present or future) Rules 2.1, 2.2, 2.3, 2.7, 3, 4, 7 or
the definitions of "Eligible Participant",
"Participating Company" or "Subscription Price" except for
minor amendments to benefit the administration
of the Scheme, to comply with or take account of any proposed
or existing legislation or law or to obtain
or maintain favourable tax, exchange control or regulatory
treatment for Option Holders (present or future)
or for any Participating Company; and
10.2.3 written notice of any alteration made in accordance
with this Rule 10.2 shall be given to all Option Holders
10.3 The cost of establishing and operating the Scheme shall be borne by the
Participating Companies in such proportions as the
Board shall determine.
10.4 The Company in general meeting or the Board may at any time resolve to
terminate this Scheme in which event no further Options shall be
granted but the provisions of this Scheme shall continue in force in
relation to Subsisting Options.
10.5 The Company shall at all times keep available sufficient authorised and
unissued Shares to satisfy the exercise to the full extent still
possible of all Options which have neither lapsed nor been fully
exercised taking account of any other obligations of the Company to
issue unissued Shares.
10.6 Any notice to be given pursuant to the terms of these Rules must be
given in writing to the party due to receive such notice at (in the
case of the Company) its registered office from time to time or (in the
case of an individual) his address as notified to the Company from time
to time. Notice must be delivered personally or sent by first class
pre-paid recorded delivery or registered post (air mail if overseas) or
by facsimile transmission and shall be deemed to be given in the case
of delivery on delivery and in the case of posting (in the absence of
evidence of earlier receipt) within 48 hours after posting (6 days if
sent by air mail) and in the case of facsimile transmission on
completion of transmission.
<PAGE>
SCHEDULE 1
Letter of Grant
[The Company's Letterhead]
Date
To: Eligible Participant
Dear [name of Eligible Participant]
THE HUNTINGDON LIFE SCIENCES GROUP UNAPPROVED SHARE OPTION SCHEME
("the Scheme")
<PAGE>
1 The Directors have granted you [an/four] option[s] [designated
'A'/'B'/'C'/'D' Options respectively] over [ ] ordinary shares [each]
("Shares") in the capital of Huntingdon Life Sciences Group plc ("the
Company") under and subject to the rules of the Scheme ("the Option")
which was approved and adopted by a written resolution of the
shareholders of the Company on 199 . [Each of your options is a Founder
Option for the purposes of the Rules.] A copy of the rules of the
Scheme is enclosed herewith.
2 The subscription price per Share payable on the exercise of the Option
is [12.5]/[]p. This subscription price is subject to adjustment under
Rule 7 of the Scheme if the Company's share capital is altered or
re-organised, in specified ways.
3 An Option certificate for[each of] your option[s] is enclosed herewith.
4 Under the rules of the Scheme ("the rules"), except in certain
circumstances the Option may not be exercised earlier than
three years from the Date of Grant.
5 [The Option may not be exercised unless the Performance Conditions
attached to this letter have been fulfilled to the satisfaction of the
Remuneration Committee except in certain circumstances permitted by the
rules.][Your Founder Option may not be exercised unless the Market
Value of the Shares is equal to or exceeds the relevant target price
specified in the relevant option certificate. You should refer to Rule
2.2 in connection with this.]
6 The Option shall not be exercisable save in accordance with the then
current Model Code for Security Transactions by Directors of Listed
Companies issued by the London Stock Exchange.
7 You may renounce the Option in whole or in part by signing (in the
presence of a witness) and returning this letter together with the
enclosed Option certificate to me before [date 21 days after the Date
of Grant].
Yours faithfully,
.....................
Secretary
[NOTE: Performance Conditions must be attached to this letter]
RENUNCIATION
I [PRINT NAME] hereby renounce the Option [in whole]/[in respect of Shares]. I
am returning with this letter the certificate in respect of the Option referred
to above.
SIGNED as a DEED by [NAME] in the presence of:
Signature:
Name:
Address:
Occupation:
<PAGE>
SCHEDULE 2
Option Certificate Number:
Incorporated under the Companies Acts
Registered in England and Wales under Number [ ]
TOTAL NUMBER OF ORDINARY SHARES OF p EACH
INCLUDED IN THIS ['A'/'B'/'C'/'D'] OPTION (number)
This is to certify that (name) was granted an ['A'/'B'/'C'/'D'] Option on the
day of to subscribe for ordinary shares of [ ]p each in the capital of the
Company ("Shares") at a Subscription Price of [12.5P]/[ ]per Share giving an
aggregate Subscription Price of (pound) upon the terms of the Huntingdon Life
Sciences Group Unapproved Share Option Scheme ("the scheme"). The Option may be
exercised only at the times and in the circumstances and manner permitted by the
rules of the Scheme and cannot be transferred, assigned, charged, pledged or
otherwise disposed of or dealt with. Any purported transfer, assignment, charge,
pledge or other disposal or dealing with shall cause the Option to lapse
forthwith.
[This ['A'/'B'/'C'/'D'] Option is subject to the conditions specified in Rule
2.2 and cannot be exercised until the Market Value of a Share is equal to or
more than 25/50/75/100 pence.]
THE COMMON SEAL of
HUNTINGDON LIFE
SCIENCES GROUP plc was affixed to this deed in the presence of:
Director
Secretary
Date .........................
NOTE:
<PAGE>
(1) A form of exercise on the Option is printed overleaf. This certificate
must be surrendered on the exercise, in whole or in part, of the Option.
(2) The number and/or description of shares covered by this Option and/or the
Subscription Price may be varied in accordance with the Rules of the
Scheme.
(3) Notice to exercise this Option must be given by [date no later than the
day before the tenth anniversary of the Date of Grant].
(4) The right to exercise this Option shall be subject to the due
satisfaction of the Performance Conditions specified on the attached sheet.
<PAGE>
SCHEDULE 3
Form of Exercise
(TO BE PRINTED ON REVERSE OF OPTION CERTIFICATE)
PLEASE READ THE NOTES AT THE FOOT OF THIS FORM
CAREFULLY BEFORE COMPLETING IT
FORM OF EXERCISE
The Secretary
Huntingdon Life Sciences Group plc
I, the undersigned, having become entitled so to do hereby exercise the
['A'/'B'/'C'/'D'] Option referred to overleaf in respect of Shares comprised in
the Option upon the terms of the Huntingdon Life Sciences Group Unapproved Share
Option Scheme ("the Scheme") and agree to accept the Shares to be allotted and
issued pursuant to this Form of Exercise subject to and in accordance with the
Memorandum and Articles of Association of the Company and hereby request you to
place my name on the Register of Members in respect thereof.
I enclose a remittance for (pound) being the aggregate Subscription Price
payable for the Shares in respect of which the Option is now exercised at the
Subscription Price per Share specified overleaf.
For the avoidance of doubt, I hereby agree that Rule 9 of the rules of the
Scheme may be applied by the Company and the Board at their discretion in
respect of the Option hereby exercised.
If applicable, I hereby request you to despatch a balance certificate for the
Option to subscribe for any Shares included in the Option referred to overleaf
and not exercised on this occasion, by post at my risk to the address mentioned
below.
Signature .....................................
Surname ......................................
Forename(s) .................................
Address .......................................
...................................................
<PAGE>
Note:
<PAGE>
(1) Although the Option referred to overleaf is personal to the holder
named overleaf it may be exercised by his personal representative(s) if
he dies while it is still capable of exercise provided the personal
representative(s) does/do so before the expiration of twelve months
from the date of the holder's death or ten years from the date of its
grant (if sooner). If there are more than one, each of the personal
representatives must sign this form.
(2) Options must be exercised in respect of whole numbers of Shares. Please
indicate the number of Shares you wish to subscribe on this occasion
which must not exceed the number of Shares comprised in the Option. In
any event you will be deemed to have exercised your rights in respect
of that whole number of Shares which can be subscribed with the moneys
represented by your remittance.
(3) The remittance should be for an amount equal to the aggregate
Subscription Price, being the Subscription Price per Share shown
overleaf, multiplied by the number of Shares applied for.
THIS DEED OF VARIATION is made the 6 day of August 1998
BETWEEN
CIBA-GEIGY, PLC (registered number 170180) whose registered office is at Hulley
Road, Macclesfield, Cheshire SK10 2NX ("the Vendor"); and
HUNTINGDON LIFE SCIENCES LIMITED (registered number 1815730) whose registered
office is at Woolley Road, Alconbury, Huntingdon, Cambridgeshire, PE18 6ES ("the
Purchaser"); and
HUNTINGDON LIFE SCIENCES GROUP plc (formerly HUNTINGDON INTERNATIONAL HOLDINGS
PLC) (registered number 502370) whose registered office is at Woolley Road,
Alconbury, Huntingdon, (Cambridgeshire, PE18 6ES ("the Guarantor").
WHEREAS
A. This Deed is supplemental to an Asset Purchase Agreement dated 14th
March 1997 between the Vendor, the Purchaser and the Guarantor (the
"Asset Purchase Agreement").
B. The Purchaser has requested amendment of the Asset Purchase Agreement.
C. The Vendor is willing to amend the timetable for the Purchaser's
Payment obligations under the Asset Purchase Agreement.
D. It is desired and agreed by the parties that the Asset Purchase
Agreement be varied hereby.
NOW THIS DEED WITNESSETH as follows:
1. In pursuance of the Asset Purchase Agreement: hereinbefore mentioned
and in consideration of the provisions hereinafter contained IT IS
HEREBY AGREED AND DECLARED by and between the parties hereto that the
provision of the Asset Purchase Agreement be and hereby are varied in
the manner following.
2. Clause 4.3 of the Asset Purchase Agreement shall be deleted in its
entirety and replaced with the following:
"The Vendor acknowledges receipt of the sum of (pound)1,200,000 (the
"Initial Consideration") paid by the Purchaser on completion.
The balance of the Fixed Consideration (the "Deferred Consideration")
shall be paid in cash on the following dates and in the following
amounts:
(a) The sum of(pound)250,000 shall be paid on 14th September 1998;
(b) The sum of(pound)250,000 shall be paid on 14th December 1998;
(c) The sum of(pound)500,000 shall be paid on 14th March 1999;
(d) The sum of(pound)500,000 shall be paid on 14th June 1999;
(e) The sum of(pound)500,000 shall be paid on 14th September 1999;
(f) The sum of(pound)500,000 shall be paid on 14th December 1999;
(g) The sum of(pound)500,000 shall be paid on 14th March 2000;
(h) The sum of(pound)500,000 shall be paid on 16th June 2000;
(i) The sum of(pound)300,000 shall be paid on 14th September 2000."
3. The Vendor hereby releases the Purchaser and the Guarantor from all and
any liabilities and claims (including costs and interest) which may
have arisen or may arise up to and including 13th September 1998,
relating to and/or arising out of Clause 4.3 of the Asset Purchase
Agreement (or any breach or alleged breach thereof) which clause is
deleted in the entirety and replaced pursuant to Clause 2 of this Deed.
4. This Deed shall be governed by and construed on all respects in
accordance with English Law and the parties hereby submit irrevocably
to the exclusive jurisdiction of the English Courts.
5. This Deed may be executed in any number of counterparts, and by the
parties hereto in separate counterparts, each of which when executed
shall constitute an original, but all of which shall together
constitute one and the same instrument. This Deed shall not be
effective until each party has executed at least one counterpart.
IT IS HEREBY AGREED AND DECLARED that the Asset Purchase Agreement shall
continue in full force and effect save as modified by the provisions of this
Deed.
EXECUTED AS A DEED
by CIBA-GEIGY PLC
Acting through two Directors or a
Director and the Secretary
EXECUTED AS A DEED by HUNTINGDON LIFE SCIENCES LIMITED Acting through two
Directors or a Director and the Secretary
EXECUTED AS A DEED by HUNTINGDON LIFE SCIENCES GROUP plc Acting through two
Directors or a Director and a Secretary
UNITED STATES DEPARTMENT OF AGRICULTURE
BEFORE THE SECRETARY OF AGRICULTURE
In re: ) AWA Docket No. 98-15
)
Huntingdon Life Sciences, Inc., )
)
) Consent Decision
Respondent ) and Order
This proceeding was instituted under the Animal Welfare Act, as amended
7 U.S.C. ss.2131 et seq.), by a complaint filed by the Administrator, Animal and
Plant Health Inspection Service, United States Department of Agriculture,
alleging that the respondent violated the regulations and standards issued
pursuant to the Act (9 C.F.R. ss. 1.1 et seq.). This decision is entered
pursuant to the consent decision provisions of the Rules of Practice applicable
to this proceeding (7 C.F.R. ss. 1.138).
The respondent admits the jurisdictional allegations in paragraph I of
the complaint and specifically admits that the Secretary has jurisdiction in
this matter, either admits nor denies the remaining allegations, waives oral
hearing and further procedure, and consents and agrees, for the purpose of
settling this proceeding and for such purpose only, to the entry of this
decision.
The complainant agrees to the entry of this decision.
Findings of Fact
(a) Huntingdon Life Sciences, Inc., hereinafter referred to as
respondent, is a Delaware corporation whose address is Post
Office Box 2360, Mettlers Road, East Milstone, New Jersey
08875-2360.
(b) The respondent, at all times material hereto, was registered
and operating as a research facility as, defined in the Act
and the regulations.
Conclusions
The respondent having admitted the jurisdictional facts and the parties
having agreed to the entry of this decision, such decision will be entered.
Order
1. Respondent, its agents and employees, successors and assigns,
directly or through any corporate or other device, shall fully
comply with the Act and the regulations and standards, and in
particular, shall not:
(a) fail to have its Institutional Animal Care and Use
Committee (IACUC) review the procedures used
involving animals to ensure that they would avoid or
minimize discomfort, distress, and pain to the
animals, to assure that appropriate sedatives,
analgesics, or anesthetics were used, and to ensure
that principal investigators had considered
alternatives to procedures that would cause more than
momentary or slight pain or distress to the animals
and had provided a written narrative description of
the methods and sources used;
(b) fail to keep primary enclosures and food receptacles clean and sanitized, as
required;
(c) fail to develop and follow an appropriate plan for
environmental enhancement adequate to promote the
psychological well-being of nonhuman primates;
(d) fail to communicate timely and accurate information
on problems of animal health, behavior, and
well-being to the attending veterinarian;
(e) fail to construct and maintain primary enclosures for
nonhuman primates so that they protect the animals
from injury and contain them securely and prevent
accidental opening of the enclosures;
(f) fail to maintain programs of adequate veterinary care
under the supervision and assistance of a doctor of
veterinary medicine;
(g) fail to have its IACUC review and approve, require
modifications in (to secure approval), or withhold
approval of those components of proposed activities
related to the care and use of animals;
(h) fail to have its IACUC review the procedures used
involving animals to ensure that no animal was
impermissibly used in more than one major operative
procedure from which it was allowed to recover; and
(i) fail to file complete annual reports.
2. Respondent is assessed a civil penalty of $50,000, 10,000 of which
shall be paid by a certified check or money order made payable to the
Treasurer of United States, Respondent shall spend $20,00 within 6
months of the effective date of this order to construct facilities
that will allow individually housed primates to be placed into paired
or group housing. Such housing shall be subject to prior approval
by APHIS./ Respondent shall donate the remaining $20,00 within 60
days of the effective date of this order to a nonprofit organization
that promotes the development and use of alternatives to animals in
research and testing. Such nonprofit organization shall be subject
to prior approval by APHIS.
3. Respondent shall retain an outside laboratory animal
consultant with expertise in the area of IACUC functions and
responsibilities. Such consultant shall be subject to prior
approval by APHIS. The consultant shall conduct a review of
respondent's animal care and use program, and shall submit a
report to respondent and APHIS. The consultant shall conduct a
follow up review with respondent to ensure that any areas
identified in the report concerning respondent's animal care
and use program are appropriately addressed.
The provisions of this order shall become effective upon
issuance.
<PAGE>
Copies of this decision shall be served upon the parties
----------------------------
Alan H. Staple
President
Huntingdon Life Sciences, Inc.
----------------------------
David L. Durkin
Attorney for Respondent
----------------------------
Frank Martin, Jr.
Attorney for Complainant
Done at Washington, D.C.
This 8th day of April, 1998
----------------------
Administrative Law Judge
THIS THIRD SUPPLEMENTAL DEED is made this 7th day of August 1998
BETWEEN:-
1. HUNTINGDON LIFE SCIENCES LIMITED, a Company incorporated under the laws
of England and Wales with registered number 1815730 of Woolley Road,
Alconbury, Huntingdon, Cambridgeshire PE17 5HS (the "Chargor"); and
2. NATIONAL WESTMINSTER BANK Plc of 3rd Floor, Juno Court, 25 Prescott
Street, London E1 8BB as agent and trustee for the Secured Parties (the
"Agent" which expression shall include all successor agents appointed
from time to time).
WHEREAS
(A) By a Facilities Agreement of even date herewith made between the
Chargor (1), Huntingdon Life Sciences Group Plc (the "Parent") (2),
Huntingdon Life Sciences Inc. (3), the Secured Parties (therein called
the "Banks") (4) and the Agent (5) ("the Facilities Agreement"), the
Banks have agreed to make available to the Borrowers (as therein
defined) certain facilities in substitution for the Existing Facilities
(as therein defined);
(B) The Existing Facilities, the Existing Ancillary Facilities and the
Bridging Facility (as defined in the Facilities Agreement) are the only
facilities which immediately prior to the signing of this Deed were
available to the Borrowers from the Banks or any of them (alone or
jointly with any other person);
(C) This Deed is supplemental to a Guarantee and Debenture dated 1st
November 1995 between the parties hereto (as amended and supplemented
by Supplemental Deeds dated 20th January 1998 and 26th February 1998,
together hereinafter referred to as "the Debenture").
NOW THIS DEED WITNESSETH as follows:-
<PAGE>
1. (a) In this Deed (including the recitals), unless the context
otherwise requires or unless otherwise defined or provided for
in this Deed, words and expressions shall have the same
meanings as are attributable to them under the Debenture and
the Facilities Agreement; and
(b) Clause 2.1 of the Debenture shall be amended by the insertion
of the words "when and to the extent that they fall due for
payment" after the words "that it will".
2. The right of the Agent to give notice and to take possession and
appoint a Receiver pursuant to Clause 7.1 of the Debenture shall be
exercisable only in accordance with Clause 13.4 of the Facilities
Agreement.
3. The provisions of Clause 7.2 of the Debenture shall, subject to Clause
8 below, have effect only if, following a breach of Clause 12.3(a) of
the Facilities Agreement which constitutes a Default under Clause
13.1(b) thereof or following a Default described in Clause 13.1(f)
thereof, the Agent gives notice pursuant to Clause 13.2 of the
Facilities Agreement and a Receiver or Receivers are appointed over the
whole of the property, assets and undertaking of any of the Borrowers.
4. The Agent may only serve notice and exercise its rights under Clause
10.1 of the Debenture if it has given notice in accordance with Clause
13.2 of the Facilities Agreement.
5. The Agent may only serve notice and exercise its rights under Clause
11.1 of the Debenture after notice has been given in accordance with
Clause 13.2 of the Facilities Agreement OR, in the case of an
application to the Court for an administration order, only in the
circumstances described in Clause 13.1(j) of the Facilities Agreement.
6. Without prejudice to any set-off pursuant to insolvency legislation
and notwithstanding any other provisions of the Debenture or this
Deed, neither the Agent nor the Secured Parties (or any of them)
shall have (i) any right whether under Clause 14 of the Debenture
or otherwise howsoever to combine, consolidate, set off or transfer
(save for a transfer pursuant to Clause 14.2.3 of the Facilities
Agreement) any sums from time to time standing to the credit
of any account of the Chargor with the Agent, transferred from the
Deposit Account and intended to be used for the Chargor's general
working capital requirements, ("a Relevant Account") or (ii) any
rights or remedies over a Relevant Account save for the exercise of the
Agent's rights under the Debenture in accordance with the provisions
of Clause 8 below.
7. The provisions of Clause 23 of the Debenture shall be subject to any
provisions inconsistent therewith in the Facilities Agreement, which
latter provisions shall prevail.
8. Notwithstanding any of the provisions of this Deed or the Debenture:-
(a) none of the rights, powers and remedies granted to the Agent
pursuant to the Debenture shall be exercisable in relation to
the sums from time to time standing to the credit of a
Relevant Account; and
(b) the Chargor shall be entitled at all times to withdraw monies
from a Relevant Account for the Chargor's general working
capital requirements;
unless (i) the Agent has made a demand for payment pursuant to Clause
13.2 of the Facilities Agreement and has appointed a Receiver or
Receivers over the whole of the property, assets and undertaking of any
of the Borrowers pursuant to Clause 11.1 of the Debenture as amended
hereby OR (ii) an administration order has been made in relation to any
of the Borrowers pursuant to section 8 of the Insolvency Act 1986 (or
any statutory notification or re-enactment thereof from time to time in
force).
9. In the event of any inconsistency between the provisions hereof and the
provisions of the Facilities Agreement the latter shall prevail.
10. Subject to the provisions hereof the Debenture shall continue in full
force and effect.
11. This Deed shall be governed by and construed and interpreted in
accordance with English law.
12. Every provision contained in this Deed shall be severable and distinct
from every other such provision and if at any time any one or more of
such provisions is or becomes invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining such provisions
shall not in any way be affected thereby.
13. This Deed may be executed in any number of counterparts and all such
counterparts shall be deemed to constitute one and the same instrument.
IN WITNESS whereof the Chargor and the Agent have signed this Deed as a deed
with the intention that it be delivered the day and year first before written.
Signed as a Deed by )
HUNTINGDON LIFE SCIENCES LIMITED )
acting by two Directors or one )
Director and its secretary )
Signed as a Deed for and on behalf of )
NATIONAL WESTMINSTER BANK PLC )
