SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 - For the quarter ended September 30, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-640
NL INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 13-5267260
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
16825 Northchase Drive, Suite 1200, Houston, Texas 77060-2544
- -------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 423-3300
-------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) had been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares of common stock outstanding on November 9, 1998: 52,127,813
NL INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - December 31, 1997
and September 30, 1998 3-4
Consolidated Statements of Income - Three months
and nine months ended September 30, 1997 and 1998 5-6
Consolidated Statements of Comprehensive Income
- Three months and nine months ended September 30,
1997 and 1998 7
Consolidated Statement of Shareholders' Equity
- Nine months ended September 30, 1998 8
Consolidated Statements of Cash Flows - Nine
months ended September 30, 1997 and 1998 9-10
Notes to Consolidated Financial Statements 11-17
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18-25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 25
Item 6. Exhibits and Reports on Form 8-K 25-26
- 2 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, September 30,
ASSETS 1997 1998
------------ -------------
Current assets:
Cash and cash equivalents, including
restricted cash of $9,751 and $12,660 ......... $ 106,145 $ 320,823
Accounts and notes receivable .................. 148,676 157,829
Refundable income taxes ........................ 1,941 10,377
Inventories .................................... 192,780 191,568
Prepaid expenses ............................... 3,348 6,635
Deferred income taxes .......................... 1,642 1,923
---------- ----------
Total current assets ....................... 454,532 689,155
---------- ----------
Other assets:
Marketable securities .......................... 17,270 20,057
Investment in joint ventures ................... 172,721 171,202
Prepaid pension cost ........................... 23,848 24,258
Other .......................................... 18,592 12,554
---------- ----------
Total other assets ......................... 232,431 228,071
---------- ----------
Property and equipment:
Land ........................................... 19,479 19,509
Buildings ...................................... 150,090 142,484
Machinery and equipment ........................ 616,309 581,255
Mining properties .............................. 88,617 82,636
Construction in progress ....................... 2,577 8,420
---------- ----------
877,072 834,304
Less accumulated depreciation and depletion .... 465,843 454,275
---------- ----------
Net property and equipment ................. 411,229 380,029
---------- ----------
$1,098,192 $1,297,255
========== ==========
- 3 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
December 31, September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1998
------------ -------------
Current liabilities:
Notes payable ................................ $ 13,968 $ 35,864
Current maturities of long-term debt ......... 77,374 184,460
Accounts payable and accrued liabilities ..... 161,730 206,260
Payable to affiliates ........................ 11,512 10,726
Income taxes ................................. 10,910 14,108
Deferred income taxes ........................ 891 931
----------- -----------
Total current liabilities ................ 276,385 452,349
----------- -----------
Noncurrent liabilities:
Long-term debt ............................... 666,779 304,060
Deferred income taxes ........................ 132,797 190,310
Accrued pension cost ......................... 44,389 41,738
Accrued postretirement benefits cost ......... 50,951 43,492
Other ........................................ 148,903 118,312
----------- -----------
Total noncurrent liabilities ............. 1,043,819 697,912
----------- -----------
Minority interest .............................. 257 624
----------- -----------
Shareholders' equity:
Common stock ................................. 8,355 8,355
Additional paid-in capital ................... 759,281 773,864
Accumulated deficit .......................... (495,421) (144,800)
Accumulated other comprehensive loss ......... (129,513) (126,170)
Treasury stock ............................... (364,971) (364,879)
----------- -----------
Total shareholders' equity (deficit) ..... (222,269) 146,370
----------- -----------
$ 1,098,192 $ 1,297,255
=========== ===========
Commitments and contingencies (Note 14)
See accompanying notes to consolidated financial statements.
- 4 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1997 1998 1997 1998
--------- --------- --------- ---------
Revenues and other income:
Net sales ................. $ 210,344 $ 221,520 $ 629,087 $ 685,794
Other, net ................ 2,956 7,500 11,718 20,769
--------- --------- --------- ---------
213,300 229,020 640,805 706,563
--------- --------- --------- ---------
Costs and expenses:
Cost of sales ............. 162,499 151,782 502,353 476,026
Selling, general and
administrative ........... 30,994 32,069 130,595 98,337
Interest .................. 16,445 15,066 49,160 46,917
--------- --------- --------- ---------
209,938 198,917 682,108 621,280
--------- --------- --------- ---------
Income (loss) from
continuing operations
before income taxes and
minority interest ..... 3,362 30,103 (41,303) 85,283
Income tax expense (benefit) (608) (1,273) (1,714) 14,174
--------- --------- --------- ---------
Income (loss) from
continuing operations
before minority
interest .............. 3,970 31,376 (39,589) 71,109
Minority interest ........... 23 17 72 36
--------- --------- --------- ---------
Income (loss) from
continuing operations . 3,947 31,359 (39,661) 71,073
Discontinued operations 5,814 -- 15,956 287,396
Extraordinary item - early
extinguishment of debt, net
of tax benefit of $1,293 and
$2,568, respectively ....... -- (2,400) - (4,766)
--------- --------- --------- ---------
Net income (loss) ..... $ 9,761 $ 28,959 $ (23,705) $ 353,703
========= ========= ========= =========
- 5 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
----------------------- ------------------------
1997 1998 1997 1998
---------- ---------- ---------- ----------
Basic earnings per share:
Continuing operations .......... $ .08 $ .61 $ (.78) $ 1.38
Discontinued operations ........ .11 -- .32 5.60
Extraordinary item ............. -- (.05) -- (.09)
---------- ---------- ---------- ----------
Net income (loss) ............ $ .19 $ .56 $ (.46) $ 6.89
========== ========== ========== ==========
Diluted earnings per share:
Continuing operations .......... $ .08 $ .60 $ (.78) $ 1.37
Discontinued operations ........ .11 -- .32 5.52
Extraordinary item ............. -- (.05) -- (0.09)
---------- ---------- ---------- ----------
Net income (loss) ............ $ .19 $ .55 $ (.46) $ 6.80
========== ========== ========== ==========
Shares used in the calculation
of earnings per share:
Basic .......................... 51,146 51,444 51,143 51,356
Dilutive impact of stock options 439 750 -- 668
---------- ---------- ---------- ----------
Diluted ........................ 51,585 52,194 51,143 52,024
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
- 6 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Three months ended Nine months ended
September 30, September 30,
------------------- --------------------
1997 1998 1997 1998
-------- -------- -------- --------
Net income (loss) ................. $ 9,761 $ 28,959 $(23,705) $353,703
-------- -------- -------- --------
Other comprehensive income
(loss), net of tax:
Marketable securities
adjustment ..................... 2,862 913 4,829 1,812
Currency translation
adjustment ..................... 935 4,603 (6,570) 1,531
-------- -------- -------- --------
Total other comprehensive
income (loss) ................ 3,797 5,516 (1,741) 3,343
-------- -------- -------- --------
Comprehensive income (loss) ..... $ 13,558 $ 34,475 $(25,446) $357,046
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
- 7 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Nine months ended September 30, 1998
(In thousands)
Accumulated other
comprehensive income (loss)
Additional ---------------------------
Common paid-in Accumulated Currency Marketable Treasury
stock capital deficit translation securities stock Total
--------- ---------- ----------- ------------- ------------ ---------- ---------
Balance at December 31, 1997 ......... $ 8,355 $ 759,281 $(495,421) $(133,810) $ 4,297 $(364,971) $(222,269)
Net income ........................... -- -- 353,703 -- -- -- 353,703
Other comprehensive income (loss), net -- -- -- 1,531 1,812 -- 3,343
Dividends ............................ -- -- (3,082) -- -- -- (3,082)
Cash received upon settlement of
shareholder derivative lawsuit, net
of $3,198 in legal fees and expenses -- 11,211 -- -- -- -- 11,211
Tax benefit of stock options exercised -- 3,372 -- -- -- -- 3,372
Treasury stock reissued .............. -- -- -- -- -- 92 92
--------- --------- --------- --------- --------- --------- ---------
Balance at September 30, 1998 ........ $ 8,355 $ 773,864 $(144,800) $(132,279) $ 6,109 $(364,879) $ 146,370
========= ========= ========= ========= ========= ========= =========
See accompanying notes to consolidated financial statements.
- 8 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1997 and 1998
(In thousands)
1997 1998
--------- ---------
Cash flows from operating activities:
Net income (loss) ................................ $ (23,705) $ 353,703
Depreciation, depletion and amortization ......... 25,711 25,531
Noncash interest expense ......................... 17,040 17,291
Deferred income taxes ............................ (1,910) 1,958
Change in accounting for environmental
remediation costs ............................... 30,000 --
Discontinued operations:
Net gain from sale of Rheox .................... -- (286,071)
Income from operations of Rheox ................ (15,956) (1,325)
Other, net ....................................... (9,848) (9,453)
--------- ---------
21,332 101,634
Change in assets and liabilities:
Accounts and notes receivable .................. (29,417) (26,697)
Inventories .................................... 45,742 (13,670)
Prepaid expenses ............................... (2,967) (3,501)
Accounts payable and accrued liabilities ....... 14,162 12,994
Income taxes ................................... 7,293 (14,572)
Other, net ..................................... (5,598) 11,808
Rheox, net ....................................... 20,266 (25,864)
--------- ---------
Net cash provided by operating activities .... 70,813 42,132
--------- ---------
Cash flows from investing activities:
Proceeds from sale of Rheox ...................... -- 435,080
Capital expenditures ............................. (22,154) (12,731)
Collection of note receivable .................... -- 6,875
Investment in joint venture, net ................. 5,836 (371)
Proceeds from disposition of property
and equipment ................................... 2,912 486
Rheox, net ....................................... (1,185) (26)
--------- ---------
Net cash provided (used) by investing
activities .................................. (14,591) 429,313
--------- ---------
- 9 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Nine months ended September 30, 1997 and 1998
(In thousands)
1997 1998
--------- ---------
Cash flows from financing activities:
Indebtedness:
Borrowings ....................................... $ -- $ 30,491
Principal payments ............................... (173,739) (170,853)
Deferred financing costs ......................... (2,343) --
Settlement of shareholder derivative lawsuit, net .. -- 11,211
Dividends .......................................... -- (3,082)
Rheox, net ......................................... 108,775 (117,500)
Other, net ......................................... 252 90
--------- ---------
Net cash used by financing activities .......... (67,055) (249,643)
--------- ---------
Cash and cash equivalents:
Net change from:
Operating, investing and financing activities .... (10,833) 221,802
Currency translation ............................. (1,068) 506
Sale of Rheox .................................... -- (7,630)
Balance at beginning of period ..................... 114,115 106,145
--------- ---------
Balance at end of period ........................... $ 102,214 $ 320,823
========= =========
Supplemental disclosures - cash paid for:
Interest, net of amounts capitalized ............... $ 35,262 $ 21,972
Income taxes, net .................................. 1,317 47,839
See accompanying notes to consolidated financial statements.
- 10 -
NL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:
NL Industries, Inc. conducts its titanium dioxide pigments ("TiO2")
operations through its wholly-owned subsidiary, Kronos, Inc. In January 1998 the
specialty chemicals business of Rheox, Inc., a wholly-owned subsidiary of NL,
was sold. At September 30, 1998 Valhi, Inc. and Tremont Corporation, each
affiliates of Contran Corporation, held approximately 58% and 19%, respectively,
of NL's outstanding common stock, and together may be deemed to control NL. At
September 30, 1998 Contran and its subsidiaries held approximately 92% of
Valhi's outstanding common stock, and Valhi and other entities related to Harold
C. Simmons held approximately 53% of Tremont's outstanding common stock.
The consolidated balance sheet of NL Industries, Inc. and Subsidiaries
(collectively, the "Company") at December 31, 1997 has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at September 30, 1998 and the consolidated statements
of income, comprehensive income, shareholders' equity and cash flows for the
interim periods ended September 30, 1997 and 1998 have been prepared by the
Company, without audit. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for a full year or of future operations.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Certain prior-year amounts have been
reclassified to conform to the current year presentation, including reporting
the Company's specialty chemicals business as a discontinued operation. The
accompanying consolidated financial statements should be read in conjunction
with the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 (the "1997 Annual
Report").
The Company will adopt Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities,
no later than the first quarter of 2000. SFAS No. 133 establishes accounting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. Under SFAS No. 133, all
derivatives will be recognized as either assets or liabilities and measured at
fair value. The accounting for changes in fair value of derivatives will depend
upon the intended use of the derivative. The Company is currently studying this
newly-issued accounting rule, and the impact of adopting SFAS No. 133, if any,
has not yet been determined but will be dependent upon the extent to which the
Company is then a party to derivative contracts or engaged in hedging
activities. At September 30, 1998 the Company is not a party to any derivative
contracts or engaged in any hedging activities covered by SFAS No. 133.
- 11 -
NOTE 2 - EARNINGS PER SHARE:
Basic earnings per share are based on the weighted average number of
common shares outstanding during each period. Diluted earnings per share are
based on the weighted average common shares outstanding and the dilutive impact
of outstanding stock options.
NOTE 3 - BUSINESS SEGMENT INFORMATION:
The Company's continuing operations are conducted by Kronos in one
business segment - TiO2.
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1997 1998 1997 1998
--------- --------- --------- ---------
(In thousands)
Net sales ......................... $ 210,344 $ 221,520 $ 629,087 $ 685,794
Other income, excluding
corporate ........................ 2,306 2,036 9,476 4,719
--------- --------- --------- ---------
212,650 223,556 638,563 690,513
Cost of sales ..................... 162,499 151,782 502,353 476,026
Selling, general and
administrative, excluding
corporate ........................ 25,243 26,750 85,798 83,339
--------- --------- --------- ---------
Operating income .................. 24,908 45,024 50,412 131,148
General corporate income (expense):
Securities earnings, net ........ 590 4,345 1,817 12,747
Expenses, net ................... (5,691) (4,200) (44,372) (11,695)
Interest expense ................ (16,445) (15,066) (49,160) (46,917)
--------- --------- --------- ---------
$ 3,362 $ 30,103 $ (41,303) $ 85,283
========= ========= ========= =========
Corporate expenses, net decreased in the first nine months of 1998 due to
the $30 million noncash charge taken in the first quarter of 1997 related to the
adoption of a new method of accounting for certain environmental remediation
costs.
NOTE 4 - INVENTORIES:
December 31, September 30,
1997 1998
------------ -------------
(In thousands)
Raw materials ................................ $ 45,844 $ 37,984
Work in process .............................. 8,018 11,472
Finished products ............................ 107,427 107,468
Supplies ..................................... 31,491 34,644
-------- --------
$192,780 $191,568
======== ========
- 12 -
NOTE 5 - MARKETABLE SECURITIES:
December 31, September 30,
1997 1998
----------- -------------
(In thousands)
Available-for-sale securities - noncurrent
marketable equity securities:
Unrealized gains ................................. $ 6,939 $ 11,254
Unrealized losses ................................ (328) (1,856)
Cost ............................................. 10,659 10,659
-------- --------
Aggregate market ............................. $ 17,270 $ 20,057
======== ========
NOTE 6 - INVESTMENT IN JOINT VENTURES:
December 31, September 30,
1997 1998
----------- -------------
(In thousands)
TiO2 manufacturing joint venture ............... $170,830 $171,202
Other .......................................... 1,891 --
-------- --------
$172,721 $171,202
======== ========
NOTE 7 - OTHER NONCURRENT ASSETS:
December 31, September 30,
1997 1998
----------- -------------
(In thousands)
Deferred financing costs, net .................. $ 9,973 $ 6,427
Intangible assets, net ......................... 4,228 2,613
Other .......................................... 4,391 3,514
------- -------
$18,592 $12,554
======= =======
NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
December 31, September 30,
1997 1998
----------- -------------
(In thousands)
Accounts payable ......................... $ 64,698 $ 50,831
-------- --------
Accrued liabilities:
Employee benefits ...................... 40,110 35,169
Environmental costs .................... 9,000 48,146
Interest ............................... 6,966 15,371
Other .................................. 40,956 56,743
-------- --------
97,032 155,429
-------- --------
$161,730 $206,260
======== ========
- 13 -
NOTE 9 - OTHER NONCURRENT LIABILITIES:
December 31, September 30,
1997 1998
----------- -------------
(In thousands)
Environmental costs .......................... $125,502 $ 79,355
Insurance claims and expenses ................ 11,436 12,200
Employee benefits ............................ 10,835 10,626
Deferred income .............................. -- 13,333
Other ........................................ 1,130 2,798
-------- --------
$148,903 $118,312
======== ========
NOTE 10 - NOTES PAYABLE AND LONG-TERM DEBT:
December 31, September 30,
1997 1998
----------- -------------
(In thousands)
Notes payable - Kronos (DM 25,000 and
DM 60,500, respectively) .......................... $ 13,968 $ 35,864
======== ========
Long-term debt:
NL Industries:
11.75% Senior Secured Notes .................... $250,000 $244,000
13% Senior Secured Discount Notes .............. 169,857 118,583
-------- --------
419,857 362,583
-------- --------
Kronos:
DM bank credit facility (DM 288,322 and
DM 207,322, respectively) ..................... 161,085 124,419
Joint venture term loan ........................ 42,429 --
Other .......................................... 3,282 1,518
-------- --------
206,796 125,937
-------- --------
Rheox - bank term loan ........................... 117,500 --
-------- --------
744,153 488,520
Less current maturities ............................ 77,374 184,460
-------- --------
$666,779 $304,060
======== ========
The Company redeemed the 13% Senior Secured Discount Notes on October 15,
1998 at the redemption price of 106% of the principal amount, in accordance with
the terms of the Senior Secured Discount Notes indenture. As a result, the
accreted value of the Senior Secured Discount Notes has been classified as a
current liability at September 30, 1998.
- 14 -
NOTE 11 - INCOME TAXES:
The difference between the provision for income tax expense attributable
to income from continuing operations before income taxes and minority interest
and the amount that would be expected using the U.S. federal statutory income
tax rate of 35% is presented below.
Nine months ended
September 30,
--------------------
1997 1998
-------- --------
(In thousands)
Expected tax expense (benefit) ......................... $(14,456) $ 29,849
Non-U.S. tax rates ..................................... (462) 281
Incremental tax on income of companies not included
in NL's consolidated U.S. federal income tax return ... 2,171 2,142
Refund of prior-year dividend withholding tax .......... -- (8,219)
Change in valuation allowance .......................... 10,459 (9,798)
U.S. state income taxes ................................ -- 200
Other, net ............................................. 574 (281)
-------- --------
Income tax expense (benefit) ..................... $ (1,714) $ 14,174
======== ========
NOTE 12 - OTHER INCOME, NET:
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
1997 1998 1997 1998
-------- -------- -------- --------
(In thousands)
Corporate interest and dividend
income .......................... $ 869 $ 4,345 $ 1,817 $ 12,747
Currency transaction gains, net .. 155 986 3,220 2,703
Noncompete agreement income ...... -- 1,000 -- 2,667
Trade interest income ............ 759 525 2,047 1,562
Gain (loss) from disposition of .. 172
property and equipment .......... (311) 2,452 (130)
Other, net ....................... 1,484 472 2,182 1,220
-------- -------- -------- --------
$ 2,956 $ 7,500 $ 11,718 $ 20,769
======== ======== ======== ========
NOTE 13 - DISCONTINUED OPERATIONS:
The Company sold the net assets of its Rheox specialty chemicals business
for $465 million cash (before fees and expenses) in the first quarter of 1998,
including $20 million attributable to a five-year agreement by the Company not
to compete in the rheological products business. The Company recognized an
after-tax gain of approximately $286 million on the sale of this business
segment. A portion of the $380 million after-tax proceeds was used to reduce
outstanding indebtedness by approximately $231 million.
- 15 -
Condensed income statement data related to discontinued operations for the
interim periods ended September 30, 1997 and 1998 are as follows. Interest
expense has been allocated to discontinued operations based on the amount of
debt specifically attributed to Rheox's operations.
Nine months ended
September 30,
-----------------------
1997 1998
--------- ---------
(In thousands)
Operations:
Net sales ......................................... $ 111,336 $ 12,630
========= =========
Operating income .................................. $ 34,315 $ 2,900
Interest and other expenses ....................... 8,933 797
--------- ---------
Income before income taxes and minority
interest ..................................... 25,382 2,103
Income tax expense ................................ 9,463 778
Minority interest ................................. (37) --
--------- ---------
15,956 1,325
Gain from sale of Rheox, net of tax expense of
$86,222 -- 286,071
--------- ---------
$ 15,956 $ 287,396
========= =========
Condensed cash flow data for Rheox (excluding dividends paid to,
contributions received from and intercompany loans with NL) is presented below:
Nine months ended
September 30,
------------------------
1997 1998
---------- ---------
(In thousands)
Cash flows from:
Operating activities ........................... $ 20,266 $ (26,493)
Investing activities - capital expenditures .... (26)
and other ..................................... (1,185)
Financing activities - indebtedness, net ....... 108,775 (117,500)
--------- ---------
$ 127,856 $(144,019)
========= =========
NOTE 14 - COMMITMENTS AND CONTINGENCIES:
For descriptions of certain legal proceedings, income tax and other
commitments and contingencies related to the Company, reference is made to (i)
Management's Discussion and Analysis of Financial Condition and Results of
Operations, (ii) Part II, Item 1 -"Legal Proceedings," (iii) the Company's
Quarterly Report on Form 10-Q for the quarters ended March 31, 1998 and June 30,
1998, and (iv) the 1997 Annual Report.
- 16 -
In July 1998 the Company reached an agreement (the "Tioxide Purchase") to
(i) acquire the North American TiO2 operations of Imperial Chemical Industries
plc's ("ICI") subsidiary, Tioxide Group Limited, and a Tioxide TiO2 plant in
England, and (ii) cancel certain rights to chloride-process technology licensed
to Tioxide by the Company in connection with the formation of Louisiana Pigment
Company ("LPC") in 1993. The aggregate amount to be paid to ICI is approximately
$365 million, including a $30 million fee for the cancellation of technology
rights and approximately $50 million in working capital. The purchase is subject
to regulatory clearances, completion of the purchase by E.I. du Pont de Nemours
& Co. of ICI's remaining non-North American TiO2 business (the "DuPont
Purchase"), and other conditions customary to transactions of this type.
The operations to be acquired include Tioxide's 50%-interest in LPC, a
manufacturing joint venture of the Company and Tioxide that operates a
chloride-process TiO2 plant in Louisiana with capacity of approximately 120,000
metric tons per annum ("mtpa"); Tioxide's 75,000 mtpa sulfate-process TiO2 plant
in Grimsby, England; Tioxide's 52,000 mtpa finishing plant in Tracy, Quebec; and
Tioxide's North American marketing and distribution business.
Upon completion of the DuPont Purchase and the Tioxide Purchase, the
Company expects to become the world's third largest manufacturer of TiO2,
increasing its productive capacity by approximately 135,000 mtpa.
Assuming regulatory clearances are received in 1998, the Company expects
the Tioxide Purchase to close in the first quarter of 1999.
- 17 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Three months ended % Nine months ended %
September 30, Change September 30, Change
------------------ ------ ------------------- ------
1997 1998 1997 1998
------ ------ ------ ------
(In millions) (In millions)
Net sales ................ $210.3 $221.5 +5% $629.1 $685.8 +9%
Operating income ......... $ 24.9 $ 45.0 +81% $ 50.4 $131.1 +160%
Percent changes in TiO2:
Sales volume ........... -9% -2%
Average selling prices
(in billing currencies) +17% +17%
Kronos' operating income in the third quarter and first nine months of
1998 increased from the comparable periods in 1997 due to higher average selling
prices, partially offset by lower sales volume and the absence of $9.7 million
of income from refunds of German franchise taxes received in the third quarter
of 1997. Kronos expects its fourth-quarter 1998 operating income will exceed its
fourth-quarter 1997 operating income primarily because of higher average
fourth-quarter 1998 TiO2 selling prices, partially offset by moderately lower
fourth-quarter 1998 sales volume.
Average TiO2 selling prices for the third quarter of 1998 were 17% higher
than the third quarter of 1997 and 2% higher than the second quarter of 1998.
Kronos' third-quarter sales volume decreased 9% from the record sales
volume in the year-earlier period as demand moderated. Sales volume in the first
nine months of 1998 was 2% lower than the year-earlier period primarily
reflecting lower sales volume in Asia, partially offset by higher sales volume
in Europe. As a result of lower second-half 1998 demand for TiO2, Kronos
anticipates its TiO2 sales volume for full-year 1998 will be slightly below that
of calendar year 1997.
Kronos' cost of sales as a percentage of net sales decreased in the third
quarter and first nine months of 1998 primarily due to higher average selling
prices. Kronos' selling, general and administrative expenses decreased in the
third quarter and first nine months of 1998 due to lower distribution costs
associated with lower sales volume and favorable effects of foreign currency
translation, partially offset by the impact of the German franchise tax refunds
received in the third quarter of 1997.
A significant amount of sales are denominated in currencies other than the
U.S. dollar, and fluctuations in the value of the U.S. dollar relative to other
currencies decreased the dollar value of sales for the third quarter and first
nine months of 1998 by $3 million and $26 million, respectively, compared to the
comparable 1997 periods.
- 18 -
The following table sets forth certain information regarding general
corporate income (expense).
Three months ended Nine months ended
September 30, Difference September 30, Difference
------------------ ---------- ------------------ ----------
1997 1998 1997 1998
------ ------ ------ ------
(In millions)
Securities earnings ... $ .6 $ 4.3 $ 3.7 $ 1.8 $ 12.7 $10.9
Corporate expenses, net (5.7) (4.1) 1.6 (44.3) (11.6) 32.7
Interest expense ...... (16.4) (15.1) 1.3 (49.2) (46.9) 2.3
------ ------ ----- ------ ------ -----
$(21.5) $(14.9) $ 6.6 $(91.7) $(45.8) $45.9
====== ====== ===== ====== ====== =====
Securities earnings increased due to higher average balances available for
investment. Corporate expenses, net in the first nine months of 1998 was lower
than the comparable period in 1997 due to the $30 million noncash charge taken
in the first quarter of 1997 related to the Company's adoption of SOP No. 96-1,
"Environmental Remediation Liabilities." This charge is included in selling,
general and administrative expense in the Company's consolidated statements of
income.
The Company expects general corporate interest income and interest expense
to be lower in the fourth quarter of 1998 compared to the third quarter of 1998
due to the redemption of the remaining 13% Senior Secured Discount Notes on
October 15, 1998.
Income taxes in the third quarter of 1998 include a tax benefit of $8.2
million resulting from a refund of prior-year German dividend withholding taxes.
The Company sold the net assets of its Rheox specialty chemicals business
in the first quarter of 1998 and, as a result of the sale, Rheox's results are
reported as discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated cash flows from operating, investing and
financing activities for the nine months ended September 30, 1997 and 1998 are
presented below.
Nine months ended
September 30,
-----------------
1997 1998
------ ------
(In millions)
Net cash provided (used) by:
Operating activities .................................... $ 70.8 $ 42.1
Investing activities .................................... (14.6) 429.3
Financing activities .................................... (67.0) (249.6)
------ ------
Net cash provided (used) by operating, investing
and financing activities ........................... $(10.8) $221.8
====== ======
The TiO2 industry is cyclical and changes in economic conditions within
the industry significantly impact the earnings and operating cash flows of the
Company. Cash flow from operations, before changes in assets and liabilities,
- 19 -
in the 1998 period improved significantly from the comparable period in 1997 due
to higher operating income. Changes in the Company's inventories, receivables
and payables (excluding the effect of currency translation) used cash in the
first nine months of 1998 but provided cash in the first nine months of 1997
primarily due to reductions in inventory levels in the 1997 period and higher
payments of income taxes in the 1998 period as a result of the gain on sale of
Rheox.
The sale of the Company's specialty chemicals business in the first
quarter of 1998 resulted in net proceeds of $380 million after current income
taxes and other expenses. In the first nine months of 1998, the Company used a
portion of the net proceeds to repay certain indebtedness, as described below,
and on October 15, 1998, used a portion of the net proceeds to redeem the
remaining $119 million of 13% Senior Secured Discount Notes at the redemption
price of 106% of the principal amount, in accordance with the terms of the
Discount Notes indenture.
During the first nine months of 1998, the Company used a portion of the
net proceeds to (i) prepay $118 million of the Rheox credit facility, (ii)
prepay $42 million of Kronos' share of the LPC joint venture term loan, (iii)
make $65 million of open-market purchases of the Company's 13% Senior Secured
Discount Notes at prices ranging from $101.25 to $105.19 per $100 of their
principal amounts, and (iv) purchase $6 million of the Senior Secured Notes and
$61 thousand of the Senior Secured Discount Notes at a price of $100 and $96.03
per $100 of their principal amounts, respectively, pursuant to a June 1998 pro
rata tender offer to Note holders as required under the terms of the indenture.
The Company prepaid DM 81 million ($44 million when paid) of its DM term
loan in the first quarter of 1998. A portion of the funds for such prepayment of
the DM term loan was provided by a first-quarter DM 35 million ($19 million when
borrowed) increase in outstanding borrowings under the Company's short-term
non-U.S. credit facilities. In the second quarter of 1998, the Company repaid DM
20 million ($11 million when paid) of the DM revolving credit facility.
In order to complete the Tioxide Purchase, the Company expects to borrow
approximately $250 million in bank financing.
At September 30, 1998 the Company had cash and cash equivalents
aggregating $321 million (14% held by non-U.S. subsidiaries), including
restricted cash equivalents of $13 million. The Company's subsidiaries had $91
million available for borrowing at September 30, 1998 under existing non-U.S.
credit facilities.
In the third quarter of 1998, the Company paid a regular quarterly
dividend of $.03 per share to shareholders aggregating $1.5 million. Dividends
paid during the first nine months of 1998 totaled $3.1 million. In October 1998
the Company's Board of Directors declared a regular quarterly dividend of $.03
per share to shareholders of record as of December 16, 1998 to be paid on
December 30, 1998.
In June 1998, as a result of the settlement of a shareholder derivative
lawsuit on behalf of the Company, Valhi transferred $14.4 million in cash to the
- 20 -
Company, and the Company agreed to pay plaintiffs' attorneys' fees and expenses
of $3.2 million.
Certain of the Company's tax returns in various U.S. and non-U.S.
jurisdictions are being examined and tax authorities have proposed or may
propose tax deficiencies, including non-income tax related items and interest.
The Company previously reached an agreement with the German tax authorities and
paid certain tax deficiencies of approximately DM 44 million ($28 million when
paid), including interest, which resolved significant tax contingencies for
years through 1990. In the third quarter of 1998, the Company received a DM 14
million ($8.2 million when received) refund of 1990 German dividend withholding
taxes. The German tax authorities were required to refund such amounts based on
a recent German Supreme Court decision in favor of another taxpayer. The refund
resulted in a reduction of the settlement amount from DM 44 million referred to
above to DM 30 million for years through 1990. No further withholding tax
refunds are expected.
Certain other significant German tax contingencies aggregating an
estimated DM 172 million ($102 million at September 30, 1998) through 1997
remain outstanding and are in litigation. Of these, one primary issue represents
disputed amounts aggregating DM 160 million ($95 million at September 30, 1998)
for years through 1997. The Company has received tax assessments for a
substantial portion of these amounts. No payments of tax or interest
deficiencies related to these assessments are expected until the litigation is
resolved. During 1997 a German tax court proceeding involving a tax issue
substantially the same as this issue was decided in favor of the taxpayer. The
German tax authorities have appealed that decision to the German Supreme Court.
The Company believes that a decision by the German Supreme Court will be
rendered within a year and will likely determine the outcome of the Company's
primary dispute with the German tax authorities. Although the Company believes
that it will ultimately prevail in this matter, the Company has granted a DM 94
million ($56 million at September 30, 1998) lien on its Nordenham, Germany TiO2
plant in favor of the City of Leverkusen, and a DM 5 million ($3 million at
September 30, 1998) lien in favor of the German federal tax authorities. If the
Company does not prevail, these contingencies will increase the Company's tax
liability for 1990 and each year thereafter, and the Company would seek to
negotiate payment over a period of time.
In addition, during 1997 the Company reached an agreement with the German
tax authorities regarding certain other issues not in litigation for the years
1991 through 1994, and agreed to pay additional tax deficiencies of DM 9 million
($5 million at September 30, 1998), most of which was paid in the third quarter
of 1998.
During 1997 the Company received a tax assessment from the Norwegian tax
authorities proposing tax deficiencies of NOK 51 million ($7 million at
September 30, 1998) relating to 1994. The Company has appealed this assessment
and has begun litigation proceedings. Although the Company believes that it will
ultimately prevail, the Company has granted a lien for the full amount of the
tax assessment on its Fredrikstad, Norway TiO2 plant in favor of the Norwegian
tax authorities.
- 21 -
No assurance can be given that these tax matters will be resolved in the
Company's favor in view of the inherent uncertainties involved in court
proceedings. The Company believes that it has provided adequate accruals for
additional taxes and related interest expense which may ultimately result from
all such examinations and believes that the ultimate disposition of such
examinations should not have a material adverse effect on the Company's
consolidated financial position, results of operations or liquidity.
The Company has been named as a defendant, potentially responsible party
("PRP"), or both, in a number of legal proceedings associated with environmental
matters, including waste disposal sites, mining locations and facilities
currently or previously owned, operated or used by the Company, certain of which
are on the U.S. Environmental Protection Agency's (the "U.S. EPA") Superfund
National Priorities List or similar state lists. On a quarterly basis, the
Company evaluates the potential range of its liability at sites where it has
been named as a PRP or defendant. The Company believes it has adequate accruals
($128 million at September 30, 1998) for reasonably estimable costs of such
matters, but the Company's ultimate liability may be affected by a number of
factors, including changes in remedial alternatives and costs, and the
allocations of such costs among PRPs. It is not possible to estimate the range
of costs for certain sites. The upper end of the range of reasonably possible
costs to the Company for sites for which it is possible to estimate costs is
approximately $160 million. The Company's estimates of such liabilities have not
been discounted to present value, and the Company has not recognized any
potential insurance recoveries. No assurance can be given that actual costs will
not exceed accrued amounts or the upper end of the range for sites for which
estimates have been made, and no assurance can be given that costs will not be
incurred with respect to sites as to which no estimate presently can be made.
Further, there can be no assurance that additional environmental matters will
not arise in the future.
The Company is also a defendant in a number of legal proceedings seeking
damages for personal injury and property damage arising from the sale of lead
pigments and lead-based paints. There is no assurance that the Company will not
incur future liability in respect of this pending litigation in view of the
inherent uncertainties involved in court and jury rulings in pending and
possible future cases. However, based on, among other things, the results of
such litigation to date, the Company believes that the pending lead pigment and
paint litigation is without merit. The Company has not accrued any amounts for
such pending litigation. Liability that may result, if any, cannot be reasonably
estimated. In addition, various legislation and administrative regulations have,
from time to time, been enacted or proposed that seek to impose various
obligations on present and former manufacturers of lead pigment and lead-based
paint with respect to asserted health concerns associated with the use of such
products and to effectively overturn court decisions in which the Company and
other pigment manufacturers have been successful. Examples of such proposed
legislation include bills which would permit civil liability for damages on the
basis of market share, rather than requiring plaintiffs to prove that the
defendant's product caused the alleged damage. The Company currently believes
the disposition of all claims and disputes, individually and in the aggregate,
should not have a material adverse effect on the Company's consolidated
financial
- 22 -
position, results of operations or liquidity. There can be no assurance that
additional matters of these types will not arise in the future.
The Company is in the process of evaluating and upgrading its computer
systems (both information technology ("IT") systems and non-IT systems involving
embedded chip technology) and software applications (collectively referred to as
"systems") to ensure that the systems function properly beginning January 1,
2000. To achieve its year 2000 compliance plan, the Company is utilizing
internal and external resources to identify, correct or reprogram, and test its
systems.
The Company has conducted an inventory of its IT systems worldwide and is
currently testing the systems and applications that have been corrected or
reprogrammed for year 2000 compliance. The Company has completed a preliminary
inventory of its non-IT systems and is in the process of validating the
inventory and correcting or replacing date-deficient systems. The Company uses a
number of packaged software products that have been upgraded to a year 2000
compliant version in the normal course of business. Excluding the cost of these
software upgrades, the Company's cost of becoming year 2000 compliant is
expected to be approximately $2 million, of which about one-third has been spent
through September 1998. The Company expects its major IT systems to be year 2000
compliant by March 1999, and expects its non-IT systems to be year 2000
compliant by September 1999.
As part of its year 2000 compliance plan, the Company has requested
confirmations from its major domestic and foreign software vendors, hardware
vendors and primary suppliers, that they are developing and implementing plans
to become, or are, year 2000 compliant. Confirmations received to date from the
Company's software vendors, hardware vendors and primary suppliers indicate that
generally they are in the process of implementing remediation plans to ensure
that their systems are compliant by December 31, 1999. The major software
vendors used by the Company have already delivered year 2000 compliant software.
The Company plans to request confirmations from its major customers that they
are developing or implementing plans to become year-2000 compliant.
The Company is developing a contingency plan to address potential year
2000 related business interruptions that may occur on January 1, 2000, or
thereafter. This plan is expected to be completed in the second quarter of 1999.
Although the Company expects its systems to be year 2000 compliant before
December 31, 1999, it cannot predict the outcome or success of the year 2000
compliance programs of its vendors, suppliers, and customers. The Company also
cannot predict whether its major software vendors, who continue to test for year
2000 compliance, will find additional problems that would result in unplanned
upgrades of their applications after December 31, 1999. As a result of these
uncertainties, the Company cannot predict the impact on its financial condition
or results of noncompliant year 2000 systems that the Company directly or
indirectly relies upon. Should the Company's year 2000 compliance plan not be
successful or be delayed beyond January 2000, the consequences to the Company
could be far-reaching and material, including an inability to produce TiO2 at
its manufacturing facilities, which could lead to an indeterminate amount of
lost
- 23 -
revenue. Other potential negative consequences could include plant malfunction,
impeded communications or power supplies, or slower transaction processing and
financial reporting.
Beginning January 1, 1999, eleven of the fifteen members of the European
Union ("EU"), including Germany, Belgium, the Netherlands and France, have
agreed to adopt a new European currency unit (the "euro") as their common legal
currency. Following the introduction of the euro, the participating countries'
national currencies will remain legal tender as denominations of the euro from
January 1, 1999 through January 1, 2002, and the exchange rates between the euro
and such national currency units will be fixed.
The Company conducts substantial operations in Europe. The functional
currency of the Company's German, Belgian, Dutch and French operations will
convert to the euro from their respective national currencies over a two-year
period beginning in 1999. The euro conversion may impact the Company's
operations including, among other things, changes in product pricing decisions
necessitated by cross-border price transparencies. Such changes in product
pricing decisions could impact both selling prices and purchasing costs and,
consequently, favorably or unfavorably impact results of operations.
The Company has a significant amount of outstanding DM-denominated
indebtedness and such debt will become euro-denominated effective January 1,
1999. Modifications of information systems to handle euro-denominated
transactions will be required, although the modifications are not expected to be
extensive.
The Company has begun to assess and evaluate the expected impact of the
euro conversion on its business. Such evaluations are still in process but are
expected to be concluded by the end of 1998. The Company expects to spend and
charge to expense less than $1 million in evaluation and conversion costs.
Because of the inherent uncertainty of the ultimate affect of the euro
conversion, the Company cannot accurately predict the impact on its results of
operations, financial condition or liquidity.
The Company periodically evaluates its liquidity requirements, alternative
uses of capital, capital needs and availability of resources in view of, among
other things, its debt service and capital expenditure requirements and
estimated future operating cash flows. As a result of this process, the Company
in the past has sought, and in the future may seek, to reduce, refinance,
repurchase or restructure indebtedness, raise additional capital, issue
additional securities, modify its dividend policy, restructure ownership
interests, sell interests in subsidiaries or other assets, or take a combination
of such steps or other steps to manage its liquidity and capital resources. In
the normal course of its business, the Company may review opportunities for the
acquisition, divestiture, joint venture or other business combinations in the
chemicals industry. In the event of any acquisition or joint venture
transaction, the Company may consider using available cash, issuing equity
securities or increasing its indebtedness to the extent permitted by the
agreements governing the Company's existing debt.
- 24 -
The statements contained in this Report on Form 10-Q ("Quarterly Report")
that are not historical facts, including, but not limited to, statements found
under the captions "Results of Operations" and "Liquidity and Capital Resources"
above, are forward-looking statements that involve a number of risks and
uncertainties. The actual results of the future events described in such
forward-looking statements in this Quarterly Report could differ materially from
those stated in such forward-looking statements and the Company disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Among the
factors that could cause actual results to differ materially are the risks and
uncertainties discussed in this Quarterly Report and in the 1997 Annual Report,
including, without limitation, the portions of such reports under the captions
referenced above, and the uncertainties set forth from time to time in the
Company's other public reports and filings and public statements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the 1997 Annual Report and the Company's Quarterly
Report on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 for
descriptions of certain previously-reported legal proceedings.
State of Illinois v. NL Industries, Inc., et al. (No. 88-CH-11618). In
October 1998 the Supreme Court of Illinois declined the State's petition to
review the previously reported decisions in favor of the Company.
DeLeon v. Exide Corp. and NL Industries, Inc., (No. DV98-02669-B). In
August 1998 the plaintiffs dismissed this previously-reported case without
prejudice.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.1 - 1998 Framework Agreement between ICI, DuPont and the
Registrant dated July 24, 1998.
10.2 - July 24, 1998 Agreement between ICI and the Registrant.
10.3 - Form of Hivedown Agreement to be entered into between
Tioxide Europe Limited and Newco.
10.4 - Form of Share Sale and Purchase Agreement of Newco to be
entered into between Tioxide Europe Limited and the Registrant.
10.5 - Form of Product Exchange Agreement to be entered into
between Newco and Tioxide Europe Limited.
- 25 -
10.6 - Form of Share Sale and Purchase Agreement of Tioxide
Americas Inc. to be entered into between ICI American Holdings Inc.
and the Registrant.
10.7 - Form of Share Sale and Purchase Agreement of Tioxide
CanadaInc. to be entered into between Tioxide Group Limited and ICI
Omicron B.V. and the Registrant.
10.8 - Form of Americas Liability Agreement to be entered into
between ICI and the Registrant.
10.9 - Intercorporate Services Agreement by and between Contran
Corporation and the Registrant effective as of January 1, 1998.
10.10 - Intercorporate Services Agreement by and between Valhi,
Inc. and the Registrant effective as of January 1, 1998.
10.11 - Intercorporate Services Agreement by and between Tremont
Corporation and the Registrant effective as of January 1, 1998.
10.12 - Intercorporate Services Agreement by and between Titanium
Metals Corporation and the Registrant effective as of January 1,
1998.
10.13 - Intercorporate Services Agreement by and between CompX
International Inc. and the Registrant effective as of January 1,
1998.
27.1 - Financial Data Schedule for the nine-month period ended
September 30, 1998.
(b) REPORTS ON FORM 8-K
Reports on Form 8-K for the quarter ended September 30, 1998 and
through the date of this report:
August 28, 1998 - reported Items 5 and 7.
October 19, 1998 - reported Items 5 and 7.
October 21, 1998 - reported Items 5 and 7.
- 26 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NL INDUSTRIES, INC.
-------------------------
(Registrant)
Date: November 9, 1998 By /s/ Susan E. Alderton
- ----------------------- ---------------------
Susan E. Alderton
Vice President and
Chief Financial Officer
Date: November 9, 1998 By /s/ Dennis G. Newkirk
- ----------------------- ---------------------
Dennis G. Newkirk
Vice President and Controller
(Principal Accounting Officer)
- 27 -
EXHIBIT 10.1
Dated 24 July 1998
IMPERIAL CHEMICAL INDUSTRIES PLC
and
E.I. DU PONT DE NEMOURS AND COMPANY
and
N L INDUSTRIES, INC.
1998
FRAMEWORK AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is made on 24 July 1998 between:
(1) IMPERIAL CHEMICAL INDUSTRIES PLC, a company incorporated under the
laws of England, whose registered office is at Imperial Chemical
House, 9 Millbank, London, SW1P 3JF ("ICI");
(2) E.I. DU PONT DE NEMOURS AND COMPANY, a corporation incorporated
under the laws of the State of Delaware, USA, having its principal
office at 1007 Market Street, Wilmington, Delaware, 19898 USA
("DUPONT"); and
(3) N L INDUSTRIES, INC., a corporation incorporated under the laws of
the State of New Jersey, USA, whose principal place of business is
at 16825 Northchase Drive, Suite 1200, Houston, Texas, 77060 USA
(the "PURCHASER").
WHEREAS:
(A) ICI or Affiliates of ICI are the holders of the Americas Shares.
TEL is the owner of the Newco Business. ICI and DuPont have agreed
that Tioxide Group Limited will sell the TEL Shares to DuPont
(U.K.) Limited.
(B) ICI, DuPont and the Purchaser have agreed that, subject to the
terms and conditions contained in this agreement, the transactions
described in recitals (C), (D) and (E) shall occur.
(C) The Americas Shares will be sold by ICI or its Affiliates and
purchased for cash by the Purchaser or an Affiliate of the
Purchaser (or both).
(D) Immediately following completion of the TEL Sale, the Newco
Business will be sold to Newco by TEL pursuant to the terms of the
Hivedown Agreement. Under the terms of the Hivedown Agreement, the
Newco Patent and Know-How Licence is to be entered into providing
Newco with rights necessary for the operation of the Newco
Business as it will have been conducted immediately prior to the
completion of the Newco Share Sale Agreement. The Newco Shares
will immediately thereafter be sold by TEL and purchased for cash
by the Purchaser or an Affiliate of the Purchaser (or both).
(E) The parties have agreed to enter into this agreement to set out,
among other things, the terms and conditions on which each will
enter into agreements and cause their Affiliates to enter into
agreements and to take all other necessary steps in order to
implement the matters described in (C) and (D) above.
(F) The parties have agreed to guarantee the obligations of their
respective Affiliates referred to above.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 In this agreement:
"AFFILIATES" means with respect to a specified entity, an entity that
directly or indirectly, through one or more intermediaries, Controls,
or is Controlled by, or is under common Control with the entity
specified, provided that, without limiting the generality of the
foregoing, in relation to ICI and DuPont and their respective
subsidiary companies, the term "AFFILIATES" shall not include any
entity in which a party has a fifty per cent. or less ownership
interest. For the purposes hereof, "Control" means possession,
directly or indirectly, of the power to direct or cause the direction
of the management and operating policies of the entity in respect of
which the determination is being made, through the ownership of voting
securities, contract, voting trust or otherwise;
"AGREED FORM" means, in relation to any document, the form of that
document which has been initialled on the date this agreement is
signed for the purpose of identification by or on behalf of the
parties to this agreement or, in relation to a document that only
concerns certain parties, by such parties;
"AMERICAS BUSINESS" means the whole of the issued share capital of TAI
and the whole of the issued share capital of TCI incorporating the
entire business and operations of those companies as of the date of
this agreement but excluding from either any matter or item
attributable to the LPC Business;
"AMERICAS IMPLEMENTATION AGREEMENTS" means the Americas Sale
Agreements and those other agreements to be entered into on the
Completion Date by ICI or Affiliates of ICI as at the Completion Date
(or both) and the Purchaser or Affiliates of the Purchaser as at the
Completion Date (or both) under this agreement which are listed in
Schedule 2 Part II and are in Agreed Form, unless otherwise stated in
such Schedule;
"AMERICAS SALE" means the sale of the Americas Shares pursuant to the
Americas Sale Agreements;
"AMERICAS SALE AGREEMENTS" means the share sale agreements relating to
TAI and TCI ("AMERICAS SHARE SALE AGREEMENTS") to be entered into on
the Completion Date between ICI and/or Affiliates of ICI, as the case
may be, and the relevant Purchaser Affiliate and the Americas
Technology Agreements and an "AMERICAS SALE AGREEMENT" means any of
them;
"AMERICAS SHARES" means:
135,000 common shares of TCI legally and beneficially held at
the date hereof by Tioxide Group Limited and 37,000 Class A
Special Shares of TCI legally and beneficially held at the
date hereof by ICI Omicron BV, together constituting the
entire issued share capital of TCI; and 10,750 shares of
common stock of US$1 each in TAI legally and beneficially held
at the date hereof by ICI American Holdings Inc, constituting
the entire issued share capital of TAI;
"AMERICAS TECHNOLOGY AGREEMENTS" means the agreements listed as 3.1 to
3.5, 5 and 6 in Schedule 2 Part II;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are generally open for normal business in both London and New
York and (where any action is required by this agreement to be taken
in Canada) Montreal;
"BUSINESSES" means the Newco Business, the Americas Business and the
LPC Business and a reference to "BUSINESS" means any one of them as
the context may require;
"COMPANIES" means TAI, TCI and Newco;
"COMPLETION DATE" has the meaning given to it in sub-Clause 2.7;
"CONDITIONS PRECEDENT" means the conditions precedent set out in
Schedule 1;
"CONSENTS" means all such licenses, consents, approvals and
permissions of third parties as may be necessary, in order to enable
the Businesses to be carried on following the Completion Date in the
same manner as they are or shall be carried on at the date of this
agreement or the Completion Date (excluding any Permit);
"Data Rooms" means the room or rooms at the offices of Linklaters, in
relation to the Newco Business, the Americas Business and the LPC
Business (other than the LPC Interests), containing information made
available to the Purchaser and indexed in the Agreed Form;
"DEFAULT INTEREST" means interest at the rate equal to LIBOR plus 200
basis points compounded monthly;
"DUPONT GROUP" means DuPont and its Affiliates at the Completion Date;
"ENTERPRISE VALUE" has the meaning ascribed thereto in Schedule 3;
"FINAL DISCLOSURE LETTERS" means the disclosure letters from ICI in
relation to the Newco Sale Agreements and from ICI in relation to the
Americas Sale Agreements to be delivered to the Purchaser in
accordance respectively with Clauses 6 and 9;
"HIVEDOWN AGREEMENT" means the agreement in the Agreed Form between
TEL and Newco relating to the sale of the Newco Business;
"HSR ACT" means the US Hart-Scott-Rodino Antitrust Improvements Act of
1976 (as amended) and the rules and regulations thereunder;
"HSR CONDITION" has the meaning given in Schedule 1;
"ICI'S AUDITORS" means KPMG Audit Plc of 8 Salisbury Square, London,
EC4Y 8BB;
"ICI GROUP" means ICI and its Affiliates from time to time;
"ICI'S CONTROLLER'S MANUALS" means the control manuals in existence at
14 July 1997 and which are compiled in accordance with UK GAAP used
for accounting purposes within the ICI Group and which are recorded on
disk form as attached and identified as Annex 1 (and which consist of
an introduction to the Group Controller's Manual, Bulletin Board
Accounting Language, Bulletin Board Reporting, Accounting Definitions
and Conventions, Accounting Policies and Procedures, Controls,
Reporting);
"INDEPENDENT EXPERT" has the meaning given in sub-Clause 11.2;
"IMPLEMENTATION AGREEMENTS" means the Americas Implementation
Agreements and the Newco Implementation Agreements;
"INITIAL AMERICAS DISCLOSURE LETTER" means the disclosure letter in
the Agreed Form in relation to the Americas Business and the LPC
Business (other than the LPC Interests);
"INITIAL NEWCO DISCLOSURE LETTER" means the disclosure letter in the
Agreed Form in relation to the Newco Business;
"LIBOR" means the rate for deposits in US Dollars for a period of one
month which appears on the Reuters Screen ISDA Page (or such other
page as the parties may agree) at approximately 11.00 a.m., London
time, on the first day of the period to which any interest period
relates (the "RELEVANT DATE"). If such rate does not appear on the
Reuters Screen ISDA Page on the Relevant Date, the rate for that
Relevant Date will be determined as if the parties had specified that
the rate for the Relevant Date will be determined on the basis of the
rates at which deposits in US Dollars are offered by Midland Bank plc
at approximately 11.00 a.m., London time, on the Relevant Date to
prime banks in the London interbank market for a period of one month
commencing on that Relevant Date for amounts of US$10,000,000;
"LONGSTOP DATE" means 31 December 1998;
"LPC" means the Louisiana Pigment Company, Limited Partnership, care
of The Corporation Trust Company, Corporation Trust Centre, 1200
Orange Street, Wilmington, Delaware 19801 USA;
"LPC BUSINESS" means the LPC Interests, sales sourced from LPC and any
Stocks, Operating Debtors, Operating Creditors less than one year (the
definitions of such terms in Schedule 3 being applied to LPC) and
other assets or liabilities relating to LPC as determined and
distinguished from the Americas Business in accordance with Schedule 5
to this agreement;
"LPC INTERESTS" means all partnership interests held by ICI or its
Affiliates in LPC pursuant to the Joint Venture Agreement dated as of
18 October 1993, as amended, between TAI and Kronos Louisiana, Inc.;
"LPC TERMINATION AGREEMENT" means the agreement listed as 5 in
Schedule 2 Part II;
"NBQ" means the land known as Nettleton Bottom Quarry as defined in a
conveyance dated 1 June 1978 between Roade Aggregates Limited and
Apollo Site Services Limited; "NEWCO" means a subsidiary of TEL being
the purchaser of the Newco Business pursuant to the Hivedown
Agreement;
"NEWCO BUSINESS" means the business to be sold to Newco pursuant to
the Hivedown Agreement;
"NEWCO IMPLEMENTATION AGREEMENTS" means the Newco Sale Agreements and
those other agreements which are listed in Schedule 2 Part I and are
in Agreed Form, unless otherwise stated in such Schedule;
"NEWCO PATENT AND KNOW-HOW LICENCE" means the licence in the Agreed
Form to be entered into between DuPont and Newco pursuant to the
Hivedown Agreement;
"NEWCO SALE" means the sale of Newco to the Purchaser in accordance
with the Newco Sale Agreements;
"NEWCO SALE AGREEMENTS" means the share sale agreement relating to the
sale of Newco ("NEWCO SHARE SALE AGREEMENT") to be entered into on the
Completion Date between TEL and the relevant Purchaser Affiliate, the
Hivedown Agreement and the Newco Technology Agreements; and a "NEWCO
SALE AGREEMENT" means any one of them;
"NEWCO SHARES" means all the issued share capital of Newco held by TEL
following completion of the TEL Sale and to be sold to the Purchaser
or the relevant Purchaser Affiliate pursuant to the Newco Share Sale
Agreement;
"NEWCO TECHNOLOGY AGREEMEnts" means the Newco Patent and Know-How
Licence and the agreements listed as 4.1 to 4.4 in Schedule 2 Part I;
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice including, without
limitation, quantity and frequency, taking into account the relevance
and reasonableness of the same and with allowance made for the
inherently cyclical nature of the titanium dioxide industry;
"PERMITS" means all licences, permits, authorisations, registrations
and approvals (formal and informal) required by law or regulation or
issued or granted by statutory or local authorities to the Seller or
the relevant Company for the purposes of operation of the Businesses
(but excluding planning permissions issued by relevant planning
authorities (save for Environmental Authorisations as defined in the
relevant Implementation Agreements) and the Regulatory Conditions);
"PROPOSED TRANSACTIONS" means the transactions (other than the TEL
Sale) contemplated by Clauses 3 and 4;
"PURCHASER GROUP" means the Purchaser and its Affiliates from time to
time;
"RECORD DATE" has the meaning given in sub-Clause 2.5;
"REGULATORY CONDITIONS" means the anti-trust approvals referred to in
sub-Clause 2.3.1;
"SALE AGREEMENTS" means the Newco Sale Agreements and the Americas
Sale Agreements;
"SELLER" means the relevant entity holding the relevant shares to be
sold or other assets to be transferred or rights to be granted under,
as the context may require, the Newco Sale Agreements and the Americas
Sale Agreements;
"TAI" means Tioxide Americas Inc, a corporation incorporated under the
laws of the State of Delaware, USA of 2001 Butterfield Road, Suite
601, Downers Grove, Illinois 60515, USA;
"TCI" means Tioxide Canada Inc, a corporation incorporated under the
laws of the Province of Quebec, Canada (registered number 1140405920)
of 1690 Route Marie Victorin, Tracy, Quebec, J3R IM7, Canada;
"TEL" means Tioxide Europe Limited, a company incorporated in England
(registered number 832447) of Lincoln House, 137/143 Hammersmith Road,
London W14 OQL;
"TEL COMPLETION DATE" means the time of completion of the TEL Sale;
"TEL SALE" means the sale of the TEL Shares by Tioxide Group Limited
to Du Pont (U.K.) Limited;
"TEL SHARES" means the entire issued share capital of TEL;
"UK GAAP" means generally accepted accounting principles in the United
Kingdom; and
"WSL CONTRACT" means the purchase contract dated 28 May 1987 (as
amended) for the supply of ilmenite between (1) Tioxide Group plc as
agent for TEL (formerly Tioxide UK Ltd), Tioxide Australia Ltd and
Tioxide Espana S.A. and (2) Westralian Sands Ltd.
1.2 Any express reference to an enactment includes references to:
1.2.1 that enactment as amended, extended or applied by or under any
other enactment before or after this agreement;
1.2.2 any enactment which that enactment re-enacts (with or without
modification); and
1.2.3 any subordinate legislation made (before or after this
agreement) under any enactment, including one within
sub-Clauses 1.2.1 or 1.2.2 above,
except to the extent that any of the matters referred to in
sub-Clauses 1.2.1 to 1.2.3 occurring after the date of this agreement
increase or alter the liability of any party under this agreement.
1.3 The singular shall include the plural and vice versa and words
denoting persons shall include bodies corporate and unincorporated
associations of persons and, unless otherwise stated, shall include
permitted successors or assigns of such persons.
1.4 Sub-Clauses 1.1 to 1.3 apply unless the contrary intention appears.
1.5 The headings in this agreement do not affect its interpretation.
1.6 Any Schedule or Annex to this agreement shall take effect as if set
out in this agreement and references to this agreement shall include
its Schedules and Annexes.
2 CONDITIONS PRECEDENT
2.1 The obligations of the parties under Clauses 3 and 4 and sub-Clauses
16.1 and 16.2 are subject to the Conditions Precedent and completion
of this agreement is subject to sub-Clause 2.8.
2.2 The parties shall use all reasonable efforts to procure that the
Conditions Precedent are fulfilled as soon as possible after the date
of this agreement.
2.3
2.3.1 Subject to the terms and conditions of this agreement,
each party will use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable in relation to antitrust
and regulatory approvals necessary to complete the Proposed
Transactions. In furtherance and not in limitation of the
foregoing, each party agrees to make an appropriate filing of
a Notification and Report Form pursuant to the HSR Act with
respect to the Proposed Transactions as promptly as
practicable and in any event within 10 Business Days of the
date hereof and to supply as promptly as practicable any
additional information and documentary material that may be
reasonably requested pursuant to the HSR Act and to take all
other actions necessary or desirable to cause the expiration
or termination of the applicable waiting periods under the HSR
Act as soon as practicable.
2.3.2 Each party shall, in connection with the efforts referred to
in sub-Clause 2.3.1:
(i) use all reasonable efforts to co-operate in all respects
with each other in connection with any filing or
submission, or the timing thereof;
(ii)in connection with any investigation or other inquiry,
including any proceeding initiated by a private party,
keep the other parties informed on a timely basis in all
material respects of any material communication received
by such party from, or given by such party to, the Office
of Fair Trading (the "OFT"), the Bundeskartellamt (the
"BK"), the European Commission (the "EC"), the US Federal
Trade Commission (the "FTC"), the Antitrust Division of
the US Department of Justice (the "DOJ") or any other
governmental authority and of any material communication
received or given in connection with any proceeding by a
private party, in each case regarding any of the Proposed
Transactions, and permit any other party to review any
material communication given by or to it; and
(iii) consult with each other, in advance of any meeting or
conference with such governmental authorities or, in
connection with any proceeding by a private party, with
any other person provided that in relation to unsolicited
communications, the obligations in this sub-Clause shall
be such as are practicable in the relevant circumstances.
2.3.3 The parties will use all reasonable endeavours to obtain
such approvals as promptly as possible and, in this regard,
provide all information reasonably requested, shall assist and
co-operate with one another to make the necessary filings and
take such other steps as may be commercially reasonably
required to secure the non-objection of the relevant antitrust
and regulatory authorities, provided that nothing in this
sub-Clause 2.3.3 shall be construed to require any party to
conduct its commercial affairs in a manner other than in
accordance with its own independent business judgement.
2.3.4 The parties will use all reasonable efforts to take all action
and to do all things necessary in order to consummate and make
effective the transactions contemplated by this agreement
(including satisfaction, but not waiver, of all Conditions
Precedent).
2.4 The Conditions Precedent shall be deemed to have been fulfilled when
they have been satisfied within the terms described in Schedule 1.
2.5 Each party shall promptly advise the others once the Conditions
Precedent which relate to that party have been fulfilled. The date
that the last of the Conditions Precedent (other than Condition
Precedent number 12 relating to the TEL Sale) has been so fulfilled
shall be the "Record Date" and the Completion Date shall be determined
in accordance with the provisions of sub-Clause 2.7 below. The parties
shall be deemed to have satisfied or waived any Conditions Precedent
(as applicable) by signing and completing the Sale Agreements in
accordance with sub-Clause 2.7 below.
2.6 If the Conditions Precedent (other than Condition Precedent number 12
relating to the TEL Sale) have not been fulfilled by the Longstop
Date, or earlier upon the written agreement of the parties that such
Conditions Precedent cannot so be met, any of the parties shall have
the right (but not the obligation) to terminate this agreement by
notice in writing, to be given after the Longstop Date or earlier by
written agreement between the parties, in which case no party shall
have any rights or obligations under this agreement except under
Clauses 14, 15, 19, 25 and 26 which shall survive the termination of
this agreement.
2.7 The TEL Sale shall be completed at midnight London time on the last
day of the calendar month (or if that last day is a Friday or not a
Business Day on the first Business Day thereafter) following the month
in which the Record Date falls. The date and time of signature and of
completion of the Hivedown Agreement and any documents to be entered
into pursuant thereto will be immediately thereafter. The date and
time of signature and completion (the "Completion Date" for the
purposes of this agreement) of the other Sale Agreements will be
immediately following completion of the Hivedown Agreement as referred
to above.
2.8 The parties agree that:
(a) the signature and completion of the Sale Agreements will not
take place unless completion of the TEL Sale has taken place;
and
(b) the signature and completion of each of the Newco Share Sale
Agreement and each of the Americas Share Sale Agreements will
be simultaneous and none will be completed unless all are
completed.
2.9 Immediately after the TEL Completion Date but before the Hivedown
Agreement is entered into, the Purchaser shall serve written notice
upon DuPont and TEL and DuPont shall procure TEL to serve written
notice on the Purchaser, in each case confirming that all conditions
precedent to the Newco Sale are satisfied and that TEL and the
Purchaser each has an unconditional obligation pursuant to this
agreement to execute and complete the Newco Share Sale Agreement.
Accordingly, TEL will have ceased to be the beneficial owner of the
Newco Shares before the Hivedown Agreement is entered into.
3 IMPLEMENTATION, CONSIDERATION AND ADJUSTMENT
3.1 Subject to the prior satisfaction of the Conditions Precedent, the
parties will and will procure that their relevant Affiliates enter
into and complete in the following order:
3.1.1 in accordance with Clause 2.7 (so as to take place immediately
following completion of the TEL Sale), the Hivedown Agreement
and any deed, document or agreement to be entered into
pursuant thereto; and
3.1.2 on the Completion Date, the Newco Implementation Agreements
and the Americas Implementation Agreements.
3.2 The consideration due to the relevant parties in relation to the sales
of the Americas Shares and the Newco Business and the LPC Termination
Agreement contemplated under the Implementation Agreements shall be
calculated in accordance with Schedule 3 and the relevant
Implementation Agreements. The Enterprise Value for each of the
Americas Business, the LPC Business (excluding the value of the LPC
Interests) and the Newco Business and the agreed consideration for the
LPC Interests shall be as shown in Schedule 3.
4 TECHNOLOGY AGREEMENTS
On the Completion Date the parties will and/or will procure that their
relevant Affiliates will enter into and complete the Newco Technology
Agreements and Americas Technology Agreements.
5 CONDUCT OF BUSINESS
5.1 Pending the execution and delivery of the Implementation Agreements
(or the earlier termination of this agreement), neither ICI nor
DuPont, nor any of their Affiliates, nor any of their officers,
employees, representatives or agents, will solicit or initiate any
discussions or negotiations with, or participate in any negotiations
with, or provide any information to or otherwise cooperate in any
other way with, or facilitate or encourage any effort or attempt by,
any corporation, partnership, person or other entity or group (other
than NL, its Affiliates and its directors, officers, employees, agents
and representatives) concerning any acquisition of the Americas
Shares, the Intellectual Property which is the subject of the Americas
Technology Agreements, the LPC Interests, the Newco Business, the
Newco Shares, or the Intellectual Property which is the subject of the
Newco Technology Agreements.
5.2 ICI agrees, pending the execution and delivery of the Implementation
Agreements (or the earlier termination of this agreement), to conduct
each of the Businesses only in the Ordinary Course of Business. ICI
shall also use its reasonable commercial endeavours to: (i) maintain
the business and properties of TAI, TCI and the Newco Business, and
preserve intact their business organisations and goodwill, (ii) keep
available the services of their officers and employees and (iii)
maintain satisfactory relationships with suppliers, customers and
others having a business relationship with the Businesses.
6 ICI WARRANTIES AND REPRESENTATIONS
6.1 ICI warrants and represents to the Purchaser that:
6.1.1 subject to satisfaction of the Conditions Precedent (in each
case in relation to the obligations referred to in sub-Clause
2.1 but not in relation to any other obligations):
(i) it has the requisite power and authority to enter into
and perform this agreement;
(ii)it has obtained and satisfied all corporate, regulatory
and other approvals, or any other conditions, necessary to
execute and perform this agreement;
(iii) this agreement constitutes the legally valid and binding
obligations of ICI enforceable in accordance with its
terms; and
(iv)compliance with the terms of this agreement and each
relevant Americas Implementation Agreement will not
constitute a default under any provision of:
(a) ICI's memorandum or articles of association; or
(b) (i) any order, judgment or decree; or (ii) any
statute, rule or regulation; or (iii) any other
restriction of any kind by which ICI is bound; and
6.1.2 none of ICI and its Affiliates has employed any investment
banker, broker or finder, or incurred any liability for any
brokerage fees, commissions, finder's fees or similar payments
in connection with the Proposed Transactions for which the
Purchaser or its Affiliates or any of the Companies or LPC may
be liable.
6.2 ICI and the Purchaser agree that the Warranties to be given under the
Americas Share Sale Agreements (in this Clause, Warranties having the
meaning given in the relevant Americas Share Sale Agreement) will be
given at the Completion Date and will be given subject to any matter
which is fairly disclosed in the Final Disclosure Letter applicable to
each Americas Share Sale Agreement. ICI and the Purchaser agree that
ICI may require to amend the Initial Americas Disclosure Letter or the
Disclosure Documents (as defined in the Initial Americas Disclosure
Letter) (together in this Clause 6, the "INITIAL AMERICAS DISCLOSURE
DOCUMENTS") in accordance with sub-Clause 6.3 below by adding to,
amending or removing the specific matters identified, referred to
and/or disclosed therein in each case in the event of them being
incomplete or inaccurate.
6.3 ICI undertakes to the Purchaser that it will fairly disclose to the
Purchaser in writing any matter or thing known to ICI before or after
the date of this agreement and prior to the TEL Completion Date which,
if not disclosed, would constitute a breach of any of the Warranties
(if they had been given at the date of this agreement) or which
constitutes an amendment which is required pursuant to sub-Clause 6.2
above in order to amend any factual errors or omissions in the Initial
Americas Disclosure Documents. Such disclosure or any such amendment
shall be made not later than 14 days before the TEL Completion Date in
respect of matters or things which are known to ICI at or before the
Record Date and shall be incorporated in the Final Disclosure Letter
applicable to each Americas Share Sale Agreement. In relation to
matters or things which only become known to ICI after the Record
Date, such disclosure or amendment shall be fairly disclosed or
communicated in writing as soon as practicable before the TEL
Completion Date and shall be incorporated in the Final Disclosure
Letter applicable to each Americas Share Sale Agreement. ICI shall
provide the Purchaser with amendments to the Initial Americas
Disclosure Documents on a regular basis (being every four to six
weeks) during the period from the date hereof to the TEL Completion
Date.
Any such amendments to the information contained in the Initial
Americas Disclosure Documents shall, to constitute a valid disclosure
against the Warranties, be required to be expressly incorporated in
the Final Disclosure Letters applicable to the Americas Share Sale
Agreements.
ICI undertakes to the Purchaser that only those specific categories of
general disclosure contained in the Initial Americas Disclosure
Letters will be contained in the Final Disclosure Letters in relation
to the Americas Sale Agreements and that such specific categories will
not be amended in any way.
7 PURCHASER'S WARRANTIES AND REPRESENTATIONS
7.1 The Purchaser warrants and represents to ICI and DuPont that:
7.1.1 subject to satisfaction of the Conditions Precedent (in each
case in relation to the obligations referred to in sub-Clause
2.1 but not in relation to any other obligation):
(i) it has the requisite power and authority to enter into
and to perform this agreement;
(ii)it has obtained and satisfied all corporate, regulatory
and other approvals, or any other significant conditions,
necessary to execute and perform this agreement;
(iii) this agreement constitutes the legally valid and binding
obligations of the Purchaser enforceable in accordance
with its terms; and
(iv)compliance with the terms of this agreement and each
relevant Implementation Agreement will not constitute a
default under any provision of:
(a) the Purchaser's by-laws or other constitutional
documents; or
(b) (i) any order, judgment or decree; or (ii) any
statute, rule or regulation or (iii) any other
restriction of any kind by which the Purchaser is
bound; and
7.2 none of the Purchaser and its Affiliates has employed any investment
banker, broker or finder, or incurred any liability for any brokerage
fees, commissions, finder's fees or similar payments in connection
with the Proposed Transactions, for which ICI or DuPont or their
Affiliates (excluding, following the Completion Date, the Companies
and LPC) may be liable.
8 DUPONT WARRANTIES AND REPRESENTATIONS
DuPont warrants and represents to the Purchaser that:
8.1 subject to satisfaction of the Conditions Precedent (in each case in
relation to the obligations referred to in sub-Clause 2.1 but not in
relation to any other obligation):
(i) it has the requisite power and authority to enter
into and to perform this agreement;
(ii)it has obtained and satisfied all corporate, regulatory
and other approvals, or any other significant conditions,
necessary to execute and perform this agreement;
(iii) this agreement constitutes the legally valid and binding
obligations of DuPont enforceable in accordance with its
terms; and
(iv)compliance with the terms of this agreement and each
relevant Newco Implementation Agreement will not
constitute a default under any provision of:
(a) DuPont's by-laws or other constitutional documents;
and
(b) (i) any order, judgment or decree; or (ii)any
statute, rule or regulation; or (iii) any other
restriction of any kind by which DuPont is bound;
8.2 none of DuPont or its Affiliates has employed any investment banker,
broker or finder, or incurred any liability for any brokerage fees,
commissions, finder's fees or similar payments in connection with the
Newco Sale Agreements for which the Purchaser or its Affiliates or any
of the Companies may be liable.
9 NEWCO DISCLOSURE DOCUMENTS
9.1 ICI and the Purchaser agree that the Warranties to be given under the
Newco Share Sale Agreement (in this Clause Warranties having the
meaning given in the Newco Share Sale Agreement) will be given at the
Completion Date and will be given subject to any matter which is
fairly disclosed in the Final Disclosure Letter applicable to the
Newco Share Sale Agreement. ICI and the Purchaser agree that ICI may
require to amend the Initial Newco Disclosure Letter or the Disclosure
Documents (as defined in the Initial Newco Disclosure Letter)
(together, the "INITIAL NEWCO DISCLOSURE DOCUMENTS") in accordance
with sub-Clause 9.2 below by adding to, amending or removing the
specific matters identified, referred to and/or disclosed therein in
each case in the event of them being incomplete or inaccurate.
9.2 ICI undertakes to the Purchaser that it will fairly disclose to the
Purchaser in writing any matter or thing known to ICI before or after
the date of this agreement and prior to the TEL Completion Date which,
if not disclosed, would constitute a breach of any of the Warranties
(if they had been given at the date of this agreement) or which
constitutes an amendment which is required pursuant to sub-Clause 9.1
above in order to amend any factual errors or omissions in the Initial
Newco Disclosure Documents. Such disclosure or any such amendment
shall be made not later than 14 days before the TEL Completion Date in
respect of matters or things which are known to ICI at or before the
Record Date and shall be incorporated in the Final Disclosure Letter
applicable to the Newco Share Sale Agreement. In relation to matters
or things which only become known to ICI after the Record Date such
disclosure or amendment shall be fairly disclosed or communicated in
writing as soon as practicable before the TEL Completion Date and
shall be incorporated in the Final Disclosure Letter applicable to the
Newco Share Sale Agreement. ICI shall provide the Purchaser with
amendments to the Initial Newco Disclosure Documents on a regular
basis (being every four to six weeks) during the period from the date
hereof to the TEL Completion Date.
Any such amendments to the information contained in the Initial Newco
Disclosure Documents shall, to constitute a valid disclosure against
the Warranties, be required to be expressly incorporated in the Final
Disclosure Letter applicable to the Newco Share Sale Agreement.
ICI undertakes to the Purchaser that only those specific categories of
general disclosure contained in the Initial Newco Disclosure Letter
will be contained in the Final Disclosure Letter in relation to the
Newco Sale Agreements and that such specific categories will not be
amended in any way.
10 TRIGGER EVENTS
10.1 If in consequence of any one or more Trigger Events (as defined below)
there is a Material Adverse Effect (as defined below) which is not
remedied by ICI or its Affiliates at no cost to the Purchaser or, as
the case may be TAI or TCI or Newco, before the TEL Completion Date,
then, provided the Purchaser or its Affiliates have not knowingly
caused or contributed to such Material Adverse Effect (to the extent
it would not have constituted such a Material Adverse Effect without
such contribution), the Purchaser shall have the right, by notice
served on both ICI and DuPont at any time during the period from the
date of this agreement to immediately prior to the TEL Completion
Date, to terminate its obligation to purchase the Newco Shares and the
Americas Shares which in the event of exercise of such right by the
Purchaser shall be its exclusive remedy and shall extinguish any claim
by the Purchaser or any of its Affiliates for damages (whether arising
in contract, tort or otherwise) in connection with this agreement
provided that on such termination the provisions of sub-Clause 2.6
shall apply mutatis mutandis.
10.2 In the event that there is a dispute as to whether a right to
terminate under sub-Clause 10.1 exists, the matter shall be referred
to the Independent Expert for determination in accordance with
sub-Clause 11.2. If completion of the Sale Agreements would have
occurred but for the application of the provisions of sub-Clause 10.1,
and if the determination is that the right to terminate does not
exist, the date of that determination shall be treated as the Record
Date for the purposes of sub-Clause 2.5 and this Clause shall apply in
relation to the new Record Date.
10.3 For the purposes of this Clause 10:
"TRIGGER EVENT" means:
10.3.1 any amendment to or variation of the Initial Newco
Disclosure Documents or the Initial Americas Disclosure
Documents or other disclosure pursuant to sub-Clauses 6.3 and
9.2 in the period following signature of this agreement and
before the TEL Completion Date in respect of any matter or
thing which but for notification to the Purchaser under
sub-Clauses 6.3 and 9.2 above would constitute a breach of the
Warranties (as defined in sub-Clauses 6.2 and 9.1) if they had
been given at the date of this agreement or the Purchaser
otherwise becoming aware, without being in breach of this
agreement, of a matter or thing which would constitute a
breach of such Warranties, if they had been given at the date
of this agreement; or
10.3.2 without prejudice to sub-Clause 10.3.1 above, where any such
amendment or variation is made to correct an error or omission
in the information contained in the Initial Newco Disclosure
Documents or the Initial Americas Disclosure Documents, the
Purchaser shall be entitled to use such information for the
purpose of calculating whether, together with any other
Trigger Event(s), a Material Adverse Effect has occurred; or
10.3.3 contractual terms not being available (immediately prior to
the expiry of the period referred to in sub-Clause 10.1) for
the Newco Business to be supplied, for a period of at least 2
years following the Completion Date, with volumes of ilmenite
ore consistent with those consumed by the Newco Business over
the 12 months ending on the date of this agreement at prices
substantially similar to those payable by TEL under the WSL
Contract from time to time.
"MATERIAL ADVERSE EFFECT" means a diminution in the aggregate value of
the Americas Business and the Newco Business having regard to their
aggregate Enterprise Value as determined by reference to Schedule 3 of
US$35,000,000 or more as a result of any one or more Trigger Events
occurring prior to the TEL Completion Date ignoring any such
diminution: (a) which would be reflected in an adjustment pursuant to
the provisions of this agreement or the Sale Agreements as at the
Completion Date to the aggregate consideration for the purchase of the
Americas Shares or the Newco Business; and (b) to the extent that the
diminution in value has been remedied by ICI at no cost to the
relevant Companies or Businesses Provided that where any adverse
effect arising from one or more Trigger Event(s) is not reasonably
capable of calculation in monetary terms, the question as to whether a
Material Adverse Effect has occurred whether wholly or partly as a
result of such Trigger Event(s) shall, failing agreement between the
parties, be determined by the Independent Expert.
11 INDEPENDENT ACCOUNTANT AND EXPERT
11.1 INDEPENDENT ACCOUNTANT
11.1.1 If any party (a "COMPLAINANT") wishes to refer any
matter in dispute in accordance with Schedule 3 for
determination under this Clause, it shall give notice to the
others (or if the matter concerns only one or some of the
others, then only to such other or others) (the "OTHERS")
requiring the appointment of an independent accounting firm of
international reputation (the "INDEPENDENT ACCOUNTANT").
Accounting firms who have acted as auditors of the Complainant
or the Others or their respective Affiliates, during the five
years preceding the date of this agreement, shall be excluded
from such appointment. If the Complainant and the Others are
unable to agree upon the Independent Accountant within 14 days
of such notice, then the Independent Accountant shall be
appointed by the President for the time being of the Institute
of Chartered Accountants in England and Wales on the
application of either the Complainant or any of the Others.
11.1.2 If the Independent Accountant delays or becomes unwilling or
incapable of acting or if for any other reason the President
for the time being of the Institute of Chartered Accountants
in England and Wales thinks fit he may discharge the
Independent Accountant and, in the absence of agreement
between the Complainant and the Others, appoint another in its
place.
11.1.3 The Independent Accountant shall act as an expert and not as
an arbitrator and its decision shall (in the absence of
manifest error) be final and binding on the Complainant and
the Others. The Independent Accountant shall afford the
Complainant and the Others the opportunity of making written
representations to it and shall make its determination within
40 days of its appointment.
11.1.4 The fees and expenses of the Independent Accountant shall be
borne by the Complainant and the Others in equal shares unless
the Independent Accountant otherwise determines.
11.2 INDEPENDENT EXPERT
11.2.1 If a Complainant wishes to refer any matter in dispute
for determination under this sub-Clause 11.2, the Complainant
may give notice to the Others requiring the matter to be
referred to an independent expert (the "INDEPENDENT EXPERT")
agreed by the Complainant and the Others. If the Complainant
and the Others are unable to agree upon the Independent Expert
within 14 days of such notice then the Independent Expert
shall be appointed by the chairman for the time being of the
Institute of Arbitrators on the application of the Complainant
or any of the Others.
11.2.2 If the Independent Expert delays or becomes unwilling or
incapable of acting or if for any other reason the chairman
for the time being of the Institute of Arbitrators thinks fit
he may discharge the Independent Expert and, in the absence of
agreement between the Complainant and the Others, appoint
another in his or her place.
11.2.3 The Independent Expert shall act as an expert and not as an
arbitrator and his or her decision shall (in the absence of
manifest error) be final and binding on the Complainant and
the Others. The Independent Expert shall afford the
Complainant and the Others the opportunity of making written
representations to him or her and shall make his or her
determination within 40 days of appointment.
11.2.4 The fees and expenses of the Independent Expert shall be borne
by the Complainant and the Others in equal shares unless the
Independent Expert otherwise determines.
12 LIABILITY IN RELATION TO THE NEWCO SALE AND THE HIVEDOWN AGREEMENT
12.1 The Purchaser agrees for itself and in respect of its Affiliates that,
other than as expressly provided in this agreement, the Americas
Implementation Agreements and the Newco Implementation Agreements, no
representation or warranty is given (express or implied) and no
liability is accepted by ICI, DuPont or any of their respective
Affiliates or any of their respective directors, employees, agents or
advisers (respectively the "ICI SELLING GROUP" and the "DUPONT SELLING
GROUP" and together the "SELLING GROUP"), as to the accuracy or
completeness of any information in the Data Rooms (or any further
information supplied on request or any communication in relation
thereto) or as to the reasonableness of any assumptions on which any
of it is based.
12.2 The Purchaser for itself and in respect of its Affiliates (including
the Companies for the purpose of this Clause 12) agrees that, other
than as a result of fraud on the part of either any member of the
DuPont Selling Group or of any member of the ICI Selling Group as
relevant (in which case only the members of the relevant Selling Group
shall be liable):
(i) no member of the Selling Group shall incur any liability
whatsoever to the Purchaser or any of its Affiliates
arising out of or in connection with the acquisition of
the Newco Shares or the Americas Shares and entry into by
the Purchaser of the Newco Sale Agreements and the
Americas Sale Agreements; and
(ii)the Purchaser shall have no right of action whatsoever
against any member of the Selling Group in connection with
or arising out of the purchase of the Companies;
both other than as provided in this agreement, the Americas
Implementation Agreements and the Newco Implementation Agreements.
12.3 The Purchaser for itself and its Affiliates undertakes to the Selling
Group to waive any liability which such parties may incur by reason of
the Purchaser's or its Affiliates' use of or reliance upon any
information or documentation provided by such party and their advisers
in relation to the sale of the Companies, other than as provided in
this agreement, the Americas Implementation Agreements and the Newco
Implementation Agreements.
12.4 It is agreed that none of ICI, DuPont, the Purchaser or any of their
respective Affiliates are partners under this agreement or any other
agreement herein referred to for any purpose, except the partnership
agreement dated 20 December 1993 (as amended) between Affiliates of
ICI and Affiliates of the Purchaser with respect to LPC.
12.5 The Purchaser acknowledges (for itself and its Affiliates) that DuPont
and ICI have agreed between themselves arrangements in the Agreed Form
regarding the conduct of any claim under any of the Newco
Implementation Agreements which also gives rise to or constitutes a
claim under the same or equivalent provisions of the agreements
between ICI or any of its Affiliates (on the one hand) and DuPont or
any of its Affiliates (on the other hand) relating to the TEL Sale.
If DuPont notifies the Purchaser that the conduct of any claim under
any of the Newco Implementation Agreements is to be assumed and
controlled by ICI or any of its Affiliates in accordance with such
arrangements then the Purchaser agrees (subject to the terms of the
Newco Implementation Agreements) to co-operate and deal accordingly so
that references in the Newco Implementation Agreements to "the Seller"
in the context of the conduct of any such claim shall be deemed to
mean ICI or any of its Affiliates and the Purchaser (for itself and
its Affiliates) acknowledges that any payment or settlement by ICI or
any of its Affiliates to or with the Purchaser (or any of its
Affiliates) in respect of any claim made by the Purchaser (or any of
its Affiliates) against DuPont or its Affiliates under any of the
Newco Implementation Agreements shall discharge DuPont or its
Affiliates' liability to the Purchaser (or any of its Affiliates)
under any such Newco Implementation Agreement in respect of such claim
to the extent of any payment or settlement so made. The provisions of
this Clause are without prejudice to the Purchaser's rights under the
Newco Implementation Agreements.
12.6 It is agreed between DuPont and the Purchaser (for itself and on
behalf of Newco) that in circumstances where the subject matter of any
claim under any of the Newco Implementation Agreements also gives rise
to or constitutes a claim or dispute between DuPont or its Affiliates
and Newco under or pursuant to the Hivedown Agreement then the
provisions of the Newco Implementation Agreements dealing with the
notification, assistance and conduct of any claim, dispute or
proceedings shall prevail over and override any corresponding or
similar provisions contained in the Hivedown Agreement. The Purchaser
shall procure that Newco complies with the provisions of this Clause.
12.7
12.7.1 ICI, DuPont and the Purchaser agree to co-operate
generally and take all steps which may reasonably be required
(including without limitation making appropriate applications
to the relevant governmental and/or local authorities) to
arrange for the transfer or assignment to Newco or the
re-issue in the name of Newco of each of the Permits (insofar
as they relate to the Newco Business) with effect from the
Completion Date in each case upon terms which will enable
Newco to continue to conduct the Newco Business with effect
from the Completion Date substantially in the manner in which
the Newco Business is conducted prior to the Completion Date.
Any direct costs arising from the obligations under this
sub-Clause 12.7 will be divided equally among the parties.
Furthermore, each of the parties shall use all reasonable
efforts to effect each such transfer, assignment or re-issue
as promptly as practicable after the date of this agreement.
12.7.2 ICI and DuPont shall together use reasonable endeavours to
obtain such consents from third parties as may be reasonably
required to enable Newco to obtain the benefit of the software
licences which are necessary for the operation of the Newco
Business as at the Completion Date at no additional licence
fee.
12.7.3 If such consents are not obtained, ICI and DuPont shall
procure such additional software licences as are necessary for
the operation by Newco of the Newco Business as at the
Completion Date. ICI and DuPont shall each be liable for 50
per cent of the costs of such additional software licence
fees.
12.8 Other than in respect of the members of the Selling Group's compliance
with the provisions of sub-Clause 12.7, the Purchaser hereby accepts
and agrees that none of the Selling Group shall be liable for any
failure or refusal by any relevant governmental or local authority to
arrange or effect the transfer or assignment to Newco or the re-issue
in the name of Newco of any of the Permits as aforesaid.
12.9 It is agreed between DuPont (for itself and on behalf of its
Affiliates) and the Purchaser (for itself and on behalf of Newco) that
the indemnity given by Newco in favour of TEL in respect of Newco
Liabilities (as defined in the Hivedown Agreement) pursuant to Clause
7.3 of the Hivedown Agreement (the "NEWCO INDEMNITY") shall not apply
if and to the extent that the subject matter of any claim under the
Newco Indemnity also gives rise to or constitutes a claim by the
Purchaser and/or relevant Purchaser Affiliate under or pursuant to the
Newco Share Sale Agreement.
12.10 For the purposes of sub-Clauses 12.7 and 12.8 the expression "PERMITS"
shall include any registrations which may be required for Newco for
taxation purposes.
12.11 With effect from the Record Date, or earlier with the agreement of the
parties (such agreement not to be unreasonably withheld), the parties
shall use such reasonable endeavours as they are each able to do so as
to procure that TEL and Newco meet their obligations under the first
sentence of paragraph 3 of Schedule 7 of the Hivedown Agreement (as if
the obligations under the first sentence of paragraph 3 had come into
effect on the Record Date, or earlier as aforesaid) but subject to the
provisions of paragraph 13 of Schedule 7 of the Hivedown Agreement.
For the purpose of this sub-Clause 12.11, references to "consents" in
such paragraph 3 shall be deemed to include the Consents.
12.12
12.12.1 If the Purchaser (which for the purpose of this sub-Clause
12.12 shall not include its successors in title) or any
relevant Affiliate ("PURCHASER COMPANIES") has not by 1
September 2003 renewed the planning approval no. W/66/338/84
in relation to NBQ issued on 27 September 1988 on appeal
against the decision of Lincolnshire County Council (the
"APPROVAL") expiring on 1 September 2003 relating to the
disposal of digester residue for a further term of a minimum
of 8 years on terms enabling the continued use of NBQ for its
current waste disposal purposes, then, subject to compliance
by the Purchaser Companies with the provisions of this
sub-Clause 12.12, ICI shall on written notice from the
Purchaser Companies given on or within ten working days after
1 September 2003 (a "COMPLETION NOTICE") purchase, or procure
the purchase of, NBQ, on the terms set out in Clause 12.12.4
from the Purchaser Companies.
12.12.2 ICI's obligation in sub-Clause 12.12.1 is conditional on the
following obligations of the Purchaser Companies, from the
Completion Date:
(i) to use and manage NBQ during the period of its ownership
materially in accordance with Environmental Law, the
standards of the relevant regulatory authorities, the
conditions of any Permits and planning permissions
relating thereto and good industry practice, in a manner
conducive to the renewal of the Approval;
(ii)to use NBQ solely for the purpose of the disposal of
digester residue arising from the sulphate TiO2 process at
the Grimsby Site (as such term is defined in the Newco
Share Sale Agreement); such residue disposed to be broadly
similar in quality, quantity and type to that currently
disposed at the date of this agreement and materially
consistent with the requirements of the Approval and any
Permits relating thereto;
(iii) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all
things reasonably necessary, proper or advisable in
relation to obtaining the renewal of the Approval for a
term of at least 8 years, including acceding to the
reasonable demands of the relevant regulatory authorities
and in particular to submit an application for such a
renewal on or before 31 December 2001.
12.12.3 The Purchaser Companies shall from the Completion Date:
(i) use all reasonable efforts to be a "fit and proper person"
within the meaning of the Environmental Protection Act
1990;
(ii)promptly inform ICI of all material matters relating to
the process for the renewal of the Approval, including
providing copies of correspondence, and permitting ICI
reasonable opportunity to participate in the process (at
ICI's expense) and including providing a copy of the
application for the renewal of the Approval to ICI prior
to its submission to the relevant planning authority.
Expense incurred by the Purchaser Companies in relation to
the renewal of the Approval shall be borne by the
Purchaser Companies; and
(iii) not create or permit or suffer to be created any
encumbrances over NBQ which shall subsist at the date of
the transfer of NBQ to the Buyer.
12.12.4 The following conditions shall apply on any sale of NBQ by the
Purchaser Companies to the "BUYER" (ICI or a company nominated
by ICI);
(i) The price payable for NBQ shall be GBP1;
(ii)The Purchaser shall sell with Full Title Guarantee;
(iii) Completion shall take place ten working days after the
receipt of a Completion Notice before 2.00 pm at the
registered office of ICI or at such other date, time or
place as may be agreed between ICI and the Purchaser;
(iv)The Purchaser Companies shall prior to completion deduce
to the Buyer the title to NBQ insofar as it differs from
the title at the date of this agreement and the Buyer
shall not raise any requisition in respect of any matter
arising before the date of this agreement;
(v) NBQ will be sold subject to:
(a) all overriding interests as defined in the Land
Registration Act 1925 as amended;
(b) all matters referred to in the registers of the title
under which NBQ is to be registered (other than
financial charges and encumbrances created in breach
of sub-Clause 12.12.3 (iii));
(c) all matters subject to which NBQ is to be sold to the
Purchaser insofar as they remain valid, subsisting
and affect the title at the completion of the sale to
the Buyer;
as well as those encumbrances referred to in Standard
Condition 3.1.2.
12.12.5 NBQ will be sold with vacant possession on completion
of its sale.
12.12.6 The transfer of NBQ will contain covenants by the Buyer to
comply with the following obligations insofar as the Purchaser
Companies may remain liable (directly or indirectly) for them
after the date of the transfer:
(i) obligations arising from matters referred to in the
registered title of NBQ;
(ii)obligations arising under any documents subject to which
NBQ is sold to the Purchaser;
and to indemnify the Purchaser Companies against any
non-compliance.
12.12.7 The transfer of NBQ will contain an undertaking by the
Purchaser to indemnify and keep indemnified on a continuing
basis the Buyer (for itself and its affiliates) against any
Adverse Consequences (as defined in the Americas Share Sale
Agreements) ICI or the Buyer may suffer as a result of the
failure of the Purchaser Companies to comply with their
obligations under sub-Clauses 12.12.2 and 12.12.3 including,
without limitation, any Environmental Liabilities arising
therefrom;
12.12.8 The agreement set out in this sub-Clause 12.12 incorporates
the Standard Conditions of Sale (Third Edition) ("STANDARD
CONDITIONS"). In case of conflict between this sub-Clause
12.12 and the Standard Conditions, this sub-clause 12.12
prevails. Terms used or defined in the Standard Conditions
have the same meanings when used in this sub-clause 12.12.
12.12.9 On the transfer of NBQ to the Buyer:
(i) ICI shall indemnify the Purchaser Companies against all
and any Loss relating to NBQ and arising from or
associated with any Environmental Liability arising on or
after 1 September 2003;
(ii)From the date on which NBQ is transferred to the Buyer and
until such time as the transfer of the Waste Management
Licence is effected, ICI shall comply with all conditions
of the Waste Management Licence and any requirement or
written or oral communication received from any regulatory
authority in relation to the same.
(iii) Both ICI and the Purchaser Companies shall use their
reasonable efforts to procure the transfer of the Waste
Management Licence to ICI as soon as possible following
the transfer of NBQ to the Buyer.
(iv)For the purposes of this sub-Clause 12.12 the following
definitions apply:
"ENVIRONMENT" means the natural and man-made environment
and all or any of the following media namely air
(including air within buildings and air within other
natural or man-made structures above or below ground),
water (including water under or within land or in drains
or sewers and inland waters) and land and any living
organisms (including humans) or systems supported by those
media;
"ENVIRONMENTAL LAW" means all present and future rules of
common law, acts, regulations, standards or codes,
applicable rights or obligations under European Community
Law, any notices, directions, impositions or requirements
issued, imposed, or directed by any regulatory authority
relating to the Environment, the protection of human
health and safety or the Environment including without
limitation all laws relating to emissions, seepages,
discharges, escapes, releases, leaks or threatened
escapes, releases, and leaks of pollutants, contaminants
or hazardous substances relating to the creation,
handling, storage or disposal of same and for the
avoidance of doubt, includes any law introducing any
materially more onerous or stringent requirements than
were applicable at the date hereto including but not
limited to Part IIA of the Environmental Protection Act
1990 (and the relevant draft guidance as at the date
hereto) and sections 161A to 161D of the Water Resources
Act 1991 whether or not in force at the date hereto;
"ENVIRONMENTAL LIABILITY" means the clean-up and
restoration of NBQ, compliance with the Waste Management
Licence or the surrender, revocation or transfer of the
same, compliance with any requirement, request or
communication from a regulatory authority in relation to
Environmental Laws, any monitoring, investigation,
remediating, removing, abating, cleaning-up, containing or
otherwise taking corrective action and shall include
post-remedial monitoring or responding to requests for
information in relation to NBQ, and shall also include any
actual or potential claim by a third party in relation to
site clean-up or restoration of the land or any of the
aforementioned matters;
"LOSS" means any losses, claims, penalties, fines, costs,
expenses, liabilities, obligations, judgements, damages or
settlement payments which are suffered or incurred
directly or indirectly by the Purchaser Companies after
sale of NBQ to the Buyer in relation to any Environmental
Liability;
"WASTE MANAGEMENT LICENCE" means the waste management
licence (number L142) issued to Tioxide Europe Limited,
Grimsby, South Humberside DN31 2SW or any similar waste
management licence relating to NBQ in force at 1 September
2003.
13 INTEREST
If any sum due for payment under or in accordance with this agreement
is not paid on the due date the party in default shall pay Default
Interest on that sum from the due date until the date of actual
payment calculated on a day to day basis.
14 ANNOUNCEMENTS
No party shall make or permit any member of the ICI Group, DuPont
Group or the Purchaser Group, as the case may be, to make any
announcement concerning this agreement or any ancillary matter except
as required by law or any competent regulatory body or with the prior
written approval of the other parties which shall not be unreasonably
withheld or delayed.
15 CONFIDENTIALITY
15.1 For the purposes of this Clause:
15.1.1 "CONFIDENTIAL INFORMATION" means:
(i) all information received by the Purchaser Group from the
ICI Group relating to ICI, its Affiliates and the
businesses conducted by the ICI Group and all information
received by the Purchaser Group from DuPont or its
Affiliates relating to DuPont or its Affiliates, (in both
cases whether pursuant to, or in relation to, this
agreement or any of the Newco Implementation Agreements or
the Americas Implementation Agreements); and
(ii)all information received by the ICI Group and the DuPont
Group from the Purchaser Group relating to the Purchaser,
its Affiliates and the businesses conducted by the
Purchaser Group (whether pursuant to, or in relation to,
this agreement or any of the Newco Implementation
Agreements or the Americas Implementation Agreements);
including, in all cases, not only written information but
information transferred orally, visually, electronically,
or by any other means. The term "Confidential Information"
shall not include:
(a) information that is in the public domain at the date
of this agreement;
(b) information that subsequently comes into the public
domain, otherwise than as a result of a breach of
this agreement, but only after it has come into the
public domain;
(c) information which the receiving party or its
Representatives obtain from a third party not under
any confidentiality obligation to the disclosing
party respecting such information;
(d) information which the receiving party or its
Representatives at the time of disclosure already has
in its possession and which is not subject to any
obligation of secrecy on their part to the disclosing
party;
(e) information which is independently developed by
employees of the receiving party or its
Representatives who had no access to the information
disclosed by the disclosing party; or
(f) information which relates exclusively to the
Businesses after completion of the Newco Sale
Agreements and Americas Sale Agreements which the
Purchaser or its Affiliates disclose publicly.
15.1.2 "REPRESENTATIVES" means Affiliates, directors, officers,
employees, agents or representatives of any party or its
Affiliates, and their respective solicitors, accountants,
consultants and financial advisers.
15.2 Each party undertakes for a period of 5 years from the date of this
agreement (subject to such other period specified in a Newco
Implementation Agreement or an Americas Implementation Agreement in
relation to particular information) following the Completion Date to
maintain Confidential Information received by it, its Affiliates or
its Representatives relating to any other party or any other party's
Affiliates in confidence and not disclose that Confidential
Information to any person other than its Representatives, except as
required by law or any competent regulatory authority or with the
prior written approval of such other party, which shall not be
unreasonably withheld or delayed.
15.3 Each party undertakes only to disclose to its Representatives such
Confidential Information relating to the disclosing party or parties
or the disclosing party's or parties' Affiliates as is reasonably
required for the purposes of performing the obligations under this
agreement or the Newco Implementation Agreements or the Americas
Implementation Agreements and only to those Representatives whom it
has informed of the confidential nature of the Confidential
Information and who undertake to keep it confidential. Each party
shall be responsible for breach of such confidentiality undertaking by
it or its Representatives and undertakes to indemnify and hold
harmless the disclosing party or parties, its Affiliates or any
successor to such business against all actions, proceedings, costs,
claims, demands, liabilities, losses or expenses (including legal
expenses) arising from such breach.
15.4 In the event that, after receipt of Confidential Information, any
party, or any person or Representative to whom it has transmitted
Confidential Information, becomes legally required (by oral questions,
interrogatories, requests for information or documents, subpoena,
civil investigation, demand or similar process, or otherwise) to
disclose any of the Confidential Information received, the legally
compelled party shall provide the disclosing party with prompt written
notice of that requirement so that the disclosing party may seek a
protective order or other appropriate remedy but shall not be obliged
to delay disclosure if to do so would be in breach of any conditions
for such disclosure imposed by the authority compelling disclosure and
in any event should the disclosing party not be successful in seeking
or obtaining a protective order or other appropriate remedy, the
disclosing party shall waive compliance with the provisions of this
agreement for such particular case to enable the legally compelled
party or its Representative to comply with any such legal requirement.
15.5 Each party will only use (or permit the use by its Representatives of)
the Confidential Information received by it or its Representatives for
the purposes of the transactions contemplated by this agreement.
15.6 Nothing in this Clause 15 shall make a party liable to any other party
for any of its Representatives in relation to breaches of this Clause
which occur after the time when such Representative becomes the
Representative of another party to this agreement. Nothing in this
sub-Clause 15.6 shall affect any duty owed personally by such
Representative.
15.7 Nothing in this Clause 15 shall supersede or vary the obligations of
the parties set out in any of the Newco Technology Agreements, the
Americas Technology Agreements or any other agreement, the
confidentiality provisions of which exist on the date of this
agreement.
15.8 Notwithstanding any provision to the contrary, the provisions of this
Clause shall survive termination of this agreement.
16 GUARANTEES AND INDEMNITY
16.1 Each party undertakes to procure that, subject to the terms of this
agreement, its relevant Affiliates enter into the relevant Newco
Implementation Agreements or Americas Implementation Agreements on the
Completion Date, as the case may be.
16.2 The parties shall on the Completion Date enter into a deed of
guarantee in the Agreed Form in relation to the obligations of the
parties and their Affiliates after the Completion Date under the Newco
Sale Agreements and Americas Sale Agreements and the relevant
Implementation Agreements.
16.3 At or as soon as reasonably practicable after the Completion Date, the
Purchaser will use its reasonable endeavours to procure, whether by
offering its own covenant in substitution for that of a member of the
Selling Group or otherwise howsoever (but in no event shall the
Purchaser or any of its Affiliates be required to make any payment as
a basis for such release), the release of ICI and/or DuPont or any of
their respective Affiliates (the "Selling Group") from the guarantees
specifically identified in the Final Disclosure Letter applicable to
the Newco Share Sale Agreement for the purposes of this provision and
pending such release the Purchaser will indemnify and keep indemnified
each of the members of the Selling Group from and against any
liability (including any claim, demand, proceeding, costs, damages and
expenses) which they may suffer or incur under or in relation to such
guarantees.
16.4 The Purchaser will indemnify and keep indemnified the Selling Group
from and against any liability (including any claim, demand,
proceeding, costs, damages and expenses) which they may suffer as a
result of the failure of the Purchaser to comply with its obligations
under paragraph 2 of Schedule 4.
17 FURTHER ASSURANCE
The parties shall, and shall procure that their Affiliates shall, at
their own expense, comply with the terms of this Clause 17 and
Schedule 4 and, at all times from the date of this agreement, do all
things as may be reasonably required to give effect to this agreement
and to all other agreements contemplated hereby, including, without
limitation, the execution of all deeds and documents, procuring the
convening of all meetings, the giving of all necessary waivers (other
than in respect of Conditions Precedent) and consents and the passing
of all resolutions and otherwise exercising all powers and rights
available to them.
18 NOTICES
18.1 Any notice or other document to be served under this agreement shall
be in writing and may be delivered by hand or by courier or sent by
fax or by post to the party to be served at its address appearing in
this agreement (and marked for the attention of the person whose name
is referred to in sub-Clause 18.3 below) or at such other address (or
marked for the attention of such other person) as it may have notified
to the other parties in accordance with this Clause. Any notice or
other document sent by post shall be sent by registered post (if both
posted and for delivery within the same jurisdiction) or by registered
airmail (if posted for delivery outside the jurisdiction in which it
is posted), return receipt requested (or any substantially equivalent
service).
18.2 Any notice or document delivered or sent in accordance with sub-Clause
18.1 shall be deemed to have been served:
18.2.1 if delivered by hand or by courier, at the time of delivery;
or
18.2.2 if sent by fax, at the time of delivery if sent between
12.01 a.m. and 6.00 p.m. (local time at the destination) or
10.00 a.m. (local time at the destination) on the Business Day
after its transmission (if sent at any other time); or
18.2.3 if posted, at 10.00 a.m. on the second Business Day after it
was put into the post if posted for delivery within the same
jurisdiction, or at 10.00 a.m. (local time at the destination)
on the fifth Business Day after it was put in the post if sent
by registered airmail.
18.3 The person to whom notices or documents should be addressed for the
purposes of sub-Clause 18.1 is:
18.3.1 if to be served on ICI:
the Company Secretary
Imperial Chemical House
9 Millbank
London SW1P 3JF
Fax: (44) 171 798 5170
18.3.2 if to be served on DuPont:
Vice President & General Manager
White Pigment & Mineral Products
E.I. du Pont de Nemours and Company
Building 36-2nd Floor
Barley Mill Plaza
Wilmington, Delaware U.S.A. 19880
Fax: (1) 302 992 6084
18.3.3 if to be served on the Purchaser:
General Counsel
NL Industries, Inc
16825 Northchase Drive
Suite 1200
Houston, Texas 77060, USA
Fax: (1) 281 423 3333
18.4 In proving service of a notice or document it shall be sufficient to
prove that delivery was made by hand, courier or fax or that the
envelope containing the notice or document was properly addressed and
posted (either by registered post or by registered airmail, as the
case may be, in accordance with the requirements of this Clause).
19 COSTS
Save as otherwise provided in this agreement, or as otherwise
specifically agreed to in writing by the parties after the date of
this agreement, each party shall pay the costs and expenses incurred
by it and its Affiliates in connection with the entering into and
completion of this agreement including without limitation in respect
of their obligations fulfilling the Conditions Precedent.
20 ASSIGNMENT
None of the rights or obligations under this agreement may be assigned
or transferred without the prior written consent of the other parties
(the "NON-ASSIGNING PARTIES") other than an assignment of the rights
(but not the obligations) to an Affiliate of the assigning party
provided that:
20.1 such assignment shall only be permitted if the assignment has no
adverse effect on the Non-assigning Parties;
20.2 if the Affiliate to which the rights have been assigned ceases to be
an Affiliate of the assigning party, the rights which have been
transferred shall be re-transferred to the party which originally
assigned those rights or to another Affiliate of that original
assigning party; and
20.3 it shall be a condition of any such assignment that reasonable notice
is given in writing to the Non-assigning Parties of the proposal to
assign (identifying the rights proposed to be assigned, the identity
of the proposed assignee and such other details relating thereto as
the Non-assigning Parties may reasonably require).
21 RTPA
Each of the parties to this agreement confirms on its own behalf and
on behalf of each of its Affiliates that is party to any of the
Implementation Agreements (as executed) that if by virtue of any
provision of this agreement or any of the Newco Implementation
Agreements or the Americas Implementation Agreements (as executed) or
any other agreement or arrangement of which this agreement or any of
the Implementation Agreements forms part, any such agreement or
arrangement is subject to registration under the Restrictive Trade
Practices Act 1976 (the "RTPA") (provided that any such agreement or
arrangement is not a non-notifiable arrangement under Section 27A of
the RTPA) none of the parties to any such agreement or arrangement who
carries on business within the United Kingdom shall give effect to, or
enforce or purport to enforce the agreement or arrangement in respect
of any such provision until the day after particulars of the agreement
or arrangement (as the case may be) have been furnished to the
Director General of Fair Trading under section 24 of the RTPA.
22 CONFLICT WITH OTHER AGREEMENTS
In the event of any conflict between this agreement and any of the
Implementation Agreements, this agreement shall prevail (as between
the parties to this agreement and as between any other members of the
ICI Group, the DuPont Group and the Purchaser Group) save where such
other agreement expressly states that it (or any part of it) is
overriding this agreement in any respect and the parties to this
agreement are either also parties to that other agreement or otherwise
expressly and in writing agree that such other agreement shall
override this agreement in that respect.
23 WHOLE AGREEMENT
23.1 This agreement, the Newco Implementation Agreements, the Americas
Implementation Agreements and any other agreements contemplated in
this agreement or in those agreements (if and when executed) contain
the whole agreement between the parties and their respective
Affiliates relating to the transactions contemplated by this agreement
and the Newco Implementation Agreements and the Americas
Implementation Agreements and supersede all previous agreements
between the parties and their respective Affiliates relating to such
transactions.
23.2 Each of the parties to this agreement acknowledges on its own behalf
and on behalf of each of its Affiliates that, in agreeing to enter
into this agreement and the Newco Implementation Agreements and the
Americas Implementation Agreements, it has not relied on any
representation, warranty, collateral contract or other assurance
(except those set out in this agreement or any Implementation
Agreement) and waives all rights and remedies which, but for this
sub-Clause, might otherwise be available to it in respect of any such
representation, warranty, collateral contract or other assurance,
provided that nothing in this Clause shall limit or exclude any
liability for fraud.
23.3 Each obligation, representation and warranty on the part of ICI,
DuPont or the Purchaser under this agreement (excluding any obligation
fully performed on the Completion Date) shall continue in force after
the Completion Date.
23.4 Nothing in this agreement or the Implementation Agreements shall be
deemed to constitute a partnership between the parties hereto. All
obligations of the parties shall be several.
24 AMENDMENTS
No amendment, variation or waiver of this agreement or any provision
of this agreement shall be effective unless it is in writing
specifically referring to this agreement and duly executed by or on
behalf of all the parties.
25 GOVERNING LAW
This agreement is governed by and shall be construed in accordance
with English law.
26 JURISDICTION
26.1 The parties agree to submit to the exclusive jurisdiction of the
English courts for all purposes relating to this agreement and to take
no action to avoid, dispute or suggest to such court that such
jurisdiction is improper.
26.2 DuPont irrevocably appoints Du Pont (U.K.) Limited of Wedgwood Way,
Stevenage, Hertfordshire SG1 4QN as its agent for the service of
process in England.
26.3 The Purchaser irrevocably appoints Herbert Smith (Ref 554) of Exchange
House, Primrose Street, London, EC2A 2HS as its agent for service of
process in England.
AS WITNESS the hands of the duly authorised representatives of the
parties on the date which appears first on page 1.
SCHEDULE 1
CONDITIONS PRECEDENT
(CLAUSE 2)
1 In so far as it has jurisdiction over the Proposed Transactions, the
Office of Fair Trading indicating in terms reasonably satisfactory to
the parties that it is not the intention of the Secretary of State to
refer the Proposed Transactions to the Monopolies and Mergers
Commission (the "OFT CONDITION").
2 In so far as it has jurisdiction over the Proposed Transactions, the
Bundeskartellamt approving the Proposed Transactions in terms
reasonably satisfactory to the parties (the "BK CONDITION")
3 In so far as it has jurisdiction over the Proposed Transactions, the
European Commission issuing a decision, pursuant to Article 6(1)(b) of
Regulation 4064/89 (or amending Regulation 1310/97) (the
"REGULATIONS") declaring in terms reasonably satisfactory to the
parties that any concentration arising from the Proposed Transactions
is compatible with the common market (the "EC CONDITION").
4 In so far as it has jurisdiction over the Proposed Transactions, the
European Commission not issuing a decision pursuant to Article 9(3) of
the Regulations, to refer the Proposed Transactions to the competent
authorities of any Member State of the European Union.
5 No Member State of the European Union taking measures pursuant to
Article 21 of the Regulations, to protect legitimate interests.
6 All waiting periods and any extensions thereof under the HSR Act
applicable to the consummation of the Proposed Transactions having
been satisfied, expired or terminated (the "HSR CONDITION").
7 The Director appointed under the Canadian Competition Act (the
"COMPETITION ACT") issuing an advance ruling certificate in terms
reasonably satisfactory to the parties under Section 102 of the
Competition Act in respect of the sale of TCI by Affiliates of ICI to
the Purchaser or the applicable waiting period under Section 123 of
the Competition Act having expired and the Director having advised the
Purchaser in terms reasonably satisfactory to the parties that he does
not intend to apply to the Competition Tribunal for an order under
Section 92 or Section 100 of the Competition Act in respect of the
proposed acquisition of TCI (the "COMPETITION ACT CONDITION").
8 All other consents and approvals, as are required by law, having been
obtained, or all waiting periods (in addition to the HSR Condition,
the OFT Condition, the EC Condition, the BK Condition and the
Competition Act Condition) (and any extensions thereof) having expired
or terminated in any relevant jurisdiction for the purposes of
implementing the Proposed Transactions in a form satisfactory to all
parties (but only where such parties are directly concerned or
interested).
9 No order, writ, injunction or decree has been issued which restrains,
enjoins or invalidates, or otherwise materially adversely affects, the
Proposed Transactions and no action, suit or other proceeding is
pending or threatened that has a reasonable likelihood of resulting in
any such order, writ, injunction or decree being issued.
10 The obligations of ICI and DuPont to consummate the Proposed
Transactions contemplated by this agreement are subject, at the option
of ICI and DuPont, to the satisfaction of the conditions that:
10.1 all obligations and undertakings of the Purchaser (the breach of
which, singly or in the aggregate, would be material) to be performed
by the Purchaser under this agreement prior to or at the Completion
Date shall have been performed; and
10.2 all warranties and representations made by the Purchaser in this
agreement (the breach of which, singly or in the aggregate, would be
material) shall be true and correct in all material respects.
11 The obligations of the Purchaser to consummate the Proposed
Transactions contemplated by this agreement are subject, at the option
of the Purchaser, to the satisfaction of the conditions that:
11.1 all obligations and undertakings of ICI (the breach of which, singly
or in the aggregate, would be material) to be performed by ICI under
this agreement prior to or at the Completion Date shall have been
performed;
11.2 all warranties and representations made by ICI in this agreement (the
breach of which, singly or in the aggregate, would be material) shall
be true and correct in all material respects; and
11.3 all warranties and representations made by DuPont in this agreement
(the breach of which, singly or in the aggregate, would be material)
shall be true and correct in all material respects.
12 The completion of the TEL Sale, for which purpose the definition of
TEL Sale shall be deemed to include the execution of the Deed relating
to the Tioxide Pension Fund in the Agreed Form.
13 All Permits which are material in relation to the operation of the
Newco Business having been transferred or assigned to or reissued in
the name of Newco or arrangements reasonably satisfactory to the
Purchaser having been made for any of the same that cannot be so
transferred or assigned or reissued prior to the Completion Date to be
so transferred or assigned or reissued after the Completion Date.
SCHEDULE 2
PART I
NEWCO IMPLEMENTATION AGREEMENTS
(CLAUSE 1.1)
1 Hivedown Agreement
2 Newco Share Sale Agreement
3 Product Exchange Agreement between TEL and Newco
4 Technology Agreements
4.1 Name Agreement between Newco, TEL and DuPont
4.2 Name Agreement between Newco, TEL and DuPont
4.3 Newco Patent and Know-How Licence
4.4 Technical Assistance Agreement between TEL (or an Affiliate of TEL)
and Newco
4.5 Service Agreement for transitional IT services between TEL (or an
Affiliate of TEL) and Newco
4.6 Service Agreement (Eutech) between ICI (or an Affiliate of ICI) and
Newco
5 Deed of Guarantee (to include a guarantee given by the Purchaser in
respect of Newco's obligations under the Hivedown Agreement)
6 Transfers, in a form reasonably satisfactory to the Purchaser, of the
legal interest in respect of the NBQ and Killingholme properties in
favour of the Purchaser or any of its Affiliates
7 Product Supply Agreement (Newco to DuPont or an Affiliate of DuPont)
for:
7.1 Zirconia Frit;
7.2 Titanyl Sulphate;
7.3 Zirconium Orthosulphate Solution
7.4 Trivalent Titanium
8 Product Supply Agreement (DuPont or an Affiliate of DuPont to Newco)
for Titanium Tetrachloride
9 Product Supply Agreement (ICI or an Affiliate of ICI to Newco) for:
9.1 Sulphuric Acid
9.2 Sulphur
9.3 Caustic Soda
SCHEDULE 2
PART II
AMERICAS IMPLEMENTATION AGREEMENTS
(CLAUSE 1.1)
1 Americas Share Sale Agreements
2 Canadian and US Deeds of Indemnity
3 Americas Technology Agreements
3.1 Assignment and Substitution Agreement between Tioxide Group Limited,
Tioxide Group Services Limited, DuPont and TCI
3.2 Name Agreement between TEL, TAI and DuPont
3.3 Name Agreement between TEL, TCI and DuPont
3.4 Patent and Know-How Licence between TCI and DuPont
3.5 Venturis Agreement between DuPont and LPC
4 Deeds of Guarantee
5 LPC Termination Agreement between Kronos, Inc., Kronos Louisiana,
Inc., Kronos International, Inc., Kronos Europe S.A./N.V., Kronos
Canada Inc., Kronos Titan GmbH, LPC, Tioxide Group Limited and Tioxide
Group Services Limited
6 LPC Licence Agreement between Kronos, Inc., Kronos Louisiana, Inc.,
Kronos International, Inc., Kronos Europe S.A./N.V., Kronos Canada
Inc., Kronos Titan GmbH, LPC and Tioxide Europe Limited
SCHEDULE 3
(CLAUSE 3.3)
1 Consideration and Adjustment
(1) In this Schedule 3:
"A FORM" means, in relation to each of TAI and TCI, the quarterly
financial reports in the format set forth in Annex 3 which are
prepared in accordance with the accounting policies, practices and
other requirements set out or referred to in ICI's Controller's
Manuals as applied by the relevant Company (with the exception of
pensions liabilities which are accounted for in accordance with FAS
87) and prepared at the Completion Date on a basis consistent with
that adopted by TAI and TCI in the A Form at 31 December 1997 (with
the exception that pensions liabilities shall be reported in
Provisions); and if the Completion Date does not fall on the due date
for the preparation of an A Form, a financial report prepared on the
same basis for the financial period from the latest date at which an A
Form was prepared to the Completion Date; and in relation to Newco, a
financial report in the format set forth in Annex 3 and in accordance
with the accounting policies, practices and other requirements set out
or referred to in ICI's Controller's Manuals and prepared as at the
Completion Date on a basis consistent with that adopted by TEL for the
preparation of A Forms prior to the completion of the Hivedown
Agreement;
"ACTUAL NET DEBT" means Net Debt as agreed or determined in accordance
with paragraphs (6) to (8) below;
"ACTUAL NET WORKING CAPITAL" means Net Working Capital as at the
Completion Date as determined under paragraphs (6) to (8) below;
"ESTIMATED CONSIDERATION" has the meaning given in paragraph
(3)(a) below as applicable;
"ESTIMATED COMPLETION STATEMENT" has the meaning given in paragraph
(3) below;
"ESTIMATED NET DEBT" has the meaning given in paragraph (3)(b) below;
"ENTERPRISE VALUE" means, for each Company or Business, the value
shown against the line described as Enterprise Value shown in the
column headed EV in Section 2 of this Schedule 3 against the relevant
Company or Business which is the amount which the parties have agreed
to represent the fair market value (excluding in relation to TAI any
item relating to the LPC Interests) of that Company or Business on a
basis free of Net Debt;
"FINAL CONSIDERATION" has the meaning given in paragraph (5)(a) below;
"FINAL COMPLETION STATEMENT" has the meaning given in paragraph
(5)(b) below;
"FINAL STOCKS" means the value of Stocks for the relevant Company at
Completion;
"INITIAL STOCKS" means the value of Stocks for the relevant Company
or Business as at 28 February 1998;
"INTEREST RATE" means LIBOR plus 25 basis points;
"NET DEBT" means, in relation to a Company, the amount reported as
"net debt" on line 70090 of the A Form for that Company as described
in ICI's Controller's Manuals which, for the avoidance of doubt, can
be either a negative or a non-negative number;
"NET WORKING CAPITAL" means the aggregate of:
(c) Operating Debtors; plus
(d) Stocks (for the purposes of this definition meaning Initial
Stocks when used for Net Working Capital as at 28 February
1998 and meaning Final Stocks when used for Actual Net Working
Capital); less
(e) Operating Creditors less than one year.
For the purposes of (b) the Stocks shall be valued in accordance with
the document headed "Stocktaking and Valuation Principles" in the
Agreed Form marked "NWC-S";
"NET WORKING CAPITAL AS AT 28 FEBRUARY 1998" or "NWC 28" means, for
each Company or Business, the value shown in the column headed NWC in
Section 2 of this Schedule 3 against the relevant Company or Business
which is the amount which the parties have agreed to represent the
value of Net Working Capital at 28 February 1998;
"OPERATING CREDITORS LESS THAN 1 YEAR" means, in relation to a
Company, the absolute value of the amount reported as creditors of
that Company which are external to that Company (including without
limitation creditors which are members of, or other business units
within, the ICI Group as at the date of the relevant A Form) as
defined by reference to "Operating Creditors less than one year" on
line 70020 of the A Form for that Company as described in ICI's
Controller's Manuals;
"OPERATING DEBTORS" means, in relation to a Company, debtors of that
Company which are external to that Company (including without
limitation debtors which are members of, or other business units
within, the ICI Group as at the date of the relevant A Form) as
defined by reference to "operating debtors" on line 70010 of the A
Form for that Company as described in ICI's Controller's Manuals;
"SHARE SALE AGREEMENTS" means the Americas Share Sale Agreements
and/or the Newco Share Sale Agreement (as the context so requires);
"STOCKS" means, in relation to a Company or Business, the stock of
fuels, raw materials, ingredients, packaging, office and laboratory
supplies, revenue engineering spares, consumable stores, work in
progress and finished goods owned by that Company or Business as
determined on line 70000 of the A Form for the relevant Company or
Business as described in ICI's Controller's Manuals;
(2) (a)All payments and values under this Schedule shall be in US
Dollars and where an amount is not itself calculated in US
Dollars it shall be converted into US Dollars at the mid
market closing exchange rate in London for the currency in
which that amount is expressed in US Dollars as published in
the London Edition of the Financial Times first published
thereafter or, where the exchange rate is not published in the
London Edition of the Financial Times, at the exchange rate
quoted by Citibank N.A. as at the close of business in London
for the currency in which that amount is expressed on the
Completion Date in relation to amounts in the Final Completion
Statement (and in relation to amounts in the Estimated
Completion Statement shall be the rate of exchange as at the
date which is nine days before the Completion Date).
(b) References to the absolute value of a number X shall be
construed as follows:
(i) if X is greater than or equal to zero, the absolute value
of X shall be equal to X; and
(ii)if X is less than zero, the absolute value of X shall be
X multiplied by -1,
so that, for the purposes of illustration, the absolute value
of 1 is equal to 1 and the absolute value of -1 is equal to 1.
ESTIMATED CONSIDERATION PAYABLE AT COMPLETION
(3) In relation to each Share Sale Agreement or, as appropriate, the
Hivedown Agreement, no later than seven days before the Completion
Date ICI (in relation to TAI and TCI) and TEL (in relation to Newco)
shall deliver to the Purchaser a statement (the "ESTIMATED COMPLETION
STATEMENT") calculating the Estimated Consideration for the relevant
Company on the following basis:
(a) Estimated Consideration for the relevant Company shall be the
amount determined by the following formula:
Estimated Consideration = EV minus END plus in the case only
of Newco US$1 (excluding in the case of TAI in relation to any
of the foregoing any item or matter attributable to the LPC
Interests) plus in the case only of TAI LV
Where (in relation to the relevant Company):
EV = Enterprise Value
END = Estimated Net Debt
LV = X (value of LPC Interests)
(b) Estimated Net Debt shall be the amount which ICI (in relation
to TAI and TCI) and TEL (in relation to Newco), estimates (in
good faith based on the accounting records and forecasts of
the relevant Company (or as the case may be TEL) and after
consultation with the Purchaser and (in relation to Newco)
DuPont) to be the Net Debt for the relevant Company at the
Completion Date.
(c) In relation to the LPC Interests, the consideration shall be
US$X, which shall not be subject to adjustment.
The figure represented by X in this paragraph (3) shall be as agreed
between ICI and the Purchaser.
(4) On the Completion Date the relevant Purchaser Affiliate will pay or
procure the payment of (in accordance with the provisions of the
relevant Share Sale Agreement or as appropriate, the Hivedown
Agreement) an amount equal to the Estimated Consideration. In relation
to the LPC Termination Agreement, the relevant Purchaser Affiliate
shall pay or procure the payment of (in accordance with the provision
of the LPC Termination Agreement) an amount equal to the consideration
due under such agreement being US$Y.
The figure represented by Y in this paragraph (4) shall be as agreed
between ICI and the Purchaser.
CALCULATION OF THE FINAL CONSIDERATION IN RELATION TO TAI AND TCI
(5) In relation to the Americas Share Sale Agreements:
(a) the Final Consideration for the relevant Company shall be
determined by the following formula:
Final Consideration = EV minus AND minus NWC 28 plus ANWC
(excluding in the case of TAI in relation to any of the
foregoing any item or matter attributable to the LPC
Interests) plus in the case only of TAI LV
Where (in relation to the relevant Company):
EV = Enterprise Value
AND = Actual Net Debt
NWC28 = Net Working Capital as at 28 February 1998
ANWC = Actual Net Working Capital
LV = X (value of LPC Interests)
The figure represented by X in this paragraph (5) shall be as
agreed between ICI and the Purchaser.
(b) After the Completion Date ICI shall prepare a completion
statement as at the Completion Date which shall contain a
statement of the Final Consideration in accordance with
paragraph 5(a) above based on ICI's calculations (the "FINAL
COMPLETION STATEMENT"). The Final Completion Statement shall
be prepared using ICI's normal accounting policies and
practices as set out or referred to in ICI's Controller's
Manuals as applied by the relevant Company on a consistent
basis and shall be submitted by ICI to ICI's Auditors for
review.
No final consideration adjustment will be made for the Newco Shares
under the Newco Share Sale Agreement and the provisions of the
Hivedown Agreement will apply. The provisions of sub-paragraphs 1(5) -
(9) inclusive will not apply to the Newco Share Sale Agreement.
(6) Within 45 days of the Completion Date, ICI shall issue the Final
Completion Statement (distinguishing between the Americas Business and
the LPC Business) for the relevant Companies to the Purchaser together
with a copy of a report by ICI's Auditors addressed to ICI and
substantially in the form set out in Annex 2 to the effect that the
Final Completion Statement has been prepared in accordance with this
agreement. Although it is ICI's responsibility to prepare the Final
Completion Statement, ICI will require the assistance of the employees
of the relevant Purchaser Affiliates to fulfil this responsibility and
the Purchaser shall ensure such assistance is provided promptly and at
no charge. Immediately after delivery of the Final Completion
Statement, the Purchaser's Auditors shall have the right, subject to
the Purchaser delivering to ICI's Auditors a signed letter in the form
set out in Annex 4, to review the Final Completion Statement and ICI's
Auditors working papers relating to the Final Completion Statement.
Within 45 days of delivery to the Purchaser of the Final Completion
Statement and ICI's Auditors report (each of which shall be in
English) to the Purchaser's designated location, the Purchaser shall
give notice to ICI in writing of any item or items in the Final
Completion Statement which it wishes to dispute and the basis on which
it disputes that item or those items and the changes to the Final
Completion Statement which the Purchaser believes should be made and
ICI and the Purchaser shall use their reasonable endeavours to resolve
that dispute. Any items in respect of which the Purchaser does not
give such notice will be deemed to have been accepted by the
Purchaser. Any written resolution reached by ICI and the Purchaser on
any disputed item shall be final, conclusive and binding on the
parties.
(7) If ICI and the Purchaser agree the Final Completion Statement then any
adjusting payments referred to in paragraph (9) below shall be made by
the paying party within seven days of being agreed by the parties.
(8) If ICI and the Purchaser fail to agree on any element of the Final
Completion Statement within 14 days after the Purchaser has given
notice in writing to ICI of any item(s) in the Final Completion
Statement which the Purchaser wishes to dispute (in accordance with
paragraph (6) above) then any agreed amounts shall be paid in
accordance with the preceding paragraph and any dispute may be
referred by either ICI or the Purchaser for final determination in
accordance with sub-Clause 11.1 of this agreement and any amounts
thereby found to be due shall be paid by the relevant party not later
than seven days after such final determination.
(9) When the Final Consideration is agreed or otherwise determined in
accordance with the three preceding paragraphs the following adjusting
payments shall be made:
(a) an amount equal to the difference between (i) the Estimated
Consideration and (ii) the Final Consideration; and
(b) interest (calculated on a day-to-day basis and compounded
monthly) at the Interest Rate on the amount in paragraph (9)
(a) above from the Completion Date to the date of payment,
calculated on a day to day basis
which shall be paid by the relevant ICI Affiliate to the relevant
Purchaser Affiliate (or vice versa, as appropriate).
(10) In this Schedule, references to lines of A Forms have been chosen by
ICI and are believed in good faith to correspond to the matters to
which they refer. If, however, that reference when compared to the
matter it describes or refers to is incorrect then, subject to the
Purchaser's agreement, there shall be substituted for that line
reference another line reference (if any) which corresponds to the
matter described or referred to. Any dispute between the Purchaser and
ICI as to any matter arising under this sub-paragraph (10) shall be
referred for final determination in accordance with sub-Clause 11.1 of
this Agreement.
2 Enterprise Value (paragraph 1(1) of this Schedule)
Uplift of
Stocks to
fair market
value for the
purpose of
allocation of
consideration
to classes of
assets
EV NWC 28
US$ GBP US$
Newco Business 118,410,000 3,950,000 (1) 215,000
TAI: US$
Americas Business 6,857,000 6,857,000 Nil
(1) As provided in the Hivedown Agreement.
LPC Business
(excluding
LPC Interests): Z 15,081,000 1,697,000
TCI: US$ CAN $ US$
Americas Business 14,733,000 7,444,000 62,000
LPC Business W 2,575,000 Nil
The figures represented by Z and W in this Section 2 shall be as
agreed between ICI and the Purchaser.
SCHEDULE 4
FURTHER ASSURANCE
(CLAUSE 17)
1 ICI, DuPont and the Purchaser recognise that it may be necessary for
certain of the excluded or shared assets to be used by the ICI Group
and/or the DuPont Group and the Companies after the Completion Date.
If any such assets are identified by ICI, DuPont or the Purchaser,
ICI, DuPont and the Purchaser will negotiate in good faith to reach a
sharing arrangement (on a fair, equitable and cost-effective basis) in
relation to such assets.
2 In accordance with its obligations under the Transfer of Undertakings
(Protection of Employment) Regulations 1981 (as amended the "TRANSFER
REGULATIONS") in relation to the employees to be employed by Newco,
the Purchaser shall promptly provide TEL, ICI or its Affiliates in
writing with such information as is reasonably necessary to enable
TEL, ICI or its Affiliates to carry out the duties under Regulations
10(2)(d) and 10(6) of the Transfer Regulations and the obligations to
consult under the Transfer Regulations and Council Directive 77/187
EEC.
3 ICI shall be responsible for the incorporation of Newco.
4
4.1 Up until the Completion Date (or the earlier termination of this
agreement) the parties agree in good faith to co-operate generally and
take all steps as may reasonably be required (in so far as each party
is able to do so and the same is permitted by law or regulation):-
(a) for TEL to split with Newco the WSL Contract (whether by
partial assignment or otherwise) on a PRO RATA volume basis by
reference to that proportion of the ilmenite ore supplied
under the WSL Contract which has been consumed by the Newco
Business during the 12 months ending on the date of this
agreement (THE "AGREED GRIMSBY VOLUME PROPORTION"); and/or
(b) for TEL to effect a sub-contract arrangement in favour of
Newco for a period of two years from the Completion Date in
respect of the WSL Contract giving to the Newco Business the
Agreed Grimsby Volume Proportion; and/or
(c) for contractual terms to be made available to Newco for Newco
to be supplied, for a period of at least two years following
the Completion Date, with volumes of ilmenite ore consistent
with those consumed by the Newco Business over the 12 months
ending on the date of this agreement (THE "GRIMSBY HISTORICAL
VOLUME"); and/or
(d) if prior to the Completion Date the volumes of ilmenite
ore contractually available for supply to the Newco Business
are less than the Grimsby Historical Volume, for any ilmenite
ore made available during the period from the date of this
agreement until the second anniversary of the Completion Date
to TEL or any other companies to be sold to DuPont or any of
its Affiliates upon completion of the TEL Sale (the "TIOXIDE
GROUP") pursuant to any new contract ("NEW CONTRACT") which is
entered into after the date of this agreement and prior to the
TEL Completion Date by any member of the Tioxide Group to be
shared as between the Newco Business and the Tioxide Group
other than the Newco Business (the "REVISED TIOXIDE Group") so
that the Newco Business is entitled to receive a proportion of
such ilmenite ore equal to the Agreed Grimsby Volume
Proportion but so that the aggregate of ilmenite ore
contractually available to the Newco Business under any New
Contracts shall not, when taken together with any other
contractual arrangements available to the Newco Business, be
required to exceed the Grimsby Historical Volume.
4.2 If the volumes of ilmenite ore contractually available for supply to
the Newco Business at the Completion Date are less than the Grimsby
Historical Volume, Dupont shall use all reasonable endeavours to
procure (if permitted by law or regulation) that any ilmenite ore made
available during the period of two years immediately after the
Completion Date to the Revised Tioxide Group pursuant to any new
contract ("NEW TIOXIDE CONTRACT") which is entered into after the
Completion Date is shared as between the Newco Business and the
Revised Tioxide Group so that the Newco Business is entitled to
receive a proportion of such ilmenite ore equal to the Agreed Grimsby
Volume Proportion but so that the aggregate of ilmenite ore so
contractually available to the Newco Business under any New Tioxide
Contracts shall not, when taken together with any other contractual
arrangements available to the Newco Business, be required to exceed
the Grimsby Historical Volume.
4.3 If the volumes of ilmenite ore contractually available for supply to
the Revised Tioxide Group at the Completion Date are less than the
volumes of ilmenite ore consumed by the Revised Tioxide Group over the
12 months ending on the date of this agreement, the Purchaser shall
use all reasonable endeavours to procure (if permitted by law or
regulation) that any ilmenite ore made available during the two years
immediately after the Completion Date to the Newco Business pursuant
to any new contract which is entered into after the Completion Date is
shared as between the Newco Business and the Revised Tioxide Group so
that each shall be entitled to receive volumes by reference to the
proportions of ilmenite ore consumed by the Newco Business and the
Revised Tioxide Group under the WSL Contract during the 12 months
ending on the date of this agreement.
4.4 Neither ICI (for itself or its Affiliates), Dupont (for itself or its
Affiliates) nor the Purchaser (for itself or its Affiliates) will
apply any price mark up pursuant to the arrangements referred to in
sub-clauses 4.1(d), 4.2 and 4.3 (save, in the case of ICI, or its
Affiliates, as consistent with practice at the date hereof).
5 On or before the Completion Date the Purchaser shall establish or
nominate a retirement benefits scheme which satisfies the conditions
set out in Schedule 4 of the Newco Share Sale Agreement.
6 ICI, DuPont and the Purchaser acknowledge that certain property,
rights and assets of or relating to or used in the Newco Business as
at the Transfer Time may not exclusively relate to or be exclusively
used in the Newco Business as at such time. If the Purchaser becomes
aware of any such property, right or asset at any time after the date
of this agreement and prior to the date falling twelve months
following the Completion Date and serves notice thereof on ICI and
DuPont, ICI (prior to the Completion Date) and DuPont (following the
Completion Date) shall unless otherwise agreed:
(i) make arrangements for the continued use of the same,
subject to the same terms (including as to cost and use)
as applied immediately prior to the Completion Date; or
(ii)to the extent such continued use is not permitted, make,
insofar as reasonably possible, arrangements for the use
of such property, right or asset as is equivalent thereto,
from and after the Completion Date.
To the extent that third party consents are required, the provisions
of Schedule 7 of the Hivedown Agreement shall apply MUTATIS MUTANDIS
and in relation to sub-paragraph (ii) the aggregate of payments
required to be made under the existing arrangements and such
equivalent arrangements (taking into account any increase in costs
thereunder) shall be borne equitably between ICI, DuPont and the
Purchaser.
This Paragraph 6 shall not apply to the extent that the use in the
Newco Business of the property, right or asset in question is
otherwise expressly provided for in the Newco Implementation
Agreements.
SCHEDULE 5
(SUB-CLAUSE 1.1)
PRINCIPLES FOR DISTINGUISHING
LPC BUSINESS AND AMERICAS BUSINESS
TAI A FORMS
AMERICAS
(SULPHATE)
LPC BUSINESS BUSINESS COMMENTS
--------------------- ----------------- ---------------- ---------------------
--------------------- ----------------- ---------------- ---------------------
- Office equipment
FIXED ASSETS All etc.
--------------------- ----------------- ---------------- ---------------------
INVESTMENTS All - Partnership share
--------------------- ----------------- ---------------- ---------------------
- Based on actual
Stocks quantities of
manufactured by All other stocks from each
STOCKS LPC stocks source
--------------------- ----------------- ---------------- ---------------------
Sales of - Based on detailed
OPERATING DEBTORS material analysis of all
Trade Debtors} manufactured by All other open accounts
Intra Group Debtors} LPC trade debtors concerned
--------------------- ----------------- ---------------- ---------------------
Items exclusive
to LPC
partnership or
trade in
product All other
Other operating manufactured by operating
debtors LPC debtors
--------------------- ----------------- ---------------- ---------------------
OPERATING CREDITORS
LESS THAN ONE YEAR Purchases of All other - Based on detailed
Trade Creditors} material operating analysis of all
Intra Group manufactured by creditors less open accounts
Creditors} LPC than 1 year concerned
--------------------- ----------------- ---------------- ---------------------
Purchases and
services
exclusively
related to LPC
partnership and - Based on detailed
to material All other analysis of all
Other operating manufactured by operating open accounts
creditors LPC creditors concerned
--------------------- ----------------- ---------------- ---------------------
Items - Mainly tax split
exclusively based on analysis
related to LPC of results based on
and materials All other non detailed analysis
NON OPERATING manufactured by operating of all open
DEBTORS/CREDITORS LPC debtors/creditor accounts concerned
--------------------- ----------------- ---------------- ---------------------
All Net Debt to
NET DEBT LPC Business
--------------------- ----------------- ---------------- ---------------------
Items
specifically All other
PROVISIONS related to LPC provisions
--------------------- ----------------- ---------------- ---------------------
Items
specifically All other
DEFERRED INCOME related to LPC deferred income
--------------------- ----------------- ---------------- ---------------------
- Calculated by
NET ASSETS difference
--------------------- ----------------- ---------------- ---------------------
NOTES:
1 Pension Liability (Approx. US$250,000) is accounted for according to
US rules (FAS87 etc.) in A Form. Therefore no reconciling difference
between US and UK GAAP.
2 ICI A Forms do not report deferred tax for ICI's US subsidiaries.
However any deferred tax in the US GAAP accounts is readily analysable
into its LPC and Sulphate and is estimated to derive to the extent of
some 99 per cent. from LPC's tax depreciation.
PRINCIPLES FOR DISTINGUISHING
LPC BUSINESS AND AMERICAS BUSINESS
TCI A FORMS
--------------------- --------------- ---------------- --------------------
AMERICAS
(SULPHATE)
LPC BUSINESS BUSINESS COMMENTS
--------------------- --------------- ---------------- --------------------
FIXED ASSETS All
--------------------- --------------- ---------------- --------------------
INVESTMENTS N/A N/A
--------------------- --------------- ---------------- --------------------
Stocks
manufactured - Based on actual
by LPC and quantities of
Kronos at All other stocks from each
STOCKS Varennes stocks source
--------------------- --------------- ---------------- --------------------
Sales of
material
manufactured - Based on
OPERATING DEBTORS by LPC and detailed analysis
Trade Debtors} Kronos at All other of all open
Intra Group Debtors} Varennes trade debtors accounts concerned
--------------------- --------------- ---------------- --------------------
Other operating
debtors All
--------------------- --------------- ---------------- --------------------
Purchases of
OPERATING CREDITORS material
LESS THAN 1 YEAR manufactured All other - Based on
Trade Creditors} by LPC and operating detailed analysis
Intra Group Kronos at creditors less of all open
Creditors} Varennes than one year accounts concerned
--------------------- --------------- ---------------- --------------------
Other operating
creditors All
--------------------- --------------- ---------------- --------------------
NON OPERATING
DEBTORS/CREDITORS All
--------------------- --------------- ---------------- --------------------
NET DEBT All
--------------------- --------------- ---------------- --------------------
PROVISIONS All
--------------------- --------------- ---------------- --------------------
DEFERRED INCOME All
--------------------- --------------- ---------------- --------------------
- Calculated by
NET ASSETS difference
--------------------- --------------- ---------------- --------------------
NOTE:
Stocks/materials/product manufactured by LPC includes items made
available to LPC under product swap arrangements with Kronos's plant
at Varennes.
SIGNED by
for and on behalf of
IMPERIAL CHEMICAL INDUSTRIES PLC } Peter E Whittle
SIGNED by
for and on behalf of
E.I. DU PONT DE NEMOURS AND
COMPANY } Jeffrey L Keefer
SIGNED by
for and on behalf of
N L INDUSTRIES, INC. } Susan E Alderton
EXHIBIT 10.2
1 Reference is made to the Framework Agreement of even date between
Imperial Chemical Industries PLC, E.l. Du Pont de Nemours and Company
and NL Industries, Inc (the "AGREEMENT").
2 For the purposes of Schedule 3 of the Agreement, the following
letters represent the following values:
W = 2,000,000
X = 176,222,000
Y = 30,000,000
Z = 16,778,000
such that the total when aggregated with the value in the column
headed EV in Section 2 of Schedule 3 to the agreement is equal to
US$365,000,000
.................................... .......................
for Imperial Chemical Industries PLC for NL Industries, Inc.
.................................... ........................
date date
EXHIBIT 10.3
DATED [ ] 1998
TIOXIDE EUROPE LIMITED
- and -
NEWCO LIMITED
AGREEMENT
- relating to -
the sale and purchase of part of the
business of TIOXIDE EUROPE LIMITED
AGREED FORM
EVERSHEDS
S O L I C I T O R S
Senator House, 85 Queen Victoria Street
London EC4V 4JL
Tel: 0171 919 4500 Fax: 0171 919 4919
Ref : MTI
I N D E X
CLAUSE DESCRIPTION PAGE NO.
1. INTERPRETATION 1
2. SALE 8
3. CONSIDERATION 9
4. COMPLETION 10
5. TITLE AND SUPPLEMENTARY PROVISIONS 12
6. DEBTORS, MATERIALS BUSINESS DEBTORS, RETAINED
BUSINESS CLAIMS AND MATERIALS BUSINESS CLAIMS 13
7. NEWCO LIABILITIES 15
8. TEL LIABILITIES 15
9. EMPLOYEES 16
10. CONTINUING OBLIGATIONS OF TEL AND NEWCO 16
11. VAT 17
12. AVAILABILITY OF INFORMATION 19
13. INDEPENDENT ACCOUNTANT 19
14. DEFAULT INTEREST 20
15. GENERAL 20
16. WHOLE AGREEMENT 21
17. NON-MERGER AND SURVIVORSHIP 22
18. NOTICES 22
19. GOVERNING LAW 22
Schedule 1 DESCRIPTION OF THE BUSINESS 23
Schedule 2 THE PROPERTIES 24
Schedule 3 EXCLUDED ASSETS AND EXCLUDED LIABILITIES 26
Schedule 4 ALLOCATION OF CONSIDERATION TO BUSINESS ASSETS
PURCHASED 29
Schedule 5 PROVISIONS RELATING TO THE PROPERTIES 30
CLAUSE DESCRIPTION PAGE NO.
Schedule 6 PROVISIONS RELATING TO THE CONTRACTS 33
Schedule 7 PROVISIONS RELATING TO THIRD PARTY CONSENTS 35
Schedule 8 NOTIFICATION, ASSISTANCE AND PROCEEDINGS 39
Schedule 9 SUPPLIER CONTRACTS OF A MATERIAL NATURE 42
Schedule 10 DOCUMENTS IN THE AGREED TERMS 43
Schedule 11 EMPLOYEES AND OTHER PERSONNEL 44
Schedule 12 SHARED SUPPLIER CONTRACTS 47
Schedule 13 TRANSFERRING EMPLOYEES 48
Schedule 14 ESTIMATED CONSIDERATION, FINAL CONSIDERATION AND
FINAL COMPLETION STATEMENT 49
Annex 1 Pharmacopeia
Annex 2 A Form
Annex 3 ICI's Controller's Manuals
Annex 4 ICI's Auditors Report
THIS AGREEMENT is made on 1998
BETWEEN:-
(1) TIOXIDE EUROPE LIMITED (registered in England No. 832447) whose registered
office is at [Lincoln House, 137/143 Hammersmith Road, London W14 OQL]
("TEL"); and
(2) NEWCO LIMITED (registered in England No. [ ]) whose
registered office is at [ ] ("NEWCO").
INTRODUCTION
(A) TEL has agreed to sell and Newco has agreed to purchase the Business as a
going concern and the Business Assets as at the Transfer Time, on the
terms and conditions of this Agreement.
(B) Newco is a wholly owned subsidiary of TEL.
(C) The Business constitutes part of the undertaking of TEL.
IT IS AGREED:-
1. INTERPRETATION
1.1 Definitions
In this Agreement, including its Schedules, the headings shall not affect
its interpretation and, unless the context otherwise requires:-
"AFFILIATES" means with respect to a specified entity, an entity that
directly or indirectly, through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with the entity specified,
provided that, without limiting the generality of the foregoing, the term
"AFFILIATES" shall not include any entity in which a party has a 50 per
cent. or less ownership interest. For the purposes hereof, "CONTROL" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management and operating policies of the entity in
respect of which the determination is being made, through the ownership of
voting securities, contract, voting trust or otherwise but any reference
in this Agreement to an Affiliate of TEL shall exclude Newco;
"AGREED TERMS" means, in relation to any document such document, in the
terms agreed between the parties and for the purposes of identification
signed by or on behalf of the parties, and listed in Schedule 10;
"BUSINESS" means the business shortly described in Schedule 1;
"BUSINESS ASSETS" means the property, assets and rights of and exclusively
relating to or used in the Business as at the Transfer Time as specified
in Clause 2.1 other than the Excluded Assets;
"BUSINESS DATA" means all information, know-how and records (whether or
not confidential and no matter in what form held) of, and relating
exclusively to or used exclusively in, the Business (or otherwise used in
the ordinary course of the operation of the Business) as at the Transfer
Time other than Commercial and Marketing Know-how and Intellectual
Property but, subject thereto, including the Materials Commercial and
Marketing Know-how, all manuals and instructions, all accounting records,
and all correspondence, orders and enquiries whether in hard copy or in
computer held or other electronic form (including for the avoidance of
doubt, such media as microfilm and microfiche) but for the avoidance of
doubt shall exclude any matter relating to the Customer Contracts or
Customers;
"COMMERCIAL AND MARKETING KNOW-HOW" means all commercial and marketing
information of and relating to or used in the Business as at the Transfer
Time, other than the Materials Commercial and Marketing Know-How, but
subject thereto, including all designs, specifications, drawings, lists
and particulars of customers, marketing manuals and procedures,
advertising copy and sales and promotional information;
"CONTRACTS" means the Supplier Contracts and the Materials Customer
Contracts;
"CONTROLLED WATERS" means waters including any ground or surface
waters;
"COSTS" includes all and any penalties, fines, costs, charges and
expenses;
"CUSTOMERS" means the customers of the Business other than customers
who are only customers of the Materials Business;
"CUSTOMER CONTRACTS" means the contracts and commitments with customers
(other than in relation to Intellectual Property) entered into prior to
the Transfer Time by or on behalf of TEL in connection with the Business
for the manufacture of goods, or the supply of goods or services by TEL
which then remain to be performed in whole or in part, other than the
Materials Customer Contracts;
"DEBTORS" means the book and other debtors accruing or owing to TEL as at
the Transfer Time (whether or not due and payable) and arising out of or
in connection with the Business excluding the Materials Business Debtors
and the Employee Loans;
"DEFAULT INTEREST" means LIBOR plus 200 basis points compounded
monthly;
"EMPLOYEE LOANS" means all amounts accruing or owing (whether or not due
and payable) as at the Transfer Time to TEL by Transferring Employees and
Offer Employees in respect of housing assistance loans or season ticket
loans or any other loans or advances to Transferring Employees of a
similar nature;
"ENVIRONMENT" means air, Controlled Waters, land (whether on, in or below
such land, excluding any buildings or other permanent structures on, in or
below the land) but including the surface of any river bed, the surface of
any sea bed or any other land covered by water, and flora and fauna and
all other natural resources;
"ENVIRONMENTAL AUTHORISATIONS" means all or any permits, consents,
licences, approvals and other authorisations required under Environmental
Law and all terms and conditions thereof required under any Environmental
Law for the operation of the Business;
"ENVIRONMENTAL LAW" means any and all legislation (whether civil, criminal
or administrative), statutes, treaty, statutory instrument, directive,
bylaw or judgment (including any judgment by the European Court of
Justice), regulations, notices, orders, government circular, code of
practice, and guidance note or decision of any competent regulatory body
or common law relating to pollution or protection of the Environment which
as at the Transfer Time are in effect and capable of enforcement by legal
process in the country in which the Properties are situated;
"EXCLUDED ASSETS" means the assets excluded from the sale and purchase
pursuant to this Agreement and identified in Part I of Schedule 3;
"EXCLUDED LIABILITIES" means any obligations and liabilities of TEL
excluded from the sale and purchase pursuant to this Agreement and
identified in Part II of Schedule 3;
"FINAL COMPLETION STATEMENT" has the meaning set out in paragraph
1.5.2 of Schedule 14;
"FINAL CONSIDERATION" has the meaning given in paragraph 1.5.1 of
Schedule 14;
"FREEHOLD PROPERTIES" means the freehold properties short
particulars of which are set out in Part I of Schedule 2;
"GOODWILL" means the goodwill in relation to the Business (but excluding
any rights relating to the Excluded Assets) and the right for Newco, so
far as TEL can grant the same, to represent itself as carrying on the
Business in succession to TEL in accordance with such terms as may be
agreed between TEL and/or its relevant Affiliate on the one hand and Newco
and/or its relevant Affiliate on the other hand;
"ICI" means Imperial Chemical Industries PLC;
"INTELLECTUAL PROPERTY" means all Technical Information and all rights,
title or interest (including, without limitation, the benefit and burden
of any licences of the same) anywhere in the world in any patents, trade
marks, service marks, registered designs, copyrights and rights to
inventions and applications for and rights to apply for protection or
registrations of any of the same including any continuing reissue,
divisional and re-examination patent application;
"LEASED EQUIPMENT CONTRACTS" means the agreements for the leasing to TEL
of equipment used exclusively in connection with the Business;
"LEASEHOLD PROPERTIES" means the leasehold properties short particulars of
which are set out in Part II of Schedule 2;
"LIBOR" means the rate for deposits in US Dollars for a period of one
month which appears on the Reuters Screen ISDA Page (or such other page as
the parties may agree) at approximately 11.00 am., London time, on the
first day of the period to which any interest period relates (the
"RELEVANT DATE"). If such rate does not appear on the Reuters Screen ISDA
Page on the Relevant Date, the rate for that Relevant Date will be
determined on the basis of the rates at which deposits in US Dollars are
offered to Midland Bank plc at approximately 11.00 am., London time, on
the Relevant Date to prime banks in London interbank market for a period
of one month commencing on that Relevant Date for amounts of
US$10,000,000;
"MATERIALS BUSINESS" means all or any of the businesses shortly described
in Part II of Schedule 1;
"MATERIALS BUSINESS CLAIMS" means the benefit of all rights and claims of
TEL relating exclusively to the Business Assets or arising exclusively out
of or in connection with the Materials Business as at, or the conduct of
the Materials Business up to, the Transfer Time to the extent that such
rights and claims do not constitute Excluded Assets;
"MATERIALS BUSINESS DEBTORS" means the book and other debtors accruing or
owing to TEL as at the Transfer Time (whether or not due and payable) and
arising exclusively out of or in connection with the Materials Business;
"MATERIALS COMMERCIAL AND MARKETING KNOW-HOW" means all commercial and
marketing information of, and relating exclusively to or used exclusively
in, the Materials Business as at the Transfer Time, other than
Intellectual Property;
"MATERIALS CUSTOMER CONTRACTS" means the contracts and commitments with
customers (other than in relation to any Intellectual Property) entered
into prior to the Transfer Time by or on behalf of TEL exclusively in
connection with the Materials Business for the manufacture of goods, or
the supply of goods or services, by TEL which then remain (in whole or
part) to be performed by TEL;
"NEWCO COMPLETION DATE" has the meaning given in Schedule 14;
"NEWCO'S GROUP" means Newco and its Affiliates from time to time but
excluding any member of TEL's Group;
"NEWCO LIABILITIES" means any liabilities whether actual, prospective or
contingent or liquidated or unliquidated to the extent incurred or owing
by TEL:-
(a) in connection with the Business or the Business Assets as at,
or the conduct of the Business up to, the Transfer Time; or
(b) in respect of events occurring or matters existing before the
Transfer Time which relate to the Business or the Business Assets;
or
(c) which are expressly deemed to constitute Newco Liabilities pursuant
to the terms of this Agreement;
including, without prejudice to the generality of the foregoing, any
Operating Creditors less than 1 year relating exclusively to the operation
of the Business, but for the avoidance of doubt excluding the Excluded
Liabilities;
"NEWCO PATENT AND KNOW-HOW LICENCE" means the licence in the Agreed Terms
to be entered into between E. I. du Pont de Nemours and Company and Newco;
"NON EXEMPT PROPERTY" means any Property notified in writing by TEL to
Newco at least 14 days prior to the Transfer Time;
"OFFER EMPLOYEES" means those employees of TEL and/or ICI and its
Affiliates who have been offered and accepted employment with Newco
pursuant to Schedule 11;
"OPERATING CREDITORS LESS THAN 1 YEAR" has the meaning set out in Schedule
14;
"PERMITS" means all licences, permits, authorisations and approvals issued
or granted by statutory or local authorities to TEL for the purposes of
operation of the Business (but excluding, for the avoidance of doubt,
planning permissions (save for Environmental Authorisations) issued by
relevant planning authorities);
"PLANT AND EQUIPMENT" means the fixed and loose plant and machinery and
all other fixtures and fittings, spare parts, equipment, furniture and
motor vehicles owned by TEL and located at the Properties at the Transfer
Time and used exclusively in the Business;
"PROPERTIES" means the Freehold Properties and the Leasehold Properties;
"REGULATIONS" means the Value Added Tax (General) Regulations 1985 as
amended;
"RETAINED BUSINESS" means all or any of the businesses of TEL's Group
other than the Business;
"RETAINED BUSINESS CLAIMS" means the benefit of all rights and claims of
TEL as at the Transfer Time except for the Materials Business Claims;
"SHARED SUPPLIER CONTRACTS" means contracts and commitments entered into
prior to the Transfer Time by or on behalf of TEL for the supply of goods
or services in connection with both the Business and the Retained Business
(other than in relation to Intellectual Property) which then remain to be
performed in whole or in part and listed in Schedule 12;
"STOCK-IN-TRADE" means the stocks of raw materials, consumables,
work-in-progress and finished products owned by TEL relating exclusively
to the Business and located at any of the Properties at the Transfer Time
but excluding any finished products and work-in-progress which is located
at but has not been manufactured at any of the Properties;
"SUPPLIER CONTRACTS" means contracts and commitments (including the Leased
Equipment Contracts) entered into prior to the Transfer Time by or on
behalf of TEL for the supply to TEL of goods or services exclusively in
connection with the Business (other than in relation to Intellectual
Property) which then remain to be performed in whole or in part, those of
material nature being listed in Schedule 9;
"TAXATION" means all forms of direct and indirect taxation including
statutory, governmental, state, provincial, local governmental or
municipal impositions in each case imposed on net income, profits, gains
or net worth and whether of the United Kingdom or elsewhere in the world
(including interest, costs or penalties relating thereto) and, for the
avoidance of doubt, the term shall include rates or other taxes imposed on
properties, landfill taxes, customs duties, national insurance payments,
taxes imposed on payments to, or income of, third parties (including
employees) or sales or value added taxes;
"TECHNICAL INFORMATION" means all technical data and know-how, industrial
and technical information, trade secrets, confidential information,
drawings, formulations, technical reports, operating and testing
procedures, instruction manuals, raw material or production
specifications, the results of research and development work, whether in
hard copy or in computer held form (including, for the avoidance of doubt,
such media as microfilm and microfiche) and existing computer software the
Intellectual Property in which is owned by TEL (or TEL's Affiliates);
"TEL'S GROUP means TEL and its Affiliates from time to time;
"TEL LIABILITIES" means any liabilities, whether actual, prospective or
contingent or liquidated or unliquidated to the extent incurred or owing
by TEL or any member of TEL's Group:-
(a) in connection with the Retained Business as at, or the conduct of
the Retained Business up to, the Transfer Time; or
(b) in respect of events occurring or matters existing before the
Transfer Time and relating to the Retained Business; or
(c) which constitute Excluded Liabilities; or
(d) which are expressly deemed to constitute TEL Liabilities pursuant to
the terms of this Agreement; or
(e) in respect of any liability to Taxation of TEL;
and, for the avoidance of doubt shall include Operating Creditors less
than 1 year which do not relate exclusively to the Business;
"TRANSFER REGULATIONS" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"TRANSFERRING EMPLOYEES" means those employees of TEL and/or ICI and its
Affiliates who are immediately prior to the Transfer Time employed in the
Business whose names are set out in Schedule 13;
"TRANSFER TIME" means immediately after 00.00 hours London time on
* 1998 [IE FIRST DAY OF THE MONTH];
"ULTRAFINE TITANIUM DIOXIDE" means titanium dioxide being
ultraviolet-attenuating grade having a ratio of absorbance response at 308
nm (A308) to absorbance response at 524 nm (A524) of not less than 5 as
defined in US Pharmacopeia, amendment published in Pharmacopeia Forum,
Volume 22, Number 4, Page 2636 and attached hereto as Annex 1;
"US DOLLARS", "US$" or "$" means the lawful currency of the United States
of America;
"VAT" means value added tax imposed by a Member State of the European
Community pursuant to the Sixth Council Directive (77/338/EEC) and
Supplemental Directives;
"VATA" means the Value Added Tax Act 1994;
1.2 Any reference in this Agreement or any other agreement in the Agreed Terms
or in any instrument executed pursuant hereto or thereto to any obligation
assumed by TEL, or any intention of TEL or Newco, to give or vest in Newco
the Business or the Business Assets or the benefit of the Business or the
Business Assets shall be subject to Clause 2.2 and so that TEL shall not,
by virtue of any such provision, be obliged to transfer to Newco any such
right, title or interest in the Business or any Business Asset which is
greater than such right, title or interest as TEL may have in the Business
and the Business Assets.
1.3 Any express reference to an enactment includes references to:-
1.3.1 that enactment as amended, extended or applied by or under any other
enactment before or after this Agreement;
1.3.2 any enactment which that enactment re-enacts (with or without
modification); and
1.3.3 any subordinate legislation made (before or after this Agreement)
under any enactment, including one within Clause 1.3.1 or 1.3.2
above,
except to the extent that any of the matters referred to in Clauses 1.3.1
to 1.3.3 occurring after the date of this Agreement increase or alter the
liability of TEL under this Agreement.
1.4 The singular shall include the plural and vice versa and words denoting
persons shall include bodies corporate and unincorporated associations of
persons and, unless otherwise stated, shall include successors or assigns
of such persons.
1.5 Clauses 1.1 to 1.3 apply unless the context otherwise requires.
1.6 The headings in this Agreement do not affect its interpretation.
1.7 Any Schedule or Annex to this Agreement shall take effect as if set out in
this Agreement and references to this Agreement shall include its
Schedules and Annexes.
2. SALE
2.1 THE SALE
Subject to the terms of this Agreement, TEL shall sell and Newco shall
purchase as a going concern as at the Transfer Time the Business
comprising the Business Assets as specified in this Clause 2.1 below so
far as TEL can sell or grant the same:
2.1.1 the Properties;
2.1.2 the Plant and Equipment;
2.1.3 the Stock-in-Trade;
2.1.4 the Employee Loans;
2.1.5 the benefit (so far as the same can lawfully be assigned or
transferred to, or held in trust absolutely for, or can otherwise be
given to, Newco) of the Materials Business Claims;
2.1.6 the Goodwill;
2.1.7 the Materials Commercial and Marketing Know-How;
2.1.8 the benefit, subject to the burden of the Contracts;
2.1.9 the Business Data; and
2.1.10 the Materials Business Debtors;
but excluding the Excluded Assets.
The Excluded Assets and all rights and benefits relating thereto shall be
retained by TEL and are excluded from the sale and purchase of the
Business and the Business Assets to Newco under this Agreement.
2.2 WARRANTIES, INDEMNITIES AND REPRESENTATIONS
Except as otherwise expressly provided in this Agreement (but having
regard to the provisions of Clause 1.2) no warranties, indemnities,
representations or undertakings (in any case, express, implied or
otherwise) with regard to the Business, the Business Assets or the title
of TEL thereto are given by TEL, nor are the same to be implied, by virtue
of TEL entering into this Agreement, or any other agreement in the Agreed
Terms or executing any instrument pursuant hereto or thereto or selling,
conveying or transferring or agreeing to sell, convey or transfer the same
pursuant hereto or thereto. The Business Assets are purchased by Newco
pursuant to this Agreement on an "as seen" and "as is" basis. TEL shall,
and shall be obliged to, transfer, to Newco only such right, title or
interest as it may have subject to all liens, charges, impediments, claims
and encumbrances as may exist thereon. Newco shall accept without enquiry,
requisition or objection such title as TEL may have in the Business and
the Business Assets.
2.3 THE PROPERTIES
The Properties shall be sold and purchased on the terms set out in
Schedule 5.
2.4 POST-TRANSFER TIME LIABILITIES
2.4.1 Save as expressly stated otherwise in this Agreement, Newco
undertakes to indemnify and hold harmless TEL from and against all
liabilities which may be incurred by TEL (or any member of TEL's
Group) or to which TEL (or any member of TEL's Group) may become
subject, and which arise as a result of the operation of the
Business after the Transfer Time (other than any liabilities
expressly retained by TEL under this Agreement) and any and all
actions, suits, proceedings, claims, demands, assessments and
judgments with respect to the foregoing. Any such liability in
respect of which Newco shall be liable to indemnify TEL (and members
of TEL's Group) as aforesaid shall constitute a "Newco Liability"
for the purposes of Clause 7 and Schedule 8.
2.4.2 Save as expressly stated otherwise in this Agreement, TEL undertakes
to indemnify and hold harmless Newco from and against all
liabilities which may be incurred by Newco (or any member of Newco's
Group) or to which Newco (or any member of Newco's Group) may become
subject, and which arise as a result of the operation of the
Retained Business after the Transfer Time (other than any
liabilities expressly assumed by Newco under this Agreement) and any
and all actions, suits, proceedings, claims, demands, assessments
and judgments with respect to the foregoing. Any such liability for
which TEL shall be liable to indemnify Newco (and members of Newco's
Group) as aforesaid shall constitute a "TEL Liability" for the
purposes of Clause 8 and Schedule 8.
3. CONSIDERATION
3.1 THE CONSIDERATION
The consideration for the sale of the Business Assets shall be:-
3.1.1 Subject to adjustment pursuant to sub-clause 3.2 below, US$
118,410,000 ("THE ESTIMATED CONSIDERATION") which sum shall
constitute a debt owed by Newco to TEL, without security and
repayable forthwith upon demand by TEL ("THE ESTIMATED NEWCO
HIVEDOWN DEBT"); and
3.1.2 an obligation on the part of Newco to assume, pay, satisfy,
discharge, fulfil and indemnify TEL against all Newco Liabilities
and Costs in respect thereof in accordance with the provisions of
Clause 7.
3.2 The Final Consideration shall be agreed or finally determined in
accordance with the provisions of Schedule 14 and any adjusting payments
between TEL and Newco shall be made in accordance with the provisions of
Schedule 14.
3.3 ALLOCATION OF THE FINAL CONSIDERATION
The Final Consideration shall be allocated to each of the Business Assets
as specified in Schedule 4.
4. COMPLETION
4.1 TIME OF COMPLETION
Completion of this Agreement shall take place at the Transfer Time.
4.2 DELIVERY BY TEL
Except as otherwise provided in this Agreement and specifically, but
without limitation, without prejudice to Clause 5.3, at or as soon as
practicable after the Transfer Time, TEL shall cause to be delivered or
made available to Newco at such place as Newco may reasonably require:-
4.2.1 such documents as Newco may reasonably require and which TEL has
available to it or under its control to complete the sale and
purchase of the Business Assets (including all documents of title
which TEL has in its possession or control, any requisite consents
or licences which TEL may have obtained, such executed conveyances,
transfers and assignments as Newco may reasonably require to vest in
Newco the benefit of the properties, rights and assets hereby agreed
to be sold) and shall permit Newco to enter into and take possession
of the Business;
4.2.2 possession of the Properties and of the other tangible assets
comprised in the Business Assets including all inventories and
records (whether in computerised or other form) exclusively relating
to the Business (but not those relating to the general affairs of
TEL or to any Excluded Assets or Excluded Liabilities or required by
law to be retained by TEL, but insofar as any such documents relate
to the Business and are reasonably required by Newco, Newco shall
have the right to examine the same at all reasonable times and to
make copies thereof and to take extracts therefrom);
4.2.3 insofar as the same have not already been delivered to Newco, the
documents in Agreed Terms, in the case of any agreement or
instrument to be delivered by TEL, duly executed by TEL or any of
its Affiliates.
4.3 DELIVERY BY NEWCO
Newco shall deliver to TEL the documents in the Agreed Terms duly executed
by Newco.
4.4 DELIVERY OF BUSINESS ASSETS
TEL may at any time prior to the Transfer Time, execute and deliver, or
cause to be, or may have, or may have caused to be, executed and
delivered, to Newco such documents as shall be required to transfer to
Newco (whether or not subject to any necessary formalities such as
stamping, registration in any register, production to any person or
otherwise) legal title to any of the Business Assets which execution and
delivery shall be carried out, in respect of the Business Assets the
subject thereof, in discharge of, and shall accordingly discharge, the
obligations of TEL under Clause 4.2. TEL and Newco agree and undertake
that the execution and delivery by TEL as contemplated in this Clause 4.3
of any conveyance, transfer or assignment in respect of any Property shall
be made on the terms contained in Schedule 5.
4.5 DELIVERY OF CONSIDERATION
Newco shall execute and deliver to TEL such documents as TEL may
reasonably require evidencing the assumption by Newco of the Newco
Liabilities pursuant to Clause 3.1.2.
4.6 PERMITS
To the extent that the same has not been carried out prior to the Transfer
Time, as soon as possible thereafter Newco and/or TEL (as the case may
require) shall apply to the relevant governmental and/or local authorities
to arrange for the transfer or assignment to Newco or the re-issue in the
name of Newco of each of the Permits (insofar as they relate to the
Business) with effect from the Transfer Time in each case upon terms which
will enable Newco to continue to conduct the Business substantially in the
manner in which the Business is currently conducted at the Transfer Time.
Furthermore, each of Newco and/or TEL shall use their respective
reasonable efforts to effect each such transfer, assignment or re-issue as
promptly as practicable after the date of this Agreement. For the
avoidance of doubt nothing in this Clause 4.5 shall give rise to any
liability on the part of TEL for any additional cost as may be required on
the part of Newco in connection with such transfer, assignment or
re-issue.
4.7 Newco hereby accepts and agrees that TEL shall not be liable for any
failure or refusal by any relevant governmental or local authority to
arrange or effect the transfer or assignment to Newco or the re-issue in
the name of Newco of any of the Permits as aforesaid.
4.8 INVESTMENT GRANTS
As soon as practicable after the Transfer Time, Newco shall execute and
deliver such undertakings and indemnities as TEL may reasonably require to
ensure so far as may be possible that:-
4.8.1 TEL will not (by reason of the sale under this Agreement or anything
done or omitted to be done by Newco or its successors in title) be
or become liable to repay any grants from any governmental, local or
public authority received by TEL in relation to the Business; and
4.8.2 TEL will be able to claim and to receive for its own benefit any
additional such grants in respect of expenditure made prior to the
Transfer Time to which it would have become entitled had it
continued to use the relevant assets in the Business.
5. TITLE AND SUPPLEMENTARY PROVISIONS
5.1 TITLE TO THE PROPERTIES
The provisions of Schedule 6 shall apply in respect of the Properties.
5.2 TITLE TO OTHER BUSINESS ASSETS
Unless otherwise agreed between TEL and Newco, title to all Business
Assets which are capable of transfer by delivery shall pass on delivery
thereof and such delivery shall be deemed to have taken place at the
Properties (or such other properties at which the Business is carried on)
at and with effect from the Transfer Time.
5.3 BENEFICIAL OWNERSHIP AND RISK
Save to the extent otherwise provided in this Agreement and specifically,
but without limitation, in Clause 4.3, beneficial ownership and risk in
respect of the Business and the Business Assets shall pass and be deemed
to have passed to Newco at the Transfer Time. TEL shall, subject to being
fully indemnified by Newco, hold the relevant Business Assets on trust for
Newco absolutely as from the Transfer Time until the same shall have been
delivered and/or formally transferred or assigned to Newco and TEL shall
grant to Newco such powers of attorney as Newco may reasonably require to
enable Newco to vest in itself or otherwise to deal with such assets and
shall deliver to Newco forthwith upon receipt any notice or other document
concerning or relating to such assets.
5.4 THIRD PARTY CONSENTS
Subject to Clause 7, the provisions of Schedule 7 shall apply in respect
of the sale and purchase of any Business Asset referred to in such
Schedule and in respect of the assumption by Newco of any Newco Liability
referred to in such Schedule and shall, in respect of any such matters,
override any other provision of this Agreement (other than Clauses 1.3 and
2.2 and 7 which shall override the provisions of such Schedule) .
6. DEBTORS, MATERIALS BUSINESS DEBTORS, RETAINED BUSINESS CLAIMS AND
MATERIALS BUSINESS CLAIMS
6.1 ASSIGNMENT OF PROCEEDS
TEL shall assign or procure that there is assigned to Newco any net
proceeds of recovery of any Materials Business Debtor or Materials
Business Claim for Newco to retain for its own account. Any Materials
Business Debtor received by TEL shall be received by TEL as trustee for
Newco absolutely, TEL shall record such payment separately in its books
and shall account to Newco for the same as soon as reasonably practicable
after receipt. For the avoidance of doubt the net proceeds of recovery to
be assigned shall be calculated after deducting any VAT for which TEL is
liable to account to H M Customs & Excise in respect of the sum payable by
the Materials Business Debtor.
6.2 MATERIALS BUSINESS DEBTORS AND MATERIALS BUSINESS CLAIMS
If any Materials Business Debtor or Materials Business Claim is not, or
gives rise to a cause of action which is not, capable of assignment to
Newco (in such manner as to permit Newco to prosecute such Materials
Business Debtor or Materials Business Claim in its own name) and in the
case of any Materials Business Debtor or Materials Business Claim which is
capable of assignment to Newco in such manner and has not been assigned,
pending such assignment, Newco shall be entitled at its own expense in its
absolute discretion to take such action as Newco shall deem necessary or
desirable to prosecute, settle or compromise such Materials Business
Debtor or Materials Business Claim, or to avoid, dispute, resist, appeal,
compromise or contest any related counter-claim to the extent that such
counter-claim is a Newco Liability, in the name of TEL, and to have the
conduct of any related proceedings, negotiations or appeals.
6.3 INDEMNITY
Newco shall indemnify TEL against all liabilities and Costs which it may
incur in complying with Clauses 6.1 to 6.4 inclusive or otherwise in
connection with any such Materials Business Debtor or Materials Business
Claim or related counter claim to the extent that such counter-claim is a
Newco Liability.
6.4 NOTIFICATION, ASSISTANCE AND PROCEEDINGS
The provisions of Schedule 8 shall apply to:-
6.4.1 the notification by one party to the other party of information with
respect to Materials Business Debtors or Materials Business Claims;
6.4.2 the giving of assistance by TEL to Newco for the purposes of
recovering any amount due in respect of, or compromising, any
Materials Business Debtor or Materials Business Claim or avoiding,
disputing, resisting, appealing, compromising or contesting any
related counter-claim to the extent that such
counter claim is a Newco Liability; and
6.4.3 the conduct of any proceedings in respect of any Materials Business
Debtor or Materials Business Claim or any related counter-claim to
the extent that such counter-claim is a Newco Liability.
6.5 ACCOUNTING BY NEWCO FOR DEBTORS RECEIVED
Any Debtor received by Newco shall be received by Newco as trustee for TEL
absolutely, Newco shall record such payment separately in its books and
shall account to TEL for the same as soon as reasonably practicable after
receipt.
6.6 NOTIFICATION, ASSISTANCE AND PROCEEDINGS
The provisions of Schedule 8 shall apply to:-
6.6.1 the notification by one party to the other party of information with
respect to Debtors or Retained Business Claims;
6.6.2 the giving of assistance by Newco to TEL for the purposes of
receiving any amount due in respect of, or comprising, any Debtor or
Retained Business Claim or avoiding, disputing, resisting,
appealing, compromising or contesting any related counter-claim to
the extent that such counter claim is a TEL Liability; and
6.6.3 the conduct of any proceedings in respect of any Debtor, Retained
Business Claim or any related counter-claim to the extent that such
counter-claim is a TEL Liability.
7. NEWCO LIABILITIES
7.1 ASSUMPTION OF NEWCO LIABILITIES
Newco agrees to assume, pay, satisfy, discharge and fulfil all the Newco
Liabilities and Costs in respect thereof.
7.2 CONDUCT OF NEWCO LIABILITIES
Newco shall be entitled at its own expense in its absolute discretion to
take such action as it shall deem necessary or desirable to avoid,
dispute, defend, resist, appeal, compromise or contest in the name of TEL
any claims of, or proceedings instituted or threatened by, any third party
whether before or after the date hereof, in respect of any Newco Liability
and to have the conduct of any related proceedings, negotiations or
appeals.
7.3 INDEMNITY
Newco shall indemnify:-
7.3.1 TEL against all Newco Liabilities; and
7.3.2 TEL against all liabilities and Costs which it may incur in
complying with this Clause 7 or otherwise in connection with any
Newco Liability.
7.4 NOTIFICATION, ASSISTANCE AND PROCEEDINGS
The provisions of Schedule 8 shall apply to:-
7.4.1 the notification by one party to the other party of information with
respect to Newco Liabilities;
7.4.2 the giving of assistance for the purposes of avoiding, disputing,
resisting, appealing, compromising or contesting any Newco
Liability; and
7.4.3 the conduct of any proceedings in respect of any Newco Liability.
8. TEL LIABILITIES
8.1 TEL LIABILITIES
TEL shall be entitled at its own expense in its absolute discretion to
take such action as it shall deem necessary or desirable to avoid,
dispute, defend, resist, appeal, compromise or contest any claims of, or
proceedings instituted or threatened by, any third party, whether before
or after the date hereof, in respect of any TEL Liability and to have the
conduct of any related proceedings, negotiations or appeals.
8.2 INDEMNITY
TEL shall indemnify:-
8.2.1 Newco against all TEL Liabilities; and
8.2.2 Newco against all liabilities and Costs which it may incur in
complying with this Clause 8 or otherwise in connection with any TEL
Liability.
8.3 NOTIFICATION, ASSISTANCE AND PROCEEDINGS
The provisions of Schedule 8 shall apply to:-
8.3.1 the notification by one party to the other party of information with
respect to TEL Liabilities;
8.3.2 the giving of assistance by Newco to TEL for the purposes of
avoiding, disputing, resisting, appealing, compromising or
contesting any TEL Liability; and
8.3.3 the conduct of any proceedings in respect of any TEL Liability.
9. EMPLOYEES
The provisions of Schedule 11 shall apply in relation to certain
employment and related matters.
10. CONTINUING OBLIGATIONS OF TEL AND NEWCO
10.1 FURTHER ASSURANCES
TEL shall (at Newco's Cost) from time to time execute such further
assurances and afford to Newco such assistance as Newco may reasonably
require which is within TEL's control for the purpose of vesting in Newco
or its nominee the benefit of the Business and the Business Assets
(including, so far as consistent with the terms of this Agreement, the
benefit of any rights accruing against third parties, whether such rights
have or have not accrued or become enforceable as at the Transfer Time)
and of all the provisions of this Agreement.
10.2 SHARED SUPPLIER CONTRACTS
TEL agrees, to the extent that it is able, to make onward supply of those
goods or services provided under Shared Supplier Contracts to the extent
that those goods or services would have been utilised by TEL in the
Business had it not been transferred to Newco pursuant to the terms of
this Agreement on the basis that Newco shall bear its proportionate share
of the net cost and expenses under such Shared Supplier Contracts.
10.3 ENVIRONMENTAL AUTHORISATIONS
TEL shall give all reasonable assistance (other than financial assistance)
to Newco in applying for, or arranging for the transfer of, the
Environmental Authorisations.
10.4 CONTRACTS
The provisions of Schedule 6 shall apply.
10.5 CUSTOMER CONTRACTS
To the extent that payment is made to Newco in respect of any Customer
Contract after the Transfer Time, Newco shall receive the same as trustee
for TEL absolutely, shall record such payment separately in its books and
shall account to TEL for the same as soon as reasonably practicable after
receipt.
10.6 NEWCO TAXATION LIABILITIES
Newco shall be responsible for all liabilities to Taxation incurred or
owing by it (whether or not due and payable) in respect of the Business
following the Transfer Time including any stamp duty arising as a result
of this Agreement or its completion.
11. VAT
11.1 TEL and Newco intend that article 5 of the Value Added Tax (Special
Provisions) Order 1995 ("ARTICLE 5") shall apply to the sale or sales of
the Business under, or procured under, this Agreement, so that the sale or
sales are treated as neither supplies of goods nor supplies of services.
11.2 If nevertheless any VAT is payable on any supply by TEL or any supply
which is procured by TEL under this Agreement, Newco shall pay it the
amount of that VAT in addition to the price (and if Newco delays or
defaults in complying with its obligations under Clause 11.3 pay it an
amount equal to any interest and penalties imposed by HM Customs and
Excise (whether on TEL or another person) arising out of the treatment by
TEL and Newco of the sale as described in Clause 11.1 above).
11.3 Without limiting Clause 11.2, VAT shall be treated as payable if HM
Customs and Excise rule that it is payable after full disclosure of all
material facts. If they have done so before the Transfer Time, the tax
shall be payable by Newco on the Transfer Time against issue of a proper
VAT invoice (issued by TEL or other appropriate person) in respect of such
VAT. If they do so on or after the Transfer Time, the tax shall be payable
by Newco within five days after TEL gives Newco written notice of the
ruling together with a proper VAT invoice (issued by TEL or other
appropriate person) in respect of that VAT.
11.4 If Newco fails to pay the amount of the tax on the due date under Clause
11.3, it shall pay Default Interest on that amount from the due date until
actual payment (excluding any period for which interest indemnified under
Clause 11.2 runs) compounded monthly except to the extent to which TEL is
fully compensated for Newco's delay by reason of the indemnity in Clause
11.2 extending to interest.
11.5 With a view to procuring that article 5 applies, Newco:
11.5.1shall ensure that Newco is registered for VAT not later
than the date of the Transfer Time;
11.5.2warrants that the Business Assets are to be used by Newco in
carrying on the same kind of business as that carried on by TEL's
Group and its Affiliates;
11.5.3warrants that Newco has, or will by the relevant date have,
properly made an election to waive exemption in respect of each
Non-Exempt Property with effect from a day not later than the
relevant date (having obtained the written permission of HM Customs
and Excise if necessary) and has, or will by that date have, duly
given to HM Customs and Excise the written notification of the
election required to make the election effective; and
11.5.4covenants that Newco will not revoke the election within three
months after the relevant date.
In this paragraph "RELEVANT DATE" has the same meaning as in paragraph (2)
of article 5.
11.6 TEL and Newco envisage that s. 49 of the Value Added Tax 1994 will apply
to the sale and purchase of the Business Assets under this Agreement but
intend that TEL should retain the records referred to in that section, and
accordingly:
11.6.1notwithstanding anything in this Agreement TEL shall not be
required to deliver to Newco the records referred to in s.49;
11.6.2TEL shall make a request to HM Customs and Excise under s.49 for
the records to be preserved by TEL;
11.6.3if or for so long as that request is not granted, TEL shall
preserve the records on behalf of Newco for such period as may be
required by law, and shall during that period permit Newco
reasonable access to them to inspect or make copies of them; and
11.6.4TEL may fulfil its obligations under Clause 11.6.3 by procuring
that a future transferee of its business or any other person
preserves the records and permits reasonable access as mentioned in
that paragraph, in which case TEL shall notify Newco of the name of
that person.
11.7 In respect of each Non-Exempt Property mentioned in Clause 11.5.1 either:
11.7.1without prejudice to that subclause, Newco shall on or before the
Transfer Time give to TEL evidence reasonably satisfactory to TEL
that the election has been made and written notification duly given
in accordance with that subclause; or
11.7.2if Newco does not give that evidence, it shall be assumed that
those things have not been done and notwithstanding Clause 11.3
Newco shall on the Transfer Time pay to TEL the amount of VAT
chargeable in respect of the relevant Non-Exempt Property on that
assumption but any forbearance of TEL to insist on its rights under
this subclause shall be without prejudice to its rights under the
preceding provisions of this clause.
11.8 References in Clause 11.5 to Newco shall be construed as references to the
transferee within the meaning of the corresponding provision of article 5
if different.
12. AVAILABILITY OF INFORMATION
Each of TEL and Newco shall make available to the other free of charge
upon written request all information (or copies of any information in
writing) which the other may reasonably require relating to the Business
and the Business Assets (including, without limitation, any records
required for the purposes of VATA or the Regulations or relating to
taxation of any kind (including Taxation) but not for the avoidance of
doubt the Customer Contracts or the Commercial and Marketing Know-How).
13. INDEPENDENT ACCOUNTANT
13.1 If either party wishes to refer any matter in dispute in accordance with
the provisions of Clause 3 or Schedule 14 for determination under this
Clause it shall give notice to the other requiring the appointment of an
independent accounting firm of international reputation ("THE INDEPENDENT
ACCOUNTANT") excluding accounting firms who have acted as auditors of
either party or of any of their Affiliates in the last 5 years. If the
parties are unable to agree upon the Independent Accountant within 14 days
of such notice, then the Independent Accountant shall be appointed by the
President for the time being of the Institute of Chartered Accountants in
England and Wales on the application of either party.
13.2 The Independent Accountant shall act as an expert and not as an arbitrator
and his decision shall (in the absence of manifest error) be final and
binding on the parties. The Independent Accountant shall afford the
parties the opportunity of making written representations to him and shall
make his determination within 40 days of his appointment.
13.3 The fees and expenses of the Independent Accountant shall be borne by the
parties in equal shares unless the Independent Accountant otherwise
determines.
14. DEFAULT INTEREST
Subject as otherwise provided to the contrary in this Agreement, if any
sum due for payment under this Agreement or in accordance with this
Agreement is not paid on the due date the party in default shall pay
Default Interest on that sum from the due date until the date of actual
payment calculated on a day to day basis.
15. GENERAL
15.1 Unless otherwise expressly stated, all claims made and payments to be made
under this Agreement shall be made in US Dollars. Payments to TEL shall be
made in immediately available funds to the account of TEL at such account
as TEL may notify to Newco and to Newco in immediately available funds to
such account as Newco may notify to TEL. All payments and values under
this Agreement shall be in US Dollars and where an amount is not itself
calculated in US Dollars, it shall be converted into US Dollars at the
mid-market closing exchange rate for that currency into US Dollars as
published in the London Edition of The Financial Times published 2
Business Days prior to the date on which the relevant payment is due or
where no such rate is published, at the rate quoted by Citibank, N.A. at
the close of business in London on that date. This sub-clause shall not
apply to Schedule 14.
15.2 Save as otherwise provided to the contrary in this Agreement, each payment
to be made under this Agreement shall be made in the currency in which the
relevant amount is payable, free and clear of all deductions or
withholdings of any kind, except for those required by law, and if any
deduction or withholding must be made by law, an additional amount will be
paid which is necessary to ensure that the recipient receives a net amount
equal to the full amount which it would have received if the payment had
been made without the deduction or withholding.
15.3 None of the rights or obligations under this Agreement may be assigned or
transferred without the written consent of the other party ("the
Non-Assigning Party") other than an assignment of the rights (but not the
obligations) to an Affiliate of the assigning party provided that:
(a) such assignment shall only be permitted if the assignment has no
adverse effect on the Non-Assigning Party;
(b) if the Affiliate to which the rights have been assigned ceases to be
an Affiliate of the assigning party, the rights which have been
transferred shall be re-transferred to the party which originally
assigned those rights or to another Affiliate of that original
assigning party; and
(c) it shall be a condition of any such assignment that reasonable
notice is given in writing to the Non-Assigning Party of the
proposal to assign, (identifying the rights proposed to be assigned,
the identity of the proposed assignee and such other details
relating thereto as the Non-Assigning Party may reasonably require).
15.4 Save as otherwise provided in this Agreement, each party shall pay the
costs and expenses incurred by it in connection with the entering into and
completion of this Agreement.
15.5 This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same agreement and any party
may enter into this Agreement by executing a counterpart.
15.6 No amendment, variation or waiver of this Agreement or any provision of
this Agreement shall be effective unless it is in writing and duly
executed by or on behalf of both parties.
16. WHOLE AGREEMENT
16.1 This Agreement (if and when executed) contains the whole agreement between
the parties relating to the transaction contemplated by this Agreement and
supersedes all previous agreements between the parties relating to such
transaction.
16.2 Each of the parties to this Agreement acknowledges on its own behalf that,
in agreeing to enter into this Agreement, it has not relied on any
representation, warranty, collateral contract or other assurance (except
those set out in this Agreement) and waives all rights and remedies which,
but for this Clause, might otherwise be available to it in respect of any
such representation, warranty, collateral contract or other assurance,
provided that nothing in this Clause shall limit or exclude any liability
or fraud.
17. NON-MERGER AND SURVIVORSHIP
Anything contained in this Agreement to which effect has not been given on
or prior to completion of the sale and purchase of the Business and the
Business Assets or which, by its terms is capable of taking effect after
such completion or is a continuing obligation of the relevant party, shall
remain and continue in full force and effect notwithstanding such
completion or otherwise.
18. NOTICES
Any notice, claim or demand requiring to be served under or in connection
with this Agreement shall be in writing and shall be sufficiently given or
served if delivered, in the case of TEL, to TEL, addressed to its
secretary at its registered office and, in the case of Newco, to Newco,
addressed to its secretary at its registered office. Any such notice shall
be delivered by hand or sent by fax or sent by prepaid first class post
and if delivered by hand or sent by fax shall conclusively be deemed to
have been given or served at the time of despatch and if sent by post
shall conclusively be deemed to have been received 48 hours from the time
of posting.
19. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law except in relation to real property located in a territory
outside England and Wales, in which case the governing law shall be the
law of that territory. 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.
THIS AGREEMENT was entered into on the date stated on page 1.
SCHEDULE 1
DESCRIPTION OF THE BUSINESS
Part I - Business generally
The manufacture of titanium dioxide pigments and related intermediate products
(including sulphuric acid and zirconia frit), as carried on by TEL from the
Properties but for the avoidance of doubt shall not include:-
(i) the manufacture by way of trade of any organometallic compounds
excepting that manufacture of a pigment which incorporates as an
essential feature of its composition an organometallic compound
shall not be considered to be manufacture of an organometallic
compound as such;
(ii) the manufacture (other than for subsequent transfer to Tioxide
Specialties Limited on agreed terms) by way of trade of any form of
Ultrafine Titanium Dioxide.
Part II - Materials Business
The supply from the Properties of ferric sulphate and copperas manufactured as
co-products from the titanium dioxide process. The supply from the Properties of
white and red Gypsum manufactured as co-products from the titanium dioxide
process.
SCHEDULE 2
THE PROPERTIES
- ------------------ --------------------------------------- -----------------
PART I
- ------------------ --------------------------------------- -----------------
Address Title No./Root of Title Present Use
- ------------------ --------------------------------------- -----------------
Factory at HS40627; HS98246; (conveyance dated Production of
Pyewipe Road 6.4.1946 and between RV Sutton's titanium dioxide
Grimsby Settled Estates and its Trustees (1)
and British Titan Products Company
Limited (2)
- ------------------ --------------------------------------- -----------------
Healing Cress Conveyance dated 1.6.1971 made Water
Beds between British Titan Limited (1) and extraction from
British Titan Products Company cress beds
Limited (2)
- ------------------ --------------------------------------- -----------------
*Nettleton Conveyance dated 01.06.78 made Disused quarry
Bottom Quarry between Roade Aggregates Limited (1) -landfill of
and Appollo Site Services Limited (2) neutralised
digester residue
- ------------------ --------------------------------------- -----------------
*Killingholme Conveyance dated 31.12.1981 made Drying Plant
between Glanford Borough Council (1)
and W T Scales & Son Limited (2)
- ------------------ --------------------------------------- -----------------
PART II
- ------------------ --------------------------------------- -----------------
ADDRESS TITLE NO./ROOT OF TITLE
- ------------------ --------------------------------------- -----------------
Strip of land on Lease dated 30.5.1989 made between Pipeline site
the banks of the ABP Limited (1) and Tioxide UK
River Humber Limited (2)
- ------------------ --------------------------------------- -----------------
Gypsum Store of Lease dated 4.9.1996 made between Storage of
Ownby Glentworth Bulb Co. Limited (1) and gypsum
TEL (2)
- ------------------ --------------------------------------- -----------------
* The beneficial interest in these two Properties is owned by TEL. The legal
title to the Property at Nettleton Bottom Quarry is held by Broadcount
Properties Limited (an Affiliate of ICI) and the legal title to the Property
at Killingholme is held by WT Scales Limited (an Affiliate of ICI).
SCHEDULE 3
EXCLUDED ASSETS AND EXCLUDED LIABILITIES
(Clause 1.1)
PART I
EXCLUDED ASSETS
1. All cash of TEL in bank and in hand and the benefit of all bank accounts
of TEL.
2. Amounts due to TEL arising out of any payment (including overpayment) of
Taxation and any and all other rights in respect of or relating to
Taxation.
3. Commercial and Marketing Know-How.
4. Customer Contracts and any rights thereunder.
5. The CO2 Liquefaction plant owned by ICI or any of its Affiliates currently
at the Properties.
6. Any right or action to which TEL may be entitled (whether in contract,
tort or otherwise) relating to the Excluded Liabilities and the Excluded
Assets.
7. Debtors.
8. Intellectual Property relating to the Business and any rights (contractual
or otherwise) relating to Intellectual Property of the Business.
9. Retained Business Claims.
10. The accounting records of TEL in so far as they do not relate to the
Business.
11. Subject to the provisions of Clause 10.2 any rights and benefits under the
Shared Supplier Contracts.
12. Work-in-progress and finished products owned by TEL which is located at
but has not been manufactured at any of the Properties.
13. Any assets, rights or benefits relating to the Business not listed in
Clause 2.1.
14. The shares held by TEL whilst TEL was an Affiliate of ICI in W T Scales
Limited, E&A West Limited, Maidgold Limited and Broadcount
Properties Limited.
PART II
EXCLUDED LIABILITIES
1 Taxation incurred or owing by TEL (whether or not due and payable) in
respect of the Business up to the Transfer Time.
2 Liabilities relating to Customer Contracts.
3 The following matters:-
Stiller Transport claim
Personal injury claim (Mr R Hartley)
SCHEDULE 4
ALLOCATION OF CONSIDERATION TO BUSINESS ASSETS PURCHASED
(Clause 3.3)
Business Asset Allocation of the Final Consideration (US$)
A. Working Capital (1)
B. Materials Commercial and
Marketing Knowhow 1,000,000
C. Land (2)
D. Buildings (2)
E. Plant and Equipment (3)
F. Other Business Assets Nil
------------------
G. Total Consideration Agreed Newco Value
------------------
(1) Actual Net Working Capital (as defined in Schedule 14) plus agreed uplift
to Fair Market Value (US$215,000)
(2) Net Book Value of Land and Buildings as at the Transfer Time in TEL's
A-Forms
(3) G - (A+B+C+D+F)
SCHEDULE 5
PROVISIONS RELATING TO THE PROPERTIES
(Clause 2.3)
PART A
Provisions relating to the Properties
1. Subject to Paragraph 6 below, TEL shall on the date hereof complete an
assurance to Newco of each of the Freehold Properties and the Leasehold
Properties in a form previously approved by the parties (each of which
shall be deemed for the purposes of this Agreement to be an agreement in
Agreed Terms) and shall on the date hereof deliver (or procure the
delivery of) each such assurance or disposition to Newco and shall also
deliver (or procure the delivery of) possession of each of the Properties
and beneficial ownership of each of the Properties shall pass on
completion of any such assurance or disposition.
2. On the date hereof TEL shall either deliver (or procure the delivery of)
to Newco or hold to Newco's order the title deeds to the Properties.
3. With effect on and from the date hereof until the Transfer Time, TEL shall
procure that the interest of Newco is noted on all policies of insurance
with respect to the Properties.
4. In relation to all of the Properties, TEL shall be entitled to remain in
occupation, as licensee only, until but not after the Transfer Time and
Newco shall make no charge in respect of the grant of any such licence.
5. TEL shall co-operate with Newco to facilitate registration of title to any
of the Properties once vested in Newco and, without prejudice to the
generality of the foregoing, shall assist in depositing any relevant land
or other certificates or documents at H M Land Registry or other relevant
registry and in replying to any requisitions raised by H M Land Registry
or other relevant registry.
6. Landlords' Consents for Leasehold Properties
6.1 Failure to Obtain Consents
6.1.1 Where a landlord's consent is required and has not been obtained by
the date hereof in respect of any of the Properties, such Property
will not, unless Newco so elects (an "ELECTED PROPERTY"), be
transferred on the date hereof but will be held in trust for Newco
absolutely from the date hereof until such landlord's consent is
obtained or Newco requires the transfer or assignment of such
Property to it in accordance with paragraph 6.3. TEL shall account
to and be indemnified by Newco accordingly and shall deliver to
Newco forthwith upon receipt any notice or other document concerning
or relating to such Property or, upon request from Newco, a power of
attorney to enable Newco to deal with such Property.
6.1.2 TEL will co-operate in any reasonable arrangements proposed by Newco
designed to provide for Newco the benefits of any such Property.
6.2 Subsequent Consents
After the date hereof, TEL shall continue to use all reasonable endeavours
(assisted if necessary by Newco) to obtain any outstanding landlord's
consent at Newco's cost in respect of any Property (which is not an
Elected Property) and keep Newco informed of progress in obtaining such
consents.
6.3 Notice to Transfer or Assign
Following the date hereof, Newco may serve notice on TEL at any time after
the relevant consent is obtained requiring TEL to execute and deliver any
transfer or assignment to Newco of any such Property which is not an
Elected Property and TEL will arrange for the execution and delivery of
such transfer or assignment (together with the relative documents of
title) to Newco not later than five working days after the receipt either
of such notice or of the engrossment of such transfer or assignment
whichever is the later.
6.4 Occupation by Purchaser
Newco may at any time after the Transfer Time go into or remain in
occupation of any Leasehold Property for which necessary consent has not
been obtained, as licensee of TEL and subject to the following
provisions:-
(a) Newco shall pay, or indemnify TEL against, all outgoings and
expenses relating thereto arising after Newco's occupation begins;
(b) Newco shall be entitled to any income thereof arising after Newco's
occupation begins;
(c) Newco shall indemnify TEL against all losses, liabilities, Costs,
actions, proceedings, claims and demands arising from the possession
or occupation of such Property by Newco and in particular (but
without limitation) will observe and perform all the covenants and
conditions contained or referred to in the leases relating thereto;
and
(d) in the event that the landlord threatens to forfeit the lease
relating to any Leasehold Property or forfeits such lease Newco
shall forthwith vacate such Leasehold Property.
6.5 Terms of purchase
The Properties are sold together with all easements, rights and licences
appurtenant thereto and all buildings and structures thereon but subject
to all easements, rentcharges, covenants, leases, tenancies, licences,
agreements and other matters affecting the same and the Leasehold
Properties are sold subject also to the rents, covenants and conditions
reserved by or contained in the leases under which the same are held.
SCHEDULE 6
PROVISIONS RELATING TO THE CONTRACTS
(Clause 10.4)
1. Newco shall with effect from the Transfer Time carry out and complete for
its own account the Supplier Contracts and the Materials Customer
Contracts to the extent that the same have not been previously performed
(whether due for performance prior to, on or after the Transfer Time).
Newco shall indemnify TEL against all Costs, claims and liabilities
arising prior to, on or after the Transfer Time by reason of or in
connection with the non-performance or the defective or negligent
performance (whether by TEL or Newco) of the Supplier Contracts or the
Materials Customer Contracts.
2. Newco shall be responsible for and shall indemnify TEL against any claim
from customers for repair, replacement, damage or otherwise duly made
before or after the Transfer Time under any guarantees or warranties given
expressly or by implication of law by TEL in respect of any goods sold or
service supplied by TEL prior to the Transfer Time in the Business.
3. To the extent that any payment is made to TEL in respect of Materials
Customer Contracts after the Transfer Time, TEL shall receive the same as
trustee for Newco absolutely, shall record such payment separately in its
books and shall account to Newco for the same as soon as reasonably
practical after receipt. In determining the liability under this paragraph
of TEL to account to Newco for amounts received, regard shall be had to
any liability of TEL to account to HM Customs and Excise for any United
Kingdom VAT in respect of the supply of goods and/or services (made under
any Materials Customer Contract) to which such amounts relate and the
liability of TEL under this paragraph shall be reduced accordingly.
4. In determining the liability of Newco to reimburse TEL for any amounts
paid by TEL to suppliers under Supplier Contracts, regard shall be had to
the extent to which TEL has been or is able to recover payment of input
tax for United Kingdom VAT purposes in respect of supplies of goods and/or
services (under a Supplier Contract) made to TEL to which such amounts
relate and the liability of Newco under this Agreement shall be reduced
accordingly.
5. If TEL has prior to the Transfer Time sub-contracted the performance of
any contracts for the supply of goods or other products to any person,
Newco shall (unless TEL would have been entitled under the contract to
reject the same and Newco determines to reject the same), on behalf of the
relevant customer seek or accept delivery from such person of the goods or
other products in respect of which such contract was made and shall make
the same available for collection by such customer.
SCHEDULE 7
PROVISIONS RELATING TO THIRD PARTY CONSENTS
(Clause 5.4)
1. Where any Business Asset, including any Materials Business Claim,
Materials Business Debtor, Materials Customer Contract, Supplier Contract
and any property or asset leased by TEL relating exclusively to the
Business (but excluding the Leasehold Properties) requires the consent or
agreement of any third party for the same to be assigned or novated to or,
in the case of any leased property, to be sub-leased to, Newco, (a
"RELEVANT BUSINESS ASSET") or any Newco Liability requires the consent or
agreement of any third party for the same to be performed by Newco, and
any such consent has not been obtained prior to the Transfer Time, the
provisions of this Schedule shall apply.
2. In respect of any Relevant Business Asset, this Agreement shall not
constitute an assignment or a purported assignment thereof, or a sub-lease
or a purported sub-lease thereof, to Newco if any such assignment or
sub-lease would constitute a breach of any agreement, contract or
undertaking (a "Relevant Agreement") of TEL with or to the third party
from whom any such consent as is referred to in paragraph 1 is required to
be obtained, pending such consent being obtained.
3. TEL and Newco shall jointly use all reasonable endeavours and render to
each other all reasonable assistance (not being financial) to obtain the
consent of such third party to an assignment, or novation (whichever is
available) or (if neither an assignment or novation is available) a
sub-lease of the Relevant Business Asset. During the period from and after
the Transfer Time until any required consent shall be obtained and the
Relevant Business Asset transferred, or assigned or novated to Newco, any
such Relevant Business Asset shall be held in trust by TEL for Newco
absolutely with effect from the Transfer Time until the same shall have
been delivered and/or formally transferred, assigned or novated to Newco
and TEL shall grant to Newco such powers of attorney as Newco may
reasonably require to enable Newco to vest in itself or otherwise to deal
with such Relevant Business Assets and shall deliver to Newco forthwith
upon receipt any notice or other document containing or relating to such
Relevant Business Assets.
4. This Agreement shall not constitute an assumption or a purported
assumption of any Newco Liability in respect of which performance thereof
by Newco would require the consent or agreement of any third party if such
assumption or purported assumption would constitute a breach of any
Relevant Agreement pursuant to which the obligation arises. Newco shall,
to the extent that the same would not result in any breach of any such
Relevant Agreement perform as TEL's sub-contractor all the obligations of
TEL thereunder and indemnify TEL against all liabilities (and all Costs
reasonably incurred by TEL) arising in connection therewith.
5. Where the performance by Newco of any Relevant Agreement as TEL's
sub-contractor would result in a breach of any agreement, contract or
undertaking with a third party (whether under the Relevant Agreement in
respect of which the obligation arises or under any other agreement with
any other person relevant to the performance of such Relevant Agreement)
Newco shall not perform such obligations as TEL's sub-contractor but TEL
shall continue to perform such obligations on behalf of and at the risk of
Newco and Newco agrees to indemnify TEL against all liabilities (and all
Costs reasonably incurred by TEL) arising in connection therewith.
6. TEL agrees and acknowledges that, insofar as any Relevant Business Asset
is expressed in this Schedule to be held on trust by TEL for Newco
absolutely, any monies received by TEL in respect thereof shall be
accounted for by TEL to Newco and any profit arising out of the conduct of
the Business utilising any such Business Asset shall accrue to Newco and
TEL agrees to pay forthwith to Newco any such amounts, less in each case
an amount equal to the relevant Costs which TEL is entitled to recover and
deduct from any such payment.
7. Newco expressly acknowledges that insofar as any Newco Liability has not
been effectively assumed by Newco and, insofar as the same relates to the
performance of any obligations under any Relevant Agreement and such
obligations are, pursuant to the provisions of this Schedule, to be
performed by Newco as TEL's sub-contractor or by TEL on behalf of Newco,
such performance is at the risk and cost of Newco and any loss and costs
in relation thereto shall be offset against any amounts to be accounted
for to Newco pursuant to paragraph 6. To the extent that any loss or Cost
exceeds any such amount to be accounted for to Newco pursuant to paragraph
6, Newco shall indemnify TEL against or reimburse TEL for any payment in
respect thereof.
8. Insofar as the provisions of this Schedule provide for TEL to perform any
Relevant Agreement or otherwise assume any obligation, Newco agrees to
lease or licence (so far as Newco is able to grant the same) to TEL, for
the period during which any such obligation exists as provided in this
Schedule, any Business Assets acquired by Newco pursuant to this Agreement
and necessary for the purposes of such performance. The consideration for
any such lease or licence shall be TEL's agreement to perform any
obligations expressed to be performed by it in this Schedule in favour of
and for the account of Newco for any monies or profits as described in
paragraph 6 above and so that TEL shall not be required to pay any
additional amount in respect thereof.
9. Newco agrees to make available to TEL the services of any Transferring
Employees or any Offer Employees to enable TEL to perform any obligations
expressed to be performed by it in this Schedule: PROVIDED that any such
employees shall continue to be employees of Newco and Newco shall perform
and observe all the obligations of the employer under or in connection
with the contracts of employment of such persons (including without
limitation holiday entitlement and pay) and Newco shall indemnify TEL
against or reimburse TEL for any payment required to be made or made by
TEL to any such Transferring Employees or Offer Employees.
10. Upon any such consent as is referred to in paragraph 1 being obtained, as
a result of which any assignment, sub-lease or any other transfer of the
benefit of any Relevant Business Asset to Newco or the assumption by Newco
of any Newco Liability would not constitute a breach of any Relevant
Agreement of TEL with or to the third party from whom any such consent is
obtained, such Relevant Business Asset shall pursuant to this paragraph be
assigned, sub-leased or the benefit thereof otherwise vested in Newco, or
Newco shall assume the Newco Liability, as the case may be on the terms of
this Agreement and:-
10.1 any lease or licence for any Business Assets referred to in paragraph 8
shall thereupon automatically terminate; and
10.2 insofar as the services of any Transferring Employees or Offer Employees
have been made available to TEL as provided in paragraph 9 in connection
with such Relevant Business Asset, such services shall thereupon
automatically cease to be made available in any case, without Costs to
TEL, and the provisions of this Schedule shall cease to apply with respect
thereto.
11. Without prejudice to the generality of the foregoing, TEL shall, without
incurring any Cost, take such actions as Newco may reasonably request to
procure that suppliers under the Supplier Contracts and customers under
the Materials Customer Contracts unconditionally consent to the
substitution of Newco as a party thereto with effect from the Transfer
Time but, in any case where such consent is refused or otherwise not
obtained, prior thereto:-
11.1 TEL shall receive any goods delivered to it by the supplier as agent for
Newco and at Newco's cost, taking reasonable care, shall deliver such
goods to such address of Newco as Newco may specify; and
11.2 Newco shall put TEL in funds to enable TEL to pay in due time the supplier
in respect thereof.
12. If, on or before 6 weeks after the Transfer Time, or such later date as
TEL and Newco may agree, any consent or agreement of any third party
referred to in paragraph 1 has not been obtained or if, at any time, the
benefit of any Relevant Business Asset cannot be vested in Newco or
otherwise dealt with by Newco, TEL and Newco shall consider what action,
if any, is to be taken in relation to the Relevant Business Asset.
13. TEL shall not be obliged to take any action pursuant to this Schedule 7 if
such action could not be lawfully undertaken by TEL, or would result in
any breach of any agreement to which TEL is a party which breach would
entitle the other party thereto to terminate such agreement or would
result in TEL incurring any Costs of a material amount against which Newco
has not agreed to indemnify it pursuant to this Agreement or otherwise. In
so far as, pursuant to this Agreement, TEL is a trustee of, or acts as
agent for Newco, TEL shall act with such care and skill as might
reasonably have been expected of TEL in the conduct of the Business
assuming the sale and purchase of the Business and the Business Assets
pursuant to this Agreement had not occurred but, subject thereto, shall
not have any duties or responsibility to Newco in respect of so acting or
have any liability to Newco except to the extent that it is guilty of
wilful default or of acting otherwise than with the care and skill
referred to in this paragraph.
SCHEDULE 8
NOTIFICATION, ASSISTANCE AND PROCEEDINGS
(Clauses 6, 7 and 8)
1. NOTIFICATION
TEL shall notify Newco and Newco shall notify TEL, in either case if the
notifying party reasonably considers the subject matter thereof to
represent a potentially significant right or liability of the other party,
promptly of receipt of any information, in whatever form, relating to any
Debtor, Materials Business Debtor, Retained Business Claim, Materials
Business Claim, Newco Liability or TEL Liability and shall supply copies
of all such information so received on request. Either party may enquire
of the other party if it has received any information referred to in this
paragraph and may request further details in respect thereof including
copies of any materials in respect thereof. Such notification will
describe the information received with sufficient particularity to enable
the recipient to assess its significance in relation to such Debtor,
Materials Business Debtor, Retained Business Claim, Materials Business
Claim, Newco Liability or TEL Liability.
2. ASSISTANCE
2.1 TEL will promptly give or procure that there is given all such information
and assistance as Newco shall reasonably require (including access to any
books, correspondence or other documents or records and the right to copy
the same and to any witnesses or potential witnesses or officials of TEL)
for the purpose of:-
2.1.1 recovering any amount due in respect of, or compromising any
Materials Business Debtor or Materials Business Claim or avoiding,
disputing, resisting, appealing, compromising, or contesting any
related counter-claim; or
2.1.2 avoiding, disputing, resisting, appealing, compromising, or
contesting any Newco Liability.
2.2 Newco shall indemnify the relevant member of TEL's Group against all Costs
and liabilities which it may incur in complying with paragraph 2.1.
2.3 Newco will promptly give or procure that there is given all such
information and assistance as TEL shall reasonably require (including
access to any books, correspondence or other documents or records and the
right to copy the same and to any witnesses or potential witnesses or
officials of Newco) for the purpose of:-
2.3.1 recovering any amount due in respect of, or compromising any Debtor
or Retained Business Claim or avoiding, disputing, resisting,
appealing, compromising, or contesting any related counter-claim; or
2.3.2 avoiding, disputing, resisting, appealing, compromising, or
contesting any TEL Liability.
2.4 TEL shall indemnify Newco against all Costs and liabilities that it may
incur in complying with paragraph 2.3.
2.5 Each of the parties agrees to keep the other informed (to the extent that
party reasonably believes the other party has an interest therein which is
not insignificant or as reasonably requested by the other party) as to the
progress of any Materials Business Claim or Retained Business Claim or of
any claim, demand or action in respect of any Newco Liability or TEL
Liability.
3. CONDUCT OF DISPUTES
3.1 This paragraph applies as to the conduct of any claim made by, or
proceedings instituted or threatened by, any third party, whether before
or after the date hereof (including any counter-claim) ("PROCEEDINGS") in
relation to any Debtor, Materials Business Debtor, Retained Business
Claim, Materials Business Claim, Newco Liability or TEL Liability by the
party (the "CONDUCTING PARTY") specified by this Agreement as being
entitled to conduct such Proceedings. In any case where this Agreement
does not specify which of the parties is to have the conduct of
Proceedings in any particular case, including in circumstances where the
potential responsibility for any liability the subject of any Proceedings
has not been allocated between the parties, the party against whom the
claim has been made, or proceedings instituted or threatened, shall have
conduct of the Proceedings, or, if the claim has been made, or proceedings
instituted or threatened, against both parties, TEL shall have the conduct
of the Proceedings and, in either case, accordingly be the Conducting
Party in respect thereof for the purposes hereof.
3.2 The Conducting Party shall inform the party not having conduct of the
Proceedings (the "OTHER PARTY") promptly of all developments regarding the
Proceedings, shall consult it and have reasonable regard to its interests
before taking any significant step in relation to the Proceedings and
shall not settle the Proceedings without the consent of the Other Party,
such consent not to be unreasonably withheld or delayed. The Conducting
Party shall conduct any Proceedings with reasonable diligence and
competence. The Other Party shall render all assistance reasonably
required in connection with the Proceedings by the Conducting Party, and
shall be entitled to payment in respect of that assistance only in the
event that the assistance it renders is significantly greater in extent
than that provided by the Conducting Party.
3.3 The Conducting Party may instruct legal advisers reasonably satisfactory
to the Other Party to represent any member of the Other Party (or any
member of the Other Party's Group in the case of TEL which is a party to
the Proceedings: PROVIDED that in any Proceedings where the named parties
to any such Proceedings (including any added parties) include both the
Conducting Party (or any member of its Group in the case of TEL) and the
Other Party (or any member of its Group in the case of TEL) and
representation of both parties by the same legal advisers would not, in
the opinion of the legal advisers appointed by the Conducting Party, be
proper due to actual or potential conflict of interest between them, the
Conducting Party shall instruct separate legal advisers reasonably
satisfactory to the Other Party to represent the Other Party (and members
of its Group) in such Proceedings and the Conducting Party shall pay the
fees and disbursements of such legal advisers.
SCHEDULE 9
SUPPLIER CONTRACTS OF A MATERIAL NATURE
(Clause 1.1)
[Details to follow]
SCHEDULE 10
DOCUMENTS IN THE AGREED TERMS
(Clause 1.1)
Newco Patent and Know-how Licence
SCHEDULE 11
EMPLOYEES AND OTHER PERSONNEL
(Clause 9)
1. Newco undertakes to TEL that it will, insofar as it has not done so prior
to the date hereof:-
1.1 deliver to each of the Transferring Employees, a letter confirming that
the employee will transfer employment to Newco by reason of the transfer
of the Business; and
1.2 deliver to each Offer Employee, a letter offering employment with Newco
with effect from the Transfer Time on their terms and conditions of
employment immediately prior to the Transfer Time (other than as to
employer).
2. The parties acknowledge and agree that the sale of the Business from TEL
to Newco is a "relevant transfer" within the meaning of the Transfer
Regulations.
3. The parties further acknowledge and agree that pursuant to the Transfer
Regulations, the contract of employment of each of the Transferring
Employees (save insofar as such contract relates to/includes any
occupational pension scheme as defined for the purposes of Regulation 7 of
the Transfer Regulations) shall be transferred to Newco with effect from
the Transfer Time which shall be the "time of transfer" under the Transfer
Regulations.
4. As from the Transfer Time, Newco shall perform and observe all the
obligations of the employer under or in connection with the contracts of
employment of the Transferring Employees and the Offer Employees
(including without limitation accrued holiday pay, holiday entitlement and
pay) and shall indemnify TEL and keep TEL indemnified, against each and
every action, proceeding, liability, Costs, claim, or loss or demand
arising from Newco's failure to perform and observe the said obligations.
5. Notwithstanding any other provision in this Agreement, Newco shall
indemnify TEL and keep TEL indemnified against all actions, proceedings,
liabilities, Costs, claims, losses, and demands made by or arising from:-
5.1 any Transferring Employees and the Offer Employees in respect of
employment on or prior to the Transfer Time;
5.2 the dismissal (whether express, constructive or otherwise) of any employee
in connection with the transfer of the Business to Newco;
5.3 any change in the working conditions of the Transferring Employees or
Offer Employees or any of them occurring after the Transfer Time;
5.4 the change of employer occurring by virtue of the Transfer Regulations
and/or this Agreement;
5.5 the employment by Newco on or after the Transfer Time of any of the
Transferring Employees or Offer Employees other than on terms (including
terms relating to any occupational pension scheme) at least as good as
those enjoyed immediately prior to the Transfer Time or the termination of
the employment of any of them on or after the Transfer Time;
5.6 any claim by any Transferring Employee or Offer Employee (whether in
contract or in tort or under statute (including the Treaty of Rome and any
directives made under the authority of that Treaty)) for any remedy
including, without limitation, in respect of unfair dismissal, redundancy,
equal pay, sex, race or disability discrimination; or
5.7 any claim by any employee representatives, trade union or affected
employee that there has been a failure to comply with any requirement of
Regulation 10 of the Transfer Regulations, any failure to inform and/or
consult employees imposed by any collective agreement, European Works
Council Agreement or other employee representative agreement.
6. Newco shall, as from the Transfer Time, perform and observe all the
obligations of TEL as employer, or host (where the employee has been
seconded to TEL but is not employed by TEL) under or in connection with:-
6.1 the contracts of employment of the Offer Employees; or
6.2 any contract relating to their secondment to TEL; or
6.3 any undertaking (whether legally binding or not) to employ any such person
after a period of absence (whether by reason of maternity, career break,
education, training or otherwise) and Newco shall indemnify TEL and keep
TEL indemnified against each and every action, proceeding, liability,
Costs, claim, loss, and demands arising from Newco's failure to perform
and observe such obligations or undertakings.
In accordance with its obligations under the Transfer Regulations, Newco
shall provide TEL in writing with such information and at such time as
will enable TEL to carry out its duties under Regulation 10 of the
Transfer Regulations concerning measures envisaged by Newco in relation to
the Transferring Employees or the Offer Employees.
7. Newco shall be entitled at its own expense in its absolute discretion to
take such action as Newco shall deem necessary or desirable to prosecute,
settle or compromise any claims of, or proceedings instituted by any
Transferring Employee or any other person, whether before or after the
date hereof, in respect of the matters expressed in this Schedule to be
obligations of Newco or in respect of which Newco has agreed to indemnify
TEL as provided herein and shall have the conduct of any related
proceedings, negotiations or appeals in accordance with Schedule 8.
8. Any reference in this Schedule to contract of employment, employer or
employee shall, unless the context otherwise requires, include contract of
training and contract of apprenticeship, trainer, and trainee and
apprentice, respectively.
9. Newco agrees that for a period of four years from the Transfer Time:
9.1 the Transferring Employees and Offer Employees will receive and enjoy
contractual remuneration and benefits (including retirement benefits)
which, judged objectively are no less favourable overall than their
contractual remuneration and benefits at the Transfer Time;
9.2 it will not make any unilateral material change to the contractual terms
and conditions of employment of the Transferring Employees and the Offer
Employees, (which includes those terms contained in a letter to employees
dated 19 June 1991 from TEL) without prior consultation where required by
any local laws or agreements with recognised trade unions, appropriate
employee representatives or the Transferring Employees and Offer
Employees.
SCHEDULE 12
SHARED SUPPLIER CONTRACTS
Contract for the supply of ilmenite between (1) Tioxide Group plc as agent for
Tioxide UK Ltd, Tioxide Australia Ltd and Tioxide Espana SA (2) Westralian
Sands.
SCHEDULE 13
TRANSFERRING EMPLOYEES
[Details to follow]
OFFER EMPLOYEES
[Details to follow of those employees currently located at Billingham site in
connection with the Materials Business who are to relocate to Grimsby.]
SCHEDULE 14
ESTIMATED CONSIDERATION, FINAL CONSIDERATION AND FINAL
COMPLETION STATEMENT
1. INTERPRETATION
1.1 In this Schedule:-
"A FORM" means in relation to Newco, a financial
report prepared in the format set forth in
Annex 2 and in accordance with the
accounting policies, practices and other
requirements set out or referred to in ICI's
Controller's Manual and prepared as at the
Newco Completion Date on a basis consistent
with that adopted by TEL for the preparation
of A Forms prior to the Transfer Time;
"ACTUAL NET WORKING means the Net Working Capital as at the Newco
CAPITAL" Completion Date as determined under
paragraphs 1.6 to 1.8 below;
"ICI'S AUDITORS" means KPMG Audit Plc of 8 Salisbury Square,
London, EC4Y 8BB;
"ICI'S CONTROLLER'S means the control manuals in effect as at 14
MANUALS" July 1997 and which are compiled in accordance
with UK GAAP used for accounting purposes
within the ICI Group and which are recorded
on disk form as attached and identified as
Annex 3 to this Agreement (and which
consists of an introduction to the Group
Controller's Manual, Bulletin Board,
Accounting Language, Bulletin Board
Reporting, Accounting Definitions and
Conventions, Accounting Policies and
Procedures, Controls, Reporting);
"INTEREST RATE" means LIBOR plus 25 basis points;
"NET WORKING CAPITAL" means:-
(a) Operating Debtors; plus
(b) Stocks; less
(c) Operating Creditors less than 1 year;
For the purposes of (b) the Stocks shall be valued
in accordance with the document headed
"Stocktaking and Valuation Principles" in the
Agreed Terms marked "NWC-S"
"NEWCO'S AUDITORS" means [ ];
"NEWCO COMPLETION DATE" means immediately after completion of this
Agreement;
"OPERATING CREDITORS means, in relation to Newco, the absolute
LESS THAN 1 YEAR" value of the amount reported as
creditors of Newco which are external to
Newco as defined by reference to
"operating creditors less than 1
year" on line 70020 of the A Form for Newco as
described in ICI's Controller's
Manuals;
"OPERATING DEBTORS" means, in relation to Newco, debtors of
Newco which are external to Newco as defined by
reference to "operating debtors" on line 70010 on
the A Form for Newco as described in ICI's
Controller's Manuals;
"STOCKS" means the stock of fuels, raw materials, raw
materials, ingredients, packaging, office
and laboratory supplies, revenue engineering
spares, consumable stores, work in progress
and finished goods owned by Newco as
determined on line 70000 of the A Form for
Newco;
"UK GAAP" means generally accepted accounting
principles in the United Kingdom.
1.2 References to the absolute value of a number X shall be construed as
follows:
1.2.1 if X is greater than or equal to zero, the absolute value of X shall
be equal to X; and
1.2.2 if X is less than zero, the absolute value of X shall be X
multiplied by -1
so that, for the purposes of illustration, the absolute value of 1 is
equal to 1 and the absolute value of -1 is equal to 1.
1.3 The definitions used in this Schedule relate only to this Schedule and,
unless expressly stated to the contrary, shall have no bearing on the
interpretation of any other agreement entered into by TEL, Newco and their
respective Affiliates.
1.4 All payments and values under this Schedule shall be in US Dollars and
where an amount is not itself calculated in US Dollars it shall be
converted into US Dollars at the mid market closing exchange rate in
London for the currency in which that amount is expressed into US Dollars
as published in the London Edition of the Financial Times first published
thereafter, or where the exchange rate is not published in the London
Edition of The Financial Times, at the exchange rate quoted by Citibank
N.A. as at the close of business in London for the currency in which that
amount is expressed on the Newco Completion Date in relation to amounts in
the Final Completion Statement.
1.5 CALCULATION OF THE FINAL CONSIDERATION
In relation to this Agreement:
1.5.1 the Final Consideration for the Business Assets ("THE FINAL
CONSIDERATION") shall be determined by the following formula:-
Final Consideration = US$ 118,410,000 minus [U.S. $ EQUIVALENT OF
GBP3,950,000 (REPRESENTING THE NET WORKING CAPITAL AS AT 28 FEBRUARY
1998) CONVERTED INTO U.S. $ IN ACCORDANCE WITH PARAGRAPH 1.4 OF THIS
SCHEDULE] plus Actual Net Working Capital.
1.5.2 After the Newco Completion Date TEL shall prepare a completion
statement as at the Newco Completion Date which shall contain a
statement of the Final Consideration in accordance with paragraph
1.5.1 above and a schedule of the Actual Net Working Capital based
on TEL's calculations (the "FINAL COMPLETION STATEMENT"). The Final
Completion Statement shall be prepared using ICI's normal accounting
policies and practices as set out or referred to in ICI's
Controller's Manuals and prepared as at the Newco Completion Date on
a basis consistent with that adopted by TEL for the preparation of A
Forms prior to the Hivedown and shall be submitted by TEL to ICI's
Auditors for review.
1.6 Within 50 days of the Newco Completion Date, TEL shall issue the Final
Completion Statement to Newco together with a copy of a report by ICI's
Auditors addressed to TEL and substantially in the form set out in Annex 4
to the effect that the Final Completion Statement has been prepared in
accordance with this Schedule. Although it is TEL's responsibility to
prepare the Final Completion Statement, TEL will require the assistance of
the employees of Newco and its Affiliates to fulfil this responsibility
and Newco shall ensure such assistance is provided promptly and at no
charge. Immediately after delivery of the Final Completion Statement,
Newco's Auditors shall have the right to review the Final Completion
Statement and ICI's Auditors working papers relating to the Final
Completion Statement. Within 30 days of delivery to Newco of the Final
Completion Statement and ICI's Auditors report (each of which shall be in
English) to Newco's designated location, Newco shall give notice to TEL in
writing of any item or items in the Final Completion Statement which it
wishes to dispute and the basis on which it disputes that item or those
items and the changes to the Final Completion Statement which Newco
believes should be made and the parties shall use their reasonable
endeavours to resolve that dispute. Any items in respect of which Newco
does not give such notice will be deemed to have been accepted by Newco.
Any written resolution reached by the parties on any disputed item shall
be final, conclusive and binding on the parties.
1.7 If the parties agree the Final Completion Statement then any adjusting
payments referred to in paragraph 1.9 below shall be made by the paying
party within 7 days of being agreed by the parties.
1.8 If the parties fail to agree on any element of the Final Completion
Statement within 24 days after Newco has given notice in writing to TEL of
any item(s) in the Final Completion Statement which Newco wishes to
dispute (in accordance with paragraph 1.6 above) then any agreed amounts
shall be paid in accordance with the preceding paragraph and any dispute
may be referred by either party for final determination in accordance with
Clause 14 of this Agreement and any amounts thereby found to be due shall
be paid by the relevant party not later than 7 days after such final
determination.
1.9 When the Final Consideration is agreed or otherwise determined in
accordance with the three preceding paragraphs the following adjusting
payments shall be made:-
1.9.1 an amount equal to the difference between (i) the Estimated
Consideration (namely US$ 118,410,000) and (ii) the Final
Consideration; and
1.9.2 interest (compounded monthly) at the Interest Rate on the amount in
paragraph 1.9.1 above from the Newco Completion Date to the date of
payment, calculated on a day to day basis;
which shall be paid by TEL to Newco (or vice versa, if the Final
Consideration exceeds the Estimated Consideration).
1.10 In this Schedule, references to lines of A-Forms have been chosen by TEL
and are believed in good faith to correspond to the matters to which they
refer. If, however, that reference when compared to the matter it
describes or refers to is incorrect then there shall be substituted for
that line reference another line reference (if any) which corresponds to
the matter described or referred to.
SIGNED by [ ]
for and on behalf of
TIOXIDE EUROPE LIMITED in the presence of:
SIGNED by [ ]
for and on behalf of
NEWCO LIMITED
in the presence of:
EXHIBIT 10.4
DATED 1998
TIOXIDE EUROPE LIMITED
and
N L INDUSTRIES, INC.
SHARE SALE AND PURCHASE AGREEMENT
OF
NEWCO
THIS AGREEMENT is made on 1998 BETWEEN:
(1) TIOXIDE EUROPE LIMITED (registered number 832447), a company
incorporated under the laws of England, whose registered office is
at 137-143 Hammersmith Road, London W14 0QL (the "SELLER");
(2) N L INDUSTRIES, INC., a corporation incorporated under the laws of
the State of New Jersey, whose principal place of business is at
16825 Northchase Drive, Suite 1200, Houston, Texas 77060, USA (the
"PURCHASER").
WHEREAS:
(A) [ ] Limited is a company registered in England, short particulars
of which are set out in Schedule 1 (the "COMPANY").
(B) The Seller holds shares in the Company (the "SALE SHARES")
particulars of which are contained in Schedule 1.
(C) The Seller has agreed to sell and the Purchaser has agreed to
purchase the Sale Shares on the terms set out in this agreement.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 In this agreement:
"ACT" means the Companies Act 1985;
"ACTUAL NET WORKING CAPITAL" has the meaning ascribed thereto in
Schedule 4 of the Hivedown Agreement;
"AFFILIATES" means with respect to a specified entity, an entity that
directly or indirectly, through one or more intermediaries, Controls,
or is Controlled by, or is under common Control with the entity
specified, provided that, without limiting the generality of the
foregoing, in relation to the Seller and its subsidiary companies, the
term "Affiliates" shall not include any entity in which a party has a
fifty per cent. or less ownership interest. For the purposes hereof,
"CONTROL" means possession, directly or indirectly, of the power to
direct or cause the direction of the management and operating policies
of the entity in respect of which the determination is being made,
through the ownership of voting securities, contract, voting trust or
otherwise but any reference in this agreement to an Affiliate of the
Seller or the Purchaser shall exclude the Company, and references to
the Seller's Group or the Purchaser's Group shall be construed
accordingly;
"AGREED FORM" means, in relation to any document, the form of that
document which has been initialled for the purpose of identification
by the parties to this agreement;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are generally open for normal business in both London and New
York;
"CAP" has the meaning set forth in sub-Clause 5.6;
"CLAIM" means any claim (other than in respect of Taxation) by the
Purchaser for breach of the Warranties or under the indemnities or
under any other provision of this agreement or under any of the
Implementation Agreements for which the Seller accepts liability or
shall be adjudicated as being liable;
"COMPLETION" means completion of the sale and purchase of the Sale
Shares in accordance with Clause 7 which shall occur immediately
following signature and exchange of this agreement;
"COMPLETION DATE" means immediately after completion of the Hivedown
Agreement;
"COMPUTER SYSTEMS" means all computer hardware, software, micro
processors and firmware which in each case are used in the Grimsby
Business;
"DEFAULT INTEREST" means LIBOR plus 200 basis points compounded
monthly;
"ENVIRONMENT" has the meaning given in Schedule 6;
"ENVIRONMENTAL AUTHORISATIONS" means all or any permits, consents,
licences, approvals and other authorisations required under
Environmental Laws and all terms and conditions thereof required under
any Environmental Law for the operation of the business of the
Company;
"ENVIRONMENTAL LAWS" has the meaning given in Schedule 6;
"ESTIMATED HIVEDOWN CONSIDERATION" has the meaning ascribed to
Estimated Consideration in the Hivedown Agreement;
"ESTIMATED NEWCO HIVEDOWN DEBT" has the meaning ascribed thereto in
sub-Clause 3.1.1 of the Hivedown Agreement;
"EXCLUDED ASSETS" means the carbon dioxide liquefaction plant owned by
ICI or its relevant Affiliate(s) and currently at the Grimsby Site;
"FINAL HIVEDOWN CONSIDERATION" has the meaning ascribed to Final
Consideration in the Hivedown Agreement;
"GRIMSBY ASSETS" has the meaning ascribed to Business Assets in the
Hivedown Agreement but excluding the Excluded Assets;
"GRIMSBY BUSINESS" means the business purchased by the Company
pursuant to the Hivedown Agreement;
"GRIMSBY BUSINESS DATA" has the meaning ascribed to Business Data in
the Hivedown Agreement;
"GRIMSBY CONTRACTS" has the meaning ascribed to Contracts in the
Hivedown Agreement;
"GRIMSBY DISCLOSURE LETTER" means the letter of the same date as this
agreement from the Seller to the Purchaser;
"GRIMSBY EMPLOYEES" has the meaning ascribed to Transferring Employees
and Offer Employees in the Hivedown Agreement;
"GRIMSBY FINANCIAL INFORMATION" means the financial information
attached as Schedule 8;
"GRIMSBY PROPERTIES" has the meaning ascribed to Properties in the
Hivedown Agreement;
"GRIMSBY SITE" means the property short particulars of which are set
out in the table contained in Schedule 2 Part I of the Hivedown
Agreement;
"GRIMSBY STOCKS" has the meaning ascribed to Stock-in-Trade in the
Hivedown Agreement;
"HIVEDOWN AGREEMENT" means the agreement of even date between the
Seller and the Company relating to the sale and purchase of the
Grimsby Business;
"ICI" means Imperial Chemical Industries PLC;
"ICI'S CONTROLLER'S MANUALS" means the control manuals in existence at
14 July 1997 and which are compiled in accordance with UK GAAP used
for accounting purposes within the ICI Group, copies of which have
been received by the Purchaser (and which consist of an introduction
to the Group Controller's Manual Bulletin Board of Accounting
Language, Bulletin Board Reporting, Accounting Definitions and
Conventions, Accounting Policies and Procedures, Controls, Reporting);
"ICI GROUP" means ICI and its Affiliates as at the Completion Date;
"IMPLEMENTATION AGREEMENTS" means the documents listed in Schedule 5;
"INTELLECTUAL PROPERTY" means all patents, trademarks, service marks,
registered designs, copyrights, and rights to inventions and
applications for and rights to apply for protection or registrations
of any of the same including any continuing, reissue, divisional and
re-examination patent applications and Technical Information;
"LIBOR" means the rate for deposits in US Dollars for a period of one
month which appears on the Reuters Screen ISDA Page (or such other
page as the parties may agree) at approximately 11.00 a.m., London
time, on the first day of the period to which any interest period
relates (the "RELEVANT DATE"). If such rate does not appear on the
Reuters Screen ISDA Page on the Relevant Date, the rate for that
Relevant Date will be determined as if the parties had specified that
the rate for the Relevant Date will be determined on the basis of the
rates at which deposits in US Dollars are offered by Midland Bank plc
at approximately 11.00 a.m., London time, on the Relevant Date to
prime banks in the London interbank market for a period of one month
commencing on that Relevant Date for amounts of US$10,000,000;
"MATERIAL GRIMSBY CONTRACTS" means all Grimsby Contracts (i) which at
Completion have in excess of 12 months to run and which in that time
can reasonably be expected to involve income or expenditure in respect
of the Grimsby Business in excess of US$200,000 per annum; or (ii)
which at Completion have less than 12 months to run and which in that
time can reasonably be expected to involve income or expenditure in
respect of the Grimsby Business in excess of US$1,000,000; or (iii)
which relate to the treatment and/or disposal of waste; or (iv) which
relate to contract manufacturing or processing of products by third
parties; and/or (v) relating to third party distribution or agency in
respect of products;
"PARENT UNDERTAKING" shall have the meaning given in section 258 of
the Companies Act 1985;
"PERMITS" means all licences, permits, authorisations, registrations
and approvals issued or granted by statutory or local authorities for
the purposes of operation of the Grimsby Business (but excluding, for
the avoidance of doubt, planning permissions issued by relevant
planning authorities (save for Environmental Authorisations) and any
licence, permit, authorisation or approval which falls within the
Regulatory Conditions);
"PLANT AND EQUIPMENT" has the meaning ascribed to Plant and Equipment
in the Hivedown Agreement;
"PURCHASER'S AUDITORS" means PricewaterhouseCoopers;
"PURCHASER'S GROUP" means the Purchaser's ultimate parent undertaking
and that parent undertaking's Affiliates;
"REGULATORY CONDITIONS" means the anti-trust or regulatory approvals
necessary to complete the sale of the Company on the terms set out in
this agreement;
"QUALIFYING AMOUNT" has the meaning set forth in sub-Clause 5.5.1;
"QUALIFYING CLAIM" has the meaning set forth in sub-Clause 5.5;
"SCHEME" means the Tioxide Pension Fund;
"SELLER'S AUDITORS" means PricewaterhouseCoopers of 32 London Bridge
Road, London SE1 9QL;
"SELLER'S GROUP" means the Seller's ultimate parent undertaking and
that parent undertaking's Affiliates as at the Completion Date;
"TAXATION" means:
(a) any tax, duty, impost or levy, past or present, of
the United Kingdom or elsewhere, whether
governmental, state, provincial, local governmental
or municipal, including but not limited to income tax
(including income tax required to be deducted or
withheld from or accounted for in respect of any
payment under Section 203 of the United Kingdom
Income and Corporation Taxes Act 1988 or otherwise),
corporation tax, advance corporation tax, capital
gains tax, value added tax, customs and other import
or export duties, stamp duty, stamp duty reserve tax,
national insurance and social security contributions
but excluding rates, council tax or any similar
charge; and
(b) any fine, penalty, surcharge, interest or other
imposition relating to any tax, duty, impost or levy
mentioned in paragraph (a) of this definition or to
any account, record, form, return or computation
required to be kept, preserved, maintained or
submitted to any person for the purposes of any such
tax, duty, impost or levy;
"TECHNICAL INFORMATION" shall mean all technical data and know-how,
industrial and technical information, trade secrets, confidential
information, drawings, formulations, technical reports, operating and
testing procedures, instruction manuals, raw material or production
specifications, the results of research and development work, whether
in hard copy or in computer held form (including, for the avoidance of
doubt, such media as microfilm and microfiche);
"TEL SHARE SALE AGREEMENT" means the share sale agreement dated [ ]
1998 between Tioxide Group Limited (1) and Du Pont (U.K.) Limited (2)
relating to the sale and purchase of the whole of the issued share
capital of the Seller;
"THRESHOLD AMOUNT" has the meaning given in sub-Clause 5.5.2;
"TRANSFER TIME" has the meaning given to it in the Hivedown Agreement;
"UK GAAP" means generally accepted accounting principles in the United
Kingdom;
"US DOLLARS", "US$" or "$" means the lawful currency of the United
States of America; and
"WARRANTIES" has the meaning given in sub-Clause 5.1.
1.2 Unless otherwise stated, any express reference to an enactment
includes references to:
1.2.1 that enactment as amended, extended or applied by or under any
other enactment before or after this agreement;
1.2.2 any enactment which that enactment re-enacts (with or without
modification); and
1.2.3 any subordinate legislation made (before or after this
agreement) under any enactment, including one within
sub-Clauses 1.2.1 or 1.2.2 above,
except to the extent that any of the matters referred to in
sub-Clauses 1.2.1 to 1.2.3 occurring after the date of this agreement
would increase or alter the liability of the Seller under this
agreement.
1.3 The singular shall include the plural and vice versa and words
denoting persons shall include bodies corporate and unincorporated
associations of persons and, unless otherwise stated, shall include
successors or assigns of such persons.
1.4 Sub-Clauses 1.1 to 1.3 apply unless the contrary intention appears.
1.5 The headings in this agreement do not affect its interpretation.
1.6 Any Schedule or Annex to this agreement shall take effect as if set
out in this agreement and references to this agreement shall include
its Schedules and Annexes.
1.7 Where any statement in this agreement (or in the attached Schedules or
Annexes) (other than in Schedule 3 paragraphs H(2) and H(3) is
qualified by the expression "so far as the Seller is aware", "to the
Seller's knowledge, information and belief", "known to the Seller" or
any similar statement, that statement shall be deemed to mean the
knowledge, after reasonable investigation, of the officers and
operational and functional managers of the Seller and its Affiliates
who have direct responsibility for the subject matter concerned being
those listed in Schedule 7.
1.8 Unless the context otherwise requires and except in relation to
Taxation matters, references in sub-Clause 1.1, sub-Clause 6.1,
Schedule 3 and Schedule 6 to the "Company" in the context of the
carrying on or operation of the Grimsby Business shall be deemed to be
a reference to the Seller in relation to the carrying on or operation
of the Grimsby Business up to and until the Transfer Time.
2 SALE AND PURCHASE OF THE SALE SHARES
2.1 The Seller shall with full title guarantee sell and the Purchaser
shall purchase the Sale Shares together with all rights attaching to
them.
2.2 The Sale Shares shall be sold free from all liens, charges, equities
and encumbrances and other rights exercisable by third parties or
Affiliates of the Seller.
3 CONSIDERATION
3.1 The consideration for the sale of the Sale Shares shall be US$1
payable in cash by the Purchaser on Completion (the "CONSIDERATION").
3.2 The payment under sub-Clause 3.1 shall be paid to the correspondent
bank named below for credit to the US$ account of o (the "TEL
ACCOUNT") referred to below:
Correspondent bank:
Bank account:
Account name:
Account no:
Sort code:
3.3 Any payments to the Purchaser under this agreement shall be paid to
the correspondent bank named below for credit to the US$ account of
[ ] (the "PURCHASER ACCOUNT") referred to below:
Correspondent bank:
Bank account:
Account name:
Account no:
Sort code:
4 PURCHASER'S WARRANTIES AND UNDERTAKINGS
4.1 The Purchaser warrants to the Seller that:
4.1.1 it (and each of its Affiliates, in respect of the
Implementation Agreements to which such Affiliate is a party)
has the requisite power and authority to enter into and to
perform this agreement and such Implementation Agreements;
4.1.2 it (and each of its Affiliates, in respect of the
Implementation Agreements to which such Affiliate is a party)
has obtained or satisfied all corporate, regulatory and other
approvals, or any other significant conditions, necessary to
execute and perform this agreement and such Implementation
Agreements;
4.1.3 this agreement and the Implementation Agreements constitute
valid and binding obligations of the Purchaser (and each of
its Affiliates, in respect of the Implementation Agreements to
which such Affiliate is a party) enforceable in accordance
with their terms; and
4.1.4 compliance with the terms of this agreement by the Purchaser
and the Implementation Agreements by the Purchaser or its
Affiliates (as appropriate) will:
(i) not constitute a breach of any agreement or contract to
which the Purchaser or such Affiliate of the Purchaser is
a party or by which it is bound; and
(ii)be in compliance with the Purchaser's or such
Affiliate of the Purchaser's by- laws; and
(iii)not contravene:
(a) any order, judgment or decree; or
(b) any statute, rule or regulation; or
(c) any other restriction of any kind by which the
Purchaser or such Affiliate of the Purchaser is
bound.
4.2 The Company will discharge and pay in full the Estimated Newco
Hivedown Debt at Completion and any additional amount payable in
relation to any adjustment thereto as described in sub-Clause 7.2
below, such payments to be made to the TEL Account.
5 SELLER'S WARRANTIES AND UNDERTAKINGS
5.1 The Seller warrants to the Purchaser that, save as otherwise stated in
this agreement and subject to all matters and circumstances fairly
disclosed in the Grimsby Disclosure Letter, each of the statements set
out in Schedule 3 to this agreement (the "WARRANTIES") is true and
accurate as at the date of this agreement and the Seller acknowledges
that the Purchaser has entered into this agreement in reliance upon
the Warranties.
5.2 Each of the Warranties shall be separate and independent and no
Warranty shall limit the scope or construction of any other Warranty
or any other provision of this agreement.
5.3 The Purchaser acknowledges and agrees that:
5.3.1 except for the Warranties, no statement, promise or forecast
made by or on behalf of the Seller or any member of the
Seller's Group or any member of the ICI Group may form the
basis of, or be pleaded in connection with, any claim by the
Purchaser under or in connection with this agreement or the
Implementation Agreements (save as may be set out in the
Implementation Agreements); and
5.3.2 any claim by the Purchaser or any person deriving title from
it in connection with the Warranties shall be subject to the
following provisions of this Clause.
5.4 The liability of the Seller under or in respect of a Claim shall be
governed by the terms of this Clause 5 and shall be limited in respect
of any liability which is contingent, unless and until such liability
becomes an actual liability and is due and payable, provided that the
Purchaser shall not be prohibited from bringing such claim pending
such liability becoming due and payable.
5.5 It is hereby agreed that the Seller shall have no liability for any
Claim:
5.5.1 unless the amount of such Claim exceeds US$100,000 (the
"QUALIFYING Amount"); and
5.5.2 until and to the extent only that the aggregate liability for
all Claims exceeding the Qualifying Amount (notified
previously or at the same time) exceeds US$5,300,000 (the
"THRESHOLD AMOUNT").
For the avoidance of doubt, notwithstanding that the aggregate
liability for Claims exceeding the Qualifying Amount ("QUALIFYING
CLAIMS") of the Seller has exceeded the Threshold Amount, the Seller
shall be liable solely for that excess.
5.6 It is hereby agreed that the maximum aggregate liability of the Seller
in respect of all Claims shall under no circumstances exceed (to the
extent that the relevant Claim has been brought by the Purchaser in
accordance with the terms of this agreement within the relevant time
period) an amount to be determined as follows (the "CAP"):
5.6.1 in respect of all Claims notified to the Seller pursuant to
this agreement in the period commencing on the Completion Date
up to but not including the third anniversary thereof, the Cap
shall be US$63,152,000;
5.6.2 on the third anniversary of the Completion Date the Cap
shall reduce to US$44,206,400;
5.6.3 on the fourth and each subsequent anniversary of the
Completion Date the Cap shall reduce (but so that the
applicable anniversary date for determining whether a Claim is
subject to a Cap reduction as aforesaid shall be by reference
to the date upon which the Claim is notified to the Seller
pursuant to this agreement and not the date upon which
liability thereunder is accepted or adjudicated) by an amount
of US$6,315,200 such that on the tenth anniversary of the
Completion Date it is completely extinguished.
5.7 Subject to sub-Clause 5.14, the Seller shall have no liability for any
Claims notified by the Purchaser on or after the tenth anniversary of
the Completion Date.
5.8 For the avoidance of doubt, in no circumstances whatsoever shall the
maximum aggregate liability of the Seller in respect of all Claims
exceed US$63,152,000.
5.9 The Purchaser acknowledges and agrees that:
5.9.1 no liability shall attach to the Seller by reason of any
breach of any of the Warranties or other provisions of this
agreement or the Implementation Agreements to the extent that
the loss has been recovered by the Purchaser under Schedule 6
or any other term of this agreement or any of the
Implementation Agreements and accordingly the Purchaser may
only recover once in respect of the same loss; and
5.9.2 in calculating the liability of the Seller for any breach of
the Warranties there shall be taken into account the amount by
which any Taxation for which the Purchaser or the Company is
now or in the future accountable or liable to be assessed is
reduced or extinguished as a result of the matter giving rise
to such liability.
5.10 The Purchaser shall not be entitled to make any Claim:
5.10.1 to the extent that the Claim arises as a result only of any
change after Completion in the accounting bases upon which the
Company values its assets or computes its profits or arises as
a result of the taxation or accounting policies, bases or
practices of the Purchaser being different to those adopted or
used in preparing the Grimsby Financial Information; or
5.10.2 to the extent that the matter which constitutes the Claim was
specifically consented to in writing by the Purchaser.
5.11 The Purchaser shall not be entitled to rescind or terminate this
agreement after Completion in any circumstances provided that nothing
in this sub-Clause shall exclude or limit any liability for fraud.
5.12 Save as otherwise provided in this agreement, the Seller shall not be
liable in respect of any Claim as a result of any legislation not
brought into force at the date of this agreement or as a result of any
change in or repeal of legislation hereafter or as a result of the
introduction or cessation of or change in the published practice of
any taxation authority after the date of this agreement.
5.13 The Purchaser shall not be entitled to make any claim in respect of
any breach or alleged breach of the Warranties or the indemnities
contained in this agreement or under any other provision of this
agreement to the extent that:
5.13.1 the facts, matters or circumstances giving rise thereto (in
respect of which any such claim or alleged claim arises) have
been fairly disclosed in the Grimsby Disclosure Letter; or
5.13.2 such claim arises or is incurred as a result of any voluntary
act or omission of the Purchaser or any Affiliate of the
Purchaser after the date of this agreement other than any such
act or omission which is in the ordinary course of business or
is required by law or is pursuant to a legally binding
commitment of the Company or any member of the Seller's Group
created or entered into before Completion; or
5.13.3 allowance, provision or reserve in respect of the subject
matter of such claim has been made or has otherwise been taken
into account or reflected in the mechanics for the calculation
of the Final Hivedown Consideration or the Actual Net Working
Capital.
5.14 The Purchaser shall take all reasonable steps to mitigate any loss
which may give rise to a Claim including, without limiting the
generality of the foregoing, the making of a claim which is available
to the Purchaser or its Affiliates under any available insurance
policy. It is agreed that:
5.14.1 no Claim by the Purchaser in respect of a breach of the
Warranties shall be enforceable unless written notice thereof
(including all material details thereof then reasonably
available to the Purchaser) has been given by the Purchaser to
the Seller as soon as reasonably practicable after the
Purchaser has become aware of the facts and circumstances
giving rise to such claim and their implications for the
purposes of this agreement and unless such written notice has
been duly served on the Seller within 24 months of the
Completion Date;
5.14.2 no other Claims by the Purchaser shall be enforceable unless
written notice thereof (including all material details thereof
or relating thereto then reasonably available to the
Purchaser) has been given by the Purchaser to the Seller (in
accordance with the terms of this agreement) as soon as
reasonably practicable after the Purchaser has become aware of
the facts and circumstances giving rise to the claim and their
implications for the purpose of this agreement;
Provided however that the Purchaser shall be able to bring any Claim
against the Seller without complying with the terms of sub-Clauses
5.14.1 and 5.14.2 hereof to the extent that the Seller has not
suffered prejudice as a result of any such non-compliance by the
Purchaser.
5.15 If any claim is made against the Company the subject matter of which
might also reasonably be expected to give rise to a Claim, but
excluding matters provided for in Schedule 6 in relation to which the
specific provisions set out in Schedule 6 shall apply:
5.15.1 the Purchaser shall, if so requested by the Seller, take all
steps which are necessary and reasonable to avoid, resist,
appeal, compromise or defend any such claim and any
adjudication in respect thereof (but subject in any such case
to the Purchaser being indemnified by the Seller against all
costs and expenses which may reasonably and necessarily be
incurred in connection therewith) and the Seller shall, at its
request, be allowed to conduct any negotiations, proceedings
or appeals incidental thereto;
5.15.2 the Seller shall raise no objection to the Purchaser attending
(and, where the rights of the Purchaser are, or may be,
detrimentally affected) being separately legally represented
(at its own expense) and, where appropriate, heard at any
negotiations, proceedings or appeals which the Seller has
taken conduct of pursuant to sub-Clause 5.15.1 above and the
Purchaser shall be consulted by the Seller prior to any
compromise, settlement or admission of liability being made by
the Seller at such negotiation, proceedings or appeals; and
5.15.3 the Purchaser shall at all reasonable times and upon
reasonable prior notice allow the Seller and its agents
reasonable access to all relevant properties of the Grimsby
Business, and access to, with the right to inspect and take
copies of, all relevant books and records and Grimsby Business
Data of the Grimsby Business (as then carried on) subject
always to keeping the same confidential other than in respect
of necessary disclosures in connection with such action or
claim which disclosures shall only be made and then only in
compliance with sub-Clause 5.15.4, if required by law or the
procedures of any court or tribunal or otherwise with the
prior written consent of the Purchaser (such consent not to be
unreasonably withheld or delayed);
5.15.4 if the Seller or its agents become legally compelled
(including by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar
process) to disclose any of the information, records, or other
material referred to in sub-Clause 5.15.3, the party so
compelled shall provide the Purchaser with prompt prior
written notice of such requirement so that the Purchaser may
seek a protective order or other appropriate remedy. So far as
it is legally able so to do, the Seller agrees to cooperate in
the Purchaser's efforts to obtain a protective order or other
reasonable assurance that confidential treatment shall be
accorded any such information. If such protective order or
other remedy is not obtained, the party so compelled agrees to
disclose only that portion of the information, records, or
other material which it is advised by opinion of outside
counsel is legally required to be disclosed and to take all
reasonable steps to preserve the confidentiality of the
information, records, or other material referred to in this
sub-Clause 5.15.4.
5.16 If the Seller pays to the Purchaser any amount under this agreement in
respect of any Claim and the Purchaser or the Company is able to
recover any sum from any third party (including any insurer) in
respect of that Claim, the Purchaser shall, and shall procure that the
Company shall, use all reasonable endeavours to so recover any such
sum and shall repay to the Seller so much of the amount paid by the
Seller as is equal to any sum recovered, after allowing for the
reasonable costs and expenses of the Purchaser or the Company
reasonably incurred in connection therewith, provided that, in the
event that the Purchaser or the Company elects not to recover any such
sum from such third party, the Seller shall be entitled at its cost to
require that the Purchaser or the Company assign such right of
recovery to the Seller. Furthermore, if any liability on the part of
the Seller hereunder which results in a payment being made by the
Seller to the Purchaser gives rise to any corresponding saving or
rebate to the Purchaser or the Company (including any tax saving or
rebate) then the value of such corresponding saving or rebate to the
Purchaser or the Company shall be set against the liability of the
Seller hereunder.
5.17 Any payment by the Seller made to the Purchaser (or for the
Purchaser's benefit) in respect of any liability under this agreement
for breach of the Warranties or otherwise shall be deemed to be a
reduction in the consideration payable hereunder in respect of the
Sale Shares.
5.18 No party hereto shall be entitled to set off any amounts due to it by
any other party (whether under this agreement, the Implementation
Agreements or otherwise) against sums owing (or claimed by such other
party to be owing) under the terms of this agreement (whether for
breach of the Warranties or otherwise).
5.19 The provisions of this Clause 5 shall have effect notwithstanding any
other provisions of this agreement.
5.20 The parties are of the view that the provisions of Section 343 of the
Income and Corporation Taxes Act 1988 and Section 171 of the Taxation
of Chargeable Gains Act 1992 will not apply in connection with the
sale and purchase of the Grimsby Assets under the Hivedown Agreement
and the Seller agrees and undertakes to prepare and submit tax returns
on the basis that the said Sections 343 and 171 are not applicable
(the "AGREED BASIS"). Subject to compliance by the Seller with the
foregoing provisions of this Clause 5.20, the Seller shall have no
liability to the Purchaser if, notwithstanding such compliance, Newco
fails to obtain capital allowances or allowable expenditure under the
said Section 343 in a manner consistent with the Agreed Basis.
6 SELLER'S INDEMNITY
6.1 The Seller undertakes to indemnify and keep indemnified the Purchaser,
its Affiliates and the Company (the "INDEMNIFIED PARTIES") against all
claims by third parties (other than any subsequent purchaser or
purchasers of either the Sale Shares or the business or assets of the
Company and their successors in title or assigns) giving rise to
losses, costs, liabilities, proceedings, claims, demands and expenses
(including reasonable legal fees) other than liabilities expressly
assumed by the Purchaser pursuant to this agreement or the
Implementation Agreements or to the extent that such liabilities have
been taken into account in the mechanics for the calculation of the
Final Hivedown Consideration or the Actual Net Working Capital
(together, "LIABILITIES") which may be incurred by any of the
Indemnified Parties or to which any of the Indemnified Parties may
become subject and which arise as a result of the operation of the
Grimsby Business by the Company prior to Completion (unless the claim
made by the third party giving rise to the Liabilities was fairly
disclosed in the Grimsby Disclosure Letter), including:
6.1.1 Liabilities arising as a result of the failure by the Company
to comply with relevant and legally enforceable corporate or
other laws, rules, ordinances or regulations with respect to
the operations of the Grimsby Business prior to Completion
6.1.2 any breach of contract, tort, product liability or other claim
arising from, or with respect to, the operation of the Grimsby
Business prior to Completion and asserted by any third party;
and
6.1.3 any suit, action, arbitration, charge, governmental
investigation, claim, litigation or proceedings pending or
threatened at Completion and affecting the Grimsby Business or
the Company.
For the avoidance of doubt, the indemnity contained in this Clause 6
shall not apply to (i) any liability to Taxation; or (ii) any
Environmental Liabilities, any failure or omission to obtain or comply
with Environmental Authorisations, any failure or omission to comply
with any Environmental Laws or any claim by any person in respect of
any matter concerning the Environment. All definitions in this
sub-Clause (ii) are as defined in Schedule 6.
6.2 The Purchaser agrees to give the Seller notice of any and all claims
asserted against any Indemnified Party for which indemnification is or
may be sought under this Clause 6. Such notice shall be given as soon
as the Purchaser becomes aware that it has or may have a claim against
the Seller under this Clause 6. Failure to give such notice shall not
abrogate or diminish the Seller's obligation under this Clause if the
Seller has or receives knowledge of the existence of any such claim by
any other means or if such failure does not prejudice the Seller's
ability to defend such a claim.
6.3 In any litigation, administrative proceedings, negotiation or
arbitration pertaining to any claim for which indemnification is
sought pursuant to sub-Clause 6.1 above the Seller shall have the
right to select legal counsel to represent any Indemnified Party and
otherwise to control such litigation, proceedings, negotiation or
arbitration. If the Seller elects to control such litigation,
proceeding, negotiation or arbitration, the Purchaser shall have at
all times the right fully to participate in the defence at its own
expense. If the Seller shall within a reasonable time after notice
unreasonably fail to defend the claim, the Purchaser shall have the
right but not the obligation to undertake the defence of and to
compromise or settle the claim or any other matter on behalf, for the
account, and at the risk, of the Seller provided that such settlement
shall be negotiated and entered into by the Purchaser on a bona fide
basis and shall not exceed the sum claimed. In the event that the
claim is one that cannot by its nature be defended solely by the
Seller with reference to the personnel and information available to
the Seller, the Purchaser shall make available all information and
assistance as the Seller may reasonably request at the Seller's
expense.
6.4 Notwithstanding the foregoing provisions, should the subject matter of
any litigation, proceeding, negotiation or arbitration include a claim
against any Indemnified Party seeking injunctive relief, the Purchaser
shall have the right to take exclusive control of the defence of the
entire proceedings.
7 COMPLETION
7.1 Completion shall take place at the offices of the [ * ] immediately
after the signature of this agreement when:
7.1.1 each party shall provide to the other evidence in a form
reasonably satisfactory to the other that it (and each of its
relevant Affiliates entering into an Implementation Agreement)
has all necessary corporate approvals and its signatories have
necessary authority to enter into this agreement and the other
agreements referred to herein
7.1.2 each party shall (or shall procure that its relevant
Affiliates) duly execute and, to the extent applicable,
complete the Implementation Agreements
7.1.3 the Seller shall deliver to the Purchaser:
(i) a duly executed transfer or transfers in favour of the
Purchaser of all the Sale Shares;
(ii)share certificate(s) or other documents of title relating
to the Sale Shares (or an express indemnity in a form
reasonably satisfactory to the Purchaser in the case of
any missing certificates or documents of title);
(iii)the company books relating to the Company, including
certificates of incorporation, common seals, minute books,
statutory registers, shareholders' agreements and share
certificate books (duly written up to date);
(iv)resignations of [all] the directors and secretary of the
Company in the Agreed Form;
[(v)the written resignation of the auditors of the Company to
take effect on Completion, with acknowledgments signed by
them to the effect that they have no claim against the
Company and to the effect that there are no circumstances
connected with their resignation which they consider
should be brought to the notice of the shareholders or
creditors of the Company;]
(vi)the Grimsby Business Data;
(vii)the documentation and title deeds to the Grimsby
Properties in accordance with the provisions of
Schedule 2;
7.1.4 the Purchaser shall pay to the Seller the Consideration;
7.1.5 the Company shall discharge and pay in full the Estimated
Newco Hivedown Debt (being the sum of US$118,410,000) to the
Seller, such payment to be made to the TEL Account;
7.1.6 the Seller shall take, or shall procure the taking of, such
steps as may be necessary to:
(i) approve the transfers referred to in sub-Clause 7.1.3 (i)
(subject only to the Purchaser arranging and paying any
taxes or duties arising in relation to the transfer); and
(ii)appoint such directors and secretary as the Purchaser
may specify as directors and the secretary of the Company.
7.2 If the Final Hivedown Consideration exceeds the Estimated Hivedown
Consideration, the excess shall be paid by the Company to the Seller
in accordance with the provisions of sub-Clause 3.2 and Schedule 14 of
the Hivedown Agreement, such payment to be made to the TEL Account.
8 GRIMSBY EMPLOYEES
The Purchaser agrees to procure that the Company for a period of four
years from the Completion Date will procure that:
8.1 the Grimsby Employees will receive and enjoy contractual remuneration
and benefits (including retirement benefits) which, judged
objectively, are no less favourable overall than their contractual
remuneration and benefits at the Completion Date; and
8.2 it will not make any unilateral material change to the contractual
terms and conditions of employment with the Grimsby Employees (which
includes those terms contained in a letter to employees dated 19 June
1991 from the Seller) without prior consultation where required by any
local laws or agreements, with recognised trade unions, appropriate
employee representatives, or the Grimsby Employees.
9 GRIMSBY PROPERTIES
The Seller and the Purchaser shall observe and perform the provisions
of Schedule 2 expressed to be observed and performed by each of them
respectively.
10 PENSIONS
Schedule 4 shall apply.
11 ENVIRONMENTAL AND COPPERAS
11.1 The Seller and Purchaser shall observe and perform the provisions of
Schedule 6 expressed to be observed and performed by each of them
respectively.
11.2 The Seller covenants that for a period of three years from and after
the Completion Date, none of the Seller and/or any of its Affiliates
will directly or indirectly market, sell or offer for sale in the
United Kingdom any copperas product provided that nothing in this
clause shall prevent the Seller and/or any of its Affiliates from
purchasing shares in any company or purchasing any business which
carries on as an ancillary part of its entire business (so as not to
form a substantial part of the same), the marketing, sale or offer for
sale of any copperas product.
12 ANNOUNCEMENTS
Neither party shall make or permit any member of the Seller's Group
or the Purchaser's Group, as the case may be, to make any announcement
concerning this agreement or any ancillary matter except as required
by law or any competent regulatory body or with the prior written
approval of the other party.
13 DEFAULT INTEREST
Subject as otherwise provided to the contrary in this agreement, if
any sum due for payment under this agreement or in accordance with
this agreement is not paid on the due date the party in default shall
pay Default Interest on that sum from the due date until the date of
actual payment calculated on a day to day basis.
14 NOTICES
14.1 Any notice or other document to be served under this agreement shall
be in writing and may be delivered by hand or by courier, sent by fax
or by post to the party to be served at its address appearing in this
agreement (and marked for the attention of the person whose name is
referred to in sub-Clause 14.3 below) or at such other address (or
marked for the attention of such other person) as it may have notified
to the other party in accordance with this Clause. Any notice or other
document sent by post shall be sent by registered post (if both posted
and for delivery within the same jurisdiction) or by registered
airmail (if posted for delivery outside the jurisdiction in which it
is posted), in either case return receipt requested (or any
substantially equivalent service).
14.2 Any notice or document delivered or sent in accordance with
sub-Clause 14.1 shall be deemed to have been served:
14.2.1 if delivered by hand, at the time of delivery; or
14.2.2 if sent by fax, at the time of delivery if sent between
12.01 a.m. and 6.00 p.m. (local time at the destination)
or at 10.00 a.m. on the Business Day after transmission if
sent at any other time; or
14.2.3 if posted, at 10.00 a.m. on the second Business Day after it
was put into the post if posted for delivery within the same
jurisdiction, or at 10.00 a.m. (local time at the place of
destination) on the fifth Business Day after it was put in the
post if sent by registered airmail.
14.3 The person to whom notices or documents should be addressed for the
purposes of sub-Clause 14.1 is:
14.3.1 if to be served on the Seller or on Affiliates of the Seller:
Vice President & General Manager
White Pigment & Mineral Products
E.I. du Pont de Nemours and Company
Building 36-2nd Floor
Barley Mill Plaza
Wilmington, Delaware USA 19880
Fax: (1) 302 992 6084
with a copy to the Company Secretary of Imperial Chemical
Industries PLC of Imperial Chemical House, 9 Millbank, London,
SW1P 3JF, Fax: (44) 171 798 5170;
14.3.2 if to be served on the Purchaser:
General Counsel
N L Industries, Inc.
16825 North Chase Drive
Suite 1200
Houston
Texas USA 77060
Fax: (1) 281 423 3333
14.4 In proving service of a notice or document it shall be sufficient to
prove that delivery was made by hand or that the envelope containing
the notice or document was properly addressed and posted (either by
registered post or by registered airmail, as the case may be, in
accordance with the requirements of this Clause).
15 GENERAL
15.1 Each of the obligations, warranties and undertakings set out in this
agreement which is not fully performed at Completion will continue in
force after Completion.
15.2 Unless otherwise expressly stated, all claims made and payments to be
made under this agreement shall be made in US Dollars. Payments to the
Seller shall be made in immediately available funds to the account of
the Seller at the TEL Account or at such other account as the Seller
may notify to the Purchaser and to the Purchaser in immediately
available funds to the Purchaser Account or such other account as the
Purchaser may notify to the Seller. All payments and values under this
agreement shall be in US Dollars and, where an amount is not itself
calculated in US Dollars, it shall be converted into US Dollars at the
mid-market closing exchange rate for that currency in US Dollars as
published in the London Edition of The Financial Times published two
Business Days prior to the date on which the relevant payment is due
or, where no such rate is published, at the rate quoted by Citibank,
N.A. at the close of business in London on that date.
15.3 Save as otherwise provided to the contrary in this agreement, each
payment to be made under this agreement shall be made in the currency
in which the relevant amount is payable, free and clear of all
deductions or withholdings of any kind, except for those required by
law and, if any deduction or withholding must be made by law, an
additional amount will be paid which is necessary to ensure that the
recipient receives a net amount equal to the full amount which it
would have received if the payment had been made without the deduction
or withholding.
15.4 None of the rights or obligations under this agreement may be assigned
or transferred without the written consent of the other party (the
"NON-ASSIGNING Party") other than an assignment of the rights (but not
the obligations) to an Affiliate of the assigning party provided that:
15.4.1 such assignment shall only be permitted if the assignment has
no adverse effect on the Non-assigning Party;
15.4.2 if the Affiliate to which the rights have been assigned ceases
to be an Affiliate of the assigning party, the rights which
have been transferred shall be re-transferred to the party
which originally assigned those rights or to another Affiliate
of that original assigning party; and
15.4.3 it shall be a condition of any such assignment that reasonable
notice is given in writing to the Non-assigning Party of the
proposal to assign (identifying the rights proposed to be
assigned, the identity of the proposed assignee and such other
details relating thereto as the Non-assigning Party may
reasonably require).
15.5 Save as otherwise provided in this agreement, each party shall pay the
costs and expenses incurred by it and its Affiliates in connection
with the entering into and completion of this agreement.
15.6 This agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and
any party may enter into this agreement by executing a counterpart.
15.7 No amendment, variation or waiver of this agreement or any provision
of this agreement shall be effective unless it is in writing and duly
executed by or on behalf of both parties.
15.8 Both parties shall at their own expense at all times from the date of
this agreement do all things as may be required to give effect to this
agreement including, without limitation, the execution of all deeds
and documents, procuring the convening of all meetings, the giving of
all waivers and consents and the passing of all resolutions and
otherwise exercising all powers and rights available to them.
16 WHOLE AGREEMENT
16.1 Subject to sub-Clause 16.2 below, this agreement and the
Implementation Agreements (if and when executed) contain the whole
agreement between the parties and their respective Affiliates relating
to the transactions contemplated by this agreement and the
Implementation Agreements and supersede all previous agreements
between the parties and their respective Affiliates relating to such
transactions.
16.2 A provision in another agreement between the parties to this agreement
or between the respective parent undertakings of the parties (and
whether made before or after the date of this agreement) which refers
to this agreement and which extends or supplements any provision in
this agreement will be deemed for the purposes of sub-Clause 16.1
above to form part of the whole agreement between the parties as
referred to in that sub-Clause.
16.3 Each of the parties to this agreement acknowledges on its own behalf
and on behalf of each of its Affiliates that, in agreeing to enter
into this agreement and the Implementation Agreements, it has not
relied on any representation, warranty, collateral contract or other
assurance (except those set out in this agreement) and waives all
rights and remedies which, but for this sub-Clause, might otherwise be
available to it in respect of any such representation, warranty,
collateral contract or other assurance, provided that nothing in this
Clause shall limit or exclude any liability for fraud.
17 GOVERNING LAW
This agreement is governed by and shall be construed in accordance
with English law.
18 JURISDICTION
The parties agree to submit to the exclusive jurisdiction of the
English courts for all purposes relating to this agreement. The
Purchaser irrevocably appoints Herbert Smith (Ref 554) of Exchange
House, Primrose Street, London EC2A 2HS as its agent for service of
process.in England.
AS WITNESS the hands of the duly authorised representatives of the
parties on the date which first appears on page 1.
SCHEDULE 1
PARTICULARS OF THE COMPANY
(RECITAL A)
[ ] LIMITED
Date and place of incorporation:
Registered Office:
Registered number:
Authorised Share Capital: GBP *
Issued Share Capital: GBP * divided into 2 Ordinary Shares
of GBP1 each
Shareholders: Tioxide Europe Limited (or its nominees)
Directors:
Secretary:
SCHEDULE 2
GRIMSBY PROPERTIES
(SUB-CLAUSE 7.1.3(VII))
On Completion the Seller shall deliver to the Purchaser all title
documentation (and other documentation disclosed to the Purchaser) in
connection with the Grimsby Properties.
SCHEDULE 3
WARRANTIES
(CLAUSE 5)
A. GENERAL
A.1 CAPACITY AND CONDUCT OF THE GRIMSBY BUSINESS
(1) The Seller (and each of its Affiliates in respect of the
Implementation Agreements to which they are parties) has the requisite
power and authority to enter into and to perform this agreement and
such Implementation Agreements.
(2) The Seller (and each of its Affiliates, in respect of the
Implementation Agreements to which they are parties) has obtained or
satisfied all corporate, regulatory and other approvals, or any other
significant conditions, necessary to execute and perform this
agreement and the Implementation Agreements.
(3) This agreement and the Implementation Agreements constitute (or when
executed will constitute) valid and binding obligations of the Seller
(and each of its Affiliates, in respect of the Implementation
Agreements to which they are parties) enforceable in accordance with
their terms.
(4) The execution and compliance with the terms of this agreement by the
Seller and the Implementation Agreements by the Seller or its
Affiliates (as appropriate) will:
(a) not constitute a breach of any Material Grimsby Contract
to which the Seller (or any of its Affiliates) is a party
or by which it or they are bound or entitle any person to
terminate or avoid any such agreement or contract;
(b) be in compliance with the Seller's and the Company's
memorandum and articles of association or other
constitutional documents (or those of any of its
Affiliates);
(c) not contravene any order, judgment, decree or regulation
or any other restriction of any kind by which the Seller
or any of its Affiliates or the Company is bound; or
(d) not result in the loss or impairment of or any default
under any licence, authorisation or consent required by
the Company for the purposes of its business.
(5) All factual information contained in Schedule 1 relating to the
Company is true and accurate in all material respects.
A.2 THE COMPANY
(1) The information relating to the Company contained in
Schedule 1 is true and accurate.
(2) Compliance has been made with all legal requirements in
connection with the formation of the Company and all issues
and grants of shares, debentures or other securities of the
Company.
A.3 OWNERSHIP OF SALE SHARES
(1) The Seller is the sole legal owner of the Sale Shares which
constitute the entire issued share capital of the Company.
(2) The Seller is entitled to sell and procure the transfer of the
full legal ownership in the Sale Shares free from any
encumbrance, equity or third party right of whatsoever nature,
from any agreement or contract to grant the same and from any
claim to any of the same.
(3) The Sale Shares are fully paid up or credited as fully paid up
and constitute the whole of the issued and allotted share
capital owned by the Seller in the Company.
(4) No agreement or contract has been entered into which requires
or may require the Company to allot or issue any share or loan
capital and the Company has not allotted or issued any
securities which are convertible into share or loan capital.
A.4 SUBSIDIARIES
(1) The Company is not the holder or beneficial owner of (nor has
agreed to acquire) any class of any shares or loan capital or
other securities of any other corporation (whether
incorporated in the United Kingdom or elsewhere).
(2) The Company is not and has not agreed to become a member of
any partnership or other unincorporated association,
joint-venture or consortium (other than recognised trade
associations).
(3) The Company does not have any place of business or permanent
establishment (as that expression is defined in double
taxation conventions) outside the United Kingdom.
A.5 OWNERSHIP OF GRIMSBY ASSETS
(1) Except for the Excluded Assets and those assets that are
leased (as described in the Grimsby Disclosure Letter) the
Company has full legal and beneficial title to all the Grimsby
Assets reflected in the Grimsby Financial Information (save
for current assets and fixed assets worth less than
US$100,000, both as defined for the purposes of the Grimsby
Financial Information, disposed of by the Company in the
ordinary course of its business since 28 February 1998) and to
all Grimsby Assets acquired by the Company since 28 February
1998.
(2) None of the Grimsby Assets is subject to any encumbrance
(including without limitation any debenture, mortgage, charge,
lien, deposit by way of security, bill of sale, option or
right of preemption) except those that arise in the ordinary
course of business and do not have a material adverse effect
on the Grimsby Business. All significant items of Grimsby
Plant and Equipment have been regularly and adequately
maintained where such maintenance is normally required and are
in reasonable working order having regard to their age and use
and taken as a whole are capable of operating the Grimsby
Business fully and effectively as previously carried on by the
Company.
(3) Save for fluctuations and variations in the Grimsby Stocks due
to normal business factors including without limitation
production schedules and market demand (including seasonal
factors affecting the same) the Grimsby Stocks in aggregate
comprise broadly the same mix of products as has been required
and has been maintained at levels sufficient to meet the level
of sales of the Grimsby Business for the last four quarters.
The Grimsby Stocks are owned by the Company free and clear of
all liens, claims, charges and encumbrances other than any
such interests arising in the ordinary course of business. The
Grimsby Stocks are located at the Grimsby Properties.
(4) The Company owns or has the right to use all the property
rights and assets necessary for the Company to carry on fully
and effectively the Grimsby Business in the manner in and to
the extent to which it is presently conducted.
(5) The Grimsby Business Data (other than historical Grimsby
Business Data) contains in all material respects bona fide and
accurate records of all matters customarily or required to be
dealt with therein. The Grimsby Business Data and the
Company's information, and the means of access to them are
exclusively owned by it and under its direct control or are
under its authority.
(6) The Grimsby Disclosure Letter contains details of the current
insurance arrangements applicable to the Grimsby Business.
Those arrangements are in full force and effect, all premiums
have been duly paid and so far as the Seller is aware, nothing
has been done or omitted to be done which would make any
policy of insurance of the Company void or voidable. There is
no material claim outstanding under any such arrangement.
A.6 COMPLIANCE WITH STATUTES
In relation to the Grimsby Business, the Company is not in
contravention of any statute, order or regulation of the United
Kingdom or any relevant foreign country, including but not limited to
the Foreign Corrupt Practices Act and the United States anti-boycott
regulations, which is likely to result in a fine or penalty or which
would have a material adverse effect on the Grimsby Business. There is
no order, decree or judgment of any court or governmental agency of
the United Kingdom or any foreign country outstanding against the
Company in relation to the Grimsby Business.
A.7 LICENCES AND CONSENTS
In relation to the operation of the Grimsby Business prior to the
Transfer Time by the Seller, the Grimsby Business had all governmental
authorisations licences and consents necessary to own and operate the
Grimsby Assets and to carry on the Grimsby Business in the manner in
which such business was carried on. All such authorisations, licences
and consents were valid and subsisting and were complied with in all
material respects. The Seller has paid all fees due under the same. A
list of material Permits relating to the Grimsby Business has been
disclosed and identified in the Grimsby Disclosure Letter.
A.8 LITIGATION
(1) Except as disclosed in the Grimsby Disclosure Letter, the
Company is not engaged in any litigation or arbitration
proceedings except as plaintiff for collection of debts in the
ordinary course of business which is likely to involve the
Company claiming or paying sums in excess of US$100,000 or
which otherwise will have a material effect on the operation
of the Company and the Grimsby Business and there are no such
proceedings pending and no letter before action has been
received by the Company and so far as the Seller is aware
there are no facts likely to give rise to any such
proceedings. The Seller has disclosed in the Grimsby
Disclosure Letter a list (which is complete and accurate in
all material respects) which includes a general description of
each pending law suit, claim, including customer complaints,
administrative proceedings, arbitration, labour dispute or
governmental investigation or inspection to which the Company
is a party or involves the operation of the Grimsby Business
and which is likely to involve the Company claiming or paying
sums in excess of US$100,000. The Seller has disclosed in
general terms all material (individually or in the aggregate)
product liability claims received by the Company or by the
Seller during the last 3 years. There are no orders decrees
judgments or agreements with any Court or governmental
authority to which the Company or the Seller (on behalf of the
Company) is a party or by which the Company or the Seller are
bound and which will have a material effect on the operation
of the Company and the Grimsby Business.
(2) No administrator, receiver or administrative receiver or any
other equivalent officer has been appointed in respect of the
Company or in respect of any parts of the assets or
undertakings of the Company.
(3) No petition has been presented, no order has been made, no
resolution has been passed and no meeting has been convened
for the winding-up of the Company or for an administration
order to be made in relation to the Company nor has any such
order been made.
(4) No voluntary arrangement has been approved under Part I
Insolvency Act 1986 and no compromise or arrangement has been
sanctioned under Section 425 of the Act in respect of the
Company.
(5) The Company has not become unable to pay its debts.
(6) No distress, distraint, charging order, garnishee order,
execution or other process has been levied or applied for in
respect of the whole or any part of any of the property,
assets and/or undertaking of the Company.
A.9 ENVIRONMENTAL MATTERS
(1) Environmental authorisations
In relation to the Grimsby Business:
(a) Prior to the Transfer Time, the Seller had lawfully
obtained all Environmental Authorisations and each such
authorisation at such time was in full force and effect
and the Seller had complied at all times therewith and the
Company, having obtained all such Environmental
Authorisations (on the same terms and subject to the same
conditions as those held by the Seller), will be able to
continue to comply in the future with all conditions of
such authorisations.
(b) No works or costs are or will be necessary to obtain or
secure compliance with or maintain any existing
Environmental Authorisations or their conditions or
otherwise to comply with Environmental Laws.
(c) The Company has received no communication in any form in
respect of any Environmental Authorisation varying,
modifying in any material respect, revoking, suspending or
cancelling the same or indicating an intention or
threatening so to do and so far as the Seller is aware
there are no facts or circumstances which may result in
any Environmental Authorisation being so varied, modified,
revoked, suspended or which may prejudice their renewal.
(d) So far as the Seller is aware all appropriate or necessary
action in connection with the renewal or extension of an
Environmental Authorisation has been taken.
(e) The Company is not engaged in and, so far as Seller is
aware, there are no facts which make it likely or
desirable that it should be engaged in any appeal in
respect of any Environmental Authorisation or any
conditions contained therein or any refusal of any
Environmental Authorisation.
(f) So far as the Seller is aware there is no reason to
believe that those Environmental Authorisations which have
been applied for but which have not yet been granted or
are pending will not be granted within a reasonable period
of time and on terms which are acceptable in order for the
Company to continue its current business operations.
(g) So far as the Seller is aware the execution and/or
performance of this agreement and all other documents
which are to be executed at Completion will not result in
any Environmental Authorisations being varied, modified,
revoked, suspended, cancelled, or not renewed.
(2) Compliance with Environmental Laws
In relation to the Grimsby Business:
(a) The Company is in compliance with Environmental Laws and
the state and use of the Grimsby Properties have been at
all times in conformity with Environmental Laws.
(b) The Company has not received any communication in any form
from any competent authority requiring the taking of
remedial or other steps in relation to the pollution or
protection of the Environment or the state or use of the
Grimsby Properties. So far as the Seller is aware there
are no circumstances which might give rise to such
communications being received and the Seller is not aware
of any intention on the part of any such authority to give
such notice.
(c) No proceedings or other action, claim or investigation are
or have been in existence or are so far as the Seller is
aware pending or threatened against the Company arising
from or in relation to any Environmental Authorisations or
otherwise concerning Environmental Laws.
(3) Liability
In relation to the Grimsby Business:
(a) The Company or the Seller, in relation to the Grimsby
Business, has not received any notice or intimation of any
complaint or claim from any person in respect of any
matter concerning the Environment.
(b) The Company or the Seller, in relation to the Grimsby
Business, are not and have not been engaged in any action,
litigation, arbitration or dispute resolution proceedings
relating to or concerning any actual or potential
liability under Environmental Laws and the Seller is not
aware of any such matters pending or being threatened or
of any circumstances or facts likely to give rise to any
such matters.
(c) The Company or the Seller, in relation to the Grimsby
Business, are not and have not been subject to any
injunction or similar remedy or order by a court of
competent jurisdiction, or to any undertakings given to
such court in respect of any matters relating to or
concerning the Environment.
(4) As far as the Seller is aware, there has not been in relation
to the Grimsby Business in the last three years any adverse
report, complaint or investigation of the Health and Safety
Executive (or any non UK equivalent if any) or any
prosecution, formal caution or warning for any violation of
any applicable laws or regulations including the Health and
Safety at Work etc. Act 1974 and the Control of Substances
Hazardous to Health Regulations 1987.
A.10 DATA ROOM DOCUMENTS
(1) Save as disclosed in Schedule 7 of the Grimsby Disclosure
Letter, so far as the Seller is aware, each licence, permit,
contract, list and report set out in Annex 1 and disclosed in
the Data Room, and identified on Annex 1 by reference to the
reference number set out in the Data Room Index annexed to the
Grimsby Disclosure Letter:
(a) other than where redacted, is a true copy of the original;
(b) is the latest version thereof;
(c) is complete; and
(d) has not been altered, amended or varied since the date
thereon.
(2) To the extent that any note, summary or response to questions
of or in respect of the documents set out in Annex 1 referred
to in sub-Paragraph A.10(1) contains any expression of opinion
of the ICI Group (not including the opinion of third parties),
such opinion reflects the current reasonably held opinion of
its author given in good faith taking into account the
respective author's knowledge and understanding.
B. GRIMSBY FINANCIAL INFORMATION
(1) The Grimsby Financial Information has been derived from the
books of the Grimsby Business of the Seller, which books have
been regularly and consistently kept and maintained using
ICI's normal accounting policies and practices as set out or
referred to in the ICI's Controller's Manuals (and the
policies contained in these Manuals are in accordance with UK
GAAP) as applied by the Seller on a consistent basis in
accordance with UK GAAP and, on such basis, represents the
assets and liabilities of the Grimsby Business as at 28
February 1998.
(2) The Grimsby Financial Information does not, so far as the
Seller is aware, materially mis-state any of the matters
presented therein. Since 28 February 1998 there has been:
(a) no material change in any accounting or inventory
valuation methods used by the Company in connection with
the Grimsby Assets;
(b) no upward re-valuations of existing Grimsby Stocks; and
(c) no material adverse change in the Grimsby Business or
financial condition of the Company, which for this purpose
shall not include the inherently cyclical nature of the
titanium dioxide industry or general economic conditions.
C. ANTI-COMPETITIVE ARRANGEMENTS
(1) The carrying on of the Grimsby Business by the Company does
not require any agreement, arrangement, concerted practice or
course of conduct which is material to the Grimsby Business
and which:
(a) is subject to registration under the Restrictive Trade
Practices Acts 1976 and 1977 but is not so registered;
(b) infringes Article 85 or 86 of the Treaty establishing
the European Community;
(c) is an "anti-competitive practice" within the meaning of
the Competition Act 1980.
(2) The Company or the Seller, in relation to the Grimsby
Business, have not received in the last three years any
process, notice or communication, formal or informal, from the
Office of Fair Trading or Directorate General IV of the
European Commission, relating to any aspect of the Grimsby
Business which alleges any illegal practices in relation to
the Grimsby Business and so far as the Seller is aware no such
process, notice or communication is likely to be received.
D. MATERIAL GRIMSBY CONTRACTS
(1) Copies of all the Material Grimsby Contracts are annexed to
the Grimsby Disclosure Letter.
(2) The Company is not in breach of, or default under, any of the
Material Grimsby Contracts or any other Grimsby Contracts the
consequence of which would or may have a material adverse
effect on the Company in relation to the Grimsby Business and,
so far as the Seller is aware, no state of facts exists or
event has occurred, is pending or is threatened which, after
the giving of notice or the lapse of time, would or may
constitute or result in a breach or a default by the Seller or
by the Company or any other person, firm, corporation or
entity of or in relation to any contract the consequences of
which would have a material effect on the operation of the
Grimsby Business. All Material Grimsby Contracts are legal
valid and binding obligations of the Company and are
enforceable in accordance with their terms.
E. GRIMSBY EMPLOYEES
(1) Particulars of the material terms of employment of all Grimsby
Employees and officers of the Company are annexed to the
Grimsby Disclosure Letter and such particulars are true,
complete and accurate in all material respects.
(2) No Grimsby Employee of Grade 37 or above has given to the
Company or the Seller and neither the Company nor the Seller
have received, or given, notice of termination of his
employment.
(3) No more than 50 Grimsby Employees at the Grimsby Site have
given to the Company or the Seller and neither the Company nor
the Seller have received, or given, notice of termination of
their employment.
(4) Standard form consultancy agreements, agency or self-employed
or contracted labour agreements or contracts where sums in
excess of GBP50,000 per annum are paid or are payable by the
Company have been disclosed in the Grimsby Disclosure Letter.
(5) The collective agreements, union recognition agreements and
European Works Council agreements annexed to the Grimsby
Disclosure Letter are all the agreements between the Company
and the trade unions or representative bodies constituted
pursuant to the European Works Council Directive No. 94/45/EC.
(6) So far as the Seller is aware, there is no material industrial
action by the Grimsby Employees pending or threatened in
relation to the Grimsby Business nor has there been within the
last 12 months.
(7) Since 28 February 1998 there has been no material change in
rates of remuneration or other benefits or other terms of
employment of the Grimsby Employees. The Company is not a
party to any contractual arrangement to make material changes
to remuneration or other benefits or other terms of employment
or to establish any new bonus arrangements for the Grimsby
Employees.
(8) Particulars of all loans made by the Company to Grimsby
Employees which are in excess of US$100,000 and which shall
remain outstanding at Completion, together with sums owed by
the Company to any Grimsby Employee (other than remuneration
and other contractual or customary benefits) which are in
excess of US$100,000, are disclosed in the Grimsby Disclosure
Letter.
(9) No Grimsby Employee of Grade 37 or above previously employed
by the Company has a right to return to work or any right to
be reinstated or re-engaged by the Company whether under
statute or otherwise.
(10) No more than 50 Grimsby Employees at the Grimsby Site,
previously employed by the Company, have a right to return to
work or any right to be re-instated or re-engaged by the
Company whether under statute or otherwise.
(11) A list of all Grimsby Employees of Grade 37 and above seconded
from ICI at the Grimsby Site is set out in or annexed to the
Grimsby Disclosure Letter.
(12) In relation to the Grimsby Employees, there are no existing
nor, so far as the Seller is aware, threatened arbitration
procedures arising out of or under any union recognition or
works council agreement covering the Grimsby Employees nor, so
far as the Seller is aware, does any basis therefore exist nor
has the Seller or the Company received any request for
recognition or representation by any trade union not currently
recognised on the Grimsby Site.
(13) The Company has complied in all material respects with all
statutes, regulations, orders and codes of conduct relating to
employment and relations with Grimsby Employees and trade
unions and has maintained records required by law regarding
the service of each of its Grimsby Employees.
(14) The Grimsby Disclosure Letter contains approximate numbers of
Grimsby Employees at the Grimsby Site as at the stated date
together with approximate numbers of Grimsby Employees below
Grade 37 and approximate numbers of Grimsby Employees above
Grade 37. The Grimsby Disclosure Letter also contains
approximate numbers of employees of the Company who are
employed at locations other than at the Grimsby Site.
For the purposes of these employment warranties alone,
"GRIMSBY EMPLOYEES" means employees of the Company who are
employed at the Grimsby Site and Grimsby Site means the
Factory at Pyewipe Road, details of which are set out in Part
1 Section 2 of Schedule 2.
For the purposes of these employment warranties "GRADE 37"
refers to a particular grade of employee, as determined by the
Company, using the Hay-MSL evaluation system.
F. PENSIONS
In this Part F: "SCHEME DOCUMENTS" means the documents relating to the
Scheme identified in the Grimsby Disclosure Letter.
(1) Except pursuant to the Scheme, the Company has not paid,
provided or contributed towards, and is not under any
obligation (whether or not legally enforceable) to pay,
provide or contribute towards any relevant benefit (as defined
in Section 612(1) of the Income and Corporation Taxes Act 1988
(referred to in this Part F as ICTA)), payable on death or
retirement for or in respect of any present or past officer or
employee (or any spouse, child or dependant of any of them) of
the Company.
(2) The Scheme Documents comprise all the documents governing the
Scheme including all explanatory booklets and announcements to
the employees describing the terms of the Scheme (other than
routine benefit statements) of current effect and full
particulars of any enhancement of benefit and contributions
payable to the Scheme and there is no obligation to provide or
continue to provide benefits in respect of employees or former
employees of the Company under the Schemes other than as
revealed in the Scheme Documents.
(3) The Scheme is approved as an exempt approved scheme (within
the meaning of Chapter I of Part XIV of ICTA) and there is in
force in respect of the employments to which the Scheme
relates an appropriate contracting-out certificate (within the
meaning of section 7 of the Pension Schemes Act 1993) and so
far as the Seller is aware nothing has been done or omitted to
be done which will or may result in the Scheme ceasing to be
approved as an exempt approved scheme or the contracting-out
certificate in respect of the Scheme being cancelled,
surrendered or varied.
(4) So far as the Seller is aware, the Scheme has at all times
complied with the provisions of all relevant statutes,
regulations and requirements and has been administered in
accordance with the trusts, powers and provisions of the
Scheme and with due regard to the general requirements of
trust law and the advisers to the Scheme have not had and do
not have any cause to report any matter to OPRA.
(5) So far as the Seller is aware, the Company has complied in all
material respects with its obligations under the Scheme and
all amounts due to be paid to the Scheme by it and its
employees have been paid.
G. GRIMSBY PROPERTIES
(1) The Grimsby Properties constitutes all of the freehold or
leasehold or other immovable property owned by occupied or
used by the Company.
(2) The particulars of the Grimsby Properties shown in Schedule 2
to the Hivedown Agreement (including in the case of registered
land the class of title and title number) are true, complete
and correct. The use of the Grimsby Properties for the purpose
stated in Schedule 2 to the Hivedown Agreement corresponds to
the use to which it is in fact put or (where the Grimsby
Properties is not presently in use) to the use to which it was
last in fact put.
(3) The Company has a good and marketable title to the Grimsby
Properties for the estate or interest stated in Schedule 2 to
the Hivedown Agreement, free from any defects, and has in its
possession, or under its control, all duly stamped deeds and
documents which are necessary to prove title to the Grimsby
Properties, and such title has already been fully deduced to
the Purchaser's Solicitors.
(4) The Company does not require the use and is not in occupation
of or entitled to any estate or interest in any land or
premises save for the Grimsby Properties. The Company is in
exclusive occupation of the whole of the Grimsby Properties
and on completion shall be in exclusive occupation of the
whole of the Grimsby Properties.
(5) The Grimsby Properties are not affected by any of the following
matters:
(a) any easement, reservation, covenant, restriction,
agreement, licence, franchise, mortgage, charge,
encumbrance, or third party right;
(b) any notice, order, proposal, dispute or complaint relating
to it or its present use under any legislation, agreement,
covenant, condition, licence or consent; or
(c) outgoings (other than uniform business rates, water
charges and other standard payments to the relevant water
company including, without limitation, insurance premiums
and other usual business expenses), whether of a
periodically recurring nature or otherwise and whether
payable by the owner or occupier of the relevant property.
(6) All obligations, restrictions, conditions and covenants
(including any imposed by or pursuant to any lease but
excluding any referred to in paragraph A.9 above) affecting
the Grimsby Properties has been observed and performed so far
as the Seller is aware and there are no subsisting allegations
of a breach of any thereof relating to the Grimsby Properties
or its present use under any legislation, agreement, covenant,
condition, licence or consent other than those referred to in
paragraph A.9 above by any competent authority or other person
or so far as the Seller is aware any circumstance which might
give rise to such a breach.
(7) The Grimsby Properties are in a good and substantial state of
repair and condition and fit for the purposes for which they
are presently used and the Company or the Seller has not used
in the Grimsby Properties any substances not in conformity
with relevant British or European standards or codes of
practice or which are generally known to be deleterious to
health and safety and there are no uncompleted works of any
description at the Grimsby Properties other than routine
maintenance.
(8) There are no subsisting allegations that the use of the
Grimsby Properties for the purpose stated in Schedule 2, Parts
I and II of the Hivedown Agreement is not the permitted user
under the provisions of all relevant legislation (including,
without limitation, legislation relating to town and country
planning and health and safety but excluding environmental
protection) or regulations made under such legislation or is
not in accordance with the requirements of the local planning
and all other competent authorities or that any restrictions,
conditions and covenants imposed by or pursuant to such
legislation have not been observed and performed and no
agreement has been entered into under section 106 Town and
Country Planning Act 1990 (or any similar statutory provision)
in respect of the Grimsby Properties.
(9) The copy documents disclosed and the replies given by
Linklaters & Paines to the Purchaser's Solicitors' written
enquiries concerning the Grimsby Properties are true, complete
and accurate in all material respects.
(10) The Company has no liabilities or contingent liabilities (but
excluding any matters referred to in paragraph A.9 above) in
respect of any properties (other than the Grimsby Properties)
(or any interest therein) whether by privity of contract or by
way of guarantee or surety or otherwise.
(11) The Grimsby Properties have the benefit of all rights,
easements and consents reasonably required for the occupation
and operation of such properties for their present use and any
plant, machinery and processes thereat and such rights,
easements and consents are enjoyed on terms which do not
permit them to be determined by any third party or by
effluxion of time.
(12) There are no outstanding liabilities to make payments in
respect of rates, water charges, or any other charges payable
in respect of the Grimsby Properties to any governmental,
state, municipal or other similar authority.
H. INTELLECTUAL PROPERTY
(1) So far as the Seller is aware, the rights to be licensed to
the Company at Completion in respect of Intellectual Property
and Technical Information are all of those considered by the
Seller to be necessary for the conduct of the Grimsby Business
by the Company as now conducted.
(2) Except as set out in the Grimsby Disclosure Letter, the Seller
has not received actual notice of infringement by others or of
attacks on the validity of or on the Seller's or its
Affiliates title to any Intellectual Property used exclusively
in the Grimsby Business. The Grimsby Disclosure Letter
identifies the status of the relevant patents and, so far as
the Seller is aware, whether or not such patents are currently
being opposed.
(3) The Seller does not have actual knowledge and has not received
written notification that activities of the Grimsby Business
infringe the Intellectual Property of any third party (the
Seller having no obligation to conduct investigations in
relation to any such potential infringement).
(4) So far as the Seller is aware, all material agreements
relating to Intellectual Property and Technical Information to
which the Seller is a party and which relate to the Grimsby
Business are listed in the Grimsby Disclosure Letter.
I. BROKERS
Neither the Seller nor the Company has employed any investment banker,
broker or finder or incurred any liability for any brokerage fees,
commissions, finders' fees or similar payments in connection with the
transactions contemplated by this agreement for which the Purchaser or
the Company may be liable.
J. THE COMPANY
As at the Completion Date, the Company has not carried on any business
or trade and has no liabilities or obligations (actual or contingent)
except for (i) any liabilities or obligations assumed by the Company
pursuant to the terms of the Hivedown Agreement or any document
entered into pursuant thereto; (ii) any liability to stamp duty
arising from completion of the Hivedown Agreement; and (iii) any
liability incurred in the ordinary course of the Grimsby Business
since the Transfer Time.
K. MILLENNIUM COMPLIANCE
(1) For the purposes of this agreement "Millennium Compliant"
means that the Computer Systems are capable of the following
functions before during and/or after 1 January 2000:
(a) handling date information involving all and any dates
before, during and/or after 1 January 2000 including
accepting date input, providing date output and performing
date calculations in whole or part;
(b) operating accurately without interruption on and in
respect of any and all dates before, during and/or after 1
January 2000 and without any change in performance;
(c) responding to and processing two digit year input without
creating any ambiguity as to the century; and
(d) storing and providing date input information without
creating any ambiguity as to the century.
(2) The Grimsby Disclosure Letter contains material details of the
measures that have been implemented within the Grimsby
Business to determine the extent to which its Computer Systems
are not Millennium Compliant, and material details of any
programme undertaken by the Grimsby Business with a view to
its Computer Systems achieving Millennium Compliance (or so
close to Millennium Compliance as is practicable).
L. INTRA-GROUP ARRANGEMENTS
(1) Except as provided for in the Hivedown Agreement and any
document entered into pursuant thereto and any liability
incurred in the ordinary course of the Grimsby Business since
the Transfer Time, there is no indebtedness or liability
(actual or contingent) nor any security owed by the Company to
any member of the Seller's Group or the ICI Group (in each
case as constituted following Completion) other than arising
in the ordinary course of business and as conducted on arm's
length terms.
(2) Except as provided for in the Hivedown Agreement and any
document entered into pursuant thereto and any liability
incurred in the ordinary course of the Grimsby Business since
the Transfer Time, there is no agreement or contract to which
the Company is a party and to which any member of the Seller's
Group or the ICI Group (in each case as constituted following
Completion) is a party or in which any such member is
otherwise interested in any way whatsoever which shall
continue beyond the Completion Date.
M. DEBTORS
(1) The Company has not made, or entered into any contract or
agreement to make any loan to, or other arrangement with, any
person as a result of which it is or may be owed any money
other than trade debts incurred in the ordinary course of
business and cash at bank.
(2) The Company is not entitled to the benefit of any debt
otherwise than as the original creditor and has not factored
or discounted any debt or agreed to do so.
(3) All of the debts which will be reflected in the Final
Completion Statement (as defined in the Hivedown Agreement) as
owing to the Company (apart from bad and doubtful debts to the
extent to which they have been provided for in the Final
Completion Statement) will realise their full value as
included in the Final Completion Statement within the payment
terms agreed with the respective debtors.
SCHEDULE 4
PENSIONS
(CLAUSE 10)
1 DEFINITIONS
"ACTUARY'S LETTER" means the letter from the Scheme Actuary to the
Purchaser's Actuary attached to this agreement at Schedule 9.
"PAYMENT DATE" means the date on which payment is due under paragraph
3.5.
"PURCHASER'S SCHEME" means the Scheme nominated under paragraph 2.1
and, where the context requires, the trustees thereof.
"PRINCIPAL EMPLOYER" means Tioxide Group Limited until the date on
which it ceases to be the Principal Employer of the Scheme and, after
that date, the Seller.
"SCHEME" means the Tioxide Pension Fund and, where the context
requires, the trustees thereof.
"TIMING ADJUSTMENT" has the meaning set out in the Actuary's Letter.
"TRANSFERRING MEMBER" means a Grimsby Employee who is a member of the
Scheme on the Completion Date who consents to a transfer of assets
being made for him to the Purchaser's Scheme under paragraph 2.3.
"PURCHASER'S ACTUARY" means the actuary or firm of actuaries appointed
by the Purchaser for the purpose of this Schedule.
"SCHEME ACTUARY" means Graham Harman of Sedgwick Noble Lowndes Limited
or any other actuary or firm of actuaries appointed by the Principal
Employer for the purpose of this Schedule.
2 THE PURCHASER'S SCHEME
2.1 The Purchaser will, on or before Completion Date, nominate the
Purchaser's Scheme being a scheme which is a contracted-out and an
exempt approved scheme for the purposes of Chapter I Part XIV of the
Income and Corporation Taxes Act 1988 ("ICTA") or capable of being a
contracted-out and exempt approved scheme and which is permitted by
its rules to receive transfer payments in respect of Transferring
Members on the terms of this Schedule. The Purchaser will use its best
endeavours to ensure that this does not change after the Completion
Date.
2.2 Unless a Grimsby Employee requests otherwise within four weeks of the
Completion Date, each Grimsby Employee who is a member of the Scheme
immediately before the Completion Date shall join the Purchaser's
Scheme with effect from the Completion Date. Any Grimsby Employee who
has not become eligible to join the Scheme by the Completion Date will
be able to join the Purchaser's Scheme on the date he would have
become eligible to join the Scheme if it had continued to apply to
him.
2.3 The Principal Employer and the Purchaser will use all reasonable
endeavours to ensure that each Grimsby Employee who is a member of the
Scheme immediately before the Completion Date and who becomes a member
of the Purchaser's Scheme is given the opportunity (in terms approved
by the Principal Employer and the Purchaser, such approval not to be
unreasonably withheld), of consenting within eight weeks of the
Completion Date to a transfer of assets being made for him from the
Scheme to the Purchaser's Scheme.
2.4 The Purchaser's Scheme will provide benefits and require employee
contributions in respect of each Transferring Member's service with
the Company from the Completion Date which are comparable with those
being provided and required under the Scheme and on a basis which is
substantially no less favourable overall (to the satisfaction of the
Principal Employer's Actuary) than the basis on which benefits are
being provided immediately before Completion for (and contributions
required from) the Transferring Members under the Scheme.
3 TRANSFER PAYMENT FROM SCHEME
3.1 The Principal Employer will use reasonable endeavours to ensure that
on the Payment Date the trustees of the Scheme transfer to the
Purchaser's Scheme an amount equal to the value of the benefits
payable under the Scheme in respect of the Transferring Members'
service before the Completion Date calculated as at the Completion
Date on the bases set out in the Actuary's Letter ("TRANSFER AMOUNT"),
with the adjustments set out below.
3.2 The Transfer Amount will be adjusted by reference to the Timing
Adjustment for the period between the Completion Date and the close of
business on the day before the date on which payment is made to the
Purchaser's Scheme.
3.3 The Transfer Amount as adjusted by paragraph 3.2 will be calculated by
the Scheme Actuary and agreed by the Purchaser's Actuary within 14
days of the Scheme Actuary notifying the Transfer Amount to the
Purchaser's Actuary.
3.4 Payment to the Purchaser's Scheme will be made on the following
conditions:
3.4.1 that the Inland Revenue has given its consent to the making of
the payment;
3.4.2 the Purchaser has complied with all its obligations in this
Schedule;
3.4.3 the Transfer Amount has either been agreed under paragraph 3.3
or determined under paragraph 6;
3.4.4 the trustees of the Purchaser's Scheme have confirmed that
they will accept the payment on the terms set out in paragraph
4.
3.5 Payment to the Purchaser's Scheme (adjusted in accordance with
paragraph 3.2) is due on the later of the following:
3.5.1 3 months after the Completion Date; and
3.5.2 14 days after the date when the last of the conditions in
paragraph 3.4 has been satisfied.
3.6 The Principal Employer and the Purchaser will use all reasonable
endeavours to secure agreement between the Scheme and the Purchaser's
Scheme respectively as to the particular assets to be transferred
representing the amount due. If agreement is not reached by the
Payment Date, the transfer will be in the form of assets of the Scheme
listed on the London Stock Exchange and selected by the Trustees of
the Scheme as a representative selection of such listed assets held by
the Scheme. To the extent that any part of the amount due is paid in
cash, the amount due will be reduced by two per cent. Any securities
to be transferred will be valued at the mid-market price at the close
of business on the relevant stock exchange on the day before the date
of transfer.
3.7 If the trustees of the Scheme do not pay the Transfer Amount
calculated and adjusted in accordance with paragraphs 3.2 and 3.6 in
full on the Payment Date, the Principal Employer will pay to the
Purchaser the amount of the difference ("SHORTFALL") less the rate of
corporation tax current at the date of payment. If they make a larger
transfer payment to the Purchaser's Scheme than the Transfer Amount
adjusted in accordance with paragraphs 3.2 and 3.6, the Purchaser will
pay the amount of the difference to the Principal Employer less the
rate of corporation tax current at the date of payment.
3.8 No payment shall be due from the Principal Employer pursuant to 3.7
above:
3.8.1 if the reason for the payment not having been made to the
Purchaser's Scheme by the expiry of the time limit referred to
above is the failure of the Purchaser's Scheme for whatever
reason to accept the whole or any part of the payment or if
the reason is any other reason outside the control of the
Trustees of the Scheme but, if no payment is due from the
Principal Employer because of any such other reason outside
the control of the Scheme, payment will become due (subject to
the other provisions of this paragraph 3) if and when such
reason ceases to exist;
3.8.2 unless the Purchaser undertakes in writing to the Principal
Employer to pay the Shortfall forthwith to the Purchaser's
Scheme and to procure that such amount be applied by the
Purchaser's Scheme to provide benefits for the Transferring
Members in respect of their pensionable service in the Scheme
before the Completion Date as mentioned in paragraph 4.
4 BENEFITS TO BE PROVIDED BY THE PURCHASER'S SCHEME IN RESPECT OF
SERVICE UNDER THE SCHEME
4.1 The Purchaser shall procure that the pension entitlements under the
Purchaser's Scheme in respect of any member of the Purchaser's Scheme
who:
4.1.1 was a member of the Scheme immediately before the Completion
Date;
4.1.2 has not consented to a transfer of assets being made for him
from the Scheme to the Purchaser's Scheme; and
4.1.3 who dies after the Completion Date, but before the last date
on which he is able to give such consent under the invitation
referred to in paragraph 2.3.
will be augmented. The augmentation will be such that the amount of
the widow's or widower's and any child's or dependant's pension which
is payable in respect of such member from the Purchaser's Scheme shall
be increased so that the total of such benefits payable in respect of
such member under the Scheme and the Purchaser's Scheme shall be the
same as that which would have been payable had that employee died
while in service immediately before the Completion Date.
4.2 The Purchaser will ensure that the Purchaser's Scheme accepts
liability for each Transferring Member's accrued rights to a
guaranteed minimum pension and accrued rights under section 9(2B) of
the Pension Schemes Act 1993 and provides benefits in respect of such
payment in accordance with regulations made under Sections 12C or 20
of that Act.
4.3 The Purchaser will ensure that the Purchaser's Scheme credits, with
effect from the Completion Date, each Transferring Member with final
salary type benefit overall at least equal in value, as determined by
the Scheme Actuary with the agreement of the Purchaser's Actuary, to
those applying for and in respect of him under the Scheme immediately
before the Completion Date. For this purpose benefits will be valued
under both schemes on the basis of the assumptions and methods set out
in the Actuary's Letter. If the trustees of the Scheme notify the
trustees of the Purchaser's Scheme that a specified part of the assets
transferred for a particular Transferring Member relates to benefits
not calculated by reference to pensionable service, the Purchaser will
ensure that he is entitled to equivalent benefits under its scheme.
5 NO ASSISTANCE
The Purchaser agrees that neither it nor the Company nor the
Purchaser's Scheme will take any action or provide any assistance to
any person (direct or indirect) which might or would result in any
claim being made against the Trustees of the Scheme or the Principal
Employer, or in the Scheme transferring a smaller or a larger amount
than the amount payable under paragraph 3.1 to the Purchaser's Scheme.
6 DISPUTES
In the event that the Scheme Actuary and the Purchaser's Actuary shall
not agree any matter on which their agreement is required under this
Schedule, the matter may be referred upon the application of either
the Principal Employer or the Purchaser to an independent actuary
appointed by the President for the time being of the Institute of
Actuaries on the application of either the Principal Employer or the
Purchaser. That actuary shall determine the matter in accordance with
this Schedule (including the Actuary's Letter) acting as an expert and
not as an arbitrator and his decision shall be final and binding. His
expenses shall be borne equally by the Principal Employer and the
Purchaser unless he makes a recommendation that they shall be borne
otherwise.
7 VOLUNTARY CONTRIBUTIONS
Nothing previously contained in this Schedule will apply to voluntary
contributions or to benefits secured by them. However, the Principal
Employer will use reasonable endeavours to ensure that the assets
representing Transferring Members' voluntary contributions will be
transferred to the Purchaser's Scheme, and the Purchaser will ensure
that in that event its scheme provides benefits for the members
concerned equal in value to the assets transferred.
SCHEDULE 5
IMPLEMENTATION AGREEMENTS
(SUB-CLAUSE 1.1)
1.1 Service Agreement for transitional IT arrangements between the Seller
(or an Affiliate of the Seller) and the Company
1.2 Service Agreement (Eutech) between ICI (or an Affiliate of ICI) and
the Company
2 Product Exchange Agreement between TEL and the Company
3 Deed of Guarantee (to include a guarantee given by the Purchaser's
ultimate parent undertaking in respect of the Company's obligations
under the Hivedown Agreement)
4 Transfers of the legal interests in respect of the Nettleton Bottom
Quarry and Killingholme properties in favour of the Purchaser or any
of its Affiliates
SCHEDULE 6
ENVIRONMENT
(CLAUSE 11)
1 INTERPRETATION
For the purposes of this Schedule 6, words and expressions defined in
the Share Sale Agreement to which this Schedule 6 is attached shall
have the same meaning in this Schedule 6 and, in addition, the
following terms shall have the following meanings:
"COMMERCIALLY REASONABLE EXPENSES" are those costs and expenses which
a reasonable person acting in a commercially prudent manner, taking
into account (but without imposing an absolute requirement) the need
to minimise his expenditure, would expend, in the case of any
obligation to carry out the remediation of Environmental Contamination
pursuant to Environmental Laws, to meet that obligation. For the
avoidance of doubt, Commercially Reasonable Expenses shall not include
any costs or expenses to the extent that they are incurred as a result
of the adoption or imposition of standards of clean-up materially more
stringent than those which are provided for under Environmental Laws;
"CONTROLLED WATERS" means waters including any ground or surface
waters;
"COUNTER INDEMNITY" means the indemnity defined in paragraph 3.1;
"EA PROVISIONS" means Part II and paragraphs 161 and 162 of schedule
22 of the Environment Act 1995 as enacted at Completion and the first
complete set of regulations and guidance under those provisions except
(in the event that they are not already in issue at Completion) to the
extent that any of the above, when they come into force, are
materially more onerous than the versions of such provisions which are
enacted or exist in draft form as at Completion;
"ENVIRONMENT" means air, Controlled Waters, land (whether on, in or
below such land, excluding any buildings or other permanent structures
on, in or below the land) but including the surface of any river bed,
the surface of any sea bed or any other land covered by water, and
flora and fauna and all other natural resources;
"ENVIRONMENTAL CONTAMINATION" means any discharge, transport,
emission, release, leakage, spillage, escape or disposal of Hazardous
Material at or from the Site(s) onto or into any part of the
Environment;
"ENVIRONMENTAL LAWS" means any and all legislation (whether civil,
criminal or administrative), statutes, treaty, statutory instrument,
directive bylaw or judgment (including any judgment by the European
Court of Justice), regulations, notices orders government circular,
code of practice, and guidance note or decision of any competent
regulatory body or common law relating to pollution or protection of
the Environment which as at Completion are in effect and capable of
enforcement by legal process in the country in which the Site(s) are
situated, save that the EA Provisions shall be deemed to be in force
at Completion;
"ENVIRONMENTAL LIABILITIES" means all claims, costs, damages, expenses
(including reasonable professional fees incurred), losses, liabilities
(including without limitation liability to third parties), fines or
penalties suffered or incurred by the Company, the Purchaser or its
Affiliates (or the Seller or its Affiliates in the case of the Counter
Indemnity) as a direct consequence of or in connection with any
Environmental Proceeding;
BUT EXCLUDING any claims, costs, damages, expenses, losses,
liabilities:
(i) in respect of capital expenditure on plant and equipment
other than capital to carry out remediation of
Environmental Contamination pursuant to Environmental
Laws;
(ii)in respect of loss of anticipated profits, loss of
revenue, or any other loss in respect of business
interruption;
(iii)where applicable to the extent that they are not
Commercially Reasonable Expenses;
"ENVIRONMENTAL PROCEEDING" means:
(i) subject to (ii) below any writ and/or interim or final
judicial or administrative decree, judgment, injunction,
order, or notice;
(a) under which the Company the Purchaser or its
Affiliates (or the Seller or its Affiliates in the
case of the Counter Indemnity) are obliged by
Environmental Laws or legal process pursuant to
Environmental Laws to undertake or pay the cost of
remediation or with which the aforesaid parties are
otherwise obliged to comply; or
(b) as a result of any violation or alleged violation of
Environmental Laws; or
(c) as a result pursuant to Environmental Laws of:
(aa)any personal injury to any third party (and, in
the case only of the Indemnity other than to
officers or employees of the Company, the
Purchaser and its Affiliates and any contractors
or agents of the Company, the Purchaser or its
Affiliates save to the extent in the case of
personal injury (other than asbestos-related
personal injury) after Completion that the
Purchaser neither knew nor reasonably ought to
have known of the circumstances giving rise to
such personal injury); or
(bb)damage to any property of any third party (and,
in the case only of the Indemnity other than as a
result of damage after Completion to the property
of any officers or employees of the Company, the
Purchaser or its Affiliates and any contractors
or agents of the Purchaser or its Affiliates save
to the extent, in the case of damage occurring
after Completion the Purchaser neither knew nor
reasonably ought to have known of the
circumstances giving rise to the damage to
property);
(ii)any agreement between the Seller and Purchaser, or in the
event of disagreement any determination by the Experts,
that it is Reasonably Necessary to undertake remediation
of Environmental Contamination which would but for the
fact that an environmental authority is unaware of it be
more likely than not to result in an environmental
authority bringing an Environmental Proceeding under
(i)(a) in the definition of Environmental Proceeding and
which would result in Environmental Liabilities;
"HAZARDOUS MATERIAL" means hazardous poisonous, dangerous, noxious, or
toxic substances, pollutants or wastes;
"INDEMNITY" means the indemnities contained in paragraph 2 below;
"OFF SITE DISPOSAL TIPS" means any properties used as a landfill or
otherwise for the deposit of waste which are located anywhere other
than on sites which sites at or any time prior to Completion are or
have been used for manufacturing or other operations of the Company,
the Seller and/or its Affiliates;
"REASONABLY NECESSARY" means reasonably necessary to avoid or avert or
mitigate the development of substantial adverse and material pollution
of the Environment or harm to human health which will arise within a
period of six months; and
"SITES(S)" means the Grimsby Properties (including, without
limitation, Off Site Disposal Tips).
2 INDEMNITY
2.1 Subject to the provisions of this agreement, the Seller undertakes to
the Purchaser (for the benefit of the Company, the Purchaser and each
of its Affiliates) that it will indemnify and hold harmless the
Company, the Purchaser and each of its Affiliates against:
2.1.1 all Environmental Liabilities arising at or from the Site(s),
to the extent that such Environmental Liabilities are a result
of Environmental Contamination occurring on or before
Completion; and
2.1.2 all costs, damages expenses, losses, fines or penalties
suffered or incurred by the Company or the Purchaser or its
Affiliates as a result of any prosecutions commenced or
proceedings taken, or notices served or other formal
enforcement action between [DATE OF SIGNATURE OF THE 1998
FRAMEWORK AGREEMENT] 1998 and Completion by any competent
regulatory body in connection with the Environment or health
and safety as a result of any breaches of any Environmental
Laws related to the operation of those Sites which are owned,
occupied or used by the Company at [DATE OF SIGNATURE OF THE
1998 FRAMEWORK AGREEMENT] 1998. For the avoidance of doubt,
damages in this paragraph 2.1.2 includes any capital
expenditure reasonably required to remedy such breaches; and
2.2 notwithstanding paragraphs 2.1 above and 4.1 below neither the Seller
nor any of its Affiliates shall be liable under the Indemnity or
otherwise to the extent that such liability arises from or is
attributable to the failure of the Purchaser to comply or procure the
Company's compliance with the provisions of paragraphs 4.2 and 5 to
14.
3 THE COUNTER INDEMNITY
3.1 The Purchaser undertakes to the Seller (for the benefit of the Seller
and each of its Affiliates) that, subject to the provisions of this
agreement, it will indemnify and hold harmless (the "Counter
Indemnity") the Seller and each of its Affiliates from and against all
Environmental Liabilities arising at or from the Site(s) after
Completion save to the extent that such Environmental Liabilities fall
within the Indemnity.
3.2 Notwithstanding sub-paragraph 3.1 above, the Purchaser and its
Affiliates shall not be liable to the Seller under the Counter
Indemnity or otherwise to the extent that such liability arises from
or is attributable to the failure of the Seller to comply with the
provisions of paragraphs 3.3, 4.2, 6-8, 10, 11, 12.1, 13 and 14 of
this Schedule.
3.3 The Seller shall take all reasonable steps to avoid or mitigate any
Environmental Liabilities and potential Environmental Liabilities
which may give rise to a claim under or in connection with this
Counter Indemnity, howsoever arising.
3.4 The provisions of paragraphs 4.2 and 12.1 shall apply equally mutatis
mutandis in respect of the Seller and the Purchaser's rights or
obligations in respect of the Counter Indemnity.
4 LIMITATIONS
4.1 Neither the Seller nor any of its Affiliates shall be liable under the
Indemnity to the extent that Environmental Liabilities have arisen,
been increased, exacerbated, enhanced or caused as a result of any act
or omission whether direct or indirect of the Company, the Purchaser
or any Affiliates, employees, agents or contractors thereof after
Completion (including, without limitation, any change of use of the
Site(s) which for the avoidance of doubt shall include closure of all
or any part of the Sites but shall not include any material change of
process within the existing plant and/or buildings or any material
change to or development of the business and operations carried on at
any Site which does not result in any Site or any part of any Site
ceasing to be used for general industrial/manufacturing of a type
materially similar to the existing Site operation and the word
"omission" as used in this paragraph 4.1 shall not mean any failure by
the Company or Purchaser to carry out remediation or preventative
action in circumstances where it is not within their power to do so or
where the Purchaser is not aware or could not reasonably have been
aware of the Environmental Liabilities in question or where (without
prejudice to the obligations of the Purchaser under paragraph 5) the
rights of the Purchaser to bring a claim under the Indemnity would be
prejudiced as a result thereof.
4.2 No claim may be made by the Purchaser for any Environmental
Liabilities under this Indemnity against the Seller to the extent that
any Environmental Liabilities arise:
4.2.1 as a result directly or indirectly of information voluntarily
given by the Purchaser or the Company (but only post
Completion in the case of the Company) to a regulatory
authority in circumstances other than where there is a
mandatory reporting requirement under Environmental Laws or
where information is given as required in the context of
applications for or variations to authorisations, licences and
other forms of environmental consent required by the business
in the course of the Company's or the Purchaser's normal
business activities or where the Seller has previously
proposed or approved this course of action in writing; and
4.2.2 from any admission of liability by a representative of the
Purchaser holding a rank not less than that of Senior Vice
President in respect of any clean-up which needs to be done,
except where the Seller has approved such admission in writing
such approval not to be unreasonably withheld or delayed.
4.3 No claim against the Seller or its Affiliates under the terms of the
Indemnity for any Environmental Liabilities shall be valid unless
notice has been served on the Seller in accordance with the provisions
of paragraph 7 within 10 years of Completion.
4.4 The Seller's liability under the Indemnity shall be limited in
accordance with the provisions of Clause 5, except for sub-Clause
5.14.2 (save for the proviso to sub-Clause 5.14) and sub-Clause 5.15,
the subject matter of which will be governed by the provisions of this
Schedule.
4.5 In the event that the Indemnitor (as defined in paragraph 6.1) either
incurs external charges, costs and expenses for environmental services
or internal charges for its own environmental services, in either case
including but not limited to testing and/or analytical services and/or
contaminated soil disposal facilities, in connection with or in
relation to any actual or potential Environmental Liabilities under
the Indemnity or Counter Indemnity (as appropriate) then such external
charges, costs and expenses shall be deemed to be payments made under
the Indemnity or Counter Indemnity (as appropriate). Any internal
charges shall be made on the same basis as the Indemnitor charges to
its own business or its Affiliates.
4.6 It is hereby expressly agreed that, save where the Seller has accepted
liability or becomes otherwise liable under the terms of the
Indemnity, all costs incurred by the Purchaser in carrying out
environmental analyses and tests of the Site(s) (and its (or their)
surrounds) shall be borne by the Purchaser.
4.7 The Seller shall be liable under the Indemnity for any
asbestos-related personal injury unless and to the extent that any
works carried out by the Purchaser or its Affiliates or the Company
after Completion, were not carried out by a reputable contractor or
contractors, who were duly and properly authorised or approved to
undertake such works to at least the standards of the relevant
federal, state or other regulatory authorities published by or in
operation (in accordance with good industry practice) at all times
during the carrying out of such works.
5 MITIGATION
The Purchaser shall take all reasonable steps after Completion to
avoid or mitigate any Environmental Liabilities and/or potential
Environmental Liabilities to the extent it is within the Purchaser's
power to do so, which may give rise to a claim under or in connection
with this Indemnity howsoever arising. Such steps will include but
shall not be limited to:
5.1 carrying out (where reasonably practicable) appropriate soil tests
before taking any action which is likely to cause a material
disturbance to soil;
5.2 where reasonably practicable carrying on its activities on the Site(s)
so as to minimise disturbance to known areas of existing or probable
soil contamination (other than deliberate removal of such contaminated
soil) without incurring abnormal unusual or excessive cost in so
doing;
5.3 the Purchaser (with the approval of the Seller not to be unreasonably
withheld or delayed) settling a claim of any party (not being an
Affiliate of the Purchaser) which will or may fall within the terms of
the Indemnity, the costs and expenses associated with such settlement
(so approved by the Seller) being deemed to be Environmental
Liabilities for the purposes of this agreement) provided always that
nothing in this paragraph 5.3 shall oblige the Purchaser to enter into
any settlement which it does not, in its sole discretion, consider to
be in the best interests of its operations;
5.4 making reasonable and timely efforts to pursue claims against any
third parties (including insurers) who may have some liability to the
Purchaser in respect of the matter in question provided always that
this shall not limit or restrict or operate in any way as a
pre-condition to the rights of the Purchaser to make a claim under
this Indemnity; and
5.5 using reasonable endeavours to avoid acts or omissions of the nature
described in paragraph 4.1.
6 NOTIFICATION
6.1 As soon as reasonably practicable after either party becomes aware of
any actual or potential Environmental Liabilities which may give rise
to a claim by it under the Indemnity or Counter Indemnity (the
"Claimant") (whether or not the Claimant is of the opinion that it has
a valid claim against the other party under the Indemnity or Counter
Indemnity (the "Indemnitor")) the Claimant shall give written notice
thereof to the Indemnitor (and thereafter will keep the Indemnitor
fully informed of all material developments relating thereto). Such
written notice shall include all material details of any actual or
potential Environmental Liabilities (including the Claimant's
reasonable estimate of the extent of and, where reasonably
practicable, the cost of remediation of the Environmental Liabilities,
as a result thereof).
6.2 Neither party shall admit, settle or discharge any claim or liability
which might constitute a claim against the other under the Indemnity
or Counter Indemnity (as appropriate) without having first served a
notice under this paragraph 6 and given the other a reasonable
opportunity to consider the circumstances referred to in the said
notice.
7 CLAIMS
In the event that the Claimant wishes to make a claim against the
Indemnitor under the Indemnity or Counter Indemnity (as appropriate)
then it shall do so by giving notice in writing of the same to the
Indemnitor giving such details as are then in its possession of the
relevant subject matter of such claim.
8 CONDUCT
If any notice is received by either party under paragraphs 6 or 7 the
Claimant shall if so requested by the Indemnitor take all steps which
are necessary and reasonable to avoid, resist, appeal, compromise or
defend any claim and any adjudication in respect thereof, (subject to
the Claimant being indemnified against all cost and expenses which may
reasonably and necessarily be incurred in connection therewith) and
the Indemnitor shall (subject to the provisions of this paragraph), at
its request, be allowed to conduct any negotiations, proceedings or
appeals incidental thereto PROVIDED ALWAYS that if the claim relates
to or arises from a Site which at the time is owned, occupied or used
by the Company and which is operational at the date of the notice
under paragraph 7 then the Purchaser shall have conduct of all
negotiations, proceedings or appeals incidental thereto but shall
nonetheless keep the Seller fully informed of all material
developments relating to the subject matter of the claims.
9 SITE ACCESS
If any notice is received by the Seller under paragraphs 6 or 7:
9.1 the Seller and/or its agents and contractors shall be free to have
access to any Site(s) to the extent it is within the power of the
Company, the Purchaser or its Affiliates, during normal business
hours, and after reasonable prior notice, and, if so required, in the
presence of an authorised representative of the Purchaser to assess
(including but not limited to assessment by soil sampling and testing)
the extent of the Environmental Liabilities and/or potential
Environmental Liabilities and to determine the action required in
order to remediate such liabilities; (such actions to be subject to
the prior agreement of the Purchaser (including as to the action to be
taken) such agreement not to be unreasonably withheld) and
9.2 the Purchaser shall (during normal business hours) allow the Seller or
its agents access to inspect and take copies of such books and records
of the business of the Company and/or the Purchaser relating to the
Site(s) as may be necessary in connection with any Environmental
Liabilities and/or potential Environmental Liabilities.
10 DISCUSSIONS
Upon either party having given a notice under paragraphs 6 or 7,
either the Seller or the Purchaser may request a meeting as soon as
practicable to discuss the matter (and if either does so the other
party shall comply promptly with such request) and, irrespective of
whether there has been any agreement on liability, each party shall be
fully involved in any discussions and/or negotiations with any party
imposing or seeking to impose any Environmental Liabilities.
11 DISPUTE RESOLUTION
Upon either party giving a notice in accordance with paragraph 7, in
the event that the Seller and the Purchaser are unable to agree
promptly any factual matter relevant to a claim under this Indemnity
or Counter Indemnity (as appropriate) or in the event of any other
matter being referred to the Experts in accordance with this Schedule
6 then the following provisions of this paragraph 11 shall apply:
11.1 a reputable independent firm of experts (the "Experts") (who shall act
as experts and not arbitrators) in relation to the Environment
relevant to the claim or potential claim (having at least ten years
relevant experience) shall be appointed by mutual agreement of the
parties hereto (and the parties shall each be obliged to use their
respective best endeavours to reach agreement as soon as practicable)
to resolve any factual matter in dispute between the parties but not
including any interpretation of laws or regulations as they apply to
such factual matters or any conclusions regarding responsibility or
liability for or in relation to any factual matters. The Experts shall
be offered the appointment within 15 Business Days of the parties
reaching such mutual agreement and shall be notified in writing of the
provisions of sub-paragraph 11.7 below. Failing such mutual agreement
on the appointment of Experts, the parties shall promptly refer the
issue, at their joint cost, to the President for the time being of the
Royal Institute of Chartered Surveyors in the United Kingdom with
instructions to appoint suitable Experts within fourteen (14) days of
receipt of such instructions;
11.2 the said Experts shall only be dismissed by the mutual agreement of
the parties hereto;
11.3 both parties shall promptly and simultaneously exchange with each
other and submit to the Experts, and in any event in accordance with
the Experts' written directions, their arguments and submissions in
connection with any matter of fact referred to him in accordance with
this paragraph 11;
11.4 following receipt by the Experts of the written arguments and other
submissions of the parties pursuant to paragraph 11.3, the parties
shall instruct the Experts to issue, as soon as reasonably
practicable, a formal written opinion pertaining to the matter of fact
referred to them. In any event the Experts shall be instructed to
present the said opinion within two months of receiving the written
arguments and other submissions of the parties pursuant to paragraph
11.3;
11.5 the formal written opinion of the Experts issued pursuant to paragraph
11.4 shall be conclusive in any proceedings between the parties hereto
as to the question of fact so determined;
11.6 the fees and expenses of the Experts shall be borne equally by the
Seller and the Purchaser (unless otherwise directed by the Experts);
and
11.7 the Experts, and any company, firm, partnership or other organisation
with which the Experts are connected shall not be eligible to be
considered to undertake any clean-up work in respect of the claim for
which they have so acted on or around the Site(s), save where the
parties hereto mutually agree to waive this provision. For the
avoidance of doubt, either party may withhold such consent in any
event.
12 ACCEPTANCE OF LIABILITY
In the event that the Seller admits that it has any liability to the
Purchaser under the Indemnity (or where the Seller agrees to accept
the Purchaser's claim as falling within the Indemnity notwithstanding
the fact that no Environmental Liability may at that point in time
have arisen):
12.1 the Seller shall have the right independently to determine whatever
measures are appropriate in order to remediate pursuant to applicable
Environmental Laws the subject matter of the claim under the Indemnity
and furthermore the Seller shall have the right independently to carry
out such remediation itself (or through suitable third party agents or
contractors) provided that in so doing the Seller (or its said agents
or contractors) shall be obliged to use reasonable endeavours to avoid
causing undue interruption to the conduct of the business of the
Company and/or the Purchaser;
12.2 the Seller and/or its agents and contractors shall, in addition to the
rights of access provided for in paragraph 9 above, be free to have
access to the Site(s) if currently owned, leased or, where within the
power of the Company and its Affiliates during normal business hours
after reasonable prior notice, and if so required, in the presence of
an authorised representative of the Purchaser, to carry out the
remediation referred to in paragraph 12.1 above.
13 STATEMENTS
In the event of any circumstances arising which do or may give rise to
Environmental Liabilities which may fall within the terms of the
Indemnity or the Counter Indemnity (as appropriate) neither the
Company, Purchaser nor the Seller (nor any of their respective
Affiliates) shall make any public statements (including, for the
avoidance of doubt, any statement to any regulatory authority, unless
required by law or in an emergency) regarding such circumstances
without first discussing with the other party and reaching written
agreement (such agreement not to be unreasonably withheld or delayed)
on the text of any such public statement before it is made.
14 GENERAL
14.1 Any information, records, or other material of one party shall be
treated as strictly confidential by the other party except when it is
required to be used in order to comply with an order of the court or
regulatory authority or it is used by the other party to enforce its
rights under this Schedule 6 or so as to make an insurance claim.
14.2 The Purchaser's and its Affiliates' exclusive remedies in respect of
any claims which fall within the scope of the Indemnity shall be in
accordance with the provisions of this Schedule 6, and the Purchaser
on behalf of itself and its Affiliates hereby waives all other
remedies whether in contract, tort (including, for the avoidance of
doubt, negligence), or howsoever otherwise arising which it may have
against the Seller or any of its Affiliates at law or in equity in
respect of the matters which fall within the scope of the Indemnity
and, for the avoidance of doubt, if such a claim under this Schedule
could also give rise to a Claim or a claim under any other provision
of this agreement in respect of the same subject matter, the Purchaser
may only bring a claim under this Schedule 6.
14.3 The Seller undertakes to co-operate with the Purchaser and assist the
Purchaser in achieving a transfer to the Purchaser (or as it directs)
of all Environmental Authorisations, permits and licences held by the
Seller at Completion.
15 CO-OPERATION
The Purchaser undertakes that wherever co-operation is required by the
Company to ensure compliance with the Purchaser's obligations
hereunder, the Purchaser will use its reasonable endeavours to ensure
that the Company provides the requisite co-operation.
SCHEDULE 7
(SUB-CLAUSE 1.7)
David Allen
David Busby
David Croft
Peter Davidson
Colin Deas
Rachel Draper
Martin Hinnigan
Garry Hodgson
John Jackson
Rob Louw
Ian Machin
Mahomed Maiter
Michael Maughan
Chris Milross
David Porter
David Rochester
Matthew Rose
Mike Wardropper
Peter Waugh
David Williams
SCHEDULE 8
GRIMSBY FINANCIAL INFORMATION
(SUB-CLAUSE 1.1)
GBP millions
Fixed Assets 74.46
Investments -
Stocks 11.18
Operating Debtors 1.65
Non Operating Debtors -
Operating Creditors
less than 1 year (8.88)
Non Operating Creditors
less than 1 year (0.51)
--------
77.90
--------
Net Debt -
Provisions -
Deferred Tax -
--------
-
SCHEDULE 9
ACTUARY'S LETTER
(Schedule 4)
ANNEX 1
(SCHEDULE 3 A.10)
DATA ROOM DOCUMENTS
GRIMSBY
ENVIRONMENTAL
CONSENTS
IPC Consents: 8.1.1/01, 8.5/05, 8.1.1/20, 18/29
Waste Disposal Consents: 1.1.1/196, 1.1.1/92, 8.3/21, 8.1.1/02,
8.1.1/03
Discharge Consents: 1.1.1/212
Water Abstraction Licences: 1.1.1/56, 1.1.1/57, 1.1.1/82
Radioactivity Licences: 8.1.1/12
REPORTS
8.2.3, 8.8.3/01, 8.3/01, 8.3/02, 8.3/03, 8.3/04, 8.6/02, 8.6/01,
8.6/03, 8.10/03, 17/03, 8.14/01, 8.7/01, 8.3/06, 8.3/11, 8.3/12,
8.3/17, 8.12/02, 8.12/03, 8.13/03, 8.3/23, 8.3/16, 8.8.1/01, 8.8.2/01,
8.2/01
REPLIES
18.35, 8.1.1/19, 18/15, 8.1.1/17, 8.3/27, 8.3/29, 8/02, 1.1.1/215,
18/54, 18/14, 18/52, 18/32, 18/36, 8.8.3/02, 8.8.3/03, 18/05, 8.6/01,
8.3/30, 18/07, 18/28
IP
3.1/01 Technology Transfer Agreement between TGL, TGI,
TGSL and EI Du Pont de Nemours
3.1/02 Name Agreement between TEL, TAI and EI Du Pont
de Nemours
3.1/03 Name Agreement between TGL, TCI and EI Du Pont
de Nemours
3.1/04 Name Agreement between TEL, TGL, TGSL and EI Du
Pont
3.1/05 Assignment and Substitution Agreement between
TGL, TGSL, EI Du Pont de Nemours and Company
and ICI
3.1/06 Patent and Know-how Licence between TCI and EI
Du Pont
4.2/01 Note on Barnburgh IT Systems dated 26/3/98 from
Ian Machin Tioxide Group IT Manager
4.3/05 Grimsby IT Systems Map
4.3/06 Tioxide UK IT Systems Map
4.6/01 Audit Report on Grimsby Site following a review
of compliance with Millenium Programme
4.6/02 Millenium Compliance - Grimsby
4.3/07 Standard Software Licence for OSI software
(Factory Information Systems)
4.3/11 Agreement between Tioxide Europe and Aspen
Technology in relation to Calciner Control
software
5.20/02 Response - Grimsby Information Technology
structure and employee details
PENSIONS
6.1/07 Response to questions re: Pension Fund (Ref:
No. P6)
18/06 Response to Question P1 relating to the Tioxide
Pension Fund
EMPLOYMENT
5.1/01 Principal Terms and conditions of Employment
5.1/30 Colin Deas Employment Contract
5.3/02 List of contractors with which Tioxide has
agreed rates
5.16/03 List of all current employee claims (Ref: No.
LIT5)
5.30/01 List of Grimsby leadership team and staff
members
10.1/05 Details of UK personal injury claims relating
to Grimsby (current and archived)
CONTRACTS
2.1/02 Agreement between British Railways Board and
Tioxide Europe for the movement of
non-hazardous chemical gypsum waste by rail.
2.1/47 Contract between (1) Tioxide Group Plc (now
Tioxide Group Ltd) as agent for Tioxide Europe
SA (Spain) and (2) Westralian Sands Ltd. for
the supply of ilmenite.
2.1/50 Agreement between Tioxide Group Services Ltd
and [ ] for the supply of copperas.
18/19 Agreement for sale of gypsum to major contract
customer.
TAX
1.2.2/01 Details of tangible assets with a depreciated
value in excess of (pound)100,000.
PROPERTY
1.1.1/146 Land Certificate of Great Coates, Grimsby.
Title number HS98246 - Proprietor being Tioxide
Europe UK Ltd together with plan
18/13 Response to Question 0P1 relating to the use of
the Landfill Site on Humber Road
1.1.1/197 Licence between Associated British Ports
("ABP") and Tioxide Europe Limited regarding
land at the south west corner of Immingham Dock
of 5.1 acres, dated 15 November 1991
POTENTIAL LITIGATION
10.1/01 Correspondence with Knauf re: potential dispute
10.1/02 Summary of a potential claim by AAF Ltd
10.1/03 Summary of a potential claim against Thomas
Broadbent & Sons Ltd
10.1/04 Summary of a potential claim by Knauf
10.1/06 Summary of potential personal injury claim
10.1/11 Latest correspondence with Knauf
MISCELLANEOUS
18/03 Response to NL/Kronos questions on North
American streaming and capability
5.12/04 Description of industrial accidents 1995 and
1996
5.12/02 List of industrial accidents 1996 - 1998
5.16/02 List of estimated claims settlements for
1993-1997 claims
1.2.2/01 Details of Tangible Assets with a depreciated
value in excess of GBP100,000
5/02 Grimsby & E A West Response re: breakdown of
manufacturing costs
18/02 Requested financial information
18/37 Response - analysis of debtor and creditor
balances for Grimsby and E A West
18/62 Variable selling cost from Grimsby Works to
America
8.2/02 Schedule of Grimsby Car Damage Claim
18/21 Response to Q.F9 relating to neutralisation
costs
SIGNATURES
SIGNED by }
for and on behalf of
TIOXIDE EUROPE LIMITED
SIGNED by }
or and on behalf of
N L INDUSTRIES, INC
EXHIBIT 10.5
PRODUCT EXCHANGE AGREEMENT
BETWEEN
NEWCO, LTD.
AND
TIOXIDE EUROPE, LTD.
INDEX
ARTICLE TITLE
1. DEFINITIONS
2. SUPPLY OF PRODUCTS
3. QUANTITIES AND FORECASTS.
4. ORDER AND DELIVERY
5. PRODUCT IMBALANCES
6. QUALITY, ADJUSTMENTS
7. TERM AND TERMINATION
8. WARRANTY
9. CLAIMS
10. REMEDY
11. PATENT WARRANTY
12. NO CONSEQUENTIAL DAMAGES
13. FORCE MAJEURE
14. ALLOCATION
15. GOVERNMENT ACTION
16. USER PROTECTION AND PRODUCT INFORMATION
17. LABELING AND LITERATURE, NAME ON PRODUCT
18. TAXES, INTEREST, VAT, IMPORT DUTIES
19. CONFIDENTIAL INFORMATION
20. DISPUTE RESOLUTION
21. ASSIGNMENT
22. NO AGENCY AND NO PARTNERSHIP
23. ENTIRE AGREEMENT/AMENDMENTS/SEVERABILITY
24. WAIVER
25. NOTICES
26. GOVERNING LAW
27. COVENANT NOT TO COMPETE
28. ASSURANCES
SCHEDULE "A" - TIOXIDE FINISHED PRODUCTS
SCHEDULE "B" - NEWCO FINISHED PRODUCTS
SCHEDULE "C" - TIOXIDE CALCINER DISCHARGE PRODUCTS
SCHEDULE "D" - NEWCO CALCINER DISCHARGE PRODUCTS
SCHEDULE "E" - CUSTOMER LIST (SULFATE PRODUCTS)
SCHEDULE "F" - CUSTOMER LIST (TC4)
PRODUCT EXCHANGE AGREEMENT
This Product Exchange Agreement ("Agreement") is entered into this
_________day of _________, 1998, by and between NEWCO, Ltd. ("Newco") a
corporation incorporated in England and Wales and Tioxide Europe, Ltd., ("TEL"),
a corporation of the United Kingdom for the purpose of exchanging Products, as
defined herein and specified in the attached Schedules, collectively referred to
herein as the "parties" or singularly as "party" and each party hereto variously
referred to as the "supplying party" or the "receiving party" as the case may
be.
Whereas, TEL, an Affiliate of DuPont, holds one-hundred percent of the
shares of stock of Newco; and,
Whereas, the primary asset of Newco is the titanium dioxide
manufacturing plant located at Grimsby, U.K. (the "Grimsby Plant"); and
Whereas, concurrent with the execution of this Agreement, Purchaser is
acquiring the Tioxide North American titanium dioxide business; and
Whereas, concurrent with the execution of this Agreement, TEL has agreed
to sell the whole of the issued share capital in Newco, to Purchaser to provide
Purchaser and its Affiliates with manufacturing capacity to support Purchaser's
North American business; and
Whereas, the Products currently sold in North America include specific
products not currently manufactured by Newco and the parties wish to ensure
continued availability of the Products while Newco and its Affiliates expand
their product range to ensure continuity and while the customers for such
Products carry out the necessary trials to approve Products newly manufactured;
and
Whereas, the Products currently sold by the Grimsby Plant are desired by
TEL (and its Affiliates) for sale in Europe for a limited period of time; and
Whereas, TEL (and its Affiliates) and Newco (and its Affiliates) therefore
wish, for a limited period of time, to exchange as between one another equal, or
close to equal quantities of the Products specified below for no additional
consideration other than the Products themselves, or as otherwise specified on
the terms and subject to the conditions contained herein; and
Whereas, the parties intend to minimize both the total quantity of
products exchanged and the duration of the exchange so as independently to
supply the needs of each company's own customers at or before the end of the
Contract Period; and
Whereas, the parties recognize that imbalances may result in one party
hereto not receiving the same quantity of Product that said party is supplying
to the receiving party; and
Whereas, the terms contained herein are, among other things, developed to
address said Product Imbalance as defined below in furtherance of the goals of
this Agreement;
NOW THEREFORE, the parties hereto agree to enter into this Product
Exchange Agreement on the terms set forth below:
1. Definitions:
In this Agreement, including the attached Schedules, the recitals,
words and expressions shall have the following meaning:
"Affiliates" shall have the same meaning as set forth in the Share
Purchase and Sale Agreement between TEL and Purchaser dated __________, 1998
relating to the sale and purchase of the whole of the issued share capital of
Newco.
"Business Day(s)" means a day (other than a Saturday or Sunday) on
which banks are generally open for normal business in each of London, Montreal
and New York.
"Calciner Discharge Products" means the Newco Calciner Discharge
Products or the Tioxide Calciner Discharge Products or generally both as the
case may be.
"Calciner Discharge Product Imbalance" means at any Product
Imbalance Date any difference in quantity between the Calciner Discharge Product
received by TEL and the Calciner Discharge Product received by Newco in the
period since the later of (1) the Completion Date or (2) the most recent
preceding Product Imbalance Date for which the Product Imbalance has been cured
or eliminated pursuant to Subclauses 5.1.4 through 5.1.6, as the case may be.
"Calciner Discharge Product Value" means an amount in U.S. dollars
determined by calculating the sum of the average per-metric-ton full cost of
manufacturing Calciner Discharge Products experienced by the Tioxide Group
during its 1997 accounting year plus a 2.5% manufacturing margin, such sum to be
escalated annually on December 31 each year by the increase/decrease in the
Retail Prices Index for such year as published by H.M. Government, and
multiplying such escalated sum by the relevant total number of tons of Calciner
Discharge Products.
"Completion Date" as used in this Agreement has the same meaning as
that set forth in the Share Purchase and Sale Agreement between TEL and
Purchaser.
"Contract Period" means the period beginning on the Completion Date
and ending two (2) years thereafter (subject to early termination under Clause 7
of this Agreement).
"Delivery Point" means the supplying party's plant.
"DuPont" means E. I. du Pont de Nemours and Company., a U.S.
(Delaware) Corporation.
"Finished Products" means the Newco Finished Products or the Tioxide
Finished Products or generally both as the case may be.
"Finished Product Imbalance" means at any Product Imbalance Date ,
any difference in quantity between the Finished Products received by TEL and the
Finished Products received by Newco in the period since the later of (1) the
Completion Date, or (2) the most recent preceding Product Imbalance Date for
which the Product Imbalance has been cured or eliminated pursuant to Subclauses
5.1.4 through 5.1.6, as the case may be.
"Finished Product Value" means an amount in U.S. dollars determined
by calculating the sum of the average per-metric-ton full cost of manufacturing
Finished Products experienced by the Tioxide Group during its 1997 accounting
year plus a 2.5% manufacturing margin, such sum to be escalated annually on
December 31 each year by the increase/decrease in the Retail Prices Index for
such year as published by H.M. Government, and multiplying such escalated sum by
the relevant total number of tons of Finished Products.
"Force Majeure" has the meaning set forth in Paragraph 13 of this
Agreement.
"Newco CD Product Imbalance" means a Calciner Discharge Product
Imbalance occurring because Newco receive a quantity of Calciner Discharge
Product from TEL that is greater than the quantity of Calciner Discharge Product
received by TEL from Newco.
"Newco Calciner Discharge Products" means the Products listed in
Schedule "D" meeting the Specifications, being all those grades of calciner
discharge produced at the Grimsby Plant (U.K.) during the three years prior to
the Completion Date for subsequent treatment to become Finished Products. These
Products will be produced by Newco solely at the Grimsby Plant (U.K.)
during the term of this Agreement.
"Newco FP Product Imbalance" means a Finished Product Imbalance
occurring because Newco received a quantity of Finished Product from TEL that is
greater than the quantity of Finished Product received TEL from Newco.
"Newco Finished Products" means the products listed in Schedule "B"
meeting the Specifications, being those Finished Products produced at the
Grimsby Plant (U.K.) during the three years prior to the Completion Date. These
Products will be produced by Newco solely at the Grimsby Plant (U.K.)
during the term of this Agreement.
"Newco Products" means the Newco Calciner Discharge Products and
the Newco Finished Products, collectively.
"Packaging Materials" means all materials used to package the
Products, including, but not limited to, all bags, containers and other
materials that are reasonably necessary to package the Products at the time
title passes in accordance with Clause 4.3.
"Product" means the Calciner Discharge Products or the Finished
Products, as the case may be. "Products" means the Calciner Discharge Products
and the Finished Products, collectively. As used in this Agreement, "Product" or
"Products" may refer to Product or Products produced by the "supplying party" or
received by the "receiving party", or generally both, as the context requires.
"Product Imbalance" means the Calciner Discharge Products
Imbalance or the Finished Products Imbalance.
"Product Imbalance Date" means any one of: (1) the date one year
following the Completion Date, (2) the date of the end of the Contract Period,
or (3) the date of termination of this Agreement pursuant to Subclause 7.2.
"Purchaser" means NL Industries, Inc., a U.S. (New Jersey)
corporation.
"Quality" means, for a given Product grade, a set of values
described within the Specifications.
"Specification(s)" means the standard specifications of the Products
on the day prior to the Completion Date or as amended by agreement in writing
between the parties hereto. For a given Product grade, such standard
Specifications may describe one or more Quality.
"Tioxide CD Product Imbalance" means a Calciner Discharge Product
Imbalance occurring because TEL received a quantity of Calciner Discharge
Product from Newco that is greater than the quantity of Calciner Discharge
Product received by Newco from TEL.
"Tioxide Calciner Discharge Products" means the products listed in
Schedule "C" meeting the Specifications, being all those grades of calciner
discharge produced by TEL or its Affiliates for transfer to North American
during the three years prior to the Completion Date for subsequent treatment to
become Finished Products. These Products will be produced by TEL or its
Affiliates during the term of this Agreement at the former (ICI) Tioxide
manufacturing plants.
"Tioxide FP Product Imbalance" means a Finished Product Imbalance
occurring because TEL received a quantity of Finished Product from Newco that is
greater than the quantity of Finished Product received by Newco from TEL.
"Tioxide Finished Products" means the products listed in Schedule
"A" meeting the Specifications, being those Finished Products sold by Tioxide or
an Affiliate in North America during the three years prior to the Completion
Date. These Products will be produced by TEL or its Affiliates solely at former
(ICI) Tioxide manufacturing plants during the term of this Agreement.
"Tioxide Products" means the Tioxide Calciner Discharge Products
and the Tioxide Finished Products, collectively.
"Value" means the Calciner Discharge Product Value and the
Finished Product Value.
2. Supply of Products.
2.1 During the Contract Period, TEL agrees to deliver to Newco or
Newco's Affiliates and Newco (or Newco's Affiliates, as the case may be) agrees
to accept from TEL the quantity of Tioxide Calciner Discharge Products and of
Tioxide Finished Products as determined in accordance with Clause 3.
2.2 In consideration of the Tioxide Calciner Discharge Products and
the Tioxide Finished Products supplied pursuant to Subclause 2.1, Newco agrees
to deliver to TEL and TEL agrees to accept a like quantity of Newco Calciner
Discharge Products and Newco Finished Products.
2.3 In consideration of any Calciner Discharge Product Imbalance
and/or Finished Product Imbalance that may occur pursuant to Subclauses 2.1 and
2.2, the parties agree to cure such Product Imbalance according to the
provisions of Clause 5.
2.4 For Product supplied according to Subclauses 2.1 and 2.2, the
grade, package type and Quality will be determined by the provisions of
Subclauses 3.2 through 3.6.
3. Quantities and Forecasts.
3.1 Based on current requirements, the parties agree that for
Tioxide Products delivered to Newco:
(a) the total quantity of Tioxide Calciner Discharge Products
listed in Schedule C shall not exceed 25,000 metric tonnes;
(b) the total quantity of Tioxide Finished Products listed in
Schedule A, Part 1 shall not exceed 55,000 metric tonnes;
(c) the total quantity of Tioxide Finished Products listed in
Schedule A, Part 2 shall not exceed 1,000 metric tonnes; and
(d) the total quantity of Tioxide Products shall not exceed
75,000 metric tonnes or such lesser amount specified in the
forecast provided by Newco pursuant to Subclause 3.2;
during any period of 12 consecutive months within the Contract Period. All Newco
forecasts will be for product to be made available by TEL at the Delivery Point
for receipt by Newco. If these quantities are not sufficient to meet Newco's
needs, the parties will negotiate in good faith to establish new limits.
3.2 Within fifteen (15) days after the Completion Date, Newco shall
provide to TEL a 12-month forecast by month for the total quantity of Tioxide
Product needed by specifying a quantity for each grade, Quality, and package
type.
3.3 Within ten (10) days after receipt of Newco's forecast pursuant
to Subclause 3.2, TEL will provide a 12-month forecast by month for the same
total quantity of Newco Product to be supplied to TEL, specifying a quantity for
each grade, Quality and package type.
3.4 The forecasts provided pursuant to Subclauses 3.2 and 3.3 will
be updated monthly on a 12-month rolling basis by each receiving party and
provided:
(a) first from Newco to TEL by the 5th day of the month
preceding the first month of each updated forecast, and
(b) then from TEL to Newco by the 10th day of the month
preceding the first month of each updated forecast.
3.5 On receipt of the reciprocal demand forecasts provided pursuant
to Subclause 3.4, each supplying party will promptly assess its ability to meet
the forecast. If any potential problem is foreseen, the parties will in good
faith promptly discuss the problem, mutually agree on a resolution, and finalize
the forecast by the 15th day of the month preceding the first month of each
updated forecast.
3.6 Each forecast provided according to Subclauses 3.2 - 3.4 shall
be non-binding and for planning purposes only and does not represent a
commitment by the supplying party to deliver and the receiving party to accept
delivery of any quantity of Product, except that for each such forecast:
3.6.1 Month 1 requirements shall be a fixed and binding
commitment by the receiving party to accept delivery of
Product quantities by grade, Quality and package type.
3.6.2 Months 2 and 3 shall be variable by plus or minus 5%
both for total quantity and for quantities by grade, Quality
and package type, but are otherwise binding on the supplying
party and the receiving party.
3.7 The parties will adjust forecasts for Months 4 through 12 in
each rolling forecast in a good faith attempt both to meet the requirements of
Subclause 3.1 and to ensure that the total quantity of Tioxide Products and of
Newco Products are equal at the end of each full year of the Contract Period.
3.8 Each forecast shall also report the total quantities of Calciner
Discharge Product and of Finished Product supplied and received during each full
year following the Completion Date, so as to enable the parties to calculate any
Product Imbalances.
3.9 All exchanges of information pursuant to this Clause 3 are
subject to Clause 19.3 "Confidential Information".
4. Order and Delivery.
4.1 The receiving party shall place all orders for Product from the
supplying party according to commercially reasonable procedures specified by the
supplying party at least forty-five (45) days before the date of requested
delivery, except that:
4.1.1 During the first month following the Completion Date,
the parties will cooperate to maintain continuity of supply
for orders placed prior to the Completion Date for delivery
during that first month; and
4.1.2 By mutual agreement, the parties may waive the 45-day
lead time to help minimize or avoid a Product Imbalance.
4.2 All orders from the receiving party shall be for full container
quantities with each container loaded to the maximum allowable weight compliant
with legal weight restrictions and physical property restrictions and in no
instance more than two (2) grade and package type combinations per container.
The receiving party shall be responsible for providing such containers. The
supplying party will make good faith efforts to avoid package damage associated
with loading products of dissimilar package size. The supplying party will have
no liability for package damage in the case of containers with more than one (1)
grade of product type where such package damage has been caused by the inclusion
of two (2) grade and package type combinations per container.
4.3 All Product will be supplied by the supplying party: "Ex Works".
All title and risk for the Product shall pass to the receiving party when the
product is accepted for loading and shipment at the Delivery Point. The
receiving party shall bear all costs of transportation, freight, duties, taxes
and related costs and is responsible for the logistics of transporting the
Product.
4.4 Product will be delivered by supplying party in Packaging
Materials provided by the receiving party at the cost of the receiving party.
4.4.1 Packaging Materials will be available to the supplying
party for its use at the relevant Delivery Point at least
sixty (60) days in advance of any delivery date in sufficient
quantity to allow supplying party to meets its commitments
hereunder.
4.4.2 All Packaging Materials will display the receiving
party's name, trademark(s), if any, and other relevant
information for use by the supplying party in fulfilling the
receiving party's requests for Product.
4.4.3 Any failure to supply Product due to lack of
availability of proper Packaging Materials will be deemed a
failure of receiving party to perform its obligations
according to the provisions of this Agreement and will not be
a failure of the supplying party to perform its obligations
according to the provisions of this Agreement, unless the
supplying party is solely negligent for lack of availability
of proper Packaging Materials.
4.4.4 During the first one hundred eighty (180) days following
the Completion Date or until sufficient Packaging Materials
are provided by the receiving party, whichever shall first
occur, the supplying party shall utilize its own Packaging
Materials, with associated costs to be reimbursed by the
receiving party. Receiving party shall be responsible for
re-labeling in accordance with Subclause 4.4.2.
4.5 All Product made available by the supplying party, in
satisfaction of an order from receiving party, will be promptly transported by
receiving party from the Delivery Point.
4.6 Product will be made available throughout the delivery month in
accordance with the supplying party's monthly production schedule.
4.7 The parties will use reasonable efforts to cooperate with one
another in providing any necessary documentation to support these transactions
and any subsequent shipments or exports contemplated hereunder.
4.8 The parties acknowledge that:
(a) This Agreement is of short duration and designed solely to
facilitate the intent of the parties described in the
Recitations,
(b) There are no significant or material differences among the
financial values of the Products listed in Schedules A and B,
(c) There are no significant or material differences among the
financial values of the Products listed in Schedules "C" and
"D", and
(d) Circumstances relating to documentation, customs, duties,
taxation, or other legal requirements may necessitate the
assignment of a financial value to a particular quantity of
Product.
The parties therefore agree that where required as in Subclause 4.8
(d), the Calciner Discharge Product value and the Finished Product value at the
time of delivery to the Delivery Point shall be deemed to be equal to the
Calciner Discharge Product Value and the Finished Product Value, respectively of
such Product, and shall not be applied differently to either Tioxide Products or
Newco Products.
5. Product Imbalances.
5.1 If a Product Imbalance should occur, the parties will promptly
cure such Product Imbalance under the following terms:
5.1.1 The "Newco Imbalance Value" for such Product Imbalance
shall be the sum of:
(1) The Calciner Discharge Product Value of the Newco
CD Product Imbalance, if any; and
(2) The Finished Product Value of the Newco FP
Imbalance, if any.
5.1.2 The "Tioxide Imbalance Value" for such Product Imbalance
shall be the sum of:
(1) The Calciner Discharge Product Value of the
Tioxide CD Product Imbalance, if any; and
(2) The Finished Product Value of the Tioxide FP
Imbalance, if any.
5.1.3 Newco, if the Newco Imbalance Value is larger than the
Tioxide Imbalance Value, or TEL, if the Tioxide Imbalance
Value is larger than the Newco Imbalance Value (the
"Reimbursing Party") shall be responsible to reimburse the
other party (the "Reimbursed Party") in an amount equal to the
net of the larger of the Newco Imbalance Value and the Tioxide
Imbalance Value less the smaller of the Newco Imbalance Value
and the Tioxide Imbalance Value (the "Net Imbalance Value").
5.1.4 The Reimbursing Party will reimburse the Reimbursed
Party by (a) supplying a quantity of Finished Product, (b)
supplying a quantity of Calciner Discharge Product, and/or (c)
making a cash payment, such that the sum of (1) the Value of
such Finished Product, (2) the Value of Such Calciner
Discharge Product, and (3) the amount of the cash payment
shall be equal to the Net Imbalance Value.
5.1.5 For any Product to be supplied pursuant to Subclause
5.1.4, (a) the Reimbursing Party shall specify the total
quantity and (b) the Reimbursed Party shall specify whether
the Product will be Calciner Discharge Product or Finished
Product. The cash payment will be adjusted accordingly.
5.1.6 The calculations, determinations, and decisions to be
made in Subclauses 5.1.1. through 5.1.5 will be completed
within thirty (30) days of the occurrence of the Product
Imbalance and any cash payment will be made by the Reimbursing
Party within fifteen (15) days thereafter.
5.1.7 For any Product to be supplied pursuant to Subclauses
5.1.4 and 5.1.5, the Reimbursed Party shall specify the
Product grade(s), Quality and package type, and the parties
will mutually agree upon delivery timing.
5.1.8 For any cash payment, VAT shall be charged to the
Reimbursed Party as appropriate.
5.2 Any quantities of Product supplied and cash payments made by the
Reimbursing Party pursuant to Subclause 5.1.4 through 5.1.6 will be excluded
from consideration in the determination of any later Product Imbalance.
5.3 The provisions of this Agreement relating to Product Imbalances
shall not apply where any Product Imbalance has been caused by a Force Majeure
event or circumstance, except to the extent that :
(a) at or near the end of the Contract Period the corrective
measures of Subclauses 13.2 or 13.3 are sufficient to remove
what would otherwise be a contribution of the Force Majeure
event to a Product Imbalance, or
(b) the party not declaring a Force Majeure elects under
Clause 13.3(b) to continue to receive Product during Force
Majeure.
5.4 The parties' obligation to cure Product Imbalances pursuant to
Clauses 5.1 and 5.2 shall survive termination of this Agreement.
6. Quality, Adjustments:
There will be no change in the specifications of the Product
produced by the supplying party without the express written consent of the
receiving party. The supplying party shall give sufficient prior notice to the
receiving party of any significant change(s) in raw materials, manufacturing
processes, or test methods for mutual assessment of the probable effect on the
receiving party's Product performance. Final Product attributes will remain
unchanged and will be consistent with the Specifications.
7. Term and Termination.
This Agreement shall become effective on the Completion Date and
terminate at the end of the Contract Period.
7.1 Clauses 5, 8, 9, 10, 11, 12, 15 and 19 shall survive
termination of this Agreement.
7.2 If both TEL and Newco reach agreement at the time of
submission of any rolling twelve-month forecasts that their
respective needs for Products for all future months after
Month 2 of the forecast will be zero, then in that case the
Contract Period will be deemed to end at the end of such Month
2 for the purposes of this Agreement.
8. Warranty:
Each supplying party warrants to each receiving party only that any
Product when supplied will meet the Specifications for the Product. EXCEPT FOR
THE FOREGOING AND AS EXPRESSLY PROVIDED HEREIN, SUPPLYING PARTY MAKES NO EXPRESS
OR IMPLIED WARRANTY (INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FROM ANY COURSE OF DEALING
OR TRADE USAGE) REGARDING THE PRODUCT. Receiving party assumes all risk and
liability for results obtained by the use of the supplying party Product,
whether used alone or in combination with other materials.
9. Claims:
9.1 With respect to either Tioxide Products or Newco Products, no
claim shall be greater in amount than the Value of the Product (plus freight,
duty and disposal costs) exchanged hereunder in respect of which damages are
claimed except in the case of willful breach of this Agreement. Failure to give
notice of a claim within one hundred eighty (180) days from date of delivery, or
the date fixed for delivery (in case of non-delivery), shall constitute a waiver
by the receiving party of all claims in respect of the Product so delivered or
not delivered, as the case may be except in the case of willful breach of this
Agreement. No Product shall be returned to the supplying party without supplying
party's permission, which shall not be unreasonably withheld or delayed, and
then only in the commercially reasonable manner prescribed by the supplying
party. No claim shall be allowed for Product that has been processed (e.g.
"finished") in any manner. Claims include, without limitation, claims of any
kind, whether or not (a) for loss, damage, expense or injury, (b) with respect
to the Product delivered or for non-delivery of the Product, or (c ) based on
supplying party's breach of warranty, contract, statute, regulation or
negligence, strict liability or any tort.
9.2 No Claim for failure to deliver on time or at all, will be valid
if the reason for said late delivery or non-delivery is the failure either in
whole or in part, by the receiving party to provide the supplying party with a
sufficient quantity of Packaging Materials for the Products ordered by the
receiving party.
10. Remedy:
Except in the case of willful breach of this Agreement, a party's
exclusive and sole remedy for any claim shall be the recovery of the Value of
the Product exchanged with the other party (plus freight, duty and disposal
costs) in the transaction giving rise to the claim. Such recovery may be in the
form of cash or in the form of Product at the discretion of the party against
whom the claim is made.
11. Patent Warranty:
The supplying party warrants that the use or sale of the Products
delivered hereunder will not infringe the claims of any validly issued patent
covering the Products themselves, but does not warrant against infringement due
to: (a) the use of the Products in combination with other Products (or third
party products of other manufacturers) or materials or in the operation of any
process, or (b) the compliance by supplying party with any specifications
provided to supplying party by the receiving party.
12. No Consequential Damages:
Neither party shall be liable for special, indirect, incidental,
punitive or consequential damages (including, without limitation, damages for
loss of business profits, business interruption or any other loss), whether or
not caused by, or resulting from, the negligence of such party even if such
party has been advised of the possibility of such damages.
13. Force Majeure:
13.1 Force Majeure is an event or circumstance beyond the reasonable
control of the party claiming the Force Majeure including but not limited to:
act of God, fire, flood, explosion, hurricane, breakdown of machinery or
equipment, governmental action or inaction or request of governmental authority,
accident, strike, lockout, labor trouble or shortage, inability to obtain raw
material, power, equipment or transportation, but the party claiming the Force
Majeure shall be diligent in attempting to remove such cause or causes and shall
promptly notify the other party of its extent and probable duration. No
liability shall result to either party from delay in performance or from
non-performance caused by a Force Majeure other than that described in this
Clause 13 and in Clause 14 and this Agreement shall remain otherwise unaffected.
13.2 If the party declaring a Force Majeure is the supplying party,
the receiving party shall be entitled to reduce its own quantity commitments (by
grade, Quality, and package of such receiving party's choice) as a supplying
party in an amount equal to the quantity by which the non-performing party fails
to perform. The non-performing party shall have no obligation to purchase
quantities of Product from other sources to enable it to perform under this
Agreement.
13.3 If the party declaring a Force Majeure is the receiving party,
the supplying party will be entitled:
(a) to reduce its own commitments as a receiving party in an
amount equal to the quantity by which the non-performing party
fails to perform, or
(b) to continue to receive Product from the non-performing
party.
13.4 In order to claim a Force Majeure hereunder, the party
attempting to excuse its delay in performance or non-performance must notify the
other party within 24 hours of obtaining knowledge of the Force Majeure and
confirm the Force Majeure event in writing within 5 Business Days thereafter. If
the other party does not agree that the event or circumstance is a Force
Majeure, that party may dispute the claim under the Dispute Resolution
provisions contained herein.
13.5 YEAR 2000 ISSUE. A delay in performance or non-performance
attributable to improper processing, management, manipulation, miscalculation or
misreading of data by computer-operated systems arising out of processing for
the year 2000 shall not constitute a Force Majeure.
14. Allocation:
14.1 If a Force Majeure event or circumstance occurs which results
in the failure of the supplying party to supply Product to the receiving party,
supplying party will distribute its available supply pro rata (based on
deliveries in the three calendar months prior to the Force majeure event or
circumstance) between the receiving party and the aggregate of all other
purchasers, including, third parties as well as divisions, joint ventures,
business units, affiliates and subsidiaries of supplying party, for the duration
of such Force Majeure event or circumstance without liability for any failure of
performance that may result therefrom. For the avoidance of confusion,
distribution among such other purchasers will be made on such basis as the
supplying party may deem fair and practical after first determining the portion
to be provided to receiving party.
14.2 If a non-Force Majeure event or circumstance occurs which
results in the failure of the supplying party to supply Product to the receiving
party according to the forecast commitments hereunder, the supplying party shall
meet all of its supply obligations under this Product Exchange Agreement prior
to, and in preference over, any other supply obligations to purchasers,
divisions, joint ventures, business units, affiliates and subsidiaries of
supplying party.
15. Government Action:
If any Government action should place or continue limitations on the
terms of this Agreement such that it would be illegal or against public or
Government policy for supplying party to receive full value (i.e. equivalent
exchanged product) for its Product, supplying party shall have the option: (a)
to continue to perform under this Agreement subject to such adjustments that
supplying party may deem necessary to comply with such Government action; (b) to
revise this Agreement, subject to receiving party's written approval, in order
to most nearly accomplish the original intent of this Agreement; or (c) to
terminate performance of the affected portions of this Agreement without
liability for damages.
16. User Protection and Product Information:
The receiving party warrants that it will use its own independent
skill and expertise in connection with the selection and use of the supplying
party's Product and that it possesses the skill and expertise to safely handle,
store, transport, use, and dispose of the Product. In connection therewith,
receiving party agrees to:
16.1 Familiarize itself with available safety and health information
and precautions, including, but not limited to, those contained in any pertinent
material safety data sheet;
16.2 Adopt and follow safe handling, storage, transportation, use,
and disposal practices with respect to the Product, including, but not limited
to, those required by applicable law and regulation; and
16.3 Instruct its employees, independent contractors, agents and
customers in the warning and safe use practices required in connection with the
unloading, handling, storage, transportation, use and disposal of the Product.
17. Labeling and Literature, Name on Product:
Each party hereto acknowledges that there may be risks and liability
resulting from the use of each party's Products. Each party hereto acknowledges
that it has received and is familiar with the supplying party's labeling,
literature and any pertinent Material Safety Data Sheets ("MSDS" sheets)
concerning such Products and their properties. The receiving party will forward
such information to receiving party's employees and any others (including
receiving party's customers), who may handle, process or sell such Product from
supplying party and advise such parties to familiarize themselves with such
information.
18. Taxes, VAT, Import Duties
18.1 The receiving party is responsible for payment of all taxes,
duties and VAT due and payable upon movement of Product under this Agreement.
18.2 Where VAT is payable by one party to another, this shall be
charged by means of a valid VAT invoice issued pursuant to the legislation
extant in the country where the VAT charge is levied.
18.3 For any goods which have been supplied to the receiving party
VAT-free on the basis that those goods are to be exported from the European
Union by the receiving party, the receiving party is required to provide within
one month of the date of supply of product a certificate of shipment proving the
goods were removed from the European Union. If such certificate is not provided
within that time period, then the supplying party shall charge and receiving
party shall pay VAT and associated penalties, if any. Such VAT and associated
penalties shall be invoiced by the supplying party and paid, within 15 days of
receipt of the invoice, by the receiving party.
19. Confidential Information:
19.1 For purposes of this Clause:
19.1.1 "Confidential Information" means all information received by the
receiving party from the disclosing party relating to the disclosing party, its
Affiliates and the businesses conducted by the disclosing party (whether
pursuant to this Agreement or otherwise) including not only written information
but information transferred orally, visually, electronically, or by any other
means. For the avoidance of doubt, the term Confidential Information shall not
include:
(i) information that is in the public domain at the date of
this Agreement;
(ii) information that subsequently comes into the public domain,
otherwise than as a result of a breach of this Agreement, but
only after it has come into the public domain;
(iii) information which the receiving party or its Representatives
obtain from a third party not under any confidentiality
obligation to the disclosing party respecting such
information;
(iv) information which the receiving party or its Representatives
at the time of disclosure already has in its possession and
which is not subject to any obligation of secrecy on their
part to the other party;
(v) information which is independently developed by employees of
the receiving party or its Representatives who had no access
to the information disclosed by the disclosing party.
19.1.2 "Representatives" means Affiliates, directors, officers, employees,
agents or representatives of either party or its Affiliates, and their
respective solicitors, accountants, consultants and financial advisors.
19.2 Each party hereto undertakes to maintain Confidential Information
received by it, its Affiliates or its Representatives relating to the other
party or the other party's Affiliates in confidence and not disclose that
Confidential Information to any person other than its Representatives except
with the prior written approval of the other party.
19.3 Each party undertakes only to disclose to Representatives such
Confidential Information relating to the other party or the other party's
Affiliates as is reasonably required for the purposes of performing the
obligations under this Agreement and only to Representatives whom it has
informed of the confidential nature of the Confidential Information and who
undertake to keep it confidential. Such information shall not be used for any
other purpose than the performance of the parties' obligations hereunder. Each
party shall be responsible for breach of such confidentiality undertaking by it
or its Representatives.
19.4 In the event that, after receipt of Confidential Information, either
party, or any person or Representative to whom it has transmitted Confidential
Information, becomes legally required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process or otherwise) to disclose any of the Confidential Information
received, the legally compelled party shall provide the other party with prompt
written notice of that requirement so that the other party may seek a protective
order or other appropriate remedy but shall not be obliged to delay disclosure
if to do so would be in breach of any conditions for such disclosure imposed by
the authority compelling disclosure and in any event should the other party not
be successful in seeking or obtaining a protective order or other appropriate
remedy, the other party shall waive compliance with the provisions of this
Agreement for such particular case to enable the legally compelled party or its
Representative to comply with any such legal requirement.
19.5 Disclosure of Confidential Information to permitted assigns shall not
be a violation of this Clause 19, provided that the disclosing party has
complied with the provisions of Clause 21.2.
20. Dispute Resolution:
20.1 In the event of a dispute between supplying party and receiving
party arising in connection with this Agreement, the parties will first attempt
to resolve the dispute informally. If such informal efforts fail to resolve the
dispute to the parties' satisfaction, senior representatives of each of the
parties shall be notified and shall, within 10 Business Days of a written
request from one party to the other, meet in a good faith effort to resolve such
dispute or difference without recourse to legal proceedings.
20.2 If the dispute or difference is not resolved as a result of
such meeting, supplying or receiving party may (at such meeting or within 10
Business Days from its conclusion) propose to the other in writing that
structured negotiations be entered into with the assistance of a mediator. Upon
receipt of such notice the parties to the dispute shall each propose and select
a suitable mediator.
20.3 All negotiations connected with the dispute shall be conducted
in strict confidence and without prejudice to the rights of the parties in any
future proceedings.
20.4 Within seven (7) Business Days of the appointment of the
mediator, both parties shall meet with him/her in order to agree on a program
for the exchange of any relevant information and the structure to be adopted for
negotiations.
20.5 If the parties to the dispute accept the mediator's
recommendations or otherwise reach agreement on the resolution of the dispute,
such agreement shall be reduced to writing and, once it is signed by their duly
authorized representatives, shall be and remain binding upon the parties. If an
agreement cannot be reached, either of the parties may invite the mediator to
provide a non-binding but informative opinion in writing, provided however that
neither party shall be entitled to rely on such opinion or introduce it into
evidence in any legal proceedings. If agreement still cannot be reached, then
any dispute or difference between the parties may be referred to the courts.
Unless a party is seeking injunctive relief, no dispute shall be referred to the
courts until 30 Business Days after the mediator has issued his/her
recommendation(s).
20.6 Each party shall bear its own costs of this Dispute Resolution
process.
21. Assignment:
21.1 Except as provided in Subclause 21.2 below, the rights,
benefits and obligations of the parties under this Agreement shall not be
assigned, transferred or otherwise disposed of in whole or in part without the
prior express written consent of the other party.
21.2 Consent to assignment of this Agreement shall not be required
(1) in circumstances where all the rights, benefits and obligations of either
party hereto are proposed to be assigned or transferred to an Affiliate of the
transferring party; or (2) in the event that either party hereto or such party's
Affiliates (if applicable) proposes to assign all its rights, benefits and
obligations to a third party purchaser of the transferring party's entire
interest in the manufacture of titanium dioxide; provided however, (upon such
event) the transferring party obtains the agreement of the proposed assignee or
transferee, prior to the transfer or assignment, to comply with the terms of
this agreement and except in the case of a sale pursuant to Subclause 21.2(2) to
obtain from the assignee or transferee a re-assignment in the event that the
assignee or transferee ceases to be an Affiliate.
22. No Agency and no Partnership:
22.1 Except as otherwise expressly provided for in this Agreement
and/or the Schedules, or unless otherwise agreed between the parties in writing,
no party shall:
22.1.1 make purchases or sales or incur any
liabilities whatsoever on behalf of the other
party hereto;
22.1.2 pledge the credit of the other party; or
22.1.3 hold itself out as acting as agent for the
other party.
22.2 The parties hereto have not and expressly do not intend to form
a partnership by virtue of this Agreement and do not intend to be partners.
23. Entire Agreement/Amendments/Severability:
23.1 This Agreement contains the whole agreement between the parties
and their Affiliates relating to the transactions contemplated by this Agreement
and supersedes and replaces all previous agreements between the parties and
their Affiliates relating to such transactions.
23.2 A provision in another agreement between the parties to this
Agreement or between the respective parent undertakings of the parties (and
whether made before or after the date of this Agreement) which refers to this
Agreement and which extends or supplements any provision of this Agreement will
be deemed for the purposes of Subclause 23.1 to form part of the whole agreement
between the parties as referred to in that Subclause.
23.3 Each of the parties to this agreement acknowledges on its own
behalf and on behalf of each of its Affiliates that , in agreeing to enter into
this Agreement, it has not relied on any representation, warranty, collateral
contract or other assurance (except those set out in this Agreement) and waives
all rights and remedies which, but for this Subclause, might otherwise be
available to it in respect of any such representation, warranty, collateral
contract or other assurance, provided that nothing in this Clause shall limit or
exclude any liability for fraud.
23.4 Except as otherwise specifically stated, no modification or
amendment hereto shall be of any force or effect unless (1) reduced to writing
and signed by both parties hereto, and (2) expressly referred to as being a
modification of this Agreement, including the attached Schedules.
23.5 If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Agreement is invalid or
unenforceable in whole or in part, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the list of customers in Schedule E, the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the pertinent
term or provision (or to approve such reductions, deletions or replacements as
agreed by the parties), and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be appealed.
24. Waiver:
24.1 The failure of either party to insist in any one or more
instances upon strict performance of any of the provisions of this Agreement or
to take advantage of any of its rights shall not be construed as a waiver of any
such provision or the relinquishment of any such right.
24.2 The provisions of the United Nations Convention on Contracts
for the International Sale of Goods 1980 shall not apply to this contract or any
transaction contemplated hereunder.
25. Notices:
25.1 Any notice or other document to be served under this Agreement
shall be in writing and may be delivered by hand or sent by post or facsimile
process where the remote facsimile machine has an answer-back facility to the
party to be served at its address or facsimile number appearing in this
Agreement and marked for the attention of the person whose name is referred to
in Subclause 25.2 below. Any notice or other document sent by post shall be sent
by registered post (if both posted and for delivery within the same
jurisdiction) or by registered airmail (if posted for delivery outside the
jurisdiction in which it is posted). Any notice or other document sent by
facsimile process shall also be sent to the other party by registered post or
registered airmail (as the case may be) in accordance with this Clause.
25.2 The person to whom notices or documents should be addressed for
the purposes of Subclause 25.1 is:
25.2.1 If to be served on TEL:
----------------------------
Name or Title, Business Unit
----------------------------
Address
25.2.2 If to be served on Newco:
----------------------------
Name or Title, Business Unit
----------------------------
Address
25.3 In proving service of a notice or document it shall be
sufficient to prove that delivery was made by hand or that the envelope
containing the notice or document was properly addressed and posted (either by
registered post or by registered airmail, as the case may be, in accordance with
the requirements of this Clause 25) or that the facsimile message was properly
addressed and dispatched as the case may be.
26. Governing Law:
This Agreement is governed by and shall be construed in
accordance with Delaware (U.S.) law.
27. Covenant Not to Compete
For a period of two and one-half years from and after the Completion
Date, none of TEL or its Affiliates will directly or indirectly market, sell or
offer for sale in North America (a) to any of the customers listed in Schedule E
any product (whether or not such product is listed in Schedules A, B, C or D)
that is manufactured by the sulfate process, and (b) to any of the customers
listed in Schedule F any TC4 Product. Schedule E shall include all current
customers and all former customers who have purchased in North America from
Tioxide (or its Affiliates), during the three-year period ending on the
Completion Date, titanium dioxide manufactured by the sulfate process. Schedule
F shall include all current customers and all former customers who have
purchased in North America from Tioxide (or its Affiliates), during the
three-year period ending on the Completion Date, TC4 Product.
28. Assurances
The parties hereto acknowledge that due to inadequate information
available to them on the Completion Date, there may be other Products (or in the
case of Schedules E and F, other customers) which, according to the provisions
of this Agreement, should have been included on the Schedules A, B, C, D, E and
F. To the extent that the parties hereto obtain additional information which
indicates that a Product or customer should have been included in the relevant
Schedule, the parties shall consult with a view to agreeing whether the Product
or customer should be included, such agreement not to be unreasonably withheld.
From and after the parties' agreement pursuant to this Clause 28, such Product
or customer shall be deemed to be a part of the relevant Schedule as if it had
been included as on the Completion Date.
IN WITNESS WHEREOF, the parties hereto have caused this Product Exchange
Agreement to be executed by their duly authorized representatives.
TIOXIDE EUROPE, LTD. NEWCO, Ltd.
By:_________________________________ By:___________________________
Title:_______________________________ Title:_________________________
Date:_______________ Date:_____________
EXHIBIT 10.6
DATED 1998
ICI AMERICAN HOLDINGS INC.
and
NL INDUSTRIES, INC.
SHARE SALE AND PURCHASE AGREEMENT
OF
TIOXIDE AMERICAS INC.
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
TEL: (+44) 171 456 2000
Ref: AXT
THIS AGREEMENT (this "AGREEMENT") is made on 1998 BETWEEN:
(1) ICI AMERICAN HOLDINGS INC. a Delaware Corporation with principal
place of business at 3411 Silverside Road, Wilmington, DE 19850,
USA (the "SELLER"); and
(2) N L INDUSTRIES, INC., a corporation incorporated under the laws of
New Jersey, whose principal place of business is at 16825 Northchase
Drive, Suite 1200, Houston, Texas 77060, USA (the "PURCHASER").
WHEREAS:
(A) Tioxide Americas Inc. is a corporation incorporated in Delaware,
USA, short particulars of which are set out in Schedule 1 (the
"COMPANY").
(B) The Seller holds all of the issued shares in the capital of the
Company (the "SALE SHARES") particulars of which are contained in
Schedule 1.
(C) The Seller has agreed to sell and the Purchaser has agreed to
purchase the Sale Shares on the terms and subject to the conditions
set out in this agreement and the Framework Agreement.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 In this agreement:
"ACCOUNTS" means the audited accounts of the Company for the year
ended 31 December 1997;
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, liens (other than
those arising by operation of law or by statute) losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses;
"AFFILIATES" means with respect to a specified entity, an entity that
directly or indirectly through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with, the entity specified,
provided, that, without limiting the generality of the foregoing, in
relation to ICI and its subsidiary companies, the term "AFFILIATES"
shall not include any entity in which a party has a 50 per cent or less
ownership interest. For the purposes hereof, "CONTROL" means possession,
directly or indirectly, of the power to direct or cause the direction of
the management and operating policies of the entity in respect of which
the determination is being made, through the ownership of voting
securities, contract, voting trust or otherwise but any reference in
this agreement to an Affiliate of the Seller or the Purchaser shall
exclude the Company, and references to the Seller's Group or the
Purchaser's Group shall be construed accordingly;
"AGREED FORM" means, in relation to any document, the form of that
document which has been initialled for the purpose of identification by
or on behalf of the parties to this agreement;
"AMERICAS LIABILITY AGREEMENT" means the liability agreement between
ICI and the Purchaser dated [ ];
"ASSETS" means all of the assets and rights of the Company relating to
the Business but excluding the LPC Interests;
"BUSINESS" means the manufacture, import, export, sale and distribution
of titanium dioxide pigments and co-products, and related products and
all other business and operations as carried on by the Company as at the
date hereof but shall not include:
(i) the manufacture, sale or disposal by way of trade of any
organometallic compounds save the manufacture, sale or
disposal of a pigment which incorporates as an essential
feature of its composition an organometallic compound shall
not be considered to be the manufacture, sale or disposal of
an organometallic compound as such;
(ii)the manufacture, sale or disposal by way of trade of any form
of titanium dioxide of ultraviolet-attenuating grade having a
ratio of absorbance response at 308 nm (A308) to absorbance
response at 524 nm (A524) of not less than 5 as defined in US
Pharmacopeia, amendment published in Pharmacopeia Forum,
Volume 22, Number 4, Page 2636 and attached hereto as Annex
2; and
(iii) any matter relating to the LPC Interests or LPC;
"BUSINESS DATA" means the Company's historical and current documents
relating to the Business, including customer lists, product, distributor
and supplier lists, catalogues, literature, employee records, documents
of title to the Assets (but excluding those relating to the Properties),
sales targets, sales statistics, market share statistics, marketing
surveys and reports, marketing research and any advertising or other
promotional materials, production data, safety data and accounting
(including management account records) and other financial data (other
than the US Financial Information), whether in hard copy or in computer
held form (including for the avoidance of doubt such media as microfilm
and microfiche);
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are generally open for normal business in both London and New York
and (when any action is required by this agreement to be taken in
Canada) Montreal;
"CODE" means the United States Internal Revenue Code of 1986, as
amended;
"COMPLETION" means completion of the sale and purchase of the Sale
Shares in accordance with Clause 7 which shall occur immediately
following signature and exchange of this agreement;
"COMPLETION DATE" means [ ] on the date of this
agreement;
"COMPUTER SYSTEMS" means all computer hardware, software,
microprocessors and firmware which in each case are used in the
Business;
"CONTRACTS" means all contracts and arrangements relating to the
Business entered into before Completion by or on behalf of the Company
in connection with the Business which remain (in whole or in part) to be
performed at Completion and, in addition, means any contracts or
arrangements between the Company and the Seller (or any of its
Affiliates) but shall not include any contracts or arrangements relating
to the LPC Interests or LPC;
"DEFAULT INTEREST" means LIBOR plus 200 basis points compounded
monthly;
"DISCLOSURE LETTER" means the letter of the same date as this
agreement from the Seller to the Purchaser;
"DUPONT" means E.I. du Pont de Nemours and Company;
"EMPLOYEES" means all those individuals employed by the Company at
Completion;
"ENVIRONMENT" has the meaning in Schedule 5;
"ENVIRONMENTAL AUTHORISATIONS" means all or any permits, certificates,
consents, licences, approvals, registrations and other authorisations
required under Environmental Laws and all terms and conditions thereof
required under any Environmental Law for the operation of the Business;
"ENVIRONMENTAL LAWS" has the meaning given in Schedule 5;
"ESTIMATED CONSIDERATION" has the meaning given in Clause 3;
"FIELD OF ACTIVITY" means the manufacture, import, export, sale and
distribution of titanium dioxide pigments and co-products, and related
products as carried on by the Company, but shall not include:
(i) the manufacture, sale or disposal by way of trade of any
organometallic compounds save the manufacture, sale or
disposal of a pigment which incorporates as an essential
feature of its composition an organometallic compound shall
not be considered to be the manufacture, sale or disposal of
an organometallic compound as such; and
(ii)the manufacture, sale or disposal by way of trade of any form
of titanium dioxide of ultraviolet-attenuating grade having a
ratio of absorbance response at 308 nm (A308) to absorbance
response at 524 nm (A524) of not less than 5 as defined in US
Pharmacopeia, amendment published in Pharmacopeia Forum,
Volume 22, Number 4, Page 2636 and attached hereto as Annex
2;
"FINAL CONSIDERATION" has the meaning given in Schedule 6;
"FRAMEWORK AGREEMENT" means the agreement dated o between ICI, DuPont
and the Purchaser;
"GUARANTEES" means all guarantees and indemnities given by the Seller or
Affiliates of the Seller in respect of obligations of the Company in
relation to the Business, short particulars of which are contained in
the Disclosure Letter;
"HAZARDOUS MATERIAL" has the meaning given in Schedule 5;
"ICI" means Imperial Chemical Industries PLC;
"ICI GROUP" means ICI and its Affiliates as at the Completion Date;
"IMPLEMENTATION AGREEMENTS" means the documents in Schedule 4;
"INDEPENDENT ACCOUNTANT" has the meaning given in Clause 11;
"INTELLECTUAL PROPERTY" shall mean all patents, trademarks, service
marks, trade names and all goodwill associated with the foregoing,
registered designs, copyrights, copyrightable works (including, without
limitation, data, documentation and databases) registered internet
domain names, and rights to inventions and applications for and rights
to apply for protection or registrations of any of the same; including
any continuation, continuation-in-part, provisional, reissue, divisional
and re-examination patent applications and all rights in Technical
Information;
"INTRA-GROUP LOANS" means all Net Debt due from the Company to the
Seller or any Affiliate of the Seller or due to the Company from the
Seller or any Affiliate of the Seller as determined in accordance with
Schedule 6, and in both circumstances relating only to those Affiliates
of the Seller following Completion;
"LIBOR" means the rate for deposits in US Dollars for a period of one
month which appears on the Reuters Screen ISDA Page (or such other page
as the parties may agree) at approximately
11.00 a.m., London time, on the first day of the period to which any
interest period relates (the "RELEVANT DATE"). If such rate does not
appear on the Reuters Screen ISDA Page on the Relevant Date, the rate
for that Relevant Date will be determined as if the parties had
specified that the rate for the Relevant Date will be determined on the
basis of the rates at which deposits in US Dollars are offered by
Midland Bank plc at approximately 11.00 a.m., London time, on the
Relevant Date to prime banks in the London interbank market for a period
of one month commencing on that Relevant Date for amounts of
US$10,000,000;
"LPC" means the Louisiana Pigment Company Limited Partnership;
"LPC INTERESTS" means all partnership interests held by the Seller or
its Affiliates in LPC pursuant to the Joint Venture Agreement dated as
of 18 October 1993, as amended, between the Company and Kronos
Louisiana, Inc.;
"LPC BUSINESS" means the LPC Interests, sales sourced from LPC and any
Stocks, Operating Debtors, Operating Creditors less than 1 year (the
definitions of such terms in Schedule 6 being applied to LPC) and other
assets or liabilities relating to LPC as determined and distinguished
from the Business in accordance with Schedule 7;
"LPC WARRANTIES" has the meaning given in sub-Clause 5.1(b);
"MATERIAL CONTRACTS" means all Contracts (i) which at Completion have in
excess of 12 months to run and which in that time can reasonably be,
expected to involve income or expenditure in respect of the Business in
excess of US$200,000 per annum; or (ii) which at Completion have less
than 12 months to run and which in that time can reasonably be expected
to involve income or expenditure in respect of the Business in excess of
US$500,000; or (iii) which relate to the treatment and/or disposal of
waste; or (iv) which relate to contract manufacturing or processing of
products by third parties; or (v) which relate to third party
distribution or agency in respect of products; or (vi) the absence of
which would have a material negative impact on the conduct of the
Business;
"NET DEBT" has the meaning given in Schedule 6;
"NON-LPC WARRANTIES" has the meaning given in sub-Clause 5.1(a);
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice including, without limitation
quantity and frequency, taking into account the relevance and
reasonableness of the same and with allowance made for the inherently
cyclical nature of the titanium dioxide industry;
"PARENT UNDERTAKING" shall have the meaning given in section 258 of
the United Kingdom Companies Act 1985;
"PERMITS" means all licences, permits, authorisations, registrations and
approvals required by law or regulation or issued or granted by
statutory or other authorities to the Company for the operation of the
Business (but excluding, for the avoidance of doubt, planning
permissions issued by relevant planning authorities (save for
Environmental Authorisations) and any licence, permit, authorisation or
approval which falls within the definition of Regulatory Conditions);
"PLANT AND EQUIPMENT" means the plant, machinery, spare parts, tools,
equipment, chattels, motor vehicles, furniture, fixtures and fittings
(to the extent they are not included in the Properties) and all other
tangible personal property located at the Property (including without
limitation office equipment) which in each case is owned and/or used by
the Company in relation to the Business as at Completion;
"PROPERTY" means the property shown in Schedule 2 Part I;
"PURCHASER'S AUDITORS" means PricewaterhouseCoopers;
"PURCHASER'S GROUP" means the Purchaser's ultimate parent undertaking
and that parent undertaking's Affiliates;
"REGULATORY CONDITIONS" means the anti-trust or regulatory approvals
(other than Environmental Authorisations) necessary to complete the sale
of the Company on the terms set out in this agreement;
"SCHEME" means the Company's pension plans described in the Disclosure
Letter;
"SELLER'S AUDITORS" means KPMG;
"SELLER'S GROUP" means the Seller's ultimate parent undertaking and
that parent undertaking's Affiliates as at the Completion Date;
"STOCK" means the stocks of fuels, raw materials, ingredients,
packaging, office and laboratory supplies, engineering spares,
consumable stores, work-in-progress and finished goods at Completion
held by the Company for the purposes of the Business;
"TAX" has the meaning given in the Tax Deed of Covenant;
"TAXATION" has the meaning given in the Tax Deed of Covenant;
"TAX AUTHORITY" has the meaning given in the Tax Deed of Covenant;
"TAX DEED OF COVENANT" means the tax deed of covenant in the Agreed
Form;
"TAX LIABILITY" has the meaning given in the Tax Deed of Covenant;
"TECHNICAL INFORMATION" shall mean all technical data and know-how,
industrial and technical information, trade secrets, confidential
information, drawings, formulations, technical reports, operating and
testing procedures, instruction manuals, raw material or production
specifications, the results of research and development work, whether in
hard copy or in computer held form (including for the avoidance of doubt
in such media as microfilm and microfiche or otherwise);
"TERRITORIES" means the United States of America, Canada, Mexico,
Central and South America;
"UK GAAP" means generally accepted accounting principles in the United
Kingdom;
"US DOLLARS", "US$" or "$" means the lawful currency of the United
States of America;
"US FINANCIAL INFORMATION" means the financial information attached as
Schedule 8;
"US NAME AGREEMENT" means the agreement in the Agreed Form;
"WARRANTIES" means the LPC Warranties and the Non-LPC Warranties; and
"WARRANTY CLAIM" has the meaning given in sub-Clause 5.4.
1.2 Unless otherwise stated, any express reference to an enactment includes
references to:
(a) that enactment as amended, extended or applied by or under any
other enactment before or after this agreement;
(b) any enactment which that enactment re-enacts (with or without
modification); and
(c) any subordinate legislation made (before or after this agreement)
under any enactment, including one within (a) or (b) above,
except to the extent that any of the matters referred to in (a) to (c)
occurring after the date of this agreement would increase or alter the
liability of any party under this agreement.
1.3 The singular shall include the plural and vice versa and words denoting
persons shall include bodies corporate and unincorporated associations
of persons and, unless otherwise stated, shall include permitted
successors or assigns of such persons.
1.4 Sub-Clauses 1.1 to 1.3 apply unless the contrary intention appears.
1.5 The headings in this agreement do not affect its interpretation.
1.6 Any Schedule or Annex to this agreement shall take effect as if set out
in this agreement and references to this agreement shall include its
Schedules and Annexes.
1.7 Where any statement in this agreement (or in the attached Schedules or
Annexes) (other than in Schedule 3 paragraphs H(2) and H(4) is qualified
by the expression "SO FAR AS THE SELLER IS AWARE," "TO THE SELLER'S
KNOWLEDGE, INFORMATION AND BELIEF," "KNOWN TO THE SELLER" or any similar
statement, that statement shall be deemed to mean the knowledge, after
reasonable investigation, of the officers and operational and functional
managers of ICI and its Affiliates who have direct responsibility for
the subject matter concerned, being those listed in Schedule 9.
2 SALE AND PURCHASE OF THE SALE SHARES
2.1 The Seller shall with full title guarantee sell and the Purchaser shall
purchase the Sale Shares together with all rights attaching to them.
2.2 The Sale Shares shall be sold free from all liens, charges, equities and
encumbrances and other rights exercisable by third parties or Affiliates
of the Seller.
3 CONSIDERATION AND ADJUSTMENTS
3.1 Subject to sub-Clause 3.4 below, the consideration for the sale of the
Sale Shares shall be US$[o] payable in cash by the Purchaser on
Completion (the "ESTIMATED CONSIDERATION").
3.2 The payment under sub-Clause 3.1 shall be paid to the correspondent bank
named below for credit to the US Dollar account of o (the "ICI ACCOUNT")
referred to below:
Correspondent bank:
Bank account:
Account name:
Account no:
Sort code:
3.3 Any payments to the Purchaser under this agreement shall be paid to the
correspondent bank named below for credit to the US Dollar account of o
(the "PURCHASER ACCOUNT") referred to below:
3.4
Correspondent bank:
Bank account:
Account name:
Account no:
Sort code:
3.5 The Final Consideration shall be determined and any difference between
the Estimated Consideration and the Final Consideration shall be paid in
accordance with the provisions of Schedule 6.
4 PURCHASER'S WARRANTIES
The Purchaser represents and warrants to the Seller that:
(a) it (and each of its Affiliates, in respect of the Implementation
Agreements to which such Affiliate is a party) has the requisite
power and authority to enter into and to perform this agreement
and such Implementation Agreements;
(b) it (and each of its Affiliates, in respect of the Implementation
Agreements to which such Affiliate is a party) has obtained or
satisfied all corporate, regulatory and other approvals, or any
other significant conditions, necessary to execute and perform
this agreement and such Implementation Agreements;
(c) this agreement and the Implementation Agreements constitute valid
and binding obligations of the Purchaser (and each of its
Affiliates, in respect of the Implementation Agreements to which
such Affiliate is a party) enforceable in accordance with their
respective terms; and
(d) compliance with the terms of this agreement by the Purchaser and
the Implementation Agreements by the Purchaser or its Affiliates
(as appropriate) will:
(i) not constitute a breach of any agreement or contract to which
the Purchaser or such Affiliate of the Purchaser is a party
or by which it is bound; and
(ii)be in compliance with the Purchaser's or such Affiliate of
the Purchaser's memorandum and articles of association or
other constitutional documents; and
(iii) not contravene:
(a)any order, judgment or decree; or
(b)any statute, rule or regulation or;
(c)any other restriction of any kind by which the Purchaser
or such Affiliate of the Purchaser is bound.
5 SELLER'S WARRANTIES
5.1 The Seller represents and warrants to the Purchaser in the terms set out
in Part A.1 of Schedule 3.1 and that:
(a) with respect to the Business and to the sale of the Sale Shares
and not with respect to the LPC Interests, save as otherwise
stated in this agreement and subject to all matters and
circumstances fairly disclosed in the Disclosure Letter, each
of the statements set out in Schedule 3.1 Part A.2 to N
(inclusive) (the "NON-LPC WARRANTIES") is true and accurate as
at the date of this agreement and the Seller acknowledges that
the Purchaser has entered into this agreement in reliance upon
the Non-LPC Warranties; and
(b) with respect to the LPC Interests only, save as otherwise stated
in this agreement and subject to all matters and circumstances
fairly disclosed in the Disclosure Letter, each of the statements
set out in Schedule 3.2 (the "LPC Warranties") is true and
accurate as at the date of this agreement and the Seller
acknowledges that the Purchaser has entered into this Agreement
in reliance upon the LPC Warranties.
The Purchaser agrees that save as set out in Schedule 3.2, no warranty,
representation, undertaking or indemnity or any other contractual
obligation or otherwise is made or given by the Seller to either the
Purchaser or its Affiliates in relation to LPC or the LPC Interests.
5.2 Each of the Warranties shall be separate and independent and no Warranty
shall limit the scope or construction of any other Warranty or any other
provision of this agreement.
5.3 The Purchaser acknowledges and agrees that:
(i) save as may be set out in this agreement or in the
Implementation Agreements, except for the Warranties and in
relation to an allegation of fraud, no statement, promise or
forecast made by or on behalf of the Seller or any member of
the Seller's Group may form the basis of, or be pleaded in
connection with, any claim by the Purchaser under or in
connection with this agreement or the Implementation
Agreements; and
(ii)any claim by the Purchaser or any person deriving title from
it in connection with the Warranties shall be subject to the
following provisions of this clause.
5.4 The liability of the Seller in respect of any breach of the Warranties
(a "WARRANTY CLAIM") or the indemnities contained in this agreement
shall be governed by the terms of the Americas Liability Agreement
except as expressly provided therein.
5.5 The liability of the Seller under or in respect of a Warranty Claim
shall also be limited in respect of any liability which is contingent,
unless and until such liability becomes an actual liability and is due
and payable provided that the Purchaser shall not be prohibited from
bringing a Warranty Claim pending such liability becoming due and
payable.
5.6 The Purchaser acknowledges and agrees that:
(i) no liability shall attach to the Seller by reason of any
breach of any of the Warranties or any indemnities contained
in this agreement to the extent that the loss including all
relevant costs and expenses has been recovered by the
Purchaser under Schedule 5 or any other term of this
agreement or any other document referred to herein and
accordingly the Purchaser may only recover once in respect of
the same loss; and
(ii)in calculating the liability of the Seller for any breach of
the Warranties there shall be taken into account the amount
by which any Taxation for which the Purchaser is now or in
the future accountable or liable to be assessed is reduced or
extinguished as a result of the matter giving rise to such
liability.
5.7 The Purchaser shall not be entitled to make any Warranty Claim:
(i) to the extent that the claim arises as a result only of any
change after Completion in the accounting bases upon which
the Company values its assets or computes its profits or
arises as a result of the taxation or accounting policies,
bases or practices of the Purchaser being different to those
adopted or used in preparing the Accounts; or
(ii)to the extent that the matter which constitutes the claim was
specifically consented to in writing by the Purchaser in the
knowledge that such matter would give rise to such Warranty
Claim.
5.8 The Purchaser shall not be entitled to rescind or terminate this
agreement after Completion in any circumstances provided that nothing in
this sub-Clause shall exclude or limit any right to rescind or terminate
for fraud.
5.9 Save as otherwise provided in this agreement, the Seller shall not be
liable in respect of any Warranty Claim to the extent that the liability
of the Seller in respect thereof is incurred or increased as a result of
any legislation not brought into force at the date of this agreement or
as a result of any change in or repeal of legislation hereafter or as a
result of the introduction or cessation of or change in the published
practice of any taxation authority after the date of this agreement.
5.10 The Purchaser shall not be entitled to make any claim in respect of any
breach or alleged breach of the Warranties to the extent that:
(i) the facts, matters or circumstances giving rise thereto (in
respect of which any such claim or alleged claim arises) have
been fairly disclosed in the Disclosure Letter; or
(ii)such claim arises or is incurred as a result of any voluntary
act or omission of the Purchaser or any Affiliate of the
Purchaser after the date of this agreement, other than any
such act or omission which is in the Ordinary Course of
Business or is required by law or is pursuant to a legally
binding commitment of the Company or any member of the
Seller's Group created or entered into before Completion.
5.11 The provisions of this Clause 5 shall have effect notwithstanding any
other provisions of this agreement.
6 SELLER'S INDEMNITY
6.1 The Seller undertakes to indemnify and keep indemnified the Purchaser,
its Affiliates and the Company (the "INDEMNIFIED PARTIES") against all
claims by third parties (other than any subsequent purchaser or
purchasers of either the Sale Shares or the business or assets of the
Company and their successors in title or assigns) giving rise to Adverse
Consequences which may be paid, suffered or incurred by any of the
Indemnified Parties or to which any of the Indemnified Parties may
become subject and which arise as a result of the operation of the
Business by the Company prior to Completion (unless and to the extent
that the circumstances giving rise to the Adverse Consequences were
fairly disclosed in the Disclosure Letter) and including without
limitation those Adverse Consequences arising:
(a) as a result of the failure by the Company to comply with relevant
and legally enforceable corporate or other laws, rules,
ordinances or regulations with respect to the operations of the
Business prior to Completion;
(b) as a result of the failure by the Company to obtain required
relevant governmental permits, licences, consents or other
authorisations with respect to the operation of the Business
prior to Completion;
(c) from or with respect to any breach of contract, tort or product
liability or otherwise arising from, or with respect to, the
operation of the Business prior to Completion and asserted by any
third party; and
(d) from or with respect to any suit, action, arbitration, charge,
governmental investigation, claim, litigation or proceedings
affecting the Business or the Company.
Provided that the indemnity contained in this Clause 6 shall not apply
to:
(i) liabilities expressly assumed by the Purchaser pursuant to
this agreement or the Implementation Agreements; or
(ii)to the extent that such liabilities have been taken into
account in establishing the Final Consideration; or
(iii) any Environmental Liabilities, any failure or omission to
obtain or comply with Environmental Authorisations, any
failure or omission to comply with any Environmental Laws or
any claim by any person in respect of any matter concerning
the Environment (indemnity for which is provided in
sub-Clause 9.2 and Schedule 5); or
(iv)Taxation (indemnity for which is provided in the Tax Deed
of Covenant); or
(v) the LPC Interests or LPC.
6.2 The Purchaser agrees to give the Seller notice of any and all claims
asserted against the Purchaser for which indemnification under this
Clause 6 is or may be sought. Such notice shall be given as soon as
reasonably practicable after the Purchaser becomes aware that it has or
may have a claim against the Seller. Under this Clause 6, failure to
give such notice shall not abrogate or diminish the Seller's obligation
under this Clause if the Seller has or receives knowledge of the
existence of any such claim by any other means or if such failure does
not prejudice the Seller's ability to defend such a claim.
7 COMPLETION
7.1 Completion shall take place at the offices of the [ ] immediately
after the signature of this agreement when:
(a) each party shall provide to the other evidence in a form
reasonably satisfactory to the other that it (and each of its
relevant Affiliates entering into an Implementation Agreement)
has all necessary corporate approvals and consents and its
signatories have necessary authority to enter into this agreement
and the other agreements referred to herein;
(b) each party shall (or shall procure that its relevant Affiliates
will) duly execute and, to the extent applicable, complete the
Implementation Agreements and the Tax Deed of Covenant;
(c) the Seller shall deliver to or into the possession and control of
the Purchaser:
(i) a duly executed transfer or transfers in favour of the
Purchaser (or such Affiliate of the Purchaser as the
Purchaser may nominate) of all the Sale Shares;
(ii)share certificate(s) or other documents of title relating to
the Sale Shares (or an express indemnity in a form reasonably
satisfactory to the Purchaser in the case of any missing
certificates or documents of title);
(iii) the company books relating to the Company, including
certificates of incorporation, common seals, minute books,
statutory registers, shareholders' agreements and share
certificate books (duly written up to date);
(iv)resignations of all the directors and secretary of the
Company;
(v) the written resignation of the auditors of the Company to
take effect on Completion, with acknowledgments signed by
them to the effect that they have no claim against the
Company and to the effect that there are no circumstances
connected with their resignation which they consider should
be brought to the notice of the shareholders or creditors of
the Company;
(vi)bank statements in respect of every account which the Company
has, dated two days prior to the Completion Date and the
relevant reconciliation statements prepared on the previous
Business Day;
(vii) the Business Data;
(viii) the documentation and title deeds to the Property in
accordance with the provisions of Part II of Schedule 2;
(ix)the Implementation Agreements duly executed by the Seller
and/or Affiliates of the Seller as applicable; and
(x) the Disclosure Letter;
(d) the Purchaser shall pay to the Seller the Estimated
Consideration;
(e) the Purchaser or another member of the Purchaser's Group shall
procure that all Intra-group Loans due from the Company to the
Seller or any Affiliate of the Seller are repaid by the Company
and the Seller or another member of the Seller's Group shall
procure that all Intra-group Loans due to the Company from the
Seller or any Affiliate of the Seller are repaid by the Seller or
its relevant Affiliates;
(f) the Seller shall take, or shall procure the taking of, such steps
as may be necessary to:
(i) approve the transfers referred to in Clause 7.1(c) (i)
(subject only to the Purchaser arranging and paying any taxes
or duties arising in relation to the transfer); and
(ii)appoint such directors and secretary as the Purchaser may
specify as directors and the secretary of the Company; and
(iii) release the securities, guarantees, claims and indemnities
existing immediately prior to Completion other than those
arising in the Ordinary Course of Business, owed or due to or
claimed by the Seller or any Affiliate (being an Affiliate
after Completion) from the Company, true and complete
particulars of which are set out in Schedule 10;
(g) each party shall deliver a copy of the Tax Deed of Covenant duly
executed to the other party.
8 EMPLOYEES
8.1 The Purchaser agrees to procure that the Company for a period of four
years from the Completion Date, will procure that:
(a) the Employees will receive and enjoy contractual remuneration and
benefits (including separation and other benefits described in
the Disclosure Letter) which, judged objectively, are no less
favourable overall than their contractual remuneration and
benefits at the Completion Date; and
(b) it will not make any unilateral material change to the
contractual terms and conditions of employment with the Employees
without prior consultation where required by any local laws or
agreements, with recognised trade unions, appropriate employee
representatives, or the Employees.
8.2 The Seller will procure that, on or before Completion, the Company will
discharge its liability to Mr Rene Lachance in respect of Supplemental
Employment Terms.
8.3 For the purposes of this clause, "SUPPLEMENTAL EMPLOYMENT TERMS" shall
mean:
8.3.1 the period of additional notice (if any) due from the Company at
the date such liability crystallises under the arrangement in
force as at Completion which is in excess of that which he would
have received under the terms of his service agreement dated 25
October 1990;
8.3.2 the additional life assurance cover (if any) under the
arrangement in force as at Completion which is in excess of the
cover provided under the terms of his service agreement dated 25
October 1990;
8.3.3 the supplemental retirement benefits that are in addition to the
benefits to which Mr. Lachance is entitled under the TAI
Retirement Plan and the TCI Staff Employees' Pension Plan; and
8.3.4 any other enhancements to his terms and conditions of employment
granted between 25 October 1990 and Completion and which are in
force as at Completion other than those granted in the Ordinary
Course of Business.
8.4 The Seller will indemnify the Purchaser (for itself and as agent and
trustee for the Company) on a continuing basis against any and all
losses or liabilities, costs (including without limitation legal costs),
charges, expenses, actions, proceedings, claims and demands which the
Purchaser or the Company may incur and which relate to or arise out of
the continuation after Completion of the Supplemental Employment Terms.
8.5 The Purchaser acknowledges and agrees that all of the funds set aside or
due at Completion to be set aside by the Company in trust for the
purpose of meeting the liability of the Seller and the Company to
provide supplemental retirement benefits for Mr Lachance will be used
for this purpose. The funds held in trust are held at Merrill Lynch
Trust Company of America Chicago in account no. 637-95-521. If these
funds have not been used for this purpose before Completion, the
Purchaser will procure that the Company complies with any directions
given by the Seller as to the use of these funds after Completion for
the purpose of providing such benefits for Mr Lachance.
8.6 The Seller will indemnify the Purchaser (for itself and as agent and
trustee for the Company) on a continuing basis against any and all
losses or liabilities, costs (including without limitation legal costs)
charges, expenses, actions, proceedings, claims and demands which the
Purchaser or the Company may incur as a result of the severance
payments, pension entitlements, accelerated pension entitlements and any
other benefits actually paid to any employee whose employment is
terminated after Completion if and to the extent such payments,
entitlements and/or benefits are in excess of those which would have
applied at any time in the period prior to 10 September 1997 Provided
always that the dismissal which results in the excess costs being
incurred takes effect within four years of Completion and the regular
salary figure used in the calculations is one which has been prevailing
in respect of the relevant employee for at least six months prior to
termination. This indemnity shall not extend to any losses or
liabilities, costs
(including without limitation legal costs) charges, expenses, actions,
proceedings, claims and demands which the Purchaser or the Company may
incur as a result of its or their negligence or default. Any claims
under this indemnity must be made within 4 years and 3 months of
Completion following which this indemnity shall have no effect.
8.7 The Seller shall not be required to make any payment under the indemnity
set out in sub clause 8.6 unless a draft certificate shall have been
delivered to it by the Purchaser within 30 days after the date requiring
the Seller to indemnify the Purchaser pursuant to sub-clause 8.6 and
certifying the amount payable thereunder. In order to enable the Seller
to review the certificate, the Purchaser shall (to the extent it is
permitted by law to do so) make available and supply to the Seller and,
at the Seller's request and expense, the Seller's auditors, copies of
all relevant records and other working papers) relating to the subject
matter of the indemnity, during normal office hours.
8.8 If the Seller does not within 30 days after presentation to it of the
draft certificate give notice to the Purchaser that it disagrees with
the certificate or any item thereof, such notice stating the reasons for
the disagreement in reasonable detail, the draft certificate shall
become final and binding on the parties for all purposes.
8.9 If the Seller gives a valid notice within such 30 days, the parties
shall attempt in good faith to reach agreement in respect thereof and,
if they are unable to do so within 21 days of such notification, either
party may by notice to the other refer the certificate to the
Independent Accountants in accordance with the provisions of clause 11
of this agreement which shall apply mutatis mutandis, references to the
"COMPLAINANT" being deemed to be references to the "SELLER" and
references to the "OTHERS" being to the "PURCHASER".
8.10 The Seller shall pay interest at the rate of LIBOR plus 200 basis point
compounded monthly on all payments pursuant to this clause from the date
of delivery of the draft certificate.
9 PROPERTY, ENVIRONMENTAL AND LOUISIANA GRANTS
9.1 The Seller and the Purchaser shall observe and perform the provisions of
Schedule 2 expressed to be observed and performed by each of them
respectively.
9.2 The Seller and the Purchaser shall observe the provisions of Schedule 5
expressed to be observed and performed by each of them respectively,
which shall apply only to the Business and not the LPC Interests or LPC.
9.3 The Seller and the Company shall cooperate with the Purchaser in taking
reasonable steps to transfer to the Purchaser the ongoing benefits of
the applicable Louisiana Exemption Grants defined in Section 5.1,
Article V, "TAX MATTERS OF THAT CERTAIN FORMATION AGREEMENT" dated as of
October 18, 1993 between Affiliates of the Purchaser and the Seller.
10 PENSIONS
10.1 The Purchaser agrees to procure that the Company will, commencing with
the Completion Date, respect and perform the provisions of the Scheme.
10.2 Subject to the payment of the transfer amount, as described below, the
Purchaser will provide retirement benefits for Mr J Gush and Mr S G
Heyes in respect of their service with the Company on and after
Completion so that, in each case, their total benefits on retirement,
leaving service or death (inclusive of any retirement benefits
attributable to service up to Completion) are as described in their
retirement benefit profiles in the Agreed Form. The Purchaser will also
nominate retirement benefits arrangements to which a transfer payment
can be made from the Tioxide Offshore Pension Fund.
10.3 The Purchaser shall indemnify the Seller (for itself and its Affiliates)
on a continuing basis against any and all losses, liabilities, costs
(including without limitation legal costs), charges, expenses, actions,
proceedings, claims and demands which the Seller or its Affiliates may
incur and which relate to or arise out of any failure by the Purchaser
to comply with these obligations.
10.4 The Seller (or its relevant Affiliate) will use its reasonable
endeavours to procure payment of a transfer amount from the Tioxide
Offshore Pension Fund to the arrangements nominated by the Purchaser.
10.5 The transfer amount will be:
10.5.1 based on benefits accrued by Mr Gush and Mr Heyes under the
Tioxide Offshore Pension Fund for service up to Completion (i.e.
excluding benefits earned under all other Tioxide plans in which
they have participated); and
10.5.2 calculated on a past service reserve basis using the projected
unit method, based on salaries projected to retirement or earlier
date of leaving or death, using the actuarial assumptions set out
in the actuarial valuation of the Tioxide Offshore Pension Fund
as at 1 April 1997 and will be adjusted as agreed between the
Seller and the Purchaser for the period between Completion and
the date of payment.
10.6 If an appropriate transfer amount cannot be agreed within three months
after Completion, either party may require the amount to be determined
by an independent actuary, to be nominated by the Seller and the
Purchaser jointly, or if they cannot agree, by the President of the
Institute of Actuaries on application by either party. The independent
actuary will act as an expert and not as an arbitrator, and his decision
will be final and binding on the parties. His costs will be payable
equally by the Seller and the Purchaser.
10.7 If the trustee of the Tioxide Offshore Pension Fund does not pay the
transfer amount in full by a date one month after the date on which it
is agreed (or decided by the independent actuary), the Seller will pay
to the Purchaser the amount of the shortfall by way of adjustment to the
Final Consideration. However, the Seller will not be required to pay an
amount in excess of the net cost to the Purchaser or the Company (after
taking account of tax) of making good the shortfall by a payment to the
arrangements.
11 INDEPENDENT ACCOUNTANT
11.1 If either party wishes to refer any matter in dispute in accordance with
the provisions of Clause 3 or Schedule 6 for determination under this
Clause it shall give notice to the other requiring the appointment of an
independent accounting firm of international reputation (the
"INDEPENDENT ACCOUNTANT") excluding accounting firms who have acted as
auditors of either party or of any of their Affiliates in the last five
years. If the parties are unable to agree upon the Independent
Accountant within 14 days of such notice, then the Independent
Accountant shall be appointed by the President for the time being of the
Institute of Chartered Accountants in England and Wales on the
application of either party.
11.2 If the Independent Accountant delays or becomes unwilling or incapable
of acting or if for any other reason the President for the time being of
the Institute of Chartered Accountants in England and Wales thinks fit
he may discharge the Independent Accountant and, in the absence of
agreement between the parties, appoint another in its place.
11.3 The Independent Accountant shall act as an expert and not as an
arbitrator and his decision shall (in the absence of manifest error) be
final and binding on the parties. The Independent Accountant shall
afford the parties the opportunity of making written representations to
them and shall make its determination within 40 days of its appointment.
11.4 The fees and expenses of the Independent Accountant shall be borne by
the parties in equal shares unless the Independent Accountant determines
otherwise.
12 PROTECTIVE COVENANTS
12.1 The Seller covenants with the Purchaser that no member of the Seller's
Group will:
(a) for a period of five years from Completion within any part of the
Territories carry on or be engaged or involved in the Field of
Activity (save as the owner for investment purposes only of
securities traded on a recognised stock exchange and not
exceeding one per cent. of the securities of that class); or
(b) without prior approval from the Purchaser, for a period of two
years from Completion, directly or indirectly solicit, or
endeavour to entice away from the Purchaser or its Affiliates any
of the Employees.
12.2 Each of the restrictions in sub-Clause 12.1 above shall be enforceable
independently and its validity shall not be affected if the other is
invalid.
12.3 The Seller acknowledges that the provisions of this Clause 12 are no
more extensive than is reasonable to protect the Company.
12.4 Nothing in this Clause 12 or in this agreement shall prevent:
(a) the Seller or its Affiliates from purchasing shares in any
company or any business which has an interest in the Field of
Activity (the ownership of which would otherwise contravene
sub-Clause 12.1) unless the turnover of such company or
business in its last accounting year generated by its interest
in the Field of Activity was the greater of 10 per cent of the
aggregate turnover of such company or business and US$100
million. In the event that the Seller or any of its Affiliates
within five years from Completion purchases any corporation or
business which does have interests in the Field of Activity,
the Seller or the relevant Affiliate are contractually obliged
to offer for sale such interests to DuPont.
If DuPont does not purchase such interests from the Seller (or
its relevant Affiliate), the Seller (or the relevant Affiliate)
shall, if DuPont shall fail to or does not accept the offer
referred to above within such period to which it is entitled for
such purpose, within 30 days of receipt from DuPont of notice
that DuPont does not intend to purchase such interests offer for
sale such interests to the Purchaser on terms which are no less
favourable by written notice ("OFFER NOTICE").
If the Purchaser does not unconditionally purchase such interests
from the Seller (or its relevant Affiliates) within a period of
18 months after the date of the Offer Notice, the Seller (or the
relevant Affiliate) shall be free to retain such interests with
the consent of the Purchaser (such consent not to be unreasonably
withheld or delayed). If such consent is reasonably withheld, the
Seller (or the relevant Affiliate) shall use its best endeavours
to divest such interests within 12 months of such consent having
been withheld; or
(b) the Seller or its Affiliates from carrying on or being engaged or
involved in:
(i) any business it currently carries on (other than the
Business);
(ii)any business which only supplies other members of the
Seller's Group; or
(iii) any business after such time as the Purchaser or its
Affiliates have ceased to carry on or be engaged or involved
in such business other than by way of trade sale.
13 ANNOUNCEMENTS
The parties agree that neither party shall make or permit any member of
the Seller's Group or the Purchaser's Group, as the case may be, to make
any announcement concerning this agreement or any ancillary matter
except as required by law or any competent regulatory body or with the
prior written approval of the other party which will not be unreasonably
withheld or delayed.
14 DEFAULT INTEREST
Subject as otherwise provided to the contrary in this agreement, if any
sum due for payment under this agreement or in accordance with this
agreement is not paid on the due date, the party in default shall pay
Default Interest on that sum from the due date until the date of actual
payment calculated on a day-to-day basis.
15 NOTICES
15.1 Any notice or other document to be served under this agreement shall be
in writing and may be delivered by hand or by courier, sent by fax or by
post to the party to be served at its address appearing in this
agreement (and marked for the attention of the person whose name is
referred to in sub-Clause 15.3 below) or at such other address (or
marked for the attention of such other person) as it may have notified
to the other party in accordance with this Clause 15. Any notice or
other document sent by post shall be sent by registered post (if both
posted and for delivery within the same jurisdiction) or by registered
airmail (if posted for delivery outside the jurisdiction in which it is
posted), in either case return receipt requested (or any substantially
equivalent service).
15.2 Any notice or document delivered or sent in accordance with sub-Clause
15.1 shall be deemed to have been served:
15.2.1 if delivered by hand or by courier, at the time of delivery; or
15.2.2 if sent by fax, at the time of delivery if sent between 12.01
a.m. and 6.00 p.m. (local time at the destination) or on the
Business Day after transmission, if sent at any other time;
15.2.3 if posted, at 10.00 a.m. on the second Business Day after it was
put into the post if posted for delivery within the same
jurisdiction, or at 10.00 a.m. (local time at the destination) on
the fifth Business Day after it was put in the post if sent by
registered airmail.
15.3 The person to whom notices or documents should be addressed for the
purposes of sub-Clause 15.1 is:
(a) if to be served on the Seller or on Affiliates of the Seller:
[ * ]
Fax: [ * ]
copy to the Company Secretary of Imperial Chemical Industries
PLC of Imperial Chemical House, 9 Millbank, London, SW1P 3JF
Fax: (44) 171 798 5170
(b) if to be served on the Purchaser:
General Counsel
NL Industries, Inc.
16825 North Chase Drive
Suite 1200
Houston, Texas USA TX 77060
Fax: (1) 281 423 3333
15.4 In proving service of a notice or document it shall be sufficient to
prove that delivery was made by hand, courier or fax or that the
envelope containing the notice or document was properly addressed and
posted (either by registered post or by registered airmail, as the case
may be, in accordance with the requirements of this Clause 15).
16 GENERAL
16.1 Each of the obligations, Warranties and undertakings set out in this
agreement which is not fully performed at Completion will continue in
force after Completion.
16.2 Unless otherwise expressly stated all claims made and payments to be
made under this agreement shall be made in US Dollars. Payments to the
Seller shall be made in immediately available funds to the account of
the Seller at such account as the Seller may notify to the Purchaser and
to the Purchaser in immediately available funds to such account as the
Purchaser may notify to the Seller. All payments and values under this
agreement shall be in US Dollars and where an amount is not itself
calculated in US Dollars, it shall be converted into US Dollars at the
mid-market closing exchange rate for that currency in US Dollars as
published in the London Edition of the Financial Times published two
Business Days prior to the date on which the relevant payment is due or
where no such rate is published, at the rate quoted by Citibank, N.A. at
the close of business in London on that date. This sub-Clause shall not
apply to Schedule 6.
16.3 Save as otherwise provided to the contrary in this agreement, each
payment to be made under this agreement shall be made in the currency in
which the relevant amount is payable, free and clear of all deductions
or withholdings of any kind, except for those required by law, and if
any deduction or withholding must be made by law, an additional amount
will be paid which is necessary to ensure that the recipient receives a
net amount equal to the full amount which it would have received if the
payment had been made without the deduction or withholding.
16.4 None of the rights or obligations under this agreement may be assigned
or transferred without the written consent of the other party (the
"NON-ASSIGNING PARTY") other than an assignment of the rights (but not
the obligations) to an Affiliate of the assigning party provided that:
(a) such assignment shall only be permitted if the assignment has no
adverse effect on the Non-assigning Party;
(b) if the Affiliate to which the rights have been assigned ceases to
be an Affiliate of the assigning party, the rights which have
been transferred shall be re-transferred to the party which
originally assigned those rights or to another Affiliate of that
original assigning party; and
(c) it shall be a condition of any such assignment that reasonable
notice is given in writing to the Non-assigning Party of the
proposal to assign (identifying the rights proposed to be
assigned, the identity of the proposed assignee and such other
details relating thereto as the Non-assigning Party may
reasonably require).
16.5 Save as otherwise provided in this agreement, each party shall pay the
costs and expenses incurred by it and its Affiliates in connection with
the entering into and completion of this agreement.
16.6 This agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and any
party may enter into this agreement by executing a counterpart.
16.7 No amendment, variation or waiver of this agreement or any provision of
this agreement shall be effective unless it is in writing specifically
referring to this agreement and duly executed by or on behalf of both
parties.
16.8 Both parties shall at their own expense at all times from the date of
this agreement do all things as may be required to give effect to this
agreement including, without limitation, the execution of all deeds and
documents, procuring the convening of all meetings, the giving of all
waivers and consents and the passing of all resolutions and otherwise
exercising all powers and rights available to them.
16.9 The Seller and the Purchaser agree to make a timely, effective and
irrevocable election under Section 338(h)(10) of the Code and under any
comparable statutes in any other jurisdiction with respect to the
Company (the "SECTION 338(H)(10) ELECTION"), and to file such election
in accordance with applicable regulations. Without limiting the
generality of the foregoing, in order to effect such election, the
Seller and the Purchaser shall jointly execute the necessary copies of
IRS Form 8023 and attachments required to be filed therewith. The
Section 338(h)(10) Election shall properly reflect the Price Allocation
(as hereinafter defined). Within 45 days after the Completion Date, the
Purchaser shall deliver to the Seller a statement (the "ALLOCATION
STATEMENT") allocating the modified ADSP (as such terms is defined in
Treasury Regulations Section 1.338(h)(10)-1) (the "MODIFIED AGGREGATE
DEEMED SALES PRICE") of the assets of the Company in accordance with
this Agreement and the Treasury Regulations promulgated under Section
338(h)(10).
The Seller shall have the right to review the Allocation Statement. If
within 30 days after receipt of the Allocation Statement, the Seller
notifies the Purchaser in writing that the allocation of one or more
items reflected in the Allocation Statement is not a reasonable
allocation, the Purchaser and the Seller will negotiate in good faith to
resolve such dispute. If the Purchaser and the Seller fail to resolve
such dispute within 30 days, the Independent Accountant shall determine
whether the allocation was reasonable and, if not reasonable, shall
appropriately revise the Allocation Statement. If the Seller does not
respond within 30 days, or upon resolution of the disputed items, the
allocation reflected on the Allocation Statement (as such may have been
adjusted) shall be the "PRICE ALLOCATION" and shall be binding on the
parties hereto. The Seller and the Purchaser agree to act in accordance
with the Price Allocation in the preparation of financial statements,
filing and audit of any Tax return.
17 WHOLE AGREEMENT
17.1 Subject to sub-Clause 17.2 below, this agreement, the Framework
Agreement and the Implementation Agreements (if and when executed)
contain the whole agreement between the parties and their respective
Affiliates relating to the transactions contemplated by this agreement
and the Implementation Agreements and supersede all previous agreements
between the parties and their respective Affiliates relating to such
transactions.
17.2 A provision in another agreement between the parties to this agreement
or between the respective parent undertakings of the parties (and
whether made before or after the date of this agreement) which refers to
this agreement and which extends or supplements any provision in this
agreement will be deemed for the purposes of sub-Clause 17.1 above to
form part of the whole agreement between the parties as referred to in
that sub-Clause.
17.3 Each of the parties to this agreement acknowledges on its own behalf and
on behalf of each of its Affiliates that, in agreeing to enter into this
agreement and the Implementation Agreements, it has not relied on any
representation, warranty, collateral contract or other assurance (except
those set out in this agreement) and waives all rights and remedies
which, but for this sub-Clause, might otherwise be available to it in
respect of any such representation, warranty, collateral contract or
other assurance, provided that nothing in this Clause shall limit or
exclude any liability for fraud.
18 GOVERNING LAW
This agreement is governed by and shall be construed in accordance with
English law.
19 JURISDICTION
19.1 The parties agree, subject to sub-Clause 19.2, to submit to the
exclusive jurisdiction of the courts of the State of Delaware for all
purposes relating to this agreement.
19.2 If the courts of the State of Delaware decline jurisdiction, the English
courts shall have exclusive jurisdiction for all purposes relating to
this agreement.
19.3 In both sub-Clauses 19.1 and 19.2, neither party shall take any action
to avoid, dispute or suggest to such court that such jurisdiction is
improper.
19.3 If the English courts have jurisdiction, ICI American Holdings Inc.
irrevocably appoints Imperial Chemical Industries PLC of Imperial
Chemical House 9, Millbank, London SW1P 3JF as its agent for process in
England and the Purchaser irrevocably appoints Herbert Smith (Ref 554)
of Exchange House, Primrose Street, London, EC2A 2HS as its agent for
process in England.
AS WITNESS the hands of the duly authorised representatives of the
parties on the date which first appears on page 1.
SCHEDULE 1
PARTICULARS OF THE COMPANY
Date and Place of
Incorporation: 11 August 1971, Dover, Delaware, USA
Registered Office: 2001 Butterfield Road, Suite 601,
Downers Grove,
IL 60515 USA
Authorised Share Capital: 11,000 Common stock of US$1 par value
Shareholders and Issued 10,750 Shares of US$1 each owned by
Share Capital: ICI American Holdings Inc.
Directors: J.A. Collingwood
G. Gauthier
R. Lachance
Secretary: R. Lachance
SCHEDULE 2
PROPERTY
(CLAUSE 1)
PART I
ADDRESS ESTATE OR INTEREST USE
2001 Butterfield Road, Leasehold Offices
Suite 601, Downers Grove
Illinois 1660515
PART II
On Completion, the Seller shall deliver to the Purchaser all title
documentation (and other documentation disclosed to the Purchaser) in
connection with the Property.
SCHEDULE 3.1
WARRANTIES WITH RESPECT TO THE BUSINESS
AND TO THE SALE SHARES ONLY
A. GENERAL
A.1 CAPACITY AND CONDUCT OF BUSINESS
(1) The Seller (and each of its Affiliates in respect of the Implementation
Agreements to which they are parties) has the requisite power and
authority to enter into and to (otherwise as provided in this agreement)
perform this agreement and such Implementation Agreements.
(2) The Seller (and each of its Affiliates, in respect of the Implementation
Agreements to which they are parties) has obtained and satisfied all
corporate, regulatory and other approvals, and any other conditions,
necessary to execute and (otherwise as provided in this agreement)
perform this agreement and the Implementation Agreements.
(3) This agreement and the Implementation Agreements constitute (or when
executed will constitute) valid and binding obligations of the Seller
(and each of its Affiliates in respect of the Implementation Agreements
to which they are parties) enforceable in accordance with their terms.
(4) The execution and compliance with the terms of this agreement by the
Seller and the Implementation Agreements by the Seller or its Affiliates
(as appropriate) will:
(a) not constitute a breach of any material contract to which the
Seller (or any of its Affiliates) is a party or by which it
or they are bound or entitle any person to terminate or avoid
any such agreement or contract;
(b) be in compliance with the Seller's and the Company's
memorandum and articles of association or other
constitutional documents (or those of any of its Affiliates);
(c) not contravene:
(i) any order, judgment or decree; or
(ii) any statute, rule or regulation;
(iii)any other restriction of any kind by which the Seller
or any of its Affiliates or the Company is bound; or
(d) not result in the loss or impairment of or any default under
any licence, authorisation or consent required by the Company
for the purposes of its business.
(5) All factual information contained in this agreement relating to the
Company is true and accurate in all material respects.
(6) There are no outstanding powers of attorney executed on behalf of the
Company.
A.2 THE COMPANY
(1) The information relating to the Company contained in Schedule 1 is
true and accurate.
(2) Compliance has been made with all legal requirements in connection with
the formation of the Company and all issues and grants of shares,
debentures or other securities of the Company.
A.3 OWNERSHIP OF THE SALE SHARES
(1) The Seller is the sole legal and beneficial owner of the Sale Shares.
The Sale Shares constitute the entire issued share capital of the
Company.
(2) The Seller is entitled to sell and procure the transfer of the full
legal and beneficial ownership in the Sale Shares free from any
encumbrance, equity or third party right of any kind or nature
whatsoever, from any agreement or contract to grant the same and from
any claim to any of the same.
(3) The Sale Shares are fully paid up or credited as fully paid up and
constitute the whole of the issued and allotted share capital owned by
the Seller in the Company.
(4) No agreement or contract has been entered into which requires or may
require the Company to allot or issue any share or loan capital and the
Company has not allotted or issued any securities which are convertible
into share or loan capital and there are no voting trusts, proxies or
other agreements or understandings with respect to the voting of the
Sale Shares.
A.4 SUBSIDIARIES
(1) The Company is not the holder or beneficial owner of (nor has agreed to
acquire) any class of any shares or loan capital or other securities of
any other corporation (whether incorporated in the United States of
America or elsewhere).
(2) Other than with respect to its interest in LPC, the Company is not and
has not agreed to become a member of any partnership or other
unincorporated association, joint venture or consortium (other than
recognised trade associations).
(3) The Company does not have any place of business or permanent
establishment (as that expression is defined in double taxation
conventions) outside the United States of America.
A.5 OWNERSHIP OF ASSETS
(1) Except for the LPC Interests and those assets that are leased (as
described in the Disclosure Letter) the Company has full legal and
beneficial title to all assets (whether tangible or intangible)
reflected in the US Financial Information (save for current assets and
fixed assets worth less than US$100,000, both as defined for the
purposes of the US Financial Information, disposed of by the Company in
the Ordinary Course of its Business since 28 February 1998) and to all
assets acquired by the Company since 28 February 1998.
(2) None of the Assets is subject to any encumbrance (including, without
limitation, any debenture, mortgage, charge, lien (other than any such
lien arising by operation of law or by statute), deposit by way of
security, bill of sale, option or right of pre-emption) except those
that arise in the Ordinary Course of Business and do not have a material
adverse effect on the Business. All significant items of Plant and
Equipment have been regularly and adequately maintained where such
maintenance is normally required and are in reasonable working order
having regard to their age and use and taken as a whole are capable of
operating the Business fully and effectively as conducted by the Company
prior to Completion.
(3) Save for fluctuations and variations in Stock due to normal business
factors including, without limitation, production schedules and market
demand (including seasonal factors affecting the same) the Stocks in
aggregate comprise broadly the same mix of products as has been required
and has been maintained at levels sufficient to meet the level of sales
of the Business for the last four quarters. The Stock is owned by the
Company free and clear of all liens, claims, charges and encumbrances
other than any such liens arising by operation of law or by statute. The
Stock is located at the Property and as disclosed in the Disclosure
Letter.
(4) The Company owns or has the right to use all the property rights and
assets necessary for the Company to carry on fully and effectively the
Business in the manner and to the extent to which it is presently
conducted.
(5) The Business Data taking into account the time, purpose, nature and
context in which it was prepared is in all material respects a bona fide
and accurate record and in the Seller's opinion is collectively
sufficient for the purposes of conducting the Company's business in the
Ordinary Course of Business. The Business Data and the Company's
information, and the means of access to them, are exclusively owned by
it and under its direct control or are under its authority.
(6) The Disclosure Letter contains details of the current insurance
arrangements applicable to the Business. Those arrangements are in full
force and effect, all premiums have been duly paid and, so far as the
Seller is aware, nothing has been done or omitted to be done which would
make any policy of insurance of the Company void or voidable. There is
no claim outstanding under any such arrangement.
A.6 COMPLIANCE WITH STATUTES
The Company has complied with all applicable laws (including rules,
regulations both having the force of law, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of national, local,
and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, claim, demand, or notice has
been filed or commenced against the Company alleging any failure so to
comply.
A.7 LICENCES AND CONSENTS
The Company has all Permits necessary to own and operate its Assets and
to carry on the Business in the manner in which such business is now
carried on. All such Permits are valid and subsisting and have been
complied with in all material respects. The Company has paid all fees
due under the same. A list of material Permits has been disclosed and
identified in the Disclosure Letter and the list identifies those
material Permits which allow for revocation on a change in controlling
shareholder.
A.8 LITIGATION
(1) The Company is not engaged in any litigation or arbitration proceedings
except as plaintiff for collection of debts in the Ordinary Course of
Business which is likely to involve the Company claiming or paying sums
in excess of US$100,000 or which otherwise will have a material effect
on the operation of the Company and the Business and there are no such
proceedings pending and no letter before action has been received by the
Company and so far as the Seller is aware there are no facts likely to
give rise to any such proceedings. The Seller has disclosed in the
Disclosure Letter a list (which is complete and accurate in all material
respects) which includes a description of each pending law suit, claim
(including customer complaints), administrative proceedings,
arbitration, labour dispute or governmental investigation or inspection
to which the Company is a party or involves the operation of the
Business or involves the Sale Shares and in each case which is likely to
involve the Company claiming or paying sums in excess of US$100,000. The
Seller has disclosed all material (individually or in the aggregate)
product liability claims received by the Company or by the Seller during
the last three years. There are no orders, decrees, judgments or
agreements with any Court or governmental authority to which the Company
or the Seller (on behalf of the Company) is a party or by which the
Company or the Seller or the Sale Shares are bound and which will have a
material effect on the operation of the Company and its business.
(2) No administrator, receiver or administrative receiver or any other
equivalent officer has been appointed in respect of the Company or in
respect of any parts of the assets or undertakings of the Company.
(3) No petition has been presented, no order has been made, no resolution
has been passed and no meeting has been convened for the winding-up of
the Company or for an administration order to be made in relation to the
Company nor has any such order been made.
(4) No voluntary arrangement has been approved and no compromise or
arrangement has been sanctioned in respect of the Company pursuant to
any applicable bankruptcy or insolvency legislation.
(5) The Company has not become unable to pay its debts.
(6) No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole or
any part of any of the property, assets and/or undertaking of the
Company.
A.9 ENVIRONMENTAL MATTERS
(1) Environmental Authorisations
(a) The Company has lawfully obtained all Environmental
Authorisations and each such authorisation is in full force
and effect and the Company has complied at all times with and
can continue to comply in the future with all conditions of
such authorisations.
(b) No works or costs are or will be necessary to obtain or
secure compliance with or maintain any existing Environmental
Authorisations or their conditions or otherwise to comply
with Environmental Laws.
(c) The Company has received no communication in any form in
respect of any Environmental Authorisation varying, modifying
in any material respect, revoking, suspending or cancelling
the same or indicating an intention or threatening so to do
and there are no facts or circumstances which the Seller
knows or ought reasonably to know which will result in any
Environmental Authorisation being so varied, modified,
revoked, suspended or which may prejudice their renewal.
(d) The Seller or the Company has taken all necessary action in
connection with the renewal or extension of all Environmental
Authorisations.
(e) The Company is not engaged in and, so far as the Seller is
aware, there are no facts which make it likely or desirable
that it should be engaged in any appeal in respect of any
Environmental Authorisation or any conditions contained
therein or any refusal of any Environmental Authorisation.
(f) So far as the Seller is aware or ought to be aware, there is
no reason (other than reasons relating to the Purchaser or
its Affiliates) to believe that those Environmental
Authorisations which have been applied for but which have not
yet been granted or are pending will not be granted within a
reasonable period of time and on terms which are acceptable
in order for the Company to continue its current business
operations.
(g) So far as the Seller is aware or ought to be aware, the
execution and/or performance of this agreement and all other
documents which are to be executed at Completion will not
result in any Environmental Authorisations being varied,
modified, revoked, suspended, cancelled or not renewed, other
than for reasons relating to the Purchaser or its Affiliates.
(2) Compliance with Environmental Laws
(a) The Company, in relation to the Business, is in compliance
with Environmental Laws and the state and use of the Property
have been at all times in conformity with Environmental Laws.
(b) The Company, in relation to the Business, has not received
any communication in any form from any competent authority
requiring the taking of remedial or other steps in relation
to the pollution or protection of the Environment or the
state or use of the Property. So far as the Seller is aware,
there are no circumstances which might give rise to such
communications being received and the Seller is not aware of
any intention on the part of any such authority to give such
notice.
(c) In relation to the Business, no proceedings or other action,
claim or investigation are or have been in existence or so
far as the Seller is aware pending or threatened against the
Company arising from or in relation to any Environmental
Authorisations or otherwise concerning Environmental Laws.
(3) Liability
(a) The Company or the Seller, in relation to the Business, has
not received any notice or intimation of any complaint or
claim from any person in respect of any matter concerning the
Environment.
(b) The Company or the Seller, in relation to the Business, are
not and have not been engaged in any action, litigation,
arbitration or dispute resolution proceedings relating to or
concerning any actual or potential liability under
Environmental Laws and the Seller is not aware of any such
matters pending or being threatened or of any circumstances
or facts likely to give rise to any such matters.
(c) The Company or the Seller, in relation to the Business, are
not and have not been subject to any injunction or similar
remedy or order by a court of competent jurisdiction, or to
any undertakings given to such court in respect of any
matters relating to or concerning the Environment.
(4) As far as the Seller is aware, there has not been in relation to the
Business in the last three years any adverse report, complaint or
investigation or any prosecution, formal caution or warning for any
violation of any applicable laws or regulations relating to health,
safety and the environment.
A.10 DATA ROOM DOCUMENTS
(1) Save as disclosed in Schedule 6 of the Disclosure Letter, so far
as the Seller is aware, each licence, permit, contract, list and
report set out in Annex 6 and disclosed in the Data Room, and
identified on Annex 6 by reference to the reference number set
out in the Data Room Index annexed to the Disclosure Letter:
(a) other than where redacted, is a true copy of the original;
(b) is the latest version thereof;
(c) is complete; and
(d) has not been altered, amended or varied since the date
thereon.
(2) To the extent that any note, summary or response to questions of
or in respect of the documents set out in Annex 6 referred to in
sub-Paragraph A.10(1) contains any expression of opinion of the
ICI Group (not including the opinion of third parties), such
opinion reflects the current reasonably held opinion of its
author given in good faith taking into account the respective
author's knowledge and understanding.
B. US FINANCIAL INFORMATION
(1) The US Financial Information relating to the Business has been derived
from the books of the Company, which books have been regularly and
consistently kept and maintained using ICI's normal accounting policies
and practices as set out or referred to in ICI's Controller's Manuals
(and the policies contained in these Manuals are in accordance with UK
GAAP) as applied by the relevant business on a consistent basis in
accordance with UK GAAP and, on such basis, represents the assets and
liabilities of the Business as at 28 February 1998.
(2) The US Financial Information relating to the Business fairly represents
the matters presented therein. Since 28 February 1998 there has been:
(a) no material change in any accounting or inventory valuation
methods used by the Company in connection with the Assets;
(b) no upward revaluations of existing Stocks; and
(c) no material adverse change in the Business or financial condition
of the Company, which for this purpose shall not include the
inherently cyclical nature of the titanium dioxide industry or
general economic conditions.
(3) Since [DATE OF FRAMEWORK AGREEMENT] 1998:
(i) the Company has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii)the Company has not entered into any agreement, contract,
lease, or licence (or series of related agreements,
contracts, leases and licences) either involving more than
US$1,000,000 within a 12 month period or outside the Ordinary
Course of Business;
(iii) no party (including any of the Company's Affiliates) has
accelerated, terminated, modified, or cancelled any
agreement, contract, lease, or licence (or series of related
agreements, contracts, leases, and licences) involving more
than US$250,000 within a 12 month period to which the Company
is a party or is bound;
(iv)the Company has not imposed or permitted another to impose
any encumbrance upon any of its assets, tangible or
intangible other than those arising by operation of law or
statute;
(v) the Company has not made any capital expenditure (or series
of related capital expenditures) either involving more than
US$250,000 or outside the Ordinary Course of Business;
(vi)the Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any
other person (or series of related capital investments, loans
and acquisitions) either involving more than US$250,000 or
outside the Ordinary Course of Business;
(vii) other than to Affiliates of the Seller, the Company has not
issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalised lease obligation either
involving more than US$250,000 singly or US$2,500,000 in the
aggregate;
(viii) the Company has not delayed or postponed the payment of
accounts payable and other liabilities other than in the
Ordinary Course of Business;
(ix)the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and
claims) either involving more than US$250,000;
(x) the Company has not granted any licence or sublicence of any
rights under or with respect to any Intellectual Property;
(xi)there has been no change made or authorised in the
constitutional documents of the Company;
(xii) the Company has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xiii) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) the Company has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property
involving sums in excess of US$250,000;
(xv) the Company has not made or pledged to make any
charitable contribution outside the Ordinary Course of
Business;
(xvi) the Company has not committed to any of the foregoing.
C. ANTI-COMPETITIVE ARRANGEMENTS
The Company or the Seller, in relation to the Business, have not
received in the last 3 years any process, notice or communication,
formal or informal, from any anti-trust regulatory authority, relating
to any aspect of the Business, which alleges any illegal practices in
relation to the Business and so far as the Seller is aware no such
process, notice or communication is likely to be received.
D. MATERIAL CONTRACTS
(1) Particulars of all Material Contracts are annexed to the Disclosure
Letter.
(2) The Company is not in breach of, or default under, any of the Material
Contracts or any other Contracts the consequence of which would or may
have a material adverse effect on the Company and, so far as the Seller
is aware, no state of facts exists or event has occurred, is pending or
is threatened which after the giving of notice or the lapse of time
would or may constitute or result in a breach or a default by the Seller
or by the Company or any other person, firm, corporation or entity of or
in relation to any contract the consequences of which would have a
material effect on the operation of the Business. All Material Contracts
are legal, valid and binding obligations of the Company and are
enforceable in accordance with their terms.
E. EMPLOYEES
(1) Particulars of the material terms of employment of all Employees and
officers of the Company are annexed to the Disclosure Letter and such
particulars are true, complete and accurate.
(2) No Employee has given to the Company and the Company has not received
from any Employee, nor has the Company given to any Employee, notice of
termination of any such Employee's employment.
(3) Standard form consultancy agreements, agency or self-employed or
contracted labour agreements or contracts where sums in excess of
US$75,000 per annum are paid or are payable by the Company have been
disclosed in the Disclosure Letter.
(4) So far as the Seller is aware, there is no material industrial action by
the Employees pending or threatened in relation to the Business nor has
there been within the last 12 months.
(5) Particulars of all loans made by the Company to Employees and which
shall remain outstanding at Completion, together with sums owed by the
Company to any Employee (other than remuneration and other contractual
or customary benefits) are disclosed in the Disclosure Letter.
(6) No Employee of Grade 37 or above previously employed by the Company has
a right to return to work or any right to be reinstated or re-engaged by
the Company, whether under statute or otherwise.
(7) No Employees previously employed by the Company have a right to return
to work or any right to be reinstated or re-engaged by the Company,
whether under statute or otherwise.
(8) In relation to the Employees, there are no existing nor, so far as the
Seller is aware, threatened arbitration procedures arising out of or
under any union recognition or works council agreement covering the
Employees nor, so far as the Seller is aware, does any basis therefore
exist nor has the Seller or the Company received any request for
recognition or representation by any trade union not currently
recognised at the Property.
(9) The Company has complied in all material respects with all statutes,
regulations, orders and codes of conduct relating to employment and
relations with Employees and trade unions and has maintained records
required by law regarding the service of each of its Employees.
(10) The Disclosure Letter contains a list of Employees at the Property
together with a list of Employees below Grade 37 and a list of Employees
above Grade 37. The Disclosure Letter also contains a list of Employees
of the Company who are employed at locations other than at the Property.
(11) So far as the Seller is aware here are no material complaints, disputes
or grievances pending or threatened against the Company of any nature in
relation to its Employees or former Employees.
(12) All of the Employees are employed by the Company.
(13) The Company has discharged such obligations to Employees in respect of
salaries, wages, commissions, bonuses, overtime pay and holidays as have
accrued and become payable to Employees in accordance with the Company's
normal pay policies, including the normal timing of such payments, as at
the date hereof.
For the purposes of this Part E, "GRADE 37" refers to a particular grade
of employee, as determined by the Company, using the Hay-MSL evaluation
system.
F. PENSIONS
In this Part F, "SCHEME DOCUMENTS" means the documents relating to the
Scheme identified in the Disclosure Letter.
(1) Except pursuant to the Scheme, the Company has not paid, provided or
contributed towards, and is not under any obligation (whether or not
legally enforceable) to pay, provide or contribute towards any relevant
benefit payable on death or retirement for or in respect of any present
or past officer or employee (or any spouse, child or dependant of any of
them) of the Company.
(2) The Scheme Documents comprise all the documents governing the Scheme
including financial statements for the preceding period of three years,
all explanatory booklets and announcements to the Employees describing
the terms of the Scheme (other than routine benefit statements) of
current effect and full particulars of any enhancement of benefit and
contributions payable to the Scheme and there is no obligation to
provide or continue to provide benefits in respect of Employees or
former Employees of the Company under the Schemes other than as revealed
in the Scheme Documents.
(3) The Scheme has been registered as required under applicable legislation.
(4) The Scheme has at all times complied with the provisions of all relevant
statutes, regulations and requirements and have been administered in
accordance with the trusts, powers and provisions of the Scheme and with
due regard to the general requirements of trust law and the advisers to
the Scheme have not had and do not have any cause to report any matter.
(5) The Company has complied in all material respects with its obligations
under the Scheme and all amounts due to be paid to the Scheme by it and
its Employees have been paid.
(6) There are no claims or actions in progress, pending or threatened (other
than routine claims for benefits) against the trustees of the Scheme or
the Company about benefits payable under the Scheme in respect of
Employees or former Employees of the Company.
(7) All information of a factual nature made available to the Purchaser or
its advisers in connection with the Scheme is true and accurate in all
material respects and there is no omission therefrom.
(8) No proposal has been announced to alter or discontinue the Scheme nor
has any proposal which is legally enforceable been announced to
establish any retirement, death or disability agreement or arrangement
of the nature referred to in paragraph (1) above in respect of Employees
which proposal remains outstanding and has not been implemented.
(9) There is no amount which is due to the trustees of the Scheme.
G. PROPERTY
(1) The Property constitutes all of the freehold or leasehold or other
immovable property currently owned by the Company or in which the
Company has an ownership interest.
(2) The particulars of the Property shown in Schedule 2 (including in the
case of immovable property registration particulars) are true, complete
and correct. The use of the Property for the purpose stated in Schedule
2 corresponds to the use to which it is in fact put or (where the
Property is not presently in use) to the use to which it was last in
fact put.
(3) The leasehold interest relating to the Property is held pursuant to a
valid and binding lease.
(4) The Company does not require the use and is not in occupation of or
entitled to any estate or interest in any land or premises other than
the Property. The Company is in exclusive occupation of the whole of the
Property and on Completion shall be in exclusive occupation of the whole
of the Property.
(5) The Property is not affected by any of the following matters:
(a) any easement, reservation, covenant, restriction, agreement,
licence, franchise, mortgage, charge, encumbrance, or third
party right;
(b) any notice, order, proposal, dispute or complaint relating to
it or its present use under any legislation, agreement,
covenant, condition, licence or consent; or
(c) outgoings (other than uniform business rates, water charges
and other standard payments to the relevant water company
including, without limitation, insurance premiums and other
usual business expenses), whether of a periodically recurring
nature or otherwise and whether payable by the owner or
occupier of the relevant property.
(6) All obligations, restrictions, conditions and covenants (including any
imposed by or pursuant to any lease but excluding any referred to in
paragraph A.9 above) affecting the Property have been observed and
performed so far as the Seller is aware and there are no subsisting
allegations of a breach of any thereof relating to the Property or its
present use under any legislation, agreement, covenant, condition,
licence or consent other than those referred to in paragraph A.9 or so
far as the Seller is aware any circumstance which might give rise to
such a breach.
(7) The Property is in a good and substantial state of repair and condition
and fit for the purposes for which it is presently used and the Company
has not used in the Property any substances not in conformity with
relevant standards or codes of practice or which are generally known to
be deleterious to health and safety and there are no uncompleted works
of any description at the Property other than routine maintenance.
(8) There are no subsisting allegations that the use of the Property for the
purpose stated in Schedule 2 is not the permitted use under the
provisions of all relevant legislation.
(9) The Company has no liabilities or contingent liabilities (but excluding
any matters referred to in paragraph A.9 above) in respect of any
properties (other than the Property) (or any interest therein) whether
by privity of contract or by way of guarantee or surety or otherwise.
(10) The Property has the benefit of all rights, easements and consents
required for the occupation and operation of the Property for its
present use and any plant, machinery and processes thereat and such
rights, easements and consents are enjoyed on terms which do not permit
them to be determined by any third party or by effluxion of time.
(11) There are no outstanding liabilities to make payments in respect of
rates, water charges, or any other charges payable in respect of the
Property to any governmental, state, municipal or other similar
authority.
H. INTELLECTUAL PROPERTY
(1) The rights licensed to the Company pursuant to the US Name Agreement in
combination with all rights owned by the Company in Intellectual
Property constitutes all the Intellectual Property necessary for the
conduct of the Business by the Company as now conducted.
(2) The Seller does not have actual notice of any infringement by others or
of attacks on the validity or enforceability of or on the Company's
title to any Material Intellectual Property used in the Business. The
Disclosure Letter identifies all patents, patent applications,
registrations and applications for registration of Intellectual
Property, all Material unregistered trademarks, service marks, trade
names and copyrights owned by the Company. "MATERIAL" in this Warranty
H(2) means Intellectual Property the absence of which would have a
significant negative impact on either (a) the revenue attributable to or
derived from the Intellectual Property or (b) otherwise on the conduct
of the Company's business. The Disclosure Letter also identifies the
status of the relevant patents and, so far as the Seller is aware,
whether or not such patents are currently being opposed.
(3) The Disclosure Letter identifies all information technology used by the
Company which is defined in the Disclosure Letter as being "MATERIAL
INFORMATION TECHNOLOGY".
(4) The Seller does not have actual knowledge and has not received written
notification that the activities of the Business infringe the
Intellectual Property of any third party (the Seller having no
obligation to conduct investigations in relation to any such potential
infringement).
(5) So far as the Seller is aware or ought to be aware, all Material
agreements relating to Intellectual Property and Technical Information
to which the Seller is a party and which relate to the Business are
listed in the Disclosure Letter. "MATERIAL" in this Warranty H(5) means
agreements relating to Intellectual Property the absence of which would
have a significant negative impact on either (a) the revenue
attributable to or derived from the Intellectual Property or (b)
otherwise on the conduct of the Company's business.
(6) All Intellectual Property material to the conduct of the Business
immediately prior to Completion will be owned or available for use by
the Company immediately after Completion. For the purposes of this
Warranty H (6), material has the same meaning as in Warranty H (2).
I. BROKERS
Neither the Seller nor the Company has employed any investment banker,
broker or finder or incurred any liability for any brokerage fees,
commissions, finders fees or similar payments in connection with the
transactions contemplated by this agreement for which the Purchaser, the
Purchaser's Affiliates, LPC or the Company may be liable.
J. TAXATION
(1) Tax Returns, disputes, records and claims etc.
(a) The Company has timely filed all proper returns required to
be made for any Taxation purpose and has supplied or caused
to be supplied all information required by law to be supplied
to any revenue authority.
(b) There is no dispute or disagreement (not including routine
queries relating to the Taxation returns of the Company)
outstanding at the date of this Agreement with any revenue
authority regarding the proper method of computing the
profits of the Company (or any part of it) for Taxation
purposes or the proper treatment of any supplies of goods or
services made (or treated as made) by the Company or in
respect of any other Taxation matter and there are no
circumstances of which the Seller is aware which make it
likely that any such dispute or disagreement will commence.
Without prejudice to the generality of the foregoing, there
is no current investigation being undertaken by any Taxation
authority and, so far as the Seller is aware, there are no
existing circumstances which make it likely, in the event of
such an investigation taking place, that a liability will
arise. There are no liens for Tax upon the Assets of the
Company, except liens for current Tax not yet due.
(c) The amount of Taxation chargeable on the Company during any
accounting period ending on or within six years before
Completion has not to any material extent depended on any
concession, agreement, dispensation or other formal
arrangement with any revenue authority in circumstances where
either:
(i) the availability of any such arrangement will be
prejudiced as a result of the change of control of the
Company resulting from this agreement; or
(ii)the Company has not acted in accordance with the terms
of the arrangement in question.
(d) The Company has made all Taxation claims, disclaimers and
elections and taken all other action the making or doing of
which was assumed to have been made for the purpose of the
Taxation provisions in the Accounts.
(2) Duties etc.
All customs duties and sales and goods and services taxes payable to any
revenue authority upon the importation of any of the Company's assets
and all excise duties payable to any revenue authority in respect of any
of these assets have been paid in full, and none of these assets is
liable to confiscation or forfeiture or subject to a Tax lien except for
liens for current Tax not yet due (whether by virtue of non-payment or
underpayment of any Taxation or duty or by virtue of non-compliance with
any legislation or regulation relating to any Taxation or duty or
otherwise howsoever).
(3) Contracts
In relation to the Business, no contracts to which the Company is a
party and no obligation to any present or former director, employee or
officer involve any future liabilities of a revenue nature which when
incurred will not be deductible in computing profits for Tax purposes
otherwise than as a result of any future changes in the law or as a
result of any voluntary act after Completion of the Purchaser or of the
Company outside the Ordinary Course of Business of the Company.
(4) Distributions and payments
In relation to the Business, the Company has deducted and properly
operated and accounted to the appropriate revenue authority for all
amounts which it has been obliged to deduct in respect of Taxation.
(5) Employee benefits
(a) The Company has made all required deductions and withholdings
from all payments made, or treated as made, to its directors,
Employees or officers or former directors, Employees or
officers or any person required to be treated as such, and
accounting to the taxation authorities for all Taxation so
deducted and for all Taxation chargeable on the Company on
benefits provided for its directors, Employees or officers,
or former directors, Employees or officers.
(b) The Disclosure Letter contains full details of all share
incentive schemes, profit sharing schemes and profit related
pay schemes established by the Company.
(6) Residence and offshore interests
(a) The Company is and has at all times been resident in the
United States of America for the purposes of all Taxation
Statutes and has not at any time been resident outside the
United States of America for the purposes of any Taxation
Statute or any double taxation arrangements.
(b) The Company has not at any time had a branch outside the
United States of America or any permanent establishment (as
that expression is defined in the respective double taxation
relief orders current at the date of this Agreement) outside
the United States of America and the Company has no existing
entitlement to receive royalties, (or any sum treated as
royalties for any Taxation purposes) which are paid subject
to deduction of Tax in a jurisdiction outside the United
States of America.
(7) Election under section 338 (h) (10) of the Code
The Seller represents that it has filed a consolidated federal income
tax return for the Company for the taxable year immediately preceeding
the current taxable year and the Seller is eligible to make an election
under Section 338 (h) (10) of the Code.
K. MILLENNIUM COMPLIANCE
(1) For the purposes of this agreement "MILLENNIUM COMPLIANT" means that the
Computer Systems are capable of the following functions before, during
and/or after 1 January 2000:
(a) handling date information involving all and any dates before,
during and/or after 1 January 2000 including accepting date
input, providing date output and performing date calculations
in whole or part;
(b) operating accurately without interruption on and in respect
of any and all dates before, during and/or after 1 January
2000 and without any change in performance;
(c) responding to and processing two digit year input without
creating any ambiguity as to the century; and
(d) storing and providing date input information without creating
any ambiguity as to the century.
(2) The Disclosure Letter contains material details of the measures that
have been implemented within the Business to determine the extent to
which its Computer Systems are not Millennium Compliant, and material
details of any programme undertaken by the Business with a view to its
Computer Systems achieving Millennium Compliance (or so close to
Millennium Compliance as is practicable).
L. INTRA-GROUP ARRANGEMENTS
(1) There is no indebtedness or liability (actual or contingent) nor any
security owed by the Company to any member of the Seller's Group or
ICI's Group (as constituted following Completion) other than arising in
the Ordinary Course of Business and as conducted on arm's length terms.
(2) There is no agreement or contract to which the Company is a party and to
which any member of the Seller's Group (as constituted following
Completion) is a party or in which any such member is otherwise
interested in any way whatsoever which shall continue beyond the
Completion Date.
M. DEBTORS
(1) The Company has not made, or entered into any contract or agreement to
make any loan to, or other arrangement with, any person as a result of
which it is or may be owed any money other than trade debts incurred in
the Ordinary Course of Business and cash at bank.
(2) The Company is not entitled to the benefit of any debt otherwise than as
the original creditor and has not factored or discounted any debt or
agreed to do so.
(3) All of the debts which will be reflected in the Final Completion
Statement as owing to the Company (apart from bad and doubtful debts to
the extent to which they have been provided for in the Final Completion
Statement (as defined in Schedule 6)) will realise their full value as
included in the Final Completion Statement within the payment terms
agreed with the respective creditors.
N. OTHER OPERATIONS AND ASSETS
(1) During the 8 years prior to the date hereof, neither the Company, nor
any of its downstream Affiliates nor any entity to which the Company has
succeeded through merger or by operation of law, has engaged, directly
or through downstream Affiliates or agents or in partnership, in a
business other than the manufacture, import, export, sale and
distribution of titanium pigments, co-products and related products.
(2) The Seller has disclosed to the Purchaser details of all real property
owned, leased or occupied by the Company or any of its downstream
Affiliates or any entity to which the Company has succeeded through
merger or by operation of law at any time during the 8 years prior to
the date hereof.
(3) The Seller has disclosed to the Purchaser all off-site disposal
locations of Hazardous Materials owned by the Company, its downstream
Affiliates and any entity to which the Company has succeeded through
merger or by operation of law during the 8 years prior to the date
hereof.
(4) Neither the Company, nor any of its downstream Affiliates nor any entity
to which the Company has succeeded through merger or by operation of law
has owned or controlled a business for whose liabilities any of them
could be responsible the business records of which have not been made
available in the Data Room.
SCHEDULE 3.2
WARRANTIES WITH RESPECT TO THE LPC INTERESTS ONLY
(1) With respect to the LPC Interests, the execution, delivery and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) violate the
certificate of incorporation or bylaws of the Seller or the Company,
(ii) violate any law, rule, regulation, judgment, injunction, order or
decree applicable to LPC or the LPC Interests, (iii) constitute a
default under any provision of any agreement or other instrument binding
upon the Seller or the Company relating to the LPC Interests or LPC, or
(iv) result in the creation or imposition of any lien on the LPC
Interests.
(2) The Seller or the Company has good title to the LPC Interests, free and
clear of any lien or other adverse interest.
(3) There is no action, suit, investigation or proceeding pending against,
or to the knowledge of Seller or the Company, threatened against or
affecting, the Seller or the Company before any court or arbitrator or
any governmental body, agency or official, relating to the LPC
Interests, which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this
agreement.
(4) Neither the Seller nor the Company is in violation of any law, rule,
regulation, judgment, injunction, order or decree applicable to the LPC
Interests or to LPC.
(5) The US Financial Information relating to the LPC Interests has been
derived from the books of the Company, which books have been regularly
and consistently kept and maintained using ICI's normal accounting
policies and practices as set out or referred to in ICI's Controller's
Manuals (and the policies contained in these Manuals are in accordance
with UK GAAP) as applied by the relevant business on a consistent basis
in accordance with UK GAAP and, on such basis, represents the assets and
liabilities of the Business as at 28 February 1998.
(6) The US Financial Information relating to the LPC Interests fairly
represents the matters presented therein. Since 28 February 1998 there
has been:
(a) no material change in any accounting or inventory valuation
methods used by the Company in connection with the Assets; and
(b) no upward revaluations of existing Stocks.
SCHEDULE 4
IMPLEMENTATION AGREEMENTS
1 Deed of Indemnity
2 Name Agreement between Tioxide Europe Limited, E.I. Du Pont de Nemours
and Company and the Company
3 LPC Termination Agreement between Kronos, Inc., Kronos Louisiana, Inc.,
Kronos International, Inc., Kronos Europe S.A./N.V., Kronos Canada Inc.,
Kronos Titan GmbH, LPC, Tioxide Group Limited and Tioxide Group Services
Limited
4 LPC Licence Agreement between Kronos, Inc., Kronos Louisiana, Inc.,
Kronos International, Inc., Kronos Europe S.A./N.V., Kronos Canada Inc.,
Kronos Titan GmbH, LPC and Tioxide Europe Limited
SCHEDULE 5
ENVIRONMENT
1 INTERPRETATION
For the purposes of this Schedule, words and expressions defined in the
Share Sale Agreement to which this Schedule is attached shall have the
same respective meanings in this Schedule and, in addition, the
following terms shall have the following respective meanings:
"COMMERCIALLY REASONABLE EXPENSES" are those costs and expenses which a
reasonable person acting in a commercially prudent manner, taking into
account (but without imposing an absolute requirement) the need to
minimise his expenditure, would expend, in the case of any obligation to
carry out the remediation of Environmental Contamination pursuant to
Environmental Laws, to meet that obligation. For the avoidance of doubt,
Commercially Reasonable Expenses shall not include any costs or expenses
to the extent that they are incurred as a result of the adoption or
imposition of standards of clean-up materially more stringent than those
which are provided for under Environmental Laws;
"CONTROLLED WATERS" means waters including any ground or surface
waters;
"COUNTER INDEMNITY" means the indemnity defined in sub-paragraph 3.1
of this Schedule;
"ENVIRONMENT" means air, Controlled Waters, land (whether on, in or
below such land, excluding any buildings or other permanent structures
on, in or below the land) but including the surface of any river bed,
the surface of any sea bed or any other land covered by water, and flora
and fauna and all other natural resources;
"ENVIRONMENTAL CONTAMINATION" means any discharge, transport, emission,
release, leakage, spillage, escape or disposal of Hazardous Material at
or from the Site(s) onto or into any part of the Environment;
"ENVIRONMENTAL LAWS" means any and all legislation (whether civil,
criminal or administrative), statutes, treaty, statutory instrument,
directive, bylaw or judgment, regulations, ordinances, notices, orders,
government circulars, codes of practice, policy and guidance notes or
decisions of any competent regulatory body or common law relating to
pollution or protection of the Environment or harm to human health
arising from Environmental Contamination, which as at Completion are in
effect and legally capable of enforcement by legal process in the
country in which the Site(s) are situated;
"ENVIRONMENTAL LIABILITIES" means all claims, costs, damages, expenses
(including reasonable professional fees incurred), losses, liabilities
(including without limitation liability to third parties), fines or
penalties suffered or incurred by the Company, the Purchaser or its
Affiliates (or the Seller or its Affiliates in the case of the Counter
Indemnity) in relation to the Company (excluding in the case of the
Indemnity but not the Counter Indemnity the LPC Interests and LPC) as a
direct consequence of or in connection with any Environmental
Proceeding;
BUT EXCLUDING any claims, costs, damages, expenses, losses, liabilities:
(i) in respect of capital expenditure on plant and equipment
other than capital to carry out remediation of Environmental
Contamination pursuant to Environmental Laws;
(ii)in respect of loss of anticipated profits, loss of revenue,
or any other loss in respect of business interruption other
than such reasonably foreseeable losses of third parties who
have themselves directly suffered the relevant Environmental
Contamination or whose use of the Environment has been
adversely and directly affected by the relevant Environmental
Contamination;
(iii) where applicable to the extent that they are not
Commercially Reasonable Expenses;
"ENVIRONMENTAL PROCEEDING" means in relation to the Company:
(i) subject to (ii) below, any one or more writs, interim or
final judicial or administrative decrees, judgments,
injunctions, orders, or notices:
(a)under which the Company, the Purchaser or its Affiliates
(or the Seller or its Affiliates in the case of the
Counter Indemnity) are obliged by Environmental Laws or
legal process pursuant to Environmental Laws to undertake
or pay the cost of remediation or with which the aforesaid
parties are otherwise obliged to comply; or
(b)in respect of any violation or alleged violation of
Environmental Laws; or
(c)in respect of:
(01) any personal injury to any third party; or
(02) damage to any property of any third party,
both pursuant to Environmental Laws;
Provided that in the case of the Indemnity only:
* the reference to the Company shall exclude the LPC
Interests and LPC; and
* in paragraphs (i) (c) (01) and (02), the reference to
a "THIRD PARTY" shall not include any employee,
contractor or agent of the Company, the Purchaser or
and its Affiliates, except when:
- the personal injury other than asbestos-related
personal injury (in the case of paragraph (i) (c)
(01); and/or
- the damage to property (in the case of (i) (c) (02),
occurs after Completion and, the Purchaser did not
know or reasonably ought not to have known of the
circumstances which gave rise to that personal injury,
or as the case may be, that damage; and
(ii)any agreement between the Seller and Purchaser (or in the
event of disagreement any determination by the Experts) that
it is Reasonably Necessary to undertake remediation of
Environmental Contamination, which would (but for the fact
that an environmental authority is unaware of it) be more
likely than not to result in an environmental authority
bringing an Environmental Proceeding under (i)(a) in the
definition of Environmental Proceeding and which would result
in Environmental Liabilities;
"HAZARDOUS MATERIAL" means hazardous, poisonous, dangerous, noxious or
toxic substances, pollutants or wastes including (to the extent they are
hazardous, poisonous, dangerous, noxious or toxic) pesticides,
contaminants, petroleum products, asbestos, polychlorinated biphenyls
and radiation;
"INDEMNITY" means the indemnities contained in paragraph 2 below;
"REASONABLY NECESSARY" means reasonably necessary to avoid or avert or
mitigate the development of substantial adverse and material pollution
of the Environment or harm to human health which will arise within a
period of six months; and
"SITES(S)" means the Properties.
2 INDEMNITY
2.1 Subject to the provisions of this agreement, the Seller undertakes to
the Purchaser (for the benefit of the Company, the Purchaser and each of
its Affiliates) that it will indemnify and hold harmless the Company,
the Purchaser and each of the Purchaser's Affiliates against:
2.1.1 all Environmental Liabilities arising at or from the Site(s), to
the extent that such Environmental Liabilities are a result of
Environmental Contamination occurring on or before Completion;
and
2.1.2 save in respect of the LPC Interests and LPC, all costs,
damages, expenses, losses, fines or penalties suffered or
incurred by the Company or the Purchaser or its Affiliates as a
result of any prosecutions commenced or proceedings taken, or
notices served or other formal enforcement action between [DATE
OF SIGNATURE OF FRAMEWORK AGREEMENT] 1998 and Completion by any
competent regulatory body in connection with the Environment or
health and safety as a result of any breaches of any
Environmental Laws related to the operation of those Sites
which are owned, occupied or used by the Company AT [DATE OF
SIGNATURE OF FRAMEWORK AGREEMENT] 1998. "DAMAGES" in this
paragraph 2.1.2 includes any capital expenditure reasonably
required to remedy such breaches; and
2.2 notwithstanding sub-paragraphs 2.1 above and 4.1 below, neither the
Seller nor any of its Affiliates shall be liable under the Indemnity or
otherwise to the extent that such liability arises from or is
attributable to the failure of the Purchaser to comply or procure the
Company's compliance with the provisions of paragraphs 4.2, 6.1, 6.2, 7,
8, 9, 10, 12 and 14 of this Schedule.
3 THE COUNTER INDEMNITY
3.1 The Purchaser undertakes to the Seller (for the benefit of the Seller
and each of its Affiliates) that, subject to the provisions of this
agreement, it will indemnify and hold harmless (the "COUNTER Indemnity")
the Seller and each of its Affiliates against all Environmental
Liabilities arising at or from the Site(s) to the extent that such
Environmental Liabilities are as a result of Environmental Contamination
after Completion.
3.2 Notwithstanding sub-paragraph 3.1 above, the Purchaser and its
Affiliates shall not be liable to the Seller under the Counter Indemnity
or otherwise to the extent that such liability arises from or is
attributable to the failure of the Seller to comply with the provisions
of paragraphs 3.3, 4.2, 6.1, 6.2, 7, 8, 9, 10, 12 and 14 of this
Schedule.
3.3 The Seller shall take all reasonable steps to avoid or mitigate any
Environmental Liabilities and potential Environmental Liabilities which
may give rise to a claim under or in connection with this
Counter Indemnity, howsoever arising.
3.4 The provisions of sub-paragraphs 4.2 and 12.1 shall apply equally
mutatis mutandis in respect of the Seller and the Purchaser's rights or
obligations in respect of the Counter Indemnity.
4 LIMITATIONS
4.1.1 Neither the Seller nor any of its Affiliates shall be liable
under the Indemnity to the extent that Environmental
Liabilities have arisen, been increased, exacerbated, enhanced
or caused as a result of any act or omission (whether direct or
indirect) of the Company, the Purchaser or any Affiliates,
employees, agents or contractors thereof after Completion
(including, without limitation, any change of use of the
Site(s) including closure of all or any part of the Sites but
not including any material change of process within the
existing plant and/or buildings or any material change to or
development of the business and operations carried on at any
Site which does not result in any Site or any part of any Site
ceasing to be used for general industrial/manufacturing of a
type materially similar to the existing Site operation.
4.1.2 The word "OMISSION" as used in this paragraph 4.1 shall not
mean any failure by the Company or Purchaser to carry out
remediation or preventative action in circumstances where it is
not within their power to do so or where the Purchaser is not
aware or could not reasonably have been aware of the
Environmental Liabilities in question or where (without
prejudice to the obligations of the Purchaser under paragraph
5) the rights of the Purchaser to bring a claim under the
Indemnity would be prejudiced as a result thereof.
4.2 No claim may be made for any Environmental Liabilities under the
Indemnity or Counter Indemnity to the extent that any Environmental
Liabilities arise:
4.2.1 as a result directly or indirectly of information voluntarily
given, in the case of the Indemnity by the Purchaser or the
Company (but only post Completion in the case of the Company)
or, in the case of the Counter Indemnity, by the Seller after
Completion to a regulatory authority in circumstances other
than where there is a mandatory reporting requirement under
Environmental Laws or where information is given as required in
the context of applications for or variations to
authorisations, licences and other forms of environmental
consent required by the Business in the course of the Company's
or the Purchaser's or Seller's normal business activities (as
appropriate) or where the other party has previously proposed
or approved this course of action in writing; and
4.2.2 save where compelled by law, from any admission of liability by a
representative of the Purchaser or Seller holding a rank not less
than that of Senior Vice President in respect of any clean-up
which needs to be done, except where the other party has approved
such admission in writing such approval not to be unreasonably
withheld or delayed.
4.3 No claim under the terms of the Indemnity or Counter Indemnity for any
Environmental Liabilities shall be valid unless notice has been served
in accordance with the provisions of paragraph 7 and in the case of
Indemnity, but not the Counter Indemnity, said notice has been served
within 10 years of Completion.
4.4 The Seller's liability under the Indemnity shall be limited in
accordance with the provisions of the Americas Liability Agreement,
except for sub-clauses 4.1.2 (save for the proviso to sub-clause 4.1)
and 4.2 of the Americas Liability Agreement, the subject matter of which
will be governed by the provisions of this Schedule.
4.5 In the event that the Indemnitor (as defined in paragraph 6.1) either
incurs external charges, costs and expenses for environmental services
or internal charges for its own environmental services, in either case
including but not limited to testing and/or analytical services and/or
contaminated soil disposal facilities, in connection with or in relation
to any actual or potential Environmental Liabilities under the Indemnity
or Counter Indemnity (as appropriate) then such external and internal
charges, costs and expenses shall be deemed to be payments made under
the Indemnity or Counter Indemnity (as appropriate). Any internal
charges shall be made on the same basis as the Indemnitor charges to its
own business or its Affiliates.
4.6 It is hereby expressly agreed that, save where the Seller has accepted
liability or becomes otherwise liable under the terms of the Indemnity,
all costs incurred by the Purchaser in carrying out environmental
analyses and tests of the Site(s) (and its (or their) surrounds) shall
be borne by the Purchaser, other than costs in the exercise of the
rights and powers given to the Seller by sub-paragraphs 9.1 and 9.2
which shall be borne by the Seller unless the Purchaser becomes liable
therefor under the terms of the Counter Indemnity or unless the parties
otherwise agree.
4.7 The Seller shall be liable under the Indemnity for any asbestos-related
personal injury unless and to the extent that any works carried out by
the Purchaser or its Affiliates or the Company after Completion, were
not carried out by a reputable contractor or contractors, who were duly
and properly authorised or approved to undertake such works to at least
the standards of the relevant federal, state or other regulatory
authorities published by or in operation (in accordance with good
industry practice) at all times during the carrying out of such works.
5 MITIGATION
The Seller and the Purchaser shall take all reasonable steps after
Completion to avoid or mitigate any Environmental Liabilities and/or
potential Environmental Liabilities to the extent it is reasonably
within their respective powers to do so, which may give rise to a claim
under or in connection with this Indemnity or Counter Indemnity, as
appropriate, howsoever arising. Such steps will include but shall not be
limited to:
5.1 in the case of the Purchaser, carrying out (where reasonably
practicable) appropriate soil tests before taking any action which is
likely to cause a material disturbance to soil;
5.2 in the case of the Purchaser, where reasonably practicable carrying on
its activities on the Site(s) so as to minimise disturbance to known
areas of existing or probable soil contamination (other than deliberate
removal of such contaminated soil) without incurring abnormal unusual or
excessive cost in so doing;
5.3 where relevant, (with the approval of the other party not to be
unreasonably withheld or delayed) settling a claim of any party (not
being an Affiliate of the Purchaser in the case of the Indemnity or of
the Seller in the case of the Counter Indemnity) which will or may fall
within the terms of the Indemnity or Counter Indemnity, as appropriate,
the costs and expenses associated with such settlement (so approved by
the other party) being deemed to be Environmental Liabilities for the
purposes of this agreement, provided always that nothing in this
sub-paragraph 5.3 shall oblige the Purchaser or the Seller to enter into
any settlement which it does not, in its sole discretion, consider to be
in the best interests of its operations;
5.4 making reasonable and timely efforts to pursue claims against any third
parties (including insurers) who may have some liability in respect of
the matter in question under the Indemnity or Counter Indemnity as
appropriate provided always that this shall not limit or restrict or
operate in any way as a pre-condition to the rights to make a claim
under this Indemnity or Counter Indemnity, as appropriate; and
5.5 in the case of the Purchaser, using reasonable endeavours to avoid acts
or omissions of the nature described in sub-paragraph 4.1 of this
Schedule.
6 Notification
6.1 As soon as reasonably practicable after either party becomes aware of
any actual or potential Environmental Liabilities which may give rise to
a claim by it under the Indemnity or Counter Indemnity (the "CLAIMANT")
(whether or not the Claimant is of the opinion that it has a valid claim
against the other party under the Indemnity or Counter Indemnity (the
"INDEMNITOR")), the Claimant shall give written notice thereof to the
Indemnitor (and thereafter will use all reasonable efforts to keep the
Indemnitor reasonably informed of all material developments relating
thereto). Such written notice shall include reasonable details of all
relevant matters relating to any actual or potential Environmental
Liabilities. Thereafter, the Claimant will promptly advise the
Indemnitor orally of the Claimant's reasonable estimate of the extent of
and, where reasonably practicable, the cost of remediation of the
Environmental Liabilities, as a result thereof), provided that the
Indemnitor shall have given the Claimant written notice of the name of
its representative to whom such oral communication shall be imparted.
6.2 Neither party shall admit, settle or discharge any claim or liability
which might constitute a claim against the other under the Indemnity or
Counter Indemnity (as appropriate) without having first served a notice
under this paragraph 6 and given the other a reasonable opportunity to
consider the circumstances referred to in the said notice.
7 CLAIMS
In the event that the Claimant wishes to make a claim against the
Indemnitor under the Indemnity or Counter Indemnity (as appropriate)
then it shall do so by giving notice in writing of the same to the
Indemnitor giving such details as are then in its possession of the
relevant subject matter of such claim.
8 CONDUCT
If any notice is received by either party under paragraphs 6 or 7, the
Claimant shall, if so requested by the Indemnitor, take all steps which
are necessary and reasonable to avoid, resist, appeal, compromise or
defend any claim and any adjudication in respect thereof (subject to the
Claimant being indemnified against all cost and expenses which may
reasonably and necessarily be incurred in connection therewith), and the
Indemnitor shall (subject to the provisions of this paragraph), at its
request, be allowed to conduct any negotiations, proceedings or appeals
incidental thereto PROVIDED ALWAYS that if the claim relates to or
arises from a Site which at the time is owned, occupied or used by the
Company and which is operational at the date of the notice under
paragraph 7 then the Purchaser shall have conduct of all negotiations,
proceedings or appeals incidental thereto but shall nonetheless keep the
Seller fully informed of all material developments relating to the
subject matter of the claims.
9 SITE ACCESS
If any notice is received by the Seller under paragraphs 6 or 7:
9.1 the Seller and/or its agents and contractors shall be free to have
access to any Site(s) to the extent it is within the power of the
Company, the Purchaser or its Affiliates, during normal business hours,
and after reasonable prior notice, and, if so required by the Purchaser,
in the presence of authorised representatives of the Purchaser to assess
(including but not limited to assessment by soil sampling and testing)
the extent of the Environmental Liabilities and/or potential
Environmental Liabilities and to determine the action required in order
to remediate such liabilities (such actions to be subject to the prior
agreement of the Purchaser (including as to the action to be taken) such
agreement not to be unreasonably withheld); and
9.2 the Purchaser shall (during normal business hours) allow the Seller or
its agents access to inspect and take copies of such books and records
of the business of the Company and/or the Purchaser relating to the
Site(s) as may be necessary in connection with any Environmental
Liabilities and/or potential Environmental Liabilities.
9.3 The Seller shall exercise proper care in the exercise of its powers and
rights pursuant to this paragraph 9 and shall indemnify the Purchaser
for all reasonably incurred losses or liabilities arising from the
Seller's failure to do so.
10 DISCUSSIONS
Upon either party having given a notice under paragraphs 6 or 7, either
the Seller or the Purchaser may request a meeting as soon as practicable
to discuss the matter (and if either does so the other party shall
comply promptly with such request) and, irrespective of whether there
has been any agreement on liability, each party shall be fully involved
but (save as otherwise agreed between the parties) not as to make any
admission or liability not permitted by the other provisions of this
Schedule in any discussions and/or negotiations with any party imposing
or seeking to impose any Environmental Liabilities.
11 DISPUTE RESOLUTION
Upon either party giving a notice in accordance with paragraph 7, in the
event that the Seller and the Purchaser are unable to agree promptly
upon any factual matter relevant to a claim under this Indemnity or
Counter Indemnity (as appropriate) or in the event of any other matter
being referred to the Experts in accordance with this Schedule then the
following provisions of this paragraph 11 shall apply:
11.1 a reputable independent firm of experts (the "EXPERTS") (who shall act
as experts and not arbitrators) in relation to the Environment relevant
to the claim or potential claim (having at least ten years relevant
experience) shall be appointed by mutual agreement of the parties hereto
(and the parties shall each be obliged to use their respective best
endeavours to reach agreement as soon as practicable) to resolve any
factual matter in dispute between the parties but not including any
interpretation of laws or regulations as they apply to such factual
matters or any conclusions regarding responsibility or liability for or
in relation to any factual matters. The Experts shall be offered the
appointment within 15 Business Days of the parties reaching such mutual
agreement and shall be notified in writing of the provisions of
sub-paragraph 11.7 below. Failing such mutual agreement on the
appointment of Experts, the parties shall promptly refer the issue, at
their joint cost, to the President for the time being of the Royal
Institute of Chartered Surveyors in the United Kingdom with instructions
to appoint suitable Experts within 14 days of receipt of such
instructions;
11.2 the said Experts shall only be dismissed by the mutual agreement of the
parties hereto;
11.3 both parties shall promptly and simultaneously exchange with each other
and submit to the Experts, and in any event in accordance with the
Experts' written directions, their arguments and submissions in
connection with any matter of fact referred to them in accordance with
this paragraph 11;
11.4 following receipt by the Experts of the written arguments and other
submissions of the parties pursuant to paragraph 11.3, the parties shall
instruct the Experts to issue, as soon as reasonably practicable, a
formal written opinion pertaining to the matter of fact referred to
them. In any event, the Experts shall be instructed to present the said
opinion within two months after receiving the written arguments and
other submissions of the parties pursuant to sub-paragraph 11.3;
11.5 the formal written opinion of the Experts issued pursuant to
sub-paragraph 11.4 shall be conclusive in any proceedings between the
parties hereto as to the question of fact so determined;
11.6 the fees and expenses of the Experts shall be borne equally by the
Seller and the Purchaser (unless otherwise directed by the Experts); and
11.7 the Experts, and any company, firm, partnership or other organisation
with which the Experts are connected, shall not be eligible to be
considered to undertake any clean-up work in respect of the claim for
which they have so acted on or around the Site(s) save where the parties
hereto mutually agree to waive this provision. For the avoidance of
doubt, either party may withhold such consent in any event.
12 ACCEPTANCE OF LIABILITY
In the event that the Seller admits that it has any liability to the
Purchaser under the Indemnity (or where the Seller agrees to accept the
Purchaser's claim as falling within the Indemnity notwithstanding the
fact that no Environmental Liability may at that point in time have
arisen):
12.1 Subject to consulting with and paying reasonable regard to the views of
the Purchaser, the Seller shall have the right independently to
determine whatever measures are appropriate in order to remediate
pursuant to applicable Environmental Laws the subject matter of the
claim under the Indemnity and furthermore the Seller shall have the
right independently to carry out such remediation itself (or through
suitable third party agents or contractors) provided that in so doing
the Seller (or its said agents or contractors) shall be obliged to use
reasonable endeavours to avoid causing undue interruption to the conduct
of the business of the Company and/or its Affiliates;
12.2 The Seller and/or its agents and contractors shall, in addition to the
rights of access provided for in paragraph 9 above, be free to have
access to the Site(s) if currently owned, leased or, where within the
power of the Company and its Affiliates, during normal business hours
after reasonable prior notice, and if so required, in the presence of
authorised representatives of the Purchaser, to carry out the
remediation referred to in sub-paragraph 12.1 above provided that the
Seller (or its agents or contractors) shall be obliged to use reasonable
endeavours to avoid causing undue interruption to the conduct of the
business of the Company and/or its Affiliates.
12.3 The Seller shall exercise reasonable care in the exercise of its powers
and rights pursuant to this paragraph 12 and shall exercise reasonable
skill, care and diligence in carrying out any works and shall not use
any materials which are not in accordance with the recommendations of
relevant authorities and codes of practice. The Seller shall procure
that the contractors and consultants engaged to carry out and advise on
the works are bound by obligations in the same terms of reasonable
skill, care and diligence as herein before mentioned and otherwise
engaged on market terms at the time and shall procure suitable
warranties in accordance with normal market practice at the time from
the contractors and consultants om favour of the Purchaser. The Seller
shall not carry out the works itself but shall always engage external
contractors and consultants approved by the Purchaser such approval not
to be unreasonably withheld or delayed.
13 STATEMENTS
In the event of any circumstances arising which do or may give rise to
Environmental Liabilities which may fall within the terms of the
Indemnity or the Counter Indemnity (as appropriate) neither the Company,
the Purchaser nor the Seller (nor any of their respective Affiliates) to
the extent practicable shall make any public statements which is not
required by law or the rules of any regulatory authority to make
regarding such circumstances without first discussing with the other
party and reaching written agreement (such agreement not to be
unreasonably withheld or delayed) on the text of any such public
statement before it is made.
14 GENERAL
14.1 Any information, records, or other material of one party shall be
treated as strictly confidential by the other party except when (a) it
is required to be used in order to comply with an order of the court or
regulatory authority or (b) it is used by the other party to enforce its
rights under this Schedule or so as to make an insurance claim provided
that, in the case of either (a) or (b), disclosure is made in accordance
with this sub-paragraph 14.1. If either party becomes legally compelled
(including by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose any
of the information, records, or other material referred to in this
sub-paragraph 14.1, the party so compelled shall provide the other with
prompt prior written notice of such requirement so that the other may
seek a protective order or other appropriate remedy. To the extent
lawfully able to do so, each party agrees to cooperate in each other's
efforts to obtain a protective order or other reasonable assurance that
confidential treatment shall be accorded any such information. If such
protective order or other remedy is not obtained, the party so compelled
agrees to disclose only that portion of the information, records, or
other material which it is advised by opinion of outside counsel is
legally required to be disclosed and to take all reasonable steps to
preserve the confidentiality of the information, records, or other
material referred to in this sub-paragraph 14.1. Any other disclosure by
one party of information, records or materials of the other party shall
require the prior written consent of such other party, which shall not
be unreasonably withheld or delayed.
14.2 The Purchaser's and its Affiliates' and the Seller's and its Affiliates'
exclusive remedies in respect of any claims which fall within the scope
of the Indemnity or Counter Indemnity, as appropriate, shall be in
accordance with the provisions of this Schedule, and the Purchaser on
behalf of itself and its Affiliates and the Seller, on behalf of itself
and its Affiliates, hereby waives all other remedies whether in
contract, tort (including, for the avoidance of doubt, negligence) or
howsoever otherwise arising which it may have against the Seller or any
of its Affiliates or the Purchaser or any of its Affiliates as
appropriate at law or in equity in respect of the matters which fall
within the scope of the Indemnity or Counter Indemnities and, for the
avoidance of doubt, if such a claim under this Schedule could also give
rise to a Warranty Claim or a claim under any other provision of this
agreement in respect of the same subject matter, the Purchaser or the
Seller as appropriate may only bring a claim under this Schedule.
14.3 The Seller undertakes to co-operate with the Purchaser and assist the
Purchaser in achieving a transfer to the Purchaser (or as it directs) of
all Environmental Authorisations, Permits and licences held by the
Seller at Completion.
15 CO-OPERATION
The Purchaser undertakes that wherever co-operation is required by the
Company to ensure compliance with the Purchaser's obligations hereunder,
the Purchaser will use its reasonable endeavours to ensure that the
Company provides the requisite co-operation.
SCHEDULE 6
CONSIDERATION ADJUSTMENT TEXT
(Clause 3.3)
1 Consideration and Adjustment
SECTION 1
(1) In this Schedule 3:
"A FORM" means, in relation to the Company, the quarterly financial
reports in the format set forth in Annex 3 which are prepared in
accordance with the accounting policies, practices and other
requirements set out or referred to in ICI's Controller's Manuals as
applied by the Company (with the exception of pensions liabilities which
are accounted for in accordance with FAS 87) and prepared at the
Completion Date on a basis consistent with that adopted by the Company
in the A Form at 31 December 1997 (with the exception that pensions
liabilities shall be reported in Provisions); and if the Completion Date
does not fall on the due date for the preparation of an A Form, a
financial report prepared on the same basis for the financial period
from the latest date at which an A Form was prepared to the Completion
Date;
"ACTUAL NET DEBT" means Net Debt as agreed or determined in accordance
with paragraphs (4) to (6) below;
"ACTUAL NET WORKING CAPITAL" means Net Working Capital as at the
Completion Date as determined under paragraphs (4) to (6) below;
"ESTIMATED CONSIDERATION" has the meaning given in sub-Clause 3.1;
"ENTERPRISE VALUE" means US$23,635,000;
"FINAL CONSIDERATION" has the meaning given in paragraph (3)(a) below;
"FINAL COMPLETION STATEMENT" has the meaning given in paragraph (3)(b)
below;
"FINAL STOCKS" means the value of Stocks for the Company at Completion;
"ICI'S CONTROLLER'S MANUALS" means the control manuals in existence at
14 July 1997 and which are compiled in accordance with UK GAAP used for
accounting purposes within the Seller's Group, copies of which have been
received by the Purchaser or an Affiliate of the Purchaser (and which
consists of an introduction to the Group Controller's Manual, Bulletin
Board Accounting Language, Bulletin Board Reporting, Accounting
Definitions and Conventions, Accounting Policies and Procedures,
Controls, Reporting);
"INITIAL STOCKS" means the value of Stocks for the Company as at 28
February 1998;
"INTEREST RATE" means LIBOR plus 25 basis points;
"NET DEBT" means the amount reported as "NET DEBT" on line 70090 of the
A Form for the Company as described in ICI's Controller's Manuals which,
for the avoidance of doubt, can be either a negative or a non-negative
number;
"NET WORKING CAPITAL" means the aggregate of:
(a) Operating Debtors; plus
(b) Stocks (for the purposes of this definition meaning Initial
Stocks when used for Net Working Capital as at 28 February 1998
and meaning Final Stocks when used for Actual Net Working
Capital); less
(b) Operating Creditors less than 1 year;
For the purposes of (b) the Stocks shall be valued in accordance with
the document headed "STOCKTAKING AND VALUATION PRINCIPLES" in the Agreed
Form marked "NWC-S";
"NET WORKING CAPITAL AS AT 28 FEBRUARY 1998" or "NWC28" means, the value
shown in the column headed NWC 28 in Section 2 of this Schedule 3 which
is the amount which the parties have agreed to represent the value of
Net Working Capital at 28 February 1998 of the Company;
"OPERATING CREDITORS LESS THAN 1 YEAR" means the absolute value of the
amount reported as creditors of the Company which are external to the
Company (including without limitation creditors which are members of, or
other business units within, the ICI Group as at the date of the
relevant A Form) as defined by reference to "OPERATING CREDITORS LESS
THAN 1 YEAR" on line 70020 of the A Form for the Company as described in
ICI's Controller's Manuals;
"OPERATING DEBTORS" means debtors of the Company which are external to
the Company (including without limitation debtors which are members of,
or other business units within, the ICI Group as at the date of the
relevant A Form) as defined by reference to "OPERATING DEBTORS" on line
70010 of the A Form for the Company as described in ICI's Controller's
Manuals;
"STOCKS" means the stock of fuels, raw materials, ingredients,
packaging, office and laboratory supplies, revenue engineering spares,
consumable stores, work in progress and finished goods owned by the
Company as determined on line 70000 of the A Form for the Company or
Business as described in ICI's Controller's Manuals;
(2)
(a) All payments and values under this Schedule shall be in US
Dollars and where an amount is not itself calculated in US
Dollars it shall be converted into US Dollars at the mid market
closing exchange rate in London for the currency in which that
amount is expressed in US Dollars as published in the London
Edition of the Financial Times first published thereafter or,
where the exchange rate is not published in the London Edition
of the Financial Times, at the exchange rate quoted by Citibank
N.A. as at the close of business in London for the currency in
which that amount is expressed on the Completion Date in
relation to amounts in the Final Completion Statement.
(b) References to the absolute value of a number X shall be construed
as follows:
(i) if X is greater than or equal to zero, the absolute value of
X shall be equal to X; and
(ii)if X is less than zero, the absolute value of X shall be X
multiplied by -1,
so that, for the purposes of illustration, the absolute value of
1 is equal to 1 and the absolute value of -1 is equal to 1.
CALCULATION OF THE FINAL CONSIDERATION
(3) In relation to this agreement:
(a) the Final Consideration for the Company shall be determined by
the following formula:
Final Consideration = EV minus AND minus NWC 28 plus ANWC
(excluding in relation to any of the foregoing any item or matter
attributable to the LPC Interests)_plus in the case only of TAI
LV
Where (in relation to the Company):
EV = Enterprise Value
AND = Actual Net Debt
NWC28 = Net Working Capital as at 28 February 1998
ANWC = Actual Net Working Capital
LV = US$176,222,000 (value of LPC Interests)
(b) After the Completion Date, the Seller shall prepare a
completion statement as at the Completion Date which shall
contain a statement of the Final Consideration in accordance
with paragraph 3(a) above based on the Seller's calculations
(the "FINAL COMPLETION STATEMENT"). The Final Completion
Statement shall be prepared using the Seller's normal
accounting policies and practices as set out or referred to in
ICI's Controller's Manuals as applied by the Company on a
consistent basis and shall be submitted by the Seller to the
Seller's Auditors for review. Taxation paid or payable by the
Company (including any sum paid or payable to a member of the
Seller's Group in respect of Taxation) as a result of the
transfer of the Sale Shares to the Purchaser (including
Taxation paid or payable by the Seller under Clause 5 of the
Tax Deed of Covenant) shall not be taken into account in the
calculation of the Final Consideration.
(4) Within 45 days of the Completion Date, the Seller shall issue the Final
Completion Statement (distinguishing between the LPC Business and the
other business of the Company) for the Company to the Purchaser together
with a copy of a report by the Seller's Auditors addressed to the Seller
and substantially in the form set out in Annex 3 to the effect that the
Final Completion Statement has been prepared in accordance with this
agreement. Although it is the Seller's responsibility to prepare the
Final Completion Statement, the Seller will require the assistance of
the employees of the relevant Purchaser Affiliates to fulfil this
responsibility and the Purchaser shall ensure such assistance is
provided promptly and at no charge. Immediately after delivery of the
Final Completion Statement, the Purchaser's Auditors shall have the
right, subject to the Purchaser delivering to the Sellers' Auditors a
signed letter in the form set out in Annex 5, to review the Final
Completion Statement and the Seller's Auditors working papers relating
to the Final Completion Statement. Within 45 days of delivery to the
Purchaser of the Final Completion Statement and the Seller's Auditors
report (each of which shall be in English) to the Purchaser's designated
location, the Purchaser shall give notice to the Seller in writing of
any item or items in the Final Completion Statement which they wish to
dispute and the basis on which they dispute that item or those items and
the changes to the Final Completion Statement which the Purchaser
believes should be made and the parties shall use their reasonable
endeavors to resolve that dispute. Any items in respect of which the
Purchaser does not give such notice will be deemed to have been accepted
by the Purchaser. Any written resolution reached by the parties on any
disputed item shall be final, conclusive and binding on the parties.
(5) If the parties agree the Final Completion Statement then any adjusting
payments referred to in paragraph (7) below shall be made by the paying
party within 7 days of being agreed by the parties.
(6) If the parties fail to agree on any element of the Final Completion
Statement within 14 days after the Purchaser has given notice in writing
to the Seller of any item(s) in the Final Completion Statement which the
Purchaser wishes to dispute (in accordance with paragraph (4) above)
then any agreed amounts shall be paid in accordance with the preceding
paragraph and any dispute may be referred by either party for final
determination in accordance with sub-Clause 11.1 of this agreement and
any amounts thereby found to be due shall be paid by the relevant
Affiliate not later than 7 days after such final determination.
(7) When the Final Consideration is agreed or otherwise determined in
accordance with the three preceding paragraphs the following adjusting
payments shall be made:
(a) an amount equal to the difference between (i) the Estimated
Consideration and (ii) the Final Consideration; and
(b) interest (compounded monthly) at the Interest Rate on the amount
in paragraph (a) above from the Completion Date to the date of
payment, calculated on a day to day basis;
which shall be paid by the Seller Affiliate to the Purchaser (or vice
versa, as appropriate).
(8) In this Schedule, references to lines of A Forms have been chosen by the
Seller and are believed in good faith to correspond to the matters to
which they refer. If, however, that reference when compared to the
matter it describes or refers to is incorrect then there shall be
substituted for that line reference to another line reference (if any)
which corresponds to the matter described or referred to.
SECTION 2
UPLIFT OF STOCKS
TO FAIR MARKET
VALUE FOR THE
NWC28 PURPOSE OF
US$ ALLOCATION OF
CONSIDERATION TO
CLASSES OF ASSETS
US$
Americas Business 6,857,000 Nil
LPC Business 15,081,000 1,697,000
SCHEDULE 7
(Clause 1.1)
PRINCIPLES FOR DISTINGUISHING
LPC BUSINESS AND AMERICAS BUSINESS
TAI A FORM
- ------------------------------------------------------------------------
LPC BUSINESS AMERICAS COMMENTS
(SULPHATE)
BUSINESS
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
FIXED ASSETS All - Office equipment
etc.
- ------------------------------------------------------------------------
INVESTMENTS All - Partnership share
- ------------------------------------------------------------------------
STOCKS Stocks All other - Based on actual
manufactured stocks quantities of
by LPC stocks from each
source
- ------------------------------------------------------------------------
OPERATING DEBTORS Sales of All other - Based on
Trade Debtors} material trade debtors detailed analysis
Intra Group Debtors} manufactured of all open
by LPC accounts concerned
- ------------------------------------------------------------------------
Other operating Items All other
debtors exclusive to operating
LPC debtors
partnership or
trade in
product
manufactured
by LPC
- ------------------------------------------------------------------------
OPERATING CREDITORS
LESS THAN 1 YEAR
Trade Creditors} Purchases of All other - Based on
Intra Group material operating detailed analysis
Creditors} manufactured creditors of all open
by LPC less than 1 accounts concerned
year
- ------------------------------------------------------------------------
Other operating Purchases and All other - Based on
creditors services operating detailed analysis
exclusively creditors of all open
related to LPC accounts concerned
partnership
and to
material
manufactured
by LPC
- ------------------------------------------------------------------------
NON OPERATING Items All other -Mainly tax split
DEBTORS/CREDITORS exclusively non-operating based on analysis
related to LPC debtors/ of results based
and materials creditors on detailed
manufactured analysis of all
by LPC open accounts
concerned
- ------------------------------------------------------------------------
NET DEBT All Net Debt
to LPC Business
- ------------------------------------------------------------------------
PROVISIONS Items All other
specifically provisions
related to LPC
- ------------------------------------------------------------------------
DEFERRED INCOME Items All other
specifically deferred
related to LPC income
- ------------------------------------------------------------------------
NET ASSETS - Calculated by
difference
- ------------------------------------------------------------------------
NOTES:
1 Pension Liability (Approx. US$250,000) is accounted for according to US
rules (FAS87 etc.) in A Form. Therefore no reconciling difference
between US and UK GAAP.
2 ICI A Forms do not report deferred tax for ICI's US subsidiaries.
However any deferred tax in the US GAAP accounts is readily analysable
into its LPC and Sulphate and is estimated to derive to the extent of
some 99 per cent. from LPC's tax depreciation.
SCHEDULE 8
US FINANCIAL INFORMATION
(Clause 1.1)
SPLIT A FORMS AS AT 28 FEBRUARY 1998
TAI BALANCE SHEET
AT 28 FEBRUARY
USD THOUSANDS
AMERICAS LPC TOTAL
BUSINESS BUSINESS
Fixed Assets 50 - 50
Investments - 155,744 155,744
Stocks 8,891 9,851 18,742
Operating Debtors 17,736 12,447 30,183
TCI Debtor - 1,405 1,405
Operating (18,002) (8,622) (26,624)
Creditors less
than 1 year
TCI Creditor (1,768) - (1,768)
Non Operating - 288 288
Debtors
Non Operating - (728) (728)
Creditors less
than 1 year ------- -------- --------
6,907 170,385 177,292
------- -------- --------
Net Debt - 39,943 39,943
Provisions 268 - 268
Deferred Income - - -
-------- -------- --------
268 39,943 40,211
Shareholders' Equity 137,081
--------
177,292
--------
NOTES:
1 Operating Debtors at 28 Feb 1998 have been split pro rata to sales in
January and February 1998.
2 The pensions provision has been reclassified into "PROVISIONS" in
accordance with the definition of A Form in this agreement.
3 TCI Debtors/TCI Creditors and TAI Debtors/TAI Creditors net out.
SCHEDULE 9
(Clause 1.7)
David Allen
David Busby
John Collingwood
Guy Gauthier
John Gush
Rene Lachance
Michael Maughan
Dave Williams
SCHEDULE 10
(Clause 7.1(f)(iii))
SIGNATURES
SIGNED by }
for and on behalf of
ICI AMERICAN HOLDINGS INC.
SIGNED by }
or and on behalf of
NL INDUSTRIES, INC.
ANNEX 1
AGREED FORM DEED OF INDEMNITY
EXHIBIT 10.7
DATED 1998
TIOXIDE GROUP LIMITED
and
ICI OMICRON BV
and
NL INDUSTRIES, INC.
SHARE SALE AND PURCHASE AGREEMENT
OF
TIOXIDE CANADA INC.
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
TEL: (+44) 171 456 2000
Ref: AXT/TDAP
THIS AGREEMENT (this "AGREEMENT") is made on 1998 BETWEEN:
(1) TIOXIDE GROUP LIMITED (registered number 249759), a company
incorporated under the laws of England, whose registered office is
at 137/143 Hammersmith Road, London W14 0QL, England ("TG");
(2) ICI OMICRON BV (registered number 171649) a company incorporated
under the laws of The Netherlands whose registered office is at
Merseyweg 10, 3197 KB Rotterdam-Botlek, Haven 5210, the Netherlands
and whose statutory domicile is Rotterdam, the Netherlands
("Omicron" and collectively with TG, the "SELLER"); and
(3) NL INDUSTRIES, INC., a corporation incorporated under the laws of
the State of New Jersey, whose principal place of business is at
16825 Northchase Drive, Suite 1200, Houston 77060, Texas, USA (the
"PURCHASER").
WHEREAS:
(A) Tioxide Canada Inc. is a company incorporated in Quebec, Canada,
short particulars of which are set out in Schedule 1 (the
"Company").
(B) The Seller holds all of the issued shares in the capital of the
Company (the "SALE SHARES") particulars of which are contained in
Schedule 1.
(C) The Seller has agreed to sell and the Purchaser has agreed to
purchase the Sale Shares on the terms and subject to the conditions
set out in this agreement and the Framework Agreement.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 In this agreement:
"ACCOUNTING DATE" means the date of the audited accounts of the Company
for the year ended 31 December 1997 (the "ACCOUNTS");
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, liens (other than
those arising by operation of law or by statute) losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses;
"ACCOUNTING STANDARDS" means generally accepted accounting principles as
in effect from time to time in Canada and applied as a basis consistent
with those of previous years;
"AFFILIATES" means with respect to a specified entity, an entity that
directly or indirectly through one or more intermediaries, Controls, or
is Controlled by, or is under common Control, with the entity specified,
provided that, without limiting the generality of the foregoing, in
relation to ICI and its subsidiary companies, the term "AFFILIATES"
shall not include any entity in which a party has a 50 per cent or less
ownership interest. For the purposes hereof, "CONTROL" means possession,
directly or indirectly, of the power to direct or cause the direction of
the management and operating policies of the entity in respect of which
the determination is being made, through the ownership of voting
securities, contract, voting trust or otherwise but any
reference in this agreement to an Affiliate of the Seller or the
Purchaser shall exclude the Company, and references to the Seller's
Group or the Purchaser's Group shall be construed accordingly;
"AGREED FORM" means, in relation to any document, the form of that
document which has been initialled for the purpose of identification by
or on behalf of the parties to this agreement;
"AMERICAS LIABILITY AGREEMENT" means the liability agreement between
ICI and the Purchaser dated [ ];
"ASSETS" means all of the assets and rights of the Company relating to
the Business;
"BUSINESS" means:
(a) the import, export, sale and distribution of titanium dioxide
pigments and co-products and related products; and
(b) the manufacture of finished products from the processes by which
reactor discharge from the chloride process and calciner discharge
from the sulphate process are treated to produce titanium dioxide
pigments
and all other business and operations as carried on by the Company as at
the date hereof but for the avoidance of doubt shall not include:
(i) the manufacture, sale or disposal by way of trade of any
organometallic compounds save the manufacture, sale or
disposal of a pigment which incorporates as an essential
feature of its composition an organometallic compound shall
not be considered to be the manufacture, sale or disposal of
an organometallic compound as such; and
(ii)the manufacture, sale or disposal by way of trade of any
form of titanium dioxide of ultraviolet-attenuating grade
having a ratio of absorbance response at 308 nm (A308) to
absorbance response at 524 nm (A524) of not less than 5 as
defined in US Pharmacopeia, amendment published in
Pharmacopeia Forum, Volume 22, Number 4, Page 2636 and
attached hereto as Annex 2; and
(iii) any matter relating to the LPC Business.
"BUSINESS DATA" means the Company's historical and current documents
relating to the Business, including customer lists, product, distributor
and supplier lists, catalogues, literature, employee records, documents
of title to the Assets (but excluding those relating to the Properties),
sales targets, sales statistics, market share statistics, marketing
surveys and reports, marketing research and any advertising or other
promotional materials, production data, safety data and accounting
(including management account records) and other financial data (other
than the Canadian Financial Information), whether in hard copy or in
computer held form (including, for the avoidance of doubt, such media as
microfilm and microfiche);
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are generally open for normal business in each of London, Montreal
and New York;
"CANADIAN FINANCIAL INFORMATION" means the financial information
attached as Schedule 7;
"CANADIAN SCHEMES" means the Company's pension plans described in the
Disclosure Letter;
"CANADIAN TECHNOLOGY AGREEMENTS" means the agreements and licence in
the Agreed Form;
"COMPLETION" means completion of the sale and purchase of the Sale
Shares in accordance with Clause 7 which shall occur immediately
following signature and exchange of this agreement;
"COMPLETION DATE" means [ ] on the date of this
agreement;
"COMPUTER SYSTEMS" means all computer hardware, software,
microprocessors and firmware which in each case are used in the
Business;
"CONTRACTS" means all contracts and arrangements relating to the
Business entered into before Completion by or on behalf of the Company
in connection with the Business which remain (in whole or in part) to be
performed at Completion and, in addition, means any contracts or
arrangements between the Company and the Seller (or any of its
Affiliates);
"DEFAULT INTEREST" means LIBOR plus 200 basis points compounded
monthly;
"DISCLOSURE LETTER" means the letter of the same date as this
agreement from the Seller to the Purchaser;
"DUPONT" means E.I. du Pont de Nemours and Company;
"EMPLOYEES" means all those individuals employed by the Company at
Completion;
"ENVIRONMENT" has the meaning in Schedule 5;
"ENVIRONMENTAL AUTHORISATIONS" means all or any permits, certificates,
consents, licences, approvals, registrations and other authorisations
required under Environmental Laws and all terms and conditions thereof
required under any Environmental Law for the operation of the Business;
"ENVIRONMENTAL LAWS" has the meaning given in Schedule 5;
"ESTIMATED CONSIDERATION" has the meaning given in Clause 3;
"FIELD OF ACTIVITY" means:
(a) the import, export, sale and distribution of titanium dioxide
pigments and co-products and related products; and
(b) the manufacture of finished products from the processes by which
reactor discharge from the chloride process and calciner discharge
from the sulphate process are treated to produce titanium dioxide
pigments
and all other business and operations as carried on by the Company as at
the date hereof but for the avoidance of doubt shall not include:
(i) the manufacture, sale or disposal by way of trade of any
organometallic compounds save the manufacture, sale or
disposal of a pigment which incorporates as an essential
feature of its composition an organometallic compound shall
not be considered to be the manufacture, sale or disposal of
an organometallic compound as such; and
(ii)the manufacture, sale or disposal by way of trade of any
form of titanium dioxide of ultraviolet-attenuating grade
having a ratio of absorbance response at 308 nm (A308) to
absorbance response at 524 nm (A524) of not less than 5 as
defined in US Pharmacopeia, amendment published in
Pharmacopeia Forum, Volume 22, Number 4, Page 2636 and
attached hereto as Annex 2.
"FINAL CONSIDERATION" has the meaning given in Schedule 6;
"FRAMEWORK AGREEMENT" means the agreement dated o between ICI, DuPont
and the Purchaser;
"GUARANTEES" means all guarantees and indemnities given by the Seller or
Affiliates of the Seller in respect of obligations of the Company in
relation to the Business, short particulars of which are contained in
the Disclosure Letter;
"HAZARDOUS MATERIAL" has the meaning given in Schedule 5;
"ICI" means Imperial Chemical Industries PLC;
"ICI GROUP" means ICI and its Affiliates as at the Completion Date;
"IMPLEMENTATION AGREEMENTS" means the documents in Schedule 4;
"INDEPENDENT ACCOUNTANT" has the meaning given in Clause 11;
"INTELLECTUAL PROPERTY" shall mean all patents, trademarks, service
marks, trade names and all goodwill associated with the foregoing,
registered designs, copyrights, copyrightable works (including, without
limitation, data, documentation and databases) registered internet
domain names, and rights to inventions and applications for and rights
to apply for protection or registrations of any of the same; including
any continuation, continuation-in-part, provisional, reissue, divisional
and re-examination patent applications and all rights in Technical
Information;
"INTRA-GROUP LOANS" means all Net Debt due from the Company to the
Seller or any Affiliate of the Seller or due to the Company from the
Seller or any Affiliate of the Seller as determined in accordance with
Schedule 6, and in both circumstances relating only to those Affiliates
of the Seller following Completion;
"LIBOR" means the rate for deposits in US Dollars for a period of one
month which appears on the Reuters Screen ISDA Page (or such other page
as the parties may agree) at approximately 11.00 a.m., London time, on
the first day of the period to which any interest period relates (the
"RELEVANT DATE"). If such rate does not appear on the Reuters Screen
ISDA Page on the Relevant Date, the rate for that Relevant Date will be
determined as if the parties had specified that the rate for the
Relevant Date will be determined on the basis of the rates at which
deposits in US Dollars are offered by Midland Bank plc at approximately
11.00 a.m., London time, on the Relevant Date to prime banks in the
London interbank market for a period of one month commencing on that
Relevant Date for amounts of US$10,000,000;
"LPC" means the Louisiana Pigment Company Limited Partnership;
"LPC BUSINESS" means any sales sourced from LPC, any Stocks, Operating
Debtors, Operating Creditors less than one year (the definitions of such
terms in Schedule 6 being applied to LPC) and other assets or
liabilities relating to LPC as determined and distinguished from the
Business in accordance with Schedule 9;
"MATERIAL CONTRACTS" means all Contracts (i) which at Completion have in
excess of 12 months to run and which in that time can reasonably be
expected to involve income or expenditure in respect of the Business in
excess of US$200,000 per annum; or (ii) which at Completion have less
than 12 months to run and which in that time can reasonably be expected
to involve income or expenditure in respect of the Business in excess of
US$500,000; or (iii) which relate to the treatment and/or disposal of
waste; or (iv) which relate to contract manufacturing or processing of
products by third parties; or (v) which relate to third party
distribution or agency in respect of products; or (vi) the absence of
which would have a material negative impact on the conduct of the
Business;
"NET DEBT" has the meaning in Schedule 6;
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice including, without limitation,
quantity and frequency, taking into account the relevance and
reasonableness of the same and with allowance made for the inherently
cyclical nature of the titanium dioxide industry;
"PARENT UNDERTAKING" shall have the meaning given in section 258 of
the United Kingdom Companies Act 1985;
"PERMITS" means all licences, permits, authorisations, registrations and
approvals required by law or regulation or issued or granted by
statutory or other authorities to the Company for the operation of the
Business (but excluding, for the avoidance of doubt, planning
permissions issued by relevant planning authorities (save for
Environmental Authorisations) and any licence, permit, authorisation or
approval which falls within the definition of Regulatory Conditions);
"PLANT AND EQUIPMENT" means the plant, machinery, spare parts, tools,
equipment, chattels, motor vehicles, furniture, fixtures and fittings
(to the extent they are not included in the Properties) and all other
tangible personal property located at the Property (including without
limitation office equipment) which in each case is owned and/or used by
the Company in relation to the Business as at Completion;
"PROPERTY" means those properties shown in Schedule 2 Part I;
"PURCHASER'S AUDITORS" means PriceWaterhouseCoopers;
"PURCHASER'S GROUP" means the Purchaser's ultimate parent undertaking
and that parent undertaking's Affiliates;
"REGULATORY CONDITIONS" means the anti-trust or regulatory approvals
(other than Environmental Authorisations) necessary to complete the sale
of the Company on the terms set out in this agreement;
"SELLER'S AUDITORS" means KPMG;
"SELLER'S GROUP" means TG and Omicron's ultimate parent undertakings and
those parent undertakings' Affiliates as at the Completion Date;
"STOCK" means the stocks of fuels, raw materials, ingredients,
packaging, office and laboratory supplies, engineering spares,
consumable stores, work-in-progress and finished goods at Completion
held by the Company for the purposes of the Business;
"TAX" has the meaning given in the Tax Deed of Covenant;
"TAXATION" has the meaning given in the Tax Deed of Covenant;
"TAX AUTHORITY" has the meaning given in the Tax Deed of Covenant;
"TAX DEED OF COVENANT" means the tax deed of covenant in the Agreed
Form;
"TAX LIABILITY" has the meaning given in the Tax Deed of Covenant;
"TECHNICAL INFORMATION" shall mean all technical data and know-how,
industrial and technical information, trade secrets, confidential
information, drawings, formulations, technical reports, operating and
testing procedures, instruction manuals, raw material or production
specifications, the results of research and development work, whether in
hard copy or in computer held form (including, for the avoidance of
doubt, in such media as microfilm and microfiche);
"TERRITORIES" means the United States of America, Canada, Mexico,
Central and South America;
"TRACY SITE" means 1690 and 1694 Marie-Victorin Boulevard, Tracy,
Quebec, J3R IM7, Canada;
"UK GAAP" means generally accepted accounting principles in the United
Kingdom;
"US DOLLARS", or "US$" means the lawful currency of the United States
of America;
"WARRANTIES" has the meaning given in Clause 5.1; and
"WARRANTY CLAIM" has the meaning given in sub-Clause 5.4.
1.2 Unless otherwise stated, any express reference to an enactment includes
references to:
(a) that enactment as amended, extended or applied by or under any
other enactment before or after this agreement;
(b) any enactment which that enactment re-enacts (with or without
modification); and
(c) any subordinate legislation made (before or after this agreement)
under any enactment, including one within (a) or (b) above,
except to the extent that any of the matters referred to in (a) to (c)
occurring after the date of this agreement would increase or alter the
liability of any party under this agreement.
1.3 The singular shall include the plural and vice versa and words denoting
persons shall include bodies corporate and unincorporated associations
of persons and, unless otherwise stated, shall include permitted
successors or assigns of such persons.
1.4 Sub-Clauses 1.1 to 1.3 apply unless the contrary intention appears.
1.5 The headings in this agreement do not affect its interpretation.
1.6 Any Schedule or Annex to this agreement shall take effect as if set out
in this agreement and references to this agreement shall include its
Schedules and Annexes.
1.7 Where any statement in this agreement (or in the attached Schedules or
Annexes) (other than in Schedule 3 paragraphs H(2) and H(4)) is
qualified by the expression "SO FAR AS THE SELLER IS AWARE," "TO THE
SELLER'S KNOWLEDGE, INFORMATION AND BELIEF," "KNOWN TO THE SELLER" or
any similar statement, that statement shall be deemed to mean the
knowledge, after reasonable investigation, of the officers and
operational and functional managers of ICI and its Affiliates who have
direct responsibility for the subject matter concerned, being those
listed in Schedule 9.
2 SALE AND PURCHASE OF THE SALE SHARES
2.1 The Seller shall with full title guarantee sell and the Purchaser shall
purchase the Sale Shares together with all rights attaching to them.
2.2 The Sale Shares shall be sold free from all liens, charges, equities and
encumbrances and other rights exercisable by third parties or Affiliates
of the Seller.
3 CONSIDERATION AND ADJUSTMENTS
3.1 Subject to sub-Clause 3.3 below, the consideration for the sale of the
Sale Shares shall be US$[o] payable in cash by the Purchaser on
Completion (the "ESTIMATED CONSIDERATION").
3.2 The payment under sub-Clause 3.1 shall be paid to the correspondent bank
named below for credit to the US Dollar account of o (the "ICI ACCOUNT")
referred to below:
Correspondent bank:
Bank account:
Account name:
Account no:
Sort code:
3.3 Any payments to the Purchaser under this agreement shall be paid to the
correspondent bank named below for credit to the US Dollar account of o
(the "PURCHASER ACCOUNT") referred to below:
Correspondent bank:
Bank account:
Account name:
Account no:
Sort code:
3.4 The Final Consideration shall be determined and any difference between
the Estimated Consideration and the Final Consideration shall be paid in
accordance with the provisions of Schedule 6.
4 PURCHASER'S WARRANTIES
The Purchaser represents and warrants to the Seller that:
(a) it (and each of its Affiliates, in respect of the Implementation
Agreements to which such Affiliate is a party) has the requisite
power and authority to enter into and to perform this agreement
and such Implementation Agreements;
(b) it (and each of its Affiliates, in respect of the Implementation
Agreements to which such Affiliate is a party) has obtained or
satisfied all corporate, regulatory and other approvals, or any
other significant conditions, necessary to execute and perform
this agreement and such Implementation Agreements;
(c) this agreement and the Implementation Agreements constitute valid
and binding obligations of the Purchaser (and each of its
Affiliates, in respect of the Implementation Agreements to which
such Affiliate is a party) enforceable in accordance with their
respective terms; and
(d) compliance with the terms of this agreement by the Purchaser and
the Implementation Agreements by the Purchaser or its Affiliates
(as appropriate) will:
(i) not constitute a breach of any agreement or contract to which
the Purchaser or such Affiliate of the Purchaser is a party
or by which it is bound; and
(ii)be in compliance with the Purchaser's or such Affiliate of
the Purchaser's memorandum and articles of association or
other constitutional documents; and
(iii) not contravene:
(a)any order, judgment or decree; or
(b)any statute, rule or regulation; or
(c)any other restriction of any kind by which the Purchaser
or such Affiliate of the Purchaser is bound.
5 SELLER'S WARRANTIES
5.1 The Seller represents and warrants to the Purchaser in the terms set out
in Part A.1 of Schedule 3.1 and that, save as otherwise stated in this
agreement and subject to all matters and circumstances fairly disclosed
in the Disclosure Letter, each of the statements set out in Schedule 3
Part A.2 to N (inclusive) to this agreement (the "Warranties") is true
and accurate as at the date of this agreement and the Seller
acknowledges that the Purchaser has entered into this agreement in
reliance upon the Warranties.
The Purchaser agrees that no warranty, representation, undertaking or
indemnity, or any other contractual obligation or otherwise is made or
given by the Seller to either the Purchaser or its Affiliates in
relation to LPC.
5.2 Each of the Warranties shall be separate and independent and no Warranty
shall limit the scope or construction of any other Warranty or any other
provision of this agreement.
5.3 The Purchaser acknowledges and agrees that:
(i) save as may be set out in this agreement or in the
Implementation Agreements, except for the Warranties and in
relation to an allegation of fraud, no statement, promise or
forecast made by or on behalf of the Seller or any member of
the Seller's Group may form the basis of, or be pleaded in
connection with, any claim by the Purchaser under or in
connection with this agreement or the Implementation
Agreements; and
(ii)any claim by the Purchaser or any person deriving title from
it in connection with the Warranties shall be subject to the
following provisions of this Clause.
5.4 The liability of the Seller in respect of any breach of the Warranties
(a "WARRANTY CLAIM") or the indemnities contained in this agreement
shall be governed by the terms of the Americas Liability Agreement
except as expressly provided therein.
5.5 The liability of the Seller under or in respect of a Warranty Claim
shall also be limited in respect of any liability which is contingent,
unless and until such liability becomes an actual liability and is due
and payable provided that the Purchaser shall not be prohibited from
bringing a Warranty Claim pending such liability becoming due and
payable.
5.6 The Purchaser acknowledges and agrees that:
(i) no liability shall attach to the Seller by reason of any
breach of any of the Warranties or any indemnities contained
in this agreement to the extent that the loss including all
relevant costs and expenses has been recovered by the
Purchaser under Schedule 5 or any other term of this
agreement or any other document referred to herein and
accordingly the Purchaser may only recover once in respect of
the same loss; and
(ii)in calculating the liability of the Seller for any breach of
the Warranties there shall be taken into account the amount
by which any Taxation for which the Purchaser is now or in
the future accountable or liable to be assessed is reduced or
extinguished as a result of the matter giving rise to such
liability.
5.7 The Purchaser shall not be entitled to make any Warranty Claim:
(i) to the extent that the claim arises as a result only of any
change after Completion in the accounting bases upon which
the Company values its assets or computes its profits or
arises as a result of the taxation or accounting policies,
bases or
practices of the Purchaser being different to those adopted
or used in preparing the Accounts; or
(ii)to the extent that the matter which constitutes the claim
was specifically consented to in writing by the Purchaser in
the knowledge that such matter would give rise to such
Warranty Claim.
5.8 The Purchaser shall not be entitled to rescind or terminate this
agreement after Completion in any circumstances provided that nothing in
this sub-Clause shall exclude or limit any right to rescind or terminate
for fraud.
5.9 Save as otherwise provided in this agreement, the Seller shall not be
liable in respect of any Warranty Claim to the extent that the liability
of the Seller in respect thereof is incurred or increased as a result of
any legislation not brought into force at the date of this agreement or
as a result of any change in or repeal of legislation hereafter or as a
result of the introduction or cessation of or change in the published
practice of any taxation authority after the date of this agreement.
5.10 The Purchaser shall not be entitled to make any claim in respect of any
breach or alleged breach of the Warranties to the extent that:
(i) the facts, matters or circumstances giving rise thereto (in
respect of which any such claim or alleged claim arises) have
been fairly disclosed in the Disclosure Letter; or
(ii)such claim arises or is incurred as a result of any
voluntary act or omission of the Purchaser or any Affiliate
of the Purchaser after the date of this agreement other than
any such act or omission which is in the ordinary course of
business or is required by law or is pursuant to a legally
binding commitment of the Company or any member of the
Seller's Group created or entered into before Completion.
5.11 The provisions of this Clause 5 shall have effect notwithstanding any
other provisions of this agreement.
6 SELLER'S INDEMNITY
6.1 The Seller undertakes to indemnify and keep indemnified the Purchaser,
its Affiliates and the Company (the "INDEMNIFIED PARTIES") against all
claims by third parties (other than any subsequent purchaser or
purchasers of either the Sale Shares or the business or assets of the
Company and their successors in title or assigns) giving rise to Adverse
Consequences which may be paid, suffered or incurred by any of the
Indemnified Parties or to which any of the Indemnified Parties may
become subject, and which arise as a result of the operation of the
Business by the Company prior to Completion (unless and to the extent
that the circumstances giving rise to the Adverse Consequences were
fairly disclosed in the Disclosure Letter) and including without
limitation those Adverse Consequences arising:
(a) as a result of the failure by the Company to comply with relevant
and legally enforceable corporate or other laws, rules,
ordinances or regulations with respect to the operations of the
Business prior to Completion;
(b) as a result of the failure by the Company to obtain required
relevant governmental permits, licences, consents or other
authorisations with respect to the operation of the Business
prior to Completion;
(c) from or with respect to any breach of contract, tort or product
liability or otherwise arising from, or with respect to, the
operation of the Business prior to Completion and asserted by any
third party; and
(d) from or with respect to any suit, action, arbitration, charge,
governmental investigation, claim, litigation or proceedings
affecting the Business or the Company.
Provided that the indemnity contained in this Clause 6 shall not
apply to:
(i) liabilities expressly assumed by the Purchaser pursuant to
this agreement or the Implementation Agreements; or
(ii)to the extent that such liabilities have been taken into
account in establishing the Final Consideration; or
(iii) any Environmental Liabilities, any failure or omission to
obtain or comply with Environmental Authorisations, any
failure or omission to comply with any Environmental Laws or
any claim by any person in respect of any matter concerning
the Environment (indemnity for which is provided in
sub-Clause 9.2 and Schedule 5); or
(iv) Taxation (indemnity for which is provided in the Tax
Deed of Covenant); or
(v) LPC.
6.2 The Purchaser agrees to give the Seller notice of any and all claims
asserted against the Purchaser for which indemnification under this
Clause 6 is or may be sought. Such notice shall be given as soon as
reasonably practicable after the Purchaser becomes aware that it has or
may have a claim against the Seller. Under this Clause 6, failure to
give such notice shall not abrogate or diminish the Seller's obligation
under this Clause if the Seller has or receives knowledge of the
existence of any such claim by any other means or if such failure does
not prejudice the Seller's ability to defend such a claim.
7 COMPLETION
7.1 Completion shall take place at the offices of the [ ] immediately
after the signature of this agreement when:
(a) each party shall provide to the others evidence in a form
reasonably satisfactory to the others that it (and each of its
relevant Affiliates entering into an Implementation Agreement)
has all necessary corporate approvals and consents and its
signatories have necessary authority to enter into this agreement
and the other agreements referred to herein;
(b) each party shall (or shall procure that its relevant Affiliates
will) duly execute and, to the extent applicable, complete the
Implementation Agreements and the Tax Deed of Covenant;
(c) the Seller shall deliver to the possession and control of the
Purchaser:
(i) a duly executed transfer or transfers in favour of the
Purchaser (or such Affiliate of the Purchaser as the
Purchaser may nominate) of all the Sale Shares;
(ii)share certificate(s) or other documents of title relating to
the Sale Shares (or an express indemnity in a form reasonably
satisfactory to the Purchaser in the case of any missing
certificates or documents of title);
(iii) the company books relating to the Company, including
certificates of incorporation, common seals, minute books,
statutory registers, shareholders' agreements and share
certificate books (duly written up to date);
(iv) resignations of all the directors and secretary of the
Company;
(v) the written resignation of the auditors of the Company to
take effect on Completion, with acknowledgments signed by
them to the effect that they have no claim against the
Company and to the effect that there are no circumstances
connected with their resignation which they consider should
be brought to the notice of the shareholders or creditors of
the Company;
(vi)bank statements in respect of every account which the
Company has, dated two days prior to the Completion Date and
the relevant reconciliation statements prepared on the
previous Business Day;
(vii)the Business Data;
(viii)the documentation and title deeds to the Property in
accordance with the provisions of Part II of Schedule 2;
(ix)the Implementation Agreements duly executed by the Seller
and/or Affiliates of the Seller as applicable; and
(x) the Disclosure Letter;
(d) the Purchaser shall pay to the Seller the Estimated
Consideration;
(e) the Purchaser or another member of the Purchaser's Group shall
procure that all Intra-group Loans due from the Company to the
Seller or any Affiliate of the Seller are repaid by the Company
and the Seller or another member of the Seller's Group shall
procure that all Intra-group Loans due to the Company from the
Seller or any Affiliate of the Seller are repaid by the Seller or
its relevant Affiliates;
(f) the Seller shall take or shall procure the taking of, such steps
as may be necessary to:
(i) approve the transfers referred to in Clause 7.1(c)(i)
(subject only to the Purchaser arranging and paying any taxes
or duties arising in relation to the transfer); and
(ii)appoint such directors and secretary as the Purchaser may
specify as directors and the secretary of the Company; and
(iii) release the securities, guarantees, claims and indemnities
existing immediately prior to Completion other than those
arising in the Ordinary Course of Business, owed or due to or
claimed by the Seller or any Affiliate (being an Affiliate
after Completion) from the Company, true and complete
particulars of which are set out in Schedule 10;
(g) each party and the Purchaser shall deliver a copy of the Tax Deed
of Covenant duly executed to the other parties.
8 EMPLOYEES
8.1 The Purchaser agrees to procure that the Company for a period of four
years from the Completion Date, will procure that:
(a) the Employees will receive and enjoy contractual remuneration and
benefits (including separation and other benefits described in
the Disclosure Letter) which, judged objectively, are no less
favourable overall than their contractual remuneration and
benefits at the Completion Date; and
(b) it will not make any unilateral material change to the
contractual terms and conditions of employment with the Employees
without prior consultation and concurrence as required by any
local laws or agreements, with recognised trade unions,
appropriate employee representatives, or the Employees.
8.2 The Seller will procure that, on or before Completion, the Company will
discharge its liability to Mr. Guy Gauthier in respect of Supplemental
Employment Terms.
8.3 For the purposes of this clause, "SUPPLEMENTAL EMPLOYMENT TERMS" shall
mean:
8.3.1 the period of additional notice (if any) due from the Company at
the date such liability crystallises under the arrangement in
force as at Completion which is in excess of that which he would
have received under the terms of his service agreement dated 25
October 1990;
8.3.2 the supplemental retirement benefits that are in addition to the
benefits to which Mr. Gauthier is entitled under the TCI Staff
Employees' Pension Plan; and
8.3.3 any other enhancements to his terms and conditions of employment
granted between 25 October 1990 and Completion and which are in
force as at Completion other than those granted in the Ordinary
Course of Business.
8.4 The Seller will indemnify the Purchaser (for itself and as agent and
trustee for the Company) on a continuing basis against any and all
losses or liabilities, costs (including without limitation legal costs),
charges, expenses, actions, proceedings, claims and demands which the
Purchaser or the Company may incur and which relate to or arise out of
the continuation after Completion of the Supplemental Employment Terms.
8.5 The Purchaser acknowledges and agrees that all of the funds set aside
(or due at Completion to be set aside) by the Company (in trust and
including related refundable tax amounts with Revenue Canada) for the
purpose of meeting the liability of the Seller and the Company to
provide supplemental retirement benefits for Mr. Gauthier will be used
for this purpose. The funds held in trust are held at Royal Trust
Company 1 Place Ville Marie Montreal in account nos. 554114673-001 and
554 831932. If these funds have not been used for this purpose before
Completion, the Purchaser will procure that the Company complies with
any directions given by the Seller as to the use of these funds after
Completion for the purpose of providing such benefits for Mr. Gauthier.
8.6 The Seller will indemnify the Purchaser (for itself and as agent and
trustee for the Company) on a continuing basis against any and all
losses or liabilities, costs (including without limitation legal costs)
charges, expenses, actions, proceedings, claims and demands which the
Purchaser or the Company may incur as a result of the severance
payments, pension entitlements, accelerated pension entitlements and any
other benefits actually paid to any employee whose employment is
terminated after Completion if and to the extent such payments,
entitlements and/or benefits are in excess of those which would have
applied at any time in the period prior to 10 September 1997 Provided
always that the dismissal which results in the excess costs being
incurred takes effect within four years of Completion and the regular
salary figure used in the calculations is one which has been prevailing
in respect of the relevant employee for at least six months prior to
termination. This indemnity shall not extend to any losses or
liabilities, costs (including without limitation legal costs) charges,
expenses, actions, proceedings, claims and demands which the Purchaser
or the Company may incur as a result of its or their negligence or
default. Any claims under this indemnity must be made within 4 years and
3 months of Completion following which this indemnity shall have no
effect.
8.7 The Seller shall not be required to make any payment under the indemnity
set out in sub clause 8.6 unless a draft certificate shall have been
delivered to it by the Purchaser within 30 days after the date requiring
the Seller to indemnify the Purchaser pursuant to sub-clause 8.6 and
certifying the amount payable thereunder. In order to enable the Seller
to review the certificate, the Purchaser shall (to the extent it is
permitted by law to do so) make available and supply to the Seller and,
at the Seller's request and expense, the Seller's auditors, copies of
all relevant records and other working papers) relating to the subject
matter of the indemnity, during normal office hours.
8.8 If the Seller does not within 30 days after presentation to it of the
draft certificate give notice to the Purchaser that it disagrees with
the certificate or any item thereof, such notice stating the reasons for
the disagreement in reasonable detail, the draft certificate shall
become final and binding on the parties for all purposes.
8.9 If the Seller gives a valid notice within such 30 days, the parties
shall attempt in good faith to reach agreement in respect thereof and,
if they are unable to do so within 21 days of such notification, either
party may by notice to the other refer the certificate to the
Independent Accountants in accordance with the provisions of clause 11
of this agreement which shall apply mutatis mutandis, references to the
"COMPLAINANT" being deemed to be references to the "SELLER" and
references to the "OTHERS" being to the "PURCHASER".
8.10 The Seller shall pay interest at the rate of LIBOR plus 200 basis point
compounded monthly on all payments pursuant to this clause from the date
of delivery of the draft certificate.
9 PROPERTY AND ENVIRONMENTAL
9.1 The Seller and the Purchaser shall observe and perform the provisions of
Schedule 2 expressed to be observed and performed by each of them
respectively.
9.2 The Seller and the Purchaser shall observe the provisions of Schedule 5
expressed to be observed and performed by each of them respectively.
10 PENSIONS
The Purchaser agrees to procure that the Company will, commencing with
the Completion Date, respect and perform the provisions of the Canadian
Schemes.
11 INDEPENDENT ACCOUNTANT
11.1 If either party wishes to refer any matter in dispute in accordance with
the provisions of Clause 3 or Schedule 6 for determination under this
Clause it shall give notice to the other requiring the appointment of an
independent accounting firm of international reputation (the
"INDEPENDENT ACCOUNTANT") excluding accounting firms who have acted as
auditors of either party or of any of their Affiliates in the last five
years. If the parties are unable to agree upon the Independent
Accountant within 14 days of such notice, then the Independent
Accountant shall be appointed by the President for the time being of the
Institute of Chartered Accountants in England and Wales on the
application of either party.
11.2 If the Independent Accountant delays or becomes unwilling or incapable
of acting or if for any other reason the President for the time being of
the Institute of Chartered Accountants in England and Wales thinks fit
he may discharge the Independent Accountant and, in the absence of
agreement between the parties, appoint another in its place.
11.3 The Independent Accountant shall act as an expert and not as an
arbitrator and his decision shall (in the absence of manifest error) be
final and binding on the parties. The Independent Accountant shall
afford the parties the opportunity of making written representations to
them and shall make its determination within 40 days of its appointment.
11.4 The fees and expenses of the Independent Accountant shall be borne by
the parties in equal shares unless the Independent Accountant determines
otherwise.
12 PROTECTIVE COVENANTS
The Seller covenants with the Purchaser that no member of the Seller's
Group will:
(a) for a period of five years from Completion within any part of the
Territories carry on or be engaged or involved in the Field of
Activity (save as provided in sub-Clause 12.4 below and as the
owner for investment purposes only of securities traded on a
recognised stock exchange and not exceeding one per cent. of the
securities of that class); or
(b) without prior approval from the Purchaser, for a period of two
years from Completion, directly or indirectly solicit, or
endeavour to entice away from the Purchaser or its Affiliates any
of the Employees.
12.1 Each of the restrictions in sub-Clause 12.1 above shall be enforceable
independently and its validity shall not be affected if the other is
invalid.
12.2 The Seller acknowledges that the provisions of this Clause 12 are no
more extensive than is reasonable to protect the Company.
12.3 Nothing in this Clause 12 or in this agreement shall prevent:
(a) the Seller or its Affiliates from purchasing shares in any
company or any business which has an interest in the Field of
Activity (the ownership of which would otherwise contravene
sub-Clause 12.1) unless the turnover of such company or
business in its last accounting year generated by its interest
in the Field of Activity was the greater of 10 per cent of the
aggregate turnover of such company or business and US$100
million. In the event that the Seller or any of its Affiliates
within five years from Completion purchases any corporation or
business which does have interests in the Field of Activity,
the Seller or the relevant Affiliate are contractually obliged
to offer for sale such interests to DuPont.
If DuPont does not purchase such interests from the Seller (or
its relevant Affiliate), the Seller (or the relevant Affiliate)
shall, if DuPont shall fail to or does not accept the offer
referred to above within such period to which it is entitled for
such purpose, within 30 days of receipt, from DuPont of notice
that DuPont does not intend to purchase such interests offer for
sale such interests to the Purchaser on terms which are no less
favourable by written notice ("OFFER NOTICE").
If the Purchaser does not unconditionally purchase such interests
from the Seller (or its relevant Affiliates) within a period of
18 months after the date of the Offer Notice, then the Seller (or
the relevant Affiliate) shall be free to retain such interests
with the consent of the Purchaser (such consent not to be
unreasonably withheld or delayed). If such consent is reasonably
withheld, then the Seller (or the relevant Affiliate) shall use
its best endeavours to divest such interests within 12 months of
such consent having been withheld; or
(b) the Seller or its Affiliates from carrying on or being engaged or
involved in:
(i) any business it currently carries on (other than the
Business);
(ii)any business which only supplies other members of the
Seller's Group; or
(iii) any business after such time as the Purchaser or its
Affiliates have ceased to carry on or be engaged or involved
in such business other than by way of trade sale; or
13 ANNOUNCEMENTS
The parties agree that no party shall make or permit any member of the
Seller's Group or the Purchaser's Group, as the case may be, to make any
announcement concerning this agreement or any ancillary matter except as
required by law or any competent regulatory body or with the prior
written approval of the other party which will not be unreasonably
withheld or delayed.
14 DEFAULT INTEREST
Subject as otherwise provided to the contrary in this agreement, if any
sum due for payment under this agreement or in accordance with this
agreement is not paid on the due date, the party in default shall pay
Default Interest on that sum from the due date until the date of actual
payment calculated on a day-to-day basis.
15 NOTICES
15.1 Any notice or other document to be served under this agreement shall be
in writing and may be delivered by hand or by courier, sent by fax or by
post to the party to be served at its address appearing in this
agreement (and marked for the attention of the person whose name is
referred to in sub-Clause 15.3 below) or at such other address (or
marked for the attention of such other person) as it may have notified
to the other party in accordance with this Clause 15. Any notice or
other document sent by post shall be sent by registered post (if both
posted and for delivery within the same jurisdiction) or by registered
airmail (if posted for delivery outside the jurisdiction in which it is
posted), in either case return receipt requested (or any substantially
equivalent service).
15.2 Any notice or document delivered or sent in accordance with sub-Clause
15.1 shall be deemed to have been served:
15.2.1 if delivered by hand or by courier, at the time of delivery; or
15.2.2 if sent by fax, at the time of delivery if sent between 12.01
a.m. and 6.00 p.m. (local time at the destination) or on the
Business Day after transmission, if sent at any other time;
15.2.3 if posted, at 10.00 a.m. on the second Business Day after it was
put into the post if posted for delivery within the same
jurisdiction, or at 10.00 a.m. (local time at the destination) on
the fifth Business Day after it was put in the post if sent by
registered airmail.
15.3 The person to whom notices or documents should be addressed for the
purposes of sub-Clause 15.1 is:
(a) if to be served on TG or on Affiliates of TG:
[ ]
Fax:
copy to the Company Secretary of Imperial Chemical Industries
PLC of Imperial Chemical House, 9 Millbank, London, SW1P 3JF;
Fax: (44) 171 798 5170
(b) if to be served on Omicron or on Affiliates of Omicron:
[ ]
copy to the Company Secretary of Imperial Chemical Industries
PLC of Imperial Chemical House, 9 Millbank, London SW1P 3JF;
Fax: (44) 171 798 5170
(c) if to be served on the Purchaser:
General Counsel
NL Industries, Inc.
16825 North Chase Drive
Suite 1200
Houston, Texas USA TX 77060
Fax: (1) 281 423 3333
15.4 In proving service of a notice or document it shall be sufficient to
prove that delivery was made by hand, courier or fax or that the
envelope containing the notice or document was properly addressed and
posted (either by registered post or by registered airmail, as the case
may be, in accordance with the requirements of this Clause 15).
16 GENERAL
16.1 Each of the obligations, Warranties and undertakings set out in this
agreement which is not fully performed at Completion will continue in
force after Completion.
16.2 Unless otherwise expressly stated all claims made and payments to be
made under this agreement shall be made in US Dollars. Payments to the
Seller shall be made in immediately available funds to the account of
the Seller at such account as the Seller may notify to the Purchaser and
to the Purchaser in immediately available funds to such account as the
Purchaser may notify to the Seller. All payments and values under this
agreement shall be in US Dollars and where an amount is not itself
calculated in US Dollars, it shall be converted into US Dollars at the
mid-market closing exchange rate for that currency in US Dollars as
published in the London Edition of The Financial Times published two
Business Days prior to the date on which the relevant payment is due or
where no such rate is published, at the rate quoted by Citibank, N.A. at
the close of business in London on that date.
This sub-Clause shall not apply to Schedule 6.
16.3 Save as otherwise provided to the contrary in this agreement, each
payment to be made under this agreement shall be made in the currency in
which the relevant amount is payable, free and clear of all deductions
or withholdings of any kind, except for those required by law, and if
any deduction or withholding must be made by law, an additional amount
will be paid which is necessary to ensure that the recipient receives a
net amount equal to the full amount which it would have received if the
payment had been made without the deduction or withholding.
16.4 None of the rights or obligations under this agreement may be assigned
or transferred without the written consent of the other parties (the
"NON-ASSIGNING PARTIES") other than an assignment of the rights (but not
the obligations) to an Affiliate of the assigning party provided that:
(a) such assignment shall only be permitted if the assignment has no
adverse effect on the Non-assigning Parties;
(b) if the Affiliate to which the rights have been assigned ceases to
be an Affiliate of the assigning party, the rights which have
been transferred shall be re-transferred to the party which
originally assigned those rights or to another Affiliate of that
original assigning party; and
(c) it shall be a condition of any such assignment that reasonable
notice is given in writing to the Non-assigning Parties of the
proposal to assign (identifying the rights proposed to be
assigned, the identity of the proposed assignee and such other
details relating thereto as the Non-assigning Parties may
reasonably require).
16.5 Save as otherwise provided in this agreement, each party shall pay the
costs and expenses incurred by it and its Affiliates in connection with
the entering into and completion of this agreement.
16.6 This agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and any
party may enter into this agreement by executing a counterpart.
16.7 No amendment, variation or waiver of this agreement or any provision of
this agreement shall be effective unless it is in writing specifically
referring to this agreement and duly executed by or on behalf of each
party.
16.8 Each party shall at their own expense at all times from the date of this
agreement do all things as may be required to give effect to this
agreement including, without limitation, the execution of all deeds and
documents, procuring the convening of all meetings, the giving of all
waivers and consents and the passing of all resolutions and otherwise
exercising all powers and rights available to them.
17 WHOLE AGREEMENT
17.1 Subject to sub-Clause 17.2, below this agreement, the Framework
Agreement and the Implementation Agreements (if and when executed)
contain the whole agreement between the parties and their respective
Affiliates relating to the transactions contemplated by this agreement
and the Implementation Agreements and supersede all previous agreements
between the parties and their respective Affiliates relating to such
transactions.
17.2 A provision in another agreement between the parties to this agreement
or between the respective parent undertakings of the parties (and
whether made before or after the date of this agreement) which refers to
this agreement and which extends or supplements any provision in this
agreement will be deemed for the purposes of sub-Clause 17.1 above to
form part of the whole agreement between the parties as referred to in
that sub-Clause.
17.3 Each of the parties to this agreement acknowledges on its own behalf and
on behalf of each of its Affiliates that, in agreeing to enter into this
agreement and the Implementation Agreements, it has not relied on any
representation, warranty, collateral contract or other assurance (except
those set out in this agreement) and waives all rights and remedies
which, but for this sub-Clause, might otherwise be available to it in
respect of any such representation, warranty, collateral contract or
other assurance, provided that nothing in this Clause shall limit or
exclude any liability for fraud.
18 GOVERNING LAW
This agreement is governed by and shall be construed in accordance with
English law.
19 JURISDICTION
19.1 The parties agree subject to sub-Clause 19.2 to submit to the exclusive
jurisdiction of the courts of the State of Delaware for all purposes
relating to this agreement.
19.2 If the courts of the State of Delaware decline jurisdiction, the English
courts shall have exclusive jurisdiction for all purposes relating to
this agreement.
19.3 In both sub-Clause 19.1 and 19.2, neither party shall take any action to
avoid, dispute or suggest to such court that such jurisdiction is
improper.
19.4 The Seller appoints ICI American Holdings Inc of 3411 Silverside Road,
Wilmington, Delaware 19850, USA as its authorised agent upon whom
process may be served in any legal suit, action or proceeding arising
out of or based upon this Agreement which may be instituted in the
courts of the State of Delaware.
19.5 If the English courts have jurisdiction, the Seller irrevocably appoints
Imperial Chemical Industries PLC of Imperial Chemical House 9, Millbank,
London SW1P 3JF as its agent for process in England and the Purchaser
irrevocably appoints Herbert Smith (Ref 554) of Exchange House, Primrose
Street, London, EC2A 2HS as its agent for process in
England.
AS WITNESS the hands of the duly authorised representatives of the
parties on the date which first appears on page 1.
SCHEDULE 1
PARTICULARS OF THE COMPANY
Date and Place of 27 July 1959; Quebec, Canada
Incorporation:
Registered Office: 1690 Route Marie-Victorin,
Tracy, Quebec, J3R 1M7
Canada
Authorised Share Capital: an unlimited number of Common Shares and an
unlimited number of Class A Special Shares both
without nominal or par value which may be issued for
an unlimited consideration
Shareholders and Issued Tioxide Group Limited - 135,000 Common Shares
Share Capital: ICI Omicron BV - 37,000 Class A Special Shares
Directors: Rene Lachance
Guy Gauthier
John A. Collingwood
Secretary: Rene Lachance
SCHEDULE 2
PROPERTIES
(CLAUSE 1)
PART I
NO. ADDRESS ESTATE OR INTEREST USE
1 Factory at 1690 and 1694 Freehold Titanium dioxide
Marie-Victorin Boulevard, finishing plant
Tracy, Quebec.
2 Land at Lot 708-102 of the Freehold Site for
Official Cadastre of the titanium
Parish of Notre-Dame-de-la- dioxide plant
Nativite-de-Becancour
and Lot 879-10 of the
Official Cadastre of the
Parish of Saint-Edouard-
de-Gentilly.
3 9999 Cavendish Boulevard, Leasehold Former offices
Ville St. Laurent. now sub-let
4 350 Burnhamthorpe Road West, Leasehold Offices
Suite 210, Mississaga.
PART II
On Completion, the Seller shall deliver up to the Purchaser all title
documentation (and other documentation disclosed to the Purchaser) in
connection with the Properties.
SCHEDULE 3
WARRANTIES
A. GENERAL
A.1 CAPACITY AND CONDUCT OF BUSINESS
(1) The Seller (and each of its Affiliates in respect of the Implementation
Agreements to which they are parties) has the requisite power and
authority to enter into and to (otherwise as provided in this agreement)
perform this agreement and such Implementation Agreements.
(2) The Seller (and each of its Affiliates, in respect of the Implementation
Agreements to which they are parties) has obtained and satisfied all
corporate, regulatory and other approvals, or any other conditions,
necessary to execute and (otherwise as provided in this agreement)
perform this agreement and the Implementation Agreements.
(3) This agreement and the Implementation Agreements constitute (or when
executed will constitute) valid and binding obligations of the Seller
(and each of its Affiliates in respect of the Implementation Agreements
to which they are parties) enforceable in accordance with their terms.
(4) The execution and compliance with the terms of this agreement by the
Seller and the Implementation Agreements by the Seller or its Affiliates
(as appropriate) will:
(a) not constitute a breach of any material contract to which the
Seller (or any of its Affiliates) is a party or by which it
or they are bound or entitle any person to terminate or avoid
any such agreement or contract;
(b) be in compliance with the Seller's and the Company's
memorandum and articles of association or other
constitutional documents (or those of any of its Affiliates);
(c) not contravene:
(i) any order, judgment or decree; or
(ii) any statute, rule or regulation; or
(ii) any other restriction of any kind by which the Seller
or any of its Affiliates or the Company is bound; or
(b) not result in the loss or impairment of or any default under
any licence, authorisation or consent required by the Company
for the purposes of its business.
(5) All factual information contained in this agreement relating to the
Company is true and accurate in all material respects.
(6) There are no outstanding powers of attorney executed on behalf of the
Company.
A.2 THE COMPANY
(1) The information relating to the Company contained in Schedule 1 is
true and accurate.
(2) Compliance has been made with all legal requirements in connection with
the formation of the Company and all issues and grants of shares,
debentures or other securities of the Company.
A.3 OWNERSHIP OF THE SALE SHARES
(1) The Seller is the sole legal and beneficial owner of the Sale Shares.
The Sale Shares constitute the entire issued share capital of the
Company.
(2) The Seller is entitled to sell and procure the transfer of the full
legal and beneficial ownership in the Sale Shares free from any
encumbrance, equity or third party right of any kind or nature
whatsoever, from any agreement or contract to grant the same and from
any claim to any of the same.
(3) The Sale Shares are fully paid up or credited as fully paid up and
constitute the whole of the issued and allotted share capital owned by
the Seller in the Company.
(4) No agreement or contract has been entered into which requires or may
require the Company to allot or issue any share or loan capital and the
Company has not allotted or issued any securities which are convertible
into share or loan capital and there are no voting trusts, proxies or
other agreements or understandings with respect to the voting of the
Sale Shares.
A.4 SUBSIDIARIES
(1) The Company is not the holder or beneficial owner of (nor has agreed to
acquire) any class of any shares or loan capital or other securities of
any other corporation (whether incorporated in Canada or elsewhere).
(2) The Company is not and has not agreed to become a member of any
partnership or other unincorporated association, joint venture or
consortium (other than recognised trade associations).
(3) The Company does not have any place of business or permanent
establishment (as that expression is defined in double taxation
conventions) outside Canada.
A.5 OWNERSHIP OF ASSETS
(1) Except for those Assets that are leased (as described in the Disclosure
Letter), the Company has full legal and beneficial title to all Assets
(whether tangible or intangible) reflected in the Accounts (save for
current assets and fixed assets worth less than US$100,000, both as
defined for the purposes of the Accounts, disposed of by the Company in
the Ordinary Course of its Business since the Accounting Date) and to
all assets acquired by the Company since 28 February 1998.
(2) None of the Assets is subject to any encumbrance (including, without
limitation, any debenture, mortgage, charge, lien (other than any such
lien arising by operation of law or by statute), deposit by way of
security, bill of sale, option or right of pre-emption) except those
that arise in the Ordinary Course of Business and do not have a material
adverse effect on the Business. All significant items of Plant and
Equipment have been regularly and adequately maintained where such
maintenance is normally required and are in reasonable working order
having regard to their age and use and taken as a whole are capable of
operating the Business fully and effectively as conducted by the Company
prior to Completion.
(3) Save for fluctuations and variations in Stock due to normal business
factors including, without limitation, production schedules and market
demand (including seasonal factors affecting the same) the Stocks in
aggregate comprise broadly the same mix of products as has been required
and has been maintained at levels sufficient to meet the level of sales
of the Business for the last four quarters. The Stock is owned by the
Company free and clear of all liens, claims, charges and encumbrances
other than any such liens arising by operation of law or by statute. The
Stock is located at the Tracy Site and as disclosed in the Disclosure
Letter.
(4) The Company owns or has the right to use all the property rights and
assets necessary for the Company to carry on fully and effectively the
Business in the manner in and to the extent to which it is presently
conducted.
(5) The Business Data taking into account the time, purpose, nature and
context in which it was prepared is in all material respects a bona fide
and accurate record and in the Seller's opinion is collectively
sufficient for the purposes of conducting the Company's business in the
Ordinary Course of Business. The Business Data and the Company's
information, and the means of access to them, are exclusively owned by
it and under its direct control or are under its authority.
(6) The Disclosure Letter contains details of the current insurance
arrangements applicable to the Company. Those arrangements are in full
force and effect, all premiums have been duly paid and, so far as the
Seller is aware, nothing has been done or omitted to be done which would
make any policy of insurance of the Company void or voidable. There is
no claim outstanding under any such arrangement.
A.6 COMPLIANCE WITH STATUTES
The Company has complied with all applicable laws (including rules,
regulations both having the force of law, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of national, local,
and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, claim, demand, or notice has
been filed or commenced against the Company alleging any failure so to
comply.
A.7 LICENCES AND CONSENTS
The Company has all Permits necessary to own and operate its Assets and
to carry on the Business in the manner in which such business is now
carried on. All such Permits are valid and subsisting and have been
complied with in all material respects. The Company has paid all fees
due under the same. A list of material Permits has been disclosed and
identified in the Disclosure Letter and the list identifies those
material Permits which allow for revocation on a change in controlling
shareholder.
A.8 LITIGATION
(1) The Company is not engaged in any litigation or arbitration proceedings
except as plaintiff for collection of debts in the Ordinary Course of
Business which is likely to involve the Company claiming or paying sums
in excess of US$100,000 or which otherwise will have a material effect
on the operation of the Company and the Business and there are no such
proceedings pending and no letter before action has been received by the
Company and so far as the Seller is aware there are no facts likely to
give rise to any such proceedings. The Seller has disclosed in the
Disclosure Letter a list (which is complete and accurate in all material
respects) which includes a description of each pending law suit, claim
(including customer complaints), administrative proceedings,
arbitration, labour dispute or governmental investigation or inspection
to which the Company is a party or involves the operation of the
Business or involves the Sale Shares and in each case which is likely to
involve the Company claiming or paying sums in excess of US$100,000. The
Seller has disclosed all material (individually or in the aggregate)
product liability claims received by the Company or by the Seller during
the last three years. There are no orders, decrees, judgments or
agreements with any court or governmental authority to which the Company
or the Seller (on behalf of the Company) is a party or by which the
Company or the Seller or the Sale Shares are bound and which will have a
material effect on the operation of the Company and its business.
(2) No administrator, receiver or administrative receiver or any other
equivalent officer has been appointed in respect of the Company or in
respect of any parts of the assets or undertakings of the Company.
(3) No petition has been presented, no order has been made, no resolution
has been passed and no meeting has been convened for the winding-up of
the Company or for an administration order to be made in relation to the
Company nor has any such order been made.
(4) No voluntary arrangement has been approved and no compromise or
arrangement has been sanctioned in respect of the Company pursuant to
any applicable bankruptcy or insolvency legislation.
(5) The Company has not become unable to pay its debts.
(6) No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole or
any part of any of the Property, Assets and/or undertaking of the
Company.
A.9 ENVIRONMENTAL MATTERS
(1) Environmental Authorisations
(a) The Company has lawfully obtained all Environmental
Authorisations and each such authorisation is in full force
and effect and the Company has complied at all times with and
can continue to comply in the future with all conditions of
such authorisations.
(b) No works or costs are or will be necessary to obtain or
secure compliance with or maintain any existing Environmental
Authorisations or their conditions or otherwise to comply
with Environmental Laws.
(c) The Company has received no communication in any form in
respect of any Environmental Authorisation varying, modifying
in any material respect, revoking, suspending or cancelling
the same or indicating an intention or threatening so to do
and there are no facts or circumstances which the Seller
knows or ought reasonably to know which will result in any
Environmental Authorisation being so varied, modified,
revoked, suspended or which may prejudice their renewal.
(d) The Seller or the Company has taken all necessary action in
connection with the renewal or extension of all Environmental
Authorisations.
(e) The Company is not engaged in and, so far as the Seller is
aware, there are no facts which make it likely or desirable
that it should be engaged in any appeal in respect of any
Environmental Authorisation or any conditions contained
therein or any refusal of any Environmental Authorisation.
(f) So far as the Seller is aware or ought to be aware, there is
no reason (other than reasons relating to the Purchaser or
its Affiliates) to believe that those Environmental
Authorisations which have been applied for but which have not
yet been granted or are pending will not be granted within a
reasonable period of time and on terms which are acceptable
in order for the Company to continue its current business
operations.
(g) So far as the Seller is aware or ought to be aware, the
execution and/or performance of this agreement and all other
documents which are to be executed at Completion will not
result in any Environmental Authorisations being varied,
modified, revoked, suspended, cancelled or not renewed, other
than for reasons relating to the Purchaser or its Affiliates.
(2) Compliance with Environmental Laws
(a) The Company is in compliance with Environmental Laws and the
state and use of the Property have been at all times in
conformity with Environmental Laws.
(b) The Company has not received any communication in any form
from any competent authority requiring the taking of remedial
or other steps in relation to the pollution or protection of
the Environment or the state or use of the Property. So far
as the Seller is aware there are no circumstances which might
give rise to such communications being received and the
Seller is not aware of any intention on the part of any such
authority to give such notice.
(c) No proceedings or other action, claim or investigation are or
have been in existence or are so far as the Seller is aware
pending or threatened against the Company arising from or in
relation to any Environmental Authorisations or otherwise
concerning Environmental Laws.
(3) Liability
(a) The Company or the Seller, in relation to the Business, has
not received any notice or intimation of any complaint or
claim from any person in respect of any matter concerning the
Environment.
(b) The Company or the Seller, in relation to the Business, are
not and have not been engaged in any action, litigation,
arbitration or dispute resolution proceedings relating to or
concerning any actual or potential liability under
Environmental Laws and the Seller is not aware of any such
matters pending or being threatened or of any circumstances
or facts likely to give rise to any such matters.
(c) The Company or the Seller, in relation to the Business, are
not and have not been subject to any injunction or similar
remedy or order by a court of competent jurisdiction, or to
any undertakings given to such court in respect of any
matters relating to or concerning the Environment.
(4) As far as the Seller is aware, there has not been in relation to the
Business in the last three years any adverse report, complaint or
investigation under an Act Respecting Industrial Accidents and
Occupational Diseases (Quebec) or an Act Respecting Labour Standards
(Quebec) or any prosecution, formal caution or warning for any violation
of any applicable laws or regulations.
A.10 DATA ROOM DOCUMENTS
(1) Save as disclosed in Schedule 7 of the Disclosure Letter, so far
as the Seller is aware, each licence, permit, contract, list and
report set out in Annex 6 and disclosed in the Data Room, and
identified on Annex 6 by reference to the reference number set
out in the Data Room Index annexed to the Disclosure Letter:
(a) other than where redacted, is a true copy of the original;
(b) is the latest version thereof;
(c) is complete; and
(d) has not been altered, amended or varied since the date
thereon.
(2) To the extent that any note, summary or response to questions of
or in respect of the documents set out in Annex 6 referred to in
sub-Paragraph A.10(1) contains any expression of opinion of the
ICI Group (not including the opinion of third parties), such
opinion reflects the current reasonably held opinion of its
author given in good faith taking into account the respective
author's knowledge and understanding.
B. ACCOUNTS
(1) Accounts
(a) The Accounts (true and complete copies of which are enclosed
with the Disclosure Letter):
(i)have been prepared in accordance with the historical
cost convention and with the Accounting Standards;
(ii) have been prepared on bases and principles which are
consistent with those used in the preparation of the
audited statutory accounts of the Company for the three
financial years immediately preceding that which ended on
the Accounting Date; and
(iii)show a true and fair view of the state of affairs of the
Company as at the Accounting Date and of the results of
the Company for the financial year ended on that date;
(b) Without prejudice to the generality of paragraph (a) above,
the Accounts make:
(i)adequate provisions or reserve (or note in accordance with
good accountancy practice) for all actual liabilities and
capital commitments of the Company;
(ii) proper provision or reserve (or note in accordance with
good accountancy practice) for all known contingent
liabilities including unquantified or disputed
liabilities;
(iii)provision or reserve reasonably regarded as adequate
for bad and doubtful debts; and
(iv) provision or reserve for taxation liable to be assessed
on the Company or for which it may be accountable in
respect of the period ended at the Accounting Date.
(c) True and complete copies of the Accounts and of the audited
accounts for each financial year of the Company preceding
that which ended on the Accounting Date have been laid before
the Company in general meeting and the auditors' reports
thereon were unqualified.
(d) The Accounts are not affected by any extraordinary,
exceptional or non-recurring items.
(e) The profits or losses of the Company for the three
consecutive financial years ended on the Accounting Date as
shown by the Accounts (and by the audited accounts of the
Company for previous periods delivered to the Purchaser) and
the trend of profits or losses thereby shown have not (except
as therein disclosed) been affected by inconsistencies of
accounting treatment, by the inclusion of non-recurring items
of income or expenditure, by transactions entered into
otherwise than on normal commercial terms or by any other
factors rendering such profits or losses for all or any of
such periods exceptionally high or low.
(f) Since the Accounting Date:
(i)there have been no material change in any accounting or
stock valuation method used by the Company;
(ii) there have been no write downs or similar reductions to
the book value of any of the Assets of the Company; and
(iii)there have been no upward revaluations of existing
Stocks.
(2) Canadian Financial Information
(a) The Canadian Financial Information has been derived from the
books of the Company, which books have been regularly and
consistently kept and maintained using ICI's normal
accounting policies and practices as set out or referred to
in the ICI's Controller's Manuals (and the policies contained
in these Manuals are in accordance with UK GAAP) as applied
by the relevant business on a consistent basis in accordance
with UK GAAP and, on such basis, represents the Assets and
liabilities of the Business as at 28 February 1998.
(b) The Canadian Financial Information fairly represents the
matters presented therein.
(c) Since 28 February 1998 there has been:
(i)no material change in accounting or inventory valuation
methods used by the Company in connection with the
Assets;
(ii) no upward re-valuations of existing Stocks; and
(iii)no material adverse change in the Business or financial
condition of the Company which for this purpose shall not
include the inherently cyclical nature of the titanium
dioxide industry or economic conditions generally.
(3) Since [date of Framework Agreement] 1998:
(i) the Company has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any agreement, contract,
lease, or licence (or series of related agreements,
contracts, leases and licences) either involving more than
US$1,000,000 within a 12 month period or outside the
Ordinary Course of Business;
(iii)no party (including any of the Company's Affiliates) has
accelerated, terminated, modified, or cancelled any
agreement, contract, lease, or licence (or series of related
agreements, contracts, leases, and licences) involving more
than US$250,000 within a 12 month period to which the
Company is a party or is bound;
(iv) the Company has not imposed or permitted another to impose
any encumbrance upon any of its assets, tangible or
intangible other than those arising by operation of law or
statutes;
(v) the Company has not made any capital expenditure (or series
of related capital expenditures) either involving more than
US$250,000 or outside the Ordinary Course of Business;
(vi) the Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any
other person (or series of related capital investments,
loans and acquisitions) either involving more than
US$250,000 or outside the Ordinary Course of Business;
(vii)other than to Affiliates of the Seller, the Company has not
issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalised lease obligation either
involving more than US$250,000 singly or US$2,500,000 in the
aggregate;
(viii) the Company has not delayed or postponed the payment of
accounts payable and other liabilities other than in the
Ordinary Course of Business;
(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and
claims) either involving more than US$250,000;
(x) the Company has not granted any licence or sublicence of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorised in the
constitutional documents of the Company;
(xii)the Company has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xiii) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xiv)the Company has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property
involving sums in excess of US$250,000;
(xv) the Company has not made or pledged to make any charitable
contribution outside the Ordinary Course of Business;
(xvi) the Company has not committed to any of the foregoing.
C. ANTI-COMPETITIVE ARRANGEMENTS
(1) The carrying on of the Business by the Company does not require any
agreement, arrangement, concerted practice or course of conduct which is
material to the Business and which:
(a) is subject to registration under the Competition Act
(Canada) but is not so registered;
(b) is an offence or a reviewable matter within the meaning of
Parts VI and VIII, respectively, of the Competition Act
(Canada).
(2) The Company or the Seller, in relation to the Business, have not
received in the last three years any process, notice or communication,
formal or informal, from the Director of Investigation and Research
appointed under the Competition Act (Canada) or any anti-trust
regulatory authority, relating to any aspect of the Business, which
alleges any illegal practices in relation to the Business and so far as
the Seller is aware no such process, notice or communication is likely
to be received.
D. MATERIAL CONTRACTS
(1) Particulars of all Material Contracts are annexed to the Disclosure
Letter.
(2) The Company is not in breach of, or default under, any of the Material
Contracts or any other Contracts the consequence of which would or may
have a material adverse effect on the Company and, so far as the Seller
is aware, no state of facts exists or event has occurred, is pending or
is threatened which after the giving of notice or the lapse of time
would or may constitute or result in a breach or a default by the Seller
or by the Company or any other person, firm, corporation or entity of or
in relation to any contract the consequences of which would have a
material effect on the operation of the Business. All Material Contracts
are legal, valid and binding obligations of the Company and are
enforceable in accordance with their terms.
E. EMPLOYEES
(1) Particulars of the material terms of employment of all Employees and
officers of the Company are annexed to the Disclosure Letter and such
particulars are true, complete and accurate.
(2) No Employee has given to the Company and the Company has not received
from any Employee, nor has the Company given to any Employee, notice of
termination of any such Employee's employment.
(3) Standard form consultancy agreements, agency or self-employed or
contracted labour agreements or contracts where sums in excess of
US$75,000 per annum are paid or are payable by the Company have been
disclosed in the Disclosure Letter.
(4) So far as the Seller is aware, there is no material industrial action by
the Employees pending or threatened in relation to the Business nor has
there been within the last 12 months.
(5) Particulars of all loans made by the Company to Employees and which
shall remain outstanding at Completion, together with sums owed by the
Company to any Employee (other than remuneration and other contractual
or customary benefits), are disclosed in the Disclosure Letter.
(6) No Employee of Grade 37 or above previously employed by the Company has
a right to return to work or any right to be reinstated or re-engaged by
the Company, whether under statute or otherwise.
(7) No Employees previously employed by the Company have a right to return
to work or any right to be reinstated or re-engaged by the Company,
whether under statute or otherwise.
(8) In relation to the Employees, there are no existing nor, so far as the
Seller is aware, threatened arbitration procedures arising out of or
under any union recognition or works council agreement covering the
Employees nor, so far as the Seller is aware, does any basis therefore
exist nor has the Seller or the Company received any request for
recognition or representation by any trade union not currently
recognised on the Tracy Site.
(9) The Company has complied in all material respects with all statutes,
regulations, orders and codes of conduct relating to employment and
relations with Employees and trade unions and has maintained records
required by law regarding the service of each of its Employees.
(10) The Disclosure Letter contains a list of Employees at the Tracy Site
together with a list of Employees below Grade 37 and a list of Employees
above Grade 37. The Disclosure Letter also contains a list of Employees
of the Company who are employed at locations other than at the Tracy
Site.
(11) So far as the Seller is aware here are no material complaints, disputes
or grievances pending or threatened against the Company of any nature in
relation to its Employees or former Employees.
(12) All of the Employees are employed by the Company.
(13) The Company has discharged such obligations to Employees in respect of
salaries, wages, commissions, bonuses, overtime pay and holidays as have
accrued and become payable to Employees in accordance with the Company's
normal policies, including the normal timing of such payments, as at the
date hereof.
For the purposes of this Part E, "GRADE 37" refers to a particular grade
of employee, as determined by the Company, using the Hay-MSL evaluation
system.
F. PENSIONS
In this Part F, "SCHEME DOCUMENTS" means the documents relating to the
Canadian Schemes identified in the Disclosure Letter.
(1) Except pursuant to the Canadian Schemes, the Company has not paid,
provided or contributed towards, and is not under any obligation
(whether or not legally enforceable) to pay, provide or contribute
towards any relevant benefit payable on death or retirement for or in
respect of any present or past officer or Employee (or any spouse, child
or dependant of any of them) of the Company.
(2) The Scheme Documents comprise all the documents governing the Canadian
Schemes including financial statements for the preceding period of three
years, all explanatory booklets and announcements to the Employees
describing the terms of the Canadian Schemes (other than routine benefit
statements) of current effect and full particulars of any enhancement of
benefit and contributions payable to the Canadian Schemes and there is
no obligation to provide or continue to provide benefits in respect of
Employees or former Employees of the Company under the Canadian Schemes
other than as revealed in the Scheme Documents.
(3) The Canadian Schemes have been registered as required under applicable
legislation.
(4) The Canadian Schemes have at all times complied with the provisions of
all relevant statutes, regulations and requirements and have been
administered in accordance with the trusts, powers and provisions of the
Canadian Schemes and with due regard to the general requirements of
trust law and the advisers to the Canadian Schemes have not had and do
not have any cause to report any matter.
(5) The Company has complied in all material respects with its obligations
under the Canadian Schemes and all amounts due to be paid to the
Canadian Schemes by it and its Employees have been paid.
(6) There are no claims or actions in progress, pending or threatened (other
than routine claims for benefits) against the trustees of the Canadian
Schemes or the Company about benefits payable under the Canadian Schemes
in respect of Employees or former Employees of the Company.
(7) All information of a factual nature made available to the Purchaser or
its advisers in connection with the Canadian Schemes is true and
accurate in all material respects and there is no omission therefrom.
(8) No proposal has been announced to alter or discontinue the Canadian
Schemes nor has any proposal which is legally enforceable been announced
to establish any retirement, death or disability agreement or
arrangement of the nature referred to in paragraph (1) above in respect
of Employees which proposal remains outstanding and has not been
implemented.
(9) There is no amount which is due to the trustees of the Canadian Schemes.
G. PROPERTIES
(1) The Property constitutes all of the freehold or leasehold or other
immovable property currently owned by the Company or in which the
Company has an ownership interest.
(2) The particulars of the Property shown in Schedule 2 are true, complete
and correct. The use of the Property for the purpose stated in Schedule
2 corresponds to the use to which it is in fact put or (where the
Property is not presently in use) to the use to which it was last in
fact put.
(3) The Company has a good and marketable title to the Property for the
estate or interest stated in Schedule 2, free from any defects, and has
in its possession, or under its control, all duly stamped deeds and
documents which are necessary to prove title to the Property, and such
title has already been fully deduced to the Purchasers.
(4) The Company does not require the use and is not in occupation of or
entitled to any estate or interest in any land or premises other than
the Property. The Company is in exclusive occupation of the whole of the
Property and on Completion shall be in exclusive occupation of the whole
of the Property.
(5) The Property is not affected by any of the following matters:
(a) any servitude, easement, reservation, covenant,
restriction, agreement, licence, franchise, hypothec,
mortgage, charge, encumbrance, or third party right;
(b) any notice, order, proposal, dispute or complaint relating to
it or its present use under any legislation, agreement,
covenant, condition, licence or consent; or
(c) outgoings (other than uniform business rates, water charges
and other standard payments to the relevant water company
including, without limitation, insurance premiums and other
usual business expenses), whether of a periodically recurring
nature or otherwise and whether payable by the owner or
occupier of the relevant property.
(6) All obligations, restrictions, conditions and covenants (including any
imposed by or pursuant to any lease but excluding any referred to in
paragraph A.9 above) affecting the Property have been observed and
performed so far as the Seller is aware and there are no subsisting
allegations of a breach of any thereof relating to the Property or its
present use under any legislation, agreement, covenant, condition,
licence or consent other than those referred to in paragraph A.9 above
or so far as the Seller is aware any circumstance which might give rise
to such a breach.
(7) The Property is in a good and substantial state of repair and condition
and fit for the purposes for which they are presently used and the
Company has not used in the Property any substances not in conformity
with relevant standards or codes of practice or which are generally
known to be deleterious to health and safety and there are no
uncompleted works of any description at the Property other than routine
maintenance.
(8) There are no subsisting allegations that the use of the Property for the
purpose stated in Schedule 2 is not the permitted use under the
provisions of all relevant legislation.
(9) The Company has no liabilities or contingent liabilities (but excluding
any matters referred to in paragraph A.9 above) in respect of any
properties (other than the Property) (or any interest therein) whether
by privity of contract or by way of guarantee or surety or otherwise.
(10) The Property has the benefit of all rights, servitudes, easements and
consents required for the occupation and operation of the Property for
their present use and any plant, machinery and processes thereat and
such rights, servitudes, easements and consents are enjoyed on terms
which do not permit them to be determined by any third party or by
effluxion of time.
(11) There are no outstanding liabilities to make payments in respect of
rates, water charges, or any other charges payable in respect of the
Property to any governmental, state, municipal or other similar
authority.
H. INTELLECTUAL PROPERTY
(1) The rights licensed to the Company pursuant to the Canadian Technology
Agreements in combination with all rights owned by the Company in
Intellectual Property constitutes all the Intellectual Property
necessary for the conduct of the Business by the Company as now
conducted.
(2) The Seller does not have actual notice of infringement by others or of
attacks on the validity or enforceability of or on the Company's title
to any Material Intellectual Property used in the Business. The
Disclosure Letter identifies all patents, patent applications,
registrations and applications for registration of Intellectual
Property, all Material unregistered trademarks, service marks, trade
names and copyrights owned by the Company. "MATERIAL" in this Warranty
H(2) means Intellectual Property the absence of which would have a
significant negative impact on either (a) the revenue attributable to or
derived from the Intellectual Property or (b) otherwise on the conduct
of the Company's business. The Disclosure Letter also identifies the
status of the relevant patents and, so far as the Seller is aware,
whether or not such patents are currently being opposed.
(3) The Disclosure Letter identifies all information technology used by the
Company which is defined in the Disclosure Letter as being "MATERIAL
INFORMATION TECHNOLOGY".
(4) The Seller does not have actual knowledge and has not received written
notification that the activities of the Business infringe the
Intellectual Property of any third party (the Seller having no
obligation to conduct investigations in relation to any such potential
infringement).
(5) So far as the Seller is aware or ought to be aware, all Material
agreements relating to Intellectual Property and Technical Information
to which the Seller is a party and which relate to the Business are
listed in the Disclosure Letter. "MATERIAL" in this Warranty H(5) means
agreements relating to Intellectual Property the absence of which would
have a significant negative impact on either (a) the revenue
attributable to or derived from the Intellectual Property or (b)
otherwise on the conduct of the Company's business.
(6) All Intellectual Property material to the conduct of the Business
immediately prior to Completion will be owned or available for use by
the Company immediately after Completion. For the purposes of this
Warranty H(5), Material has the same meaning as in Warranty H(2).
I. BROKERS
Neither the Seller nor the Company has employed any investment banker,
broker or finder or incurred any liability for any brokerage fees,
commissions, finders fees or similar payments in connection with the
transactions contemplated by this agreement for which the Purchaser, the
Purchaser's Affiliates or the Company may be liable.
J. TAXATION
(1) Tax Returns, disputes, records and claims etc.
(a) The Company has made all proper returns required to be made
for any Taxation purpose and has supplied or caused to be
supplied all information required by law to be supplied to
any revenue authority.
(b) There is no dispute or disagreement (not including routine
queries relating to the Taxation returns of the Company)
outstanding at the date of this Agreement with any revenue
authority regarding the proper method of computing the
profits of the Company (or any part of it) for Taxation
purposes or the proper treatment of sales and goods and
services tax of any supplies of goods or services made (or
treated as made) by the Company or in respect of any other
Taxation matter and there are no circumstances of which the
Seller is aware which make it likely that any such dispute or
disagreement will commence. Without prejudice to the
generality of the foregoing, there is no current
investigation being undertaken by any Taxation authority and,
so far as the Seller is aware, there are no existing
circumstances which make it likely, in the event of such an
investigation taking place, that a liability will arise.
(c) The amount of Taxation chargeable on the Company during any
accounting period ending on or within six years before
Completion has not to any material extent depended on any
concession, agreement, dispensation or other formal
arrangement with any revenue authority in circumstances where
either:
(i) the availability of any such arrangement will be
prejudiced as a result of the change of control of the
Company resulting from this agreement; or
(ii)the Company has not acted in accordance with the terms
of the arrangement in question.
(d) The Company has made all Taxation claims, disclaimers and
elections and taken all other action the making or doing of
which was assumed to have been made for the purpose of the
Taxation provisions in the Accounts.
(2) Duties etc.
All customs duties and sales and goods and services taxes payable to any
revenue authority upon the importation of any of the Company's assets
and all excise duties payable to any revenue authority in respect of any
of these assets have been paid in full, and none of these assets is
liable to confiscation or forfeiture (whether by virtue of non-payment
or underpayment of any Taxation or duty or by virtue of non-compliance
with any legislation or regulation relating to any Taxation or duty or
otherwise howsoever).
(3) Stamp Duty
All documents which are in the possession or control of the Company and
which are subject to stamp duty or similar duty and which confer any
right upon the Company have been duly stamped and all stamp duty or
similar duty properly paid thereon. The Company has never incurred any
liability to stamp duty reserve tax.
(4) Contracts
No contracts to which the Company is a party and no obligation to any
present or former director, employee or officer involve any future
liabilities of a revenue nature which when incurred will not be
deductible in computing profits for corporation tax purposes otherwise
than as a result of any future changes in the law or as a result of any
voluntary act after Completion of the Purchaser or of the Company
outside the Ordinary Course of Business of the Company.
(5) Distributions and payments
The Company has deducted and properly operated and accounted to the
appropriate revenue authority for all amounts which it has been obliged
to deduct in respect of Taxation.
(6) Employee benefits
(a) The Company has made all required deductions and withholdings
from all payments made, or treated as made, to its directors,
Employees or officers or former directors, Employees or
officers or any person required to be treated as such, and
accounting to the taxation authorities for all Taxation so
deducted and for all Taxation chargeable on the Company on
benefits provided for its directors, Employees or officers,
or former directors, Employees or officers.
(b) The Disclosure Letter contains full details of all share
incentive schemes, profit sharing schemes and profit related
pay schemes established by the Company.
(7) Residence and offshore interests
(a) The Company is and has at all times been resident in Canada
for the purposes of all Taxation Statutes and has not at any
time been resident outside Canada for the purposes of any
Taxation Statute or any double taxation arrangements.
(b) The Company has not at any time had a branch outside Canada
or any permanent establishment (as that expression is defined
in any applicable double taxation treaties) outside Canada
and the Company has no existing entitlement to receive
royalties, (or any sum treated as royalties for any Taxation
purposes) which are paid subject to deduction of Tax in a
jurisdiction outside Canada.
K. MILLENNIUM COMPLIANCE
(1) For the purposes of this agreement "MILLENNIUM COMPLIANT" means that the
Computer Systems are capable of the following functions before, during
and/or after 1 January 2000:-
(a) handling date information involving all and any dates before,
during and/or after 1 January 2000 including accepting date
input, providing date output and performing date calculations
in whole or part;
(b) operating accurately without interruption on and in respect
of any and all dates before, during and/or after 1 January
2000 and without any change in performance;
(c) responding to and processing two digit year input without
creating any ambiguity as to the century; and
(d) storing and providing date input information without creating
any ambiguity as to the century.
(2) The Disclosure Letter contains material details of the measures that
have been implemented within the Business to determine the extent to
which its Computer Systems are not Millennium Compliant, and material
details of any programme undertaken by the Business with a view to its
Computer Systems achieving Millennium Compliance (or so close to
Millennium Compliance as is practicable).
L. INTRA-GROUP ARRANGEMENTS
(1) There is no indebtedness or liability (actual or contingent) nor any
security owed by the Company to any member of the Seller's Group or
ICI's Group (as constituted following Completion) other than arising in
the Ordinary Course of Business and as conducted on arm's length terms.
(2) There is no agreement or contract to which the Company is a party and to
which any member of the Seller's Group (as constituted following
Completion) is a party or in which any such member is otherwise
interested in any way whatsoever which shall continue beyond the
Completion Date.
M. DEBTORS
(1) The Company has not made, or entered into any contract or agreement to
make any loan to, or other arrangement with, any person as a result of
which it is or may be owed any money other than trade debts incurred in
the Ordinary Course of Business and cash at bank.
(2) The Company is not entitled to the benefit of any debt otherwise than as
the original creditor and has not factored or discounted any debt or
agreed to do so.
(3) All of the debts which will be reflected in the Final Completion
Statement as owing to the Company (apart from bad and doubtful debts to
the extent to which they have been provided for in the Final Completion
Statement (as defined in Schedule 6)) will realise their full value as
included in the Final Completion Statement within the payment terms
agreed with the respective creditors.
N. OTHER OPERATIONS AND ASSETS
(1) During the 8 years prior to the date hereof, neither the Company, nor
any of its downstream Affiliates nor any entity to which the Company has
succeeded through merger or by operation of law, has engaged, directly
or through downstream Affiliates or agents or in partnership, in a
business other than the manufacture, import, export, sale and
distribution of titanium pigments, co-products and related products.
(2) The Seller has disclosed to the Purchaser details of all real property
owned, leased or occupied by the Company or any of its downstream
Affiliates or any entity to which the Company has succeeded through
merger or by operation of law at any time during the 8 years prior to
the date hereof.
(3) The Seller has disclosed to the Purchaser all off-site disposal
locations of Hazardous Materials owned by the Company, its downstream
Affiliates and any entity to which the Company has succeeded through
merger or by operation of law during the 8 years prior to the date
hereof.
(4) Neither the Company, nor any of its downstream Affiliates nor any entity
to which the Company has succeeded through merger or by operation of law
has owned or controlled a business for whose liabilities any of them
could be responsible the business records of which have not been made
available in the Data Room.
SCHEDULE 4
IMPLEMENTATION AGREEMENTS
1 Deed of Indemnity.
SCHEDULE 5
ENVIRONMENT
1 INTERPRETATION
For the purposes of this Schedule, words and expressions defined in the
Share Sale Agreement to which this Schedule is attached shall have the
same respective meanings in this Schedule and, in addition, the
following terms shall have the following respective meanings:
"COMMERCIALLY REASONABLE EXPENSES" are those costs and expenses which a
reasonable person acting in a commercially prudent manner, taking into
account (but without imposing an absolute requirement) the need to
minimise his expenditure, would expend, in the case of any obligation to
carry out the remediation of Environmental Contamination pursuant to
Environmental Laws, to meet that obligation. For the avoidance of doubt,
Commercially Reasonable Expenses shall not include any costs or expenses
to the extent that they are incurred as a result of the adoption or
imposition of standards of clean-up materially more stringent than those
which are provided for under Environmental Laws;
"CONTROLLED WATERS" means waters including any ground or surface
waters;
"COUNTER INDEMNITY" means the indemnity defined in sub-paragraph 3.1
of this Schedule;
"ENVIRONMENT" means air, Controlled Waters, land (whether on, in or
below such land, excluding any buildings or other permanent structures
on, in or below the land) but including the surface of any river bed,
the surface of any sea bed or any other land covered by water, and flora
and fauna and all other natural resources;
"ENVIRONMENTAL CONTAMINATION" means any discharge, transport, emission,
release, leakage, spillage, escape or disposal of Hazardous Material at
or from the Site(s) onto or into any part of the Environment;
"ENVIRONMENTAL LAWS" means any and all legislation (whether civil,
criminal or administrative), statutes, treaty, statutory instrument,
directive, bylaw or judgment, regulations, ordinances, notices, orders,
government circulars, codes of practice, policy and guidance notes or
decisions of any competent regulatory body or common law relating to
pollution or protection of the Environment or harm to human health
arising from Environmental Contamination, which as at Completion are in
effect and legally capable of enforcement by legal process in the
country in which the Site(s) are situated;
"ENVIRONMENTAL LIABILITIES" means all claims, costs, damages, expenses
(including reasonable professional fees incurred), losses, liabilities
(including without limitation liability to third parties), fines or
penalties suffered or incurred by the Company, the Purchaser or its
Affiliates (or the Seller or its Affiliates in the case of the Counter
Indemnity) in relation to the Company (excluding in the case of the
Indemnity but not the Counter Indemnity the LPC Interests and LPC) as a
direct consequence of or in connection with any Environmental
Proceeding;
BUT EXCLUDING any claims, costs, damages, expenses, losses, liabilities:
(i) in respect of capital expenditure on plant and equipment
other than capital to carry out remediation of Environmental
Contamination pursuant to Environmental Laws;
(ii)in respect of loss of anticipated profits, loss of revenue,
or any other loss in respect of business interruption other
than such reasonably foreseeable losses of third parties who
have themselves directly suffered the relevant Environmental
Contamination or whose use of the Environment has been
adversely and directly affected by the relevant Environmental
Contamination;
(iii) where applicable to the extent that they are not
Commercially Reasonable Expenses;
"ENVIRONMENTAL PROCEEDING" means in relation to the Company:
(i) subject to (ii) and (iii) below, any one or more writs,
interim or final judicial or administrative decrees,
judgments, injunctions, orders, or notices:
(a)under which the Company, the Purchaser or its Affiliates
(or the Seller or its Affiliates in the case of the
Counter Indemnity) are obliged by Environmental Laws or
legal process pursuant to Environmental Laws to undertake
or pay the cost of remediation or with which the aforesaid
parties are otherwise obliged to comply; or
(b)in respect of any violation or alleged violation of
Environmental Laws; or
(c)in respect of:
(01) any personal injury to any third party; or
(02) damage to any property of any third party,
both pursuant to Environmental Laws;
Provided that in the case of the Indemnity only:
* the reference to the Company shall exclude the LPC
Interests and LPC; and
* in paragraphs (i) (c) (01) and (02), the reference to
a "THIRD PARTY" shall not include any employee,
contractor or agent of the Company, the Purchaser or
its Affiliates, except when:
- the personal injury other than asbestos-related
personal injury (in the case of paragraph (i) (c)
(01)); and/or
- the damage to property (in the case of (i) (c) (02)),
occurs after Completion and the Purchaser did not know
or reasonably ought not to have known of the
circumstances which gave rise to that personal injury,
or as the case may be, that damage; and
(ii)any agreement between the Seller and Purchaser (or in the
event of disagreement any determination by the Experts) that
it is Reasonably Necessary to undertake remediation of
Environmental Contamination, which would (but for the fact
that an environmental authority is unaware of it) be more
likely than not to result in an environmental authority
bringing an Environmental Proceeding under (i)(a) in the
definition of Environmental Proceeding and which would result
in Environmental Liabilities;
(iii) notwithstanding sub-paragraph 4.1 hereafter, any agreement
by the Purchaser or its Affiliates with an environmental
authority that the Purchaser or its Affiliates will undertake
remediation of Environmental Contamination if such
remediation is required by such environmental authority as a
condition to the granting, surrender or variation of an
Environmental Authorisation relating to the Site, provided
that:
(a)the grant, surrender or variation of the Environmental
Authorisation arises out of the conduct of the Business
by the Purchaser or its Affiliates; and
(b)the subject matter of the agreement with the environmental
authority shall relate to the Site Provided that if the
subject matter of the agreement does not relate to the
Site, the Purchaser shall have taken all such steps as may
be reasonable to contest the relevant environmental
authorities linkage of the subject matter of the agreement
to the Site; and
(c)the remediation is not required because of any proposed
change of use of the Site from the Business of the
Company; and
(d)save in respect of sub-paragraph 4.1.2 relating to any
Site or part thereof, the remediation is not required
because of any proposed closure of all or part of the
Site, other than in relation to:
(I) any material change of process within the existing
plant and/or buildings on such Site; or
(II)any material change to or development of the business
and/or operations carried on at the Site which does
not result in such Site (or any part) ceasing to be
used for general industrial/manufacturing of a type
materially similar to the existing Site operation; and
(e)the Purchaser or its Affiliates has to the extent
practicable consulted in good faith with the Seller on the
agreement or arrangements with the environmental
authority.
"HAZARDOUS MATERIAL" means hazardous, poisonous, dangerous, noxious or
toxic substances, pollutants or wastes including (to the extent they are
hazardous, poisonous, dangerous, noxious or toxic) pesticides,
contaminants, petroleum products, asbestos, polychlorinated biphenyls
and radiation;
"INDEMNITY" means the indemnities contained in paragraph 2 below;
"REASONABLY NECESSARY" means reasonably necessary to avoid or avert or
mitigate the development of substantial adverse and material pollution
of the Environment or harm to human health which will arise within a
period of six months; and
"SITES(S)" means the Properties.
2 INDEMNITY
2.1 Subject to the provisions of this agreement, the Seller undertakes to
the Purchaser (for the benefit of the Company, the Purchaser and each of
its Affiliates) that it will indemnify and hold harmless the Company,
the Purchaser and each of the Purchaser's Affiliates against:
2.1.1 all Environmental Liabilities arising at or from the Site(s), to
the extent that such Environmental Liabilities are a result of
Environmental Contamination occurring on or before Completion;
and
2.1.2 save in respect of the LPC Interests and LPC, all costs,
damages, expenses, losses, fines or penalties suffered or
incurred by the Company or the Purchaser or its Affiliates as a
result of any prosecutions commenced or proceedings taken, or
notices served or other formal enforcement action between [DATE
OF SIGNATURE OF FRAMEWORK AGREEMENT] 1998 and Completion by any
competent regulatory body in connection with the Environment or
health and safety as a result of any breaches of any
Environmental Laws related to the operation of those Sites
which are owned, occupied or used by the Company at [DATE OF
SIGNATURE OF FRAMEWORK AGREEMENT] 1998. "DAMAGES" in this
paragraph 2.1.2 includes any capital expenditure reasonably
required to remedy such breaches; and
2.2 notwithstanding sub-paragraphs 2.1 above and 4.1 below, neither the
Seller nor any of its Affiliates shall be liable under the Indemnity or
otherwise to the extent that such liability arises from or is
attributable to the failure of the Purchaser to comply or procure the
Company's compliance with the provisions of paragraphs 4.2, 6.1, 6.2, 7,
8, 9, 10, 12 and 14 of this Schedule.
3 THE COUNTER INDEMNITY
3.1 The Purchaser undertakes to the Seller (for the benefit of the Seller
and each of its Affiliates) that, subject to the provisions of this
agreement, it will indemnify and hold harmless (the "COUNTER Indemnity")
the Seller and each of its Affiliates against all Environmental
Liabilities arising at or from the Site(s) to the extent that such
Environmental Liabilities are as a result of Environmental Contamination
after Completion.
3.2 Notwithstanding sub-paragraph 3.1 above, the Purchaser and its
Affiliates shall not be liable to the Seller under the Counter Indemnity
or otherwise to the extent that such liability arises from or is
attributable to the failure of the Seller to comply with the provisions
of paragraphs 3.3, 4.2, 6.1, 6.2, 7, 8, 9, 10, 12 and 14 of this
Schedule.
3.3 The Seller shall take all reasonable steps to avoid or mitigate any
Environmental Liabilities and potential Environmental Liabilities which
may give rise to a claim under or in connection with this
Counter Indemnity, howsoever arising.
3.4 The provisions of sub-paragraphs 4.2 and 12.1 shall apply equally
mutatis mutandis in respect of the Seller and the Purchaser's rights or
obligations in respect of the Counter Indemnity.
4 LIMITATIONS
4.1.1 Neither the Seller nor any of its Affiliates shall be liable
under the Indemnity to the extent that Environmental
Liabilities have arisen, been increased, exacerbated, enhanced
or caused as a result of any act or omission (whether direct or
indirect) of the Company, the Purchaser or any Affiliates,
employees, agents or contractors thereof after Completion
(including, without limitation, any change of use of the
Site(s) including closure of all or any part of the Sites but
not including any material change of process within the
existing plant and/or buildings or any material change to or
development of the business and operations carried on at any
Site which does not result in any Site or any part of any Site
ceasing to be used for general industrial/manufacturing of a
type materially similar to the existing Site operation.
4.1.2 In connection with any Site or part thereof, the use of which had
substantially ceased prior to Completion, nothing in the
provisions of paragraph 4.1.1 shall apply to Environmental
Liabilities resulting from the Purchaser's or its Affiliates'
change of activities or demolition or closure thereon, save:
(i) where this was done other than in the conduct of the
Business by the Purchaser or its Affiliates; and
(ii)so long as and to the extent that the Environmental
Liabilities have not otherwise been so increased,
exacerbated, enhanced or caused as a result of any such act
or omission as aforesaid.
4.1.3 The word "OMISSION" as used in this paragraph 4.1 shall not
mean any failure by the Company or Purchaser to carry out
remediation or preventative action in circumstances where it is
not within their power to do so or where the Purchaser is not
aware or could not reasonably have been aware of the
Environmental Liabilities in question or where (without
prejudice to the obligations of the Purchaser under paragraph
5) the rights of the Purchaser to bring a claim under the
Indemnity would be prejudiced as a result thereof.
4.2 No claim may be made for any Environmental Liabilities under the
Indemnity or Counter Indemnity to the extent that any Environmental
Liabilities arise:
4.2.1 as a result directly or indirectly of information voluntarily
given, in the case of the Indemnity by the Purchaser or the
Company (but only post Completion in the case of the Company)
or, in the case of the Counter Indemnity, by the Seller after
Completion to a regulatory authority in circumstances other
than where there is a mandatory reporting requirement under
Environmental Laws or where information is given as required in
the context of applications for or variations to
authorisations, licences and other forms of environmental
consent required by the Business in the course of the Company's
or the Purchaser's or Seller's normal business activities (as
appropriate) or where the other party has previously proposed
or approved this course of action in writing; and
4.2.2 save where compelled by law, from any admission of liability by a
representative of the Purchaser or Seller holding a rank not less
than that of Senior Vice President in respect of any clean-up
which needs to be done, except where the other party has approved
such admission in writing such approval not to be unreasonably
withheld or delayed.
4.3 No claim under the terms of the Indemnity or Counter Indemnity for any
Environmental Liabilities shall be valid unless notice has been served
in accordance with the provisions of paragraph 7 and in the case of
Indemnity, but not the Counter Indemnity, said notice has been served
within 10 years of Completion.
4.4 The Seller's liability under the Indemnity shall be limited in
accordance with the provisions of the Americas Liability Agreement,
except for sub-clauses 4.1.2 (save for the proviso to sub-clause 4.1)
and 4.2 of the Americas Liability Agreement, the subject matter of which
will be governed by the provisions of this Schedule.
4.5 In the event that the Indemnitor (as defined in paragraph 6.1) either
incurs external charges, costs and expenses for environmental services
or internal charges for its own environmental services, in either case
including but not limited to testing and/or analytical services and/or
contaminated soil disposal facilities, in connection with or in relation
to any actual or potential Environmental Liabilities under the Indemnity
or Counter Indemnity (as appropriate) then such external and internal
charges, costs and expenses shall be deemed to be payments made under
the Indemnity or Counter Indemnity (as appropriate). Any internal
charges shall be made on the same basis as the Indemnitor charges to its
own business or its Affiliates.
4.6 It is hereby expressly agreed that, save where the Seller has accepted
liability or becomes otherwise liable under the terms of the Indemnity,
all costs incurred by the Purchaser in carrying out environmental
analyses and tests of the Site(s) (and its (or their) surrounds) shall
be borne by the Purchaser, other than costs in the exercise of the
rights and powers given to the Seller by sub-paragraphs 9.1 and 9.2
which shall be borne by the Seller unless the Purchaser becomes liable
therefor under the terms of the Counter Indemnity or unless the parties
otherwise agree.
4.7 The Seller shall be liable under the Indemnity for any asbestos-related
personal injury unless and to the extent that any works carried out by
the Purchaser or its Affiliates or the Company after Completion, were
not carried out by a reputable contractor or contractors, who were duly
and properly authorised or approved to undertake such works to at least
the standards of the relevant federal, provincial or other regulatory
authorities published by or in operation (in accordance with good
industry practice) at all times during the carrying out of such works.
5 MITIGATION
The Seller and the Purchaser shall take all reasonable steps after
Completion to avoid or mitigate any Environmental Liabilities and/or
potential Environmental Liabilities to the extent it is reasonably
within their respective powers to do so, which may give rise to a claim
under or in connection with this Indemnity or Counter Indemnity, as
appropriate, howsoever arising. Such steps will include but shall not be
limited to:
5.1 in the case of the Purchaser, carrying out (where reasonably
practicable) appropriate soil tests before taking any action which is
likely to cause a material disturbance to soil;
5.2 in the case of the Purchaser, where reasonably practicable carrying on
its activities on the Site(s) so as to minimise disturbance to known
areas of existing or probable soil contamination (other than deliberate
removal of such contaminated soil) without incurring abnormal unusual or
excessive cost in so doing;
5.3 where relevant, (with the approval of the other party not to be
unreasonably withheld or delayed) settling a claim of any party (not
being an Affiliate of the Purchaser in the case of the Indemnity or of
the Seller in the case of the Counter Indemnity) which will or may fall
within the terms of the Indemnity or Counter Indemnity, as appropriate,
the costs and expenses associated with such settlement (so approved by
the other party) being deemed to be Environmental Liabilities for the
purposes of this agreement, provided always that nothing in this
sub-paragraph 5.3 shall oblige the Purchaser or the Seller to enter into
any settlement which it does not, in its sole discretion, consider to be
in the best interests of its operations;
5.4 making reasonable and timely efforts to pursue claims against any third
parties (including insurers) who may have some liability in respect of
the matter in question under the Indemnity or Counter Indemnity as
appropriate provided always that this shall not limit or restrict or
operate in any way as a pre-condition to the rights to make a claim
under this Indemnity or Counter Indemnity, as appropriate; and
5.5 in the case of the Purchaser, using reasonable endeavours to avoid acts
or omissions of the nature described in sub-paragraph 4.1 of this
Schedule.
6 NOTIFICATION
6.1 As soon as reasonably practicable after either party becomes aware of
any actual or potential Environmental Liabilities which may give rise to
a claim by it under the Indemnity or Counter Indemnity (the "CLAIMANT")
(whether or not the Claimant is of the opinion that it has a valid claim
against the other party under the Indemnity or Counter Indemnity (the
"INDEMNITOR")), the Claimant shall give written notice thereof to the
Indemnitor (and thereafter will use all reasonable efforts to keep the
Indemnitor reasonably informed of all material developments relating
thereto). Such written notice shall include reasonable details of all
relevant matters relating to any actual or potential Environmental
Liabilities. Thereafter, the Claimant will promptly advise the
Indemnitor orally of the Claimant's reasonable estimate of the extent of
and, where reasonably practicable, the cost of remediation of the
Environmental Liabilities, as a result thereof), provided that the
Indemnitor shall have given the Claimant written notice of the name of
its representative to whom such oral communication shall be imparted.
6.2 Neither party shall admit, settle or discharge any claim or liability
which might constitute a claim against the other under the Indemnity or
Counter Indemnity (as appropriate) without having first served a notice
under this paragraph 6 and given the other a reasonable opportunity to
consider the circumstances referred to in the said notice.
7 CLAIMS
In the event that the Claimant wishes to make a claim against the
Indemnitor under the Indemnity or Counter Indemnity (as appropriate)
then it shall do so by giving notice in writing of the same to the
Indemnitor giving such details as are then in its possession of the
relevant subject matter of such claim.
8 CONDUCT
If any notice is received by either party under paragraphs 6 or 7, the
Claimant shall, if so requested by the Indemnitor, take all steps which
are necessary and reasonable to avoid, resist, appeal, compromise or
defend any claim and any adjudication in respect thereof (subject to the
Claimant being indemnified against all cost and expenses which may
reasonably and necessarily be incurred in connection therewith), and the
Indemnitor shall (subject to the provisions of this paragraph), at its
request, be allowed to conduct any negotiations, proceedings or appeals
incidental thereto PROVIDED ALWAYS that if the claim relates to or
arises from a Site which at the time is owned, occupied or used by the
Company and which is operational at the date of the notice under
paragraph 7 then the Purchaser shall have conduct of all negotiations,
proceedings or appeals incidental thereto but shall nonetheless keep the
Seller fully informed of all material developments relating to the
subject matter of the claims.
9 SITE ACCESS
If any notice is received by the Seller under paragraphs 6 or 7:
9.1 the Seller and/or its agents and contractors shall be free to have
access to any Site(s) to the extent it is within the power of the
Company, the Purchaser or its Affiliates, during normal business hours,
and after reasonable prior notice, and, if so required by the Purchaser,
in the presence of authorised representatives of the Purchaser to assess
(including but not limited to assessment by soil sampling and testing)
the extent of the Environmental Liabilities and/or potential
Environmental Liabilities and to determine the action required in order
to remediate such liabilities (such actions to be subject to the prior
agreement of the Purchaser (including as to the action to be taken) such
agreement not to be unreasonably withheld); and
9.2 the Purchaser shall (during normal business hours) allow the Seller or
its agents access to inspect and take copies of such books and records
of the business of the Company and/or the Purchaser relating to the
Site(s) as may be necessary in connection with any Environmental
Liabilities and/or potential Environmental Liabilities.
9.3 The Seller shall exercise proper care in the exercise of its powers and
rights pursuant to this paragraph 9 and shall indemnify the Purchaser
for all reasonably incurred losses or liabilities arising from the
Seller's failure to do so.
10 DISCUSSIONS
Upon either party having given a notice under paragraphs 6 or 7, either
the Seller or the Purchaser may request a meeting as soon as practicable
to discuss the matter (and if either does so the other party shall
comply promptly with such request) and, irrespective of whether there
has been any agreement on liability, each party shall be fully involved
but (save as otherwise agreed between the parties) not as to make any
admission or liability not permitted by the other provisions of this
Schedule in any discussions and/or negotiations with any party imposing
or seeking to impose any Environmental Liabilities.
11 DISPUTE RESOLUTION
Upon either party giving a notice in accordance with paragraph 7, in the
event that the Seller and the Purchaser are unable to agree promptly
upon any factual matter relevant to a claim under this Indemnity or
Counter Indemnity (as appropriate) or in the event of any other matter
being referred to the Experts in accordance with this Schedule then the
following provisions of this paragraph 11 shall apply:
11.1 a reputable independent firm of experts (the "EXPERTS") (who shall act
as experts and not arbitrators) in relation to the Environment relevant
to the claim or potential claim (having at least ten years relevant
experience) shall be appointed by mutual agreement of the parties hereto
(and the parties shall each be obliged to use their respective best
endeavours to reach agreement as soon as practicable) to resolve any
factual matter in dispute between the parties but not including any
interpretation of laws or regulations as they apply to such factual
matters or any conclusions regarding responsibility or liability for or
in relation to any factual matters. The Experts shall be offered the
appointment within 15 Business Days of the parties reaching such mutual
agreement and shall be notified in writing of the provisions of
sub-paragraph 11.7 below. Failing such mutual agreement on the
appointment of Experts, the parties shall promptly refer the issue, at
their joint cost, to the President for the time being of the Royal
Institute of Chartered Surveyors in the United Kingdom with instructions
to appoint suitable Experts within 14 days of receipt of such
instructions;
11.2 the said Experts shall only be dismissed by the mutual agreement of the
parties hereto;
11.3 both parties shall promptly and simultaneously exchange with each other
and submit to the Experts, and in any event in accordance with the
Experts' written directions, their arguments and submissions in
connection with any matter of fact referred to them in accordance with
this paragraph 11;
11.4 following receipt by the Experts of the written arguments and other
submissions of the parties pursuant to paragraph 11.3, the parties shall
instruct the Experts to issue, as soon as reasonably practicable, a
formal written opinion pertaining to the matter of fact referred to
them. In any event, the Experts shall be instructed to present the said
opinion within two months after receiving the written arguments and
other submissions of the parties pursuant to sub-paragraph 11.3;
11.5 the formal written opinion of the Experts issued pursuant to
sub-paragraph 11.4 shall be conclusive in any proceedings between the
parties hereto as to the question of fact so determined;
11.6 the fees and expenses of the Experts shall be borne equally by the
Seller and the Purchaser (unless otherwise directed by the Experts); and
11.7 the Experts, and any company, firm, partnership or other organisation
with which the Experts are connected, shall not be eligible to be
considered to undertake any clean-up work in respect of the claim for
which they have so acted on or around the Site(s) save where the parties
hereto mutually agree to waive this provision. For the avoidance of
doubt, either party may withhold such consent in any event.
12 ACCEPTANCE OF LIABILITY
In the event that the Seller admits that it has any liability to the
Purchaser under the Indemnity (or where the Seller agrees to accept the
Purchaser's claim as falling within the Indemnity notwithstanding the
fact that no Environmental Liability may at that point in time have
arisen):
12.1 Subject to consulting with and paying reasonable regard to the views of
the Purchaser, the Seller shall have the right independently to
determine whatever measures are appropriate in order to remediate
pursuant to applicable Environmental Laws the subject matter of the
claim under the Indemnity and furthermore the Seller shall have the
right independently to carry out such remediation itself (or through
suitable third party agents or contractors) provided that in so doing
the Seller (or its said agents or contractors) shall be obliged to use
reasonable endeavours to avoid causing undue interruption to the conduct
of the business of the Company and/or its Affiliates;
12.2 The Seller and/or its agents and contractors shall, in addition to the
rights of access provided for in paragraph 9 above, be free to have
access to the Site(s) if currently owned, leased or, where within the
power of the Company and its Affiliates, during normal business hours
after reasonable prior notice, and if so required, in the presence of
authorised representatives of the Purchaser, to carry out the
remediation referred to in sub-paragraph 12.1 above provided that the
Seller (or its agents or contractors) shall be obliged to use reasonable
endeavours to avoid causing undue interruption to the conduct of the
business of the Company and/or its Affiliates.
12.3 The Seller shall exercise reasonable care in the exercise of its powers
and rights pursuant to this paragraph 12 and shall exercise reasonable
skill, care and diligence in carrying out any works and shall not use
any materials which are not in accordance with the recommendations of
relevant authorities and codes of practice. The Seller shall procure
that the contractors and consultants engaged to carry out and advise on
the works are bound by obligations in the same terms of reasonable
skill, care and diligence as herein before mentioned and otherwise
engaged on market terms at the time and shall procure suitable
warranties in accordance with normal market practice at the time from
the contractors and consultants in favour of the Purchaser. The Seller
shall not carry out the works itself but shall always engage external
contractors and consultants approved by the Purchaser such approval not
to be unreasonably withheld or delayed.
13 STATEMENTS
In the event of any circumstances arising which do or may give rise to
Environmental Liabilities which may fall within the terms of the
Indemnity or the Counter Indemnity (as appropriate) neither the Company,
the Purchaser nor the Seller (nor any of their respective Affiliates) to
the extent practicable shall make any public statements which are not
required by law or the rules of any regulatory authority to make
regarding such circumstances without first discussing with the other
party and reaching written agreement (such agreement not to be
unreasonably withheld or delayed) on the text of any such public
statement before it is made.
14 GENERAL
14.1 Any information, records, or other material of one party shall be
treated as strictly confidential by the other party except when (a) it
is required to be used in order to comply with an order of the court or
regulatory authority or (b) it is used by the other party to enforce its
rights under this Schedule or so as to make an insurance claim provided
that, in the case of either (a) or (b), disclosure is made in accordance
with this sub-paragraph 14.1. If either party becomes legally compelled
(including by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose any
of the information, records, or other material referred to in this
sub-paragraph 14.1, the party so compelled shall provide the other with
prompt prior written notice of such requirement so that the other may
seek a protective order or other appropriate remedy. To the extent
lawfully able to do so, each party agrees to cooperate in each other's
efforts to obtain a protective order or other reasonable assurance that
confidential treatment shall be accorded any such information. If such
protective order or other remedy is not obtained, the party so compelled
agrees to disclose only that portion of the information, records, or
other material which it is advised by opinion of outside counsel is
legally required to be disclosed and to take all reasonable steps to
preserve the confidentiality of the information, records, or other
material referred to in this sub-paragraph 14.1. Any other disclosure by
one party of information, records or materials of the other party shall
require the prior written consent of such other party, which shall not
be unreasonably withheld or delayed.
14.2 The Purchaser's and its Affiliates' and the Seller's and its Affiliates'
exclusive remedies in respect of any claims which fall within the scope
of the Indemnity or Counter Indemnity, as appropriate, shall be in
accordance with the provisions of this Schedule, and the Purchaser on
behalf of itself and its Affiliates and the Seller, on behalf of itself
and its Affiliates, hereby waives all other remedies whether in
contract, tort (including, for the avoidance of doubt, negligence) or
howsoever otherwise arising which it may have against the Seller or any
of its Affiliates or the Purchaser or any of its Affiliates as
appropriate at law or in equity in respect of the matters which fall
within the scope of the Indemnity or Counter Indemnities and, for the
avoidance of doubt, if such a claim under this Schedule could also give
rise to a Warranty Claim or a claim under any other provision of this
agreement in respect of the same subject matter, the Purchaser or the
Seller as appropriate may only bring a claim under this Schedule.
14.3 The Seller undertakes to co-operate with the Purchaser and assist the
Purchaser in achieving a transfer to the Purchaser (or as it directs) of
all Environmental Authorisations held by the Seller at Completion.
15 CO-OPERATION
The Purchaser undertakes that wherever co-operation is required by the
Company to ensure compliance with the Purchaser's obligations hereunder,
the Purchaser will use its reasonable endeavours to ensure that the
Company provides the requisite co-operation.
SCHEDULE 6
CONSIDERATION ADJUSTMENT TEXT
(Clause 3.3)
1 Consideration and Adjustment
SECTION 1
(1) In this Schedule 3:
"A FORM" means, in relation to the Company, the quarterly financial
reports in the format set forth in Annex 3 which are prepared in
accordance with the accounting policies, practices and other
requirements set out or referred to in ICI's Controller's Manuals as
applied by the Company (with the exception of pensions liabilities which
are accounted for in accordance with FAS 87) and prepared at the
Completion Date on a basis consistent with that adopted by the Company
in the A Form at 31 December 1997 (with the exception that pensions
liabilities shall be reported in Provisions; and if the Completion Date
does not fall on the due date for the preparation of an A Form, a
financial report prepared on the same basis for the financial period
from the latest date at which an A Form was prepared to the Completion
Date;
"ACTUAL NET DEBT" means Net Debt as agreed or determined in accordance
with paragraphs (4) to (6) below;
"ACTUAL NET WORKING CAPITAL" means Net Working Capital as at the
Completion Date as determined under paragraphs (4) to (6) below;
"ESTIMATED CONSIDERATION" has the meaning given in sub-Clause 3.1;
"ENTERPRISE VALUE" means US$16,733,000;
"FINAL CONSIDERATION" has the meaning given in paragraph (3)(a) below;
"FINAL COMPLETION STATEMENT" has the meaning given in paragraph (3)(b)
below;
"FINAL STOCKS" means the value of Stocks for the Company at Completion;
"ICI'S CONTROLLER'S MANUALS" means the control manuals in existence at
14 July 1997 and which are compiled in accordance with UK GAAP used for
accounting purposes within the Seller's Group, copies of which have been
received by the Purchaser or an Affiliate of the Purchaser (and which
consists of an introduction to the Group Controller's Manual, Bulletin
Board Accounting Language, Bulletin Board Reporting, Accounting
Definitions and Conventions, Accounting Policies and Procedures,
Controls, Reporting);
"INITIAL STOCKS" means the value of Stocks for the Company as at 28
February 1998;
"INTEREST RATE" means LIBOR plus 25 basis points;
"NET DEBT" means the amount reported as "NET DEBT" on line 70090 of the
A Form for the Company as described in ICI's Controller's Manuals which,
for the avoidance of doubt, can be either a negative or a non-negative
number;
"NET WORKING CAPITAL" means the aggregate of:
(a) Operating Debtors; plus
(b) Stocks (for the purposes of this definition meaning Initial
Stocks when used for Net Working Capital as at 28 February 1998
and meaning Final Stocks when used for Actual Net Working
Capital); less
(b) Operating Creditors less than 1 year;
For the purposes of (b) the Stocks shall be valued in accordance with
the document headed "STOCKTAKING AND VALUATION PRINCIPLES" in the Agreed
Form marked "NWC-S";
"NET WORKING CAPITAL AS AT 28 FEBRUARY 1998" or "NWC28" means, the value
shown in the column headed NWC 28 in Section 2 of this Schedule 3 which
is the amount which the parties have agreed to represent the value of
Net Working Capital at 28 February 1998 of the Company;
"OPERATING CREDITORS LESS THAN 1 YEAR" means the absolute value of the
amount reported as creditors of the Company which are external to the
Company (including without limitation creditors which are members of, or
other business units within, the ICI Group as at the date of the
relevant A Form) as defined by reference to "OPERATING CREDITORS LESS
THAN 1 YEAR" on line 70020 of the A Form for the Company as described in
ICI's Controller's Manuals;
"OPERATING DEBTORS" means debtors of the Company which are external to
the Company (including without limitation debtors which are members of,
or other business units within, the ICI Group as at the date of the
relevant A Form) as defined by reference to "OPERATING DEBTORS" on line
70010 of the A Form for the Company as described in ICI's Controller's
Manuals;
"STOCKS" means the stock of fuels, raw materials, ingredients,
packaging, office and laboratory supplies, revenue engineering spares,
consumable stores, work in progress and finished goods owned by the
Company as determined on line 70000 of the A Form for the Company or
Business as described in ICI's Controller's Manuals;
(2)
(a) All payments and values under this Schedule shall be in US
Dollars and where an amount is not itself calculated in US
Dollars it shall be converted into US Dollars at the mid market
closing exchange rate in London for the currency in which that
amount is expressed in US Dollars as published in the London
Edition of the Financial Times first published thereafter or,
where the exchange rate is not published in the London Edition
of the Financial Times, at the exchange rate quoted by Citibank
N.A. as at the close of business in London for the currency in
which that amount is expressed on the Completion Date in
relation to amounts in the Final Completion Statement.
(b) References to the absolute value of a number X shall be construed
as follows:
(i) if X is greater than or equal to zero, the absolute value of
X shall be equal to X; and
(ii)if X is less than zero, the absolute value of X shall be X
multiplied by -1,
so that, for the purposes of illustration, the absolute value of
1 is equal to 1 and the absolute value of -1 is equal to 1.
CALCULATION OF THE FINAL CONSIDERATION
(3) In relation to this agreement:
(a) the Final Consideration for the Company shall be determined by
the following formula:
Final Consideration = EV minus AND minus NWC 28 plus ANWC
Where (in relation to the Company):
EV = Enterprise Value
AND = Actual Net Debt
NWC28 = Net Working Capital as at 28 February 1998
ANWC = Actual Net Working Capital
(b) After the Completion Date, the Seller shall prepare a
completion statement as at the Completion Date which shall
contain a statement of the Final Consideration in accordance
with paragraph 3(a) above based on the Seller's calculations
(the "FINAL COMPLETION STATEMENT"). The Final Completion
Statement shall be prepared using the Seller's normal
accounting policies and practices as set out or referred to in
ICI's Controller's Manuals as applied by the Company on a
consistent basis and shall be submitted by the Seller to the
Seller's Auditors for review.
(4) Within 45 days of the Completion Date, the Seller shall issue the Final
Completion Statement for the Company to the Purchaser together with a
copy of a report by the Seller's Auditors addressed to the Seller and
substantially in the form set out in Annex 3 to the effect that the
Final Completion Statement has been prepared in accordance with this
agreement. Although it is the Seller's responsibility to prepare the
Final Completion Statement, the Seller will require the assistance of
the employees of the relevant Purchaser Affiliates to fulfil this
responsibility and the Purchaser shall ensure such assistance is
provided promptly and at no charge. Immediately after delivery of the
Final Completion Statement, the Purchaser's Auditors shall have the
right, subject to the Purchaser delivering to the Sellers' Auditors a
signed letter in the form set out in Annex 5, to review the Final
Completion Statement and the Seller's Auditors working papers relating
to the Final Completion Statement. Within 45 days of delivery to the
Purchaser of the Final Completion Statement and the Seller's Auditors
report (each of which shall be in English) to the Purchaser's designated
location, the Purchaser shall give notice to the Seller in writing of
any item or items in the Final Completion Statement which they wish to
dispute and the basis on which they dispute that item or those items and
the changes to the Final Completion Statement which the Purchaser
believes should be made and the parties shall use their reasonable
endeavors to resolve that dispute. Any items in respect of which the
Purchaser does not give such notice will be deemed to have been accepted
by the Purchaser. Any written resolution reached by the parties on any
disputed item shall be final, conclusive and binding on the parties.
(5) If the parties agree the Final Completion Statement then any adjusting
payments referred to in paragraph (7) below shall be made by the paying
party within 7 days of being agreed by the parties.
(6) If the parties fail to agree on any element of the Final Completion
Statement within 14 days after the Purchaser has given notice in writing
to the Seller of any item(s) in the Final Completion Statement which the
Purchaser wishes to dispute (in accordance with paragraph (4) above)
then any agreed amounts shall be paid in accordance with the preceding
paragraph and any dispute may be referred by either party for final
determination in accordance with sub-Clause 11.1 of this agreement and
any amounts thereby found to be due shall be paid by the relevant
Affiliate not later than 7 days after such final determination.
(7) When the Final Consideration is agreed or otherwise determined in
accordance with the three preceding paragraphs the following adjusting
payments shall be made:
(a) an amount equal to the difference between (i) the Estimated
Consideration and (ii) the Final Consideration; and
(b) interest (compounded monthly) at the Interest Rate on the amount
in paragraph (a) above from the Completion Date to the date of
payment, calculated on a day to day basis;
which shall be paid by the Seller Affiliate to the Purchaser (or vice
versa, as appropriate).
(8) In this Schedule, references to lines of A Forms have been chosen by the
Seller and are believed in good faith to correspond to the matters to
which they refer. If, however, that reference when compared to the
matter it describes or refers to is incorrect then there shall be
substituted for that line reference to another line reference (if any)
which corresponds to the matter described or referred to.
SECTION 2
VALUES FOR THE PURPOSE OF
ALLOCATION TO CLASSES OF
ASSET
NET ADDITIONAL
WORKING UPLIFT OF
NWC28 CAPITAL STOCKS TO FAIR
CANADIAN $ US$ MARKET VALUE US$
Americas Business 7,444,000 5,200,000 62,000
LPC Business 2,575,000 2,000,000 Nil
SCHEDULE 7
CANADIAN FINANCIAL INFORMATION
(Clause 1.1)
TCI BALANCE SHEET
AT 28 FEBRUARY
1998
CANADIAN DOLLARS THOUSANDS
AMERICAS
BUSINESS LPC BUSINESS TOTAL
Fixed Assets 12,167 - 12,167
Investments - - -
Stocks 20,342 4,258 24,600
Operating Debtors 7,216 1,425 8,641
TAI Debtor 2,515 - 2,515
Operating
Creditors less
than 1 year (22,629) (1,109) (23,738)
TAI Creditor - (1,999) (1,999)
Non Operating
Debtors - - -
Non Operating
Creditors less
than 1 year (1,043) - (1,043)
18,568 2,575 21,143
-------- -------- --------
Net Debt (20,824) - (20,824)
Provisions - - -
-
Deferred Income
-------- -------- --------
(20,824) 0 (20,824)
Shareholders' 41,967
Equity --------
21,143
--------
Notes:
1. Operating Debtors at 28 Feb 1998 have been split pro rata to sales
in January and February 1998.
2. TAI Debtors/TAI Creditors and TCI Debtors/TCI Creditors net out
SCHEDULE 8
(Clause 1.7)
John Collingwood
Rene Lachance
John Gush
Michel Blais
Guy Gauthier
Michael Maughan
SCHEDULE 9
LPC Business
- -----------------------------------------------------------------------
AMERICAS
(SULPHATE)
LPC BUSINESS BUSINESS COMMENTS
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
FIXED ASSETS All
- -----------------------------------------------------------------------
INVESTMENTS N/A N/A
- -----------------------------------------------------------------------
- Based on
actual
Stocks quantities
manufactured by of stocks
LPC and Kronos from each
STOCKS at Varennes All other stocks source
- -----------------------------------------------------------------------
- Based on
Sales of detailed
material analysis of
OPERATING DEBTORS manufactured by all open
Trade Debtors} LPC and Kronos All other trade accounts
Intra Group Debtors} at Varennes debtors concerned
- -----------------------------------------------------------------------
Other operating
debtors All
- -----------------------------------------------------------------------
- Based on
OPERATING CREDITORS Purchases of detailed
LESS THAN 1 YEAR material All other analysis of
Trade Creditors} manufactured by operating all open
Intra Group LPC and Kronos creditors less accounts
Creditors} at Varennes than 1 year concerned
- -----------------------------------------------------------------------
Other operating
creditors All
- -----------------------------------------------------------------------
NON OPERATING
DEBTORS/CREDITORS All
- -----------------------------------------------------------------------
NET DEBT All
- -----------------------------------------------------------------------
PROVISIONS All
- -----------------------------------------------------------------------
DEFERRED INCOME All
- -----------------------------------------------------------------------
- Calculated
NET ASSETS by difference
- -----------------------------------------------------------------------
NOTES:
1 Stocks/materials/product manufactured by LPC includes items made
available to LPC under product swap arrangements with Kronos's plant at
Varennes
SCHEDULE 10
(CLAUSE 7.1(F)(III))
SIGNATURES
SIGNED by
for and on behalf of
TIOXIDE GROUP LIMITED }
SIGNED by
for and on behalf of
ICI OMICRON BV }
SIGNED by
for and on behalf of
[PURCHASER] }
ANNEX 1
AGREED FORM DEED OF INDEMNITY
EXHIBIT 10.8
Dated 1998
IMPERIAL CHEMICAL INDUSTRIES PLC
and
N L INDUSTRIES, INC.
AMERICAS LIABILITY AGREEMENT
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
Ref: AXT
THIS AGREEMENT (this "AGREEMENT") is made on 1998
BETWEEN:
(1) IMPERIAL CHEMICAL INDUSTRIES PLC, a company incorporated under the
laws of England, whose registered office is at Imperial Chemical
House, 9 Millbank, London, SW1P 3JF ("ICI"); and
(2) N L INDUSTRIES, INC., a corporation incorporated under the laws of
the State of New Jersey, USA, whose principal place of business is
at 16825 Northchase Drive, Suite 1200, Houston, Texas 77060 USA (the
"PURCHASER").
WHEREAS:
(A) ICI and the Purchaser and their respective Affiliates have entered
into or will enter into certain agreements relating to the purchase
of the Companies (as defined below) namely:
* the Share Sale Agreements;
* the Tax Deeds of Covenant; and
* the Guarantees
in each case as defined below (hereinafter collectively or
individually called the "AGREEMENTS" or individually an
"Agreement").
(B) The parties have agreed on certain liability and claim provisions
that shall apply in respect of the Agreements upon the terms and
subject to the conditions of this agreement.
IT IS AGREED as follows:
1 INTERPRETATION
Except where the context requires otherwise, the definitions and
provisions as to interpretation set forth below shall apply to this
agreement:
"AFFILIATES" means, with respect to a specified entity, an entity that
directly or indirectly through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with the entity specified,
provided that, in relation to ICI and its subsidiary companies, without
limiting the generality of the foregoing, the term "AFFILIATES" shall
not include any entity in which a party has a 50 per cent. or less
ownership interest. For purposes hereof, "Control" means possession,
directly or indirectly, of the power to direct or cause the direction of
the management and operating policies of the entity in respect of which
the determination is being made, through the ownership of voting
securities, contract, voting trust or otherwise;
"ACQUISITION SEPARATION PROGRAMME CLAIM" means any claim (other than a
claim for fraud) by the Purchaser Companies wider Clause [ ] of the TAI
Share Sale Agreement and/or under Clause [ ] of the TCI Share Sale
Agreement;
"BENEFIT CLAIM" means any claim (other than a claim for fraud) by the
Purchaser Companies arising under Clause 8.4 of the TAI Share Sale
Agreement and/or under Clause 8.4 of the TCI Share Sale Agreement;
"CAP" has the meaning set forth in sub-Clause 3.2;
"CLAIM" means any claim (other than a claim for fraud) by the Purchaser
Companies for breach of the warranties, under the indemnities or under
any other provision contained in the Agreements or the Implementation
Agreements (as defined in the Agreements) for which the ICI Companies
accept liability, are liable or shall be adjudicated as being liable,
excluding all Tax Claims;
"COMPANIES" means Tioxide Canada Inc. and Tioxide Americas Inc.;
"COMPLETION DATE" means for each Company the Completion Date as
defined in the Share Sale Agreements;
"GUARANTEES" means the guarantees to be entered into by ICI and the
Purchaser in respect of the obligations of their respective Affiliates
under the Agreements;
"ICI COMPANIES" means all or any of ICI and those of its Affiliates who
are parties to the Agreements and shall be deemed to include their legal
successors and permitted assigns;
"PURCHASER COMPANIES" shall mean all or any of the Purchaser and those
of its Affiliates who are parties to the Agreements (or any of the
Companies the shares of which are acquired pursuant to the Agreements
which thereby become Affiliates of the Purchaser and which may (or are
required to) bring Claims pursuant to the terms of the relevant
Agreements) and shall be deemed to include their legal successors and
permitted assigns;
"QUALIFYING AMOUNT" has the meaning set forth in sub-Clause 3.1.1;
"SHARE SALE AGREEMENTS" means the agreements between ICI and/or its
relevant Affiliate(s) and the relevant Purchaser Affiliate(s) for the
sale and purchase of the Companies;
"TAI SHARE SALE AGREEMENT" means the share sale agreement of even date
between ICI American Holdings Inc and NL Industries, Inc. relating to
the sale of Tioxide Americas Inc;
"TAX CLAIM" means any claim by the Purchaser Companies under the Deeds
of Indemnity or for breach of the warranties in respect of taxation
matters contained in the Agreements for which the ICI Companies accept
liability, are liable or shall be adjudicated as being liable;
"TAX DEEDS OF COVENANT" means the deeds of indemnity in respect of
taxation to be entered into pursuant to the relevant Share Sale
Agreements;
"TCI SHARE SALE AGREEMENT" means the share sale agreement of even date
between Tioxide Group Ltd, ICI Omicron BV and NL Industries Inc.
relating to the sale of Tioxide Canadas Inc; and
"THRESHOLD AMOUNT" has the meaning set forth in sub-Clause 3.1.2.
2 ADHERENCE OF THE PURCHASER COMPANIES AND THE ICI COMPANIES
2.1 The parties hereto have entered into this agreement for the benefit, and
to accept restrictions on behalf, of themselves and their respective
Affiliates. In this respect, the Purchaser has agreed on behalf of the
Purchaser Companies that the liability of the ICI Companies arising in
connection with the Agreements shall be limited as set forth in this
agreement. Accordingly, the Purchaser hereby agrees to procure that each
of the Purchaser Companies and any third party claiming or acting with
the consent of or at the behest of, through, in the name or on behalf of
the Purchaser Companies (whether by right of subrogation or otherwise)
shall strictly adhere to and comply with the provisions of this
agreement as if they were each a party hereto.
2.2 If and to the extent that any of the Purchaser Companies or such third
parties fail, omit or decline to so adhere and comply (for whatever
reason) the Purchaser hereby covenants with ICI (for the benefit of
itself and each of the ICI Companies) that it will indemnify, defend and
hold harmless the ICI Companies from all claims, costs, damages,
expenses (including reasonable professional fees), losses, liabilities
and penalties suffered or incurred by the ICI Companies as a result of
and in connection with such non-adherence or non-compliance.
3 Limitation of ICI Companies' Liability
3.1 It is hereby agreed that the ICI Companies shall have no liability for
any Claim (other than Benefit Claims and Acquisition Separation
Programme Claims):
3.1.1 unless the amount of such Claim or alleged Claim exceeds US
$100,000 (the "Qualifying Amount"); and
3.1.2 until and to the extent only that the aggregate liability for all
Claims exceeding the Qualifying Amount (notified previously or at
the same time) exceeds US $1.4 million (the "Threshold Amount").
For the avoidance of doubt, notwithstanding that the aggregate liability
of the ICI Companies for Claims exceeding the relevant Qualifying Amount
has exceeded the Threshold Amount, the ICI Companies shall be liable
solely for that excess.
3.2 Subject to Clause 4.1.1, it is hereby agreed that the maximum aggregate
liability of the ICI Companies in respect of all Claims (other than
Benefit Claims) shall under no circumstances exceed an amount to be
determined as follows (the "Cap"):
3.2.1 in respect of Claims notified to the ICI Companies pursuant to
the Agreements and/or this agreement in the period commencing on
the Completion Date up to but not including the third anniversary
thereof, the Cap shall be US $25,000,000;
3.2.2 on the third anniversary of the Completion Date the Cap shall
reduce to US $17,500,000;
3.2.3 on the fourth and each subsequent anniversary of the Completion
Date the Cap shall reduce (but so that the applicable
anniversary date for determining whether a Claim is subject to
a Cap reduction as aforesaid shall be by reference to the date
upon which the Claim is notified to the ICI Companies pursuant
to the Agreements and/or this agreement and not the date upon
which liability thereunder is accepted or adjudicated) by an
amount of US $2,500,000 such that on the tenth anniversary of
the Completion Date it is completely extinguished;
3.2.4 the ICI Companies shall have no liability for any Claim notified
by the Purchaser Companies on or after the tenth anniversary of
the Completion Date.
3.3 In no circumstances whatsoever shall the maximum aggregate liability of
the ICI Companies in respect of all Claims exceed US $25,000,000.
3.4 Subject to the obligations as to notification in Clause 4.1.1, but not
the time limits for notification, it is hereby agreed that:
(i) the maximum aggregate liability of the ICI Companies in
respect of all Benefit Claims shall under no circumstances
exceed US$10,000,000; and
(ii)the maximum aggregate liability of the ICI Companies in
respect of all Acquisition Separation Claims shall under no
circumstances exceed US$2,500,000.
3.5 All monetary amounts expressed in US Dollars in this agreement shall be
calculated after converting all relevant monetary amounts under the
Agreements which are not in US Dollars to US Dollars at the mid-market
closing exchange rate in London for amounts of that size as published in
the London Edition of the Financial Times published two Business Days
prior to the date any Claim is formally notified by the Purchaser
Companies in accordance with the terms of the relevant Agreements
(and/or this agreement), or where no such rate is published, at the rate
quoted by Citibank, N.A. at the close of business in London on that
date.
4 MITIGATION OF CLAIMS
4.1 The Purchaser Companies shall take all reasonable steps to mitigate any
loss which may give rise to a Claim against the ICI Companies including,
without limiting the generality of the foregoing, the making of a claim
which is available to the Purchaser Companies under any available
insurance policy. It is agreed that:
4.1.1 no Claim by the Purchaser Companies in respect of a breach of
the warranties under the Agreements shall be enforceable unless
written notice thereof (including all material details thereof
then reasonably available to the Purchaser Companies) has been
given by the Purchaser Companies to the ICI Companies as soon
as reasonably practicable after the Purchaser Companies have
become aware of the facts and circumstances giving rise to such
Claim and their implications for the purposes of the Agreement
in question, unless such written notice has been duly served on
the ICI Companies on or before [30 April 2001(1)/2002(2)] or
by close of business on the date six years after the end of the
accounting period ending after the Completion Date in respect
of a Tax Claim;
4.1.2 no other Claims by the Purchaser Companies shall be enforceable
unless written notice thereof (including all material details
thereof or relating thereto then reasonably available to the
Purchaser Companies has been given by the Purchaser Companies
to the ICI Companies (in accordance with the terms of the
Agreement in question) as soon as reasonably practicable after
the Purchaser Companies have become aware of the facts and
circumstances giving rise to the Claim and their implications
for the purposes of the Agreement in question;
Provided however that the Purchaser Companies shall be able to bring any
Claim against the ICI Companies without complying with the terms of
sub-Clauses 4.1.1 and 4.1.2 hereof to the extent that the ICI Companies
have not suffered prejudice as a result of any such non-compliance by
the Purchaser Companies.
4.2 If any claim is made against the Purchaser Companies the subject matter
of which might reasonably be expected to constitute a breach of one or
more of the Agreements by the ICI Companies save for indemnities
contained in the Tax Deeds of Covenant or environmental indemnities
contained in the relevant Agreements in relation to which the specific
provisions set out in the relevant Agreement or Deed shall apply:
4.2.1 the Purchaser Companies shall if so requested in writing by the
ICI Companies take all steps which are necessary and reasonable
to avoid, resist, appeal, compromise or defend any such claim
and any adjudication in respect thereof (but subject in any
such case to the Purchaser Companies being indemnified by the
ICI Companies against all costs and expenses which may be
incurred in connection therewith) and the ICI Companies shall,
at their request, be allowed to conduct any negotiations,
proceedings or appeals incidental thereto with counsel
reasonably satisfactory to the Relevant Purchaser;
4.2.2 the ICI Companies shall raise no objection to the Purchaser
Companies attending (and, where the rights of the Purchaser
Companies are, or may be, detrimentally affected) being
separately legally represented (at their own expense) and,
where appropriate, heard at any negotiations, proceedings or
appeals of which the ICI Companies have taken conduct and the
Purchaser Companies shall be consulted by the ICI Companies
prior to any compromise, settlement or admission of liability
being made by the ICI Companies at such negotiation,
proceedings or appeals; and
- --------
(1). If completion takes place in 1999
(2). If completion takes place in 2000
4.2.3 the Purchaser Companies shall at all reasonable times and upon
reasonable prior notice allow the ICI Companies and their
agents reasonable access to all relevant properties of the
Relevant Purchaser, and access to, with the right to inspect
and take copies of, all relevant books and records of the
Relevant Purchaser (as then carried on) subject always to
keeping the same confidential other than in respect of
necessary disclosures in connection with such Claim which
disclosures shall only be made, and then only in compliance
with sub-Clause 4.2.4, if required by law or the procedures of
any court or tribunal or otherwise with the prior written
consent of the relevant Purchaser Companies (such consent not
to be unreasonably withheld or delayed).
4.2.4 If any of the ICI Companies or their agents become legally
compelled (including by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar
process) to disclose any of the information, records, or other
material referred to in this Clause 4.2.3, the party so
compelled shall provide the Relevant Purchaser with prompt
prior written notice of such requirement so that the Relevant
Purchaser may seek a protective order or other appropriate
remedy. So far as it is legally able so to do, the ICI
Companies agree to cooperate in the Relevant Purchaser's
efforts to obtain a protective order or other reasonable
assurance that confidential treatment shall be accorded any
such information. If such protective order or other remedy is
not obtained, the party so compelled agrees to disclose only
that portion of the information, records, or other material
which it is advised by opinion of outside counsel is legally
required to be disclosed and to take all reasonable steps to
preserve the confidentiality of the information, records, or
other material referred to in this sub-Clause 4.2.4.
4.2.5 Notwithstanding the foregoing provisions, should the subject
matter of any litigation, proceeding, negotiation, or arbitration
include a claim against the Relevant Purchaser seeking injunctive
relief, the Relevant Purchaser shall have the right to take
exclusive control of the defence of such proceeding with counsel
of its choice, the reasonable fees and expenses of which shall be
for the account of the ICI Companies.
4.2.6 The party or parties conducting the defence of any
investigation, litigation, proceedings, negotiations or
arbitration shall keep the other parties apprised of all
significant developments and shall not enter into any
settlement, compromise or consent to judgment with respect to
such investigation, litigation, proceedings, negotiations or
arbitration unless the other party consents, such consent not
to be unreasonably withheld or delayed.
4.3 If the ICI Companies pay to the Purchaser Companies any amount under any
of the Agreements in respect of any Claim under such Agreement and the
Purchaser Companies are thereafter able to recover any sum from any
third party (including any insurer) in respect of that Claim, the
Purchaser Companies shall use all reasonable endeavours to so recover
any such sum and shall repay to the ICI Companies so much of the amount
paid by the ICI Companies as is equal to any sum recovered, after
allowing for the reasonable costs and expenses of the Purchaser
Companies reasonably incurred in connection therewith.
Furthermore, if any liability on the part of the ICI Companies under any
of the Agreements which results in a payment being made by the ICI
Companies to the Purchaser Companies gives rise to any corresponding
saving or rebate for the Purchaser Companies (including any tax saving
or rebate) then the value of such corresponding saving or rebate to the
Purchaser Companies shall be set against the liability of the ICI
Companies in the particular instance.
5 CONSIDERATION REDUCED BY CLAIMS
Any payment by the ICI Companies paid to the Purchaser Companies (or for
the Purchaser Companies' benefit) in respect of any Claim or Tax Claim
shall be deemed to be a reduction in the consideration payable under the
relevant Agreement in respect of the business, assets or shares thereby
sold.
6 NO SET-OFF
None of the Purchaser Companies shall be entitled to set off any amounts
due to it by the ICI Companies (whether under this agreement, the
Agreements or otherwise) against the sums owing (or claimed by such
other party to be owing) under the terms of this agreement.
7 NOTICES
7.1 Any notice or other document to be served under this agreement shall be
in writing and may be delivered by hand or by courier or sent by fax or
by post to the party to be served at its address appearing in this
agreement (and marked for the attention of the person whose name is
referred to in sub-Clause 7.3 below) or at such other address (or marked
for the attention of such other person) as it may have notified to the
other parties in accordance with this Clause. Any notice or other
document sent by post shall be sent by registered post (if both posted
and for delivery within the same jurisdiction) or by registered airmail
(if posted for delivery outside the jurisdiction in which it is posted),
return receipt requested (or any substantially equivalent service).
7.2 Any notice or document delivered or sent in accordance with sub-Clause
7.1 shall be deemed to have been served:
7.2.1 if delivered by hand or by courier, at the time of delivery; or
7.2.2 if sent by fax, at the time of delivery if sent between 12.01
a.m. and 6.00 p.m. (local time at the destination) or at 10.00
a.m. (local time at the destination) on the Business Day after
its transmission (if sent at any other time); or
7.2.3 if posted, at 10.00 a.m. on the second Business Day after it was
put into the post if posted for delivery within the same
jurisdiction, or at 10.00 a.m. (local time at the destination) on
the fifth Business Day after it was put in the post if sent by
registered airmail.
7.3 The person to whom notices or documents should be addressed for the
purposes of sub-Clause 7.1 is:
7.3.1 if to be served on ICI:
the Company Secretary
Imperial Chemical House
9 Millbank
London SW1P 3JF
Fax: (44) 171 798 5170
7.4 if to be served on the Purchaser:
General Counsel
NL Industries, Inc
16825 Northchase Drive
Suite 1200
Houston, Texas 77060, USA
Fax: (1) 281 423 3333
7.5 In proving service of a notice or document it shall be sufficient to
prove that delivery was made by hand, courier or fax or that the
envelope containing the notice or document was properly addressed and
posted (either by registered post or by registered airmail, as the case
may be, in accordance with the requirements of this Clause).
8 GOVERNING LAW
8.1 This agreement shall be governed and construed in accordance with the
laws of England and the parties hereto agree to submit, subject to
sub-Clause 8.2. to the exclusive jurisdiction of the courts of the state
of Delaware as regards any claims or matters arising hereunder.
8.2 If the courts of the state of Delaware should decline jurisdiction, the
English courts shall have exclusive jurisdiction for all purposes
relating to this agreement.
8.3 In both sub-Clause 8.1 and 8.2, neither party shall take any action to
avoid, dispute or suggest to such court that such jurisdiction is
improper.
8.4 ICI irrevocably appoints ICI American Holdings Inc as its authorised
agent ("ICI Authorised Agent") upon whom process may be served in any
legal suit, action or proceeding arising out of or based upon this
Agreement which may be instituted in the courts of the State of
Delaware.
8.5 If the English courts have jurisdiction, the Purchaser irrevocably
appoints Herbert Smith (Ref 534) of Exchange House, Primrose Street,
London, EC2A 2HS as its agent for process in England.
In Witness whereof the parties have caused this agreement to be executed
as a Deed and delivered the day and year first above written.
Executed as a Deed }
for and on behalf of
IMPERIAL CHEMICAL INDUSTRIES
PLC
Executed as a Deed }
for and on behalf of
NL INDUSTRIES, INC.
EXHIBIT 10.9
INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "AGREEMENT"), effective as of
January 1, 1998, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 1997 by and between CONTRAN CORPORATION, a
Delaware corporation ("CONTRAN"), and NL INDUSTRIES, INC., a New Jersey
corporation. ("RECIPIENT"),
RECITALS
A. Harold C. Simmons, an employee of Contran and a director and the
Chairman of the Board of Recipient, performs certain advisory functions for
Recipient, which functions are unrelated to his function as a director and the
Chairman of the Board of Recipient, without direct compensation from Recipient.
B. Recipient does not separately maintain the full internal capability to
perform all necessary advisory functions that Recipient requires.
C. The cost of engaging the advisory services of someone possessing Mr.
Simmons' expertise and the cost of maintaining the personnel necessary to
perform the functions provided for by this Agreement would exceed the fee set
forth in SECTION 3 of this Agreement and the terms of this Agreement are no less
favorable to Recipient than could otherwise be obtained from a third party for
comparable services.
D. Recipient desires to continue receiving the advisory services of Harold
C. Simmons and Contran is willing to continue to provide such services under the
terms of this Agreement.
AGREEMENT
For and in consideration of the mutual premises, representations and
covenants herein contained, the parties hereto mutually agree as follows:
SECTION 1. SERVICES TO BE PROVIDED. Contran agrees to make available
to Recipient, upon request, the following services (the "SERVICES") to be
rendered by Harold C. Simmons:
(a) Consultation and assistance in the development and
implementation of Recipient's corporate business strategies, plans and
objectives; and
(b) Such other services as may be requested by Recipient from time
to time.
This Agreement does not apply to and the Services provided for herein do not
include any services that Harold C. Simmons may provide to Recipient in his role
as a director on Recipient's Board of Directors, as Chairman of such Board of
Directors or any other activity related to such Board of Directors.
SECTION 2. MISCELLANEOUS SERVICES. It is the intent of the parties hereto
that Contran provide only the Services requested by Recipient in connection with
routine functions related to the ongoing operations of Recipient and not with
respect to special projects, including corporate investments, acquisitions and
divestitures. The parties hereto contemplate that the Services rendered in
connection with the conduct of Recipient's business will be on a scale compared
to that existing on the effective date of this Agreement, adjusted for internal
corporate growth or contraction, but not for major corporate acquisitions or
divestitures, and that adjustments may be required to the terms of this
Agreement in the event of such major corporate acquisitions, divestitures or
special projects. Recipient will continue to bear all other costs required for
outside services including, but not limited to, the outside services of
attorneys, auditors, trustees, consultants, transfer agents and registrars, and
it is expressly understood that Contran assumes no liability for any expenses or
services other than those stated in SECTION 1. In addition to the fee paid to
Contran by Recipient for the Services provided pursuant to this Agreement,
Recipient will pay to Contran the amount of out-of-pocket costs incurred by
Contran in rendering such Services.
SECTION 3. FEE FOR SERVICES. Recipient agrees to pay to Contran
$245,000.00 quarterly, commencing as of January 1, 1998, pursuant to this
Agreement.
SECTION 4. ORIGINAL TERM. Subject to the provisions of SECTION 5 hereof,
the original term of this Agreement shall be from January 1, 1998 to December
31, 1998.
SECTION 5. EXTENSIONS. This Agreement shall be extended on a
quarter-to-quarter basis after the expiration of its original term unless
written notification is given by Contran or Recipient thirty (30) days in
advance of the first day of each successive quarter or unless it is superseded
by a subsequent written agreement of the parties hereto.
SECTION 6. LIMITATION OF LIABILITY. In providing its Services hereunder,
Contran shall have a duty to act, and to cause its agents to act, in a
reasonably prudent manner, but neither Contran nor any officer, director,
employee or agent of Contran or its affiliates shall be liable to Recipient for
any error of judgment or mistake of law or for any loss incurred by Recipient in
connection with the matter to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Contran.
SECTION 7. INDEMNIFICATION OF CONTRAN BY RECIPIENT. Recipient shall
indemnify and hold harmless Contran, its affiliates and their respective
officers, directors and employees from and against any and all losses,
liabilities, claims, damages, costs and expenses (including attorneys' fees and
other expenses of litigation) to which such party may become subject arising out
of the Services provided by Contran to Recipient hereunder, PROVIDED that such
indemnity shall not protect any person against any liability to which such
person would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence on the part of such person.
SECTION 8. FURTHER ASSURANCES. Each of the parties will make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as the other party may reasonably request and as may reasonably
be required in order to effectuate the purposes of this Agreement and to carry
out the terms hereof.
SECTION 9. NOTICES. All communications hereunder shall be in writing and
shall be addressed, if intended for Contran, to Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240, Attention: President, or such other
address as it shall have furnished to Recipient in writing, and if intended for
Recipient, to Two Greenspoint Plaza, 16825 Northchase Drive, Suite 1200,
Houston, Texas 77060, Attention: President or such other address as it shall
have furnished to Contran in writing.
SECTION 10. AMENDMENT AND MODIFICATION. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated other than by
agreement in writing signed by the parties hereto.
SECTION 11. SUCCESSOR AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of Contran and Recipient and their respective
successors and assigns, except that neither party may assign its rights under
this Agreement without the prior written consent of the other party.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
CONTRAN CORPORATION
By:
STEVEN L. WATSON
VICE PRESIDENT
NL INDUSTRIES, INC.
By:
J. LANDIS MARTIN
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
EXHIBIT 10.10
INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "AGREEMENT"), effective as of
January 1, 1998, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 1997 by and between VALHI, INC., a Delaware
corporation ("VALHI"), and NL INDUSTRIES, INC., a New Jersey corporation ("NL").
RECITALS
A. NL desires to have the services of certain Valhi personnel and Valhi is
willing to provide such services under the terms of this Agreement.
B. Valhi desires to have the services of certain NL personnel and NL is
willing to provide such services under the terms of this Agreement.
C. The costs of maintaining the additional personnel necessary to perform
the functions provided for by this Agreement would exceed the amount charged to
such party that is contained in the net fee set forth in SECTION 4 of this
Agreement and that the terms of this Agreement are no less favorable to each
party than could otherwise be obtained from a third party for comparable
services.
D. Each party desires to continue receiving the services presently
provided by the other party and its affiliates and each party is willing to
continue to provide such services under the terms of this Agreement.
AGREEMENT
For and in consideration of the mutual premises, representations and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto mutually agree as follows:
SECTION 1. VALHI SERVICES TO BE PROVIDED. Valhi agrees to make available
to NL, upon request, the following services (the "VALHI SERVICES") to be
rendered by the internal staff of Valhi and affiliates of Valhi:
(a) Consultation and assistance in the development and
implementation of NL's corporate business strategies, plans and
objectives;
(b) Consultation and assistance in management and conduct of
corporate affairs and corporate governance consistent with the charter and
bylaws of NL;
(c) Consultation and assistance in maintenance of financial records
and controls, including preparation and review of periodic financial
statements and reports to be filed with public and regulatory entities and
those required to be prepared for financial institutions or pursuant to
indentures and credit agreements;
(d) Consultation and assistance in cash management and in arranging
financing necessary to implement the business plans of NL;
(e) Consultation and assistance in tax management and
administration, including, without limitation, preparation and filing of
tax returns, tax reporting, examinations by government authorities and tax
planning; and
(f) Such other services as may be requested by NL from time to time.
SECTION 2. NL SERVICES TO BE PROVIDED. NL agrees to make available to
Valhi, upon request, the following services (the "NL SERVICES," and collectively
with the Valhi Services, the "SERVICES") to be rendered by the internal staff of
NL:
(a) The services of Joseph S. Compofelice (through February 16,
1998) to act as Executive Vice President of Valhi, which Valhi and NL
agree shall involve substantially such time as has been allocated in the
past and is currently being devoted;
(b) The services of NL's internal audit personnel in providing
consultation and assistance in performing internal audit projects as
requested from time to time; and
(c) certain administration and management services with respect to
Valhi's insurance and risk management needs, including, without
limitations, administration of Valhi's:
(i) property and casualty insurance program,
(ii) claims management program,
(iii) property loss control program, and
(d) Such other services as may be requested by Valhi from time to
time.
SECTION 3. MISCELLANEOUS SERVICES. It is the intent of the parties hereto
that each party to this Agreement provide (a "PROVIDING PARTY") only such
Services as are requested by the other party (a "RECEIVING PARTY") in connection
with routine management, financial and administrative functions related to the
ongoing operations of the Receiving Party and not with respect to special
projects, including corporate investments, acquisitions and divestitures. The
parties hereto contemplate that the Services rendered by a Providing Party in
connection with the conduct of each Receiving Party's business will be on a
scale compared to that existing on the effective date of this Agreement,
adjusted for internal corporate growth or contraction, but not for major
corporate acquisitions or divestitures, and that adjustments may be required to
the terms of this Agreement in the event of such major corporate acquisitions,
divestitures or special projects. Each Receiving Party will continue to bear all
other costs required for outside services including, but not limited to, the
outside services of attorneys, auditors, trustees, consultants, transfer agents
and registrars, and it is expressly understood that each Providing Party assumes
no liability for any expenses or services other than those stated in this
Agreement to be provided by such party. In addition to the amounts charged to a
Receiving Party for Services provided pursuant to this Agreement, such Receiving
Party will pay the Providing Party the amount of out-of-pocket costs incurred by
the Providing Party in rendering such Services.
SECTION 4. NET FEE FOR SERVICES. NL agrees to pay to Valhi a net annual
fee of $12,600 payable in quarterly installments of $3,150 each, commencing as
of January 1, 1998, pursuant to this Agreement. In addition to the net annual
fee:
(a) Valhi shall pay to NL an additional amount equal to the sum of:
(i) the product of (x) $600, (y) the number of days devoted
by NL's internal auditors to providing NL Services described
in SUBSECTION 2(B) and (z) the number of internal auditors
providing such NL Services; and
(ii) all related out-of-pocket expenses;
(b) Valhi shall credit or pay to NL additional amounts plus all
related out-of-pocket costs, all as agreed to by the parties, for all NL
Services provided under SUBSECTION 2(D); and
(c) NL shall credit or pay to Valhi additional amounts plus all
related out-of-pocket costs, all as agreed to by the parties, for all
Valhi Services provided under SUBSECTION 1(F).
SECTION 5. ORIGINAL TERM. Subject to the provisions of SECTION 6 hereof,
the original term of this Agreement shall be from January 1, 1998 to December
31, 1998.
SECTION 6. EXTENSIONS. This Agreement shall be extended on a
quarter-to-quarter basis after the expiration of its original term unless
written notification is given by Valhi or NL thirty (30) days in advance of the
first day of each successive quarter or unless it is superseded by a subsequent
written agreement of the parties hereto.
SECTION 7. LIMITATION OF LIABILITY. In providing Services hereunder, each
Providing Party shall have a duty to act, and to cause its agents to act, in a
reasonably prudent manner, but no Providing Party nor any officer, director,
employee or agent of such party nor or its affiliates shall be liable to a
Receiving Party for any error of judgment or mistake of law or for any loss
incurred by the Receiving Party in connection with the matter to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Providing Party.
SECTION 8. INDEMNIFICATION. Each Receiving Party shall indemnify and hold
harmless the Providing Party, its affiliates and their respective officers,
directors and employees from and against any and all losses, liabilities,
claims, damages, costs and expenses (including attorneys' fees and other
expenses of litigation) to which such Providing Party may become subject arising
out of the Services provided by such Providing Party to the Receiving Party
hereunder, PROVIDED that such indemnity shall not protect any person against any
liability to which such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on the part of such person.
SECTION 9. FURTHER ASSURANCES. Each of the parties will make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as the other party may reasonably request and as may reasonably
be required in order to effectuate the purposes of this Agreement and to carry
out the terms hereof.
SECTION 10. NOTICES. All communications hereunder shall be in writing and
shall be addressed, if intended for Valhi, to Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240, Attention: President, or such other
address as it shall have furnished to NL in writing, and if intended for NL, to
Two Greenspoint Plaza, 16825 Northchase Drive, Suite 1200, Houston, Texas 77060,
Attention: President, or such other address as it shall have furnished to Valhi
in writing.
SECTION 11. AMENDMENT AND MODIFICATION. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated other than by
agreement in writing signed by the parties hereto.
SECTION 12. SUCCESSOR AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of Valhi and NL and their respective successors and
assigns, except that neither party may assign its rights under this Agreement
without the prior written consent of the other party.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
VALHI, INC.
By:
STEVEN L. WATSON
VICE PRESIDENT
NL INDUSTRIES, INC.
By:
J. LANDIS MARTIN
President and Chief Executive
Officer
EXHIBIT 10.11
INTERCORPORATE SERVICES AGREEMENT
INTERCORPORATE SERVICES AGREEMENT effective as of January 1, 1998, by and
between Tremont Corporation ("Tremont"), a Delaware corporation, and NL
Industries, Inc. ("NL"), a New Jersey corporation.
WHEREAS, Tremont desires that NL provide certain services to Tremont, and
NL is willing to provide such services to Tremont pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the premises and promises set forth
herein, the parties to this Agreement agree as follows:
1. SERVICES PROVIDED. NL will make available to Tremont the
following services (the "Services"):
(a) certain administration and management services with respect to
Tremont's insurance and risk management needs, including:
(i) management of claims (including insured and
self-insured workers compensation and
liability claims);
(ii) budgeting and related activities;
(iii) administration of Tremont's captive
insurance company;
(iv) coordination of property loss
control program; and
(v) administration of Tremont's insurance
program, excluding all employee
benefit and welfare related programs.
(b) certain administration and management services with respect to
Tremont's real properties and interests.
(c) consultation and assistance in performing internal audit
projects, as requested.
(d) consultation and assistance in tax management and
administration, including, without limitation, preparation and
filing of tax returns, tax reporting, examinations by
government authorities and tax planning.
(e) certain executive secretarial and administrative services.
2. FEES FOR SERVICES AND REIMBURSEMENT OF EXPENSES. During the Term (as
defined below) of this Agreement, Tremont shall pay to NL an annual fee of
$87,200 (the "Annual Fee") for the Services described in paragraphs 1(a), 1(b),
1(d) and 1(e) above payable in quarterly installments of $21,800, plus all
out-of-pocket expenses incurred in connection with the performance of such
Services. In addition, Tremont will, within thirty (30) days after receipt of an
invoice (such invoices to occur no more frequently than once per month) pay to
NL an amount equal to the product of $600 multiplied by the number of days
devoted by NL's internal auditors to providing Services described in paragraph
1(c) above times the number of internal auditors providing such Services plus
all out-of-pocket expenses incurred in the performance of such Services.
Notwithstanding the foregoing, in the event that Tremont determines, in its sole
discretion, that it no longer desires certain of the Services or NL determines,
in its sole discretion, that it no longer desires to provide certain of the
Services, then Tremont or NL, as appropriate, shall provide the other party with
a ninety (90) day prior written notice of cancellation describing the Services
to be terminated or discontinued and Tremont and NL during such ninety-day
period shall agree to a pro-rata reduction of the fees due hereunder for such
terminated or discontinued Services.
3. LIMITATION OF LIABILITY. In providing Services hereunder, NL shall have
a duty to act, and to cause its agents to act, in a reasonably prudent manner,
but neither NL nor any officer, director, employee or agent of NL shall be
liable to Tremont or its subsidiaries for any error of judgment or mistake of
law or for any loss incurred by Tremont or its subsidiaries in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of NL or from
NL's reckless disregard of obligations and duties under this Agreement.
4. INDEMNIFICATION OF NL BY TREMONT. Tremont shall indemnify and hold
harmless NL, its subsidiaries and their respective officers, directors and
employees from and against any and all losses, liabilities, claims, damages,
costs and expenses (including reasonable attorneys' fees and other expenses of
litigation) to which such party may become subject arising out of the provision
by NL to Tremont and its subsidiaries of any of the Services, provided that such
indemnity shall not protect any such party against any liability to which such
person would otherwise by subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations and duties hereunder.
5. FURTHER ASSURANCE. Each of the parties will make, execute, acknowledge
and deliver such other instruments and documents, and take all such other
actions, as the other party may reasonably request and as may reasonably by
required in order to effectuate the purposes of this Agreement and to carry out
the terms hereof.
6. NOTICES. All communications hereunder shall be in writing and shall be
addressed to:
If to NL: NL Industries, Inc.
16825 Northchase Drive, Suite 1200
Houston, Texas 77060
Attention: General Counsel
If to Tremont: Tremont Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
Attention: General Counsel
or such other address as the parties shall have specified
in writing.
7. AMENDMENT AND MODIFICATION. Neither this Agreement nor any item hereof
may be changed, waived, discharged or terminated other than by agreement in
writing signed by the parties hereto.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties hereto,
provided that this Agreement may not be assigned by either of the parties hereto
without the prior written consent of the other party.
9. MISCELLANEOUS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. This Agreement shall be governed in all respects, including
validity, interpretation and affect, by the laws of the State of Texas.
10. TERM OF AGREEMENT. This Agreement shall be effective as of January 1,
1998, and shall remain in effect for a term of one year until December 31, 1998
(the "Term"); provided, however, the Agreement shall be extended on a
quarter-to-quarter basis after the expiration of the Term unless written
notification is given by either party thirty (30) days in advance of the first
day of each successive quarter or unless it is terminated or superseded by a
subsequent written agreement of the parties hereto. Upon such termination or
upon the expiration of this Agreement, the parties' rights and obligations
hereunder shall cease and terminate except with respect to rights and
obligations arising on or prior to the date of expiration or termination and the
rights and obligations arising under paragraph 4 above.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the ____ day of July, 1998, which Agreement will be deemed to be effective as of
January 1, 1998.
NL INDUSTRIES, INC.
By:__________________________
Dennis G. Newkirk
Vice President
TREMONT CORPORATION
By:___________________________
J. Thomas Montgomery
Vice President
EXHIBIT 10.12
INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "Agreement") is made effective
as of January 1, 1998, by and between Titanium Metals Corporation ("TIMET"), a
Delaware corporation, and NL Industries, Inc. ("NL"), a New Jersey corporation.
WHEREAS, TIMET desires that NL provide certain insurance, risk management,
loss control, internal audit, tax, and executive secretarial and administrative
services to TIMET, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and promises set forth
herein and for other good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the parties to this Agreement agree as follows:
1. SERVICES PROVIDED. NL will make available to TIMET and its
subsidiaries the following services (the "Services"):
(a) certain administration and management services with respect to
TIMET's insurance and risk management needs, including:
(i) management of claims (including insured
and self-insured workers compensation
and liability claims);
(ii) budgeting and related activities;
(iii) coordination of property loss control
program; and
(iv) administration of TIMET's insurance program, excluding
all employee benefit and welfare related programs.
(b) consultation and assistance in performing internal audit
projects, as requested.
(c) consultation and assistance in tax management and
administration, including, without limitation, preparation and
filing of tax returns, tax reporting, examinations by
government authorities and tax planning.
(d) certain executive secretarial and administrative services.
2. FEES FOR SERVICES AND REIMBURSEMENT OF EXPENSES. During the Term (as
defined below) of the Agreement, TIMET shall pay to NL an annual fee of $335,000
for the Services described in paragraphs 1(a), 1(c), and 1(d) above payable in
quarterly installments of $83,750 plus all out-of-pocket expenses incurred in
connection with the performance of such Services. In addition, TIMET will pay to
NL within thirty (30) days after receipt of an invoice (such invoices to occur
no more frequently than once per month) an amount equal to the product of 600
multiplied by the number of days devoted by NL's internal auditors to providing
Services described in paragraph 1(b) above times the number of internal auditors
providing such Services plus all out-of-pocket expenses incurred in the
performance of such Services. Notwithstanding the foregoing, in the event that
TIMET determines, in its sole discretion, that it no longer desires certain of
the Services or NL determines, in its sole discretion, that it no longer desires
to provide certain of the Services, then TIMET or NL, as appropriate, shall
provide the other party with a ninety (90) day prior written notice of
cancellation describing the Services to be terminated or discontinued and TIMET
and NL during such ninety-day period shall agree to a pro-rata reduction of the
fees due hereunder for such terminated or discontinued Services.
3. LIMITATION OF LIABILITY. In providing Services hereunder, NL shall have
a duty to act, and to cause its agents to act, in a reasonably prudent manner,
but neither NL nor any officer, director, employee or agent of NL shall be
liable to TIMET or its subsidiaries for any error of judgment or mistake of law
or for any loss incurred by TIMET or its subsidiaries in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of NL or from NL's
reckless disregard of obligations and duties under this Agreement.
4. INDEMNIFICATION OF NL BY TIMET. TIMET shall indemnify and hold harmless
NL, its subsidiaries and their respective officers, directors and employees from
and against any and all losses, liabilities, claims, damages, costs and expenses
(including reasonable attorneys' fees and other expenses of litigation) to which
such party may become subject arising out of the provision by NL to TIMET and
its subsidiaries of any of the Services, provided that such indemnity shall not
protect any such party against any liability to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations and duties hereunder.
5. FURTHER ASSURANCE. Each of the parties will make, execute, acknowledge
and deliver such other instruments and documents, and take all such other
actions, as the other party may reasonably request and as may reasonably by
required in order to effectuate the purposes of this Agreement and to carry out
the terms hereof.
6. NOTICES. All communications hereunder shall be in writing and shall be
addressed to:
If to NL: NL Industries, Inc.
16825 Northchase Drive, Suite 1200
Houston, Texas 77060
Attention: General Counsel
If to TIMET: Titanium Metals Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
Attention: General Counsel
or such other address as the parties shall have specified in
writing.
7. AMENDMENT AND MODIFICATION. Neither this Agreement nor any item hereof
may be changed, waived, discharged or terminated other than by agreement in
writing signed by the parties hereto.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties hereto,
provided that this Agreement may not be assigned by either of the parties hereto
without the prior written consent of the other party.
9. MISCELLANEOUS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. This Agreement shall be governed in all respects, including
validity, interpretation and affect, by the laws of the State of Texas.
10. TERM OF AGREEMENT. This Agreement shall be effective as of January 1,
1998, and shall remain in effect for a term of one year until December 31, 1998
(the "Term"); provided, however, the Agreement shall be extended on a
quarter-to-quarter basis after the expiration of the Term unless written
notification is given by either party thirty (30) days in advance of the first
day of each successive quarter or unless it is terminated or superseded by a
subsequent written agreement of the parties hereto. Upon such termination or
upon the expiration of this Agreement, the parties' rights and obligations
hereunder shall cease and terminate except with respect to rights and
obligations arising on or prior to the date of expiration or termination and the
rights and obligations arising under paragraph 4 above.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
effective as of the _____ day of July, 1998, which Agreement will be deemed to
be effective as of January 1, 1998.
NL INDUSTRIES, INC.
By:____________________________________
Dennis G. Newkirk
Vice President
TITANIUM METALS CORPORATION
By:____________________________________
J. Thomas Montgomery
Vice President
EXHIBIT 10.13
INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "AGREEMENT"), effective as of
January 1, 1998, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 1997 between NL INDUSTRIES, INC., a New
Jersey corporation ("NL"), and COMPX INTERNATIONAL INC., a Delaware corporation
("RECIPIENT").
RECITALS
A. NL provides Recipient certain occupancy and related office services
(the "OCCUPANCY AND RELATED OFFICE SERVICES"), which services include, without
limitation, office space that Recipient's personnel currently occupy at NL's
corporate offices at Two Greenspoint Plaza, 16825 Northchase Drive, Suite 1200,
Houston, Texas and mail, telecommunication, computer support, copying and other
reasonable office services related to such occupancy.
B. The terms of this Agreement are no less favorable to Recipient than
could otherwise be obtained from a third party for comparable services.
C. Recipient desires to continue receiving the Occupancy and Related
Office Services presently provided by NL and affiliates of NL and NL is willing
to continue to provide such services under the terms of this Agreement.
AGREEMENT
For and in consideration of the mutual premises, representations and
covenants herein contained, the parties hereto mutually agree as follows:
SECTION 1. SERVICES TO BE PROVIDED. NL agrees to make available to
Recipient the following services (the "SERVICES") to be rendered by the internal
staff of NL and affiliates of NL:
(a) the Occupancy and Related Office Services; and
(b) such other services as may be requested by Recipient or deemed
necessary and proper from time to time.
SECTION 2. MISCELLANEOUS SERVICES. It is the intent of the parties hereto
that NL provide only the Services requested by Recipient in connection with
routine administrative functions related to the ongoing operations of Recipient
and not with respect to special projects, including corporate investments,
acquisitions and divestitures. The parties hereto contemplate that the Services
rendered in connection with the conduct of Recipient's business will be on a
scale compared to that existing on the effective date of this Agreement but not
for major corporate acquisitions or divestitures, and that adjustments may be
required to the terms of this Agreement in the event of such major corporate
acquisitions, divestitures or special projects. Recipient will continue to bear
all other costs required for outside services, and it is expressly understood
that NL assumes no liability for any expenses or services other than those
stated in SECTION 1. In addition to the fee paid to NL by Recipient for the
Services provided pursuant to this Agreement, Recipient will pay to NL the
amount of out-of-pocket costs incurred by NL in rendering such Services.
SECTION 3. FEE FOR SERVICES.. Recipient agrees to pay to NL $10,937.50
quarterly, commencing as of January 1, 1998, pursuant to this Agreement.
SECTION 4. ORIGINAL TERM. Subject to the provisions of SECTION 5 hereof,
the original term of this Agreement shall be from January 1, 1998 to December
31, 1998.
SECTION 5. EXTENSIONS. This Agreement shall be extended on a
quarter-to-quarter basis after the expiration of its original term unless
written notification is given by NL or Recipient thirty (30) days in advance of
the first day of each successive quarter or unless it is superseded by a
subsequent written agreement of the parties hereto.
SECTION 6. LIMITATION OF LIABILITY. In providing its Services hereunder,
NL shall have a duty to act, and to cause its agents to act, in a reasonably
prudent manner, but neither NL nor any officer, director, employee or agent of
NL or its affiliates shall be liable to Recipient for any error of judgment or
mistake of law or for any loss incurred by Recipient in connection with the
matter to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of NL.
SECTION 7. INDEMNIFICATION OF NL BY RECIPIENT.. Recipient shall indemnify
and hold harmless NL, its affiliates and their respective officers, directors
and employees from and against any and all losses, liabilities, claims, damages,
costs and expenses (including attorneys' fees and other expenses of litigation)
to which such party may become subject to arising out of the Services provided
by NL to Recipient hereunder, PROVIDED that such indemnity shall not protect any
person against any liability to which such person would otherwise be subject to
by reason of willful misfeasance, bad faith or gross negligence on the part of
such person.
SECTION 8. FURTHER ASSURANCES. Each of the parties will make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as the other party may reasonably request and as may reasonably
be required in order to effectuate the purposes of this Agreement and to carry
out the terms hereof.
SECTION 9. NOTICES. All communications hereunder shall be in writing and
shall be addressed, if intended for NL, to Two Greenspoint Plaza, 16825
Northchase Drive, Suite 1200, Houston, Texas 77060, Attention: President, or
such other address as it shall have furnished to Recipient in writing, and if
intended for Recipient, to Two Greenspoint Plaza, 16825 Northchase Drive, Suite
1200, Houston, Texas 77060, Attention: Chairman of the Board, or such other
address as it shall have furnished to NL in writing.
SECTION 10. AMENDMENT AND MODIFICATION. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated other than by
agreement in writing signed by the parties hereto.
SECTION 11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of NL and Recipient and their respective successors and
assigns, except that neither party may assign its rights under this Agreement
without the prior written consent of the other party.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the state of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
NL INDUSTRIES, INC.
By:
J. LANDIS MARTIN
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
COMPX INTERNATIONAL INC.
By:
JOSEPH S. COMPOFELICE
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
EXHIBIT 27.1
5
1,000
9-MOS
DEC-31-1998
JAN-01-1998
SEP-30-1998
320,823
0
149,645
2,523
191,568
689,155
834,304
454,275
1,297,255
452,349
304,060
0
0
8,355
138,015
1,297,255
685,794
706,563
476,026
476,026
0
(131)
46,917
85,283
14,174
71,073
287,396
(4,766)
0
353,703
6.89
6.80
