SALE AND PURCHASE AGREEMENT
DATED SEPTEMBER 27, 2006
BETWEEN:
1. HUNTSMAN PETROCHEMICALS (UK) HOLDINGS, an unlimited company registered in England and Wales under registered number 05411362 whose registered office is at Haverton Hill Road, Billingham, Cleveland TS23 1PS (the Vendor);
2. HUNTSMAN INTERNATIONAL LLC, a limited liability company formed under the laws of Delaware, whose principal place of business is at 500 Huntsman Way, Salt Lake City, Utah, the United States of America (the Vendors Guarantor);
3. SABIC UK PETROCHEMICALS HOLDINGS LIMITED, a company registered in England and Wales under registered number 05947494 whose registered office is at 10 Norwich Street, London, EC4A 1BD (the Purchaser);
AND
4. SABIC EUROPE B.V., a private company with limited liability incorporated and existing under the laws of The Netherlands with its seat in Heerlen, The Netherlands, and its principal place of business at 6135 LD Sittard, Europaboulevard 1, The Netherlands, and registered at the Trade Register of the Chamber of Commerce and Industries for Zuid-Limburg under number 14073237. (the Purchasers Guarantor).
WHEREAS:
The Vendor has agreed to sell and the Purchaser has agreed to purchase and pay for the Shares (as defined in this Agreement) for the consideration specified in and on the terms of this Agreement.
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
(a) Certain words and expressions used in, and principles of interpretation applicable to, this Agreement are defined, or as the case may be set out, in Schedule 1.
(b) The Schedules form part of this Agreement and shall have the same force and effect as if set out in the body of this Agreement and any reference to this Agreement shall include the Schedules.
2. CONDITIONS
(a) The obligations of the Vendor and the Purchaser under this Agreement (other than those contained in this Clause 2, Clause 8 and Clauses 26 to 28 and Clauses 30 to 40 which are unconditional) are conditional in all respects upon:
(i) the European Commission having issued a decision under Council Regulation (EC) No. 139/2004 (the Merger Regulation) (or being deemed to have done so under Article 10(6) of the Merger Regulation) declaring the purchase of the Shares by the Purchaser compatible with the common market and/or, if any aspect of the acquisition is referred to a competent authority of a European Union or EFTA State or more than one such competent authorities under Article 9 of the Merger Regulation, confirmation having been received from each such competent authority that the purchase of the Shares by the Purchaser may proceed;
(ii) the receipt of evidence in a form and substance reasonably satisfactory to the Vendor and the Purchaser that, if required, all other regulatory consents and appraisals have been received, all filings have been made and all waiting periods have expired or been terminated in relation to the transactions contemplated in this Agreement pursuant to the applicable laws of any jurisdiction, including without limitation, the Hart Scott Rodino Anti-Trust Improvements Act of 1976 (as amended) of the United States of America;
(iii) either (a) no factual information that has not been fairly disclosed in the Disclosure Letter or the Data Room or that has not been delivered prior to the date hereof to the Purchasers Solicitors expressly in the context of their review of the LDPE Technology Licence (such information being referred to in this Clause 2(a)(iii) as new information) coming to the attention of either the Vendor or the Purchaser which relates to the period prior to the date hereof and which is relevant to the interpretation of the LDPE Technology Licence (and for the avoidance of doubt, ExxonMobils reaction, of itself (as opposed to any new information put forward as the basis for, or in connection with such reaction), to the transactions contemplated by this Agreement will not be treated as a fact which is relevant to the interpretation of the LDPE Technology Licence), or (b) if such new information does come to the attention of the Vendor or the Purchaser, the obtaining of an opinion pursuant to Clause 9(b) or Clause 9(c) in relation to the LDPE Technology Licence which gives the confirmations contemplated by Clause 9(b)(ii) or Clause 9(c)(ii) (as the case may be);
(iv) the receipt of the items set out in paragraph 2(A) of Schedule 5 (Pensions);
(v) the completion of the steps set out in Schedule 11 (Pre-sale Reorganisation);
(vi) no event or circumstance, other than an event or circumstance which is constituted by matters which pertain either to general economic conditions affecting the United Kingdom, European or world economy or to conditions in the petrochemicals industry generally, having occurred which has or is more than likely to have a material adverse effect on the financial or operational condition of the Company;
(vii) the Vendor having complied in all material respects with its obligations under Clause 8 (or, if the Vendor has failed to comply in all material respects with such obligations, such failure not having been remedied on or before Completion);
(viii) no event or circumstance having occurred or been discovered which, if the Purchaser were to proceed to Completion, would entitle the Purchaser to bring a claim (or claims
2
in aggregate) for one or more breaches of Warranty and which would have (or would be more than likely to have) a material adverse effect on the Company, or a claim (or claims in aggregate) for a material amount under the Environmental Covenant;
(ix) no event or circumstance, other than an event or circumstance which is constituted by matters which pertain either to general economic conditions affecting the United Kingdom, European or world economy or to conditions in the petrochemicals industry generally, having occurred or been discovered which, if the Warranties were repeated immediately before Completion, would have constituted a breach of Warranty and which would have (or would be more than likely to have) a material adverse effect on the Company; and
(x) no order or judgment of any court or governmental, statutory or regulatory body having been issued or made prior to Completion, and no legal or regulatory requirement remaining to be satisfied, which has the effect of making unlawful or otherwise prohibiting either (i) the transfer of the Shares to the Purchaser or (ii) the transactions contemplated by this Agreement other than the transfer of the Shares to the Purchaser (in the case of (ii) only) to a material extent.
(b) The Vendor shall use all reasonable endeavours promptly to procure the satisfaction of the conditions set out in sub-clause (a)(i), (ii), (iv), (v), (vii) and (x). The Purchaser shall use all reasonable endeavours promptly to procure the satisfaction of the conditions set out in sub-clause (a)(i), (ii), (iv), and (x)
(c) Without prejudice to sub-clause (b) above, but subject to sub-clause (e) below, the Purchaser shall, as promptly as practicable, take all reasonable steps within its control (including making filings and notifications and providing undertakings to merger control authorities where such undertakings would not have a material adverse effect on the value of the Acquired Business) to obtain all consents, approvals or actions of any governmental or regulatory body or any other person which are required in order to complete the sale and purchase of the Shares including without limitation:
(i) providing information which is requested by any such governmental or regulatory body or other person;
(ii) co-operating with and assisting the Vendor and the Company to obtain any consents, approvals or actions of any governmental or regulatory body or other person required by either the Vendor or the Company;
(iii) notifying the Vendor, and providing copies, of any communications from any such governmental or regulatory body or other person in relation to obtaining any such consent, approval or action;
(iv) disclosing to the Vendor or the Vendors advisers any information relating to the Purchaser or the Purchasers Group as may be reasonably required by the Vendor for the purposes of obtaining any such consent, approval or action; and
3
(v) where requested by the Vendor, providing the Vendor (or advisers nominated by the Vendor) with draft copies of all submissions and communications to governmental or regulatory bodies or other persons at such time as will allow the Vendor a reasonable opportunity to provide comments on such submissions and communications before they are submitted or sent and amending all such submissions or communications in accordance with the reasonable requirements of the Vendor (or such nominated advisers) and providing the Vendor (or such nominated advisers) with copies of all such submissions and communications in the form submitted or sent.
(d) Without prejudice to sub-clause (b) above, the Vendor shall, so far as is reasonably necessary, and as promptly as practicable, provide the Purchaser with such reasonable assistance as the Purchaser may reasonably require for the purpose of fulfilling the Purchasers obligations under sub-clause (c) above, including without limitation:
(i) providing information which is requested by any governmental or regulatory body or other persons whose consents, approvals or other actions are required in order to permit completion of the transactions contemplated by this Agreement, including information which the Purchaser reasonably considers necessary for it to make all notifications and filings to any such body or person;
(ii) co-operating with and assisting the Purchaser and the Company to obtain any consents, approvals or actions of any governmental or regulatory body or other person required by either the Purchaser or the Company;
(iii) notifying the Purchaser, and providing copies, of any communications from any such governmental or regulatory body or other persons in relation to obtaining any such consent, approval or action where such communications have not been independently or simultaneously supplied to the Purchaser;
(iv) where requested by the Purchaser, providing the Purchaser (or advisers nominated by the Purchaser) with draft copies of all submissions and communications to governmental or regulatory bodies or other persons at such time as will allow the Purchaser a reasonable opportunity to provide comments on such submissions and communications before they are submitted or sent and amending all such submissions or communications in accordance with the reasonable requirements of the Purchaser (or such nominated advisers); and providing the Purchaser (or such nominated advisers) with copies of all such submissions and communications in the form submitted or sent.
(e) Nothing in this Clause 2 shall impose any obligation on any party to:
(i) enter into agreements to hold separate or dispose of any part of the businesses of the Vendors Group or the Purchasers Group (as the case may be); or
(ii) enter into agreements to supply any products; or
(iii) enter into agreements other than on commercially reasonable terms; or
4
(iv) enter into any consent judgment, consent agreement or undertaking in relation to any part of its business which competes with all or part of the Acquired Business; or
(v) disclose confidential information relating to its financial or business affairs to any person other than to another party to this Agreement or such other partys legal advisors or to governmental or regulatory authorities; or
(vi) where that party is obliged under this Clause 2 to disclose confidential information relating to its financial or business affairs to another party to this Agreement or its legal advisers, disclose such information beyond the extent necessary to enable such other party to comply with its obligations under this Clause 2 (which may, by way of example, involve disclosure of specific information to legal advisers on the basis that it will not be disclosed to such other party).
(f) The conditions set out in sub-clauses (a)(i), (ii), (iv), (v), (viii) and (x) may only be waived by the written agreement of each party to this Agreement. The conditions set out in sub-clauses (a)(iii), (vi), (vii) and (ix) may be waived in writing by the Purchaser alone. For the avoidance of doubt, any such waiver by the Purchaser shall not in any respect constitute a waiver by the Purchaser of any rights which it might have in respect of the circumstances giving rise to the non-satisfaction of the relevant condition, including but not limited to any right which it may have to bring a claim for breach of warranty in the case of the non-satisfaction of the conditions set out in sub-clauses (a)(viii) or (ix), provided that if new information (as defined in sub-clause (a)(iii)) emerges in relation to the LDPE Technology Licence and the Purchaser waives the condition set out in sub-clause (a)(iii), that new information shall be deemed to have been fairly disclosed in the Disclosure Letter and the Purchasers rights to bring a claim for breach of Warranty in respect of the Warranties contained in paragraph 49 or, insofar as it relates to the LDPE Technology Licence, paragraph 51(A), of Schedule 3 shall be limited accordingly.
(g) If any fact which makes any of the conditions set out in sub-clause (a) incapable of being satisfied on or before the relevant Termination Date comes to the knowledge of any party at any time prior to Completion then that party shall notify the others of that fact and any party shall be entitled to treat this Agreement as terminated by written notice to the others provided that (i) no party shall be entitled to treat this Agreement as terminated where that party is in breach of its obligations under this Clause where such breach has contributed materially to the non-satisfaction of the condition and (ii) no party other than the Purchaser or the Purchasers Guarantor shall be entitled to treat this Agreement as terminated by reference to the incapability of satisfaction of any of the conditions the satisfaction of which may be waived by the Purchaser alone, unless and until the Purchaser states in writing that it will not waive that condition.
(h) If the conditions set out in sub-clause (a) are not satisfied or waived in accordance with sub-clause (f) on or before the relevant Termination Date, this Agreement shall automatically terminate.
(i) If this Agreement is terminated or terminates pursuant to this Clause then the obligations of each party under this Agreement (except for obligations under this Clause 2 and Clauses 26 to 28 and Clauses 30 to 40) shall automatically terminate provided that the rights and liabilities of
5
the parties which have accrued prior to termination shall subsist and provided further that, for the avoidance of doubt, no rights and liabilities in respect of the Warranties or in respect of any breach of Clause 8 shall subsist following such termination. The only remedy available to any party (i) for another partys failure to use all reasonable endeavours pursuant to sub-clause 2(b), or (ii) where the failure to satisfy a condition under Clause 2(a) has been caused by the Vendors breach of Clause 8 or a breach of a Warranty, shall in either case be compensation for wasted costs and expenses incurred in connection with negotiating this Agreement and carrying out due diligence on the Company, and such remedy shall only be available to the extent that such other party could reasonably have prevented such failure or breach.
3. SALE AND PURCHASE
(a) On the terms set out in this Agreement, the Vendor shall sell and the Purchaser shall purchase the legal and beneficial ownership of the Shares as at and with effect from Completion together with all rights attached or accruing to them at Completion.
(b) The Vendor undertakes that the Shares shall be transferred at Completion free from all liens, charges and encumbrances and all other rights in favour of or exercisable by third parties.
(c) The Purchaser shall be entitled from Completion to exercise all rights attached or accruing to the Shares, including, without limitation, the right to receive all dividends or distributions or any return of capital declared, paid or made by the Company, on or after the Completion Date.
(d) The Vendor (for itself and on behalf of any other relevant member of the Vendors Group) waives all rights of pre-emption over the Shares, howsoever conferred and shall procure that no later than Completion all such rights of pre-emption and any other similar or comparable rights over or in respect of the Shares conferred upon any other person are waived so as to permit the sale and purchase of the Shares hereunder.
(e) For the avoidance of doubt, Part I of the Law of Property (Miscellaneous Provisions) Act 1994 shall not apply for the purpose of this Clause 3.
4. CONSIDERATION
(a) The initial aggregate consideration payable at Completion for the sale of the Shares shall be the payment by the Purchaser to the Vendor of the Debt Free Price:
(i) plus the Provisional Cash Amount;
(ii) less the aggregate of the Provisional Third Party Debt Amount and the Provisional Intra-Group Debt Amount;
(iii) either:
(A) plus the difference between the Provisional Working Capital and the Target Working Capital, if the Provisional Working Capital is greater than the Target Working Capital; or
6
(B) less the difference between the Provisional Working Capital and the Target Working Capital, if the Provisional Working Capital is less than the Target Working Capital;
(iv) either:
(A) less the amount (if any) by which the Provisional Actual Expenditure is less than $208,000,000; or
(B) plus the amount (if any) by which the Provisional Actual Expenditure is more than $208,000,000; and
(v) less the amount (if any) by which the Provisional Forecast Expenditure is more than $360,000,000,
provided the adjustments in (i), (ii), (iv) and (v) (but excluding the adjustment in (iv)(B)) above shall only apply to the extent that they do not result in an amount over the Debt Free Price being payable,
(the Initial Cash Consideration) (such payment to be made in accordance with Clause 10).
Between the date of this Agreement and Completion, the parties will procure that their respective accountants or financial personnel will meet with a view to agreeing the methodology for determining the provisional amounts specified in (i) to (v) above with a view to ensuring that those provisional amounts are as accurate as possible. Where the parties do not agree prior to Completion on a methodology for determining any such provisional amount, the relevant provisional amount shall be as estimated in good faith by the Vendor. Where the parties agree on a methodology in relation to any such provisional amount prior to Completion, the Vendor shall use such methodology in estimating such provisional amount.
Not less than 2 Business Days prior to the Completion Date the Vendor will notify the Purchaser in writing of its estimates of the Provisional Cash Amount, the Provisional Third Party Debt Amount, the Provisional Intra-Group Debt Amount, the Provisional Working Capital, the Provisional Actual Expenditure and the Provisional Forecast Expenditure together with supporting documentation and a statement signed by the CFO (Chief Financial Officer) of the Vendors Guarantor confirming that the estimates have been determined in good faith and are believed by him (without assuming personal liability) to be fair.
(b) Following determination of the Final Third Party Debt Amount, the Final Intra-Group Debt Amount, the Final Cash Amount, the Actual Expenditure, the Forecast Expenditure and the Completion Working Capital, in accordance with the provisions of Clauses 5, 6 and 7 and Schedule 10, the Initial Cash Consideration shall be adjusted to take account of payments made pursuant to those Clauses in order to determine the final aggregate cash consideration for the sale of the Shares (the Final Cash Consideration), provided that:
(i) the adjustments to the Initial Cash Consideration pursuant to Clauses 5(a)(i) to (iv), 6 and 7 and Schedule 10 (excluding any adjustment under paragraph 3(A)(i) of Schedule 10 and any interest under Clauses 5(a) or 6(b)) shall apply only to the extent
7
that they do not cause the Final Cash Consideration (excluding any reduction by virtue of paragraph 14 of Schedule 4) to exceed the Debt Free Price; and
(ii) any upward adjustment to the Initial Cash Consideration in relation to Actual Expenditure pursuant to paragraph 3(A)(i) of Schedule 10 or in relation to Completion Working Capital pursuant to Clause 5(a)(v) and (vi) or in relation to interest under Clauses 5(a) or 6(b) will apply regardless of the extent it causes the Final Cash Consideration to exceed the Debt Free Price.
(c) The Initial Cash Consideration, the Final Cash Consideration, any payments made pursuant to Clauses 5, 6 and 7 and Schedule 10, and any other payment made under this Agreement to the Vendor shall be exclusive of any amount in respect of VAT.
5. CASH/THIRD PARTY DEBT/WORKING CAPITAL ADJUSTMENT
(a) Subject to Clause 4(b), if:
(i) the Final Cash Amount is greater than the Provisional Cash Amount, then the Purchaser shall pay to the Vendor an amount equal to the difference;
(ii) the Final Cash Amount is less than the Provisional Cash Amount, then the Vendor shall pay to the Purchaser an amount equal to the difference;
(iii) the Final Third Party Debt Amount is greater than the Provisional Third Party Debt Amount, then the Vendor shall pay to the Purchaser an amount equal to the difference;
(iv) the Final Third Party Debt Amount is less than the Provisional Third Party Debt Amount, then the Purchaser shall pay to the Vendor an amount equal to the difference;
(v) the Completion Working Capital is greater than the Target Working Capital, then the Purchaser shall pay to the Vendor an amount equal to the difference,
(A) less the amount paid by the Purchaser to the Vendor pursuant to Clause 4(a)(iii)(A) (if any); or
(B) plus the amount deducted from the Initial Cash Consideration pursuant to Clause 4(a)(iii)(B) (if any);
(vi) the Completion Working Capital is less than the Target Working Capital, then the Vendor shall pay to the Purchaser an amount equal to the difference,
(A) less the amount deducted from the Initial Cash Consideration pursuant to Clause 4(a)(iii)(B) (if any); or
(B) plus the amount paid by the Purchaser to the Vendor pursuant to Clause 4(a)(iii)(A) (if any),
8
provided that the above payments shall be netted-off against each other and, within five Business Days of the final agreement or determination of the Final Cash Amount, the Final Third Party Debt Amount and the Completion Working Capital, the Vendor shall be obliged to pay the Purchaser the net balance or the Purchaser shall be obliged to pay the Vendor the net balance, as the case may be, together with an amount equal to interest on the net balance at the Agreed Rate (accrued daily) for the period from the Completion Date to the date of payment. Any payment under this sub-clause 5(a) shall constitute an adjustment to the Initial Cash Consideration.
(b) Within 20 Business Days of Completion, the Vendor shall notify the Purchaser of its calculation of the Final Cash Amount, the Final Third Party Debt Amount and the Completion Working Capital together with reasonably detailed supporting documentation. The Purchaser shall notify the Vendor of any dispute in relation to any such amount within 30 Business Days of the date of the Vendors notice and shall provide reasonable details of the grounds for disputing such amount and (so far as reasonably practicable) of the amount which the Purchaser believes in good faith to be the correct amount for such Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital. The Purchaser shall be deemed to have agreed to the Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital (as the case may be) which it does not so dispute within 30 Business Days of the date of the Vendors notice.
(c) If the Purchaser serves notice of a dispute in accordance with sub-clause 5(b), and if the Vendor and the Purchaser are unable to agree any of the Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital within 15 Business Days of the date of the Purchasers notice referred to in sub-clause 5(b) (or such longer period as they may agree), then the determination of such Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital shall be referred for determination to the Expert who shall be instructed to notify both the Vendor and the Purchaser of his determination and of the reasons for it within 20 Business Days of such referral. In making his determination the Expert shall act as expert and not arbitrator and his determination shall, in the absence of manifest error, be final and binding and deemed to have been accepted and approved by the Vendor and the Purchaser and shall be deemed to constitute the Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital (as the case may be) for all purposes of this Agreement. The fees and costs of the Expert incurred under this Clause 5 shall be paid as to one-half by the Vendor and one-half by the Purchaser unless otherwise directed by the Expert (who shall have the authority to make such direction if he deems it equitable).
(d) For the purposes of determining and agreeing the Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital the Purchaser shall, and shall procure that the Company shall, give the Vendor and the Expert reasonable access at all reasonable times to all books and records relating to such Final Cash Amount, Final Third Party Debt Amount or Completion Working Capital in their respective possession or control and the Vendor shall as soon as reasonably practicable respond to all reasonable enquiries and provide such relevant information reasonably within its control as may be reasonably requested by the Purchaser and/or the Expert for that purpose.
9
(e) In determining the Final Cash Amount, the Final Third Party Debt Amount and Completion Working Capital the definitions, principles, policies, procedures and methods and practices of accounting set out in Attachment IV shall be applied.
(f) All payments referred to in this Clause 5 shall be made in immediately available funds to the Purchasers Bank Account or (as the case may be) the Vendors Bank Account.
(g) The Vendor undertakes that it will identify to the Purchaser no later than the time of delivery of the Vendors notice referred to in Clause 5(b) all items which are properly to be included in the Final Third Party Debt Amount.
6. INTRA-GROUP DEBTS
(a) The Purchaser shall immediately prior to Completion advance to the Company on loan a sum sufficient to enable the Company to repay the amount (if any) owed by it to the Vendors Group taken into account within the Provisional Intra-Group Debt Amount, and the Vendor shall procure that, immediately after receipt of that sum, but prior to Completion, (i) such sum shall be paid by the Company to the Vendor (as trustee for the relevant members of the Vendors Group) in repayment of such amount, and (ii) the relevant member of the Vendors Group shall repay to the Company the amount (if any) owed to the Company taken into account within the Provisional Intra-Group Debt Amount provided that the price adjustments under Clauses 4, 5 and 6 shall be made disregarding such loan and the payments in (i) and (ii) above, and the Vendor shall prepare its notifications under sub-clauses 4(a) and 5(b) disregarding such loan and such payments (and for the avoidance of doubt this sub-clause 6(a) does not affect the Vendors ability to prepare such notifications taking into account any cash that will be applied to reduce the Final Intra-Group Debt Amount up until immediately before such loan and such payments).
(b) Subject to Clause 4(b), in relation to the Final Intra-Group Debt Amount:
(i) if the Final Intra-Group Debt Amount is greater than the Provisional Intra-Group Debt Amount then the Vendor shall pay an amount equal to the difference, together with an amount equivalent to interest which has accrued on the amount of the difference outstanding from time to time at the Agreed Rate for the period from the Completion Date to the date the relevant difference is repaid, to the Purchaser within ten Business Days of the agreement or determination of such Final Intra-Group Debt Amount;
(ii) if the Final Intra-Group Debt Amount is less than the Provisional Intra-Group Debt Amount then the Purchaser shall pay an amount equal to the difference, together with an amount equivalent to interest which has accrued on the amount of the difference outstanding from time to time at the Agreed Rate for the period from the Completion Date to the date the relevant difference is repaid, to the Vendor within ten Business Days of the agreement or determination of such Final Intra-Group Debt Amount.
(c) Payments to be made under this Clause 6 from the Purchaser to the Vendor or vice versa shall constitute an adjustment to the Initial Cash Consideration.
10
(d) Within 20 Business Days of Completion, the Vendor shall notify the Purchaser of the calculation of the Final Intra-Group Debt Amount owed by the Company together with reasonably detailed supporting documentation. The Purchaser shall notify the Vendor of any dispute in relation to any such amount within 30 Business Days of the date of the Vendors notice and shall provide reasonable details of the grounds for disputing such amount and (so far as reasonably practicable) of the amount which the Purchaser believes in good faith to be the correct amount for the Final Intra-Group Debt Amount. The Purchaser shall be deemed to have agreed to the Final Intra-Group Debt Amount if it does not so dispute within 30 Business Days of the date of the Vendors notice.
(e) If the Purchaser serves notice of a dispute in accordance with sub-clause 6(d), and if the Vendor and the Purchaser are unable to agree the Final Intra-Group Debt Amount within 15 Business Days of the date of the Purchasers notice referred to in sub-clause 6(d) (or such longer period as they may agree), then the determination of the Final Intra-Group Debt Amount may be referred for determination by any party to the Expert who shall be instructed to notify both the Vendor and the Purchaser of his determination and of the reasons for it within 20 Business Days of such referral. In making his determination the Expert shall act as expert and not arbitrator and his determination shall, in the absence of manifest error, be final and binding and deemed to have been accepted and approved by the Vendor and the Purchaser and shall be deemed to constitute the relevant Final Intra-Group Debt Amount for all purposes of this Agreement. The fees and costs of the Expert incurred under this Clause 6 shall be paid as to one-half by the Vendor and one-half by the Purchaser unless otherwise directed by the Expert (who shall have the authority to make such direction if he deems it equitable).
(f) For the purposes of determining and agreeing the Final Intra-Group Debt Amount the Purchaser shall, and shall procure that the Company shall, give the Vendor and the Expert reasonable access at all reasonable times to all books and records relating to such Final Intra-Group Debt Amount in their respective possession or control and the Vendor shall procure that each member of the Vendors Group shall give the Purchaser and the Expert reasonable access at all reasonable times to the books and records of each member of the Vendors Group relating to such Final Intra-Group Debt Amount and each party shall promptly respond to all reasonable enquiries and provide such other information within its control as may reasonably be requested by the other and/or the Expert for that purpose.
(g) In determining the Final Intra-Group Debt Amount, the definitions, principles, policies, procedures and methods and practices of accounting set out in Attachment IV shall be applied.
(h) All payments referred to in this Clause 6 shall be made in immediately available funds to the Vendors Account or, as the case may be, the Purchasers Account.
(i) The Vendor undertakes that it will identify to the Purchaser no later than the time of delivery of the Vendors notice referred to in Clause 6(d) above all items which are properly to be included in the Final Intra-Group Debt Amount.
7. WILTON LDPE PROJECT
The provisions of Schedule 10 shall apply in relation to the LDPE Project.
11
8. CONDUCT OF BUSINESS BEFORE COMPLETION
(a) Subject to sub-clause (b), between the date of this Agreement and Completion the Vendor shall procure that the Company shall not undertake any act or course of conduct (including in relation to operating the Acquired Business) which is outside the ordinary course of business. Subject to sub-clause (b), in particular (but without prejudice to the generality of the foregoing) the Vendor shall procure that the acts or matters specified in sub-clause (c) do not occur in relation to the Company without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed).
(b) Sub-clause 8(a) shall not operate so as to restrict or prevent:
(i) any matter reasonably undertaken in response to events beyond the control of any member of the Vendors Group or the Company, or within the control of the Vendors Group or the Company but which requires urgent or immediate response, in each case with the intention of minimising any adverse effect of such events;
(ii) the completion or performance of any obligations undertaken pursuant to any contract or arrangement entered into prior to the date of this Agreement (unless such contract or arrangement was entered into in contemplation of this Agreement and in order to avoid restrictions that would otherwise apply under this Clause), including, without limitation, the performance of any obligations in relation to joint purchasing arrangements as they have been carried on in the twelve months prior to the date of this Agreement;
(iii) any matter undertaken at the written request of the Purchaser;
(iv) any action or omission which any member of the Vendors Group or the Company is required to take or omit to take by any applicable law or regulation;
(v) any disposal of stocks, obsolete assets or redundant assets, or any disposal of cash, in each case as part of the ordinary running of the Acquired Business;
(vi) any matters that are contemplated by Schedule 11 (Pre-Sale Reorganisation);
(vii) the issue of shares by the Company to the Vendor in connection with the capitalisation of intra-group debt owed by the Company to any member of the Vendors Group; or
(viii) any actions, including the making of appropriate accounting entries, by the Company that are reasonably necessary for it to withdraw from the accounts receivable securitisation program that is operated by J P Morgan on behalf of the Vendors Group prior to Completion.
(c) The acts and matters referred to in sub-clause (a) are as follows:
(i) any advancement of turnaround or any voluntary unscheduled shutdown of any primary operating units (but not voluntary shutdowns of other units), in each case which is outside the ordinary course of business;
12
(ii) any acquisition or disposal of, or of any rights in, any material asset including but not limited to by sale, lease, surrender, abandonment, exchange, gift or licence;
(iii) any declaration, authorisation, making or payment of a dividend whether in cash or in specie or dividend in kind or any reduction of capital;
(iv) any creation, allotment or issue or any grant of any option over or other right to subscribe or purchase, or any redemption or purchase of, any share or loan capital or securities of the Company or securities convertible into any of the foregoing;
(v) the entry by the Company into any material transaction or any agreement with any member of the Vendors Group excluding transactions entered into on the same or substantially equivalent terms as existing arrangements;
(vi) any creation or grant of any option, right to acquire, mortgage, charge, pledge, lien on, over or affecting the Shares and/or (other than a Permitted Encumbrance) the whole or any substantial part of the assets of the Company;
(vii) the making of any loan by the Company (other than the granting of trade credit in the ordinary course of the Acquired Business or other loans in the ordinary course of the Acquired Business) to any person (other than arms length loans to a member of the Vendors Group, any of the Companys employees or any other employees of any member of the Vendors Group from time to time) and the entry into any other agreement which would require any amount to be recognised as a constituent of the Final Third Party Debt Amount at Completion;
(viii) any material amendment to the memorandum or articles of association of the Company;
(ix) any material change to the accounting practices or policies of the Company except where required by applicable accounting practices or principles coming into force, or in respect of financial periods ending, after the date of Completion;
(x) the acquisition of any body corporate or business or the entering into of any partnership or joint venture arrangement;
(xi) the entry into any material lease of Immovable Property except (a) in the ordinary course of the Acquired Business or (b) for renewals of existing leases on substantially similar terms;
(xii) the entry into any contract or commitment otherwise than in the ordinary course of business which is material, or which is of an unusual or abnormal nature, or which is material to the operation of the Acquired Business and is not expected to be fully performed within 24 months of such contract or commitment being entered into;
(xiii) the issue, sale, purchase, redemption or repurchase by the Company of any equity securities of the Company, excluding the issue of shares by the Company to the
13
Vendor in relation to the capitalisation of intra-group debt owed by the Company to members of the Vendors Group;
(xiv) the granting of any guarantees or indemnities by the Company, otherwise than in the ordinary course of the Acquired Business;
(xv) the settlement or compromise of any litigation or arbitration with a value of over 100,000;
(xvi) the entering into of any litigation, arbitration, mediation or similar formal dispute procedure (except debt recovery in the ordinary course, and save in circumstances where it is reasonable to do so in order to prevent a claim or potential claim becoming time-barred or in circumstances where it is reasonable to seek injunctive relief on an urgent basis);
(xvii) except in accordance with Clause 14 and Schedule 8, the termination of the employment (except for cause) or the material variation to the terms of employment (other than variations that are consistent with group-wide variations applying across the Vendors Group) of any employee whose base annual salary exceeds 50,000;
(xviii) except in accordance with Clause 14 and Schedule 8 or to fill a vacancy either existing at the time of this Agreement or created by the departure of an employee of the Company after the date of this Agreement, the employment of (a) any new employee with a base annual salary over 40,000, (b) any individual who, immediately prior to being employed by the Company, was employed by another member of the Vendors Group, or (c) any new employee who is to be solely or principally involved on the LDPE Project where such employment is not contemplated by the plan to be agreed by the Vendor and Purchaser relating to the LDPE Project;
(xix) the acts and matters referred to in paragraph 2(B) of Schedule 5 (Pensions);
(xx) cancellation of or any change to the terms of, or the doing (or failure to do) anything likely to result in the avoidance of, any insurance cover for the benefit of the Company or its assets;
(xxi) the entry into capital commitments (excluding capital commitments in relation to the LDPE Project) between the date of this Agreement and Completion of an aggregate amount in excess of $5,000,000;
(xxii) the entry into any agreement or the voluntary assumption of any legal obligation to do any of the acts and matters specified in this sub-clause 8(c);
(xxiii) the material variation of any agreement or transaction which the Company would by virtue of this sub-clause 8(c) have been prevented from entering into; and
(xxiv) the adoption or variation of any material employee bonus or incentive scheme (including performance targets).
14
(d) From the date hereof until the Completion Date, the Vendor will give, and will cause the Company to give, the Purchaser and its representatives such reasonable information in respect of the Company as the Purchaser may reasonably request and notice of any matter coming to the knowledge of Sam Scruggs, Jim Moore, Michael Maughan, Mahomed Maiter, John ONeill, Paul Booth, Michael Ducker or Ronald Grant after the date of this Agreement which the relevant individual is aware or ought reasonably to have been aware constitutes a breach of this Clause 8 or any of the Warranties. The Vendor undertakes that immediately prior to Completion the individuals listed in Schedule 1 in the definition of so far as the Vendor is aware will be consulted by one or more of the individuals named in the preceding sentence of this paragraph in order to determine whether a notification is required under this sub-clause in relation to a breach of this Clause 8 or any of the Warranties.
(e) Subject to sub-clause (b), between the date of this Agreement and Completion, the Vendor will comply with, and procure that the Company complies with, the conduct of business provisions contained in paragraph 1 of Schedule 10 (Wilton LDPE Project).
Home
Intelligence
Services