THIS AGREEMENT is made on 8 May 2002

3. By an agreement dated as of the date hereof, Seller has agreed to sell, and CTS UK has agreed to purchase, the legal and beneficial interest in the entire issued share capital of Gaelta (as hereinafter defined), subject to the terms of such agreement.

4. In consideration of the Seller agreeing to sell the Shares to the Buyer, CTS UK has agreed to the variation of certain obligations and liabilities of the Seller and CTS UK in respect of the UK Agreement (as hereinafter defined) as more particularly set out below.

1. INTERPRETATION

   1. The following words and expressions shall, unless the context otherwise requires, have the following meanings:

      "ACCI" means Applied Clinical Concepts, Inc., a North Carolina corporation;

      "Accounts" means the unaudited financial statements comprising a balance sheet, profit and loss account, cash flow statement and notes thereto prepared in accordance with applicable standards, accounting principles and practices generally accepted in the United Kingdom for each of the Companies for the financial period commencing on the day following the Accounts Date and ending on the Completion Date;

      "Accounts Date" means 30 September 2001;

      "Aggregated Net Asset Value" has the meaning attributed to it clause 5.9 hereof;

      "Agreed Form" means, in relation to a document, in the form agreed between the parties on or prior to the date hereof and for the purposes of identification signed on their behalf;

      "Agreed Net Asset Value" means the sum of L39.9 million sterling;

      "Agreed Rate" means 2 per cent. above the base rate from time to time of National Westminster Bank plc;

      "associated company" has the meaning given to it in sections 416 at seq. TA;

      "Bank Facility Letter" means the letter to be dated 8 May 2002 between, inter alia, CTS UK and Northern Bank Limited;

      "business day" means a day (other than a Saturday or Sunday) when banks are open for business in Belfast;

      "Buyer's Account" means the account in the name of the Buyer, account number and sort code to be provided to the Seller prior to Completion at Northern Bank Limited in Portadown;

      "Buyer's Accountants" means PricewaterhouseCoopers of Waterfront Plaza, 8 Laganbank Road, Belfast BT1 3LR;

      "Buyer's Group" means the Buyer and the subsidiary undertakings and associated companies, all of them and each of them as the context admits which shall, for the avoidance of doubt, include CTS UK;

      "Buyer's Solicitors" means L'Estrange and Brett Solicitors, Arnott House, 12-16 Bridge Street, Belfast BT1 1LS;

      "Cash" means the aggregate amount of cash held by the Group as at the close of business on the Completion Date, as set out in the Statement and calculated in accordance with clause 5 and on the basis of the accounting policies and procedures set out in schedule 2B;

      "Circular" means the explanatory circular to be despatched by the Seller to its shareholders pursuant to the Listing Rules seeking their approval to the transaction contemplated in this agreement;

      "Code" means the U.S. Internal Revenue Code of 1986, as amended;

      "Companies" means Galen Inc., ACCI and CTS Delaware and "Company" means any one of them;

      "Completion" means the completion of the sale and purchase of the Shares in accordance with clause 3;

      "Completion Accounts" means the consolidated balance sheet of the Companies as at the Completion Date and the consolidated profit and loss account of the Companies for the period from the day following the Accounts Date to the close of business on the Completion Date, prepared in accordance with clause 5 in the format as set out in schedule 2A and on the basis of the accounting policies and procedures set out in schedule 2B, and as derived from the Accounts of the Companies for the period ended on the Completion Date;

      "Completion Date" means the date on which Completion occurs;

      "Computer Software Agreement" means the agreement between the Seller and CTS Analytical to be entered into prior to Completion in the Agreed Form relating to certain computer software used by the Companies in the CTS Business;

      "Conditions" means the conditions set out in clause 3.1;

      "connected person" means a person who is connected with another for the purpose of section 839 of the TA;

      "Confidential Information" means, in relation to the obligations of the Seller, all information relating to the CTS Business or the Buyer's Group, or financial or other affairs (including future plans and targets of any Company or the Buyer's Group) which is of a confidential nature and not in the public domain (including but not limited to Know-How) and in relation to the obligations of the Buyer, all information relating to any business of the Seller's Group, or financial or other affairs (including future plans and targets of any member of the Seller's Group) which is of a confidential nature and is not in the public domain;

      "Consideration" has the meaning given to it in clause 2.3 of this agreement;

      "CTS Analytical" means CTS Analytical Limited, formerly named Galen Limited, (No. NI007005) whose registered office is at Unit 22, Seagoe Industrial Estate, Craigavon, Co. Armagh, Northern Ireland, BT6 5UA;

      "CTS Delaware" means Clinical Trial Services, Inc., a Delaware corporation;

      "CTS Business" means the clinical trial services business of the Seller's Group including but not limited to the granulation and over-encapsulation of active tablets; the manufacture of placebo tablets and capsules; the construction of placebo and blinded comparator medical devices; verification of the integrity of over-encapsulated products; pack design and packaging; tooling and tool design fabrication; label generation; labelling and compilation; drug accountability and destruction; analytical services including but not limited to dissolution and stability testing and distribution and related logistics services insofar as any or all of the same are carried out solely in connection with such clinical trial services business as carried on by the Seller's Group from its sites in Craigavon, Co. Armagh, Audubon, Pennsylvania and Durham, North Carolina as at the date of this agreement, excluding the ICTI Business;

      "Debt" means the aggregate amount of indebtedness of each of the Companies including indebtedness for borrowed monies and for finance leases, credit facilities, whether from banks or similar institutions (excluding (a) any such indebtedness owing between members of the Group, (b) Intra-Group Payables and (c) debts arising in the ordinary course of business) as at the close of business on the Completion Date, as set out in the Statement and calculated in accordance with clause 5 and on the basis of the accounting policies and procedures set out in schedule 2B;

      "Disclosure Letter" means an Agreed Form letter of today's date together with the attachments thereto addressed by the Seller to the Buyer disclosing exceptions to the Warranties in the Agreed Form;

      "Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien, trust, right of set off or other third party right or interest (legal or equitable) including any right of pre-emption, assignment by way of security, reservation of title or any other security interest of any kind however created or arising;

      "Environment" means any and all of the following media namely the air, water and land (including any sub-soil) and any living organisms or systems supported by those media;

      "Environmental Laws" means all treaties, laws (including the common law), rules, regulations, orders, decrees, judgments or injunctions issued, promulgated or entered into by any Governmental Authority which relate to the Environment, the preservation or reclamation of natural resources, or human health and safety or the Environment as affected by exposure to Hazardous Substances which are applicable in each case to the CTS Business and/or the Companies;

      "Environmental Matters" means the Release of Hazardous Substances and the creation of any noise, vibration, radiation, common law or statutory nuisance or other adverse impact on the Environment and any other matters in relation to the Properties and the business of the Companies which are related to pollution or protection of the Environment;

      "ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as amended;

      "Estimated Cash" means the amount of Cash estimated by the Seller pursuant to clause 2.4;

      "Estimated Debt" means the amount of Debt estimated by the Seller pursuant to clause 2.4;

      "Estimated Intra-Group Indebtedness" means the net total of the Estimated Intra-Group Payables and Estimated Intra-Group Receivables (calculated on the basis that the Intra-Group Payables balances shall be treated as being negative and the Intra-Group Receivables shall be treated as positive) which shall be Estimated Intra-Group Payables of at least twenty million pounds sterling (L20,000,000);

      "Estimated Intra-Group Payables" means the amount of Intra-Group Payables estimated by the Seller pursuant to clause 2.4;

      
       

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