EXHIBIT 10.8
Dated 1998
IMPERIAL CHEMICAL INDUSTRIES PLC
and
N L INDUSTRIES, INC.
AMERICAS LIABILITY AGREEMENT
LINKLATERS & PAINES
One Xxxx Xxxxxx
Xxxxxx XX0X 0XX
Ref: XXX
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 Xxxxxxxx
Xxxxx, 0 Xxxxxxxx, Xxxxxx, XX0X 0XX ("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 00000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 XXX (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 Xxxxxxxx Xxxxx
0 Xxxxxxxx
Xxxxxx XX0X 0XX
Fax: (00) 000 000 0000
7.4 if to be served on the Purchaser:
General Counsel
NL Industries, Inc
00000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000, XXX
Fax: (0) 000 000 0000
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 Xxxxxxx Xxxxx (Ref 534) of Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxx,
Xxxxxx, XX0X 0XX 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.
