Exhibit 99.3
Dated 1997
XXXXXXX XXXXX XXXXXX (1)
ASPECT VISION HOLDINGS LIMITED (2)
AND
THE XXXXXX COMPANIES, INC. (3)
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EARN OUT AGREEMENT
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XXXXXXX XXXXXXX
XXXXX XXXXX
000 XXXXXXXXXX XXXXXX
XXXXXX XX0X 0XX
T x00(0)000 000 0000
F x00(0)000 000 0000
THIS AGREEMENT is made the day of November 1997
BETWEEN:-
(1) XXXXXXX XXXXX XXXXXX of Xxxxxx Xxx, Xxx Xxxxxxx, Xxxxxxx Xxxxxxx, XX00 0XX
("Xx. Xxxxxx");
(2) ASPECT VISION HOLDINGS LIMITED (registered in England with number 3448379)
whose registered office is at Xxxxx Xxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx
XX0X 0XX ("AVH"); and
(3) THE XXXXXX COMPANIES, INC. a company incorporated in Delaware whose
principal office is at 0000 Xxxxxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX
00000, XXX ("TCC").
WHEREAS:
(A) Immediately prior to the exchange and execution of this Agreement:
- TCC was the beneficial owner of all the fully paid ordinary shares of
10p each in the capital of AVH;
- AVH had undertaken to Xx. Xxxxxx to issue to him a loan note as part
of the consideration for the sale of his shares in Contact Lens
Technologies Limited and New Focus Health Care Limited entitling him
to participate in an earn out payment by AVH, the terms of the
instrument which will constitute the loan note are set out in EXHIBIT
1 to this Agreement;
- AVH intends to adopt an unapproved share option scheme, the rules of
which are attached as EXHIBIT 2 to this Agreement;
- AVH intends to grant options over authorised but unissued ordinary
shares in the capital of AVH to those persons (other than Xx. Xxxxxx)
listed in SCHEDULE 1.
(B) AVH may grant options pursuant to the rules of the share option scheme
referred to in (A) above to additional persons after the date hereof.
(C) The rules of the said share option scheme provide that on the grant of
options pursuant to the said scheme the person accepting such a grant shall
enter into a deed of adherence in the form set out in EXHIBIT 3 to this
Agreement.
(D) Xx. Xxxxxx and TCC are entering into this Agreement to define their
relationship with one another regarding the future management of AVH, to
agree the means of calculating the principal amount of the loan note
referred to above and to set out the terms of options relating to holdings
of shares in AVH which will result from the exercise of options granted
pursuant to the share option scheme referred to above.
WHEREBY IT IS AGREED as follows:
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1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following words and expressions have the meaning set
opposite them:
"ACCOUNTING STANDARDS": statements of standard accounting practice
(including financial reporting standards)
issued pursuant to section 256, CA 85 by the
ASB;
"A DIRECTORS": from time to time those Directors appointed
by TCC;
"AFFILIATES": in relation to any body corporate, any
holding company or subsidiary undertaking of
such body corporate or any subsidiary
undertaking of a holding company of such body
corporate;
"AGREEMENT": this agreement including its recitals and the
schedules hereto;
"ARTICLES": the articles of association of AVH;
"ASB": Accounting Standards Board Limited
(registered number 2526824) or such other
body prescribed by the Secretary of State
from time to time pursuant to Section 256,
CA 85;
"AVH'S ACCOUNTANTS": KPMG of 0 Xxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"B DIRECTORS": from time to time those Directors appointed
by Xx. Xxxxxx;
"BALANCE SHEET DATE": 31 October;
"BOARD": the board of Directors of AVH;
"BUSINESS DAY": a week day (other than a Saturday) when banks
are open for business in London;
"CA85": Companies Xxx 0000;
"CALL OPTIONS": the call options over the Remaining Shares
granted by each of the Optionholders to TCC
pursuant to CLAUSE 2.1;
"COMPLETION": the performance by the parties of all their
obligations under CLAUSE 2.7 in respect of
the First Tranche and the Second Tranche;
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"CONFIDENTIAL INFORMATION": all information supplied by or on behalf of a
party in the negotiations leading to, this
Agreement and which relates to;
(a) the provisions of this Agreement;
(b) the negotiations relating to this
Agreement;
(c) TCC;
"XXXXXX VISION": Xxxxxx Vision Inc, a wholly owned subsidiary
of TCC;
"CLT": Contact Lens Technologies Limited;
"DEED OF ADHERENCE": the deed of adherence set out in EXHIBIT 3 to
this Agreement which is referred to in
recital (C) above the effect of which is to
extend to those Managers who are not parties
to this Agreement, the rights and obligations
of the Managers which are described in this
Agreement;
"DIRECTORS": the directors of AVH from time to time;
"EOLN": the loan note for the Principal Amount
calculated in accordance with SCHEDULE 3 to
be issued by AVH to Xx. Xxxxxx which will be
constituted by the instrument, the terms of
which are set out in EXHIBIT 1, which loan
note will represent part of the consideration
payable by AVH in respect of the purchase of
Xx. Xxxxxx'x holdings of shares in CLT and
NFHC;
"EXERCISE NOTICE": a notice served upon the Optionholders (or
any of them) by TCC exercising a Call Option
and/or a notice served upon TCC by any of the
Optionholders exercising a Put Option
(whether in respect of the First Tranche or
the Second Tranche, as the case may be);
"FINANCIAL YEAR": each accounting reference period of AVH and
the Subsidiaries which will end on 31 October
in each year subject to any longer or shorter
period determined by the Board;
"FIRST CALL OPTION PERIOD" the period commencing on 1 May 2001 and
terminating on 31 October 2001;
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"FIRST PUT OPTION PERIOD": the period commencing on 1 December 2000 and
terminating on 30 April 2001;
"FIRST OPTION PRICE": the price per Remaining Share comprised in
the First Tranche calculated pursuant to
SCHEDULE 3;
"FIRST TRANCHE": half of the total number of Remaining Shares
held by the Optionholders;
"GROUP": AVH and its subsidiaries;
"LEVEL 1/LEVEL 2 EMPLOYEES": those employees of the Group who hold senior
positions;
"MANAGERS": Xx. Xxxxxx and the Optionholders;
"MANAGERS' ACCOUNTANTS": any accountants appointed by Xx. Xxxxxx to
act as such from time to time;
"MANAGERS' SOLICITORS": Xxxxxxx Xxxxx Xxxxxxxxxxx of 00 Xxxx Xxxx,
Xxxxxx XX0X 0XX;
"NFHC": New Focus Health Care Limited;
"OPTION ACCOUNTS": the consolidated accounts of the Group
referred to in CLAUSE 3, prepared in
accordance with SCHEDULE 2;
"OPTIONHOLDERS": those persons who, as at today's date, hold
options to subscribe for shares in the
capital of AVH pursuant to the Scheme and
whose names are set out in SCHEDULE 1 and
such other persons who from time to time
participate in the Scheme;
"OPTION PRICES": the First Option Price and the Second Option
Price;
"PRINCIPAL AMOUNT": the principal amount of the EOLN calculated
pursuant to SCHEDULE 3;
"PROCEEDINGS": any proceedings, suit or action arising out
of or in connection with this Agreement;
"PUT OPTIONS": the put options over the Remaining Shares
granted by TCC to each of the Optionholders
pursuant to CLAUSE 2.1;
"REMAINING SHARES": up to 4,500 ordinary shares of 10p each in
the share capital of AVH which result from
the exercise of options granted under the
terms of the Scheme;
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"SCHEME": the unapproved share option scheme adopted by
AVH, the rules of which are attached as
EXHIBIT 2 to this Agreement;
"SECOND CALL OPTION PERIOD": the period commencing on 1 May 2002 and
terminating on 31 October 2002;
"SECOND PUT OPTION PERIOD": the period commencing on 1 December 2001 and
terminating on 30 April 2002;
"SECOND OPTION PRICE": the price per Remaining Share comprised in
the Second Tranche calculated pursuant to
SCHEDULE 3;
"SECOND TRANCHE": half of the total number of Remaining Shares
held by the Optionholders;
"SUBSIDIARIES": those companies which are subsidiaries of AVH
following completion of the Purchase
Agreements as the same are defined in the
Umbrella Agreement;
"UMBRELLA AGREEMENT": the agreement of the date hereof made between
Xx. Xxxxxx, AVH and TCC relating to the sale
and purchase of shares in AVC and other
companies.
1.2 The table of contents and headings in this Agreement are inserted for
convenience only and shall not affect its construction.
1.3 Unless the context otherwise requires words denoting the singular shall
include the plural and vice versa, references to any gender shall include
all other genders and references to persons shall include bodies corporate,
unincorporated associations and partnerships in each case whether or not
having a separate legal personality. References to the word "include" or
"including" are to be construed without limitation.
1.4 References to recitals, schedules and clauses are to recitals and schedules
to and clauses of this Agreement unless otherwise specified and references
within a schedule to paragraphs are to paragraphs of that schedule unless
otherwise specified.
1.5 References in this Agreement to any statute, statutory provision or EC
Directive include a reference to that statute, statutory provision or EC
Directive as amended, extended, consolidated or replaced from time to time
(whether before or after the date of this Agreement) and include any order,
regulation, instrument or other subordinate legislation made under the
relevant statute, statutory provision or EC Directive.
1.6 Words and expressions defined in the Umbrella Agreement shall, to the
extent not inconsistent, bear the same meanings in this Agreement.
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1.7 References to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any
legal concept or thing shall in respect of any jurisdiction other than
England be deemed to include that which most approximates in that
jurisdiction to the English legal term.
1.8 Any reference to "writing" or "written" includes faxes and any
non-transitory form of visible reproduction of words.
1.9 It is intended that the rights and obligations of Managers which are
described in this Agreement shall apply to those Managers who are not
parties to this Agreement by their entering into a Deed of Adherence with
the parties to this Agreement as envisaged in CLAUSE 19.
1.10 References to times of the day are to London time and references to a day
are to a period of 24 hours running from midnight to midnight.
2. GRANT OF OPTIONS
2.1 TCC grants to each of the Optionholders an option exerciseable in respect
of the First Tranche during the First Put Option Period and in respect of
the Second Tranche during the Second Put Option Period to require TCC to
purchase the Remaining Shares ("Put Options") and each of the Optionholders
grants to TCC an option exerciseable in respect of the First Tranche during
the First Call Option Period and in respect of the Second Tranche during
the Second Call Option Period to require the Optionholders to sell to TCC
the Remaining Shares respectively held by them ("Call Options"), such
Options to be exercised in respect of the First Tranche at the First Option
Price and in respect of the Second Tranche at the Second Option Price.
2.2 The Options shall only be exerciseable as regards the First Tranche and the
Second Tranche in respect of all of the holdings of shares of the
Optionholders in the respective tranches and shall not be capable of being
exercised in respect of part of those holdings.
2.3 The completion of the exercise of either a Put Option or a Call Option in
respect of the First Tranche or the Second Tranche (as the case may be)
shall determine all rights in connection with the other in respect of that
Tranche.
2.4 The Put Options shall be exerciseable by the relevant Optionholders serving
upon TCC an Exercise Notice which shall thereupon become binding upon TCC
in respect of that Optionholders' Remaining Shares comprised in the First
Tranche or the Second Tranche (as the case may be).
2.5 The Call Options shall be exerciseable by TCC serving upon the
Optionholders or any of them an Exercise Notice which shall thereupon
become binding upon the Optionholder concerned in respect of that
Optionholders' Remaining Shares comprised in the First Tranche or the
Second Tranche (as the case may be).
2.6 An Exercise Notice when served (whether upon TCC or any of the
Optionholders) shall be irrevocable.
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2.7 Completion shall be held within 3 Business Days of the end of the relevant
period at the registered office of AVH. At Completion the Optionholders in
receipt of an Exercise Notice in respect of a Call Option and the Managers
who have served an Exercise Notice in respect of a Put Option shall deliver
to TCC definitive share certificates for the Remaining Shares the subject
of the Call Option or the Put Option (as the case may be) together with
duly executed transfers of shares in favour of TCC (or as it may direct)
and TCC shall pay to the Managers' Solicitors by telegraphic transfer the
aggregate of the consideration (calculated at the First Option Price or the
Second Option Price, as the case may be) payable in respect of such of
those Remaining Shares comprised in the First Tranche or the Second Tranche
(as the case may be) as have been the subject of an Exercise Notice. The
receipt by the Managers' Solicitors shall be binding upon each of the
Optionholders and TCC shall not be concerned with the distribution of such
consideration amongst the Optionholders (or any of them).
2.8 If any Optionholder shall fail to deliver duly executed transfers of the
Remaining Shares the subject of an Exercise Notice at Completion (whether
in respect of the First Tranche or the Second Tranche) and certificates of
title thereto such Optionholder hereby irrevocably authorises and appoints
TCC (acting by any director of TCC or any person duly authorised by the
directors of TCC) as his attorney to execute on his behalf any such
transfer of Remaining Shares and any indemnity for any documents of title
not so delivered.
3. OPTION ACCOUNTS
3.1 Preparation of Option Accounts
3.1.1 Forthwith after approval by AVH of its statutory consolidated
accounts for the Balance Sheet Date in each of the years ending 31
October 1998, 1999 and 2000, TCC shall procure that Option Accounts
are prepared for the Group for the relevant year. TCC shall procure
that the Option Accounts are submitted to the Managers for review
within 60 days after the end of the financial year. TCC may involve
AVH's Accountants in the preparation of the Option Accounts and the
Managers may require the Managers' Accountants to review the same.
TCC shall pay the charges of AVH's Accountants and the Managers shall
pay the charges of the Managers' Accountants.
3.1.2 If TCC shall fail to procure the preparation of Option Accounts in
accordance with CLAUSE 3.1.1 the Managers may procure the same at
TCC's expense.
3.1.3 The Option Accounts shall comprise the statutory consolidated
accounts of AVH for the financial years ending on the Balance Sheet
Date in each of 1998, 1999 and 2000 adjusted in accordance with the
provisions of SCHEDULE 2.
3.1.4 Unless within 21 days (or such longer period or shall be agreed
between Xx. Xxxxxx on behalf of the Managers and TCC) after receipt
of the version of the Option Accounts pursuant to CLAUSE 3.1.1 Xx
Xxxxxx on behalf of the Managers notifies TCC in writing of any
disagreement or
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difference of opinion relating to the Option Accounts, the parties
shall be deemed to have accepted such accounts as accurate.
3.1.5 If within the period of 21 days referred to in CLAUSE 3.1.4 or such
longer period as shall have been agreed Xx Xxxxxx on behalf of the
Managers notifies TCC of any disagreement or difference of opinion
relating to the Option Accounts ("Notice of Disagreement") and if
they are able to resolve such disagreement or difference of opinion
within 21 days of the Notice of Disagreement (or such longer period
as shall be agreed between Xx. Xxxxxx on behalf of the Managers and
TCC), the parties shall be deemed to have accepted the Option
Accounts as accurate.
3.1.6 If TCC and Xx Xxxxxx on behalf of the Managers is unable to reach
agreement within 21 days of the Notice of Disagreement or such longer
period as shall have been agreed, the matter in dispute shall be
referred to the decision of an independent chartered accountant (the
"Independent Accountant") to be appointed (in default of a nomination
by agreement between TCC and Xx Xxxxxx on behalf of the Managers) by
the President for the time being of the Institute of Chartered
Accountants in England and Wales.
3.1.7 The Independent Accountant shall act as an expert and not as
arbitrator, the Arbitration Acts 1950 and 1979 shall not apply and
his decision on the matter in dispute shall (in the absence of
manifest error) be final and binding on TCC and the Managers. The
costs of the Independent Accountant shall be apportioned between TCC
and the Managers as the Independent Accountant shall decide but each
party shall be responsible for its own costs for presenting its case
to the Independent Accountants.
3.1.8 TCC shall and shall procure that AVH's Accountants (if they have been
involved) shall give the Managers and the Managers' Accountants
unrestricted access to all working papers (with the right to take
copies) during the planning, execution and finalisation of the Option
Accounts and TCC agrees that the Managers' Accountants shall be at
liberty to disclose to the Managers any information and copies of any
documents which they receive by virtue of this clause.
4. PRINCIPAL AMOUNT AND OPTION PRICES
4.1 Within 3 Business Days of the agreement or determination of the Option
Accounts for the financial year ending on the Balance Sheet Date in 2000
TCC shall notify the Managers of the Principal Amount and the Option
Prices. Unless within 7 Business Days after receipt of such notification Xx
Xxxxxx on behalf of the Managers notifies TCC in writing of any
disagreement or difference of opinion relating to the Principal Amount and
the Option Prices the parties shall be deemed to have accepted them.
4.2 If within the period of 7 Business Days referred to in CLAUSE 4.1 the
Managers notify TCC of any disagreement or difference of opinion relating
to the Principal Amount and the Option Prices ("Notice of Price
Disagreement") and if TCC and Xx Xxxxxx on behalf of the Managers are able
to resolve such disagreement or difference of
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opinion within 7 Business Days of the Notice of Price Disagreement, the
parties shall be deemed to have accepted the Principal Amount and the
Option Prices.
4.3 If TCC and Xx Xxxxxx on behalf of the Managers are unable to reach
agreement within 7 Business Days of the Notice of Price Disagreement, the
matter in dispute shall be referred to the decision of an independent
chartered accountant to be appointed in the same manner and upon the same
terms as the Independent Accountant referred to in CLAUSES 3.1.6 and 3.1.7.
4.4 On or prior to the expiry of the period of seven Business Days from the
date of the determination of the Principal Amount of the EOLN and the
Option Prices AVH will enter into the instrument constituting the EOLN and
issue the EOLN for the Principal Amount on the basis that the payment date
for the Principal Amount pursuant to the terms of the EOLN is such date as
is 6 months and 2 days after the date of issue of the EOLN.
5. DECISIONS BY THE BOARD
5.1 Subject as provided in CLAUSE 5.2 below and save as required by law, all
decisions concerning AVH and any Subsidiary shall be taken by the Board. A
simple majority of the Directors, which majority must include at least one
A Director and one B Director, shall be required in respect of any decision
by the Board to undertake any of the following:
5.1.1 any decision to issue, sell, pledge, dispose of or create any
encumbrance over any of the shares in AVH or any of the Subsidiaries;
5.1.2 any split, combination or reclassification of the shares of any of
AVH or the Subsidiaries;
5.1.3 any declaration or payment of any dividend or distribution by AVH;
5.1.4 the redemption, purchase or other acquisition by AVH or any of the
Subsidiaries of any of their respective shares;
5.1.5 the transfer by any Subsidiary of any shares, assets or liabilities
of any Subsidiary to any other Subsidiary except that this shall not
prohibit the conduct of business between Subsidiaries pursuant to
agreements currently in force at the date hereof;
5.1.6 the sale, pledge, disposition or creation of any encumbrance over any
material asset of AVH or any of the Subsidiaries;
5.1.7 any amendment or proposal to amend the memorandum or articles of
association of AVH or any of the Subsidiaries;
5.1.8 the adoption by AVH or any of the Subsidiaries of a plan of
liquidation or the passing of any resolutions providing for the
liquidation, dissolution, merger, consolidation or other
reorganisation of AVH or the Subsidiaries;
5.1.9 the acquisition by AVH or any of the Subsidiaries of any corporation,
partnership or other business organisation or division thereof or any
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material investment by AVH or any of the Subsidiaries in any other
individual or entity;
5.1.10 the release or relinquishment by AVH or any of the Subsidiaries of
any material contractual rights;
5.1.11 engaging in any activities or entering into any agreements not
related to the contact lens business; and
5.1.12 the offer of employment to, or dismissal of, a Level 1/Level 2
employee by AVH or any of the Subsidiaries save for the prospective
offers to be made pursuant to the business plan in existence at the
date hereof.
EXCEPT THAT the consent of one B Director shall not be required for the
payment to AVH of dividends from any of the Subsidiaries nor the payment of
dividends or interest by AVH to TCC provided that any such payment by AVH
has been made pursuant to professional written advice received by TCC
and/or AVH and a copy of such advice has been previously submitted to Xx.
Xxxxxx and provided that the effect of any such payment by AVH shall be
excluded for the purpose of preparing the Option Accounts.
5.2 In the event that either the annual sales or the net income of AVH and the
Subsidiaries, calculated in accordance with the provisions of SCHEDULE 2
below, falls below 70% of the targets set out in SCHEDULE 4, then TCC may
require the B Directors to resign as Directors but such persons as resign
as B Directors shall retain the right to attend and be heard at board
meetings as observers but not vote (without prejudice to any contracts of
employment they may have) and TCC may appoint further Directors with the
right to vote in their place.
6. DIRECTORS
6.1 The maximum number of Directors holding office at any time shall be five
unless otherwise agreed in writing by TCC and Xx Xxxxxx.
6.2 TCC shall be entitled to appoint three Directors and at any time to require
the removal or substitution of any Director so appointed. The Directors so
appointed shall be designated as A Directors.
6.3 Subject to CLAUSE 6.4 below, Xx. Xxxxxx shall be entitled for a period of
three years from the date hereof to appoint two Directors and at any time
to require the removal or substitution of any Director so appointed. The
Directors so appointed by Xx. Xxxxxx shall be designated as B Directors.
6.4 Xx. Xxxxxx may not exercise his right to appoint any B Director without
obtaining the prior written approval of TCC as regards the identity of the
Director proposed to be appointed.
6.5 By execution of this Agreement TCC hereby designates Messrs Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxx and, subject to a further notice being given to Xx. Xxxxxx,
Xxx Xxxxxxxxxx as A Directors.
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6.6 By execution of this Agreement Xx. Xxxxxx hereby appoints himself and Xx.
Xxxxxx Xxxxx as B Directors.
6.7 If TCC or Xx. Xxxxxx shall, pursuant to the Articles of Association of AVH,
determine the appointment of any Director, TCC or Xx. Xxxxxx (as the case
may be) shall indemnify AVH against any claim which may be made by such a
Director against AVH directly or indirectly arising from such
determination.
7. TRANSFERS OF SHARES
7.1 Save as is mentioned in CLAUSE 7.2 below, neither TCC nor any of the
Managers shall create or permit to subsist any pledge, lien or charge over,
or grant any option or other rights or dispose of any interest (whether
legal or equitable) in, any or all of the shares in the capital of AVH from
time to time held by them respectively and any person in whose favour any
such pledge, lien or charge is created or permitted to subsist or such
option or rights are granted or such interest is disposed of shall be
subject to and bound by the same limitations and provisions as embodied in
this Agreement.
7.2 CLAUSE 7.1 above shall not apply to:
7.2.1 the charge over shares in the capital of AVH entered into on the date
hereof by TCC in favour of Xx Xxxxxx as trustee for the Noteholders
(as the same are therein defined);
7.2.2 any transfer of shares in the capital of AVH from TCC to any
Affiliates of The Xxxxxx Companies, Inc.
PROVIDED THAT in the case of 7.2.2 the transferee previously agrees by deed
to be bound by the provisions of this agreement
8. ASSIGNMENT
8.1 No party may assign the benefit of this Agreement whether absolutely or by
way of security except in the case of an absolute assignment of all or part
by TCC to an Affiliate of TCC and provided and so long as it remains an
Affiliate (failing which the benefit of this Agreement shall no longer be
available to such assignee nor to any assignor) save that TCC may assign
such benefit absolutely or by way of security to a person other than an
Affiliate of AVH with the prior consent in writing of the Vendor such
consent not to be unreasonably withheld or delayed and any purported
assignment in contravention of this clause shall be ineffective.
8.2 Subject to CLAUSE 8.1, this Agreement shall be binding upon and ensure for
the benefit of the personal representatives and assigns and successors in
title of each of the parties.
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9. WAIVER, VARIATION AND RELEASE
9.1 No omission to exercise or delay in exercising on the part of any party to
this Agreement any right, power or remedy provided by law or under this
Agreement shall constitute a waiver of such right, power or remedy or any
other right, power or remedy or impair such right, power or remedy. No
single or partial exercise of any such right, power or remedy shall
preclude or impair any other or further exercise thereof or the exercise of
any other right, power or remedy provided by law or under this Agreement.
9.2 Any waiver of any right, power or remedy under this Agreement must be in
writing and may be given subject to any conditions thought fit by the
grantor. Unless otherwise expressly stated any waiver shall be effective
only in the instance and only for the purpose for which it is given.
9.3 No variation to this Agreement shall be of any effect unless it is agreed
in writing and signed by or on behalf of each party.
10. COSTS AND EXPENSE
Save as otherwise stated in this Agreement, each party shall pay its own
costs and expenses in relation to the negotiation, preparation, execution
and carrying into effect of this Agreement and other agreements forming
part of the transaction.
11. NOTICES
11.1 Any communication to be given in connection with the matters contemplated
by this Agreement shall except where expressly provided otherwise be in
writing and shall either be delivered by hand or sent by first class
pre-paid post or sent by air mail. Delivery by courier shall be regarded as
delivery by hand.
11.2 Such communication shall be sent to the address of the relevant party
referred to in this Agreement or to such other address as may previously
have been communicated to the other parties in accordance with this clause.
Each communication shall be marked for the attention of the relevant
person.
11.3 A communication shall be deemed to have been served:-
11.3.1 if delivered by hand at the address referred to in CLAUSE 11.2, at
the time of delivery;
11.3.2 if sent by first class pre-paid post to the address referred to in
CLAUSE 11.2, at the expiration of two clear days after the time of
posting; and
11.3.3 if sent by air mail to the address referred to in CLAUSE 11.2, at
the expiration of five clear days after posting.
If a communication would otherwise be deemed to have been delivered outside
of normal business hours (being 9:30 a.m. to 5:30 p.m. on a Business Day)
in the time zone of the territory of the recipient under the preceding
provisions of this clause,
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it shall be deemed to have been delivered at the opening of business on the
next Business Day.
11.4 In proving service of the communication, it shall be sufficient to show
that delivery by hand was made or that the envelope containing the
communication was properly addressed and posted as a first class pre-paid
letter or air mail letter.
11.5 A party may notify the other parties to this Agreement of a change to its
name, relevant person, address or facsimile number for the purposes of
CLAUSE 11.1 PROVIDED THAT such notification shall only be effective on:-
11.5.1 the date specified in the notification as the date on which the
change is to take place; or
11.5.2 if no date is specified or the date specified is less than five
clear Business Days after the date on which notice is deemed to have
been served, the date falling five clear Business Days after notice
of any such change is deemed to have been given.
12. COUNTERPARTS
12.1 This Agreement may be executed in any number of counterparts and by the
parties on different counterparts, but shall not be effective until each
party has executed at least one counterpart.
12.2 Each counterpart shall constitute an original of this Agreement but all the
counterparts shall together constitute one and the same Agreement.
13. LANGUAGE
13.1 This Agreement is drawn up in the English language and if this Agreement is
translated into any language other than English, the English language text
shall prevail.
13.2 Each notice, instrument, certificate or other communication to be given by
one party to another hereunder or in connection with this Agreement shall
be in the English language (being the language of negotiation of this
Agreement) and in the event that such notice, instrument, certificate or
other communication or this Agreement is translated into any other
language, the English language text shall prevail.
14. INVALIDITY
Each of the provisions of this Agreement is severable. If any such
provision is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, the legality, validity or enforceability
in that jurisdiction of the remaining provisions of this Agreement of that
provision or any other provision of this Agreement, shall not in any way be
affected or impaired thereby.
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15. DURATION
This Agreement shall continue in full force and effect for so long as any
of the Managers owns any of the Remaining Shares and/or has options
outstanding over Shares under the terms of the Scheme and shall thereafter
forthwith terminate without prejudice to any claims accrued to that date.
16. THE TERMS OF THIS AGREEMENT TO PREVAIL
In the event of ambiguity or conflict arising between the terms of this
Agreement and those of AVH's memorandum of association or the Articles, the
terms of this Agreement shall prevail as between TCC and the Managers and
TCC and the Managers shall exercise such voting rights and other powers
available to them to give full force and effect to this Agreement
including, without limitation, to amend AVH's and any Subsidiary's
memorandum and articles of association to the extent reasonably necessary
to remove such ambiguity or conflict
17. THIS AGREEMENT NOT TO CONSTITUTE A PARTNERSHIP
The arrangements contained in this Agreement constitute a single joint
venture between TCC and the Managers. None of the provisions of this
Agreement shall be deemed to constitute a partnership between TCC and the
Managers or any other party at any time or, save as expressly provided
herein, to constitute any party the agent of the other or to have any
authority to bind the others in anyway except as expressly provided.
18. CONFIDENTIALITY
18.1 The Managers each hereby undertake with AVH and TCC that they shall both
during and after the term of this Agreement keep confidential, and not
reveal, report, publish, disclose or transfer or use for their own or any
other purposes Confidential Information except:-
18.1.1 in the circumstances set out in CLAUSE 18.2; or
18.1.2 to the extent otherwise expressly permitted by this Agreement; or
18.1.3 with the prior consent in writing of the party to whose affairs such
Confidential Information relates.
18.2 The circumstances referred to in CLAUSE 18 above are:-
18.2.1 where the Confidential Information, before it is furnished to, or
comes into the knowledge or possession of, the Manager, is in the
public domain; or
18.2.2 where the Confidential Information, after it is furnished to or
comes into the knowledge or possession of the Manager enters the
public domain otherwise than as a result of (a) a breach by the
Manager of its obligations in this CLAUSE 18 or (b) a breach by the
person who disclosed that
14
Confidential Information of his confidentiality obligation and the
Manager is aware of such breach; or
18.2.3 if and to the extent the Manager makes disclosure of the
Confidential Information to any person:
(a) in compliance with any requirement of law; or
(b) in response to a requirement of the Stock Exchange or the Panel
on Take-overs and Mergers or any other applicable competent
authority to which the Manager is subject where such
requirement has the force of law; or
(c) in order to obtain tax or other clearances or consents from the
Inland Revenue or other relevant taxing or regulatory
authorities; or
18.2.4 to the consultants and professional advisers of the Vendor, in each
case on the basis that they will comply with the Manager's
obligations of confidence hereunder,
PROVIDED THAT any such information disclosable pursuant to CLAUSES 18.2.3
(a), (b) OR (c) shall be disclosed to the extent permitted by law and only
after consultation with the other party.
18.3 The restrictions contained in this clause shall continue to apply after the
Completion without limit in time.
19. DEED OF ADHERENCE
Each of the parties hereto undertakes to enter into a Deed of Adherence
with a Manager who is not a party to this Agreement in the circumstances
described in rule 3.5 of the Scheme.
20. GOVERNING LAW AND JURISDICTION
20.1 English law
This Agreement shall be governed by and construed in accordance with
English law.
20.2 Courts of England and Wales
The parties to this Agreement irrevocably agree that the courts of England
shall have the non-exclusive jurisdiction to settle any dispute which may
arise out of or in connection with this Agreement and that accordingly any
Proceedings may be brought in such courts.
20.3 Acceptance
15
20.4 For the avoidance of doubt, the Managers, AVH and TCC expressly and
specifically agree and accept the terms of this clause and sign below in
recognition of this fact.
IN WITNESS of which all of the parties hereto have executed this document as a
deed and have delivered it upon dating it.
16
SCHEDULE 1
(1) (2)
--- ---
Name and address Options over
---------------- Remaining Shares
----------------
Xxxxxx Xxxxxxx 800
Xxxxxx Xxxxx 400
Xxxx Xxxxxxxx 100
Xxx Xxxxx 200
Xxx XxXxxxxxx 200
Xxxxxxx Xxxxxx 200
Fabrizio Lambertini 200
Xxxxx Xxxxxx 100
Xxxxx Xxxxxxx 100
Xxxxxxx Xxxxx 100
Xxx Xxxxxx 100
Xxx Xxxxxxxx 75
Xxxxx Xxxxxxx 75
Xxxx Cheater 75
Xxxxx Xxxx 75
Xxxx Xxxxxxx 75
Xxxxxxxxxx May 75
Xxxxx Xxxxx 50
Xxxxxxx Xxxxxxx 50
Xxxxxxx Xxxx 50
Xxxxx Xxxxx 50
Xxxxxx Xxxx 50
i
SCHEDULE 2
Part 1 - Basis for preparation of Option Accounts
1. General Requirements
Subject to the provisions set out below, the Option Accounts shall be
prepared under the historical cost convention and in accordance with
accounting principles generally accepted in the United Kingdom (including
Accounting Standards) and, subject as aforesaid, on a basis consistent with
the balance sheets and profit and loss accounts of each company within the
Group (other than AVH) made up to 31 March 1997.
2. Balance Sheet
2.1 For the purpose of preparing the balance sheet in the Option Accounts the
following principles shall be applied:-
2.1.1 sums receivable in respect of debtors shall not be included at sums
higher than the amounts collectable, making appropriate provision for
doubtful debts;
2.1.2 stocks and work-in-progress shall be valued at the lower of cost and
net realisable value;
2.1.3 liabilities shall include accruals at the close of business on the
date of the Option Accounts;
2.1.4 immovable property and other fixed assets shall be included at their
net book value as at the less depreciation at rates calculated to
write off the cost of the assets over the following periods:
(a) plant and machinery 3-7 years;
(b) fixtures and fittings 3-7 years;
(c) motor vehicles 4 years;
(d) short leasehold properties the term of the lease;
2.1.5 adequate provision shall be made for all taxation, including deferred
taxation.
3. Profit and loss account
Unless already taken into account, the following principles shall be
observed in drawing up the profit and loss account of the Group which is to
form part of the Option Accounts:-
ii
3.1 there shall be excluded any profits, gains or losses arising from any
disposal of any immovable property or from any revaluation of
immovable property or surpluses or deficits arising on currency
transactions, whether or not such profits, gains, losses, surpluses or
deficits are treated in the said accounts as items of an extraordinary
or exceptional nature;
3.2 depreciation shall be deducted on the basis and by reference to the
rates mentioned in PARAGRAPH 2.1.4 above;
3.3 any taxation on profits and any subvention or other payment to any
other company in lieu of payment of any such tax or in consideration
of a surrender of group relief by the other company shall not be
deducted; and
3.4 the profits or losses shall be computed before paying any dividends by
AVH or making appropriations of profit or allocations to or from
reserves and before deducting any extraordinary item or making any
prior year adjustment, as defined in SSAP 6.
4. Exclude interest costs on monies borrowed by AVH to effect the acquisition
of the Subsidiaries and amortisation of good will.
5. Exclude:
- fees for technical services provided by TCC for the Group and which
are not agreed by Xx. Xxxxxx;
- the impact of any of the matters referred to in paragraph 4 Part 2
below and which have not been approved by the B Directors.
6. The price of goods sold by AVC to Xxxxxx shall be as follows:-
T60 and BP55 products as per current agreement;
T43 (spherical) at cost and 10% of gross margin (i.e. 10% of
difference between TCC selling price and COGS e.g. if product sold at
$4.00 and COGS is $1.00 transfer price is $1.30);
Disposable toric transfer price is cost and 20% of gross margin (see
above explanation);
Hybrid lenses at a transfer price to be agreed between TCC and Xx.
Xxxxxx.
7. Interest on funds provided by TCC to the Group for loan or working capital
purposes shall be included and shall be deemed to accrue at 9% per annum up
to 'L'5,000,000 and at 10% per annum for funds in excess of that amount.
8. Changes in business activities in the form of the Group acquiring new
business from TCC or third parties etc. to be included or excluded on terms
to be agreed between TCC and Xx. Xxxxxx on behalf of the Managers.
iii
Part 2 - Adjusting Events
1. If the A Directors determine that AVH or any of the Subsidiaries shall
undertake any of the matters in CLAUSE 5.1 or in PARAGRAPH 4 below then:-
1.1 subject to PARAGRAPH 1.2 below, if the B Directors (on behalf of the
Managers) shall approve any such matters their effect shall be taken into
account in the preparation of the Option Accounts and the calculation of
the Principal Amount, the First Option Price and the Second Option Price;
but
1.2 if the B Directors (on behalf of the Managers) shall object to any such
matters or shall agree to such matters but only on the condition that the
effect of such matters be excluded from the Option Accounts their effect
shall be excluded from the Option Accounts and the calculation of the First
Option Price and the Second Option Price.
2. If the A Directors (on behalf of TCC) and the B Directors (on behalf of the
Managers) are unable to agree on the method by which the effect of any of
the matters in PARAGRAPH 4 below is to be taken into account or excluded
from the Option Accounts points in dispute shall be referred to the
decision of an independent chartered accountant (the "Independent
Accountant") to be appointed (in default of nomination by agreement between
the A Directors and the B Directors) by the President for the time being of
the Institute of Chartered Accountants in England and Wales.
3. The Independent Accountant shall act as an expert and not as an arbitrator,
the Arbitration Acts 1950 and 1979 shall not apply and his decision on the
matter in dispute shall (in the absence of manifest error) be final and
binding on TCC and the Managers. The costs of the Independent Accountant
shall be apportioned between TCC and the Managers as the Independent
Accountant shall decide but each party shall be responsible for its own
costs of presenting its case to the Independent Accountant.
4. The matters which may lead to an adjustment to the preparation of the
Option Accounts are those matters listed in CLAUSE 5.1 of the Agreement and
in addition are:-
4.1 AVH or any of the Subsidiaries incurring any lease obligations,
indebtedness for borrowed money or issuing any debt securities or assuming,
guaranteeing or endorsing the obligations of any other individual entity in
an amount that, individually or in the aggregate, exceeds 'L'100,000;
4.2 the taking of any action which is other than consistent with best practice
with respect to the grant of any severance or termination pay to employees
or with respect to any increase of benefits payable under any severance or
termination pay policies or agreements of the Subsidiaries in effect at the
date of this Agreement;
4.3 the adoption of or amendment to any bonus, profit sharing, compensation,
share option, pension, retirement, deferred compensation, employment or
other employee benefit plan, agreement, trust, fund or other arrangement
for the benefit
iv
or welfare of any employee of AVH or any of the Subsidiaries, or any
increase in any manner in the compensation or fringe benefits of any
employee or payment of any benefit to any employee not required by any
existing plan, arrangement or Agreement;
4.4 the making of any tax election or claim or settlement or compromise of any
material tax liability of AVH or any of the Subsidiaries;
4.5 the hiring of any Xxxxx 0/ Xxxxx 0 employees by AVH or any of the
Subsidiaries;
4.6 any purchase of equipment by AVH or any of the Subsidiaries in excess of
'L'75,000;
4.7 the making of any loans to any employees or officers of AVH or any of the
Subsidiaries;
4.8 entering into any royalty or original equipment manufacturers agreements by
AVH or any of the Subsidiaries that would have a significant impact on the
sales activities of AVH or the Subsidiaries or Xxxxxx Vision;
4.9 the termination by any of the Subsidiaries of any existing contractual
obligations and relationships with customers and/or distributors;
4.10 any grant by AVH or any of the Subsidiaries of any original equipment
manufacturing sub-contract arrangements;
4.11 the giving of assistance by AVH or any of the Subsidiaries to third party
manufacturers and/or subcontract licensees;
4.12 the instigation of any legal action which is likely to result in AVH or any
of the Subsidiaries incurring expenses in excess of 'L'30,000.
PROVIDED THAT any of the matters listed above may be undertaken by
resolution of a simple majority of the Directors without the need for an A
Director or a B Director to vote in favour of the resolution where such
matters are provided for in the business plan provided by Xx. Xxxxxx at the
date hereof.
v
SCHEDULE 3
1. Each of the First Option Price and the Second Option Price for each
Remaining Share shall be calculated by reference to the following:-
(A + B + C)
-----------
10,000
where
A = Ten per cent. of the pre-tax profits (or losses) of the Group as
shown by the Option Accounts for each of the financial years ending on
the Balance Sheet Date in each of 1998, 1999 and 2000 multiplied by a
factor of 2.07, 2.07 and 8.28 respectively. Net losses shall be
treated as a negative number and deducted from net profits for the
purpose of the calculation. In no circumstances can A itself be a
negative number.
B = 'L'5,000,000.
C = half of the post tax savings realised by CooperVision from a
manufacturing improvement introduced by the Group to CooperVision,
such savings being the saving accruing to CooperVision in the first
year of the use of such improvement.
PROVIDED ALWAYS THAT if the turnover for the Group falls below
'L'250,000,000, 'L'27,500,000, and 'L'30,250,000 in the years ending on 31
October in 1998, 1999 and 2000 respectively, the First Option Price and the
Second Option Price for each Remaining Share shall be the nominal value
(10p) of each such Share.
2. The Principal Amount of the EOLN shall be calculated by reference to the
following:-
(A + B + C) - Z
where
A and B = are as defined above.
Z = the aggregate amount calculated pursuant to paragraph 1 above to
acquire all the Remaining Shares.
vi
SCHEDULE 4
1. Targets for annual sales and profit before taxes of the Group.
YEAR ENDING 31 OCT 1998 1999 2000
Sales targets ('L'000) 27,098 34,015 42,213
Profit before taxes ('L'000) 5,559 6,487 8,713
vii
Signed by ANTONY XXXXX XXXXXX )
and delivered as a Deed in the )
presence of: )
Signed and delivered as a Deed )
by ASPECT VISION HOLDINGS LIMITED )
acting by:- )
Director
Director/Secretary
Signed and delivered as a Deed )
by THE XXXXXX COMPANIES, INC. )
acting by its duly authorised )
representative [ ] in )
accordance with the laws of the territory )
in which THE XXXXXX COMPANIES, INC )
is incorporated )
