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things, taxes and transitional services. Under the terms of the Demerger Agreement, each of Alent <strong>plc</strong> and<br />
<strong>Vesuvius</strong> <strong>plc</strong> has agreed to indemnify the other in respect of liabilities incurred by members of their<br />
respective groups following the Demerger Effective Time which relate to the Alent Business and <strong>Vesuvius</strong><br />
Business, respectively. The amounts payable by Alent <strong>plc</strong> and <strong>Vesuvius</strong> <strong>plc</strong> to the other pursuant to such<br />
indemnity obligation could be significant.<br />
<strong>Vesuvius</strong> <strong>plc</strong> has also, under the terms of the Tax Sharing and Indemnification Agreement and subject to<br />
certain conditions, agreed to indemnify Alent <strong>plc</strong> for taxes imposed on Alent that are attributable to certain<br />
restructuring transactions undertaken in anticipation of the Demerger (including the Reorganisation). The<br />
tax liabilities that could arise were a taxing authority successfully to challenge the treatment of the<br />
restructuring transactions could be significant. However, in the event of a change of control of Alent <strong>plc</strong><br />
(i.e. more than 50 per cent. of the shares in Alent <strong>plc</strong> being acquired by a third party), the obligations of<br />
<strong>Vesuvius</strong> <strong>plc</strong> to indemnify Alent <strong>plc</strong> for additional taxes in respect of the restructuring and other<br />
transactions may terminate, to the extent that such taxes are attributable to that change of control.<br />
As described in paragraph 4 of Section B of Part IV of the Cookson Circular, were members of Alent to<br />
take certain actions that might result in the Demerger and preceding restructuring transactions failing to<br />
qualify for non-recognition treatment for US federal income tax purposes, Alent <strong>plc</strong> may be required to<br />
indemnify <strong>Vesuvius</strong> <strong>plc</strong> for liabilities that are incurred as a result of such failure. Even if such a liability<br />
were to arise, based on valuations provided by its advisers, <strong>Vesuvius</strong> expects that any such liability would<br />
not be significant. However, these valuations could be subject to differing interpretations and, as a result,<br />
there is no guarantee that they could not be successfully challenged by a tax authority. Were that to be the<br />
case, <strong>Vesuvius</strong> could have a significant tax liability for which indemnification would be sought from Alent<br />
<strong>plc</strong>.<br />
SECTION C: RISKS RELATING TO THE VESUVIUS SHARES<br />
1 The price of the <strong>Vesuvius</strong> Shares may be volatile<br />
The price of the <strong>Vesuvius</strong> Shares following <strong>Vesuvius</strong> Admission could be subject to significant<br />
fluctuations due to the volatility of the stock market in general and a variety of other factors, some of<br />
which are beyond <strong>Vesuvius</strong>’ control, including the other risks relating to an investment in <strong>Vesuvius</strong><br />
described in this section. The fluctuations could result from national and global economic and financial<br />
conditions, the market’s response to the Demerger, market perceptions of <strong>Vesuvius</strong>, including its ability to<br />
manage its existing debt facilities and raise new capital, regulatory changes affecting its operations,<br />
variations in <strong>Vesuvius</strong>’ operating results, business developments and/or its competitors and liquidity of<br />
financial markets. Furthermore, the operating results and prospects from time to time may be below the<br />
expectations of market analysts and investors. Any of these events could result in a decline in the market<br />
price of the <strong>Vesuvius</strong> Shares.<br />
2 Any future equity issues by <strong>Vesuvius</strong> <strong>plc</strong> could have an adverse effect on the market price of the<br />
<strong>Vesuvius</strong> Shares and could dilute ownership<br />
Other than the proposed issue of shares under the Proposals, <strong>Vesuvius</strong> <strong>plc</strong> has no current plans for an<br />
offering of its shares. However, it is possible that <strong>Vesuvius</strong> <strong>plc</strong> may decide to issue additional shares in the<br />
future and, if shareholders did not take up such offer or were not eligible to participate, their proportionate<br />
ownership and voting interests in <strong>Vesuvius</strong> <strong>plc</strong> would be reduced and the percentage that their shares<br />
would represent of the total share capital of <strong>Vesuvius</strong> <strong>plc</strong> would be reduced accordingly. A future equity<br />
issue, or significant sale of <strong>Vesuvius</strong> Shares by major shareholders, could have a material adverse effect on<br />
the market price of <strong>Vesuvius</strong> Shares as a whole.<br />
3 Any change in current tax law or practice could adversely affect holders of <strong>Vesuvius</strong> Shares<br />
Statements in this document concerning the taxation of holders of <strong>Vesuvius</strong> Shares are based on current<br />
UK, US and Jersey tax law and practice as at the date of this document, each of which is subject to change,<br />
possibly with retrospective effect.<br />
The taxation of an investment in <strong>Vesuvius</strong> Shares depends on the individual circumstances of the <strong>Vesuvius</strong><br />
Shareholder and the summary of the UK, US and Jersey taxation treatment of an investment in the<br />
<strong>Vesuvius</strong> Shares set out in Part XI: “Taxation Considerations” of this document is intended as a general<br />
guide only. It does not address the specific tax position of every investor and only deals with rules of UK,<br />
US and Jersey taxation of general application. Therefore, any investors who are in any doubt as to their tax<br />
position regarding the <strong>Vesuvius</strong> Shares and any investors subject to tax in any other jurisdiction should<br />
consult their own independent tax advisers.<br />
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