<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 3, 1995
---------------
United States Filter Corporation
--------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 1-10728 33-0266015
- - --------------------------- ----------- ------------------
(State of other juris- (Commission (IRS Employer
diction of incorporation File Number) Identification No.)
</TABLE>
73-710 Fred Waring Drive, Suite 222, Palm Desert, California 92260
- - ------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (619) 340-0098
---------------
<PAGE>
Item 2. Acquisition of Assets
On April 3, 1995, United States Filter Corporation (the "Company")
acquired all of the outstanding capital stock of the Permutit Company Limited,
an English corporation ("Permutit UK") and The Permutit Company Pty Ltd., an
Australian corporation ("Permutit Australia"). Permutit Australia has one
subsidiary, Permutit New Zealand Limited. The Company acquired Permutit UK and
Permutit Australia through the Company's English subsidiary, Ionpure
Technologies Limited (the "Purchaser") pursuant to a Share Purchase Agreement
dated April 3, 1995 (the "Purchase Agreement") among the Purchaser, the Company,
Thames Water Products & Services Limited ("TWPS") and PWT Overseas Limited
("PWT"), both English corporations and the owners of, respectively, the capital
stock of Permutit UK and Permutit Australia, and Thames Water PLC ("Sellers
Guarantor"), an English corporation. TWPS and PWT (together the "Sellers") are
indirect subsidiaries of Sellers Guarantor. Permutit UK, Permutit Australia and
Permutit New Zealand Limited are referred to as the "Permutit Group". The
transaction will be accounted for as a purchase, effective April 3, 1995.
The cash consideration for the acquisition (the "Acquisition") of
Permutit UK and Permutit Australia under the Purchase Agreement is
(Pounds)6,268,037, which amount was paid on April 3, 1995, the closing date.
Also on the closing date, Permutit UK assigned to the Purchaser a note for
(Pounds)2,785,345 owed by TWPS to Permutit UK and that note was then discharged
as part of the consideration for the Acquisition. Of this aggregate
consideration of (Pounds)9,053,382, the Purchase Agreement provides that
(Pounds)7,799,775 was apportioned to the purchase of Permutit UK and
(Pounds)1,253,607 was apportioned to the purchase of Permutit Australia.
The amount paid by the Purchaser for Permutit UK and Permutit Australia
is subject to reduction if the "Net Asset Value" (as defined) of the Permutit
Group at March 31, 1995 is less than (Pounds)3,125,000 (the "Base Net Asset
Value"). The Net Asset Value at March 31, 1995 is to be determined within 90
days of April 3, 1995 by Seller's accountants by the delivery by such
accountants of financial statements for the Permutit Group as of March 31, 1995
(the "Completion Accounts") and, if such Net Asset Value is less than the Base
Net Asset Value, the amount of such difference is to be paid to Purchaser within
seven days of the agreement of the Sellers and the Purchaser on the Completion
Accounts or the determination of an independent chartered accountant in the
event of a dispute. The Base Net Asset Value is subject to adjustment, upward or
downward, in the event of a change in the difference between the Permutit
Group's actual margins and forecasted margins, determined by comparing the
actual and forecasted margins at March 31, 1995 as set forth in the Purchase
Agreement, with the actual and forecasted margins determined pursuant to the
Completion Accounts.
-1-
<PAGE>
Under the Purchase Agreement, the parties thereto provided various
representations, including with respect to the Sellers, representations as to
the Permutit Group and their respective properties, and provided certain
indemnities for the breach of any obligation or representations, all as set
forth in the Purchase Agreement, and subject to the limitations provided for
therein.
The Purchase Agreement also provides that, for a period of two years,
neither the Sellers, nor their subsidiaries, will be engaged or interested in
any business which directly competes with the "Business of the Group" (as
defined), provided, that certain "Permitted Businesses" (as defined) may
continue to be carried on as at the closing date and under license agreements
entered into upon closing between Permutit UK and subsidiaries of the Sellers
guarantor, the "Permutit Brand Name" (as defined) may be used in Egypt and
South Africa by the Sellers' subsidiaries operating in those countries.
The obligations of the Sellers under the Agreement have been guaranteed
by the Seller's Guarantor.
Through its ten offices, The Permutit Group has a strong position in the
United Kingdom, Australian and New Zealand markets in ion exchange and
membrane technology. The Permutit Group also offers a range of products,
including pre-engineered water treatment systems for the pharmaceutical,
laboratory and chemical markets and other commercial customers. The Permutit
Group believes it has the largest market share in its Australian and New
Zealand markets. The Company believes that The Permutit Group's comprehensive
service and SDI network will complement the Company's already strong presence
in Western Europe. The Acquisition will further implement the Company's
strategy of offering a broad range of products and services in its market
areas, and will also expand the Company's operations into Australia and New
Zealand and will enhance its presence in the Far East.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired:
Report of Coopers & Lybrand;
Profit and Loss Account;
Balance Sheets as of March 31, 1994 and 1993;
Notes to Financial Statements.
(b) Pro Forma Financial Information:
Pro Forma combined balance sheet, statements of operation and
notes thereto.
-2-
<PAGE>
(c) Exhibits
2.0 Share Purchase Agreement dated April 3, 1995 among Thames
Water Products & Services Limited, PWT Overseas Limited,
Ionpure Technologies Limited, Thames Water PLC and United
States Filter Corporation, including only Schedules 1, 2
and 3.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED STATES FILTER CORPORATION
By: /s/ Donald L. Bergmann
---------------------------
Donald L. Bergmann
Vice President
Date: April , 1995
-3-
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of The Permutit Company Limited
We have audited the accompanying balance sheets of The Permutit Company
Limited (a wholly owned subsidiary of Thames Water PLC) at 31 March 1994 and
1993, and the related profit and loss accounts and statements of cashflows for
the years then ended set out on pages F-2 to F-13. These financial statements
are the responsibility of management. Our responsibility is to express an
opinion on those financial statements.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom which are substantially the same as auditing
standards generally accepted in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Permutit Company Limited
at 31 March 1994 and 1993 and the results of its operations and its cashflows
for the years then ended in conformity with generally accepted accounting
principles in the United Kingdom.
The financial statements were prepared in accordance with the accounting
policies set out in note 1 and comply with generally accepted accounting
principles in the United Kingdom which differ in certain respects from United
States generally accepted accounting principles as set out in note 29.
/s/ Coopers & Lybrand
- - ---------------------
Coopers & Lybrand
Independent Accountants and Registered Auditors
Uxbridge
West London
United
Kingdom
16 June 1994,
except for note
30, as to which
the date is 3
April 1995
F-1
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
NOTE 1994 1993
---- ---------- ----------
(Pounds) (Pounds)
<S> <C> <C> <C>
Turnover........................................... 2 8,195,824 10,439,674
Cost of sales...................................... (5,199,271) (6,703,198)
---------- ----------
Gross profit....................................... 2,996,553 3,736,476
Marketing, selling and distribution expenses....... (2,829,780) (2,847,449)
Administration expenses............................ (1,309,684) (1,292,505)
---------- ----------
Loss on ordinary activities before interest........ (1,142,911) (403,478)
Interest receivable................................ 3 212 9,711
Interest payable................................... 4 (61,599) (21,096)
---------- ----------
Loss on ordinary activities before taxation........ 5 (1,204,298) (414,863)
Tax on ordinary activities......................... 8 238,108 77,311
---------- ----------
Loss on ordinary activities after taxation......... (966,190) (337,552)
Dividends paid..................................... -- (657,843)
---------- ----------
Loss retained for the financial year............... 18 (966,190) (995,395)
========== ==========
</TABLE>
The above results all arise from continuing activities.
The company has no recognised gains and losses other than those included in
the results above, and therefore no separate statement of total recognised
gains and losses has been presented.
There is no difference between the loss on ordinary activities before
taxation and the retained loss for the year stated above, and their historical
cost equivalents.
The notes on pages F-5 to F-13 form part of these accounts.
F-2
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
BALANCE SHEETS
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
NOTE 1994 1993
---- ---------- ----------
(Pounds) (Pounds)
<S> <C> <C> <C>
Fixed assets
Intangible assets................................ 9 185,511 190,936
Tangible assets.................................. 10 714,241 904,430
Investments...................................... 11 6 6
---------- ----------
899,758 1,095,372
---------- ----------
Current assets
Stocks........................................... 12 956,859 1,084,272
Debtors.......................................... 13 5,673,473 6,646,263
Cash at bank and in hand......................... -- 64,864
---------- ----------
6,630,332 7,795,399
Creditors
Amounts falling due within 1 year................ 14 (2,488,038) (2,969,073)
---------- ----------
Net current assets................................. 4,142,294 4,826,326
---------- ----------
Total assets less current liabilities.............. 5,042,052 5,921,698
Creditors
Amounts falling due after more than 1 year....... 15 (5) (5)
Provisions for liabilities and charges............. 16 (175,052) (88,508)
---------- ----------
Net assets......................................... 4,866,995 5,833,185
========== ==========
Capital & reserves
Called up share capital.......................... 17 5,800,000 5,800,000
Profit and loss account.......................... (933,005) 33,185
---------- ----------
4,866,995 5,833,185
========== ==========
</TABLE>
The notes on pages F-5 to F-13 form part of these accounts.
F-3
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED 31
MARCH
--------------------
NOTE 1994 1993
---- --------- --------
(Pounds) (Pounds)
<S> <C> <C> <C>
Net cash inflow/(outflow) from operating activities. 27 (578,664) 17,909
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received................................. 212 9,711
Interest paid..................................... (61,599) (21,096)
Dividends paid.................................... -- (657,843)
--------- --------
Net cash outflow from returns in investments and
servicing of finance............................... (640,051) (651,319)
TAXATION
Group tax relief received........................... 92,000 201,157
INVESTING ACTIVITIES
Purchase of tangible fixed assets................... (129,753) (364,650)
Sale of tangible fixed assets....................... 59,426 35,354
--------- --------
Net cashflow from investing activities.............. (70,327) (329,296)
--------- --------
Net cash inflow (outflow) before financing.......... (618,378) (779,458)
--------- --------
Increase/(decrease) in cash and cash equivalents.... 28 (618,378) (779,458)
========= ========
</TABLE>
The notes on pages F-5 to F-13 form part of these accounts.
F-4
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
a) Accounting Convention
The accounts have been prepared in accordance with the historical cost
convention rules and applicable accounting standards. The company is a wholly
owned subsidiary undertaking of Thames Water Plc.
The parent has committed to continue its support of the operations of the
Company for the next twelve months. Accordingly, the financial statements may
not be indicative of the conditions that would have existed or the results of
operations that would have been obtained had the Company operated on a stand
alone basis.
The Company receives certain managerial, financial, technical and other
support from its parent for which the Company receives a management charge,
which amounted to (Pounds)49,000 during the year (1993:(Pounds)57,000). This
management charge is allocated by the parent to its subsidiaries based upon the
budgeted turnover for each subsidiary. Management of the parent is of the
opinion that the allocation method used is reasonable, as a more specific
allocation of the actual expenses is not practicable. In addition certain
central management personnel costs which are not separately identifiable have
been borne by the parent.
b) Turnover
Turnover, which excludes value added tax, represents the income receivable in
the ordinary course of business for goods and services provided.
c) Stock and Work in Progress
Stock and work in progress are, with the exception of long term contract work
in progress, valued at the lower of cost and net realisable value. Cost
includes the direct cost of materials and labour. Long term contract work in
progress is stated at costs incurred net of amounts transferred to cost of
sales, after deducting foreseeable losses and payments on account not matched
with turnover.
d) Depreciation
Depreciation of all fixed assets is provided on a straight line basis over
the estimated economic lives of individual assets, based on their cost, and the
rates generally applied range from 10% p.a. to 33 1/3% p.a.
e) Research and Development
Research and development expenditure is written off in the period during
which it is incurred.
f) Contributions to Pension Schemes
Contributions to pension schemes at rates recommended by independent
actuaries are charged to the profit and loss account on a consistent annual
basis.
g) Interest
Interest payable is written off to the profit and loss account as it is
incurred.
h) Taxation
The charge or credit for taxation is based on the result for the year as
adjusted for disallowable and non- taxable items.
Consideration receivable or payable in respect of losses surrendered or
claimed by way of group relief is dealt with in the profit and loss account.
The credit in respect of corporation tax has been computed in accordance with
the group accounting policy of Thames Water Plc. This represents an estimate of
the net present value of losses surrendered to other companies within the
Thames Water group under the provisions of UK tax legislation.
F-5
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
Tax deferred or accelerated is accounted for in respect of all material
timing differences to the extent that it is probable that a liability or asset
will crystallise. Provision is made at the rate which is expected to be applied
when the liability or asset is expected to crystallise.
i) Foreign Currency
All transactions denominated in foreign currencies are translated into
sterling at the actual rate of exchange ruling on the date of the transaction.
Assets and liabilities in foreign currencies have been translated into sterling
at rates of exchange ruling at the balance sheet date. All exchange differences
arising are dealt with in the profit and loss account.
j) Operating Lease Commitments
These are provided for in the financial statements at the time the rental
liabilities arise.
k) Cash and Cash Equivalents
Cash and cash equivalents for the purpose of the cash flow statement comprise
cash at bank, current asset investments which are readily convertible into
known amounts of cash without notice and which are within three months of
maturity when acquired, less bank loans and overdrafts repayable within three
months from the date of the advance.
2. TURNOVER
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
1994 1993
----------------- ------------------
(Pounds) (Pounds)
<S> <C> <C>
Geographical distribution by market
United Kingdom........................ 6,399,165 8,050,779
Continental Europe.................... 726,162 416,537
Americas.............................. 160,358 155,266
Africa................................ 275,461 311,153
Australasia........................... 89,709 35,445
Asia.................................. 544,969 1,470,494
----------------- ------------------
(Pounds)8,195,824 (Pounds)10,439,674
----------------- ------------------
</TABLE>
3. INTEREST RECEIVABLE
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
1994 1993
----------------- ------------------
(Pounds) (Pounds)
<S> <C> <C>
On bank and money market deposits..... 212 9,711
----------------- ------------------
(Pounds)212 (Pounds)9,711
----------------- ------------------
</TABLE>
4. INTEREST PAYABLE
<TABLE>
<CAPTION>
YEAR ENDED
31 MARCH YEAR ENDED
1994 31 MARCH 1993
----------------- ------------------
(Pounds) (Pounds)
<S> <C> <C>
On bank loans and overdrafts.......... 61,599 21,096
----------------- ------------------
(Pounds)61,599 (Pounds)21,096
----------------- ------------------
</TABLE>
F-6
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
5. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
1994 1993
---------- ----------
(Pounds) (Pounds)
<S> <C> <C>
The profit on ordinary activities before taxation is
stated after crediting:
Gains on foreign currency borrowings/Deposits..... 6,557 22,525
Profit on disposals of fixed assets............... 16,122 11,365
And after charging:
Depreciation and diminution in value of tangible
assets........................................... 268,560 273,135
Depreciation and diminution in value of intangible
assets........................................... 5,425 5,425
Auditors' remuneration............................ 31,390 26,000
Auditors' remuneration for non-audit services..... 585 7,512
Loss on disposals of fixed assets................. 8,078 3,177
Other operating lease rentals..................... 357,475 356,558
Directors' emoluments............................. 61,733 62,932
Research and development.......................... 47,775 183,479
</TABLE>
6. EMPLOYEES
<TABLE>
<CAPTION>
AVERAGE NUMBERS AGGREGATE PAYROLL COSTS
--------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH 31 MARCH 31 MARCH
1994 1993 1994 1993
---------- ---------- ----------------- -----------------
(Pounds) (Pounds)
<S> <C> <C> <C> <C>
Production.............. 53 68 856,111 946,629
Marketing, selling &
distribution........... 48 55 1,660,202 1,665,334
Administration.......... 20 24 419,025 399,119
--- --- ----------------- -----------------
121 147 (Pounds)2,935,338 (Pounds)3,011,082
--- --- ----------------- -----------------
Aggregate payroll costs
comprise:
Wages & salaries...... 2,571,977 2,596,630
Social security costs. 194,022 212,498
Contributions to
pension scheme....... 169,339 201,954
----------------- -----------------
(Pounds)2,935,338 (Pounds)3,011,082
----------------- -----------------
</TABLE>
7. DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
1994 1993
-------------- --------------
(Pounds) (Pounds)
<S> <C> <C>
Emoluments.................................... (Pounds)61,733 (Pounds)62,932
Emoluments excluding pension contributions:
Chairman.................................... NIL NIL
Highest paid Director....................... (Pounds)44,595 (Pounds)57,754
</TABLE>
Number of Directors within the following ranges of emoluments excluding
pension scheme contributions:
<TABLE>
<CAPTION>
NO. NO.
--- ---
<S> <C> <C>
Up to (Pounds)5,000.................................................. 1 1
(Pounds)10,001 to (Pounds)15,000..................................... 1 --
(Pounds)40,001 to (Pounds)45,000..................................... 1 --
(Pounds)55,001 to (Pounds)60,000..................................... -- 1
</TABLE>
F-7
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
8. TAXATION
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
1994 1993
--------------- --------------
(Pounds) (Pounds)
<S> <C> <C>
No liability to UK corporation tax arises
on the results for the year:
Amounts receivable for Group relief
surrendered........................... 238,084 84,847
Deferred taxation account transfers.... (7,129) (9,627)
--------------- --------------
Total taxation for the year.............. 230,955 75,220
Adjustments of prior years............... 7,153 2,091
--------------- --------------
(Pounds)238,108 (Pounds)77,311
--------------- --------------
</TABLE>
The consideration receivable in respect of Group relief reflects the
estimated present value of the losses as agreed with the claimant companies.
9. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
TRADEMARKS
---------------
(Pounds)
<S> <C>
Cost:
At 31 March 1993........................................... 216,995
---------------
At 31 March 1994........................................... (Pounds)216,995
---------------
Depreciation:
At 31 March 1993........................................... 26,059
Provided during year....................................... 5,425
---------------
At 31 March 1994........................................... (Pounds)31,484
---------------
Net book value:
At 31 March 1994........................................... (Pounds)185,511
---------------
At 31 March 1993........................................... (Pounds)190,936
---------------
</TABLE>
10. TANGIBLE ASSETS
<TABLE>
<CAPTION>
FIXTURES
PLANT & MOTOR FITTINGS &
MACHINERY VEHICLES EQUIPMENT TOTAL
--------------- --------------- --------------- -----------------
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Cost:
At 31 March 1993...... 444,717 627,468 917,666 1,989,851
Additions at cost..... 15,034 93,639 21,080 129,753
Disposals............. -- (211,389) (13,803) (225,192)
--------------- --------------- --------------- -----------------
At 31 March 1994...... (Pounds)459,751 (Pounds)509,718 (Pounds)924,943 (Pounds)1,894,412
--------------- --------------- --------------- -----------------
Depreciation:
At 31 March 1993...... 187,131 301,263 597,027 1,085,421
Provided during year.. 30,833 145,674 92,053 268,560
Disposals............. -- (164,270) (9,540) (173,810)
--------------- --------------- --------------- -----------------
At 31 March 1994...... (Pounds)217,964 (Pounds)282,667 (Pounds)679,540 (Pounds)1,180,171
--------------- --------------- --------------- -----------------
Net book value:
At 31 March 1994...... (Pounds)241,787 (Pounds)227,051 (Pounds)245,403 (Pounds) 714,241
--------------- --------------- --------------- -----------------
At 31 March 1993...... (Pounds)257,586 (Pounds)326,205 (Pounds)320,639 (Pounds) 904,430
--------------- --------------- --------------- -----------------
</TABLE>
F-8
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
11. INVESTMENTS
<TABLE>
<CAPTION>
UNLISTED SUBSIDIARY
AT COST COMPANIES TOTAL
--------- ---------- ---------
<S> <C> <C> <C>
Cost or valuation at 31 March 1994 and 31
March 1993................................. (Pounds)1 (Pounds)5 (Pounds)6
</TABLE>
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
--------- ---------
<S> <C> <C>
Investment in subsidiary undertakings (see note 25):
Shares at cost or valuation: (Pounds)5 (Pounds)5
</TABLE>
In the opinion of the Directors the value of the Company's investment in its
subsidiary undertakings is not less than the figure stated above.
12. STOCKS
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
----------------- -----------------
(Pounds) (Pounds)
<S> <C> <C>
Raw materials and consumables........ 606,948 740,434
Work in progress (see below)......... 180,264 136,630
Finished goods and goods for resale.. 169,647 207,208
----------------- -----------------
(Pounds) 956,859 (Pounds)1,084,272
----------------- -----------------
Work in progress includes:
Long term contract costs incurred.... 875,856 2,038,379
WIP offset........................... 328,278 --
Less: Progress claims made........... (1,319,961) (2,229,811)
----------------- -----------------
(Pounds) (115,827) (Pounds) (191,432)
----------------- -----------------
Representing:
Carrying value of contracts in excess
of progress claims made (included in
Note 13)............................ 15,539 168,695
Progress claims made in excess of
carrying value of contracts
(included in Note 14)............... (131,366) (360,127)
----------------- -----------------
(Pounds) (115,827) (Pounds) (191,432)
----------------- -----------------
</TABLE>
13. DEBTORS
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
----------------- -----------------
(Pounds) (Pounds)
<S> <C> <C>
Trade debtors........................... 1,820,016 2,726,746
Amounts recoverable on contracts (see
note below) ........................... 15,539 168,695
Bills of exchange receivable............ 8,126 5,085
Amounts owed by parent & fellow
subsidiaries........................... 3,711,599 3,576,762
Other debtors........................... 17,672 25,202
Prepayments and accrued income.......... 100,521 143,773
----------------- -----------------
(Pounds)5,673,473 (Pounds)6,646,263
----------------- -----------------
</TABLE>
Included within trade debtors of (Pounds)1,820,016 is (Pounds)73,782 falling
due after more than one year. Amounts recoverable on contracts include the
excess of turnover over payments on account.
F-9
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
----------------- -----------------
(Pounds) (Pounds)
<S> <C> <C>
Progress claims and advance payments.... 131,366 360,127
Trade creditors......................... 776,576 1,565,223
Taxation (VAT & PAYE)................... 53,340 130,934
Amounts owed to parent and fellow
subsidiaries........................... 179,028 121,489
Social security contributions........... 21,292 27,093
Accruals and deferred income............ 275,314 266,599
Bank overdraft.......................... 1,051,122 497,608
----------------- -----------------
(Pounds)2,488,038 (Pounds)2,969,073
----------------- -----------------
</TABLE>
Progress claims and advance payments include payments on account in excess of
amounts matched with turnover or offset against long term contract balances.
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
-------- --------
(Pounds) (Pounds)
<S> <C> <C>
Amounts owed to parent and fellow subsidiaries............. 5 5
</TABLE>
Amounts owed to group companies are repayable after more than five years.
Interest on these amounts is charged at group rates.
16. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
DEFERRED OTHER
TAXATION PROVISIONS TOTAL
-------------- --------------- ---------------
(Pounds) (Pounds) (Pounds)
<S> <C> <C> <C>
At 31 March 1993............ 12,023 76,485 88,508
Utilised during the year.... -- (76,485) (76,485)
Provided during the year.... 7,129 155,900 163,029
-------------- --------------- ---------------
At 31 March 1994............ (Pounds)19,152 (Pounds)155,900 (Pounds)175,052
-------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
AMOUNT AMOUNT
PROVIDED PROVIDED
31 MARCH 31 MARCH
1994 1993
-------------- --------------
(Pounds) (Pounds)
<S> <C> <C>
The provision for deferred taxation is:
Excess of capital allowances over
depreciation................................. 16,768 8,028
Income assessable to tax in future years...... 2,384 3,995
-------------- --------------
Deferred tax liability........................ (Pounds)19,152 (Pounds)12,023
-------------- --------------
</TABLE>
The liability for deferred taxation relating to the excess of capital
allowances over depreciation has been calculated at 33% (1993 33%).
Other provisions consist of provisions for future expenditure on closed
contracts (Pounds)155,900 (1993 (Pounds)76,485).
F-10
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
17. SHARE CAPITAL
<TABLE>
<CAPTION>
ALLOTTED, CALLED UP
AUTHORISED AND FULLY PAID
----------------------------------- -----------------------------------
31 MARCH 31 MARCH 31 MARCH 31 MARCH
1994 1993 1994 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Ordinary shares of
(Pounds)1 each......... (Pounds)5,800,000 (Pounds)5,800,000 (Pounds)5,800,000 (Pounds)5,800,000
----------------- ----------------- ----------------- -----------------
</TABLE>
18. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
1994 1993
----------------- -----------------
(Pounds) (Pounds)
<S> <C> <C>
Loss for the financial year............ (966,190) (337,552)
Dividends.............................. - (657,843)
----------------- -----------------
(966,190) (995,395)
Opening shareholders' funds............ 5,833,185 6,828,580
----------------- -----------------
Closing shareholders' funds............ (Pounds)4,866,995 (Pounds)5,833,185
----------------- -----------------
</TABLE>
19. CONTRACTS FOR CAPITAL EXPENDITURE
Capital expenditure contracted for, and authorised but not contracted for, at
31st March 1994 for which no provision has been made in these accounts was:
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
--------------- ---------------
(Pounds) (Pounds)
<S> <C> <C>
Contracted for.............................. 13,422 48,660
Authorised but not contracted for........... 205,589 180,419
--------------- ---------------
(Pounds)219,011 (Pounds)229,079
--------------- ---------------
</TABLE>
20. LEASING COMMITMENTS
<TABLE>
<CAPTION>
31 MARCH 31 MARCH
1994 1993
--------------- ---------------
(Pounds) (Pounds)
<S> <C> <C>
Operating leases:
Amounts payable within one year........... (Pounds)293,021 (Pounds)314,853
--------------- ---------------
Commitments expiring:
Land and buildings:
Between two and five years.............. -- 8,500
More than five years.................... 104,000 100,400
--------------- ---------------
104,000 108,900
Other operating leases:
Less than one year........................ 17,940 18,341
Between one and two years................. 131,446 29,424
Between two and five years................ 25,086 143,639
More than five years...................... 14,549 14,549
--------------- ---------------
(Pounds)293,021 (Pounds)314,853
--------------- ---------------
</TABLE>
21. OTHER FINANCIAL COMMITMENTS
Forward contracts existed at 31st March 1994 for the sale of foreign
currencies at a sterling equivalent of (Pounds)32,345 (1993 (Pounds)43,243).
F-11
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
22. GUARANTEES
There are contingent liabilities in respect of guarantees given on our behalf
for plants installed or under construction and other engagements in the
ordinary course of business amounting to (Pounds)754,126 (1993
(Pounds)742,881).
23. HOLDING COMPANY
The immediate holding company is Thames Water Products & Services Limited
incorporated in Great Britain and registered in England and Wales. The ultimate
holding Company, for which consolidated financial statements are prepared, is
Thames Water PLC incorporated in Great Britain and registered in England and
Wales. Copies of the consolidated financial statements can be obtained from
Thames Water Plc., 14 Cavendish Place, London W1M 9DJ.
24. PENSIONS AND SIMILAR OBLIGATIONS
Pension arrangements for the majority of the Company's employees are of the
defined benefit type funded through the Thames Water (PWT) Pension Scheme whose
assets are held separately from those of the Company in an independently
administered fund. The Thames Water (PWT) Pension Scheme also provides pension
benefits for employees of other companies within the Thames Water group.
The total pension cost for the Company was (Pounds)169,339 (1993
(Pounds)201,954). The pension cost relating to the Thames Water (PWT) Pension
Scheme is assessed in accordance with advice received relating to the scheme as
a whole from Bacon & Woodrow, the consulting actuaries to the scheme.
Details of the actuarial valuation of the Thames Water (PWT) Pension Scheme
are disclosed in the financial statements of Thames Water Plc.
25. SUBSIDIARY UNDERTAKING
The subsidiary undertaking, Ion Exchange Ltd., is dormant and in the opinion
of the Directors is not material in terms of profit or assets.
The subsidiary undertaking is wholly owned. It is incorporated in Great
Britain, registered in England and operates in the United Kingdom.
26. GROUP ACCOUNTS
Under section 5 of the Companies Act 1989 group accounts are not required as
the company is itself a wholly owned subsidiary undertaking of another company
incorporated in an EEC country.
27. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES
<TABLE>
<CAPTION>
YEAR ENDED 31 MARCH
--------------------
1994 1993
---------- --------
(Pounds) (Pounds)
<S> <C> <C>
Operating loss..................................... (1,142,911) (403,478)
Depreciation on tangible fixed assets.............. 273,985 278,560
(Profit)/loss on sale of tangible fixed assets..... (8,044) (8,188)
(Increase)/decrease in stocks...................... 127,413 (143,836)
(Increase)/decrease in debtors..................... 1,126,027 (78,752)
Increase/(decrease) in creditors................... (955,134) 373,603
---------- --------
Net cash inflow/(outflow) from operating
activities........................................ (578,664) 17,909
========== ========
</TABLE>
F-12
<PAGE>
THE PERMUTIT COMPANY LIMITED
(A WHOLLY OWNED SUBSIDIARY OF THAMES WATER PLC)
NOTES TO THE ACCOUNTS
28. ANALYSIS OF THE BALANCE OF CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
31 MARCH
--------------------
1994 1993 CHANGE IN YEAR
---------- -------- --------------
(Pounds) (Pounds) (Pounds)
<S> <C> <C> <C>
Cash at bank and in hand............ -- 64,864 (64,864)
Bank over drafts.................... (1,051,122) (497,608) (553,514)
---------- -------- --------
Decrease in cash and cash
equivalents........................ (1,051,122) (432,744) (618,378)
========== ======== ========
</TABLE>
29. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES ("GAAP") AND OTHER US FINANCIAL INFORMATION
DEFERRED TAXES
Under UK GAAP, provision is made for deferred tax under the liability method
where in the opinion of the Directors it is probable that a tax liability will
become payable within the forseeable future. Under US GAAP, deferred tax is
provided in full under the liability method. However, the net loss and total
net assets of the Permutit Company Limited is stated at the same amount under
both US and UK GAAP in respect of this matter.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Under UK GAAP, returns on investments and servicing of finance are shown as a
separate activity in the statement of cash flows. Under US GAAP, returns on
investments and taxation would be shown as cash flows from operating activities
and dividends paid would be shown as financing activities.
The statement of cash flows is reconciled to an amount that includes bank
overdraft balances. Under US GAAP, changes to such balances are generally
included as financing activities.
For US GAAP purposes, the following cash flow headings and totals would have
been reported.
<TABLE>
<CAPTION>
YEAR ENDED 31
MARCH
------------------
1994 1993
-------- --------
(Pounds) (Pounds)
-------- --------
<S> <C> <C>
Net cash (used
in)/provided by operat-
ing activities......... (548,051) 207,681
======== ========
Net cash (used in) in-
vesting activities..... (70,327) (329,296)
======== ========
Net cash provided
by/(used in) financing
activities............. 553,514 (160,235)
======== ========
Net increase/(decrease)
in cash and cash equiv-
alents................. 432,744 (281,850)
======== ========
Cash and cash equiva-
lents at beginning of
year................... 64,864 346,714
======== ========
Cash and cash equiva-
lents at end of year... -- 64,864
======== ========
</TABLE>
In addition, there are certain other aspects in which UK GAAP differs from US
GAAP, however these differences do not result in material adjustments to either
the reported loss or net assets for the years ended 31 March 1993 and 1994.
30. POST BALANCE SHEET EVENTS
On April 3, 1995, United States Filter Corporation ("US Filter") acquired
all of the outstanding stock of the Company. US Filter has committed to provide
the necessary financial support to enable the Company to meet its debts as and
when they fall due effective for twelve months from the date of the
acquisition.
F-13
<PAGE>
(b) Pro forma financial information.
The following unaudited pro forma combined financial data presents the
Pro Forma Combined Balance Sheet at December 31, 1994, giving effect to
the acquisition of The Permutit Company Limited, a U. K. company, and
Permutit Company Pty Limited, an Australian company (collectively "The
Permutit Group"), (the "Acquisition") as if it were consummated on that
date. Also presented are the Pro Forma Combined Statements of Operations
for the fiscal year ended March 31, 1994, and the nine months ended
December 31, 1994, after giving effect to the Acquisition as if it was
consummated on April 1, 1993. The pro forma data is based on the
historical combined statements of the Company and The Permutit Group
giving effect to the acquisition transaction under the purchase method of
accounting and the assumptions and adjustments outlined in the
accompanying Notes to Pro Forma Combined Financial Data. Under the
purchase accounting method, assets acquired and liabilities assumed will
be recorded at their estimated fair value at the date of Acquisition. The
pro forma adjustments set forth in the following pro forma combined
financial statements are estimates and may differ from the actual
adjustments when they become known.
The unaudited pro forma data is provided for comparative purposes only.
It does not purport to be indicative of the results that actually would
have occurred if the Acquisition had been consummated on the dates
indicated or which may be obtained in the future. The pro forma combined
financial data should be read in conjunction with the notes thereto and
the audited financial statements of The Permutit Company Limited (a
member of The Permutit Group) and the related notes thereto contained
elsewhere herein and the audited consolidated financial statements of the
Company and the related notes thereto filed in its report on Form 10-K
for the year ended March 31, 1994.
F-14
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
December 31, 1994
---------------------------------------------------------------------------
Pro Forma
--------------------------------------
Historical Adjustments
------------------------------- Increase Adjustments
Company The Permutit Group (Decrease) Reference Combined
----------- ------------------ ----------- ------------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $11,893 $771 ($2,751) a (i) $ 9,913
Short-term investments 7,624 - (7,624) a (i) -
Accounts receivable, net 87,325 3,350 90,675
Cost and estimated earnings
in excess of billings on
uncompleted contracts 20,206 - 20,206
Inventories 36,623 1,356 37,979
Prepaid expenses 4,853 194 5,047
Deferred taxes 2,598 - 2,598
Other current assets 2,097 120 2,217
-------- ------- --------
Total current assets 173,219 5,791 168,635
-------- ------- --------
Property, plant and equipment,
net 63,440 1,479 64,919
Investment in Mexico leasehold
interest, net 21,634 - 21,634
Goodwill, net 97,510 7,104 a (ii) 104,614
Other assets 17,960 281 18,241
-------- ------- --------
$373,763 $7,551 $378,043
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $28,812 $1,712 $30,524
Accrued liabilities 40,567 953 41,520
Current portion of long-term
debt 1,078 - 1,078
Notes payable 23,818 - 23,818
Billings in excess of costs
and estimated earnings on
uncompleted contracts 15,715 - 15,715
Other current liabilities 7,769 1,254 9,023
-------- ------- --------
Total current
liabilities 117,759 3,919 121,678
-------- ------- --------
Long-term debt, excluding
current portion 7,936 - 7,936
Convertible subordinated debt 105,000 - 105,000
Loan (receivable) payable
--Parent - (5,295) 5,295 c -
Deferred taxes 5,774 - 5,774
Other liabilities 3,620 361 3,981
-------- ------- --------
Total liabilities 240,089 (1,015) 244,369
-------- ------- --------
Shareholders' equity:
Convertible preferred stock 25,577 - 25,577
Common stock 150 - 150
Additional paid-in capital 128,496 9,380 (9,380) b 128,496
Translation adjustment 215 - 215
Accumulated deficit (20,764) (814) 814 b (20,764)
-------- ------- --------
Total shareholders' equi 133,674 8,566 133,674
-------- ------- --------
$373,763 $7,551 $378,043
======== ======= ========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
financial data.
F-15
<PAGE>
Pro Forma Combined Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Fiscal Year Ended March 31, 1994
---------------------------------------------------------------------------
Pro Forma
--------------------------------------
Historical Adjustments
------------------------------- Increase Adjustments
Company The Permutit Group (Decrease) Reference Combined
----------- ------------------ ----------- ------------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues $180,421 $19,687 $200,108
Cost of sales 132,811 12,545 145,356
-------- ------- --------
Gross profit 47,610 7,142 54,752
Selling, general and
administrative expenses 52,484 8,601 280 d 61,365
-------- ------- --------
Operating income (4,874) (1,459) (6,613)
-------- ------- --------
Other income (expense):
Interest expense (2,077) (109) (2,186)
Other 1,174 50 1,224
-------- ------- --------
(903) (59) (962)
-------- ------- --------
Income before income
taxes (5,777) (1,518) (7,575)
Provision for income taxes (3,236) (364) (3,600)
-------- ------- --------
Net income ($2,541) ($1,154) ($3,975)
======== ======= ========
Net income per common
share ($0.26) ($0.38)
======== ========
Weighted average number of
shares outstanding 12,453 12,453
======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
financial data.
F-16
<PAGE>
Pro Forma Combined Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1994
---------------------------------------------------------------------------
Pro Forma
--------------------------------------
Historical Adjustments
------------------------------- Increase Adjustments
Company The Permutit Group (Decrease) Reference Combined
----------- ------------------ ----------- ------------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues $194,453 $13,916 $208,369
Cost of sales 139,164 8,587 147,751
-------- ------- --------
Gross profit 55,289 5,329 60,618
Selling, general and
administrative expenses 45,819 5,199 205 d 51,223
-------- ------- --------
Operating income 9,470 130 9,395
-------- ------- --------
Other income (expense):
Interest expense (3,632) (65) (3,697)
Other 1,641 6 1,647
-------- ------- --------
(1,991) (59) (2,050)
-------- ------- --------
Income before income
taxes 7,479 71 7,345
Provision for income taxes 2,056 (119) 1,937
-------- ------- --------
Net income $ 5,423 $ 190 $ 5,408
======== ======= ========
Net income per common
share $ 0.33 $ 0.33
======== ========
Weighted average number of
shares outstanding 14,881 14,881
======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
financial data.
F-17
<PAGE>
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
a. The pro forma combined balance sheet has been prepared to reflect the
acquisition of The Permutit Group by the Company for aggregate estimated
all-cash purchase price of $10,375,000 (including estimated acquisition
costs of $375,000).
The estimated tangible net book value, as adjusted, of The Permutit Group
and the fair value of the net assets as of the Closing Date are both
assumed to be $3,271,000. The difference between the estimated purchase
price and the estimated fair value of the net assets of The Permutit
Group is approximately $7,104,000, which has been recorded as costs in
excess of net assets of businesses acquired attributable to the
Acquisition in the accompanying pro forma combined balance sheet.
The pro forma combined balance sheet has been adjusted to reflect the
above as follows:
(i) To record the payment of cash and estimated
transaction costs;
(ii) To adjust goodwill for the difference between the
estimated purchase price and the estimated fair value of
the net assets acquired;
b. The pro forma combined balance sheet has been adjusted to eliminate the
equity of The Permutit Group.
c. The pro forma combined balance sheet has been adjusted to eliminate the
net loan receivable of The Permutit Company Limited from its parent
company.
d. The pro forma combined statements of operations give effect to the
additional goodwill amortization that results from the Acquisition.
F-18
<PAGE>
CONFORMED COPY
DATED 3rd April 1995
--------------------
THAMES WATER PRODUCTS & SERVICES LIMITED
PWT OVERSEAS LIMITED
and
IONPURE TECHNOLOGIES LIMITED
and
THAMES WATER PLC
and
UNITED STATES FILTER CORPORATION
_______________________________
SHARE PURCHASE AGREEMENT
_______________________________
Slaughter and May
35 Basinghall Street
London EC2V 5DB
(RCS/AJZP)
<PAGE>
SHARE PURCHASE AGREEMENT
------------------------
CONTENTS
--------
<TABLE>
<C> <S>
1. Interpretation
2. Sale and purchase
3. Consideration
4. Completion
5. Preparation of the Completion Accounts
6. Seller's Warranties and Undertakings
7. Purchaser's and Purchaser's Guarantor's
Warranties and Undertakings
8. Purchaser's remedies and Seller's limitations on liability
9. Guarantees
10. Restrictions on Seller's business activities
11. Isleworth underlease and assignment of lease
of property at Doncaster
12. Pensions
13. Intellectual Property
14. Effect of Completion
15. Remedies and waivers
16. Assignment
17. Entire agreement
18. Notices
19. Announcements
20. Confidentiality
21. Restrictive Trade Practices Act 1976
22. Costs and expenses
23. Counterparts
24. Time of essence
25. Invalidity
26. Language
27. Choice of governing law
28. Jurisdiction
29. Agent for Service
</TABLE>
<PAGE>
THIS AGREEMENT is made on 3rd April 1995 BETWEEN:
(1) THAMES WATER PRODUCTS & SERVICES LIMITED (whose registered number is
315984) whose registered office is situated at 14 Cavendish Place,
London W1M ONU ("TWPS") and PWT Overseas Limited (whose registered
number is 724 065) whose registered office is situated at 14 Cavendish
Place, London W1M 0NU ("PWT") (the "Sellers"); and
(2) IONPURE TECHNOLOGIES LIMITED (whose registered number is 2417739) whose
registered office is situated at Harforde Court, Foxholes Business Park,
John Tate Road, Hertford SG13 7NW (the "Purchaser").
(3) THAMES WATER PLC (whose registered number is 2366623) whose registered
office is situated at 14 Cavendish Place, London W1M 0NU ("the Sellers'
Guarantor"); and
(4) UNITED STATES FILTER CORPORATION (registered in Delaware) whose
principal office is situated at 73-710 Fred Waring Drive, Suite 222,
Palm Desert, California, 92260 ("the Purchaser's Guarantor")
WHEREAS:
(A) Particulars of the Companies (as defined in this agreement) are set out
in schedule 5 (Basic information about the Companies).
(B) TWPS is the beneficial owner of the whole of the issued and allotted
share capital in Permutit UK.
(C) PWT is the beneficial owner of the whole of the issued and allotted
share capital in Permutit Australia.
(D) The Sellers have agreed to sell and the Purchaser has agreed to purchase
and pay for the Shares (as defined in this agreement) in each case on
the terms and subject to the conditions set out in this agreement.
(E) The Sellers' Guarantor is the indirect beneficial owner of the entire
issued share capital of the Sellers.
(F) The Purchaser's Guarantor is the indirect beneficial owner of the entire
issued share capital of the Purchaser.
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
(A) In this agreement and the schedules to it:
" Accounts" means the audited financial
<PAGE>
2
statements of Permutit UK, prepared in
accordance with the Companies Acts, for the
accounting reference period ended on 31st
March 1994, and the audited financial
consolidated statements of Permutit
Australia and its subsidiaries prepared in
accordance with the Corporations Law and
Australian generally accepted accounting
standards for the financial year ended 31st
March, 1994, and the reports, accounts and
other documents required by law to be
attached thereto copies of which have, for
the purpose of identification only, been
initialled by the Seller's Solicitors and
delivered to the Purchaser or the
Purchaser's Solicitors;
"Accounts Date" means 31st March 1994;
"Asbestos Claim" means any claim made against Permutit UK in
respect of personal injury, the cause of
which is the asbestos at the Manchester
Property;
" Available Items" means items made available pursuant to
clause 13(G);
"Australian Licence" means the licence agreement dated 7th
October, 1993 made between Kevin McEntee &
Associates Pty Ltd and Permutit Australia
of Suite 12, 154 Fullarton Road, Rose Park;
"Australian Property" means the Property described in Part C of
schedule 8 (Immovable Properties);
"Books and Records" has its common law meaning and includes,
without limitation, all notices,
correspondence, orders, inquiries,
drawings, plans, books of account and other
documents and all computer disks or tapes
or other machine legible programs or other
records;
<PAGE>
3
"Business Day" means a day (other than a Saturday or a
Sunday) on which banks are open for
business in London and Sydney and Auckland;
"Business Information" means all information, know-how and records
(whether or not confidential and in
whatever form held) including (without
limitation) all formulas, designs,
specifications, drawings, data, manuals and
instructions and all customer lists,
supplier lists, sales information, business
plans and forecasts, and all technical or
other expertise and all computer software
and all accounting and tax records,
correspondence, orders and inquiries
relating to the Group;
"Business of the Group" means all businesses as at the date of
Completion undertaken by the Group
Companies and which are concerned with the
sale or supply of products, systems and
services (including without limitation
catalogue products and systems,
HEAVC/commercial softeners, and pre-
engineered systems) used in industrial
water purification, laboratory water
purification, other non-municipal water
purification, industrial wastewater
treatment and other non-municipal
wastewater treatment;
"Claim for Tax" means a notice of assessment, a written
decision by an Inspector of the Board, the
New Zealand Inland Revenue, the Australian
Inland Revenue, any other Tax Authority,
determination of an appeal by the
Commissioners, the New Zealand
Commissioners, the Australian Commissioners
and a decision of any Court from which
assessment, decision or determination it
appears that a Tax Liability has, will or
is likely to be imposed on any Group
Company or any member of the Purchaser's
Group for which the Purchaser does or will
or would
<PAGE>
4
have a claim against the Sellers under the
provisions of this agreement or the Tax
Covenant;
"Companies Acts" means the Companies Act 1985, the Companies
Consolidation (Consequential Provisions)
Act 1985, the Companies Act 1989 and Part V
of the Criminal Justice Act 1994;
"Companies" means The Permutit Company Limited and The
Permutit Company Pty Ltd, basic information
concerning which is set out in schedule 5
(Basic information about the Companies)and
each is referred to as a "Company";
"Completion" means completion of the sale and purchase
of the Shares under this agreement;
"Completion Accounts" means the accounts prepared in accordance
with clause 5 for the purpose of
establishing the Net Asset Value;
"Confidential Business
Information" means Business Information which is
confidential or not generally known;
"Corporations Law" means the Corporations Law of New South
Wales and other jurisdictions of Australia
as it applies to Permutit Australia;
" Deed of Assignment" means a deed of assignment in the form
attached to the Disclosure Letter to be
entered into by TWPS in favour of the
Purchaser;
"Disclosure Letter" means the letter of even date herewith
written by the Seller to the Purchaser for
the purposes of clause 8(B) (Purchaser's
remedies and Sellers' limitations on
liability) and delivered to the Purchaser's
Solicitors before the execution of this
agreement;
<PAGE>
5
"Dubai Leases" means the two lease agreements in the name
of Permutit UK dated 25th July, 1994 and
18th December, 1994 in respect of apartment
708 Golden Sands III and apartment 715
Golden Sands I;
" Egypt Side Letter" an agreement of even date herewith made
between PWT Projects Limited and the
Purchaser;
"Egypt Trade Mark User means the agreement contained in
Agreement" Part B of Schedule 14;
"Employee" means any person employed at the date of
this agreement by any member of the Group
including any director of any member of the
Group;
"Environment" consists of all, or any, of the following
media: namely, air (including the air
within buildings and the air within other
natural or man-made structures above or
below ground), water (including
territorial, coastal and inland waters and
natural water and drains and sewers) and
land (including sea bed or river bed under
any water as described above, surface land
and sub-surface land);
"Environmental Approvals" means permits, consents, licences, and
other authorisations and approvals required
under Environmental Laws to be obtained in
connection with the use of any of the
Properties or the conduct of the business
of any Group Company;
"Environmental Laws" means, in relation to any Group Company:
(i) all current and previous
national or local
statutes, codes,
directives, notes or
other laws or
legislation concerning
Environmental Matters
which are applicable at
or prior to the date of
this agreement to any of
the
<PAGE>
6
Properties or the
conduct of the Group
Company's business at
any of the Properties
and all rules,
regulations, ordinances,
orders, notices and
directives made
thereunder at or prior
to the date of this
agreement;
(ii) judicial and
administrative
interpretations of each
of the foregoing;
"Environmental Liabilities" means liability under
Environmental Laws in relation
to Environmental Matters
including (without limitation)
monetary claim or fine, actual
liability to make good, repair,
reinstate, treat or clean up:-
(i) any of the Properties or
any property previously
owned or occupied by any
Group Company;
(ii) any place where any
Group Company has caused
or permitted any
Hazardous Materials to
be sent, spilt,
discharged, disposed of,
displaced or otherwise
directly or indirectly
to become located; or
(iii) otherwise arising out of
or in connection with
the business of any
Group Company;
" Environmental Matters" means:-
(i) the disposal, release,
spillage, deposit,
escape, discharge, leak
or emission of, contact
with, or exposure of any
person to, Hazardous
Materials or Waste;
(ii) the creation of any
noise, vibration,
radiation, common law or
statutory nuisance, or
other adverse impact on
the Environment;
<PAGE>
7
(iii) any other matters
relating to the
condition, protection,
maintenance, restoration
or replacement of the
Environment or any part
of it arising directly
or indirectly out of the
manufacturing,
processing, treatment,
keeping, handling, use
(including as a building
material),possession,
supply, receipt, sale,
purchase, import,
export, transportation
or presence of Hazardous
Materials or Waste;
"Group" means the Companies and all the
Subsidiaries;
"Group Company" means any Company or Subsidiary;
"Hazardous Materials" includes any substance, whether
solid, liquid or gaseous and
noise or electromagnetic or
other radiation which in any
case is capable of causing harm
to man or any other living
organism supported by the
Environment;
"ICTA 1988" means the Income and Corporation
Taxes Act 1988;
"Immovable Property" means freehold, leasehold or
other immovable property in any
part of the world;
"Information Memoranda" means the information memorandum
prepared by Coopers and Lybrand
on the Group, dated December,
1994 as attached to the
Disclosure Letter;
"Intellectual Property" means patents, trade names,
trade marks and service marks,
registered designs, rights in
designs, trade or business
names, copyrights (including
rights in computer software) and
topography rights (whether or
not any of these are registered
and including applications for
registration of any such thing)
and all rights or forms of
protection of a similar nature
or having equivalent or
<PAGE>
8
similar effect to any of these
which may subsist anywhere in
the world;
"Isleworth Property" the property known as Pemberton
House, 632-652 London Road,
Isleworth;
"ITA 1984" means the Inheritance Tax Act
1984;
" Items" means:-
(i) the Specified Items; and
(ii) any other drawings or
documents containing
know-how or technical
information which has at
any time been used in
the business of the
relevant Group Company;
" Loan Note" a L2,785,345 nominal loan note
issued by TWPS in the form
attached to the Disclosure
Letter;
"London Stock Exchange" means the International Stock
Exchange of the United Kingdom
and the Republic of Ireland
Limited;
"Management Accounts" means the management accounts of
each of the Companies as at 28th
February 1995, in the form
attached to the Disclosure
Letter;
"Manchester Property" means Units B1 and B2, Floats
Road Industrial Estate,
Wythenshawe, Manchester;
"Net Asset Value" means the aggregate of the
Companies' assets including the
Companies' intangible assets
less the aggregate of the
Companies' liabilities
calculated in accordance with
generally accepted accounting
principles but ignoring for this
purpose, any bank indebtedness
owed by any Group Company and
any sums owed to any Group
Company by any member of the
Retained Group or vice versa,
other than by way of trading in
the ordinary course;
<PAGE>
9
"New Zealand Property" means the Property described in
Part B of schedule 8 (Immovable
Properties);
"Panel" means the Panel on Takeovers and
Mergers;
"Permitted Businesses" means the businesses specified
in clause 10(E) (Restrictions on
Sellers' business activities);
"Permutit Australia" means The Permutit Company Pty
Ltd;
"Permutit Australia Shares" means all the issued share
capital of Permutit Australia;
"Permutit Brand Name" means the registered and
unregistered Intellectual
Property using the name
"Permutit" as set out in the
schedule which is annexed to the
Disclosure Letter;
"Permutit New Zealand" means Permutit New Zealand
Limited;
"Permutit UK" means The Permutit Company
Limited;
"Permutit UK Shares" means all the issued share
capital of Permutit UK;
"Pontyclun Claims" means any claim made against any
member of the Group including,
without limitation, claims in
respect of any personal injury
or environmental matter arising
from or in respect of the
business which was carried on by
Permutit UK at Pontyclun, South
Wales;
"Proceedings" means any proceeding, suit or
action arising out of or in
connection with this agreement;
"Properties" means the Immovable Property
listed in schedule 8 (Immovable
Properties owned by members of
the Group);
"Purchaser's Accountants" means Giess Wallis Crisp;
"Purchaser's Group" means the Purchaser, its
subsidiaries and subsidiary
undertakings, any holding
company of the Purchaser and all
other
<PAGE>
10
subsidiaries of any such holding
company from time to time;
"Purchase Price" means the consideration referred
to in clause 3 (Consideration);
"Purchaser's Solicitors" means Fox Williams;
"Relief" has the meaning given in the Tax
Covenant;
"Retained Group" means the Sellers, their
subsidiaries and subsidiary
undertakings any holding company
of the Sellers and all other
subsidiaries and subsidiary
undertakings of any such holding
company from time to time
(except any member of the
Group);
"RTPA" means the Restrictive Trade
Practices Acts 1976 and 1977;
"Sellers' Accountants" means Coopers & Lybrand;
"Sellers' Solicitors" means Slaughter and May;
"Shares" means the Permutit UK shares and
the Permutit Australia shares;
"South Africa Trade Mark means the agreement set out in
User Agreement" Part B of Schedule 14;
" Specified Intellectual means any Intellectual Property
Property" in any Specified Items which the
Sellers have warranted under
sub-clause 7(H)(ix) of Schedule
2 to be in the possession of any
of the Group Companies;
"Specified Items" means the items referred to in
schedule 11;
"Subsidiary" means at any relevant time any
then subsidiary or subsidiary
undertaking of either of the
Companies, basic information
concerning each current
subsidiary and subsidiary
undertaking being set out in
schedule 6 (Basic information
about the Subsidiaries and
Subsidiary Undertakings);
<PAGE>
11
"Tax" or "Taxation" has the meaning given in the Tax
Covenant;
"Taxes Act 1976" means the New Zealand Income Tax
Act 1976;
"Tax Authority" has the meaning given in the Tax
Covenant;
"Tax Covenant" means the tax covenant referred
to in schedule 1 (Completion
arrangements) entered into at
Completion between the parties
to this agreement;
"Tax Liability" has the meaning given in the Tax
Covenant;
"Tax Warranties" means the warranties set out in
clause 10 of Schedule 2;
"TCGA 1992" means the Taxation of Chargeable
Gains Act 1992;
"TMA 1970" means the Taxes Management Act
1970;
"Transaction" has the meaning given in the Tax
Covenant;
"UK Properties" means the Properties listed in
Part A of schedule 8 (Immovable
Properties);
"VATA" means the Value Added Tax Act
1994;
"VAT Legislation" means the VATA and all other
enactments in relation to value
added tax and all notices,
provisions and conditions made
or issued thereunder including
the terms of any agreement
reached with HM Commissioners of
Customs and Excise or any
concession relating to VAT
referred to in the Disclosure
Letter;
"Warranties" means the warranties set out in
schedule 2 (Warranties) and
schedule 7 (Pensions) given by
the Sellers;
<PAGE>
12
"Waste" means any waste (including
anything which is abandoned,
unwanted or surplus)
irrespective of whether it is
capable of being recovered or
recycled or has any value;
"Working Hours" means 9.30 a.m. to 5.30 p.m. on
a Business Day.
(B) In this agreement, unless otherwise specified:
(i) references to clauses, sub-clauses, paragraphs, sub-paragraphs,
parts and schedules are to clauses, sub-clauses, paragraphs,
sub-paragraphs and parts of, and schedules to, this agreement;
(ii) a reference to any statute or statutory provision shall, be
construed as a reference to the same as was in effect at the
relevant date (including any amendments, modifications or re-
enactments prior to such date in effect on such date) or as it
may have been, or may from time to time be, amended, modified or
re-enacted;
(iii) references to a "company" shall be construed so as to include
any company, corporation or other body corporate, wherever and
however incorporated or established;
(iv) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a
state or any joint venture, association or partnership (whether
or not having separate legal personality);
(v) the expressions "accounting reference date", "accounting
reference period", "allotment", "body corporate", "current
assets", "debentures", "holding company", "paid up", "profit and
loss account" "subsidiary", "subsidiary undertaking" and
"wholly-owned subsidiary" shall have the meaning given in the
Companies Acts; and in relation to Permutit Australia "current
assets", "debentures", "profit and loss account" and "financial
year" have the meaning given in or applicable under the
Corporations Law and in relation to Permutit New Zealand
"debentures", "holding company" and "subsidiary" shall have the
meanings given in the Companies Act 1955;
(vi) a person shall be deemed to be "connected" with another if that
person is connected with another within the meaning of section
839 ICTA 1988;
(vii) references to writing shall include any modes of reproducing
words in a legible and non-transitory form;
(viii) references to times of day are to London time;
<PAGE>
13
(ix) headings to clauses and schedules are for convenience only and
do not affect the interpretation of this agreement;
(x) words importing the singular number include the plural and vice
versa; and
(xi) the schedules form part of this agreement and shall have the
same force and effect as if expressly set out in the body of
this agreement, and any reference to this agreement shall
include the schedules.
2. SALE AND PURCHASE
(A) TWPS shall sell as beneficial owner the Permutit UK Shares and PWT shall
sell as beneficial owner the Permutit Australia Shares and the Purchaser
relying on the representations, warranties and undertakings herein
contained shall purchase, subject to clause 2(B), the Shares. The Shares
shall be free from all claims, liens, charges, encumbrances and options,
equities or any similar right and shall be sold with all rights attached
or accruing to them at Completion.
(B) The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the purchase of all the Shares is completed
simultaneously in accordance with this agreement.
(C) The Purchaser shall be entitled to exercise all rights now attached or
hereafter accruing to the Shares including, without limitation, the
right to receive all dividends, distributions or any return of capital
declared, paid or made by the Companies in respect of periods commencing
on or after Completion.
(D) The Sellers waive and shall procure that all rights of pre-emption over
any of the Shares conferred by the articles of association of either of
the Companies or in any other way are waived.
3. CONSIDERATION
The consideration for the purchase of the Shares shall be the payment by
the Purchaser of the sum of L9,053,382 which shall be apportioned between the
Shares as to L7,799,775 in respect of Permutit UK and L1,253,607 in respect of
Permutit Australia and shall be payable in accordance with clause 4
(Completion).
4. COMPLETION
(A) Prior to Completion:-
(i) TWPS shall procure that the overdraft of Permutit UK is
discharged;
<PAGE>
14
(ii) Permutit UK shall execute the Deed of Assignment in favour of
the Purchaser in consideration for the creation of an interest
free debt in a sum equal to the nominal value of the Loan Note.
(B) Completion shall take place immediately following the signing of this
agreement at the offices of the Sellers' Solicitors at 35 Basinghall
Street, London EC2V 5DB.
(C) At Completion the Seller shall do the things listed in Part A of
schedule 1 (Completion arrangements).
(D) At Completion, the Purchaser shall do the things listed in Part B of
schedule 1 (Completion arrangements).
(E) Payment of the Purchase Price in accordance with paragraph (i) of part B
of schedule 1 (Completion arrangements) shall constitute payment of the
consideration for the Shares and shall discharge the obligations of the
Purchaser under clause 2 (Sale and Purchase).
(F) The solicitors to any party to this agreement are authorised to take
delivery on behalf of such party of any items hereunder and their
receipt shall be a good discharge therefor to the party and the
solicitors to the party making delivery, and the Purchaser shall not be
concerned to see that the Purchase Price is delivered to and applied
towards payment of the Sellers' entitlements pursuant to this agreement.
(G) After Completion, the Sellers shall do the things listed in Part C of
Schedule 1 (Completion arrangements).
5. PREPARATION OF THE COMPLETION ACCOUNTS
(A) The Sellers shall use all reasonable endeavours to procure the prompt
preparation (and in any event within 90 days of Completion) by the
Sellers' Accountants of a profit and loss account and balance sheet for
Permutit UK and a consolidated profit and loss account and consolidated
balance sheet for Permutit Australia in each case for the financial year
ended 31 March 1995 (the "Completion Accounts") and the parties shall
disclose to and open for inspection by the Sellers' Accountants all
information, documents and records in their possession or under their
control reasonably requested by the Sellers' Accountants for that
purpose. The costs of preparing the Completion Accounts shall be borne
firstly by the relevant Company from the provision that will be made in
the Completion Accounts to the extent that the work relates to the
preparation of statutory accounts for the same period and half the
remainder of the costs shall be borne by the Sellers and half by the
Purchaser.
<PAGE>
15
(B) The Completion Accounts shall be prepared on the following bases:
(i) Proper provision shall be made and identified for all
liabilities of the Group, including, without limitation:
(a) all accrued commissions payable to agents of the Group;
(b) all costs in respect of the redundancy of Alison
Anderson, if her employment with Permutit UK ends on or
before 31 April 1995;
(c) all costs to be borne by any Group Company in respect of
the redundancy of Mervin Cottie; and
(d) the vouchers purchased from Group Companies which may be
exchanged with Group Companies for resin regeneration.
(ii) All receivables and payables shall, save to the extent hedged,
be revalued in accordance with Thames Water Plc Treasury Rates
at the close of business on 31 March 1995.
(iii) The provision for bad debts shall be based on the knowledge of
the Group Companies at the date the Completion Accounts are
agreed and shall reflect not only the length of time the debts
have been outstanding, but also any available information as to
the reasons that debts are outstanding.
(iv) No account shall be taken of the intra group balance created
pursuant to Clause 4(A)(ii) nor of any asset or liability dealt
with pursuant to Clause 7(O);
(v) A provision of L32,750 shall be made in respect of remedial
works relating to the asbestos at the Manchester Property;
(vi) Subject to sub-clause (B)(i) to (v), the Completion Accounts
shall be prepared in accordance with the accounting policies,
principles and practices adopted by the Companies in relation to
the Accounts and the Management Accounts applied on a consistent
basis and, to the extent that they are consistent with the above
in the case of the accounts of Permutit UK:
(a) the Companies Acts.
(b) the Statements of Standard Accounting Practice issued by
the Accounting Standards Committee of the Consultative
Committee of Accountancy Bodies whether or not adopted
by the Accounting Standards Board;
<PAGE>
16
(c) the Financial Reporting Standards issued by the
Accounting Standards Board of the Financial Reporting
Council;
(d) the guidance, rulings and consensus interpretations or
pronouncements issued by the Urgent Issues Task Force of
the Accounting Standards Board of the Financial
Reporting Council;
(e) the requirements of the Financial Reporting Review Panel
of the Financial Reporting Council;
and in the case of the consolidated accounts of Permutit
Australia:
(f) have been prepared in accordance with accounting
standards, principles and practice generally accepted in
Australia;
(g) comply with the requirements of the Corporations Law and
Australian Accounting Standards applicable to Permutit
Australia and other applicable statutes and regulations.
(C) A value of nil shall be attributed in the Completion Accounts to the
shares in Permutit Egypt Limited held by Permutit UK as nominee.
(D) Upon completion of the preparation of the Completion Accounts pursuant
to clause 5(A) and (B) the Sellers' Accountants shall be instructed to
send a copy of them to the Purchaser's Accountants and to disclose to
the Purchaser's Accountants all information reasonably requested by the
Purchaser's Accountants in relation thereto.
(E) The Purchaser shall within 120 days of Completion raise any objections
to the Completion Accounts. Objections may only be made on the basis
that the Completion Accounts have not been prepared in accordance with
the bases set out in clause 5(B) or that they do not properly reflect
the value of the net assets of each Group Company as at the date of the
Completion Accounts. Such objections shall be made in writing to the
Sellers.
(F) If any aspect of the Completion Accounts is objected to by the Purchaser
and the parties are unable to resolve the dispute within 30 days of such
notification, the dispute shall be referred for determination by an
independent chartered accountant nominated by agreement between the
Sellers and the Purchaser or, in the absence of such agreement within 7
days, nominated at the request of either the Sellers or the Purchaser by
the President for the time being of the Institute of Chartered
Accountants in England and Wales. The determination of the said
chartered
<PAGE>
17
accountant (who shall act as an expert and not an arbitrator)
shall (in the absence of manifest error) be final and binding on the
Sellers and the Purchaser. In the event that the Sellers and the
Purchaser shall agree, or that the said independent chartered accountant
shall determine, that the Completion Accounts should be adjusted, the
same shall forthwith be so adjusted. The fees of the said chartered
accountant and any costs related to his appointment shall be borne as he
shall direct.
(G) Upon agreement between the parties (or lack of any objection) as to the
Completion Accounts or the determination of the independent chartered
accountant, the Completion Accounts shall be used to establish the Net
Asset Value of the Companies as at the date of the Completion Accounts.
(H) All parties agree that the forecast margin bank figure at 31st March
1995 is L942,000 and the actual margin bank figure at 31st March 1995 is
L1,253,000. The amount by which the actual margin bank differs from the
forecast margin bank, L311,000, shall be known as the margin bank
differential (the "Margin Bank Differential"). Appropriate adjustment
shall be made to the Margin Bank Differential to the extent that the
method for calculating the actual margin bank at 31 March, 1995 differs
from the methodology used in calculating the forecast margin bank at
31st March, 1995 (prepared at 31st December, 1994).
(I) In the event that, and only to the extent that Net Asset Value (plus
Margin Bank Differential (as adjusted) if it is positive or less Margin
Bank Differential (as adjusted) if it is negative) is less than
L3,125,000 (being the forecast net asset value less L300,000) the
Sellers shall pay to the Purchasers L1.00 for each L1.00 by which such
amount is less than such figure. For the purpose of calculating the Net
Asset Value and the Margin Bank Differential of Permutit Australia in
sterling, the exchange rate shall be taken to be L1 = Australian dollars
2.217. Such payment shall be made by banker's draft made payable to the
Purchaser not more than 7 days after the agreement of the parties as to
the Completion Accounts or the determination of the independent
chartered accountant.
6. SELLERS' WARRANTIES AND UNDERTAKINGS
(A) Subject to clauses 8(A) and (B) (Purchaser's remedies and Seller's
limitations on liability) each Seller warrants and represents in respect
of the Company it is selling and any Subsidiary of that Company to the
Purchaser that each of the Warranties is true and correct and not
misleading in relation to the relevant Group Company at the date of this
agreement.
(B) Each of the Warranties shall be construed as a separate and independent
warranty and (except where expressly provided to the
<PAGE>
18
contrary) shall not be limited or restricted by reference to or
inference from the terms of any other Warranty.
(C) TWPS agrees to indemnify and hold harmless each member of the Group from
and against all claims, actions, proceedings, demands, liabilities,
losses, damages, and costs and expenses reasonably incurred in respect
of or arising out of any Pontyclun Claims or Asbestos Claims. None of
the provisions of clause 8 or schedule 3 shall apply to this indemnity.
(D) In relation to any claims by the Purchaser pursuant to clause 6(C) the
Purchaser shall and shall procure that the relevant Group Company shall:
(i) notify TWPS in writing as soon as reasonably practicable after
any Pontyclun Claim or Asbestos Claim has been threatened or
made;
(ii) give TWPS on demand the full, unrestricted and exclusive right
to assume or to allow its insurers to assume the conduct of the
relevant Pontyclun Claim or Asbestos Claim in the name of the
relevant member of the Group subject to TWPS providing the
Purchaser as soon as reasonably practicable with details of any
action taken and providing the Purchaser and any relevant Group
Company with security to their reasonable satisfaction for any
costs and expenses which may be incurred by them in relation to
any action;
(iii) provide all records, information and other assistance reasonably
requested by TWPS in relation to any Pontyclun Claim or Asbestos
Claim; and
(iv) not make any admission or agree any settlement or purport to do
either of the above in relation to any Pontyclun Claim or
Asbestos Claim,
Provided that, if TWPS fails to demand conduct of the relevant Pontyclun
Claim or Asbestos Claim within one month of receiving a notice under
paragraph (i) the relevant Group Company may require TWPS to assume
conduct. If TWPS refuses to assume conduct within 7 days of being
required to do so or if, having assumed conduct, TWPS subsequently
abandons conduct of the relevant Pontyclun Claim or Asbestos Claim, the
relevant Group Company may take any reasonable steps to settle the
claim.
(E) Except to the extent provided to the contrary if any Group Company, the
Seller, any member of the Retained Group, or the Purchaser or any member
of the Purchaser's Group suffers any loss ("Loss") in respect of which
it is entitled to be indemnified or re-imbursed (the "Indemnity
Payment") pursuant to any provision under this Agreement and the
Indemnity Payment would be taken into account as a receipt in computing
a Tax Liability of the
<PAGE>
19
recipient and the Loss would not be deductible in computing the Tax
Liability, the Indemnity Payment will be increased to such amount as is
necessary to ensure that the recipient is put in the same net of tax
position as it would be in if the Loss was not deductible and the
Indemnity Payment was not taxable in the recipient's hands.
(F) TWPS agrees to indemnify and hold harmless the Purchaser from and
against all claims, actions, proceedings, demands, liabilities, losses,
damages and costs and expenses reasonably incurred by the Purchaser or
any Group Company or any of its or their officers or employees in
respect of or arising out of the termination within seven days of
Completion of the contract of employment of Neil Edkins by Permutit UK
or his loss of office or his employment or the holding of any office or
any other matter whatsoever or howsoever arising (including, without
limitation, any claim for a statutory redundancy payment, wrongful
dismissal, unfair dismissal or otherwise at common law or under
statute), which termination TWPS hereby agrees Permutit UK may effect at
its own discretion at any time after the Completion Date.
(G) To the extent that any such claim by Neil Edkins against Permutit UK as
set out in Clause 6(F) is for an amount not exceeding L82,527, TWPS will
pay Permutit UK such amount. If any such claim against Permutit UK
exceeds that amount, then the Purchaser shall, and shall procure that
Permutit UK shall:
(i) notify TWPS in writing as soon as reasonably practicable after
any such claim has been threatened or made;
(ii) give TWPS on demand the full, unrestricted and exclusive right
to assume or to allow its insurers to assume the conduct of the
claim in the name of Permutit UK subject to TWPS providing the
Purchaser as soon as reasonably practicable with details of any
action taken and providing Permutit UK with security for its
reasonable satisfaction for any costs and expenses which may be
incurred by them in relation to any action;
(iii) provide all records, information and other assistance reasonably
requested by TWPS in relation to the claim;
(iv) not make any admission or agree any settlement or purport to do
any of the above in relation to any claim,
Provided that if TWPS fails to demand conduct of the claim within one
month of receiving notice under paragraph (i) Permutit UK may require
TWPS to assume conduct. If TWPS refuses to assume conduct within 7 days
of being so required to do so or if, having assumed conduct, TWPS
subsequently abandons conduct of the claim, Permutit may take any
reasonable steps to settle the claim.
<PAGE>
20
(H) Each of the Sellers hereby jointly and severally undertakes to the
Purchaser that:
(i) it will within twenty-eight days of Completion assign or procure
the relevant member of the Retained Group to assign to such
member of the Group as shall be notified by the Purchaser such
of the Intellectual Property as shall at Completion be shown on
the schedule of registered Intellectual Property which is
annexed to the Disclosure Letter not to be registered in the
name of a member of the Group;
(ii) such assignment shall be in the form of the deed of assignment
set out in schedule 15 or a form reasonably similar thereto;
(iii) it will pending such assignment hold or procure the relevant
member of the Retained Group to hold such Intellectual Property
on trust for the member of the Group notified by the Purchaser
absolutely;
(iv) it will pending such assignment take no action and will procure
the relevant member of the Retained Group to take no action
whereby such Intellectual Property might cease to be valid and
enforceable without the prior written consent of the Purchaser;
(v) it hereby grants or will procure the relevant member of the
Retained Group to grant immediately to the member of the Group
notified by the Purchaser an exclusive, irrevocable, royalty
free licence to use such Intellectual Property;
(vi) it will as soon as reasonably practicable procure the
registration of such licence with the relevant Intellectual
Property registry (if such be a requirement of such registry and
the Purchaser so requires);
(vii) it will be responsible for all fees and out of pocket expenses
of whatsoever nature (excluding internal administrative costs)
incurred by it, the relevant member of the Retained Group, the
member of the Group notified by the Purchaser and the Purchaser
in making and registering such licence and assignment;
(viii) it will immediately upon becoming aware of the same bring to the
attention of the Purchaser:
(a) any claim of any third party that such Intellectual
Property is invalid;
(b) any claim that the use of such Intellectual Property
infringes any rights of any third party.
<PAGE>
21
(I) In the event of any claim being made or action brought arising out of
the matters referred to in Clause 6(H)(viii)(a) or (b) then the Sellers
and the Purchaser will within 10 (ten) Business Days of either of the
Sellers becoming aware of any such claim or action use their reasonable
endeavours to agree an appropriate course of action PROVIDED THAT the
Purchaser may, if it considers it necessary to protect such Intellectual
Property, take control of the conduct of any relevant litigation and of
the settlement of any such claim or action but will inform the Sellers
of the progress of any relevant litigation. The costs of any such action
shall be borne by the Purchaser (without prejudice to any rights of the
Purchaser in respect of any breach of any of the warranties in Schedule
2). The Sellers shall not and shall procure that no member of the
Retained Group shall make any admission that may be prejudicial to the
Purchaser. The Sellers shall and shall procure that each member of the
Retained Group shall (at its sole cost and expense) give all available
assistance for the purpose of contesting or supporting any such claim or
action. Any amounts recovered shall be for the account of the Purchaser.
(J) There shall be excluded from Clause 6(H) the following trade marks:
PERMAK
TRIPOL.
7. PURCHASER'S AND PURCHASER'S GUARANTOR'S WARRANTIES
AND UNDERTAKINGS
(A) Each of the Purchaser and the Purchaser's Guarantor represents and
warrants to the Sellers that neither the execution of this agreement by
it nor the consummation of the transaction as contemplated by this
agreement will:
(i) result in a material breach of any provision of the memorandum
or articles of association of the Purchaser or the Purchaser's
Guarantor; or
(ii) result in a material breach of, or constitute a material default
under, any instrument to which the Purchaser or the Purchaser's
Guarantor is a party or by which the Purchaser or the
Purchaser's Guarantor or any of its assets is bound; or
(iii) result in a breach of any order, judgment or decree of any court
or governmental agency by which the Purchaser or the Purchaser's
Guarantor or any of their respective assets is bound.
(B) The Purchaser undertakes to procure that the auditors of each Group
Company at the time of Completion shall be retained as such
<PAGE>
22
by each Group Company until the Completion Accounts have been agreed
between the parties.
(C) In the event that at any time after the date hereof, the Sellers shall
wish to take out insurance against liability under any relevant
provision of this agreement, the Purchaser on being indemnified to its
reasonable satisfaction for any costs incurred undertakes to provide
such information as the prospective insurer may reasonably require.
(D) The Purchaser undertakes to indemnify PWT against all actions, costs,
claims or demands or other liabilities incurred by PWT as a result of
PWT being jointly and severally liable for the debts of Permutit
Australia as a result of having been a sole shareholder in Permutit
Australia.
(E) The Purchaser undertakes that, to the extent any shares in Permutit
Egypt Limited are owned as nominee by Permutit UK at Completion, it will
procure that such shares are transferred to the Seller for nil as soon
as practically possible after Completion. The Sellers will reimburse
Permutit Egypt Limited or the Purchaser for all costs properly incurred
by either of them in connection with the transfer.
(F) The Purchaser and the Purchaser's Guarantor represent and warrant that
do not have actual knowledge of any breach of Warranty.
(G) The Purchaser and the Purchaser's Guarantor covenant to use all
reasonable endeavours (including, without limitation, the giving of
parent company guarantees to the relevant third party), following
Completion, to secure the release of the Sellers or any member of the
Retained Group from the guarantees and bonds set out in part 1 of
schedule 12 and covenant to indemnify the Sellers, for itself and as
trustee for any member of the Retained Group, against all actions,
costs, claims and demands or other liabilities incurred by the Sellers
or any member of the Retained Group in relation to or arising out of
such guarantees and bonds.
(H) The Purchaser and the Purchaser's Guarantor hereby agree to indemnify
the Sellers for themselves and as trustees for any member of the
Retained Group against all actions, costs, claims and demands or other
liabilities incurred by the Sellers or any member of the Retained Group
in relation to or arising out of the guarantees and bonds set out in
part 2 of schedule 12.
(I) In relation to any claims by the Sellers pursuant to clauses 7(D), 7(G)
or 7(H), the relevant Seller shall and shall procure that the relevant
member of the Retained Group shall:
(i) notify the Purchaser in writing as soon as reasonably
practicable after it becomes aware that any such loss or
<PAGE>
23
liability has been incurred or any claim under such a bond or
guarantee has been threatened or made;
(ii) give the Purchaser on demand the full, unrestricted and
exclusive right to assume or to allow its insurers to assume the
conduct of the relevant claim subject to the Purchaser providing
the Sellers as soon as reasonably practicable with details of
any action taken and providing the relevant Seller and any
relevant member of the Retained Group with security to their
reasonable satisfaction for any costs and expenses which may be
incurred by them in relation to any action;
(iii) provide all records, information and other assistance reasonably
requested by the Purchaser in relation to any such claim; and
(iv) not make any admission or agree any settlement or purport to do
either of the above in relation to any such claim,
Provided that if the Purchaser fails to demand conduct of the relevant
claim within one month of receiving a notice under paragraph (i) the
Seller may require the Purchaser to assume conduct. If the Purchaser
refuses to assume conduct within seven days of being required to do so,
or if having assumed conduct, the Purchaser subsequently abandons
conduct of the relevant claim, the Sellers or the relevant member of the
Retained Group may take any reasonable steps to settle the claim.
(J) In relation to bonds or guarantees given by the Sellers or any member of
the Retained Group, which will continue after Completion, on contracts
entered into by any Group Company as set out in part 3 of schedule 12,
the Purchaser and the Purchaser's Guarantor covenant to use their
reasonable endeavours to ensure:
(i) the performance by the Group Companies of all works reasonably
necessary to remedy any breach of warranty under such contracts
other than the payment of money;
(ii) the payment by the Group Companies of all ordinary course fees,
charges and expenses incurred in maintaining such bonds; and
(iii) the return to the Sellers of all such bonds forthwith upon their
expiry.
(K) To the extent that it transpires that any bonds or guarantees listed in
Parts 1 and 2 of Schedule 12 are in respect of contracts which have been
handed over to clients, such bonds and guarantees will be treated by all
parties as if they were in part 3 of schedule 12.
<PAGE>
24
(L) The Purchaser undertakes to the Sellers (as trustees on behalf of the
employees of all the Group Companies at the date of Completion) to
procure that all the Group Companies comply with the terms of the
employees' enhanced redundancy terms set out in Schedule 10 of this
agreement.
(M) The Purchaser, as a result of the Sellers agreeing to continue, until
1st October, 1995, insuring the employees of the Group Companies in
respect of permanent health insurance, BUPA and death in service
insurance to the extent they are insured at Completion, undertakes to
procure that the relevant Group Company reimburses (or failing which,
itself to pay) the Sellers in respect of all costs, expenses and
liabilities reasonably incurred as a result of doing so. The costs of
such insurances will be no more than would be charged to any member of
the Retained Group in like circumstances.
(N) The Purchaser undertakes to procure that the relevant Group Company
shall pay (or failing which, itself to pay) to the Sellers or the
relevant member of the Retained Group a commission of 1% per annum of
the value of each guarantee given by any member of the Retained Group
prior to the date of this agreement in respect of obligations of a Group
Company which are to remain in force after Completion.
(O) The Purchaser and the Sellers shall within 21 days of Completion agree a
bank reconciliation in respect of the bank accounts of all Group
Companies as at Completion. If such reconciliation is not agreed, any
dispute shall be resolved in the terms, mutatis mutandis, of Clause
5(F). A sum equal to any net cash shall be paid by the Purchaser to the
Sellers and any net indebtedness shall be paid by the Sellers to the
Purchaser.
(P) The Purchaser undertakes to procure that, in the circumstances set out
in Clause 10(A)(iii)(a), the relevant Group Company shall make available
to the Sellers such moulds and patterns necessary for the production of
such items to the extent these are in the possession of the relevant
Group Company and provide such other assistance as the Sellers may
reasonably require, such reasonable costs incurred by the relevant Group
Company in so doing to be paid by the Seller.
8. PURCHASER'S REMEDIES AND SELLERS' LIMITATIONS ON LIABILITY
(A) Subject to sub-clause (B) and to the limitations set out in schedule 3
(Sellers' limitations on liability), the Purchaser shall be entitled to
claim after Completion that any of the Warranties has been breached and
(in accordance with clause 14 (Effect of Completion)) Completion shall
not in any way constitute a waiver of any of the Purchaser's rights. The
Purchaser's rights and remedies shall not be affected by any
<PAGE>
25
waiver except a duly authorised written waiver or release by the
Purchaser.
(B) The Purchaser shall not be entitled to claim that any fact causes any of
the Warranties to be breached if it has been fairly disclosed by the
Disclosure Letter or this agreement. The Warranties shall be subject to
no other qualifications whatsoever save for any qualifications arising
by operation of statute, common law or equity.
(C) No liability shall attach to the Sellers in respect of claims under the
Warranties or the Tax Covenant, as the case may be, if and to the extent
that the limitations referred to in sub-clause 8(A) above apply.
(D) The Seller and the Purchaser agree that, subject to the provisions of
this clause 8, if there is a breach of any of the Warranties in respect
of any Group Company, damages shall be calculated such that the Sellers
shall pay in cash to the Purchaser a sum equal to the aggregate of:
(i) the amount equal to the amount which, if the amount were payable
to the relevant Group Company, the relevant Group Company would
need to receive to put that Group Company into the financial
position which would have existed had there been no breach of
the Warranty in question Provided always that in determining
such amount common law rules as to foreseeability and remoteness
of loss shall apply; and
(ii) all reasonable out of pocket costs suffered or incurred by the
Purchaser or such Group Company, as a result of or in connection
with such breach of Warranty.
Notwithstanding the foregoing, the Purchaser shall be obliged to
mitigate any loss as if the common law rules applied unamended.
9. GUARANTEES
(A) (i) The Sellers' Guarantor hereby guarantees to the
Purchaser the due performance by the Sellers
(notwithstanding any legal limitation on or incapacity
of or other circumstances relating to the Sellers) of
the Warranties, undertakings, agreements and other
obligations on the part of the Sellers hereunder and
under the Tax Covenant and the Sellers' Guarantor hereby
covenants with the Purchaser that if and whenever the
Sellers shall make any default in any such Warranty,
undertaking, agreement or other obligation each will
indemnify the Purchaser against all losses, damages,
costs and expenses which may be incurred by the
Purchaser by reason of such default.
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26
(ii) The Sellers' Guarantor waives any rights which it might have to
require the Purchaser to proceed first against or claim payment
from the Sellers to the intent that as between the Purchaser and
the Sellers' Guarantor, the Sellers' Guarantor shall be deemed
to be liable as a principal as if it had entered into such
Warranties, undertakings, agreements and other obligations
jointly and severally with the Sellers.
(iii) The Sellers' Guarantor acknowledges that it shall not be
released by time or indulgence being given to or any
arrangements or alterations of terms being made with the Sellers
or by any release or dealing by the Purchaser or by the
invalidity of any such Warranty, undertaking, agreement or other
obligation.
(iv) The Sellers' Guarantor shall not, after any claim has been made
pursuant to its guarantee and indemnity hereunder, claim from
the Sellers any sums which may be owing to it from the Sellers
or have the benefit of any set-off or counter-claim or proof
against or dividend, composition or payment by the Sellers until
all sums owing to the Purchaser in respect hereof shall have
been paid in full.
(v) This guarantee and indemnity shall be a continuing and
irrevocable guarantee and indemnity.
(vi) The Seller's Guarantor hereby guarantees to the Purchaser the
due performance by PWT Projects Limited of its obligations under
the Egypt Side Letter and the Egypt Trade Mark User Agreement
and of the Permutit Company of South Africa Pty under the South
Africa Trade Mark User Agreement on the terms, mutatis mutandis,
of (i) to (v) above.
(B) In consideration of the Sellers entering into the agreement, the
Purchaser's Guarantor hereby guarantees to the Sellers for themselves
and as trustee for PWT Projects the due performance by the Purchaser of
all its obligations hereunder and under the Egypt Side Letter on the
terms, mutatis mutandis of Clause 9(A)(i) to (v).
10. RESTRICTIONS ON SELLERS' BUSINESS ACTIVITIES
(A) The Sellers undertake that neither they nor any member of the Retained
Group will do any of the following things without the consent of the
Purchaser:
(i) neither pending nor within two years after the date of
Completion, be engaged or (save as the holder of or being
interested in shares in a listed company which confer not more
than three per cent. of the votes which could normally be cast
at a general meeting of the company) directly or
<PAGE>
27
indirectly interested in carrying on any business which directly
competes with the Business of the Group;
(ii) within two years after the date of Completion, attempt to
discourage any person, firm or company from dealing with any
Group Company in respect of the Business of the Group;
(iii) use any information which is Confidential Business Information
for so long as that information remains Confidential Business
Information;
Provided that:
(a) should the Companies stop selling to the Retained group
the items set out in schedule 9 or if they should stop
selling such items to any member of the Retained Group
on arm's length terms, the Sellers shall be entitled to
retain and pass on to third parties know-how relating to
the production of such items so that such third party
may produce such items for the purchase by, amongst
others, the Sellers or any member of the Retained Group;
(b) the Sellers and any member of the Retained Group shall
be entitled to disclose information which is
Confidential Business Information to its professional
advisers;
(c) this sub-clause shall not apply in respect of any
Confidential Business Information which is in or becomes
part of the public domain, other than through a breach
of the obligations of confidentiality set out in this
agreement;
(d) this sub-clause shall not apply to the extent that the
Sellers and any member of the Retained Group are
required to disclose such Confidential Business
Information by any applicable law, regulatory or
governmental order, decree, regulation, licence or rule
or pursuant to the regulations of the Panel or any
recognised securities exchange whether or not the
requirement has the force of law;
(iv) at any time after the date of Completion maliciously do or say
anything harmful to the reputation of the Business of the Group
or which leads or may lead any person, firm or company to cease
to do business of the type carried on by the Group at the date
of Completion with any Group Company on substantially equivalent
terms to those previously offered or not to engage in such
business with any Group Company;
<PAGE>
28
(v) neither pending nor within l year after Completion, solicit or
entice away from the employment of any of the Group Companies
any person at present an employee of any of the Group Companies
EXCEPT for those who answer a public advertisement or those who
are approached when they are no longer employed by any of the
Group Companies.
(B) The Sellers undertake that no Competitive Business as defined in sub-
clause (D) will (without the consent of the Purchaser), neither pending
nor within two years after the date of Completion, solicit for the
purposes of any business which competes with the Business of the Group,
the custom or business of any person from whom any of the Group
Companies have within one year before the date of Completion solicited
or received an order for goods or services and who has for that purpose
had contact with any of the Sellers.
(C) Each undertaking contained in this clause shall be construed as a
separate undertaking and if one or more of the undertakings is held to
be against the public interest or unlawful or in any way an unreasonable
restraint of trade, the remaining undertakings shall continue to bind
the Sellers.
(D) Nothing in clause 10(A)(i) (Restrictions on Sellers' business
activities) shall prevent the Sellers or any of their subsidiaries
(other than a member of the Group) from:
(i) carrying on any of the Permitted Businesses subject to subclause
(F); or
(ii) acquiring another company, group of companies, business,
undertaking or entity which has, as a part of its business, a
business or businesses which are competitive with the Business
of the Group (a "Competitive Business"), provided that the sole
or main purpose of the acquisition is not acquiring a business
which so competes, the Competitive Business is not a material
part of the business or businesses of the company, group of
companies, business, undertaking or entity to be acquired and
within 45 days of such acquisition the Sellers offer to sell the
Competitive Business to the Purchaser at market value.
(E) For the purpose of sub-clause (D), "Permitted Businesses" means the
businesses carried on by Flocovery Systems Inc., Houseman N.V., Houseman
B.V., the Permutit Company of South Africa (Pty) and Home
Waterbehandeling B.V. in each case as carried on at the date of
Completion.
(F) The Sellers undertake that for a period of two years after the date of
Completion, none of the Permitted Business shall, whilst still part of
the Retained Group, carry on any direct business in the United Kingdom
where such business competes with the Business
<PAGE>
29
of the Group. The Seller shall inform the Purchaser if they intend to
dispose of any such business.
11. ISLEWORTH UNDERLEASE AND ASSIGNMENT OF LEASE OF PROPERTY AT
DONCASTER
(A) In this clause:-
(i) "The Doncaster Lease" means the lease dated 15th November l988
made between Jack Lunn (Properties) Limited (1) and Permutit UK
(2) whereby the premises known as 7 Trafford Court were demised
to Permutit UK;
(ii) "The Doncaster Agreement" means the agreement of the date hereof
made between Permutit UK (1) TWPS (2) and The Sellers Guarantor
(3) under which the Doncaster Lease is to be assigned to TWPS
(subject to Landlord's consent); and
(iii) "The Doncaster Property" means the premises known as 7 Trafford
Court, Doncaster comprised in the Doncaster Lease.
(B) From the date of this Agreement the Sellers shall pay the rents and all
other sums due under the Doncaster Lease and will observe and perform
the covenants and obligations on the part of the lessee and will keep
the Purchaser and Permutit UK indemnified against all costs, claims,
proceedings, losses, damages, expenses liabilities and demands arising
under the Doncaster Lease or otherwise in respect of the Doncaster
Property.
None of the provisions of clause 8 or schedule 3 shall apply to this
sub-clause.
(C) The Sellers will request the landlord to release Permutit UK from its
liability under the Doncaster Lease following the assignment of the
Doncaster Lease pursuant to the Doncaster Agreement. The Sellers will
use all reasonable endeavours to obtain the release (but without being
under any obligation to make any payment for the release) including if
necessary procuring that the Sellers' Guarantor guarantees the
obligations of TWPS following the assignment of the Doncaster Lease to
TWPS. If the landlord so releases Permutit UK, the indemnity set out in
(B) above shall cease, with effect from the date of the release (but
without prejudice to any claims arising before the date of the release).
The Sellers undertake to indemnify Permutit UK against any costs,
claims, proceedings, losses, damages, expenses, liabilities and demands
arising under the lease dated 24th June, l966 made between Nonador
Properties Limited (1) and Permutit UK (2) as varied by the Annexure
Lease dated 3rd July 1972 made between Liverpool Victoria Trustees
Limited (1) Liverpool Victoria Friendly Society (2) and Permutit UK (3)
whereby the premises known as 632/652 London Road, Hounslow, Middlesex,
were demised
<PAGE>
30
to Permutit UK other than any arising out of the breach of its
obligations contained in an agreement of the date hereof made between
PWT Projects Limited (1) and Permutit UK (2). None of the provisions of
clause 8 or schedule 3 shall apply to this indemnity.
12. PENSIONS
Each of the parties shall comply with the requirements pertaining to
that party set out in schedule 7 (Pensions).
13. INTELLECTUAL PROPERTY
(A) The Purchaser acknowledges that the Permutit Brand Name is presently
used in relation to the Named Businesses.
(B) Immediately on Completion the Sellers shall procure the Permutit Company
of South Africa (Pty) to surrender immediately all licences which it
holds to use the name "Permutit".
(C) The Purchaser agrees that a duly executed licence to use the Permutit
Brand name in the forms attached to this agreement as Parts A and B of
schedule 14 shall be granted to PWT Projects Limited and the Permutit
Company of South Africa (Pty) respectively on Completion.
(D) Following the expiry of such licences, the Sellers shall procure that
neither PWT Projects Limited nor the Permutit Company of South Africa
(Pty) as the case may be shall use the Permutit Brand Name.
(E) Subject to Clause 13(C), the Sellers shall procure that from Completion
no member of the Retained Group shall use the Permutit Brand Name.
(F) For the purpose of this clause 13 "Named Businesses" shall mean the
business carried on by Permutit Egypt Limited and the Permutit Company
of South Africa (Pty) as at the date of this Agreement.
(G) The Sellers undertake to procure that any Items which are in the
possession of any Retained Companies shall be made available at no cost
to the Purchaser or the relevant Group Company upon request by the
Purchaser or the relevant Group Company, provided for the avoidance of
doubt that the Sellers shall not be obliged to procure the making
available of any Item which is not in the possession of any Retained
Companies (without prejudice to any rights of the Purchaser under the
Warranties in schedule 2). The Sellers shall grant or procure the grant
to the Purchaser or the relevant Group Company of an irrevocable, non-
exclusive and royalty-free licence to use any Items which are made
available under this clause 13(G).
<PAGE>
31
(H) The Sellers undertake to procure that on demand from any Group Company,
such company is granted a licence in the form in schedule 13 to use the
trade mark "TRIPOL". The Purchaser undertakes to procure that on demand
from any of the Retained Companies, such company is granted a licence in
the form in schedule 13 to use the trade marks "VARIVOID" and/or
"HIPOL".
14. EFFECT OF COMPLETION
(A) Any provision of this agreement and any other documents referred to in
it, which has not been performed at or before Completion, or which is
capable of being performed after but which has not been performed at
Completion, and all Warranties and other undertakings contained in or
entered into pursuant to this agreement shall remain in full force and
effect notwithstanding Completion.
(B) After Completion the Sellers shall do and execute all other necessary
acts, deeds, documents and things within their power for effectively
vesting the Shares in the Purchaser or its nominees and pending such
vesting, the Sellers shall as from Completion hold the Shares in trust
for the Purchaser.
(C) After completion at the request of the Purchaser the Sellers or any of
them shall execute as a deed a power of attorney in favour of the
Purchaser or such person as may be nominated by the Purchaser generally
in respect of the Shares and in particular to enable the Purchaser (or
its nominee) to attend and vote at general meetings of the Companies.
15. REMEDIES AND WAIVERS
(A) Without prejudice to schedule 3 (Sellers' limitations on liability), no
delay or omission on the part of any party to this agreement in
exercising any right, power or remedy provided by law or under this
agreement or any other documents referred to in it shall:
(i) impair such right, power or remedy; or
(ii) operate as a waiver thereof.
(B) The single or partial exercise of any right, power or remedy provided by
law or under this agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
(C) The rights, powers and remedies provided in this agreement are
cumulative and not exclusive of any rights, powers and remedies provided
by law unless stated expressly.
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32
16. ASSIGNMENT
(A) This agreement and the benefits and obligations under it and any part of
it shall not be assignable except that the Purchaser may, upon giving
written notice to the Sellers, assign the benefit (but not the burden)
of this agreement to a member of the Purchaser's Group provided that any
such assignee remains a member of the Purchaser's Group and provided
further that before such assignee ceases to be a member of the
Purchaser's Group, the Purchaser will procure that the benefit of this
agreement is assigned to the Purchaser or (upon giving further written
notice to the Sellers) to another company within the Purchaser's Group
(any such further assignment to be subject to the same conditions as
aforesaid).
17. ENTIRE AGREEMENT
(A) This agreement, the Tax Covenant and the Disclosure Letter and any other
documents referred to in this agreement constitute the entire agreement
between the parties relating to the sale and purchase of the Shares and,
save if and only to the extent repeated in any of the documents referred
to, supersedes and extinguishes any prior drafts, agreements,
undertakings, representations, warranties and arrangements of any nature
whatsoever, whether or not in writing, relating thereto.
(B) Each party acknowledges that in entering into this agreement, the Tax
Covenant and the Disclosure Letter and any other documents referred to
in this agreement on the terms set out therein, it is not relying upon
any representation, warranty, promise or assurance made or given by any
other party or any other person, whether or not in writing, at any time
before the execution of this agreement which is not expressly set out
herein.
(C) Neither of the parties shall have any right of action against the other
party arising out of or in connection with any prior agreement,
undertaking, representation, warranty, promise, assurance or arrangement
referred to in sub-clause (A) or (B) above (except in the case of fraud)
(D) This agreement may only be varied in writing signed by each of the
parties.
18. NOTICES
(A) Any notice or other communication given or made under or in connection
with the matters contemplated by this agreement shall be in writing
(other than writing on the screen of a visual display unit or other
similar device which shall not be treated as writing for the purposes of
this clause) and shall be deemed effective on actual receipt by the
addressee.
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33
(B) The relevant addressee, address and facsimile number of each party for
the purposes of this agreement, subject to sub-clause (C), are:
Name of party Address Facsimile No.
Thames Water Products 14 Cavendish Place (0171) 436 6753
& Services Limited London W1M ONU
For the attention
of: the Company Secretary
PWT Overseas Limited 14 Cavendish Place (0171) 436 6753
London W1M 0NU
For the attention
of: the Company Secretary
Thames Water Plc 14 Cavendish Place (0171) 436 6753
London W1M 0NU
For the attention
of: the Company Secretary
Ionpure Technologies Harforde Court (01992) 501528
Limited Foxholes Business
Park,
John Tate Road
Hertford SG13 7NW
For the attention
of: the Company Secretary
United States Filter 73-710 Fred Waring 001 619 341 9368
Corporation Drive, Suite 222,
Palm Desert,
California 92260
For the attention
of: Chief Financial Officer
(C) Either party may notify the other party to this agreement of a change to
its name, relevant addressee, address, or facsimile number for the
purposes of sub-clause (B)
19. ANNOUNCEMENTS
(A) Subject to sub-clause (B), no public announcement concerning the sale
and purchase of the Shares or any ancillary matter shall be made by
either party without the prior written approval of the other such
approval not to be unreasonably withheld or delayed.
<PAGE>
34
(B) Either party may make a public announcement concerning the sale and
purchase of the Shares or any ancillary matter if required by:
(i) the law of any relevant jurisdiction;
(ii) any securities exchange or regulatory or governmental body to
which that party is subject or submits, wherever situated,
including (without limitation) the London Stock Exchange or the
Panel whether or not the requirement has the force of law,
in which case the party concerned shall take all such steps as may be
reasonable and practicable in the circumstances to agree the contents of
such announcement with the other parties before making such announcement
PROVIDED THAT, in any event, any such announcement shall be made only
after notice to the other party.
20. CONFIDENTIALITY
(A) Subject to sub-clause (B), the parties shall treat as strictly
confidential all information received or obtained as a result of
entering into or performing this agreement which relates to the
negotiations relating to this agreement.
(B) Any party may disclose information which would otherwise be confidential
if and to the extent:
(i) required by the law of any relevant jurisdiction;
(ii) required by any securities exchange or regulatory or
governmental body to which any party is subject or submits,
wherever situated, including (without limitation) the London
Stock Exchange or the Panel, whether or not the requirement for
information has the force of law;
(iii) required to vest the full benefit of this agreement in any
party;
(iv) it is disclosed to the professional advisers, auditors and
bankers of each party;
(v) the information has come into the public domain through no fault
of that party; or
(vi) the other parties have given prior written approval to the
disclosure, such approval not to be unreasonably withheld or
delayed,
PROVIDED THAT any such information disclosed pursuant to paragraphs (i)
or (ii) shall be disclosed only after notice to the other parties.
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35
(C) The restrictions contained in this clause 20 (Confidentiality) shall
continue to apply after any termination of this agreement without limit
in time.
21. RESTRICTIVE TRADE PRACTICES ACT 1976
If there is any provision of this agreement, or of any agreement or
arrangement of which this agreement forms part, which causes or would cause
this agreement or that agreement or arrangement to be subject to registration
under the RTPA, then that provision shall not take effect until the day after
particulars of such agreement or arrangement (as the case may be) have been
furnished to the Director General of Fair Trading pursuant to section 24 RTPA
1976.
22. COSTS AND EXPENSES
Save as otherwise stated in any other provision of this agreement (and
for stamp duty or any transfer tax which shall be borne by the Purchaser), each
party shall pay its own costs and expenses in relation to the negotiations
leading up to the sale and purchase of the Shares and to the preparation,
execution and carrying into effect of this agreement and all other documents
referred to in it.
23. COUNTERPARTS
(A) This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
(B) Each counterpart shall constitute an original of this agreement, but all
the counterparts shall together constitute but one and the same
instrument.
24. TIME OF ESSENCE
Time is only of the essence in respect of clause 4 (Completion) of this
agreement.
25. INVALIDITY
If at any time any provision of this agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction, that
shall not affect or impair:
(A) the legality, validity or enforceability in that jurisdiction of any
other provision of this agreement; or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this agreement.
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36
26. LANGUAGE
Each notice, demand, request, statement, instrument, certificate, or
other communication given, delivered or made by one party to another under or in
connection with this agreement shall be in English.
27. CHOICE OF GOVERNING LAW
This agreement shall be governed by and construed in accordance with
English law.
28. JURISDICTION
The parties to this agreement irrevocably agree that the courts of
England are to have jurisdiction to settle any disputes which may arise out of
or in connection with this agreement and that accordingly any Proceedings may be
brought in such courts. Subject and without prejudice to the provisions of
article 17 of the Convention on jurisdiction and the enforcement of judgments in
civil and commercial matters signed in Brussels in 1968 and article 17 of the
Convention on jurisdiction and the enforcement of judgments in civil and
commercial matters opened for signature at Lugano in 1988, nothing contained in
this clause shall limit the right of any party to take Proceedings against any
other party in any other court of competent jurisdiction, nor shall the taking
of Proceedings in one or more jurisdictions preclude the taking of Proceedings
in any other jurisdiction, whether concurrently or not, to the extent permitted
by the law of such other jurisdiction. It is acknowledged that this clause is
not concluded for the benefit of only one party to this agreement.
29. AGENT FOR SERVICE
(A) The Purchaser's Guarantor irrevocably agrees that any Service Document
may be sufficiently and effectively served on it in connection with
Proceedings in England and Wales by service on its agent, the Purchaser,
if no replacement agent has been appointed and notified to the Sellers
pursuant to sub-clause (D), or on the replacement agent if one has been
appointed and notified to the Sellers.
(B) Any Service Document served pursuant to this clause shall be marked for
the attention of:-
(i) the Company Secretary, Ionpure Technologies Limited, Harforde
Court, Foxholes Business Park, John Tate Road, Hertford SG13 7NW
or such other address within England or Wales as may be notified
to the Sellers by the Purchaser's Guarantor; or
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37
(ii) such other person as is appointed as agent for service pursuant
to sub-clause (D) at the address notified pursuant to sub-clause
(D).
(C) Any document addressed in accordance with sub-clause (B) shall be deemed
to have been duly served on actual receipt by the addressee.
(D) If the agent referred to in sub-clause (A) (or any replacement agent
appointed pursuant to this sub-clause) at any time ceases for any reason
to act as such, the Purchaser's Guarantor shall appoint a replacement
agent to accept service having an address for service in England or
Wales and shall notify the Sellers of the name and address of the
replacement agent; failing such appointment and notification, the
Sellers shall be entitled by notice to the Purchaser's Guarantor to
appoint such a replacement agent to act on behalf of the Purchaser's
Guarantor. If the Sellers appoint such a replacement, the Purchaser's
Guarantor may remove such a replacement agent by appointing a further
replacement and notifying the Sellers of the name and address of such
replacement agent.
(E) A copy of any Service Document served on an agent pursuant to this
clause shall be sent by post to the Purchaser's Guarantor at its address
for the time being for the service of notices and other communications
under clause 18 (Notices), but no failure or delay in so doing shall
prejudice the effectiveness of service of the Service Document in
accordance with the provisions of sub-clause (A).
(F) "Service Document" means a writ, summons, order, judgment or other
document relating to or in connection with any Proceedings.
<PAGE>
38
SCHEDULE 1
----------
(Completion arrangements referred to in
clause 4 (Completion))
Part A
At Completion the Sellers shall:
(i) deliver to the Purchaser or the Purchaser's Solicitors duly
executed transfers in respect of the Shares in favour of the
Purchaser or such person as the Purchaser may nominate and share
certificates for the Shares in the name of the relevant
transferors and any power of attorney under which any transfer
is executed on behalf of the Seller or nominee;
(ii) procure that the Tax Covenant is executed and delivered to the
Purchaser by the Sellers and the Sellers' Guarantor;
(iii) deliver to the Purchaser the powers of attorney referred to in
clause 14(C);
(iv) deliver to the Purchaser's Solicitors such of the following as
the Purchaser may require, insofar as they are not held by or to
the order of any member of the Group:
(a) the statutory books (which shall be written up to but
not including the date of Completion), the certificate
of incorporation (and any certificate of incorporation
on change of name), common seal (if any) and all Books
and Records and Business Information;
(b) a copy of the minutes of duly held meetings of the
directors of the Sellers and the Sellers' Guarantor
authorising the execution by the Sellers and the
Sellers' Guarantor of this agreement and the Tax
Covenant (such copy minutes being certified as correct
by the secretary or a director of the relevant Seller or
the Sellers' Guarantor).
(c) cheque books in respect of all bank accounts operated by
the Companies and the Subsidiaries together with bank
statements drawn up to the day preceding Completion
relating to such accounts.
(d) certificates for all shares in the Subsidiary and duly
executed transfers in favour of the Purchaser or as it
shall direct (to be delivered in the same manner as the
Shares) of all of such shares not registered in the name
of Permutit Australia together with a deed of
<PAGE>
39
waiver of its pre-emption rights in respect of any
shares not so registered; and
(e) an original letter from National Westminster Bank plc
dated 30th March, 1995 releasing Permutit UK from the
composite accounting system agreement and deed of
guarantee dated 5th May, 1994.
(v) procure that those persons whom the Purchaser has in writing on
the day of Completion identified resign from their offices as
director or secretary, as the case may be, and relinquish any
rights or claims which they may have under any contract of
employment with any member of the Group or under any statutory
provision or otherwise including any right to damages for
wrongful dismissal, redundancy payment or compensation for loss
of office or unfair dismissal, such resignations, in agreed
terms, to be tendered at the board meeting referred to in
paragraph (vi) of this schedule 1;
(vi) procure that a board meeting of each Group Company be held at
which:
(a) (in the case of the Companies) it shall be resolved that
each of the transfers relating to the Shares shall be
approved for registration and (subject only to the
transfers being duly stamped) each transferee registered
as the holder of the Shares concerned in the register of
members;
(b) (in the case of the Subsidiary) it shall be resolved
that any shares in the Subsidiary held by a nominee
shareholder are transferred to the Purchaser or its
nominee and it shall be resolved that such transfers
shall be approved for registration and (subject only to
the transfers being duly stamped) the Purchaser or its
nominee registered as the holder of such shares in the
Register of Members;
(c) each of the persons nominated by the Purchaser shall be
appointed directors and/or secretary, as the Purchaser
shall direct, such appointments to take effect on the
date of Completion;
(d) the resignations of the directors and secretary referred
to in paragraph (iv) above shall be tendered and
accepted so as to take effect at the close of the
meeting and each of the persons tendering his
resignation shall deliver to the relevant Company or
Subsidiary an acknowledgement executed as a deed that he
has no claim against that company for breach of
contract, compensation for loss of office, redundancy or
unfair dismissal or on any other account whatsoever
<PAGE>
40
and that no agreement or arrangement is outstanding
under which that company has or could have any
obligation to him;
(e) all existing instructions to banks shall be revoked and
new instructions to such banks in such form as the
Purchaser may direct shall be approved, provided the
Purchaser has supplied such new instructions to the
Sellers;
(f) the situation of the registered office shall be changed
to such address as the Purchaser may nominate and
(subject to the provisions of the Companies Acts and in
the case of Permutit New Zealand, the Financial
Reporting Act 1993) the accounting reference date and in
the case of Permutit New Zealand the balance date shall
be changed in accordance with any instructions given by
the Purchaser; and
that minutes of the duly held board meeting, certified as
correct by the secretary of the relevant Group Company and the
resignations and acknowledgements referred to are delivered to
the Purchaser's Solicitors; and
(vii) deliver to the Purchaser or the Purchaser's Solicitors the
documents of title relating to the Properties, the Dubai Leases
and the Australian Licence.
Part B
At Completion the Purchaser shall:
(i) pay L6,2687,037 of the Purchase Price to TWPS' account with
National Westminster Bank at 21 Lombard Street, London with the
balance of the Purchase Price to be satisfied by setting it off
against the indebtedness represented by the Loan Note;
(ii) deliver to the Sellers' Solicitors, duly executed by the
Purchaser, a counterpart original of the Tax Covenant; and
(iii) deliver to the Sellers a copy (certified by the secretary of the
Purchaser to be a true copy of a resolution in force at
Completion) of the resolution of the directors of the Purchaser
which authorised the purchase of the Shares for the Purchase
Price and upon the terms set out in this agreement.
(iv) deliver to Sellers a copy (certified by the secretary of the
Purchaser's Guarantor of a resolution in force at Completion) of
the resolution of the directors of the
<PAGE>
41
Purchaser's Guarantor which authorised the entry by the
Purchaser's Guarantor into this agreement.
PART C
After Completion the Sellers shall instruct all employees of the
Retained Group who receive requests relating to the Business of the Group to
pass on such requests to the relevant Group Company.
<PAGE>
42
SCHEDULE 2
Warranties and Representations
1. Ownership of the Shares
TWPS is the beneficial owner of all the Permutit UK Shares and PWT is
the beneficial owner of all the Permutit Australia Shares and such Shares in
aggregate constitute the entire allotted issued share capital of the Companies.
All the Shares are fully paid up.
2. Capacity of the Sellers
(A) The Sellers and the Sellers' Guarantor will at Completion have the right
and power to enter into and perform this agreement and the Tax Covenant
and in particular to sell and transfer or procure the transfer of, all
the Shares to the Purchaser in accordance with the provisions of this
agreement.
(B) This agreement constitutes and the Tax Covenant and the other documents
executed by the Sellers and the Sellers' Guarantor which are to be
delivered at Completion will, when executed, constitute binding
obligations of the Sellers and the Sellers' Guarantor.
(C) The execution and delivery of, and the performance by, the Sellers and
the Seller's Guarantor of their obligations under this agreement and the
Tax Covenant will not:
(i) result in a material breach of any provision of the memorandum
or articles of association of the Sellers or the Sellers'
Guarantor; or
(ii) result in a material breach of, or constitute a material default
under, any instrument to which the Sellers or the Sellers'
Guarantor or any member of the Retained Group are a party or by
which the Sellers or the Sellers' Guarantor or any member of the
Retained Group or any of their assets are bound; or
(iii) result in a breach of any order, judgment or decree of any court
or governmental agency by which the Sellers or the Sellers'
Guarantor or any member of the Retained Group or any of their
assets are bound.
3. Formal and legal
(A) The contents of the recitals and schedules 4, 5, 6 and 8 are true,
accurate and complete in all respects and are not misleading because of
any omission or ambiguity or for any other reason.
<PAGE>
43
(B) Permutit UK does not have any Subsidiaries. Permutit Australia has only
one Subsidiary namely Permutit New Zealand. No Group Company owns any
other shares or is a member, otherwise than through the holding of share
capital, of any corporate or unincorporated body. No Group Company has
any outstanding liability resulting from having held such shares or
having been such a member. The shares in Permutit Engineering Company of
Australia Pty Limited were transferred by Permutit Australia to Permutit
Asia/Pacific Limited at the value give to them in the Accounts.
(C) Permutit UK owns shares in Permutit Egypt Limited solely as nominee and
accordingly such shares have no value to Permutit UK.
(D) All documents required by law to be filed with or delivered to:
(i) in respect of Permutit UK, to the Registrar of Companies;
(ii) in respect of Permutit Australia, the Australian Securities
Commission; and
(iii) in respect of Permutit New Zealand, the Registrar of Companies
in New Zealand;
have, in all material respects, been properly made, delivered and duly
filed.
(E) The copies of the memorandum and articles of association of the Group
Companies annexed to the Disclosure Letter are true, complete and
accurate and in all material respects the Register of Members and other
statutory books of the Group Companies (including, without limitation,
all registers required to be kept by Permutit UK under the Companies
Acts or by Permutit Australia under the Corporations Law or in relation
to Permutit New Zealand under the Companies Act 1955):
(i) have been properly kept; and
(ii) contain a true, accurate and complete record of the matters
which should be dealt with and recorded therein.
(F) All title deeds, share certificates and agreements to which any Group
Company is party owned by or which ought to be in the possession of each
Group Company are in the possession of the relevant Group Company and
are properly stamped.
(G) The Group Companies have conducted their business in all respects in
accordance with their memorandum and articles of association and with
all applicable Statutes in the United Kingdom as regards Permutit UK,
Australia as regards Permutit Australia, and New Zealand as regards
Permutit New Zealand and in any foreign country in which they carry on
business and there is no violation
<PAGE>
44
of, or default with respect to, any Statute, or any judgment or decision
of any court or central or local governmental agency of the United
Kingdom, Australia or New Zealand (as the case may be) or any foreign
country which has or could have a material adverse effect upon the
assets, business or profitability of any Group Company. In so far as
this warranty applies to countries other than the United Kingdom,
Australia and New Zealand, the Sellers will not be liable for any breach
of warranty where they can show that the relevant Group Company has
acted in accordance with normal business practice in the relevant
country.
4. Capital and distributions
(A) The Group Companies have no loan capital outstanding (whether created or
issued) and since the Accounts Date no loan or share capital of any
Group Company has been allotted or issued or put under option or agreed
to be allotted or issued or to be put under option and no person has the
right (whether exercisable now or in the future and whether contingent
or not) to call for the transfer or allotment or issue of any share or
loan capital of the Group Companies.
(B) There is not outstanding any indebtedness or other liability (of
whatsoever nature, whether present or future, actual or contingent)
owing:-
(i) by the Group Companies to any member of the Retained Group or to
any director or former director of any Group Company or to any
person connected with any Group Company or with any member of
the Retained Group or with any director or former director of
any Group Company; or
(ii) to the Group Companies by any member of the Retained Group or by
any director or former director of any Group Company or by any
person connected with any Group Company or with any member of
the Retained Group or with any director or former director of
the Group Companies:
and for the purposes of this sub-paragraph 4(B) section 839, Income and
Corporation Taxes Act 1988 shall apply in determining whether any person
is connected with any other.
(C) Since the Accounts Date no dividend or other distribution has been
declared or paid (and there has been no agreement to do any of the
foregoing) on, and no capital distribution made or agreed to be made in
respect of, any share capital of the Group Companies and, save as
provided in this agreement, no loan (otherwise than in the ordinary
course of day to day business) or loan capital has been repaid by the
Group Companies in whole or in part. Without prejudice to the foregoing,
since 31st March, 1995 no distribution has been made or agreed to be
made for tax purposes.
<PAGE>
45
(D) So far as the Sellers are aware, Permutit UK has not entered into any
transaction nor been given a preference to which sections 238 or 239, or
sections 242 or 243, Insolvency Act 1986 may apply or which may
otherwise be liable to be set aside or avoided for any reason.
(E) So far as the Sellers are aware Permutit Australia has not entered into
any transaction nor has been given a preference to which sections
588FA - 588FE of the Corporations Law may apply or which may otherwise
be liable to be set aside or avoided for any reason.
(F) So far as the Sellers are aware Permutit New Zealand has not entered
into any transaction nor has been given a preference to which sections
266 -275 of the Companies Act 1955 of New Zealand may apply or which may
otherwise be liable to be set aside or avoided for any reason.
5. Accounts
(A) The Accounts:
(i) were prepared in accordance with applicable law and accountancy
practices, standards and principles generally accepted in the
United Kingdom in respect of Permutit UK and Australia in
respect of Permutit Australia at the time they were audited; and
(ii) showed a true and fair view of the state of affairs of the Group
Companies as at the Accounts Date and its profits or losses for
the financial period ended on that date.
(B) Save as disclosed in the Disclosure Letter, the accounting records of
the Group Companies have been kept on a proper and consistent basis in
all material respects, are up-to-date and, in all material respects,
contain details of the business activities of the Group Companies and of
all matters required, where relevant, by the Companies Acts or relevant
Australian or New Zealand laws or regulations to be entered in them.
(C) The profits or losses of the Group Companies for the period ended on
28th February 1995 and for the accounting period ended on the Accounts
Date as shown in the Management Accounts of the Group Companies and the
Accounts have not been affected by the inclusion of extraordinary or
exceptional items of income or expenditure.
6. Properties
(A) Ownership of land
The Properties referred to in schedule 8 owned by the Group are
<PAGE>
46
the only Immovable Properties owned, used or occupied by the Group or in
respect of which the Group has any estate, interest, right or liability
(including any continuing or contingent liability) and for the avoidance
of doubt no Group Company has given any guarantee which is still
subsisting of the performance by any person of any obligation in respect
of any Immovable Property. Each of the Properties is used and occupied
for the purpose of the business of a member of members of the Group.
(B) UK Property Warranties
In relation to each of the UK Properties:-
(a) Title
The Properties are owned by the relevant Group Company
free from any option, right of pre-emption, mortgage,
charge (fixed or floating), pledge, lien or any like
encumbrance or any agreement in respect thereof which
are not apparent from the documents of title disclosed
to the Purchaser or which would not be disclosed by
searches and enquiries which would be carried out by a
prudent purchaser.
(b) Documents of Title
All documents of title for the Properties are in the
possession or under the control of the relevant Group
Company.
(c) Planning matters and use
(d) the current use of the Properties is permitted
under Town and Country Planning legislation and
(in the case of properties which are leasehold)
is also permitted by the leases under which the
Properties are held;
(e) all necessary planning permissions and other
consents in respect of the Properties have been
obtained and all development on the Properties
has been carried out in accordance with planning
legislation.
(f) Statutory obligations
All statutes, orders or regulations affecting the
Properties, its current user or development have been
observed.
<PAGE>
47
(g) Disputes notices and claims
There are no outstanding litigation, disputes, actions,
claims, demands or complaints in respect of the
Properties and no notice affecting the Properties has
been given or received nor does any member of the Group
expect any.
(h) Services and access
There are available to the Properties all rights and
easements and such services (including, without
limitation, electricity, gas and water supply, sewage
and telecommunications) as are necessary for the
existing use of the Properties.
(i) Enquiries
The Seller's replies to written enquiries concerning the
Properties and the Isleworth Property made by the
Purchaser's Solicitors have been given after making due
and diligent enquiry and are true and accurate in all
material respects. For the purposes of this paragraph
(i) a reply to a written enquiry shall be true and
accurate "in all material respects" if the amount of the
claim in respect of any inaccuracy does not exceed
L5000.
(j) Condition
All buildings and structures comprised in the Properties
are in a state of repair and condition which is adequate
to enable the business of the Company to be carried on
as it is carried on at present.
(k) Leasehold Properties
Where any of the Properties are leasehold, the leases
under which the Properties are held are correctly
summarised in schedule 8 and the current rents are
evidenced by memoranda of rent review where they are not
the rents originally reserved.
(C) New Zealand Property Warranties
In relation to Permutit New Zealand the New Zealand Property comprises
all the land and buildings owned or occupied by Permutit New Zealand
and:
(i) there are no restrictive covenants or provisions, legislation or
orders which preclude the use of the New Zealand Property for
the purposes for which it is now used,
<PAGE>
48
and that use is permitted under the provisions of the planning
acts and regulations and is in accordance with the requirements
of the relevant local authorities;
(ii) the Sellers have received no notice alleging breach of any
covenant, restriction or other obligation (including by-laws)
affecting the New Zealand Property and no rights, easements,
quasi-easements or privileges exist in favour of any person in
respect of the New Zealand Property which would interfere with
or prevent the use of the New Zealand Property for the purposes
for which it is now used;
(iii) there are no outstanding enforcement or other notices or
proceedings issued in respect of the New Zealand Property nor,
so far as the Sellers are aware, any order or resolution for the
compulsory acquisition of any part of any of the New Zealand
Property;
(iv) so far as the Sellers are aware the New Zealand Property is not
subject to or affected by any planning permission or development
permit or any proposals for road widening or any other notices
whatsoever issued by any governmental or municipal department or
other competent authority which would interfere with or prevent
the continued use of the New Zealand Property for the purposes
for which it is now used;
(v) the Sellers have received no notice alleging breach of the terms
of any agreement affecting the New Zealand Property;
(vi) so far as the Sellers are aware there is no liability for
repairs or dilapidations or to carry out works in respect of the
New Zealand Property; and
(vii) so far as the Sellers are aware and except in respect of matters
which do not have a material adverse effect the lease of the New
Zealand Property is current valid and enforceable.
(D) Australian Property Warranties
(i) (a) There is no restriction on the Company's exclusive
occupation and quiet enjoyment of the Australian
Property that would have a material adverse effect on
the Company.
(b) There are no Encumbrances affecting the Australian
Property that have a material adverse effect on the
Company.
For the purpose of this sub-paragraph "Encumbrance"
means a mortgage, charge, pledge, lien or other
encumbrance (but excludes a lien that arises as a
<PAGE>
49
matter of law or an encumbrance that arises from any
reservation of title provision).
(ii) The Australian Property comprises all the freehold or leasehold
properties owned, used or occupied by the Company in connection
with the business of the Company.
(iii) As far as the Sellers are aware the use of the Australian
Property by the Company for the business of the Company does not
constitute a breach of any of applicable law that would have a
material adverse effect on the Company.
(iv) As far as the Sellers are aware, all covenants contained in the
leases and licences disclosed in schedule 8 affecting the
Australian Property that would have a material adverse effect on
the Company if they were not properly performed or observed have
been properly performed or observed.
(v) As far as the Sellers are aware there are no outstanding orders
or notices affecting the Australian Property or any proposals
from any local or other authority (involving compulsory
acquisition or requisition or otherwise) or any other
circumstances which would result in any such order or notice
being made or served which would have a material adverse on the
Company's quiet enjoyment of the Australian Property.
(vi) As far as the Sellers are aware and except in respect of matters
which do not have a material adverse effect all leases and
licences of the Australian Property are current, valid and
enforceable.
7. Business and trading
(A) Since the Accounts Date the Group Companies have carried on in the
ordinary and usual course the business carried on by the Group at that
date and have not carried on any other business, or acquired or disposed
of any fixed asset exceeding L10,000 in value, or assumed or incurred
any liability (actual or contingent), or entered into any contract, in
each case other than in such ordinary and usual course.
(B) Since the Accounts Date there has been no material adverse change in the
Group's financial position.
(C) (i) The Group Companies own or have on lease or hire
purchase the motor vehicles the make, model,
registration number and driver of which are set out
opposite their names in a schedule annexed to the
Disclosure Letter.
(ii) All material plant, machinery, vehicles and equipment
owned or used by the Group Companies is in such a
condition that
<PAGE>
50
the Business of the Group can be carried on after Completion in
the same way as it was carried on at the date hereof.
(iii) Maintenance contracts as annexed to the Disclosure Letter are in
full force and effect and all assets to which such maintenance
contracts relate have been maintained in all material respects
in accordance with safety regulations usually observed in
relation thereto and the terms and conditions of any leasing or
similar agreement.
(iv) The asset registers of the Group Companies (a true and correct
copy of which is annexed to the Disclosure Letter) comprise, in
all material respects, a complete and accurate record of all
plant, machinery, vehicles, equipment and other assets owned,
used or possessed by the Group Companies.
(v) All plant, machinery, vehicles, equipment or other assets used
by the Group Companies (including, without limitation, any
computer installation used by any Group Company) are the
absolute and unencumbered property of the Group Companies and
are not subject to nor agreed to be subject to any leasing, hire
or hire purchase agreement or agreement for payment on deferred
terms or any similar agreement or arrangement nor are they
loaned or otherwise unavailable to the Group Companies.
(D) All the book and other debts of the Group Companies outstanding
at Completion:-
(i) are the absolute property of the Group Companies and not the
subject of any assignment, factoring agreement or other
encumbrance; and
(ii) are no more than 90 days old from their dates of invoice.
(E) Since the Accounts Date:
(i) the Group Companies have continued to pay their creditors in the
ordinary course of business and there are no debts due from the
Group Companies which have been due for more than 90 days; and
(ii) no debt has been released by the Group Companies on terms that
the debtor paid more than L10,000 less than the book value of
his debt and no debt owing to the Group Companies has been
deferred, subordinated or written off or has proved to any
extent to be irrecoverable.
(F) (i) Details of the insurance policies in respect of which
any member of the Group has an interest are set out in
the Disclosure Letter;
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51
(ii) Such policies are in full force and effect;
(iii) The premiums on such policies are up to date;
(iv) So far as the Sellers are aware, there are no circumstances
which might lead to any liability on such policies being avoided
by the insurers or the premiums being increased; and
(v) So far as the Sellers are aware, there is no claim outstanding
on such policies and, so far as the Sellers are aware there has
been no act or omission which would or might lead to such a
claim.
(G) The Group Companies do not carry on business under or use on their
letterhead or business documents a name other than the full corporate
name of the relevant Group Company, Permutit UK has not received any
direction under section 28, Companies Act 1985, none of the Group
Companies has received any notice that they may become obliged to change
their names or trade under different names, and so far as the Sellers
are aware there are no other circumstances by reason of which the Group
Companies may become obliged to change their names or trade under
different names.
(H) (i) The Group Companies are the sole beneficial owner of all
registered Intellectual Property referred to in the
schedule which is annexed to the Disclosure Letter and
constitutes the only registered Intellectual Property
owned by the Group Companies. No registered user rights
or licences have been granted or agreed to be granted
and no agreement for assignment has been made in respect
of such Intellectual Property and no act has been done
by any member of the Group (except for acts which are
both reasonable and in the normal course of business)
whereby any part of such Intellectual Property might
cease to be valid and enforceable and no member of the
Group pays any royalty or other payment to any third
party in relation to such Intellectual Property (except
for renewal fees, agents fees and other administrative
expenses in the normal course of business). All renewal
fees in respect of such Intellectual Property which are
due and payable have been paid.
(ii) So far as the Sellers are aware, there is no existing
fact, matter or circumstance which is reasonably likely
to result in any of the rights of any of the Group
Companies in the Permutit Brand Name becoming invalid or
unenforceable.
(iii) All rights in all Intellectual Property which are
Required for the Business of the Group are solely and
beneficially owned by or licensed to the relevant member
of the Group (or, where clause 13(G) applies, the
relevant member of the Retained Group) and no act has
been done by any member of the Group (except for acts
which are both reasonable and in
<PAGE>
52
the normal course of business) whereby any part of such
Intellectual Property might cease to be valid and enforceable.
No material licences have been granted or agreed to be granted
and no agreement for assignment has been made in respect of such
Intellectual Property by any member of the Group. All material
licences of Intellectual Property to any member of the Group
have been disclosed in the Disclosure Letter.
(iv) No member of the Group is in breach of any material licence
granted to it in respect of any Intellectual Property.
(v) No member of the Group has received any notice that the conduct
of the business of such member of the Group as presently
conducted infringes the rights of any other person in
Intellectual Property.
(vi) No member of the Group has disclosed any of its know-how, in
respect of Scion and Scion/Hipol technology and products other
than subject to confidentiality agreements which a company
carrying on the same business as the Group Company could
reasonably be expected to have entered into.
(vii) Without prejudice to sub-paragraph (vi) of this paragraph (H),
so far as the Sellers are aware no Group Company has disclosed
any of its:
(a) other know-how;
(b) trade or financial secrets; or
(c) lists of customers,
to any person (other than subject to a confidentiality
agreement) in circumstances which would or might result in any
material adverse effect on any Group Company.
(viii) For the purposes of this paragraph (H), any Intellectual
Property is "Required for the Business" of the relevant Group
Company if (and only if) it:
(a) except in relation to Specified Intellectual Property in
Specified Items is or has in the last two years been
used in the business of the relevant Group Company; or
(b) is Specified Intellectual Property; or
(c) is Intellectual Property in Available Items; or
(d) is required to carry on the business of the relevant
Group Company in the same manner as it is presently
carried on; or
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53
(e) is required to fulfil any of the present contracts of
the relevant Group Company in relation to its business;
or
(f) is required to fulfil contracts which are the subject of
tender or negotiation at Completion; or
(g) is required to fulfil contracts which are the subject of
enquiry by the relevant Group Company at Completion; or
(h) is required to comply with any law applicable in
relation to its business.
(ix) The Sellers warrant that:-
(i) the Items referred to in paragraphs 1, 5 and 6
of Schedule 11 are in the possession of the
Group Companies;
(ii) the Items referred to in paragraph 2 of Schedule
11 are in the possession of the Group Companies
so far as material in relation to products and
contracts sold or made since 1st April, 1986;
(iii) the Items referred to in paragraph 3 of Schedule
11 are in the possession of the Group Companies
so far as material in relation to products sold
since 1st April, 1986;
(iv) the Items referred to in paragraph 4 of Schedule
11 are in the possession of the Group Companies
in any case where they have at any time during
the last two years been in the possession of the
Group Companies;
Except as warranted above in this paragraph (ix), no warranty is
given by the Sellers as to the possession by the Group Companies
of any of the Specified Items. This warranty and the preceding
sentence are without prejudice to clause 13(G).
(I) (i) Save pursuant to the express terms of this agreement, no
Group Company is party to any arrangement which
infringes or which has or should have been registered
under the RTPA or which infringes the Fair Trading Act
1973 or which infringes the Competition Act 1980 or
Articles 30 to 34, Article 85 or Article 86 of the
Treaty of Rome or contravenes the provisions of the
Resale Prices Act 1976 or any other anti-trust
legislation and no Group Company has pursued or is
pursuing any course of conduct which amounts to an anti-
competitive practice within section 2, Competition Act
<PAGE>
54
1980 or is subject to or under notice of any
investigation, report decision, undertaking or order
under that Act.
(ii) So far as the Sellers are aware no Group Company is party to any
agreement or arrangement which has been notified to the
Commission of the European Community for an exemption or in
respect of which an application has been made to the said
Commission for negative clearance.
(J) The Group Companies have in full force and effect all licences,
consents, registrations, authorities and other qualifications necessary
for the carrying on of their business as and where such business is now
carried on (details of which are set out in the Disclosure Letter) and
so far as the Sellers are aware there has been no act, event or omission
as a result of which any such qualification will or may be withdrawn,
not be renewed or otherwise cease to have effect. All reports, returns
and information required by law or as a condition of any licence,
consent, permit or approval to be made or given to any person or
authority in connection with the business of the Group Companies have
been made or given to the appropriate person or authority, in each case,
to the extent material in the context of the business of the relevant
Group Company.
(K) No Group Company has outstanding:
(i) any commitment for capital expenditure in excess of L1,000;
(ii) any commitment for the purchase of goods or services under which
supply or delivery is liable to take place more than 12 months
from the time of fixing the price;
(iii) any commitment to obtain or supply goods or services exclusively
from or to any person;
(iv) any agreement or arrangement in which any member of the Retained
Group or any director of any such member or any person connected
with them as described in section 839, Income and Corporation
Taxes Act 1988 is interested other than an agreement or
arrangement entered into on an arm's length basis;
(v) any agreement or arrangement for consultancy or similar
services;
(vi) any agreement or arrangement not negotiated on an arm's length
basis;
(vii) any contract or arrangement which restricts its freedom to carry
on its business in any part of the world in such manner as it
may think fit; or
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55
(viii) any contract entered into other than in the ordinary course of
business.
(L) The list of open orders (order bank) annexed to the Disclosure Letter is
complete and accurate. The margin bank for such orders has been
calculated in good faith in accordance with the normal method of the
relevant Group Company as applied in calculating the margin bank
forecast for 31st March, 1995 and represents the Sellers' best estimate
of the margin attaching to such orders as at 31st March, 1995.
(M) Complete and accurate copies of all systems contracts as at 24th March,
1995, where handover has not been accepted by the customer, where the
consideration receivable by the relevant Group Company will or may be
more than L50,000 are annexed to the Disclosure Letter. Such copies
contain full details of the terms of the contract, any guarantees given
under the relevant contract, penalty clauses, warranties given, work
carried out to-date, costs incurred and any commitments in respect of
completion. There have been no material changes in such contracts since
that date outside the ordinary course of business.
(N) A complete and accurate list of all planned maintenance contracts is
annexed to the Disclosure Letter. This list shall contain details of the
parties to the contract, the level of service to be provided by the
relevant Group Company and the consideration payable.
(O) There is not outstanding nor has any Group Company agreed to enter into
or give or create:
(i) any mortgage, charge, pledge, lien or similar encumbrance nor
any equity nor any option on or over the whole or any part of
the undertaking, property or assets of the Group excluding any
such encumbrance arising in the ordinary course of trade;
(ii) any contract for hire or rent, hire purchase or purchase by way
of credit sale, conditional sale or periodical payment in
respect of movable or personal property;
(iii) any guarantee, indemnity or suretyship;
(iv) any power of attorney;
(v) any authority (express or implied) to any person (other than a
director duly authorised or to employees to enter routine
contracts) to bind or commit any Group Company in any way;
(vi) any partnership, joint venture, European Economic Interest
Grouping or consortium arrangement involving any Group
<PAGE>
56
Company nor is any Group Company a member of any other
unincorporated association;
(vii) any agency, distributorship, licensing or managing agreement; or
(viii) any financial assistance from any international, national or
local authority or governmental agency.
(P) Each systems contract and each other material contract to which each
Group Company is a party is a legal, valid and binding obligation of the
relevant Group Company and is in full force and effect. Each party to
such contracts has so far as the Sellers are aware performed all
material obligations required to be performed by it under such contracts
and so far as the Sellers are aware is not in breach or default nor is
alleged to be in breach or default in any material respect thereunder,
and so far as the Sellers are aware no other event has occurred and no
condition or state of facts exists (or would exist upon the giving of
notice or the lapse of time or both) that would become or cause a breach
or default in any material respect thereunder where in any such case the
loss to the relevant Group Company would be greater than L15,000,
Provided always that if there are a number of claims each less than such
amount but together aggregating L100,000 or more, then they shall be
treated as a single claim of more than L15,000.
(Q) The Management Accounts have been prepared in accordance with the same
accounting principles as the Accounts.
(R) No intimation has been received by any Group Company that the
transactions contemplated by this agreement will result in loss of
business with any of the Group Companies' present suppliers or
customers.
(S) None of the Group Companies are party to any agreement or arrangement
material in the context of the business of the relevant Group Company
which is or may become terminable by another party or under which the
rights of any person are likely to be affected as a result of any of the
transactions contemplated by this agreement or Completion or which
grants any rights to any person dependent on Completion.
(T) No Group Company has outstanding any bid or tender or sale or service
proposal which is substantial in relation to the business of the
relevant Group Company. (For these purposes substantial means any bid or
tender where the price offered is more than, in relation to Permutit UK,
L150,000, in relation to Permutit Australia, Australia dollars 300,000
and in relation to Permutit New Zealand, New Zealand dollars 375,000.) A
list of such bids and tenders for installed system contracts is annexed
to the Disclosure Letter. Such bids and tenders have been made and
<PAGE>
57
priced in accordance with the normal business practice of the relevant
Group Company.
(U) All assets acquired or disposed of by the Group Companies have been
acquired or disposed of at market value, other than assets acquired or
disposed of intra group, and no agreements or arrangements have been
entered into during the two years prior to the date hereof to which any
of the Group Companies are party and in which a shareholder in or a
director of any of the Group Companies or any person connected with any
such person as described in section 839, Income and Corporation Taxes
Act 1988 has been interested whether directly or indirectly and in
particular (but without limitation) no Group Company has entered into
any transaction which, had such Group Company been a listed company,
would have been a transaction with a related party (as defined in
chapter 11 of the Listing Rules issued by the London Stock Exchange).
(V) (i) Not more than ten per cent. in value of purchases by
each Group Company in each of the last two calendar
years have been placed with any one supplier (and, so
far as the Sellers are aware, in the current calendar
year not more than ten per cent. in value of purchases
by each Group Company will be so placed) and the Sellers
have annexed to the Disclosure Letter full written
particulars of all customers of any Group Company whose
purchases of any product, stock or services of such
Group Company have in any of the last three calendar
years exceeded ten per cent. of such Group Company's
turnover of such product or stock for such calendar
year.
(ii) Since the Accounts Date the business of the Group
Companies has not been affected to any material extent
by the loss of any important contract or customer or
source of supply nor has any customer or supplier
material in the context of the business of the relevant
Group Company indicated an intention to cease trading
with or supplying any Group Company or that it is likely
to reduce its trading with or supply to any Group
Company.
(iii) No customer or supplier of any Group Company has
indicated an intention to change the basis or terms on
which it is prepared to enter into contracts or do
business with such Group Company and no such change has
taken place during the two years ending with Completion
in each case, to an extent material in the context of
the relevant Group Company.
(W) Particulars of all grants, allowances, aids and subsidies paid or made
or pledged to any Group Company during the last six years by, and of all
outstanding claims by any Group Company for any such grant, allowance,
aid or subsidy from, any supranational, national or local authority or
government agency are set out in
<PAGE>
58
the Disclosure Letter and no Group Company has done or failed to do any
act or thing which could result, nor will the sale of the Shares result,
in all or any part of such grant, allowance, aid or subsidy becoming
repayable or forfeited.
(X) No Group Company has any of its records needed for the conduct of its
business, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held
by any means whatsoever which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of
such Group Company.
(Y) Permutit UK has registered with the Registrar under the Data Protection
Act 1984.
(Z) Details of all bank accounts maintained or used by each Group Company
(including, in each case, the name and address of the bank with whom the
account is kept and the number and nature of the account) and of all
direct debit or standing order or similar authorities applicable to any
of the accounts are set out in or attached to the Disclosure Letter.
(AA) Full details of all overdraft, loan and other financial facilities
available to the Group are set out in the Disclosure Letter and neither
the Sellers nor any Group Company has done anything whereby the
continuance of any of those facilities would be affected or prejudiced.
There will be no outstanding debts owing by Group Companies (other than
trading indebtedness) at Completion.
(BB) No order has been made and no resolution has been passed for the winding
up of any Group Company or for a provisional liquidator to be appointed
in respect of any Group Company and no petition has been presented of
which notice has been given to any Group Company and no meeting has been
convened for the purpose of winding up any Group Company.
(CC) No administration order has been made and no petition for such an order
has been presented of which notice has been given to any Group Company
in respect of that Group Company.
(DD) No receiver (which expression shall include an administrative receiver)
or, in the case of Permutit New Zealand, manager has been appointed in
respect of any Group Company or all or any of its assets or undertaking
and no steps have been taken by any Group Company with a view to the
appointment of such a person.
(EE) No Group Company is insolvent, or unable to pay its debts within the
meaning of section 123 Insolvency Act 1986, or in relation to Permutit
New Zealand section 261 Companies Act 1955, or has stopped paying its
debts as they fall due.
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59
(FF) No voluntary arrangement has been proposed under section 1 Insolvency
Act 1986, or in relation to Permutit New Zealand, section 209J Companies
Act 1955 in respect of any Group Company and its creditors and/or
members of any class of its creditors and/or its members.
(GG) No unsatisfied judgment is outstanding against any Group Company or the
whole or any part of it, its assets or undertaking.
(HH) No controller or administrator (as each of those terms is defined in the
Corporations Law) or any other person has taken possession or has
control of the property of Permutit Australia or is appointed to
Permutit Australia or any action has been taken which could result in
any such event occurring.
(II) No inspector is or has been appointed to investigate the affairs of
Permutit Australia pursuant to the Australian Securities Commission Act
1989.
(JJ) No compromise or arrangement is proposed or has been made between
Permutit Australia and its creditors and/or members or any creditor or
member or any class of member and no application has been made to any
court for an order summoning a meeting of creditors of Permutit
Australia.
(KK) Save as contemplated by clause 10 no member of the Retained Group nor
any director of any such member has any interest in any business which
competes, directly or indirectly, with any business now carried on by
any Group Company.
(LL) All information relating to installed systems which has at any time
since 1st January, 1988 belonged to any Group Company is held and owned
by such Group Company at the time of Completion.
(MM) Save as expressly contemplated herein, no Group Company has since 31st
March, 1995 undertaken any acts outside the ordinary course of business.
(NN) The regeneration plant at the Manchester Property is operating as
effectively and fully at the date of this agreement as it was when first
fully commissioned.
8. Employees
(A) The schedule of officers and employees of each Group Company showing
details of all their terms of employment (including the name, sex, age,
position held, hours of work, date of commencement of period of
continuous service, notice period, number of days' statutory sick pay
received during current calendar year, current salary and other benefits
of each such person) annexed to the Disclosure Letter is true, complete
and accurate in all material respects.
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60
(B) There is no liability whatsoever to make any payment to or for the
benefit of any person (whether or not an officer or employee or former
officer or employee) in respect of past service or the termination of
the employment of that or any other person and there are no amounts
owing to any present or former directors or employees or members of any
Group Company.
(C) No person is employed by any Group Company on terms which in any
particular circumstances would entitle him to a bonus or incentive
payment or commission (based on profits or turnover) or participation in
a share option scheme, share incentive scheme or profit sharing, bonus
or other such incentive scheme, and no Group Company has in existence
nor has it indicated any proposal to introduce any such scheme.
(D) (i) The terms of employment shown in the schedule specified
in paragraph 8(A) are the same as applied at the
Accounts Date.
(ii) There is no outstanding commitment to increase the
remuneration or change the other terms of employment of
any officer or employee of any Group Company and there
is no agreement or arrangement (whether legally binding
or not) between any Group Company and any employee or
ex-employee relating to his employment, his ceasing to
be employed or his retirement.
(E) No employee of any Group Company:-
(i) at the date of the cessation of his employment with such
Group Company earning a salary or wages of more than
L10,000 per annum has during the period of twelve months
preceding the making of this agreement: or
(ii) possessed of confidential information or customer
goodwill the disclosure of which by that employee or the
soliciting of which from that employee would be
detrimental to any Group Company has during the period
of three years preceding the making of this agreement:
ceased to be employed by such Group Company (other than through
retirement at normal retirement age) and no employee has given
any Group Company or the Sellers any indication that he will
leave a Group Company's employ as a result of the transactions
contemplated by this agreement.
(F) No Group Company has any agreement or other arrangement (binding or
otherwise) with and has not recognised any trade union or other body
representing its employees or any of them and no trade union or body has
such a level of membership among any employees of any Group Company as
would be likely to entitle that trade union or body to recognition by
such Group Company.
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61
(G) None of the Group Companies nor any of their employees is engaged or
involved in any industrial or trade dispute or any dispute or
negotiation and no act, event or omission has occurred which is likely
to give rise to any such dispute, or negotiation.
(H) There are no training schemes, arrangements or proposals in existence
nor have there been in the past any such schemes, arrangements or
proposals, in respect of which a levy may become payable by Permutit UK
under the Industrial Training Act 1982.
(I) None of the Group Companies' senior employees have ever expressed to any
of the Sellers opposition to the Purchaser's acquiring the Shares or
offered to purchase any of the Shares.
(J) Permutit UK has not received and is not aware that it will receive any
claim from any of its employees pursuant to the Patents Act 1977.
(K) There is not outstanding any contract of service or contract for
services between any Group Company and any of its directors, officers or
employees which is not terminable by such Group Company without
compensation (other than a statutory redundancy payment or statutory
compensation for unfair dismissal) on one month's notice at any time.
(L) No liability has been incurred by any Group Company for breach of any
contract of service or contract for services, for redundancy payments,
protective awards or for compensation for wrongful dismissal or unfair
dismissal or for failure to comply with any order for the reinstatement
or re-engagement of any employee or for any other liability accruing
from the termination of any contract of service or contract for services
and no gratuitous payment has been made or promised by any Group Company
in connection with the actual or proposed termination or suspension of
employment or variation of any contract of service of any present or
former officer or employee.
(M) In the period of one year preceding the date hereof Permutit UK:
(i) has not been a party to any relevant transfer (as such
expression is defined in the Transfer of Undertakings
(Protection of Employment) Regulations 1981);
(ii) has not failed to comply with any duty to inform and consult any
independent trade union under the Transfer of Undertakings
(Protection of Employment) Regulations 1981;
(iii) has not given notice of any redundancies to the relevant
Secretary of State or started consultation with any independent
trade union under the provisions of Part IV, Employment
Protection Act 1975 nor has it failed to comply with any such
obligation under the said Part IV.
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62
(N) The Group Companies have in relation to each of their employees and
former employees complied with all obligations imposed on them by
Statute, codes of conduct and practice, collective agreements, customs
and practices and with all awards, recommendations and declarations in
any way relating to the relations between them and their employees or
any trade union and the conditions of service of their employees.
9. DELIBERATELY LEFT BLANK.
10. Taxation
Administration
(A) Each Group Company has for all periods falling within the seven years
prior to Completion correctly made all returns and payments within the
relevant time limits and provided all other information and documents
required to be provided by such Group Company to any Tax Authority for
any Tax purposes.
(B) Each Group Company has for all periods falling within the seven years
prior to Completion maintained all records as it is required to maintain
by law for the purpose of any Tax.
(C) In respect of any period not ended at Completion, no Tax Authority has
operated or agreed to operate any arrangement (being an arrangement
which is not based on relevant legislation or any published practice) in
relation to any Group Company's Tax affairs.
(D) Full particulars of all returns and payments in respect of any Tax each
Group Company is required to make and all other information each Group
Company is required to provide within twelve weeks after Completion or
which any Group Company has been required by written notice from a Tax
Authority to provide after Completion are set out in the Disclosure
Letter.
(E) There is no existing dispute in relation to Tax between any Group
Company and any Tax Authority, no notification has been received by the
Sellers or any Group Company from any Tax Authority suggesting that such
Tax dispute may arise after Completion and no such dispute is
contemplated by the Sellers or any Group Company.
(F) No Group Company has been or currently is the subject of an
investigation of a non-routine nature by any Tax Authority and, so far
as the Sellers are aware, no such investigation is contemplated.
(G) No Group Company has been a party to any transaction in respect of which
any consent or clearance was required by law without such consent or
clearance first having been obtained. All
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63
particulars provided to any Tax Authority in connection with the
application for any consent, ruling or clearance, on behalf of the
relevant Group Company or affecting the relevant Group Company, fully
and accurately disclosed all material facts and circumstances relevant
to the decision of the Tax Authority and any Transaction for which such
consent, ruling or clearance has been obtained has been carried into
effect (if at all) only in accordance with the terms of the relevant
application and consent, ruling or clearance.
(H) All elections and claims in respect of Tax made by each Group Company
have been made correctly and any Transaction which is affected by the
election or claim has been carried into effect (if at all) only in
accordance with the terms of the election or claim.
(I) Full particulars of all rulings, consents and clearances obtained in
respect of any Group Company which contain any conditions which are
required to be complied with after Completion are set out in the
Disclosure Letter.
(J) Each Group Company has sufficient records relating to past transactions
(to the extent that such transactions are relevant), including any
claims and elections made, to calculate any Tax Liability which would
arise on the disposal or deemed disposal or realisation of any asset on
or after Completion.
(K) Each Group Company has made all deductions and withholdings from
payments made or deemed to have been made by or through it in respect of
periods not ended on or before Completion, and has accounted for all
such deductions and withholdings to the relevant Tax Authorities as
required by law.
(L) Particulars of all existing agreements and arrangements under which any
Group Company is obliged (or in the case of any put option, would be
obliged) to make any payment or under which a payment would be deemed to
be made by or through any Group Company after Completion are set out in
the Disclosure Letter with specific reference to this clause and for the
purposes of this clause a payment means any payment in respect of which
the relevant Group Company may be required, by law, to make a deduction
or withholding.
(M) Permutit UK is not and, in respect of any period not ended on or before
Completion, has not been, a branch or agent of any person not resident
in the United Kingdom for United Kingdom tax purposes.
(N) The Completion Accounts of Permutit UK will not include as an asset any
Relief which consists of trading or capital losses which may be
available to the company to be set against any trading or capital
profits. Full details of all Reliefs which
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64
will be included as any asset or taken into account in calculating any
provision in the Completion Accounts including the nature of the Relief
and the time in which the claim or election for Relief should be made
are set out in the Disclosure Letter.
(O) The value adopted for the purposes of the Completion Accounts of
Permutit UK of each of its assets on the disposal of which a chargeable
gain or allowable loss could arise will not exceed the amount deductible
under TCGA 1992, section 38.
(P) All expenditure which Permutit UK has agreed to incur or consideration
which Permutit UK has agreed to give on or after Completion which will
not be fully deductible in calculating the trading income of the company
for the period beginning immediately after Completion, is in respect of
or in connection with an asset of Permutit UK on the disposal of which a
chargeable gain or allowable loss could arise and all such expenditure
and consideration given would be fully allowable as a deduction under
TCGA 1992, section 38, in computing the chargeable gain or allowable
loss of Permutit UK in respect of any disposal by Permutit UK of the
relevant asset.
(Q) The amount of consideration in money received or receivable by Permutit
UK in respect of any disposal, on or before the time of disposal, of any
asset (other than a trading asset) which it would be under an obligation
to make at any time after Completion pursuant to any option or agreement
entered into by Permutit UK on or before Completion is not less than the
amount it will be treated as receiving for the purposes of calculating
its chargeable gain in respect of that disposal.
(R) Permutit UK is not a party to any arrangement or agreement under which
any loss it may make on any disposal on or after Completion would be
subject to the provisions of TCGA 1992, section 18(3) (transactions
between connected persons).
(S) Permutit UK is not a party to any arrangement or agreement under which
it could be treated at any time after Completion as a limited partner
for the purposes of TCGA 1992, section 55 (restriction on relief:
companies).
(T) No asset owned by Permutit UK is a wasting asset within TCGA 1992,
section 44 (wasting assets) and there is no agreement or arrangement in
existence under which it will (or, in the case of a put option, could)
acquire any such asset.
(U) Permutit UK does not own any rights, or any interest in rights, under a
policy of assurance or contract for a deferred annuity on the life of
any person of which it is not the original beneficial owner and there is
no agreement or arrangement under which it
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65
will (or, in the case of a put option, could) acquire such a right or
interest.
(V) Permutit UK has not made any gain on any disposal where the tax
chargeable in respect of the gain is deferred to the happening of any
event after Completion other than the corporation tax on gains made in
the accounting period ended 31st March 1995 which is payable by the
Company nine months and one day after Completion.
(W) Permutit UK does not own any shares in a company which has agreed to
make at any time after Completion any such transfer as is referred to in
TCGA 1992, section 125 (shares in a close company transferring assets at
an under value) and there is no agreement or arrangement in existence
under which it will (or, in the case of a put option, could) receive any
asset by way of gift as mentioned in TCGA 1992, section 282 (gifts:
recovery from donee).
(X) There is no agreement or arrangement under which any transaction which
Permutit UK is obliged (or, in the case of a put option, would be
obliged) to carry out after Completion may be treated as a disposal of
an asset by Permutit UK to which TCGA 1992, section 29 would apply.
(Y) Permutit UK is not a party to any agreement or arrangement under which
it could be obliged to make a disposal at any time on or after
Completion to which the provisions of TCGA 1992, section 19 would apply
to treat it as having received an amount of consideration which is
greater than the actual amount of consideration it receives for the
purposes of calculating its chargeable gain in respect of that disposal.
(Z) The entering into of this agreement and Completion will not make
Permutit UK liable to be assessed to Tax under any of the provisions of
sections 179, 189 or 190, TCGA 1992.
(AA) If Permutit UK disposed of each of its assets, or of any pool of assets
(that is to say all those assets the aggregate of the expenditure
relating to which would be taken into account in computing whether a
balancing charge would arise on a disposal of any of those assets) for a
consideration equal to their book value as shown or adopted for the
purpose of the Completion Accounts, no balancing charge would arise in
respect of any such asset or pool of assets under any legislation
relating to capital allowances.
(BB) Since the Accounts Date no accounting period (as defined in section 12,
ICTA 1988) of Permutit UK has ended (as referred to in section 12(3),
ICTA 1988).
(CC) Permutit UK has not adopted and does not operate or is not part of any
scheme approved or for which approval has been or is to be
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66
sought under section 202 ICTA 1988 (Charities: Payroll Deductions
Scheme), Chapter III of Part V ICTA 1988 (Profit Related Pay) or Chapter
IV of Part V ICTA 1988 (Share Option and Approved Profit Sharing
Schemes).
(DD) No agreement or arrangements exist whereunder Permutit UK may be obliged
to make a payment at any time after Completion to which section 601,
ICTA 1988 may apply.
(EE) No tax relief for any contribution which may be made by Permutit UK to
any pension scheme after Completion could be restricted under the
provision of section 112 of the Finance Act 1993 by reference to
contributions made in or provisions for contributions made (by Permutit
UK or any other person) in respect of any period ending on or prior to
Completion.
(FF) Permutit UK has not agreed and is not obliged (contingently or
otherwise) to surrender any amount in respect of any period not ended on
or before Completion and has not received or agreed to receive any
amount surrendered by any other company under, the provisions of
sections 240, 402-403, 407-409 and 411-413, ICTA 1988 and it is not
liable to make any payment for any amount surrendered by any other
company under or in connection with the provisions of any of those
sections.
(GG) Permutit UK is not and, during or for the purposes of any period not
ended before Completion, has not been a member of a partnership.
(HH) Permutit UK is under no obligation to make a payment of rent, interest,
annual payments or other sums of an income nature payable at any time
after Completion which may be wholly or partially disallowable as
deductions or charges in computing profits or against profits for Tax
purposes by virtue of the provisions of sections 74, 125, 338, 339, 779,
781-785 and 787, ICTA 1988, or otherwise on the basis that the business
of Permutit is carried on in the same way as at Completion.
(II) Permutit UK has not effected any demerger falling within sections 213 to
218, ICTA 1988 under which any Group Company has been concerned in an
exempt distribution (as defined in section 214(4) of ICTA 1988) and
there are no arrangements by Permutit UK to effect any such demerger.
(JJ) Permutit UK has not made any claim under section 140, TCGA 1992 in
respect of the transfer of any trade carried on by it outside the United
Kingdom and there are no arrangements by Permutit UK to make any such
transfer or claim.
(KK) On the basis that Permutit is not a company which falls within section
704(D) ICTA 1988, Permutit UK has not within the last ten years repaid,
redeemed or purchased or agreed to repay, redeem or
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67
purchase any of its share capital otherwise than by the receipt of new
consideration (within the meaning of Part VI ICTA 1988).
(LL) On the basis that Permutit is not a company which falls within Section
704(D) ICTA 1988, Permutit UK has not within the last ten years
capitalised or agreed to capitalise in the form of shares or debentures
any profits or reserves of any class or description, or otherwise issued
or agreed to issue share capital otherwise than wholly for new
consideration (as defined in section 254 ICTA 1988).
(MM) There is no obligation on Permutit UK to carry out at any time after
Completion any transaction which would be a distribution or deemed
distribution within the meanings of sections 209 or 210 ICTA 1988.
(NN) Permutit UK is not and has not during the time which it has been a
subsidiary of the Sellers been a close company for the purposes of
United Kingdom Tax legislation and does not have any interest in and has
never had during the time which it has been a subsidiary of the Seller
any interest in a close company.
(OO) (i) Permutit UK is not a party to any scheme or arrangement
the whole or part of which is yet to be effected and
which is designed wholly or mainly for the purposes of
avoiding or deferring Tax.
(ii) Permutit UK is not under any obligation to carry out any
Transaction at any time after Completion to which the
provisions of sections 770, ICTA 1988 may be applied.
(iii) Permutit UK is not under any obligation or party to any
arrangements where it could realise a gain at any time
on or after Completion of a capital nature for the
purposes of section 776, ICTA 1988.
(iv) Permutit UK is not under any obligation or party to any
arrangements or arrangement whereunder it will (or, in
the case of a put option, could) be treated as obtaining
a tax advantage in consequence of any transaction in
securities effected at any time after Completion to
which the provisions of sections 703 to 709, ICTA 1988
could apply provided that the entering into of this
Share Purchase Agreement shall not be treated as such an
obligation or arrangement for the purposes of this
warranty.
(PP) Permutit UK:
(i) is registered for the purposes of value added tax, has been so
registered at all times that it has been required to be
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68
so registered, and such registration is not subject to any
conditions imposed by or agreed with H M Customs and Excise;
(i) has complied fully with and observed in all material respects
the terms of VAT legislation;
(ii) has maintained and obtained at all times complete, correct and
up-to-date records, invoices and other documents appropriate or
required for the purposes of VAT legislation and has preserved
such records, invoices and other documents in such form and for
such periods as are required by VAT legislation;
(iii) subject to any limitations applicable pursuant to section 25(7)
VATA 94, obtains credit for all input tax paid or suffered by
it;
(iv) is not and has not been treated as a member of a group for the
purposes of VAT legislation, and has never applied for such
treatment;
(v) is not required to make payments on account of value added tax
for which it may become liable in a prescribed accounting period
(pursuant to The Value Added Tax (Payments on Account)
Regulations 1992); and
(vi) is not and has not been subject under VAT legislation to any
penalty liability notice, written warning of failure to comply,
surcharge liability notice or requirement to give security as a
condition of making taxable supplies.
(QQ) In respect of each of the assets of Permutit U.K. (if any) which is a
capital item for the purpose of Part VA of the VAT (General) Regulations
1985, the Disclosure Letter sets out accurately
(i) the capital item affected;
(ii) the amount of the total input tax (within the meaning of the
said regulations) which is subject to adjustment;
(iii) the percentage of that input tax which was reclaimable on the
capital item in the first interval applicable to it and any
adjustments made having regard to events occurred up to the date
hereof;
(iv) the date of acquisition of the capital item and the number of
intervals in the adjustment period not ended on or before
Completion;
(v) full particulars of all matters to date which are likely to be
relevant in determining any adjustments which may be
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69
required in respect of any periods not ended on or before
Completion.
(RR) (i) Permutit UK has both maintained and obtained full,
complete, correct and up-to-date records, invoices and
other documents appropriate or required for the purposes
of Customs Duty and Excise Duty.
(ii) Permutit UK has complied fully with all provisions of
the Tax legislation relating to Customs Duty and Excise
Duty and all directions and conditions made or imposed
pursuant thereto.
(SS) (i) Any exemption or relief obtained by Permutit UK from
capital duty under Part III Schedule 19, Finance Act
1973 or from stamp duty under section 55, Finance Act
1927 or section 42, Finance Act 1930 was properly
claimed and no such exemption or relief has become
liable to forfeiture.
(ii) All documents in the possession or under the control of
each Group Company or to the production of which any
Group Company is entitled and which establish or are
required to establish the title of such Group Company to
any asset which belongs to it have been stamped and any
applicable stamp duties or charges in respect of such
documents have been accounted for and paid, and there
are no such documents which are outside the United
Kingdom which would attract stamp duty if they were
brought into the United Kingdom.
(TT) No Group Company is under any obligation or party to any arrangement to
enter into any Transaction at any time on or after Completion in respect
of which a charge to stamp duty reserve tax could arise.
(UU) So far as the Sellers are aware, no Group Company is entitled to an
interest in possession in settled property.
(VV) Permutit UK is and always has been resident in the United Kingdom for
United Kingdom Tax purposes. Permutit UK does not have any presence, for
tax purposes, in any jurisdiction other then the United Kingdom, and is
not a dual resident investing company for the purposes of section 404
ICTA 1988.
(WW) Neither Permutit Australia nor Permutit New Zealand have any presence,
for the purpose of any United Kingdom Tax, in the United Kingdom and
neither is a dual resident investing company for the purposes of section
404 ICTA 1988.
(XX) There are no circumstances in existence under which the Inland Revenue
could make a direction under section 747, ICTA 1988
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70
pursuant to which any profits of any Group Company could be apportioned
to Permutit U.K..
(YY) Permutit UK does not, for the purposes of sections 757 to 760, ICTA
1988, have a material interest in an offshore fund.
(ZZ) No Group Company has carried out, been a party to, permitted to be
carried out or is under any obligation to carry out any Transaction or
series of Transactions for which consent (whether general or special)
was or could be required pursuant to sections 765 to 767 ICTA 1988.
Warranties in respect of Permutit Australia
1. The value adopted for the purposes of the Completion Accounts of
Permutit Australia of each of its assets on the disposal of which a
taxable profit or allowable loss could arise will not exceed the amount
which would be deductible from the disposal proceeds in calculating the
taxable profit or allowable loss.
2. All expenditure which Permutit Australia has agreed to incur or
consideration which Permutit Australia has agreed to give on or after
Completion which will not be fully deductible in calculating the trading
income of Permutit Australia for the period beginning immediately after
Completion, is in respect of or in connection with an asset of Permutit
Australia on the disposal of which a taxable profit or allowable loss
could arise and all such expenditure incurred or consideration given
would be fully deductible in calculating the taxable profit or allowable
loss.
3. Permutit Australia has properly operated the PAYE tax system and the
fringe benefits tax system and has deducted tax from payments or
benefits made or allowed to or treated as made or allowed to employees
former employees or officers of Permutit Australia or from which tax
should have been deducted in terms of the Income Tax Assessment Act 1936
or the Fringe Benefits Tax Assessment Act 1986 and has accounted to the
Commissioner of Federal or State Taxation for the tax deducted.
Warranties in respect of Permutit New Zealand
4. No assessable income would arise if any capital asset of Permutit New
Zealand were to be sold, disposed of or distributed for an amount equal
to their book value adopted for the purposes of Completion Accounts,
except any depreciation recapture under section 117 of the Taxes Act
1976 or section EG 19 of the Income Tax Act 1994.
5. All expenditure which Permutit New Zealand has agreed to incur or
consideration which Permutit New Zealand has agreed to give on or after
Completion which will not be fully deductible in
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71
calculating the assessable income of Permutit New Zealand for the period
beginning immediately after Completion, is in respect of or in
connection with the purchase of a fixed asset of Permutit New Zealand in
respect of which a depreciation allowance would be available under
section 108 of the Taxes Act 1976 or section EG 1 of the Income Tax Act
1994.
6. Permutit New Zealand has not at any time:
(i) obtained or sought to obtain a taxation advantage through any
fraud or evasion; or
(ii) obtained a taxation advantage from any arrangement to which
section 99 of the Taxes Act 1976 or section BB 9 or GB 1 of the
Income Tax Act 1994 or section 76 of the Goods and Services Act
1985 applies; or
(iii) made or entered into any arrangement, undertaking or scheme
which was at the time it was entered into a sham or fiscal
nullity.
7. Permutit New Zealand:
(i) is a registered person for the purpose of the Goods and Services
Tax Act 1985;
(ii) has complied in all respects with that Act; and
(iii) is not in default of any obligation to make any payment or
return or notification under that Act.
8. Permutit New Zealand has a balance date for New Zealand income tax
purposes of 31st March of each year.
9. Permutit New Zealand is not and, in respect of any period not ended on
or before Completion, has not been, a branch or agent of any person not
resident in New Zealand for New Zealand tax purposes.
11. Disputes
(A) None of the Group Companies nor any person for whose acts or defaults
any Group Company might be vicariously liable is involved in litigation,
prosecution, arbitration or any other proceedings for the enforcement of
rights or settlement of disputes with the exception of the collection of
debts in the ordinary course of business and so far as the Sellers are
aware no act, omission or event has occurred which has given rise to a
threat of such proceedings or which is likely to result in any Group
Company being involved in any such proceedings; in particular (but
without prejudice to the generality of the foregoing):-
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(i) no breach of contract has been committed and no Group Company
has otherwise failed to comply with the terms of any contract
for which any Group Company is liable (either directly or
vicariously) or which would cause damage to any Group Company,
in each case where the loss to the Group Company is more than
L15,000 Provided always that if there are a number of claims
each less than such amount but together aggregating L100,000 or
more, then they shall be treated as a single claim of more than
L15,000; and
(ii) no Group Company is subject to any order or judgment given by
any Court or governmental agency and has not been a party to any
undertaking or assurance given to any Court or governmental
agency which is still in force; and
(iii) no Group Company has received any notice of complaint or
intended prosecution from the Financial Reporting Review Panel.
(B) No proceedings have been served upon any Group Company in the last three
years.
(C) Since the Sellers acquired the Companies, there have been no situations
with respect to any Group Company that involved or involve (i) the use
of any corporate funds for unlawful contributions, unlawful gifts,
unlawful entertainment or other unlawful expenses related to political
activity or to any of the customers or suppliers of such Group Company,
(ii) the making of any direct or as far as the Sellers are aware,
indirect unlawful payments to government officials or others from
corporate funds or the establishment or maintenance of any unlawful or
unrecorded funds, (iii) the violation of any of the provisions of the
Foreign Corrupt Practices Act of 1977 or any rules or regulations
promulgated thereunder, (iv) the receipt of any illegal discounts or
rebates or any other violation of anti-trust laws or (v) any
investigation by any governmental body.
12. Environmental
Except as set out in the Disclosure letter:
(i) all Environmental Approvals have been obtained and complied with
and are in full force and have been disclosed to the Purchaser;
(ii) there has been no material breach of any Environmental Approvals
or Environmental Laws;
(iii) no statutory or, so far as the Sellers are aware, informal
notices relating to Environmental Approvals, Environmental Laws
or Environmental Matters have been received by any Group Company
or the Sellers relating to any of the
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73
Properties or the conduct of the business of any Group Company
at any of the Properties;
(iv) so far as the Sellers are aware no Environmental Liabilities
exist and no proceedings or other actions of whatsoever nature
are pending or threatened in relation to Environmental Approvals
or Environmental Laws;
(v) so far as has come to the Sellers' knowledge during their period
of ownership of each of the Properties, no underground storage
tanks or vessels or any sort of underground storage system or
pipelines (whether used or disused but excluding pipelines in
relation to utilities) exist at any of the Properties.
13. Information
Any reference in this schedule (save where indicated to the contrary
below) to the awareness, knowledge or belief of the Sellers in relation to a
matter shall be deemed to constitute an additional statement that it has been
made after due and careful enquiry of (and solely of) the officers of each Group
Company and of the named individuals set out below.
Neil Edkins - Managing Director
Richard Astle - Production Manager
David Marsan - UK Sales Manager
Mark Hodder - International Sales Manager
Keith Patton - Technical Manager
Barry Clutton - Finance Manager
Alison Anderson - International Project Manager
Tom Kenny - Service Manager
Nick Broomfield - Product Manager
Patrick Bluett - Accounting
Steve Jardine - Accounting
Dimitri Lazarou - Gulf
Terry Moore - Contracts Manager
Steve Smith - Tax warranties only
Richard Wheeler - Pensions warranties only
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SCHEDULE 3
(Limitations on the Sellers' liability under the
Warranties and Undertakings)
Contents List
I. Agreements to which this schedule is applicable
II. Warranties and Undertakings
III. Limitations on liability under Warranties and Undertakings
1. Limitation on quantum
2. Time limits for bringing claim
3. Conduct of litigation
4. No liability if loss is otherwise compensated for
- Purchaser can only claim once
- Taxation
- Insurances
- Recovery from third parties
5. Acts of Purchaser
6. Allowance, provision or reserve in the Accounts
7. Retrospective legislation
8. Taxation
9. Purchaser's knowledge
10. Information Memorandum and independent advice of Purchaser
11. Immovable Property
I. Agreements to which this schedule is applicable
Save to the extent there is provision specifically to the contrary the
parties intend that the provisions in this schedule apply both to the
Warranties and to the Tax Covenant (in addition to the limitations (if any) set
out in that document). Accordingly, for the purposes of this schedule,
"Undertakings" shall mean any covenant or any undertaking given by or on behalf
of the Sellers in the Tax Covenant.
II. Warranties and Undertakings
Notwithstanding anything in this agreement to the contrary, the
provisions of this schedule shall operate to limit the liability of the Sellers
in respect of any claim by the Purchaser under the Warranties and/or
Undertakings, as applicable.
For the avoidance of doubt, "Damages" includes any payment under any
Undertaking.
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III. Limitations on liability under Warranties and Undertakings
1. Limitation on quantum
(A) The Purchaser shall not be entitled in any event to damages in respect
of any claim or claims under any of the Warranties (other than Tax
Warranties unless and until and to the extent that the aggregate amount
of all such substantiated claims and the amount by which the Net Asset
Value as adjusted by the Margin Bank Differential (as adjusted) is less
than L3,425,000 exceeds L300,000 in which case the relevant Seller shall
be liable for the amount by which such aggregate exceeds L300,000.
For the purposes of this clause, "substantiated" means a claim which is
admitted or proved in a court of competent jurisdiction
(B) The total aggregate liability of the Sellers under or pursuant to the
Warranties and the Tax Covenant (whether for breach of the Warranties or
claims under the Undertakings or otherwise) shall not in any event
exceed the Purchase Price less any amount paid by the Sellers to the
Purchaser in accordance with clause 5(I).
2. Time limits for bringing claim
(A) No claim shall be brought against the Sellers in respect of any breach
of the Warranties or under any of the Undertakings unless the Purchaser
shall have given to the relevant Seller written notice of such claim
specifying (in reasonable detail in so far as it is available) the
matter which gives rise to the breach or claim, the nature of the breach
or claim and the amount claimed in respect thereof:
(i) on or before the 7th anniversary of the Accounts Date in respect
of claims under the Tax Covenant or the Tax Warranties; or
(ii) on or before the date three years from the date hereof in
respect of any claim under the Warranties relating to
environmental matters; or
(iii) at any time after Completion in respect of any claim under the
Warranties relating to the ownership of the Shares; or
(iv) on or before 31st July, 1997 (the "Warranty Claim Date") in
respect of any other matters,
PROVIDED that the liability of the relevant Seller under this paragraph
shall absolutely determine (if such claim has not been previously
satisfied, settled or withdrawn) if Proceedings in respect of such claim
shall not have been commenced within two years of the service of such
notice and, for this purpose, Proceedings shall not be deemed to have
been commenced unless
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76
they shall have been properly issued and validly served upon the
relevant Seller.
(B) None of the limitations contained in paragraphs 1 and 2 shall apply to
any breach of the Warranties which (or the delay in discovery of which)
is the consequence of fraud or dishonest concealment, by any of the
Sellers, or any of their officers or employees.
3. Conduct of litigation
Upon the Purchaser or any member of the Group becoming aware of any claim,
action or demand against it or matter likely to give rise to the same, in
respect of the Warranties (other than the Tax Warranties), the Purchaser shall,
and shall procure that the relevant member of the Group shall:
(i) as soon as reasonably practicable notify the relevant Seller by
written notice as soon as it appears to the Purchaser that the
relevant Seller is or may become liable under such Warranties or
that any assessment or claim of a third party received by the
Purchaser may result in a claim under such Warranties;
(ii) subject to the relevant Seller indemnifying the Purchaser and/or
the relevant member of the Group to their reasonable
satisfaction against any liability, costs, damages or out of
pocket expenses which may be incurred thereby, take such action
and give such information and access to personnel, premises,
chattels, documents and records to the relevant Seller and its
professional advisers as the relevant Seller may reasonably
request and the relevant Seller shall be entitled to require the
relevant member of the Group to take such action and give such
information and assistance in order to avoid, dispute, resist,
mitigate, settle, compromise, defend or appeal any claim in
respect thereof or adjudication with respect thereto;
(iii) subject to the proviso set out below, make no admission of
liability, agreement, settlement or compromise with any third
party in relation to any such claim or assessment without the
prior written consent of the relevant Seller (such consent not
to be unreasonably withheld or delayed); and
(iv) take all reasonable action to mitigate any loss suffered by it
or any member of the Group in respect of which a claim could be
made under such Warranties.
PROVIDED THAT if the Sellers shall not make any request as to avoiding,
disputing, resisting, appealing or compromising any claim within one
month of being invited in writing to give
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instructions in relation to the same or within such lesser time period
as shall be specified in such written invitation, being the requisite
procedural time limit for avoiding, disputing, resisting, appealing or
compromising (as appropriate) such claim, then the Purchaser may take
any reasonable steps to settle the claim.
4. Conduct of Tax Disputes
(A) The Purchaser shall give notice to the Sellers of any Claim for Tax
within seven Business Days of the Purchaser becoming aware thereof.
(B) The Seller shall be entitled to resist any such Claim for Tax in the
name of the Purchaser, the relevant member of the Purchaser's Group or
the relevant Group Company, as the case may be, and to have made
available information and documents of the relevant Group Company
reasonably necessary for the purpose of such resistance provided that:
(i) the Purchaser, each member of the Purchaser's Group and each of
the Group Companies which may be affected by the Claim for Tax
is indemnified and secured to the Purchaser's satisfaction by
the Sellers against all losses (including additional Tax
Liability), costs (including reasonable compensation for the
time spent by the Purchaser's Group or their officers,
employees, agents and advisers), damages and expenses which may
be incurred in resisting the Claim for Tax; and
(ii) the Sellers have been advised by an independent tax adviser,
acceptable to the Purchaser in its reasonable discretion, after
disclosure of all relevant information and documents, that it is
reasonable to resist the Claim for Tax in the manner proposed by
the Sellers.
(C) The Sellers shall forfeit the right to resist any such Claim for Tax
forthwith upon service of notice by the Purchaser:
(i) that it appears to the Purchaser that either the Sellers or any
of the Group Companies committed at any time on or before
Completion acts or were responsible for omissions which might
constitute fraud; or
(ii) that the Purchaser considers that resistance to the Claim for
Tax would prejudice a right or interest of a member of the
Purchaser's Group; or
(iii) that the Purchaser has been advised by Queen's Counsel or, in
relation to New Zealand, a legal practitioner experienced in
taxation matters that it is unreasonable to resist the Claim for
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(iv) that the Sellers have failed to comply with the provisions of
this paragraph 4.
(D) The right of the Sellers to resist Claim for Tax and the forfeiture of
such right shall be without prejudice to the Indemnities contained in
this agreement or the Deed of Tax Covenant.
(E) The Purchaser shall be kept fully and promptly informed of all matters
and all steps proposed to be taken by the Sellers and shall be entitled
to receive from the Sellers copies of all correspondence in connection
with any action taken by the Sellers pursuant to this clause in respect
of any Claim for Tax.
(F) The appointment of solicitors or professional advisers shall be subject
to the prior approval and continuing approval of the Purchaser, such
approval not to be unreasonably withheld or withdrawn.
(G) All written communications which are to be transmitted to the relevant
Tax Authority in connection with the Claim for Tax shall first be
submitted to the Purchaser and shall not be despatched unless approval
is given, such approval not to be unreasonably withheld.
(H) The relevant member of the Purchaser's Group or the relevant Group
Company (as the case may be) shall be at liberty without reference to
the Sellers and on such terms as it may in its absolute discretion think
fit to admit, compromise, settle, discharge or otherwise deal with any
Claim for Tax if:
(i) within seven business days following the service of notice of
that Claim for Tax on the Sellers pursuant to sub-paragraph (A)
of this paragraph the Sellers fail to notify the Purchaser of
their wish to resist the Claim for Tax; or
(ii) the Sellers serve a notice on the Purchaser to the effect that
they do not or no longer wish to resist the Claim for Tax.
(I) The Sellers shall be bound to accept for the purposes of this agreement
and the Deed of Tax Covenant any admission, compromise, settlement or
discharge of any Tax Liability and the outcome of any proceedings
relating thereto, made or arrived at in accordance with the provisions
of this paragraph 4.
(J) Nothing in this paragraph 4 shall prevent any member of the Purchaser's
Group or any Group Company from paying the Tax Liability (or any part of
it) which is the subject of the Claim for Tax where the Tax Liability in
question includes a liability to pay Tax.
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(K) If in respect of any Claim for Tax, any sum is recovered by the relevant
Group Company or the Purchaser or any member of the Purchaser's Group
from any Tax Authority as a result of any action taken under this clause
(the "Recovery Amount"), the Purchaser will pay to the Sellers an amount
equal to the Recovery Amount including any repayment supplement in
respect of that Recovery Amount provided that the Recovery Amount may
not exceed the aggregate of the amount paid in respect of the underlying
Tax Liability under the Tax Covenant or the Tax Warranties to the
Purchaser, each of the Purchaser's Group and each of the Group Companies
under Clause 4(B) (i) and an amount equal to notional interest
calculated at the Base Rate of National Westminster Bank PLC thereon as
reduced by (i) any sums owed to the Purchaser under this Agreement or
the Tax Covenant and (ii) any Tax Liability of the Purchaser in respect
of the Recovery Amount and the repayment supplement.
5. No liability if loss is otherwise compensated for
Purchaser can only claim once
(A) The Purchaser and those deriving title from the Purchaser on or after
Completion shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once between them in respect of
any individual breach of the Warranties or claim under the Undertakings.
(B) No liability shall attach to the relevant Seller by reason of any breach
of the Warranties to the extent that the same loss occasioned to the
Purchaser or any member of the Group by reason of such breach has been
recovered under the Undertakings and no liability shall attach to the
relevant Seller under the Undertakings to the extent that the same loss
has been recovered by a claim under the Warranties given by it.
(C) The relevant Seller shall not be liable for breach of any of the
Warranties nor to a claim under any of the Undertakings if and to the
extent that the subject of the claim has been made good or is otherwise
compensated for without cost or expense to the Purchaser or to any
member of the Purchaser's Group or the Group.
Credit for tax benefits
(D) If, at the request and expense of the Sellers, a chartered accountant
appointed by the Purchaser and the Sellers by agreement, or failing
agreement, on application by the Sellers, by the President for the time
being of the Institute of Chartered Accountants in England and Wales or
equivalent in other jurisdictions, shall certify that any Tax Liability
in respect of which the Sellers have made a payment to the Purchaser
under this agreement or the Tax Covenant, has or will give rise to a
Relief
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for the relevant member of the Purchaser's Group or the relevant
Group Company, then:-
(i) where the Relief has been utilised as a deduction from or offset
against Tax, an amount equal to the amount of the Relief; and
(ii) where the Relief has been utilised as a deduction from or offset
against income profits or gains an amount equal to the amount of
Tax which has been saved;
shall be dealt with in accordance with sub-clause(E) of this clause.
(E) Where an amount (the "Relevant Amount") is to be dealt with under this
sub-clause:-
(i) the Relevant Amount shall first be set off against any payment
then due from the Sellers to the Purchaser under this agreement
or the Tax Covenant; and
(ii) to the extent that there is an excess, an amount equal to the
excess shall be paid by the Purchaser to the Sellers, within ten
business days of demand.
Insurances
(F) If and to the extent that, in respect of any matter which would give
rise to a breach of the Warranties (other than the Tax Warranties), the
Sellers shall not be liable for such breach to the extent the Group
Companies could recover any amount under a reasonably prudent insurance
policy (including a level of cover for professional indemnity reasonably
considered appropriate by the Purchaser after consultation with the
Sellers). The Sellers confirm that the insurance policies held by Group
Companies prior to Completion were more than reasonably prudent having
regard to the size and nature of the Thames Water Group and the fact
that insurance is placed through a captive insurance company.
Recovery From Third Parties
(G) (i) Where the Purchaser and/or any member of the Group is at
any time entitled to recover from some other person
other than the Purchaser or a member of the Purchaser's
Group or any Tax Authority any sum in respect of any
matter giving rise to a claim under the Warranties
and/or Undertakings the Purchaser if requested to do so
and on being indemnified to its reasonable satisfaction
by the Sellers, shall, and shall procure that the
relevant member of the Group shall, undertake all
reasonably necessary steps (having regard, inter alia,
to the Purchaser's ongoing business interests) to
enforce such recovery and, in the event that the
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Purchaser or any member of the Group shall recover any
amount from such other person, the amount of the claim
against the relevant Seller shall (if not paid) be
adjusted by the amount recovered or (if paid) the
Purchaser shall make a payment to the Seller in
accordance with sub-paragraph G(ii). The provisions of
this sub-paragraph (i) shall not affect the primary
liability of the Sellers to pay the Purchaser the amount
of any loss suffered. The Seller shall be obliged to pay
Purchaser the full amount of any loss suffered and,
where appropriate, the provisions of sub-paragraph
(G)(ii) shall apply following such payment.
(ii) If the relevant Seller has paid at any time to the Purchaser an
amount pursuant to a claim in respect of the Warranties and/or
the Undertakings and the Purchaser or any member of the Group is
entitled to recover from some other person other than any Tax
Authority or the Purchaser or a member of the Purchaser's Group
any sum in respect of any matter giving rise to such claim, the
Purchaser if requested to do so and on being indemnified to its
reasonable satisfaction by the Sellers, shall, and shall procure
that the relevant member of the Group shall take all reasonably
necessary steps (having regard, inter alia, to the Purchaser's
ongoing business interests) to enforce such recovery, and the
Purchaser shall within 10 business days of recovery from such
other person repay to the Seller so much of the amount recovered
by the Purchaser or the relevant member of the Group from such
other person less an amount equal to any Tax Liability the
Purchaser or the relevant member of the Group in respect of the
sum recovered from such other person PROVIDED THAT the amount
repayable to the Sellers shall not exceed the sum recovered by
the Purchaser from the Sellers under the claim for breach of
Warranty and/or Undertaking.
(iii) If any amount is repaid to the Seller by the Purchaser or any
member of the Group pursuant to sub-paragraph (G)(ii) above, an
amount equal to the amount so repaid shall be deemed never to
have been paid by the Seller to the Purchaser for the purposes
of clause 1 (Limitation on quantum) of this schedule 3.
6. Acts of Purchaser
(i) No claim shall lie against the Sellers under the Warranties
(other than the Tax Warranties) to the extent that such claim is
wholly or partly attributable to any act, omission, transaction,
or arrangement carried out by any member of the Group after
Completion which is outside the ordinary course of business and
where the Sellers can show that the relevant Group Company acted
in the knowledge that such act, omission, transaction or
arrangement would cause or increase a loss for which a claim
could be made against the
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Sellers PROVIDED that nothing in this clause shall prejudice the
common law duty of the Purchaser to mitigate any loss.
(ii) The Sellers shall not be liable for any breach of Warranties or
claim under the Undertakings to the extent that such breach or
claim would not have arisen but for any changes after Completion
in the accounting basis on which any member of the Group values
its assets or any other change after Completion in accounting
policy or practice of any member of the Group after Completion
unless such change is required by law or is made to satisfy
generally accepted accounting principles.
7. Allowance, provision or reserve in the Completion Accounts
The Seller shall not be liable for any breach of any of the Warranties
or claim under the Undertakings to the extent that a relevant allowance,
provision or reserve (whether general or specific) shall have been made in the
Completion Accounts.
8. Retrospective legislation
No liability shall arise in respect of any breach of any of the
Warranties or claim under the Undertakings if and to the extent that liability
for such breach or such claim occurs or is increased wholly or partly as a
result of any legislation not in force at the date hereof and not announced to
be introduced with effect from a date before Completion.
9. Taxation
The Seller shall not be liable in any event in respect of any breach of
the Warranties or claim under the Undertakings or the Tax Covenant in respect of
any Tax Liability:-
(A) to the extent that provision or reserve in respect of that Tax Liability
is made in the Completion Accounts; or
(B) to the extent that the Tax Liability arises or is increased as a result
of any increase in rates of Tax or any change in law or any change or
withdrawal of any published extra-statutory concession or Statement of
Practice by a Tax Authority being an increase, withdrawal or change
made, in any such case, after Completion with retrospective effect and
in each case not announced to be introduced with effect from a date
before Completion; or
(C) to the extent that that Tax Liability would not have arisen but for a
voluntary transaction, action or omission carried out or effected by the
Company at any time after Completion, other than any such transaction,
action or omission carried out or effected under a legally binding
commitment created on or before
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Completion or any action the Purchaser takes at the request of the
Sellers under any of the following clauses: Conduct of Tax Disputes (4),
Tax Returns (10) Surrender of Group Relief (11) Recovery from Third
Parties 5(G) and Mitigation (12); or
(D) to the extent that that Tax Liability arises by reason of a voluntary
disclaimer by the Company after Completion of the whole or part of any
Relief or by reason of a voluntary revocation by the Company after
Completion of any claim for Relief made (whether provisionally or
otherwise) prior to Completion; or
(E) to the extent that any Income, Profits or Gains to which that Tax
Liability is attributable were actually earned or received by or
actually accrued to the Company but were not (in either such case)
reflected in the Completion Accounts except to the extent that the Tax
Liability exceeds the amount of the aforementioned Income, Profit or
Gains; or
(F) to the extent that that Tax Liability arises or is increased as a
consequence of any failure by the Purchaser or the Company to comply
with any of their respective obligations under 4 (Conduct of Tax
Disputes), 10 (Tax Returns), 11 (Surrender of Group Relief) or
Mitigation (12); or
(G) to the extent that that Tax Liability would not have arisen but for a
cessation of, or a major change in the nature or conduct of, any trade
carried on by the Company, being a cessation or change occurring after
Completion; or
(H) to the extent that the Tax Liability arises or increases as a result of
any changes after Completion in the bases, methods or policies of
accounting of the Purchaser or any of the Group Companies unless such
change is required as a result of any Group Company failing to satisfy
generally acceptable accountancy practices, standards and principles as
in existence at Completion.
10. Tax Returns
(A) The Sellers shall be entitled and they or their duly authorised
agents shall, at the Sellers cost, in respect of all periods
ending or ended on or before Completion, prepare and submit, in
accordance with the applicable law, all returns of the Group
Companies for the purposes of all Taxes and all claims,
elections, surrenders, disclaimers, notices and consents
required by law to be submitted in connection with such returns.
(B) The Purchasers shall procure that each Group Company shall
following Completion:
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(i) afford, at the Sellers' cost, the Sellers and their duly
authorised agents access to the Group Companies'
documents and records to prepare and submit the said
returns, claims, elections, surrenders, disclaimers,
notices and consents; and
(ii) subject to being reasonably satisfied that the
documentation in question is accurate, prepared in
accordance with the applicable law and will not result
in any Group Company or any member of the Purchaser's
Group or any officer or employee or agent of any such
company committing an offence, complete and execute such
documentation as the Sellers may reasonably request in
connection with or for the purposes of the Sellers'
obligations under clause 10(A). No provision in this
sub-clause 10(B)(ii) will affect the Purchaser's or any
Group Company's rights against the Sellers or the
Sellers' Guarantor under any provision of this Agreement
or the Tax Covenant.
(C) The Purchaser agrees that neither it nor any member of its Group
will not voluntarily disturb any returns which are agreed with
the relevant Tax Authorities pursuant to this clause.
11. Surrender of Group Relief
(A) The Purchaser shall, on being reasonably indemnified or all professional
costs it may reasonably and property incur, procure that Permutit UK
shall surrender to any member of the Retained Group as the Sellers may
at their sole discretion specify all such trading losses described in
section 403 ICTA 1988 ("Group Relief") available for potential surrender
by Permutit UK to any member of the Retained Group pursuant to Chapter
IV of Part X ICTA 1988 and which relate to any accounting period of the
Company ended on or before Completion.
(B) The Purchaser hereby undertakes that it shall, and shall procure that
Permutit UK will, complete and execute all such documentation as is
reasonably required to give full effect to the surrenders to be made
under sub-clause (A) and that such surrenders are allowed in full by the
Inland Revenue and (without prejudice to the generality of the
foregoing) the Purchaser shall procure that the Company shall sign and
submit to the Inland Revenue all such notices of consent to surrender
(including provisional or protective notices of consent in cases where
any relevant Tax computation has not yet been agreed).
(C) In consideration of each of the surrenders to be made under sub-clause
(A), the Sellers shall pay to Permutit UK, a sum equal to the amount of
corporation tax from which the company that is the claimant company in
respect of such surrender has been
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85
relieved by virtue of that surrender being validly and effectively
made.
(D) Any sum payable under sub-clause (C) shall be paid on the date on which
any corporation tax chargeable on the taxable profits of the company
that is the claimant company in respect of the surrender in question for
the accounting period of its to which that surrender relates becomes due
and payable (or would have become due and payable had the claimant
company incurred any liability to corporation tax in respect of that
accounting period).
(E) In the event that any payment is made in accordance with the foregoing
provisions of this clause in respect of any surrender of Group Relief
made under sub-clause (A) and corporation tax falls nevertheless to be
charged in respect of the taxable profits that the relevant surrender
was intended to relieve from such tax (whether as a result of the Inland
Revenue refusing to allow Group Relief or subsequently withdrawing Group
Relief in respect of the relevant surrender or for any other reason
whatsoever), the Purchaser shall procure that Permutit UK shall within
five Business Days of the demand repay to the Sellers or to the relevant
subsidiary or subsidiaries of the Sellers either the sum previously paid
in respect of the relevant surrender in accordance with the foregoing
provisions of this clause or, as the case may be, such part of that sum
as is attributable to the element of the surrender that did not have the
effect of relieving from corporation tax the taxable profits intended to
be relieved by virtue of that surrender PROVIDED THAT where the receipt
of the sum previously paid to Permutit UK was or will be taken into
account in calculating a Tax Liability of Permutit UK, the amount
repayable will be equal to the sum previously paid less the Tax
Liability.
12. Mitigation
(A) To the extent that Permutit U.K. uses any of its Reliefs which has not
been treated as an asset or taken into account in calculating any
provision in the Completion Accounts and which has arisen prior to
Completion to reduce or eliminate any Tax Liability in respect of which
the Purchaser would have been able to make a claim against the Sellers
or any of them under the Tax Warranties or the Tax Covenant it shall not
be entitled to make such claim under the Tax Warranties or the Tax
Covenant in respect of that Tax Liability provided that nothing in this
clause shall require the Purchaser to utilise such Relief in priority to
any Relief arising after Completion.
(B) The Purchaser agrees that Permutit UK shall not utilise any of its
Reliefs arising prior to Completion and which is not treated as an asset
or taken into account in calculating any provision in the Completion
Accounts to set off against income, profits or
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86
gains or any Tax Liability arising after Completion until the expiry of
two years after Completion unless it is in accordance with sub-clause
(A) above.
13. Information Memoranda and independent advice of Purchaser
The Purchaser acknowledges and agrees with the Seller (for themselves
and for the benefit of their officers, employees and advisers and as trustees
for such officers, employees and advisers) that:
(A) save to the extent expressly provided to the contrary herein, the
invitation to it by the Seller to consider the purchase of the Shares
and the provision of information relating to the Group, its undertaking,
financial position or prospects (including, in particular but without
limitation, the information contained in the Information Memoranda), was
made by the Seller and accepted by the Purchaser, and this agreement is
entered into, on the basis and condition that no member of the Retained
Group nor any of the officers, employees and advisers of each member of
the Retained Group has made or makes any representation or warranty as
to the accuracy or completeness of such information, or accepts any duty
of care in relation to the Purchaser in respect of the provision of such
information and that none of such persons shall be under any liability
to the Purchaser in the event that, for whatever reason, such
information (including, in particular but without limitation, the
information contained in the Information Memoranda) is or becomes
inaccurate, incomplete or misleading; and
(B) the Purchaser has received independent legal and financial advice
relating to the purchase of the Shares and to the terms of this
agreement and the documents to be executed pursuant to it, including the
terms of this paragraph.
14. Immovable Property and the Environment
(A) The Sellers shall not be liable under the Warranties other than that
contained in clause 6 of schedule 2 or the Tax Warranties to the extent
that the subject of the claim relates to the ownership, occupation
and/or use of Immovable Property owned, occupied and/or used by the
Company.
(B) The Sellers shall not be liable under the Warranties other than those
contained in clause 11 of schedule 2 to the extent that the subject of
the claim relates to Environmental Matters or Environmental Liabilities.
This sub-clause 14(B) of schedule 3 prevails over sub-clause 14(A) of
schedule 3.
15. Group Netting Agreement
(A) Permutit UK has no liability (whether actual or contingent) under
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87
the Composite Accounting System Agreement and Deed of Guarantee given in
favour of National Westminster Bank plc ("Nat West") dated 5th May 1994
("the Guarantee").
(B) Nat West has not prior to 30th March 1995 exercised any of its rights
under the guarantee contained in the Guarantee.
(C) No security has been given or payment made by any person in connection
with the release of the Guarantee by Nat West dated 30th March 1995 and
annexed to the Disclosure Letter.
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88
SIGNED by )
for and on behalf of )
THAMES WATER PRODUCTS AND ) Janet Ravenscroft
SERVICES LIMITED )
SIGNED by )
for and on behalf of )
PWT OVERSEAS LIMITED ) Janet Ravenscroft
SIGNED by )
for and on behalf of )
IONPURE TECHNOLOGIES ) Ian Gallantree
)
SIGNED by )
for and on behalf of ) Janet Ravenscroft
THAMES WATER PLC )
SIGNED by )
for and on behalf of )
UNITED STATES FILTER ) Ian Gallantree
CORPORATION )
