<PAGE> 1
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 30, 1997
-------------------------------
ICO, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-10068 75-1619554
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11490 Westheimer, Suite 1000, Houston, Texas 77077
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (281) 721-4200
-----------------------------
<PAGE> 2
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective April 30, 1997, ICO, Inc. ("ICO") purchased all of the
outstanding stock of Rotec Chemicals Ltd., ("Rotec") of Rushden,
England for $2,500,000 in cash, funded through short-term bank
borrowings from Bank of America Texas, N.A., and 427,351 shares of ICO
common stock. In addition, the former Rotec shareholders may be
entitled to additional consideration in cash and ICO common stock
based on future earnings.
Rotec is a leading supplier of specialized color concentrates,
primarily for the rotational molding industry in the United Kingdom,
Ireland and Continental Europe. ICO believes that the Rotec
acquisition will enhance its distribution capabilities in Europe and
will offer it opportunities to provide its United States rotational
molding customers with products currently sold by Rotec.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The required audited financial statements of Rotec as of and for the
year ended December 31, 1996, together with the report of the
auditors, are attached hereto as Exhibit 99.1 and are incorporated by
reference herein.
B. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information, including the
notes thereto, give effect to the acquisition of Rotec by ICO and are
qualified in their entirety by reference to, and should be read in
conjunction with the historical consolidated financial statements and
the notes thereto of ICO and Rotec incorporated herein by reference.
The pro forma combined financial statements are based on the purchase
method of accounting. The unaudited pro forma combined condensed
balance sheet at December 31, 1996 assumes the merger was consummated
as of December 31, 1996 and the unaudited pro forma combined condensed
statements of operations assume the merger was consummated as of the
beginning of each of the periods presented.
The pro forma data is presented for informational purposes only and is
not necessarily indicative of the operating results or financial
position that would have occurred had the merger been consummated at
the dates indicated, nor is such data necessarily indicative of future
operating results or financial position. There is no assurance that
similar results will be achieved in the future.
-1-
<PAGE> 3
ICO/ROTEC UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------- PRO FORMA
ICO ROTEC(1) ADJUSTMENTS COMBINED
-------------- ------------- ---------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales and services revenues................... $ 108,663 $ 9,933 $ 118,596
----------- --------- -----------
Costs and Expenses:
Cost of sales and services........................ 74,704 8,190 82,894
Selling, general and administrative............... 19,996 1,016 (128) (a) 20,884
Depreciation and amortization..................... 7,230 233 146 (b) 7,609
Impairment of long-term assets.................... 5,025 5,025
Non-recurring compensation arrangements........... 1,812 1,812
Non-recurring litigation charges.................. 1,112 1,112
Write-down of inventories......................... 868 868
----------- --------- ---------- -----------
Operating income (loss)........................... (2,084) 494 (18) (1,608)
----------- --------- ---------- -----------
Interest, net..................................... (608) 45 174 (c) (389)
Other, net........................................ 216 35 251
----------- --------- ---------- -----------
Net income (loss) before income taxes............. (1,692) 414 (192) (1,470)
Income taxes (benefit)............................ (632) 110 12 (d) (510)
----------- --------- ---------- -----------
Net income (loss)................................. $ (1,060) $ 304 $ (204) $ (960)
=========== ========= ========== ===========
Earnings per common and common
equivalent share............................... $ (0.24) $ (0.23)
=========== ===========
Weighted average shares outstanding............... 13,327,855 427,351 (e) $13,755,206
=========== ===========
</TABLE>
- --------
(1) Rotec historical amounts were derived from the audited financial
statements of Rotec for the twelve months ending December 31, 1996 contained
herein, translated to US dollars at an average exchange rate of
$1.58975/(pound)1.0.
-2-
<PAGE> 4
ICO/ROTEC UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------
PRO FORMA
ICO ROTEC(2) ADJUSTMENTS COMBINED
-------------- ------------- --------------- -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales and services revenues................... $ 36,503 $ 2,529 $ 39,032
----------- --------- ------------
Costs and Expenses:
Cost of sales and services........................ 24,239 2,096 26,335
Selling, general and administrative............... 6,873 466 (128) (a) 7,211
Depreciation and amortization..................... 2,500 73 37 (b) 2,610
----------- --------- ---------- ------------
Operating income (loss)........................... 2,891 (106) 91 2,876
----------- --------- ---------- ------------
Interest, net..................................... 199 12 43 (c) 254
Other, net........................................ (62) 1 (61)
----------- --------- ---------- ------------
Net income (loss) before income taxes............. 2,754 (119) 48 2,683
Income taxes (benefit)............................ 907 (32) 21 (d) 896
----------- --------- ---------- ------------
Net income (loss)................................. $ 1,847 $ (87) $ 27 $ 1,787
=========== ========= ========== ============
Earnings per common and common
equivalent share............................... $ 0.07 $ 0.06
=========== ============
Weighted average shares outstanding............... 19,976,733 427,351 (e) 20,404,084
=========== ============
</TABLE>
- --------
(2) Rotec historical amounts were derived from the unaudited quarterly
financial statements for Rotec translated to US dollars at an average exchange
rate of $1.7140/(pound)1.0.
-3-
<PAGE> 5
ICO/ROTEC UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
(In thousands)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------- PRO FORMA
ICO ROTEC(3) ADJUSTMENTS COMBINED
----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and equivalents..................... $ 9,187 $ 154 $ 9,341
Trade receivables, net................... 28,365 1,963 30,328
Inventories.............................. 12,435 764 13,199
Deferred tax asset....................... 4,294 4,294
Prepaid expenses and other............... 2,854 2,854
----------- ------------ ----------- ----------
Total Current Assets................ 57,135 2,881 60,016
----------- ------------ ----------- ----------
Property, plant and equipment, net....... 77,284 1,392 $ 200 (f) 78,876
----------- ------------ ----------- ----------
Goodwill................................. 34,833 3,108 (g) 37,941
Investment in joint ventures............. 4,622 4,622
Other.................................... 2,981 2,981
----------- ------------ ----------- ----------
TOTAL ASSETS $ 176,855 $ 4,273 $ 3,308 $ 184,436
=========== ============ =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Short-term borrowings and current portion
of long-term debt.................... $ 4,772 $ 1,506 $ 2,500 (h) $ 8,778
Accounts payable......................... 10,402 535 10,937
Accrued expenses......................... 11,733 375 12,108
Dividends payable........................ 1,589 1,589
Income taxes payable..................... 974 93 1,067
----------- ------------ ----------- ----------
Total Current Liabilities........... 29,470 2,509 $ 2,500 34,479
----------- ------------ ----------- ----------
Long-term debt net of current portion.... 16,445 357 16,802
Deferred income taxes.................... 2,014 90 2,104
Other long-term liabilities.............. 2,366 2,366
----------- ------------ ----------- ----------
TOTAL LIABILITIES................... 50,295 2,956 2,500 55,751
----------- ------------ ----------- ----------
STOCKHOLDERS' EQUITY..................... 126,560 1,317 2,125 (i) 128,685
(1,317)(j)
----------- ------------ ----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY..................... $ 176,855 $ 4,273 $ 3,308 $ 184,436
=========== ============ =========== ==========
</TABLE>
- --------
(3) Rotec historical amounts were derived from the audited financial
statements of Rotec as of December 31, 1996 contained herein, translated to US
dollars at an exchange rate of $1.7123/(pound)1.0.
-4-
<PAGE> 6
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
NOTE 1 -- ROTEC'S FISCAL YEAR END
Rotec's audited financial statements for the year ending December 31, 1996 were
used to prepare the Pro Forma Statement of Operations for the year ending
September 30, 1996. Accordingly, Rotec's results for the three
months ended December 31, 1996 have been included in the Pro Forma Statements
of Operations for both the year ended September 30, 1996 and the three months
ended December 31, 1996. Revenues and net loss for the three months ended
December 31, 1996 were $2,529,000 and ($87,000), respectively. Revenues and net
loss for the three months ending December 31, 1995 were $1,870,000 and
($65,000), respectively.
NOTE 2 -- PRO FORMA ADJUSTMENTS
Statements of Operations:
(a) To remove former Rotec shareholder salaries and bonuses which will no
longer be paid.
(b) To increase amortization related to the goodwill and increase
depreciation for machinery and equipment resulting from purchase
price accounting adjustments. Goodwill is amortized over an estimated
useful life of 40 years.
(c) To reflect interest expense on debt incurred to consummate the
acquisition.
(d) To reflect the tax effect of the pro forma income statement
adjustments.
(e) To give effect to shares issued in connection with the acquisition.
Balance Sheet
(f) To increase property, plant and equipment to estimated fair market
value.
(g) To reflect the excess purchase price over fair value of net tangible
assets acquired allocated to goodwill.
(h) To reflect borrowings for cash consideration paid.
(i) To reflect the value of shares issued in connection with the
acquisition.
(j) To eliminate Rotec historical stockholders' equity accounts.
C. EXHIBITS
99.1 - Rotec Chemicals Ltd. Financial Statements for the year ended
December 31, 1996
99.2 - Share Purchase Agreement between Rotec Chemicals Ltd. and the
registrant.
-5-
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, ICO, Inc.
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
ICO, INC.
Date: May 12, 1997 /s/ Dr. Asher O. Pacholder
--------------------------
Dr. Asher O. Pacholder
Chairman of the Board and
Chief Financial Officer
-6-
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
99.1 Rotec Chemicals Ltd. Financial Statements for the year ended
December 31, 1996
99.2 Share Purchase Agreement between Rotec Chemicals Ltd. and the
registrant.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
[GRANT THORNTON LOGO]
ROTEC CHEMICALS LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 1996
Company no 1559052
<PAGE> 2
ROTEC CHEMICALS LIMITED
FINANCIAL STATEMENTS
For the year ended 31 December 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Company registration number: 1559052
Registered office: 24 Norris Way
Wellingborough Road
Rushden
Northants
NN10 6BP
Directors: R I Kliene
J Y Kliene
J S Kliene
T R Brown
I J Mayes
Secretary: I J Mayes
Bankers: Midland Bank plc
High Street
Rushden
Northants
NN10 0NP
Solicitors: Toller Hales and Collcutt
55 The Headlands
Kettering
Northants
NN15 7EY
Auditors: Grant Thornton
Registered Auditors
Chartered Accountants
Grant Thornton House
Kettering Parkway
Kettering Venture Park
Kettering
NN15 6XR
</TABLE>
<PAGE> 3
ROTEC CHEMICALS LIMITED
FINANCIAL STATEMENTS
For the year ended 31 December 1996
- -------------------------------------------------------------------------------
INDEX PAGE
Report of the directors 1-2
Report of the auditors 3
Principal accounting policies 4-5
Profit and loss account 6
Balance sheet 7
Cash flow statement 8
Notes to the financial statements 9-18
<PAGE> 4
ROTEC CHEMICALS LIMITED
REPORT OF THE DIRECTORS
- --------------------------------------------------------------------------------
The directors present their report together with financial statements for the
year ended 31 December 1996.
PRINCIPAL ACTIVITIES
The company is principally engaged in the formulation and manufacture of
plastics colour and additive masterbatches and plastic compounds. The company
also operates as a distributor for a number of major international polymer
manufacturers and specialist plastics additive producers.
BUSINESS REVIEW
During 1996 Rotec's enhanced manufacturing facilities were fully utilised. Sales
turnover of (pound) 6,248,016 was achieved (1995: (pound) 5,549,011). The sales
plan was exceeded with manufactured product sales performing well; 25% up on
1995 levels. With its continued emphasis on specialist products the company
lifted gross profit by 22%, operating profit by 74% and net profit by almost
100%.
Growing demand for Rotec masterbatches led to the purchase of a new twin screw
extrusion line and associated high speed blending equipment lifting production
capacity by 30%. Refurbishment and replacement of ancillary compounding
equipment was also undertaken. In total an investment of more than (pound)
300,000 was made in 1996.
Whilst investing in plant the company also recognises the need to invest in its
personnel. In 1996 formal training budgets were implemented and development of
skills encouraged. This is an ongoing programme with resources increased for
1997.
Mid year the company reorganised its marketing activities creating two focused
groups to service its key markets, rotomoulding and colourants. Export
potential is under review and new agents have been appointed, notably in North
America where considerable opportunities for Rotec's rotomoulding materials
have been identified.
The outlook for 1997 is very encouraging with significant forecasted growth in
all areas of the business.
There was a profit for the year after taxation amounting to (pound) 191,631
(1995: (pound) 101,545). The directors do not recommend payment of a dividend
and the profit has therefore been transferred to reserves.
DIRECTORS
The present membership of the Board is set out below. All directors served
throughout the year.
The interests of the directors in the shares of the company as at 31 December
1996 and 1 January 1996, were as follows:
<TABLE>
<CAPTION>
ORDINARY SHARES
31 DECEMBER 1 JANUARY
1996 1996
<S> <C> <C>
R I Kliene 250 250
J Y Kliene 250 250
J S Kliene 500 500
T R Brown 143 143
I J Mayes -- --
</TABLE>
Page 1
<PAGE> 5
ROTEC CHEMICALS LIMITED
REPORT OF THE DIRECTORS
_______________________________________________________________________________
DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:
- - select suitable accounting policies and then apply them consistently
- - make judgments and estimates that are reasonable and prudent
- - prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for maintaining proper accounting records, for
safeguarding the assets of the company and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
AUDITORS
Grant Thornton offer themselves for reappointment as auditors in accordance
with section 385 of the Companies Act 1985.
ON BEHALF OF THE BOARD
/s/ R.I. KLIENE
- ----------------------------------
R.I. Kliene
Director
20 March 1997
Page 2
<PAGE> 6
[GRANT THORNTON LOGO]
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
ROTEC CHEMICALS LIMITED
We have audited the accompanying balance sheet of Rotec Chemicals Limited as of
31 December 1996 and the related statements of operations, shareholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United Kingdom and the United States of America. 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 that our
audit provides 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 Rotec Chemicals Limited as of
31 December 1996 and the results of their operations and their cash flows for
the year then ended, in conformity with generally accepted accounting
principles in the United Kingdom.
Generally accepted accounting principles in the United Kingdom vary in certain
significant respects from generally accepted accounting principles in the
United States. Application of generally accepted accounting principles in the
United States would have affected the cash flow statement for the year ended 31
December 1996 to the extent summarized in Note 27 to the financial statements.
GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
KETTERING
20 MARCH 1997
except for Note 28 -- Subsequent Event as to which the date is
29 APRIL 1997
Page 3
<PAGE> 7
ROTEC CHEMICALS LIMITED
PRINCIPAL ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention.
The principal accounting policies of the company have remained unchanged from
the previous year and are set out below.
TURNOVER
Turnover is the total amount receivable by the company for goods supplied and
services provided, excluding VAT and trade discounts.
DEPRECIATION
Depreciation is calculated to write down the cost of all tangible fixed assets
by equal annual instalments over their expected useful lives. The periods
generally applicable are:
Plant and equipment 4 or 10 years
Motor vehicles 3 years
Fixtures, fittings and office equipment 4 or 10 years
RESEARCH AND DEVELOPMENT
Research and development expenditure is charged to profits in the period in
which it is incurred.
INTANGIBLE FIXED ASSETS
Purchased goodwill is amortised on a straight-line basis over its estimated
useful economic life of five years.
STOCKS
Stocks are stated at the lower of cost and net realisable value.
DEFERRED TAXATION
Deferred tax is provided for under the liability method using the tax rates
estimated to arise when the timing differences reverse and is accounted for to
the extent that it is probable that a liability or asset will crystallise.
Unprovided deferred tax is disclosed as a contingent liability.
CONTRIBUTIONS TO PENSION FUNDS
DEFINED CONTRIBUTION SCHEME
The pension costs charged against profits represent the amount of the
contributions payable to the scheme in respect of the accounting period.
LEASED ASSETS
Assets held under finance leases and hire purchase contracts are capitalised in
the balance sheet and depreciated over their expected useful lives. The
interest element of leasing payments represents a constant proportion of the
capital balance outstanding and is charged to the profit and loss account over
the period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the profit and loss account on a straight-line basis over
the lease term.
Page 4
<PAGE> 8
ROTEC CHEMICALS LIMITED
PRINCIPAL ACCOUNTING POLICIES
_______________________________________________________________________________
FOREIGN CURRENCIES
Transactions in foreign currencies are translated at the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. All exchange differences are dealt with through the profit and loss
account.
Page 5
<PAGE> 9
ROTEC CHEMICALS LIMITED
PROFIT AND LOSS ACCOUNT
For the year ended 31 December 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTE 1996 1995
(pound) (pound)
<S> <C> <C> <C>
Turnover 1 6,248,016 5,549,011
Cost of sales (4,285,015) (3,952,655)
---------- ----------
Gross profit 1,963,001 1,596,356
Distribution costs (950,595) (799,124)
Administrative expenses (722,899) (631,216)
---------- ---------
OPERATING PROFIT 289,507 166,016
Net interest 2 (28,659) (30,141)
---------- ---------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 1 260,848 135,875
Tax on profit on ordinary
activities 4 (69,217) (34,330)
---------- ---------
PROFIT TRANSFERRED TO RESERVES 15 191,631 101,545
========== =========
</TABLE>
There were no recognized gains or losses other than the profit
for the financial year.
The accompanying accounting policies and notes form an integral part of these
financial statements.
Page 6
<PAGE> 10
ROTEC CHEMICALS LIMITED
BALANCE SHEET AT 31 DECEMBER 1996
______________________________________________________________________________
<TABLE>
<CAPTION>
NOTE 1996 1996 1995 1995
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets 5 -- 6,000
Tangible assets 6 813,068 570,192
--------- -------
CURRENT ASSETS 813,068 576,192
Stocks 8 446,337 331,142
Debtors 9 1,146,467 958,936
Cash at bank and in hand 90,094 57,759
---------- ----------
1,682,898 1,347,837
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR 10 (1,465,575) (1,212,442)
---------- ----------
NET CURRENT ASSETS 217,323 135,395
--------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES 1,030,391 711,587
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR 11 (208,743) (96,670)
PROVISIONS FOR LIABILITIES
AND CHARGES 12 (52,700) (37,600)
--------- -------
768,948 577,317
========= =======
CAPITAL AND RESERVES
Called up share capital 14 1,143 1,143
Share premium account 15 51,857 51,857
Profit and loss account 15 715,948 524,317
--------- -------
SHAREHOLDERS' FUNDS 16 768,948 577,317
========= =======
</TABLE>
The financial statements were approved by the Board of Directors on
20 March 1997.
R I KLIENE /s/ R I KLIENE DIRECTOR
J S KLIENE /s/ J S KLIENE DIRECTOR
The accompanying accounting policies and notes form an integral part of these
financial statements.
Page 7
<PAGE> 11
ROTEC CHEMICALS LIMITED
CASH FLOW STATEMENT
For the year ended 31 December 1996
_______________________________________________________________________________
<TABLE>
<CAPTION>
NOTE 1996 1995
(pound) (pound)
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING
ACTIVITIES 17 293,459 33,014
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest paid (10,136) (16,259)
Finance lease interest paid (18,523) (13,882)
-------- --------
Net cash outflow from returns
on investments and servicing
finance (28,659) (30,141)
-------- --------
TAXATION
UK corporation tax paid (28,998) (5,172)
INVESTING ACTIVITIES
Purchase of tangible fixed assets (123,875) (213,182)
Sale of tangible fixed assets 28,351 10,250
-------- --------
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (95,524) (202,932)
-------- --------
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 140,278 (205,231)
FINANCING
Capital element of finance lease
rentals (126,051) (10,723)
-------- --------
NET CASH OUTFLOW FROM FINANCING 18 (126,051) (10,723)
-------- --------
INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 19 14,227 (215,954)
======== ========
</TABLE>
The accompanying accounting policies and notes form an integral part of these
financial statements.
Page 8
<PAGE> 12
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
------------------------------------------------------------------------
1 TURNOVER AND PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The turnover and profit before taxation are attributable to three
activities, consultancy work, sales of materials, and the manufacture
of colour master batches, colour compounds and pigment blends for the
plastics industry.
<TABLE>
<S> <C> <C>
The profit on ordinary activities is stated after: 1996 1995
(pound) (pound)
Research and development 4,328 3,940
Auditors' remuneration 10,000 10,000
Depreciation and amortisation:
Goodwill 6,000 3,000
Tangible fixed assets, owned 71,010 64,749
Tangible fixed assets, held under finance
leases and hire purchase contracts 75,608 51,950
Other operating lease rentals 112,365 112,365
========= =======
</TABLE>
2 NET INTEREST
<TABLE>
<S> <C> <C>
1996 1995
(pound) (pound)
On bank overdraft 10,136 16,259
Finance charges in respect of finance leases 18,523 13,882
--------- -------
28,659 30,141
========= =======
</TABLE>
3 DIRECTORS AND EMPLOYEES
<TABLE>
<S> <C> <C>
Staff costs during the year were as follows: 1996 1995
(pound) (pound)
Wages on salaries 890,360 728,575
Social security costs 82,463 78,990
Other pension costs 56,145 33,965
--------- -------
1,028,968 841,530
========= =======
</TABLE>
The average number of employees of the company during the year was 47 (1995:43).
Page 9
<PAGE> 13
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
- --------------------------------------------------------------------------------
Remuneration in respect of directors was as follows: 1996 1995
(pound) (pound)
Management remuneration 239,584 258,479
======= =======
The emoluments of the directors, excluding pension
contributions, were as follows: 1996 1995
(pound) (pound)
The Chairman 52,375 49,217
======= =======
The highest paid director 66,914 72,110
======= =======
The emoluments of the other directors, excluding pension contributions, fell
within the following ranges:
1996 1995
NUMBER Number
(pound)15,001 - (pound)20,000 -- 1
(pound)20,001 - (pound)25,000 1 --
(pound)30,001 - (pound)35,000 -- 1
(pound)35,001 - (pound)40,000 -- 1
(pound)40,001 - (pound)45,000 1 --
(pound)50,001 - (pound)55,000 1 --
===== =======
4 TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge is based on the profit for the year and represents:
1996 1995
(pound) (pound)
UK Corporation tax at 27% (1995: 25%) 54,117 29,000
Deferred tax (note 12) 15,100 6,550
------ ------
69,217 35,550
Adjustments in respect of prior years:
Corporation tax -- (1,220)
------ ------
69,217 34,330
====== ======
Page 10
<PAGE> 14
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
__________________________________________________________________________
5 INTANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
PURCHASED
GOODWILL
(pound)
<S> <C>
Cost
At 1 January 1996 and 31 December 1996 15,000
------
Amortisation
At 1 January 1996 9,000
Charge for the year 6,000
------
At 31 December 1996 15,000
------
Net book amount at 31 December 1996 --
======
Net book amount at 31 December 1995 6,000
======
</TABLE>
The purchased goodwill relates to the acquisition of part of the business of
Elf Atochem UK Limited, under a contract dated 1 December 1992. The cost has
been amortised to zero net book amount in the year, as the contract has now
been completed.
Page 11
<PAGE> 15
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
__________________________________________________________________________
6 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
FIXTURES,
PLANT AND MOTOR FITTINGS AND
EQUIPMENT VEHICLES OFFICE TOTAL
EQUIPMENT
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Cost
At 1 January 1996 734,792 162,067 163,812 1,060,671
Additions 321,507 50,847 23,784 396,138
--------- ------- ------- ---------
1,056,299 212,914 187,596 1,456,809
Disposals (100,316) (60,292) (9,156) (169,764)
--------- ------- ------- ---------
At 31 December 1996 955,983 152,622 178,440 1,287,045
--------- ------- ------- ---------
Depreciation
At 1 January 1996 327,491 87,000 75,988 490,479
Provided in the year 78,741 47,553 20,324 146,618
--------- ------- ------- ---------
406,232 134,553 96,312 637,097
Eliminated on disposals (100,315) (53,649) (9,156) (163,120)
--------- ------- ------- ---------
At 31 December 1996 305,917 80,904 87,156 473,977
--------- ------- ------- ---------
Net book amount at 31 December 1996 650,066 71,718 91,284 813,068
========= ======= ======= =========
Net book amount at 31 December 1995 407,301 75,067 87,824 570,192
========= ======= ======= =========
</TABLE>
The figures stated above include assets held under finance leases and
similar hire purchase contracts, as follows:
<TABLE>
<CAPTION>
PLANT AND MOTOR
EQUIPMENT VEHICLES
(pound) (pound)
<S> <C> <C>
Net book amount at 31 December 1996 441,858 41,033
======= ======
Net book amount at 31 December 1995 227,918 60,715
======= ======
Depreciation provided during year 45,686 29,922
======= ======
</TABLE>
7 INVESTMENTS
<TABLE>
<CAPTION>
SHARES IN
SUBSIDIARY
UNDERTAKINGS
(pound)
<S> <C>
Net book amount at 31 December 1996 and at 31 December 1995 --
======
</TABLE>
Page 12
<PAGE> 16
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
_______________________________________________________________________________
At 31 December 1996 the company held more than 20% of the allotted share
capital of the following undertakings:
<TABLE>
<CAPTION>
COUNTRY OF CLASS
INCORPORATION OF SHARE PROPORTION NATURE OF
/REGISTRATION CAPITAL HELD HELD BUSINESS
<S> <C> <C> <C> <C>
Tecron Industries Limited England (pound) 1 ordinary 66.67% Dormant
Fabri-moulds Limited England (pound) 1 ordinary By Dormant
subsidiary
undertaking
100%
Swavesey Colours Limited England (pound) 1 ordinary 100% Dormant
</TABLE>
8 STOCKS
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Raw materials 438,164 324,308
Short-term work in progress 8,173 6,834
------- -------
446,337 331,142
======= =======
</TABLE>
9 DEBTORS
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Trade debtors 1,007,076 754,183
Amounts owed by related undertakings 109,995 177,121
Prepayments and accrued income 29,396 27,632
--------- -------
1,146,467 958,936
========= =======
</TABLE>
Page 13
<PAGE> 17
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
- --------------------------------------------------------------------------------
10 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1996 1995
(pound) (pound)
Bank overdraft 312,728 294,620
Trade creditors 768,388 625,241
Amounts owed to group undertakings 11,794 11,794
Amounts owed to related undertakings 211 17
Corporation tax 54,119 29,000
Social security and other taxes 92,719 85,384
Other creditors 6,217 2,320
Accruals and deferred income 108,041 86,847
Amounts due under finance leases 111,358 77,219
--------- ---------
1,465,575 1,212,442
========= =========
The bank overdraft is secured by a fixed and floating charge over all
the assets of the company.
11 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1996 1995
(pound) (pound)
Amounts due under finance leases 208,743 96,670
======= ======
Borrowings are repayable as follows: 1996 1995
(pound) (pound)
Within one year
Bank overdraft 312,728 294,620
Finance leases 111,358 77,219
After one and within two years
Finance leases 74,902 61,685
After two and within five years
Finance leases 133,841 34,985
------- -------
632,829 468,509
======= =======
Page 14
<PAGE> 18
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
- --------------------------------------------------------------------------------
12 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
DEFERRED
TAXATION
(pound)
<S> <C>
At 1 January 1996 37,600
Provided during the year 15,100
--------
At 31 December 1996 52,700
========
</TABLE>
13 DEFERRED TAXATION
Deferred taxation is fully provided for in the financial statements and is set
out below. The amounts provided have been calculated using a tax rate of 25%
(1995-25%).
<TABLE>
<CAPTION>
AMOUNT PROVIDED
1996 1995
(pound) (pound)
<S> <C> <C>
Accelerated capital allowances 52,700 37,600
====== ======
</TABLE>
14 SHARE CAPITAL
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Authorized
10,000 ordinary shares of (pound) 1 each 10,000 10,000
====== ======
Allotted, called up and fully paid
1,143 ordinary shares of (pound) 1 each 1,143 1,143
====== ======
</TABLE>
15 SHARE PREMIUM ACCOUNT AND RESERVES
<TABLE>
<CAPTION>
SHARE
PREMIUM PROFIT AND
ACCOUNT LOSS ACCOUNT
(pound) (pound)
<S> <C> <C>
At 1 January 1996 51,857 524,317
Retained profit for the year -- 191,631
------ -------
At 31 December 1996 51,857 715,948
====== =======
</TABLE>
Page 15
<PAGE> 19
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
------------------------------------------------------------------------
16 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Profit for the financial year 191,631 101,545
--------- -------
Net increase in shareholders' funds 191,631 101,545
Shareholders' funds at 1 January 1996 577,317 475,772
--------- -------
Shareholders' funds at 31 December 1996 768,948 577,317
========= =======
</TABLE>
17 NET CASH INFLOW FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Operating profit 289,507 166,016
Depreciation and amortisation 152,618 119,699
Profit on sale of tangible fixed assets (21,707) (10,248)
Increase in stocks (115,195) (34,138)
Increase in debtors (187,531) (237,268)
Increase in creditors 175,767 28,953
--------- -------
Net cash inflow from operating activities 293,459 33,014
========= =======
</TABLE>
18 ANALYSIS OF CHANGES IN FINANCING
<TABLE>
<CAPTION>
SHARE CAPITAL LOANS AND AMOUNTS DUE
(INCLUDING PREMIUM) UNDER FINANCE LEASES
1996 1995 1996 1995
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
At 1 January 1996 53,000 53,000 173,889 139,930
Net cash outflow from financing -- -- (126,051) (10,723)
Inception of finance leases -- -- 272,263 44,682
------ ------ -------- -------
At 31 December 1996 53,000 53,000 320,101 173,889
====== ====== ======== =======
</TABLE>
19 ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
At 1 January 1996 (236,861) (20,907)
Net cash inflow/(outflow) 14,227 (215,954)
-------- --------
At 31 December 1996 (222,634) (236,861)
======== ========
</TABLE>
Page 16
<PAGE> 20
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 1996
- -------------------------------------------------------------------------------
20 ANALYSIS OF CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION> CHANGE IN CHANGE IN
Cash and cash equivalents comprise: 1996 1995 1994 1996 1995
(pound) (pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
Cash at bank and in hand 90,094 57,759 88,965 32,335 (31,206)
Bank overdraft (312,728) (294,620) (109,872) (18,108) (184,748)
-------- -------- -------- ------- --------
(222,634) (236,861) (20,907) 14,227 (215,954)
======== ======== ======== ======= ========
</TABLE>
21 CAPITAL COMMITMENTS
The company had no capital commitments at 31 December 1996 or
31 December 1995.
22 CONTINGENT LIABILITIES
There were no contingent liabilities at 31 December 1996 or
31 December 1995.
23 PENSIONS
Defined Contribution Scheme
The company operates a defined contribution pension scheme for the
benefit of certain directors and employees. The assets of the scheme are
administered by trustees in a fund independent from those of the
company.
24 LEASING COMMITMENTS
Operating lease payments amounting to (pound) 125,357 (1995: (pound)
25,357) are due within one year. The leases to which these amounts
relate expire as follows:
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Land and buildings
In five years or more 125,357 125,357
======= =======
</TABLE>
25 CONTROLLING RELATED PARTY
John Kliene is this company's controlling related party by virtue of
his shareholding. John Kliene holds another controlling directorship in
Francis Ward Limited which results in the two companies being related.
Tecron Pension Fund Limited is a related party as Ron Kliene holds more
than 20% of the share capital of Rotec Chemicals Limited and is also a
trustee in Tecron Pension Fund Limited.
Page 17
<PAGE> 21
ROTEC CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 1996
___________________________________________________________________________
26 RELATED PARTY TRANSACTIONS
<TABLE>
<CAPTION>
VALUE OF
TRANSACTIONS
(pound)
<S> <C>
Sales to Francis Ward Limited 689,885
Repairs to machinery completed for Francis Ward Limited 10,953
Capital equipment sold to Francis Ward Limited 39,175
Recharged expenses incurred by Rotec Chemicals Limited
on behalf of Francis Ward Limited 181,246
Purchases from Francis Ward Limited 2,684
Contributions to Tecron Pension Fund Limited 16,582
=======
</TABLE>
27 UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United Kingdom. The
principles differ in a number of important respects from account principles
generally accepted in the United States. With respect to the financial
statements of the Company, changes to the presentation of the Cash Flow
Statement would have been required had accounting principles generally
accepted in the United States been applied.
CASH FLOW STATEMENT
Under UK GAAP, returns on investments and servicing of finance are shown as
a separate activity in the cash flow statement. Under US GAAP, these amounts
would be included in cash flows from operating activities.
Under US GAAP, non cash transactions are not included within the cash flow
statement but shown separately in a note. For the year ended 31 December
1996, capital lease obligations of (pound)213,806 were entered into for the
purchase of equipment.
Also, the Company reconciles the statement of cash flows to an amount that
includes bank overdraft balances. Under US GAAP, changes to such balances
are generally included as financing activities.
28 SUBSEQUENT EVENT
On 21 March 1997 it was announced that the boards of Rotec and ICO INC have
reached an agreement in principle whereby ICO will purchase Rotec for
$2,500,000 and 427,350 shares of ICO common stock. The purchase price is
also subject to an earnout provision based on future net income.
Page 18
<PAGE> 1
EXHIBIT 99.2
1 SHARE PURCHASE AGREEMENT-LONG FORM
INDEX
1 Parties
2 Recitals
3 Definitions and interpretation
4 Sale and purchase of shares
5 Consideration
6 Conditions
7 Completion
8 Vendors' Loans or Repayment of Group indebtedness
9 Warranties
10 Covenant up to Completion
11 Release of guarantees
12 Pensions
13 Non-competition
14 Costs
15 Notices
16 Governing Law and Jurisdiction
17 Publicity
18 General
19 Vendors Protection Provisions
20 Tecron Pension
21 Arbitration
Schedule 1 Vendors' shares consideration and vendors' loans
Schedule 2 The Company
Schedule 3 The Subsidiaries
Schedule 4 The Properties
Schedule 5 Tax Deed
Schedule 6 Warranties
Schedule 7 Pensions
Schedule 8 Environmental Authorisations
Schedule 9 Vendors Protection Provisions
<PAGE> 2
THIS AGREEMENT is made the 21st day of March 1997
1 Parties
1.1 The persons whose names and addresses are set out in Schedule 1 ('the
Vendors')
1.2 ROTEC CHEMICALS LIMITED Registration Number 1559052 whose registered
office is at 24 Norris Way Wellingborough Road Rushden Northants NN10
6BP ('the Company')
1.3. ICO, Inc a Texas Corporation whose principal office is at 11490
Westheimer Suite 1000 Houston Texas 77077 USA ('the Purchaser' which
expression shall where the context so admits include its successors and
assigns')
2 Recitals
2.1 The Company is a private company limited by shares and at the date of
this agreement has an authorised share capital of L.10,000 divided into
10,000 Ordinary Shares of L.1 each of which 1143 have been issued are
fully paid or credited as fully paid and are registered in the names of
the Vendors and short details of the Company are set out in Schedule 2
2.2 The Vendors are beneficially entitled to the shares in the numbers set
out in Schedule 1 and have the right to sell or procure the sale of them
free from all liens charges and incumbrances
2.3 (Intentionally omitted) ("io")
2.4 Other than disclosed in the Disclosure Letter the Company is the
beneficial owner (directly or indirectly) of the whole of the issued
share capital in each of the companies listed in Schedule 3 ('the
Subsidiaries'). The
2
<PAGE> 3
Subsidiaries are the only subsidiaries" of the Company
2.5 The Vendors have agreed with the Purchaser to sell or procure the sale
to it of the Shares as hereinafter defined on the terms but subject to
the conditions of this agreement
NOW IT IS AGREED as follows:
3 Definitions and interpretation
3.1 In this agreement and in the schedules (unless the context otherwise
requires) the following words and expressions shall have the following
meanings:
3.1:1 'the Accounting Date' means 31st December 1996
3.1.2 (io)
3.1:3 'Associate' means in relation to any Vendor:
3.1:3.1 his issue spouse brother sister or parent or
3.1:3.2 any company with which he or any of his relatives as
detailed in 3.1:3.1 above is or may be associated
'associated' shall have the meaning ascribed to it in the
Companies Act 1985 (Section 346)or
3.1:3.3 any partnership of which he is a member and for the
purposes of 3.1:3.2 above
3.1:4 'the Audited Accounts"' means the audited accounts of the
Company and the Subsidiaries for the accounting reference period ended
on the Accounting Date (a copy of which has been included in the
Disclosure Letter) comprising inter alia a balance sheet profit and loss
account notes auditors' and directors' reports and a statement of the
source and application of funds
3
<PAGE> 4
3.1:5 'CAA 1990' means the Capital Allowances Act 1990
3.1:6 'the Companies Acts' means the Companies Acts 1985 and 1989 the
Criminal Justice Act 1993 (in relation to Insider Dealing) the Companies
Consolidation (Consequential Provisions) Act 1985 and the Financial
Services Act 1986
3.1:7 'the Completion Date' means the date of actual completion of the
matters provided for in clause 7.1 and 'Completion' shall be construed
accordingly
3.1:8 (io)
3.1:9 'the Disclosure Letter' means the letter and its annexures to be
delivered before the Completion Date and addressed by the Vendors'
Solicitors to the Purchaser's Solicitors disclosing various matters
relative to the Warranties
3.1:10 'Environmental Legislation' means all national or local statutes
codes or other laws or legislation concerning health safety or matters
related to pollution or protection of the environment and all decisions
rules regulations ordinances orders notices and directives of the
European Community the United Kingdom Parliament and other official
bodies having jurisdiction in respect of such matters
3.1:11 'Environmental Authorisations' means the permits consents
licences authorisations and approvals required by any Group Company
under the Environmental Legislation and detailed in Schedule 8
3.1:12 'Group Company' means the Company and (as the context requires)
the Subsidiaries and each or any of them
4
<PAGE> 5
3.1:13 'ICTA 1988' means the Income and Corporation Taxes Act 1988
3.1:14 'IHTA 1984' means the Inheritance Tax Act 1984
3.1:15 'Incumbrance' means any mortgage charge (whether fixed or
floating) pledge lien option right of pre-emption right of retention of
title or any other form of security interest or any obligation
(including any conditional obligation) to create any of the same
3.1:16 'Management Accounts' means the unaudited profit and loss
accounts of the Company and the Subsidiaries for the period ended on
31st January 1997
3.1:17 'the Properties' means the freehold and leasehold properties
short particulars of which are contained in Parts I and II of Schedule 4
and 'Property' shall mean any of them
3.1:18 'the Purchaser's Solicitors' means Tallents Godfrey & Co of 3
Middlegate Newark Nottinghamshire NG24 1AQ (MDX 11801 Newark)
3.1:19 'the Revenue' means all fiscal authorities (national municipal or
local) whether of the United Kingdom or elsewhere
3.1:20 'the Shares' means the 1143 issued ordinary shares of L.1 each in
the share capital of the Company details of which appear in clause 2.1
3.1:21 (io)
3.1:22 'the Subsidiaries' means those companies referred to in clause
2.4 short details of which are set out in Schedule 3 and 'Subsidiary'
shall mean any one of them
5
<PAGE> 6
3.1:23 'Taxation' or 'Tax' means any form of taxation duty levy impost
charge national insurance or other similar contribution or rates whether
created or imposed by any governmental state federal local municipal or
other body and whether in the United Kingdom or elsewhere (including
without limitation any obligation to repay in whole or part any payment
for group relief or for the surrender of advance corporation tax) and
also including any related penalty interest fine or surcharge
3.1:24 'the Tax Deed"' means the tax deed referred to in clause 7.1:1.9
below
3.1:25 'TCGA 1992' means the Taxation of Chargeable Gains Act 1992
3.1:26 'VATA 1994' means the Value Added Tax Act 1994
3.1:27 (io)
3.1:28 'the Vendors' Solicitors' means Toller Hales & Collcutt of 55
Headlands Kettering NN15 7EY (MDX 12801 Kettering)
3.1:29 'the Warranties' means the representations warranties and
undertakings given by the Vendors referred to in clause 9 and Schedule 6
3.2 Expressions in the singular shall include the plural and in the
masculine shall include the feminine and vice versa and references to
persons shall include corporations and vice versa
3.3 References to any statute or statutory provision shall be construed as
references to such statute or statutory provision as respectively
amended or re-enacted or as their
6
<PAGE> 7
operation is modified by any other statute or statutory provision
(whether before or after the date of this agreement) and shall include
any provisions of which they are re-enactments (whether with or without
modification) and shall include subordinate legislation made under the
relevant statute
3.4 References to recitals clauses and schedules are references to recitals
and clauses of and schedules to this agreement
3.5 All obligations expressed to be given or entered into by the Vendors or
resulting from the execution of or breach of the provisions of this
agreement (including without limitation any of the Warranties proving to
be untrue or misleading or being breached) shall be deemed to be given
undertaken or entered into by them jointly and severally
3.6 Expressions defined in ICTA 1988 TCGA 1992 or in the Companies Acts
shall wherever used in this agreement have the meanings given to them in
the relevant statute (unless the context otherwise requires) and in the
case of any inconsistency the defined terms used in the Companies Acts
shall prevail
3.7 The headings used in this agreement are inserted for convenience only
and shall not affect its construction or interpretation
3.8 The Schedules form part of this agreement
4 Sale and Purchase of The Shares
4.1 Subject to the terms of this agreement:
4.1:1 each of the Vendors shall with full title guarantee sell or
procure the sale of and
7
<PAGE> 8
4.1:2 the Purchaser (relying on the representations warranties
undertakings and indemnities by the Vendors in this agreement) shall
purchase the Shares free from all claims or Incumbrances and with all
attached or accrued rights as at the Completion Date for the
consideration detailed in clause 5
4.1:3 the Purchaser may assign the benefit of this agreement to any
wholly owned subsidiary of the Purchaser but the obligation in
connection herewith shall remain with the Purchaser
4.2 The Purchaser shall be entitled to all dividends and distributions
declared paid or made in respect of the Shares after the Completion Date
4.3 Each of the Vendors waives any rights of pre-emption conferred on it by
the articles of association of the Company over those of the Shares
agreed to be sold by the other Vendors
4.4 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the purchase of all of the Shares is completed
simultaneously
5 Consideration
5.1 Subject to any adjustment as provided by clause 6 the consideration
payable for the Shares ('the Purchase Price) shall be the aggregate of:-
5.1.1 The sum of $5,000,000 which shall be paid and satisfied by:
(a) $2,500,000 shall be paid in U.S. dollars in cash on the Completion
Date
8
<PAGE> 9
(b) $2,500,000 shall be paid by the issue by the Purchaser to the
Vendors of four hundred and twenty seven thousand three hundred and
fifty one (427,351) shares the Purchaser's Common Stock ("the
Consideration Shares")
5.1.2 Additional Consideration and "Earn out"
For the purposes of this clause 'the Adjusted Net Profit' means the
combined net profit after tax as disclosed in the profit and loss
accounts of the Company and its Subsidiaries ('the Group') for the
period 1st January 1997 to 31st December 1999 ('the Relevant Accounts')
such profit and loss accounts to be prepared on the same bases and in
accordance with the same policies as the Audited Accounts (including in
particular any provisions for depreciation and stock) or so as to show a
true and fair view of the Group's results as required by the Companies
Acts and in accordance with accounting standards applicable to the
United Kingdom and on bases consistent with those adopted in the two
immediately prior financial years (including in particular any
provisions for depreciation and stock) unless all the Vendors and the
Purchaser shall prior to the date of this agreement have agreed in
writing any changes in such bases and principles adjusted (unless such
adjustments have already been taken into account in their preparation)
as follows:
5.1.2.1 to make proper provision for all liabilities and losses
excluding extraordinary charges gains and losses as
defined in Financial Reporting Standard (FRS) 3
9
<PAGE> 10
5.1.2.2 to be struck before charging interest payable by the Group
on sums borrowed to finance any amounts distributed by way
of dividend paid by reference to a record date after
Completion (and to the extent any such dividend is so
distributed from the Group's own cash resources the
accounts shall be adjusted to take account of the
consequential loss of interest earned)
5.1.2.3 to be struck before charging emoluments payable to any
nominee of the Purchaser appointed to the board of any
Group Company
5.1.2.4 to exclude:
5.1.2.4.1 the gain or income on any transactions with Francis
Ward Ltd which is outside the normal course of
business or not consistent with the Company's prior
business practices with Frances Ward Ltd with
regard to such matters as price and volume
5.1.2.4.2 any management or similar charges or increased
expenses from the Purchaser or its subsidiaries or
associated companies or partnership as a result of
the Purchaser's requirements except to the extent
that the same may have been agreed with all the
Vendors'
5.1.2.5 but after charging or deducting:
5.1.2.5.1 all expenses and outgoings properly incurred in the
ordinary course of business of the
10
<PAGE> 11
Group
5.1.2.5.2 all expenses of working and management directors'
fees and remuneration (subject to the limitations
referred to in clause 5.1.2.4)
5.1.2.5.3 (subject as provided in 5.1.2.2) interest on
borrowed money
5.1.2.5.4 any charge of a revenue nature which ought in the
reasonable opinion of the Reporting Accountants to
be fairly and properly deducted
5.1.2.6 to exclude (in accordance with the provisions of clause
5.2 below) profits or losses income or expenses deriving
from the events or transactions referred to in clause 5.2
5.1.2.7 to make such other adjustments as the Reporting
Accountants reasonably consider to be necessary or
appropriate to be taken into account it being the
intention of the Vendors and Purchaser that the Relevant
Accounts be prepared in accordance with the principles set
out in clauses 5.1 and 5.2
5.1.2.8 to be struck after charging a market rate of interest on
loans payable to the Company or its subsidiaries by the
Purchaser or any Associated Companies
5.2 In addition to those matters referred to in clause 5.1 above the
Adjusted Net Profit shall be further adjusted so
11
<PAGE> 12
as to discount and exclude the effect on the Group's profits (or losses)
of the following events or transactions taking place after completion:
5.2.1 loans or payments or any other transactions made otherwise than
in the ordinary course of business or otherwise than on arm's length and
market terms to the Purchaser or its subsidiary or associated companies
or to a partnership of which it or they are members
5.2.2 the change of the Group's year end to 30th September
5.3 The Adjusted Net Profit shall be reported by Grant Thornton and at the
Purchaser's option Price Waterhouse or their respective successors ('the
Reporting Accountants') whose report ('the Report') shall (in the
absence of manifest error) be conclusive and binding on the Vendors and
Purchaser
5.4 The Vendors and Purchaser shall use all reasonable endeavours to procure
that the Report is prepared within (three) months after the end of the
financial period of the Group to which it relates
5.5 In respect of the financial period of the Group for the 3 years ended on
31st December 1999 inclusive the Purchaser shall pay to the Vendors by
way of additional consideration for the Shares ('the Additional
Consideration') an amount computed as follows. The Company's Adjusted
Net Profit for 1st January 1997 to 31st December 1999 less L.900,000
with the result multiplied by 1.667. Such Additional Consideration to
be satisfied by (a) 50% paid in cash in pounds sterling the Conversion
Rates from dollars to pounds
12
<PAGE> 13
shall be the average for the five business days prior to the date
referred to in clause 5.6 (b) the balance shall be paid by the issue by
the Purchaser to the Vendors of sufficient shares in the Purchaser's
Common Stock. The value of each such share of the Purchaser's Common
Stock shall be deemed to be equal to the average closing price of the
said stock on the NASDAQ Stock Market over the five business days prior
to the date referred to in clause 5.6
5.6 The Additional Consideration (if any) due to the Vendors shall be paid
within 28 days after the Reporting Accountants shall have issued their
Report for such period.
5.7 If the Purchaser shall have given notice to the Vendors of a claim or
claims in respect of any breach non-observance or non-performance of any
of the provisions of or under the terms of this agreement or of any
documents executed pursuant to this agreement (including without
prejudice to the generality of the foregoing any claim in respect of any
breach of the Warranties or under the Tax Deed) (a 'Claim' or 'Claims')
the following provisions shall apply:
5.7.1 Any amount payable to the Purchaser which shall have been agreed
or finally determined or adjudged to be payable in respect of the Claim
or Claims and which shall not already have been paid shall be retained
by the Purchaser by way of set-off against any Additional Consideration
due to the Vendors
5.7.2 Any amount of Additional Consideration payable by the Purchaser
which shall not have been agreed or finally determined or adjudged to be
payable in respect of the
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Claim or Claims shall on the date on which it would have been paid to
the relevant Vendor be immediately paid into an interest-bearing deposit
account with Midland Bank plc opened in the joint names of the Vendors'
Solicitors and the Purchaser's Solicitors ('the Claims Account') (whose
respective partners will be the sole persons authorised to operate such
account) who will hold such sums and shares as stakeholders (but
interest will accrue on such sums for the benefit of the relevant party)
and no withdrawals shall be made from such Claims Account pending the
settlement or final adjudication of the relevant Claim or Claims
5.7.3 As soon as possible following the settlement or final
determination or adjudication of the relevant Claim or Claims the
Vendors and the Purchaser shall instruct the Vendors' Solicitors and the
Purchaser's Solicitors to make payment out of the Claims Account:
5.7.3.1 to the Purchaser of a sum equal to the amount for which
the Claim or Claims shall have been settled or for which
judgment shall have been obtained together with interest
on such amount at the agreed rate or statutory rate (as
appropriate) until the date of payment ('the Principal
Amount') and interest subject to clause 5.7.3.3 below such
payment shall be made first from cash and then from shares
receivable under clause 5.5
5.7.3.2 subject to clause 5.7.3.3 below to the Vendors' Solicitors
of the balance of the money standing to the credit of the
Claims Account
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<PAGE> 15
5.7.3.3 all payments of the Principal Amount out of the Claims
Account shall carry interest accrued on such amount from
the date of deposit until the date of withdrawal
5.7.4 For the avoidance of doubt nothing contained in this clause shall
prejudice the right of the Purchaser to make any claim against the
Vendors in respect of any breach non-observance or non-performance of
any of the provisions of or under such terms of this agreement
(including without prejudice to the generality of the foregoing any
claim against the Vendors in respect of any breach of the Warranties or
under the Tax Deed)
5.8 The Purchase Price shall be apportioned among the Vendors in due
proportion to the number of Shares registered in their respective names
as detailed in Schedule 1
6 Conditions
6.1 The obligations of the Vendors to sell the Shares and of the Purchaser
to purchase the Shares on the terms of this agreement are conditional
upon:
6.1:1 Clearances or exemptions being obtained under or in respect of
TCGA 1992 Section 138 and ICTA 1988 Section 707
6.1:1.1 In the event that such clearance is not obtained
either as originally applied for or subsequently
applied for or appealed against ('the Event') and
the Vendors would become liable to pay Capital
Gains Tax on the Consideration Shares referred to
in clause 5.1 (b) the Purchaser reserves the right
at
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<PAGE> 16
its option to pay in addition to the Purchase Price
such a sum as would compensate the Vendors for such
portion of the Capital Gains Tax for which a
deferral would have been available to them had they
received clearance. Vendors must give notice to
the Purchase promptly upon the occurrence of the
Event and must keep the Purchaser informed of the
status of and developments relating to the
application for clearance. Notice of the
Purchaser's decision shall be given to the Vendors
within five days of the Purchaser receiving notice
of the Event from the Vendors and such notice will
be deemed to satisfy the condition described in
clause 6.1:1
6.1:2 The Purchaser being reasonably satisfied in all respects prior to
Completion with the results of its enquiries into the matters disclosed
by the Disclosure Letter provided that the termination by Dow Chemicals
of its distribution arrangement with the Company may not be the basis
for the Purchaser not being reasonably satisfied under this clause or
under the Warranties in Schedule 6 nor shall it be the basis for a claim
under the Warranties
6.2 6.2:1 The parties to this agreement shall use all reasonable endeavours
to procure that the conditions in clause 6.1 are fulfilled by 30th April
1997
6.2:2 This Agreement may be terminated
6.2.2.1 By mutual agreement by the parties in
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<PAGE> 17
writing
6.2.2.2 By the Purchaser of the condition contained in
clause 6.1:2 is not satisfied or waived
6.2.2.3 By the Vendors acting together if the Purchaser
does not exercise the option in clause 6.1.1.1
above
6.3 The Purchaser represents and warrants to the Vendors that
6.3.1 the Purchaser has passed at a meeting of its Board of Directors a
resolution approving the transactions provided for in this agreement
including the issue of the Consideration Shares
6.3.2 the Consideration Shares are and will be at the time of their
issue to the Vendors be fully paid validly issued non-assessable and
freely transferrable (subject to clause 6.4) without any restriction
pledge privilege charge encumbrance or any other similar right of a
third party whatsoever
6.3.3 The Purchaser has heretofore delivered to the Vendors copies of
the Purchaser's (i) Annual Reports for the year ended 30th September
1996 (ii) Quarterly Report on Form 10-Q for the quarter ended 31st
December 1996. As of their respective dates such reports did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were
made not misleading. The audited consolidated financial statements and
unaudited condensed consolidated interim financial statements of the
Purchaser and its consolidated subsidiaries included in such reports
17
<PAGE> 18
were prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of
the Purchaser and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the
periods then ended subject in the case of the unaudited condensed
consolidated interim financial statements to normal year end adjustments
and any other adjustments described therein
6.3.4 Since 31st December 1996 (a) there has not been any adverse
affect on the business and properties of the Purchaser as the result of
any fire explosion accident riot civil or labour disturbance strike
boycott lockout flood drought storm earthquake embargo or other casualty
or act of God or the public enemy (b) there has not been any change in
the financial condition assets or liabilities of the Purchaser other
than changes occurring in the ordinary course of business which
individually or in the aggregate have not materially adversely affected
the business properties financial condition or results of operations of
the Purchaser
6.4 The Vendors and each of them hereby represents warrants covenants and
agrees with the Purchaser as follows:
6.4.1 that the Consideration Shares are being acquired for investment
and not with a view to the distribution or future resale of the same
within 12 months of the
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<PAGE> 19
Completion Date
6.4.2 that the Consideration Shares being received under this Agreement
have not been registered under the Securities Act of 1933 ("the Act")
(an American Act) or the blue sky or securities laws of any state
including Texas where each Vendor resides and therefore must be held
until they are registered under the Act and applicable state securities
laws or unless an exemption from such registration is available for any
such proposed sale or transfer. The Vendors further understand that
Rules 144 and 145 under the Act provide a basis for making routine sales
of restricted securities without registration under the Act but only
upon strict compliance with the conditions set forth in such Rules and
that there can be no assurances that the conditions of such Rules will
be satisfied so as to allow a proposed sale.
6.4.3 that they will not sell pledge hypothecate or otherwise transfer
any of the Consideration Shares received under this Agreement except or
unless there is in effect a registration statement under the Act
covering such proposed disposition and the disposition is made in
accordance with such registration statement or the Vendors or each of
them has notified the Purchaser of the proposed disposition and shall
have furnished the Purchaser with a detailed statement of the
circumstances surrounding the proposed disposition and if reasonably
requested by the Purchaser the Vendors shall have furnished the
Purchaser with an opinion of counsel reasonably satisfactory to the
Purchaser
19
<PAGE> 20
that such disposition will not require registration of such shares under
the Act or any State or Securities Act
6.4.4 the Vendors acknowledge that the Purchaser has no obligation to
register any of the shares
6.4.5 the Vendors acknowledge that a legend will be placed upon
certificates representing the shares purchased in substantially the
following form:
The securities represented by this Certificate have not been
registered under the Securities Act of 1933 or the laws of any
state and may not be transferred in the absence of (a) an
effective registration statement for the securities under the
Securities Act of 1933 and applicable state laws or (b) an
opinion of counsel for the corporation that such registration is
not required
7 Completion
7.1 Completion of the sale and purchase of the Shares shall take place on or
before the 30th April 1997 or within 7 days of the final determination
of the clearances described in clause 6.1.1 at the offices of the
Purchaser's Solicitors when:
7.1:1 The Vendors will deliver to the Purchaser:
7.1:1.1 transfers of the Shares duly executed by the registered
holders in favour of the Purchaser (or as it in writing
directs) accompanied by their respective share
certificates
7.1:1.2 such waivers consents or other documents as may be
required to give full title guarantee to the
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<PAGE> 21
Shares and to enable the Purchaser or its nominees to
become their registered holders
7.1:1.3 certificates in respect of all issued shares in each of
the Subsidiaries and transfers of all shares in any
Subsidiary held by a nominee other than the Company or
another Subsidiary
7.1:1.4 the certificates of incorporation statutory books
(including minute books) common seal and all books of
account and other records of the Company and the
Subsidiaries complete and (where appropriate) written up
to date
7.1:1.5 the title deeds to the Properties and all ancillary
documents
7.1:1.6 the resignation of the existing directors and secretary of
the Company (other than John Stuart Kliene) and of the
Subsidiaries with a written acknowledgment from each that
he has no claim whatever against the Company or the
Subsidiaries whether in respect of compensation for loss
of office damage pensions loans or otherwise
7.1:1.7 a written acknowledgment from John Stuart Kliene who is to
continue as a director after the date of Completion that
he has no claim whatever against the Company or the
Subsidiaries
7.1:1.8 (io)
7.1:1.9 a Tax Deed in the form set out in Schedule 5 duly executed
by each of the Vendors and the Company and the
Subsidiaries
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<PAGE> 22
7.1:1.10 certificates from the Company's and Subsidiaries' bankers
certifying the current and deposit account balances of the
Company and of the Subsidiaries at the close of business
on the last business day preceding Completion
7.1:1.11 appropriate forms to amend the mandates given by the
Company and each Subsidiary to its bankers
7.1:1.12 written confirmation from the Vendors that there are no
subsisting guarantees given by the Company or any
Subsidiary in their favour and that after compliance with
clause 7.1:5 none of the Vendors or their Associates will
be indebted to the Company or any Group Company or vice
versa
7.1:1.13 appropriate certified minutes of the Company or each Group
Company authorising execution of this agreement the Tax
Deed
7.1:1.14 original certificates of all registered trademarks patents
and designs and the originals of all licences or
Environmental Authorisations obtained by or issued to the
Company or any Subsidiary or any other person in
connection with the business carried on by it or any of
them
7.1:1.15 evidence (in a form reasonably satisfactory to the
Purchaser) of the release from all charges debentures and
other security interests created by the Company or any of
the Subsidiaries or to which any of its or their assets is
subject or (as appropriate) certificates of
22
<PAGE> 23
non-crystallisation
7.1:1.16 such other papers and documents as the Purchaser may (by
notice from the Purchaser's Solicitors to the Vendors'
Solicitors given not less than 5 business days prior to
Completion) reasonably require
7.1:2 The Vendors will procure that a board meeting of the Company and
of each of the Subsidiaries shall be held at which:
7.1:2.1 such persons as the Purchaser may nominate shall be
appointed as directors and the secretary of the Company
and each of the Subsidiaries
7.1:2.2 there shall be submitted and accepted the resignations of
the directors and secretaries referred to in clause
7.1:1.7
7.1:2.3 (io)
7.1:2.4 the transfers of the Shares and shares in the Subsidiaries
(subject to stamping) shall be approved for registration
7.1:2.5 the existing bank mandates given by the Company and the
Subsidiaries shall be cancelled
7.1:2.6 the registered offices of the Company and the Subsidiaries
shall be changed as the Purchaser may direct
7.1:3.1 The Company and John Stuart Kliene Trevor Richard Brown
and Ian John Mayes shall enter into service agreements and
the Company and Ronald Ian Kliene will enter into a
Consultancy Agreement in
23
<PAGE> 24
forms to be agreed between the Company and the before
mentioned persons the terms of which shall be based upon
the terms upon which the before mentioned persons are
currently employed by the Company but containing
reasonable non-competition clauses
7.1.3.2 A Supply Agreement between the Company and Francis Ward
Limited the material terms of which are attached hereto
7.1:4 The Vendors shall and shall procure that their Associates shall
repay all money then owing by them to the Company and/or any Subsidiary
other than normal trade accounts with Francis Ward Limited (whether then
due for payment or not)
7.1:5 The Purchaser shall:
7.1:5.1 pay or procure the payment to and in favour of the
Vendors' Solicitors (whose receipt shall be a full
discharge to the Purchaser) by way of bank telegraphic
transfer of that part of the Purchase Price as is payable
in cash
7.1:5.2 allot and issue to the Vendors in due proportion the
Consideration Shares and issue to them definitive share
certificates
7.2 If in any respect the provisions of clause 7.1 are not complied with on
the date for Completion set by this clause the Purchaser may:
7.2:1 defer Completion to a date not more than 28 days
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<PAGE> 25
after the date set by clause 7.1 (and so that the provisions of that
clause shall apply to Completion as so deferred) or
7.2:2 proceed to Completion so far as practicable (without prejudice
to its rights under this agreement) or
7.2:3 rescind this agreement without prejudice to any other remedy and
without incurring any liability to the Vendors or any of them
8. (io)
9 Warranties
9.1 The Vendors warrant and represent to the Purchaser:
9.1:1 in relation to the Company and
9.1:2 as separate warranties and representations in relation to each
of the Subsidiaries as if their respective names (where the context so
admits) were substituted for references to 'the Company'
9.1:2.1 in the terms set out in Schedule 6 and
9.1:2.2 that to the best of the knowledge and belief of the
Vendors all information contained or referred to in the
Disclosure Letter is true and accurate and fairly
presented and nothing has been omitted which renders any
of such information incomplete or misleading to the intent
that:
9.1:3 such warranties and representations shall remain in full force
and effect notwithstanding Completion and
9.1:4 so far as such warranties and representations relate in whole or
in part to present or past matters of fact at Completion they shall also
be deemed to constitute
25
<PAGE> 26
fundamental representations upon the faith of which this agreement has
been entered into by the Purchaser
9.2 For the avoidance of doubt the Warranties shall be separate and
independent and save as expressly provided shall not be limited by
reference to any other clause or anything in this agreement or its
Schedules
9.3 The provisions of this clause shall be without prejudice to any right
which the Purchaser may have to rescind this agreement if the Purchaser
discovers any material breach on the part of the Vendors prior to
Completion and it shall not be a defence to any claim that the Purchaser
knew or ought to have known that any matters warranted or represented
were not as warranted or represented
9.4 If at any time after the Completion Date it should transpire that any of
the Warranties is reasonably shown to be untrue or incorrect and has
been breached then without prejudice to any other remedy available to
the Purchaser the Vendors will as the Purchaser may elect either:
9.4:1 immediately pay to the Purchaser a cash amount sufficient to
compensate the Purchaser against all loss suffered by it in consequence
of such breach taking into account in particular the resulting
diminution as at the Completion Date in the value of the Shares or
9.4:2 immediately pay to the Company or the relevant Subsidiary (as the
case may be) by way of indemnity a cash amount equal to the diminution
or shortfall in value of any of its or their assets and/or the amount of
any liability (actual or contingent) which would not have been made or
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<PAGE> 27
incurred or occasioned if the relevant matters had been as represented
in the Warranties
such payment:
9.4:3 in each case to provide on a full indemnity basis for any costs
and expenses incurred investigating resisting or negotiating any claim
(whether successful or not) which if successful would have given rise to
a liability on the part of the Vendors or any of them under this clause
and
9.4:4 in each case to have regard to the fact (as is the case) that the
Purchaser enters into this agreement with the intention that the
business of the Company and the Subsidiaries shall or may be continued
as a going concern utilising all the assets and subject only to the
liabilities to which in accordance with the terms of this agreement the
Company and the Subsidiaries would on Completion be entitled and bound
on the basis that all the Warranties were duly performed and fulfilled
9.4:5 (if made under clause 9.4:1 above) to be calculated on the basis
that the Company did not prior to Completion have an obligation to repay
the Vendors' Loans (the net asset value of the Company being accordingly
increased by an equal amount) and that the Purchase Price had been
increased by an equal amount
9.5 Without limitation to the provisions of clause 9.4 in the event of a
breach of the Environmental Warranties set out in paragraph 16 of
Schedule 6 the Vendors agree to indemnify and hold the Purchaser and the
relevant Group Company harmless from and against and to reimburse the
27
<PAGE> 28
Purchaser on a full indemnity basis for any and all losses damages
liabilities claims and expenses (including without limitation fines
penalties clean-up costs activities and obligations legal fees technical
consultants' engineers' and experts' fees incidental and consequential
damages and lost profits) ('Environmental Losses') which may be
sustained or suffered by the Purchaser or the relevant Group Company
arising out of based upon or by reason of any Environmental Warranties
being untrue or incorrect or by virtue of any Environmental Losses
incurred by the Purchaser arising out of any use of the Properties or
operation of the businesses of any Group Company prior to Completion
whether or not such liability was known to the Vendors or could
reasonably have been known by the Vendors notwithstanding that all
reasonable enquiries were made as to such liabilities by the Vendors
prior to Completion save in respect of those matters set out in the
Disclosure Letter
9.6 Without prejudice to any of the Warranties the Vendors shall be liable
to the Purchaser in respect of the Properties to the same extent as if
the Properties according to their tenure had been conveyed by the
Vendors to the Purchaser for valuable consideration and in the
conveyance the Vendors had been expressed to convey with full title
guarantee and the conveyance had been made subject only to all
incumbrances and other adverse interests disclosed to the Purchaser in
the Disclosure Letter
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9.7 The rights and remedies of the Purchaser in respect of the Warranties
shall not be affected by:
9.7:1 Completion
9.7:2 any investigation made by it or on its behalf into the affairs
of the Company
9.7:3 its knowledge of any information the Purchaser may have received
or been given or have actual implied or constructive notice of prior to
the signing of this agreement (other than that fairly and fully
disclosed in the Disclosure Letter)
9.7:4 its rescinding or failing to rescind this agreement or failing
to exercise or delaying the exercise of any right or remedy or
9.7:5 by any event or matter whatever except a specific and duly
authorised written waiver or release
9.8 The Warranties shall be deemed to be given immediately before Completion
and to relate to the facts then existing
9.9 The Vendors undertake with the Purchaser that they shall procure that
(save only as may be necessary to give effect to this agreement) neither
they nor the Company nor any Subsidiary shall do allow or procure any
act or omission before Completion which would or be likely to constitute
a breach of any of the Warranties if they were given at Completion or
which would make any of such Warranties inaccurate or misleading if they
were so given
9.10 The Vendors undertake with the Purchaser that they will immediately
disclose in writing to the Purchaser any event
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<PAGE> 30
or circumstance which may arise or become known to them after the date
of this agreement and prior to Completion which is inconsistent with any
of the Warranties or which had it occurred on or before the date of this
agreement would have constituted a breach of the Warranties or which is
material to be known by a purchaser for value of the Shares
9.11 The Purchaser shall have the right to rescind this agreement by notice
to the Vendors if upon Completion:
9.11:1 the Vendors are in breach of any of the Warranties or any other
provision of this agreement other than disclosed in the Disclosure
Letter or
9.11:2 it appears that any of the Warranties is or has become
inaccurate or misleading or
9.11:3 any act or event occurs which had it occurred before the date
of this agreement would have constituted a breach of any of the
Warranties
PROVIDED that any such rescission or the failure of the Purchaser upon
the occurrence of any such act or event or discovery of such
circumstance to rescind this agreement shall not extinguish any right to
damages or other compensation to which the Purchaser may be entitled in
respect of such breach or the occurrence of such event
9.12 If prior to Completion the Company or any of the Subsidiaries shall
sustain a loss on account of fire flood accident or other calamity which
in the opinion of the Purchaser materially and adversely affects the
Company or any of the Subsidiaries the Purchaser shall (regardless of
30
<PAGE> 31
whether or not such loss shall have been insured) be entitled to rescind
this agreement without liability to the Vendors but shall have no other
claim
9.13 None of the information supplied by the Company or the Subsidiaries
or their professional advisers prior to the date of this agreement to
the Vendors or their officers employees agents representatives or
advisers in connection with the Warranties and the contents of the
Disclosure Letter or otherwise in relation to the business or affairs of
the Company or the Subsidiaries shall be deemed a representation
warranty or guarantee of its accuracy by the Company or any of the
Subsidiaries to the Vendors and the Vendors waive any claims against the
Company the Subsidiaries or their officers employees agents
representatives or advisers which they might otherwise have in respect
of the same"
9.14 Any of the Warranties which are qualified by the expression 'to
the best of the knowledge information and belief of the Vendors' or 'so
far as the Vendors are aware or any similar expression shall be deemed
to include an additional statement that they have been made after due
diligent and careful inquiry
10 Covenants up to completion
10.1 The Vendors covenant with the Purchaser that prior to Completion
and without the prior written consent of the Purchaser:
10.1:1 neither the Company nor any of the Subsidiaries shall:
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<PAGE> 32
10.1:1.1 incur any expenditure on capital account or enter
into any commitments so to do
10.1:1.2 dispose of or agree to dispose of or grant any
option in respect of any part of its assets except
in the ordinary course of trading
10.1:1.3 borrow any money or make any payments out of or
drawings on its bank account(s) other than routine
payments
10.1:1.4 enter into any unusual or abnormal contract or
commitment or:
10.1:1.4:1 grant or agree to grant any lease or third
party right in respect of the Properties or
any of them or assign or agree to assign or
otherwise dispose of the same
10.1:1.4:2 make any loan
10.1:1.4:3 enter into any leasing hire purchase or
other agreement or arrangements for payment
on deferred terms
10.1:1.5 declare make or pay any dividend or other
distribution or do or suffer anything which may
render its financial position less favourable than
as at the date of this agreement
10.1:1.6 grant or issue or agree to grant or issue any
mortgages charges debentures or other
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securities for money or redeem or agree to redeem
any such securities or give or agree to give any
guarantees or indemnities
10.1:1.7 make any change in the terms and conditions of
employmentment or pension benefits of any of its
directors or employees or employ or terminate
(other than for good cause) the employment of any
person
10.1:1.8 permit any of its insurances to lapse or do
anything which would make any policy of insurance
void or voidable
10.1.1.9 create issue or grant any option in respect of any
class of share or loan capital or agree so to do
10.1:1.10 in any other way depart from the ordinary course of
its respective day-to-day business either as
regards the nature scope or the manner of
conducting the same
10.1:2 none of the Vendors shall:
10.1:2.1 dispose of any interest in the Shares or any of
them or grant any option over or mortgage charge or
otherwise incumber the Shares or any of them
10.1:2.2 permit the Company or any Subsidiaries to pass any
resolution in general meeting
10.2 Pending Completion the Vendors shall procure that the Purchaser its
agents and representatives are given full access to the Properties and
to the books and records of
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<PAGE> 34
the Company and Subsidiaries and the Vendors shall upon request furnish
such information regarding the businesses and affairs of the Company and
Subsidiaries as the Purchaser may require
11 Release of guarantees
11.1 The Vendors shall procure that prior to or on Completion
the Company and the Subsidiaries shall be released from all guarantees
and indemnities given by any of them (save in respect of the obligations
of any Group Company)
12 Pensions
Each of the parties shall comply with the applicable requirements of Schedule 7
relating to pensions
13 Non-competition
13.1 Each of the Vendors covenants with the Purchaser and as a separate
covenant with those subsidiary and associated companies of the Purchaser
(as such expressions are defined by the Companies Act 1985 Section 736
and ICTA 1988 Section 302) engaged in similar business to the businesses
of any Group Company at the date of this agreement or to that of the
Purchaser (the Purchaser for this purpose contracting on behalf of
itself and as trustee for such subsidiary or associated Companies) that
except as otherwise agreed in writing with the Purchaser:
13.1.1 it will not (and will procure that no Associate shall) during
the period of 2 years from the payment under clause 5.1:2 or 3 years
from Completion whichever is the later either solely or jointly with or
as manager agent or consultant of any other person (corporate or
34
<PAGE> 35
unincorporated) carry on or be engaged or concerned or interested
directly or indirectly within the geographic area currently served by
the Company or the geographic area served at 31st December 1999 the
United Kingdom or within the European Economic Community in the business
of the formulation and manufacture of plastics colour and additive
master batches and plastic compounds and distribution of polymer
manufacture and specialist plastics additive products
13.1.2 it will not (and will procure that no Associate shall) in
respect of goods or services of the nature presently provided in the
business carried on at the date of this agreement by any Group Company
or the Company for a period of 2 years from Completion solicit (either
on its or their own account or as the employee or manager agent
consultant or employee of any other person) the custom of any person who
is or was within a period of 12 months prior to Completion a customer
(including those whose custom was sought) of any Group Company or the
Company in relation to their respective businesses or have any dealings
with any such person
14 Costs
14.1 Subject to clause 14.2 below all costs and expenses incurred by or on
behalf of the parties to this agreement including all fees of
representatives solicitors and accountants employed by any of the
parties in connection with the negotiation preparation and execution of
this agreement shall be borne solely by the party who shall have
35
<PAGE> 36
incurred the same and the other parties shall have no liability in
respect of such costs and expenses
14.2 (io)
15 Notices
15.1 Any notice to be given for the purposes of this agreement shall either
be delivered personally or sent by first class recorded delivery post
Datapost or telefax (facsimile transfer)
15.2 The address for service of the Vendors shall be the address (or
principal address if more than one) of the Vendors' Solicitors or such
other firm:
15.2:1 with which it may merge or which a majority of its partners may
join or
15.2:2 as the Vendors who own the majority in number of Shares may by
notice in writing to the Purchaser require If at any time it shall not
be evident which firm of solicitors is appointed for the purposes of
this sub-clause the Purchaser may by notice to the Vendors at their
addresses in this agreement nominate one of their number for the
purposes of receiving and giving notices
15.3 The address for service of the Company and the Purchaser shall be their
respective registered offices for the time being
15.4 A notice shall be deemed to have been served as follows:
15.4:1 if personally delivered at the time of delivery
15.4:2 if sent by recorded delivery post at the expiration of 48
hours after the same was delivered into the custody of the postal
authorities
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<PAGE> 37
15.4:3 if sent by Datapost at the expiration of 24 hours after the
same was delivered into the custody of the postal authorities and
15.4:4 if sent by telefax (facsimile transfer) at the expiration of
12 hours after despatch
15.5 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice was
properly addressed and delivered into the custody of the postal
authorities as a pre-paid recorded delivery letter or Datapost letter or
that the telefax (facsimile transfer) was properly addressed and
despatched
15.6 Notice given to the Vendors pursuant to clause 15.2 above shall be
deemed to be notice to all the Vendors and any notice by the Vendors
(other than a notice changing their solicitors pursuant to clause
15.2:2) shall only be given by their solicitors or the Vendor nominated
by the Purchaser pursuant to clause 15.2
16 Governing law and jurisdiction
16.1 This agreement shall be governed by and construed in all respects in
accordance with English law and the parties irrevocably agree that the
Courts of England and Wales shall have exclusive jurisdiction in respect
of any dispute suit action arbitration or proceedings ('Proceedings')
which may arise out of or in connection with this agreement
16.2 The Vendors expressly and specifically agree and accept that the terms
of this clause are fair and reasonable and appoint The Vendors'
Solicitors for the time being to
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<PAGE> 38
accept service on their behalf of any Proceedings which may be commenced
in England and Wales
17 Publicity
No announcement or other disclosure concerning the sale and purchase of the
Shares or any ancillary matter shall be made before or after Completion by the
Vendors (whether to the press employees customers or suppliers) save in a form
agreed between the parties or otherwise as required by law
18 General
18.1 This agreement shall (except for any obligation fully performed prior to
or at the Completion Date) continue in full force and effect after the
Completion Date notwithstanding Completion
18.2 All of the parties to this agreement will after as well as before and
upon the Completion Date do all acts and things and sign and execute all
documents and deeds requisite for the purpose of implementing the terms
of this agreement
18.3 Notwithstanding any rule of law or equity to the contrary any release
waiver or compromise or any other arrangement of any kind whatever which
the Purchaser may agree to or effect in relation to one Vendor in
connection with this agreement and in particular the Warranties shall
not affect the rights and remedies of the Purchaser as regards any other
Vendor
18.4 If the Shares shall at any time be sold or transferred the benefit of
each of the obligations undertakings indemnities or warranties
undertaken or given by the Vendors or any of them under or pursuant to
this agreement shall be
38
<PAGE> 39
assignable to the purchaser or transferee of the Shares and such
purchaser or transferee shall be entitled to enforce the same against
the Vendors or any of them as if it were named in this agreement as the
Purchaser
18.5 Save as set out in clauses 4.1.3 and 18.4 none of the rights or
obligations under or pursuant to this agreement may be assigned or
transferred to any other person without the written consent of all the
parties
18.6 This agreement contains the whole agreement between the parties relating
to the transactions provided for in this agreement and supersedes all
previous agreements (if any) between such parties in respect of such
matters and each of the parties to this agreement acknowledges that in
agreeing to enter into this agreement it has not relied on any
representations or warranties except for those contained in this
agreement
18.7 If there is any provision of this agreement or of any other 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 pursuant to the Restrictive Trade Practices Act 1976 then
that provision shall not take effect until the day after particulars of
this agreement or of that agreement or arrangement (as the case may be)
have been furnished to the Director General of Fair Trading pursuant to
Section 24 of the said Act
18.8 (io)
18.9 Any remedy or right conferred upon the Purchaser for breach
39
<PAGE> 40
of this agreement (including the right to rescission) shall be in
addition to and without prejudice to all other rights and remedies
available to it
18.10 No failure or delay by the Purchaser in exercising any claim remedy
right power or privilege under this agreement shall operate as a waiver
nor shall any single or partial exercise of any claim remedy right power
or privilege preclude any further exercise thereof or exercise of any
other claim right power or privilege
19 The Vendors and the Purchaser agree that the provisions of Schedule 9
shall apply
20 In the event that the Company or the Subsidiary Tecron Industries
Limited receives any money from the Tecron Pension Scheme it is acnowledged
that these moneys do not belong to the Company or Tecron Industries Limited and
any moneys will be held upon trust for those beneficiaries of the Scheme who
are shown to be entitled to it
21 Any dispute or difference between the parties in connection with this
agreement shall be referred to an arbitrator or arbitrators conversant
with the dispute or differences concerned ('the Arbitrator')
21.1 The arbitration shall be held in London
21.2 The Arbitrator shall be appointed by the parties or failing
agreement by The President for the time being of the Law Society
21.3 The procedure shall be agreed by the parties or failing agreement
determined by the Arbitrator
21.4 If either party fails to comply with any procedural
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<PAGE> 41
order made by the Arbitrator the Arbitrator shall have power to proceed
in the absence of that party and deliver the award
21.5 The Arbitrator shall act as an expert and not as an arbitrator to
the intent that his decision in the absence of manifest error shall be
final and binding upon the Vendors and the Purchaser and his costs and
expenses shall be borne as or such other proportions as is determined by
the Arbitrator
SCHEDULE 1
<TABLE>
<CAPTION>
VENDOR'S NAME AND NUMBER CONSIDERATION
ADDRESS SHARES PAYABLE FOR
SOLD SHARES
<S> <C> <C>
Ronald Ian Kliene
of Upper Leys, Pavenham,
Bedford, Bedfordshire
MK43 7PD 250 $546,806
Joy Yvonne Kliene
of Upper Leys, Pavenham,
Bedford, Bedfordshire
MK43 7PD 250 $546,806
John Stuart Kliene
of 36 Hobby Close,
Northampton NN4 0RN 400 $874,890
Jennifer Ann Brown
of 9 Braggs Lane,
Wrestlingworth Sandy,
Bedfordshire SG19 2ER 71 $155,294
Trevor Richard Brown
of 9 Braggs Lane,
Wrestlingworth Sandy,
Bedfordshire SG19 2ER 72 $157,481
John Stuart Kliene and
Valerie Evelyn Kliene
both of 36 Hobby Close,
Northampton NN4 0RN 100 $218,723
Trustees of the Kliene
Grandchildren's Settlement
</TABLE>
41
<PAGE> 42
SCHEDULE 2
The Company
<TABLE>
<S> <C>
Registered Number : 1559052
Registered Office : 24 Norris Way Wellingborough Road Rushden
Northants
Date of Incorporation : 30th April 1981
Directors : R.I. Kliene, J.S. Kliene, J.Y. Kliene, T.R.
Brown and I.J. Mayes
Secretary : I.J. Mayes
Accounting Ref. Date : 31st December
Auditors : Grant Thornton
Authorised Share Capital : L.10,000.00
Issued Share Capital : 1143
SCHEDULE 3
The Subsidiaries
SWAVESEY COLOURS LIMITED
Registered Number : 1606172
Registered Office : 24 Norris Way Wellingborough Road Rushden
Northants
Date of Incorporation : 30th December 1981
Directors : R.I. Kliene, J.S. Kliene, T.R. Brown and
J.A. Brown
Secretary : J.A. Brown
Accounting Ref. Date : 31st December
Auditors : Grant Thornton
Authorised Share Capital : L.11,000.00
Issued Share Capital : 11,000 Ordinary Shares of L.1 each
TECRON INDUSTRIES LIMITED
Registered Number : 1290152
Registered Office : 24 Norris Way Wellingborough Rushden
Northants
Date of Incorporation : 10th December 1976
Directors : R.I. Kliene, J.Y. Kliene, J.S. Kliene
Secretary : J.Y. Kliene
Accounting Ref. Date : 31st December
Auditors : Grant Thornton
Authorised Share Capital : 10,000 divided into 9550 ordinary shares of
L.1 each and 450 deferred shares of L.1 each
Issued Share Capital : 450 ordinary shares and 450 deferred shares
FABRIMOULDS LIMITED
Registered Number : 1483264
Registered Office : 24 Norris Way Wellingborough Road Rushden
Northants
Date of Incorporation : 6th March 1980
Directors : R.I. Kliene and J.Y. Kliene
</TABLE>
42
<PAGE> 43
<TABLE>
<S> <C> <C>
Secretary : J.Y. Kliene
Accounting Ref. Date : 31st December
Auditors : Grant Thornton
Authorised Share Capital : L.100 divided into 98 ordinary shares of L.1
each and 2 deferred shares of L.1 each
Issued Share Capital : 40 ordinary shares and 2 deferred shares
</TABLE>
SCHEDULE 4
The Properties
Part 1
None
Part 11
23, 24, 25, 26, and 27 Francis Court Norris Way Wellingborough Road Rushden
Northampton and the old pit site Norris Way aforesaid
SCHEDULE 5
Tax Deed
THIS TAX DEED is made the day of 1997
BETWEEN
(1) The persons whose names and addresses are set out in Part I of the
Schedule ('the Covenantors')
(2) The companies whose names and registered offices are set out in Part II
of the Schedule ('the Companies') and ICO, Inc a Texas Corporation whose
principal office is at 1490 Westheimer Suite 1000 Houston Texas 77077
USA ('the Purchaser' which expression shall where the context so admits
include its successors and assigns)
WHEREAS pursuant to an agreement ('the Agreement') dated (date) the Purchaser
has today completed the purchase from [the Covenantors] of the whole of the
issued share capital of Rotec Chemicals Limited in reliance inter alia upon the
indemnities contained in this deed
IT IS AGREED as follows:
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<PAGE> 44
1. Definitions
1.1 In this deed unless the context otherwise requires the following
expressions shall have the following meanings:
1.1:1 'the Accounting Date' means 31st December
1.1:2 'the Audited Accounts' means the consolidated accounts of the
Company for the accounting reference period ended on the Accounting Date
1.1:3 'Business Day' means a day (other than a Saturday) when banks are
open for the transaction of normal banking business in London
1.1:4 'Claim' means any notice demand assessment letter direction or
order or other document issued or action taken by or on behalf of any
fiscal revenue or other authority or official anywhere in the world
whereby the Company is liable or is sought to be made liable to make any
payment to the authority or official or other person (whether the same
is primarily payable by the Company and whether or not the Company shall
or may have any right of reimbursement against any other person) or is
denied or sought to be denied any Relief
1.1:5 'the Company' means any or all of the Companies as the case may
be
1.1:6 'Event' means any event act transaction omission or occurrence of
whatever nature and (without limitation) completion the receipt or
accrual of any income or any distribution failure to distribute
acquisition disposal transfer payment loan or advance including the
death of any person [and the failure to make sufficient dividend
44
<PAGE> 45
payments to avoid an apportionment or deemed distribution of income]
1.1:7 'ICTA 1988' means the Income and Corporation Taxes Act 1988
1.1:8 'Relief' means any relief loss allowance credit deduction
exemption set-off or right to repayment claimed or available in relation
to Taxation pursuant to any legislation or otherwise
1.1:9 'Taxation' means any form of taxation duty levy impost charge
national insurance or other similar contribution or rates whether
created or imposed by any government state federal local municipal or
other body and whether in the United Kingdom or elsewhere (including
without limitation any obligation to repay in whole or part any payment
for group relief or for the surrender of advance corporation tax)
including any payment which the Company may be or become bound to make
or obliged to account for to any person in respect of Taxation and also
including any related penalty interest fine or surcharge
1.2 Other expressions used in this deed shall where the context so admits
have the meanings ascribed to them in the Agreement
1.3 Reference to the result of any Event on or prior to a particular date
shall include the combined result of 2 or more Events the first of which
shall have taken place on or before such date and shall also include any
Event which is deemed for Taxation purposes to have occurred prior to
such date
45
<PAGE> 46
1.4 Any reference to a statute or statutory provision shall be construed as
a reference to such provision (including any subordinate legislation
made under it) as modified or re-enacted from time to time
1.5 Headings in this deed are for ease of reference only and shall not
affect its construction
2 The indemnities
2.1 Subject to clause 2.5 the Covenantors jointly and severally covenant
with the Company and the Purchaser to indemnify them and hold them
harmless against any liability:
2.1:1 for Taxation arising as a result of or by reference to any Event
on or before completion
2.1:2 for Taxation which would have been saved but for the loss
reduction modification or cancellation of some Relief in consequence of
an Event occurring on or before completion
2.1:3 for Taxation which arises in consequence of an Event occurring on
or before completion and which would have been payable but for the
utilisation or set-off of some Relief where the Relief arises in respect
of an Event occurring after completion and
2.1:4 for Taxation arising in consequence of an Event occurring after
completion and for which the Company is liable as a result of having
been a member of any group for Taxation purposes at any time before
completion
[[2.2 Without limiting clause 2.1 the Covenantors jointly and severally
covenant with the Company and the Purchaser to indemnify them and hold
them harmless against any liability
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<PAGE> 47
as a result of any inheritance tax which:
2.2:1 is at completion a charge on or gives rise to a power to sell
mortgage or charge any of the shares or assets of the Company or
2.2:2 after completion becomes a charge on or gives rise to a power to
sell mortgage or charge any of the shares or assets of the Company which
is a liability in respect of inheritance tax payable as a consequence of
the death of any person (whenever occurring) within 7 years after a
transfer of value occurring on or before completion
2.2:3 arises as a consequence of a transfer of value occurring on or
before completion (whether or not in conjunction with the death of any
person whenever occurring) made by or to the Company]
[2.3 For the avoidance of doubt any payment made by the Company or the
Purchaser to discharge or remove any power to sell mortgage or charge
shall give rise to a liability and notwithstanding any provision of this
deed the Company or the Purchaser may disregard any right to pay any
Taxation in instalments in discharging or removing a charge or power]
2.4 The Inheritance Tax Act 1984 Section 213 shall not apply in relation to
any payments to be made by the Covenantors under this deed]]
2.5 Any Taxation which would have been repaid to the Company but for the
loss reduction set-off or cancellation of any right to repayment of
Taxation in consequence of an Event occurring on or before completion
shall for the purposes of
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<PAGE> 48
clause 2.1:1 be deemed to be Taxation for which the Company is liable
and which arises in consequence of the Event
2.6 There shall be treated as an amount of Taxation which would for the
purposes of clause 2.1:2 have been saved but for the loss reduction
modification or cancellation of some Relief the amount by which the
liability to Taxation would have been reduced by the Relief lost reduced
modified or cancelled applying the relevant rates of Taxation in force
in the period or periods in respect of which the Relief would have
applied or (where the rate has at the relevant time not been fixed) at
the last known rate and assuming that the Company had sufficient profits
against which Relief might be set-off or given
2.7 The Covenantors jointly and severally covenant with the Company and the
Purchaser and each of them to indemnify the Company and the Purchaser on
a full indemnity basis and to hold them harmless against any costs or
expenses incurred or payable by the Company or the Purchaser in
connection with any Claim
2.8 The indemnity in clause 2.1 shall not apply to any liability to the
extent that:
2.8:1 a specific provision in respect of such liability is made in the
Audited Accounts
2.8:2 such a provision is insufficient by reason only of an increase
in the rates of Taxation announced after completion but with
retrospective effect
2.8:3 the loss occasioned has been recovered pursuant to any claim
under the warranties in the Agreement
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<PAGE> 49
2.8:4 the liability arises in consequence of an Event which has
occurred since the Accounting Date in the ordinary course of the trading
activities of the Company and without limitation for this purpose none
of the following shall be regarded as carried out in the ordinary course
of the trading activities of the Company namely any disposal of an asset
other than stock in trade any Event giving rise to a liability to
Taxation primarily payable by some other person any Event giving rise to
a liability under ICTA 1988 Sections 703-787 in relation to tax
avoidance or any event which involves a distribution within the meaning
of ICTA 1988 Section 418 or a loan within ICTA 1988 Section 419
3. Conduct of claims and appeals
3.1 In the event of the Company or the Purchaser becoming aware of any Claim
the Company or the Purchaser (as the case may be) shall as soon as
reasonably practicable give written notice of the Claim to the
Covenantors but such notice shall not be a condition precedent to the
liability of the Covenantors
3.2 Subject to:
3.2:1 the Covenantors first having secured the Company and the
Purchaser to their reasonable satisfaction against any Taxation being
the subject of or likely to be incurred in connection with the Claim and
against any amounts likely to be payable pursuant to clause 2.4
[3.2:2 the Covenantor first having agreed to pay L.(amount) per hour to
the Company and/or the Purchaser for any time
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<PAGE> 50
in excess of (number) hours per week spent by any of its executives in
assisting the Covenantors in any way whatever with the Claim] and
3.2:3 the following provisions of this clause 3 the Purchaser and the
Company shall take any such action as the Covenantors may reasonably
request to avoid dispute resist appeal compromise or defend the Claim
3.3 The appointment by the Covenantors of solicitors or other professional
advisers shall be subject to the approval of the Purchaser (such
approval not to be unreasonably withheld or delayed)
3.4 All communications written or otherwise relating to the Claim received
from the Taxation authority shall be immediately copied (if in writing)
or otherwise communicated to the Purchaser and all communications
intended to be made to the relevant Taxation authority shall first he
submitted to the Company or the Purchaser for approval giving sufficient
rime for comments and shall only be transmitted if such approval is
given (such approval not to be unreasonably withheld or delayed)
3.5 The Covenantors shall effect no settlement or compromise of the Claim or
agree any matter in the conduct of the dispute which is reasonably
considered likely by the Purchaser to prejudice the future liability of
the Company or the Purchaser in respect of Taxation without the prior
written approval of the Company or the Purchaser as appropriate
3.6 Neither the Company nor the Purchaser shall be obliged to contest a
Claim beyond the first appellate body (including
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<PAGE> 51
the Special or General Commissioners or a VAT tribunal or equivalent
body) in the jurisdiction concerned
3.7 If in the reasonable opinion of the Purchaser:
3.7:1 the Covenantors or the Company have committed any acts or
omissions which constitute fraudulent or negligent conduct or any
Taxation return or computation the subject of a Claim is not true and
accurate in all material respects or
3.7:2 there is any delay on the part of the Covenantors in complying
with clause 3.2:1 or 3.7:3 the resistance of a Claim is at any time not
being properly and effectively conducted the Company or the Purchaser
may without further reference to the Covenantors admit compromise settle
discharge or otherwise deal with any outstanding or future Claims
4 Taxes
4.1 Subject to clause 4.2 all sums payable by the Covenantors under this
deed shall be paid free and clear of all deductions or withholdings
unless the deduction or withholding is required by law
4.2 If any such deduction or withholding is required by law to be made from
any such sum (other than in respect of interest payable to the
Purchaser) the Covenantors shall pay such additional amount as shall be
required to ensure that the net amount received by the Purchaser or the
Company will equal the full amount which would have been received by it
or them had no such deduction or withholding been made
51
<PAGE> 52
4.3 If any payment by the Covenantors under this deed has or in the
reasonable opinion of the Purchaser will be chargeable to Taxation
(other than a reduction in the base cost to the Purchaser of the shares
of the Company) then the amount so payable shall be grossed up by such
amount as will ensure that after deduction of the Taxation so chargeable
there shall be left in the hands of the Company or the Purchaser a sum
equal to the amount that would otherwise have been payable
5 Date for payment and interest
5.1 The Covenantors shall pay to the Company or the Purchaser as the case
may be any amount required to be paid by them pursuant to clause 2.1 in
cleared funds on or before the (number) 19 Business Day prior to:
5.1:1 if the Claim involves an actual payment of Taxation the date on
which such Taxation becomes due and payable to the authority official or
person demanding the same
5.1:2 if the Claim involves no actual payment of Taxation then to the
extent that such liability involves the denial or loss or set-off in
whole or in part of any right to repayment of Taxation the date on which
such Taxation would otherwise have been repaid
5.1.3 if a Claim involves no actual payment of Taxation then to the
extent that such liability involves the denial or loss or set-off in
whole or in part of any Relief other than a right to repayment of
Taxation the date on which the Taxation which would have been saved but
for such denial loss or set-off becomes (or on the assumption in clause
2.3
52
<PAGE> 53
would become) due and payable
and
5.1:4 (in the case of a liability under clause 2.1:3) the date which
would have been the due date in clause 5.1:1 but for the availability of
the Relief
5.2 The Covenantors shall pay to the Company or the Purchaser as the case
may be any amount required to be paid by them pursuant to clause 2.4 on
the date on which the Company or the Purchaser incurs or suffers such
costs or expenses
5.3 Notice of the amount of the payment required to be made by the
Covenantors under clause 2 and the due date for payment shall be given
in writing by the Company or the Purchaser and shall (save for manifest
error) be conclusive and binding on the Covenantors
5.4 Any sum not paid by the Covenantors on the due date for payment shall
bear interest (which shall accrue from day to day after as well as
before any judgment for the same)20 at the annual rate of (amount)% over
the base rate for the time being of(bank) plc (or if such a rate cannot
be ascertained for any reason at such similar rate as the Purchaser
shall reasonably select) to and including the day of actual payment (or
the next Business Day if the date of actual payment is not a Business
Day) of such sums compounded on the usual quarter days
6 Credit for recoveries
If the Covenantors shall have paid to the Purchaser an amount in respect of a
claim and subsequent to the making of such payment the Purchaser or the Company
shall receive from a third party a
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<PAGE> 54
sum referable to the sum paid to the Purchaser the Purchaser shall immediately
repay or procure the repayment to the Covenantors of so much of the amount paid
by the Covenantors to the Purchaser as shall represent double recovery by the
Purchaser but after deduction of any relevant Taxation on and all costs and
expenses of recovery
7 Waiver
No delay or omission of the Company or the Purchaser in exercising any right
power or privilege under this deed shall impair the right power or privilege or
be construed as a
waiver of the right power or privilege and any single or partial exercise of
any right power or privilege under this deed shall not preclude the further
exercise of any right power or
privilege. The rights and remedies of the Company and the Purchaser provided
in this deed are cumulative and not exclusive of any rights and remedies
provided by law
8 Assignment
The benefit of this deed may be assigned in whole or in part by the Purchaser
or the Company
9 Notices
9.1 Any notice to be given under this deed shall either be delivered
personally or sent by recorded delivery post Datapost or telefax
(facsimile transfer)
9.2 The address for service of the Covenantors shall be the address (or
principal address if more than one) of the Vendors' Solicitors or such
other firm:
9.2:1 with which it may merge or which a majority of its partners may go
in or
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<PAGE> 55
9.2:2 as the beneficial owners of the majority in number of shares may
by notice in writing to the Purchaser require.
If at any time it shall not be evident which firm of solicitors is appointed
for the purposes of this clause the Purchaser may by notice to the Covenantors
at their addresses in the Agreement nominate one of their number for the
purposes of receiving and giving notices
9.3 The address for service of the Company and the Purchaser shall be their
respective registered offices for the time being
9.4 A notice shall be deemed to have been served as follows:
9.4:1 if personally delivered at the time of delivery
9.4:2 if sent by recorded delivery post on the expiry of 48 hours
after the same was delivered into the custody of the postal authorities
9.4:3 if sent by Datapost on the expiry of 24 hours after the same was
delivered into the custody of the postal authorities and
9.4:4 if sent by telefax (facsimile transfer) on the expiry of 12
hours after the same was despatched
9.5 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice was
properly addressed and delivered into the custody of the postal
authorities as a pre-paid recorded delivery letter or Datapost letter or
that the telefax (facsimile transfer) was properly addressed and
despatched to the appropriate number
9.6 Notice given to the Covenantors pursuant to clause 9.2
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<PAGE> 56
shall be deemed to be notice to all the Covenantors and any notice by
the Covenantors (other than a notice changing solicitors pursuant to
clause 9.2:2) shall only be given by the Vendors' Solicitors or the
Covenantor nominated by the Purchaser pursuant to clause 9.2
10 Governing law and jurisdiction
10.1 This deed shall be governed by and construed in all respects in
accordance with English law and the parties irrevocably agree that the
courts of England and Wales shall have exclusive jurisdiction in respect
of any dispute suit action arbitration or proceedings ('Proceedings')
which may arise out of or in connection with this deed save that nothing
contained in this deed shall be taken to have limited the right of the
Purchaser or the Company to bring proceedings in any other jurisdiction
or jurisdictions whether concurrently or not
10.2 The Covenantors expressly and specifically agree and accept that the
terms of this clause are fair and reasonable and appoint (name affirm)
or such other firm as is mentioned in clause 9.2 for the time being to
accept service on their behalf of any Proceedings which may be commenced
in England and Wales
11 Counterparts
This deed may be executed in any number of counterparts by the different
parties on separate counterparts each of which shall when executed and
delivered constitute an original but all of which shall together constitute one
and the same instrument
IN WITNESS whereof the parties hereto have hereunto set their
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<PAGE> 57
hands the day and year first before-written
SCHEDULE
Part I
The Covenantors
(set out names and addresses of Vendors)
Part II
The Companies
(set out names, numbers and registered offices of the companies)
THE COMMON SEAL OF
was hereunto affixed
in the presence of:-
THE COMMON SEAL of
was hereunto affixed
in the presence of:-
SCHEDULE 6
Warranties
The Warranties and undertakings referred to in Clause 9 are as
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follows except as provided for in this agreement or fairly and fully disclosed
in the Disclosure Letter:
1 Corporate matters
1.1 The information contained in clause 2 to this agreement and Schedules 2
and 3 and 8 is true and accurate in all respects
1.2 The Company has complied with all applicable provisions of the Companies
Acts and the European Communities Act 1972
1.3 The register of members and all other statutory books and minute books
of the Company:
1.3:1 have been properly kept
1.3:2 are up-to-date and
1.3:3 contain true full and accurate records of all matters required
to be dealt with in them
1.4 The Company has not received any notice of any application or intended
application under the provisions of the Companies Acts for the time
being in force for the rectification of the register of members
1.5 The Purchaser has been supplied with a copy of the memorandum and
articles of association of the Company having attached thereto copies of
all resolutions as are by law required to be attached together with
copies of all resolutions setting out the rights attached to or the
conditions of issue of any of the share capital of the Company.
Those copies are true complete and up-to-date and set out in full the
rights and restrictions attaching to the share capital of the Company
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1.6 The Company is not a public limited company within the meaning of the
Companies Act 1985 Section 1(3)
1.7 No allotment of share capital in the Company has been made in
contravention of the provisions of the Companies Acts
1.8 The Company has not at any time acquired or taken a charge over any of
its own shares
1.9 No unlawful distribution has been made by the Company
1.10 The Company has not entered into any arrangement involving the
acquisition from or disposal to its directors or connected persons of
non-cash assets
1.11 The Company has not in contravention of the provisions of the Companies
Acts in relation to any of its directors or any person connected with
such director:
1.11:1 granted any loan or quasi-loan or entered into any guarantee or
credit transaction or
1.11:2 provided any security in connection with any such loan quasi-loan
guarantee or credit transaction
1.12 The Company has properly and punctually made and filed all returns
particulars resolutions and documents required by the Companies Acts or
any other legislation to be filed with the registrar of companies or any
other governmental or local authority and all such filings were and are
correct. In particular all charges created by or in favour of the
Company have (if appropriate) been registered in accordance with the
provisions of the Companies Acts
1.13 The Company has maintained and continues to maintain readily available
for inspection by members of the public all documents required to be
made so available by the
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Companies Acts or other legislation
2 The Shares and share capital
2.1 There are no agreements or other arrangements in force which:
2.1:1 provide for the present or future issue allotment or transfer of
or
2.1:2 accord to any person the right (absolute or conditional) to call
for the issue allotment or transfer of any share or loan capital of the
Company (including any option or right of pre-emption or conversion)
2.2 Since the Accounting Date:
2.2:1 no share or loan capital of the Company has been issued or
allotted or agreed to be issued or allotted whether conditionally or
absolutely
2.2:2 the Company has not undergone any capital reorganisation or change
in its capital structure
2.2:3 no resolutions have been passed by the Company and 2.2:4 nothing
has been done in the conduct or management of the affairs of the Company
which would be likely to prejudice the interests of the Purchaser as
prospective purchaser of the Shares
2.3 The Company has not at any time:
2.3:1 reduced its share capital
2.3:2 redeemed any share capital
2.3:3 purchased any of its shares
2.4 No share capital shown in the Audited Accounts or in the statutory books
of the Company has been forfeited
2.5 No shares in the capital of the Company have at any time
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been issued and no transfers of shares in the capital of the Company
have been registered otherwise than in accordance with the articles of
association of the Company from time to time in force and the Companies
Acts and any necessary governmental consents have been obtained for each
issue and transfer of shares in the capital of the Company
2.6 The Shares constitute the whole of the issued and allotted share capital
of the Company and are beneficially owned by the Vendors free of all
liens charges and incumbrances or interests in favour of or claims made
by or which could be made by any other person
2.7 No dividends or other distributions of profits have been declared made
or paid since the Accounting Date and
2.8 All dividends or other distributions of profits declared made or paid
since the date of incorporation of the Company have been declared made
and paid in accordance with law and its articles of association (or
equivalent documents)
3 CAPACITY OF VENDORS
3.1 The Vendors are entitled to sell or procure the sale of the full legal
and beneficial interest in the Shares to the Purchaser on the terms set
out in this agreement
3.2 Each Vendor has taken all corporate (if relevant) and other actions
necessary to enable it to enter into and perform this agreement and has
secured all approvals and consents (governmental or otherwise) required
for the performance of the transactions contemplated by this agreement
3.3 Neither the execution or delivery of this agreement by the Vendors nor
Completion of the transactions contemplated is
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prohibited by or violates any provision and will not result in a breach
of
3.3:1 any applicable law rule regulation judgment decree order or
other requirements of the United Kingdom or of any court authority
department commission board bureau or agency or
3.3:2 (to the extent relevant) the memorandum or articles of
association of the Vendors
3.4 This agreement constitutes and imposes valid legal and binding
obligations on each Vendor fully enforceable in accordance with their
terms
3.5 Completion of the transactions contemplated by this agreement by the
Vendors will not:
3.5:1 conflict with result in the breach of constitute a default
under or accelerate the performance provided by the terms of any
contract agreement or deed which any Vendor may be bound or affected or
3.5:2 constitute a default or an event which with the lapse of time
or action by a third party could result in the creation of any lien
incumbrance security interest equity claim or restriction on any of the
Shares
4 ACCOUNTS
4.1 The accounting reference date of the Company for the purposes of the
Companies Acts is (31st December) and has not at any time been any other
such date
4.2 The Purchaser has been supplied with a true and complete copy of the
Audited Accounts
4.3 The Audited Accounts:
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4.3:1 comply with the requirements of the Companies Acts
4.3:2 have been prepared on a consistent basis in accordance with good
accounting practice and comply with all current SSAPs and financial
reporting standards applicable to a United Kingdom company
4.3:3 are accurate in all material respects and show a true complete
and fair view of the state of affairs financial position assets and
liabilities of the Company and of its results for the financial period
ending on the Accounting Date
4.3:4 as at the Accounting Date are not affected by any unusual or
non-recurring items
4.3:5 make full provision for depreciation of the fixed assets of the
Company having regard to their original cost and estimated life
4.3:6 make due provision for any bad or doubtful debts
4.3:7 fully disclose all assets of the Company as at the Accounting
Date
4.4 The Audited Accounts set out correctly all such reserves or provisions
for Taxation as are necessary on the basis of the rates of tax now in
force to cover all Taxation (Present and future) in respect of any
transaction occurring prior to the Accounting Date liable to be assessed
on the Company or for which the Company is accountable up to such date
4.5 In the Audited Accounts
4.5:1 any slow moving stock has been written down appropriately and
redundant obsolete or unsaleable stock
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and irrecoverable work-in-progress costs have been wholly
written off and
4.5:2 the value attributed to the remaining stock new materials and
work-in-progress does not exceed the lowest of cost (on a first in first
out valuation) or net realisable value or replacement price at the
Accounting Date and
4.5:3 the same basis was adopted for the valuation of stock and
work-in-progress as had been adopted in the preparation of all
consolidated audited accounts of the Company laid before the Company in
general meeting for the financial periods ending prior to the date of
this agreement or for each accounting period since incorporation if
fewer than
4.6 All liabilities or outstanding capital commitments of the Company as at
the Accounting Date have been included in the Audited Accounts by way of
4.6:1 full provision or reserve or
4.6:2 (in the case of such a liability as was contingent unquantified
or disputed) by way of note stating the maximum amount which has been or
could be claimed and the best estimate of the directors (after taking
all relevant professional advice) of the likelihood of such a claim
materialising or being successful
4.7 No asset of the Company has been acquired for any consideration in
excess of its market value at the date of its acquisition or otherwise
than by way of bargain at arm's length
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4.8 Each of the book debts shown in the Audited Accounts or The Management
Accounts and such other book debts relating to the period up to and
including the date of Completion will realise within 6 months of such
date their nominal value less the value attributed to any reserve for
bad or doubtful debts included in the Audited Accounts and none of the
book debts is subject to any counter-claim or set-off
4.9 No part of the amounts included in the Audited Accounts or subsequently
recorded in the books of the Company as owing by any debtors is overdue
by more than 90 days or has been realised on terms that any debtor pays
less than the full book value of his debt or has been written off or has
proved to any extent to be irrecoverable or is now regarded by the
Company as irrecoverable in whole or in part
4.10 No event has occurred during the period covered by the Audited Accounts
or Management Accounts that has resulted in the profits of the Company
in respect of such period being abnormally high or low
4.11 The Management Accounts:
4.11:1 have been prepared on a basis wholly consistent with that
warranted as adopted in the preparation of the Audited Accounts
4.11:2 are accurate in all material respects and show a true and fair
view of the assets and liabilities of the Company and of its results for
the financial period ended 31st January 1997
4.11:3 make full provision or reserve for all liabilities and other
matters warranted as provided for or
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reserved in the Audited Accounts such that the Company has no
liabilities of any nature whatever other than those disclosed or
provided for in the Management Accounts
4.12 The accounting and other books ledgers financial and other records of
the Company:
4.12:1 are in its possession
4.12:2 have at all times been properly and fully written up
4.12:3 accurately present and reflect in accordance with generally
accepted accounting principles and standards and the Companies Acts all
of the transactions entered into by the Company or the transactions to
which the Company has been a party and its financial contractual and
trading position and
4.12:4 have been held for the periods required by the Companies Acts
5 BORROWINGS AND LENDING
5.1 The total amount borrowed by the Company from its bankers does not
exceed:
5.1:1 the limit of its facilities as set out in the Disclosure Letter
or
5.1:2 any limitation on borrowing powers contained in its articles of
association or in any debenture or other agreement binding on it
5.2 Except as disclosed in the Audited Accounts the Company does not have
outstanding (whether made by or incurred by the Company):
5.2:1 any borrowing or indebtedness in the nature of
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borrowing including (other than those contained in the Disclosure
Letter) any bank overdrafts liability under acceptances (otherwise than
in respect of normal trade bills) or any acceptance credit (including
any amounts due to any present or former directors or to members of the
Company other than remuneration accrued due or for reimbursement of
business expenses) or
5.2:2 any Incumbrance guarantee or similar obligation
5.2:3 any arrangements of a type covered by the Companies Act 1985
Sections 320 or 330 or any agreements for such arrangements or any other
transaction in which a director of or a person connected with the
Company has a material interest
5.3 The Company:
5.3:1 has not lent any money which has not been repaid to it
5.3:2 does not own the benefit of any debt (whether present or future)
or the right to receive any money other than debts accrued to it in the
ordinary course of its business
5.4 The statements of the Company's bank accounts and of their credit or
debit balances to be delivered at Completion and any such statements
delivered prior to such date are and will be correct and the Company has
no other bank or deposit accounts (whether in credit or overdrawn) not
included in such statements
5.5 In relation to such Incumbrances or guarantees (if any) detailed in the
Disclosure Letter and in relation to any bank overdraft borrowings or
other financial facilities
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available to or financial obligations incurred by the Company:
5.5:1 the Vendors have supplied to the Purchaser full details and true
and correct copies of all relevant documents
5.5:2 there has been no contravention of or non-compliance with any
provision of any such document
5.5:3 no steps for the enforcement of any Incumbrances have been taken
or threatened
5.5:4 there has not been any alteration in the terms and conditions of
any of the arrangements or facilities all of which are in full force and
effect
5.5:5 none of the Vendors nor the Company has done anything whereby
the continuance of the arrangements and facilities might be affected or
prejudiced and
5.5:6 none of the arrangements is dependent on the guarantee of or on
any security provided by a third party
5.6 The Company has not:
5.6:1 factored any of its debts or engaged in financing of a type
which would not require to be shown or reflected in the Audited Accounts
5.6:2 since the Accounting Date repaid or become liable to repay or
prepaid any loan or loan capital or indebtedness in advance of its date
of maturity
5.6:3 received notice from any lenders of money to it requiring
repayment or intimating enforcement of any Incumbrance and there are no
circumstances likely to give rise to any such notice
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5.7 Having regard to existing bank and other facilities the Company has
sufficient working capital for the purposes of continuing to carry on
its business in its present form and at its present level of turnover
for the period of 12 months after Completion
5.8 The Company has not applied for or received any grant award subsidy or
financial assistance from any governmental department or agency
('Governmental Grants')
5.9 The Company has not done or agreed to do anything as a result of which
any of the Governmental Grants is or may be liable to be refunded in
whole or in part
6 Assets
6.1 Except for assets disposed of by the Company in the ordinary course of
trading the Company is the owner of and has good marketable title to all
assets included in the Audited Accounts and all assets acquired since
the Accounting Date and not subsequently disposed of and all such assets
are in the Company's possession or under its control
6.2 There is no Incumbrance or agreement to create an Incumbrance over the
whole or any part of the undertaking property assets goodwill or
uncalled capital of the
Company
6.3 The fixed and loose plant and machinery fixtures and fittings vehicles
and office equipment used in connection with the business of the
Company:
6.3:1 are in good repair and condition regularly maintained properly
tested and certified safe and without
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risk to health when used 6.3:2 are capable of being efficiency and
properly used in connection with the business of the Company
6.3:3 are not to any extent surplus to requirements
6.3:4 are not expected to require replacements or additions within 6
months from Completion
6.3:5 are all capable and will remain capable throughout the
respective periods of time during which they are each written down to a
nil value in the accounts of the Company (in accordance with existing
accounting policies consistently applied) of doing the work for which
they were designed or purchased
6.4 The Company has not agreed to acquire any asset (including stock) on
terms that the property in such asset does not pass until full payment
is made or all indebtedness incurred in connection with that acquisition
discharged
6.5 The stock-in-trade of the Company is in good condition and free from
defects and is capable of being sold by the Company in the ordinary
course of its business in accordance with its current price but without
rebate or allowance to a purchaser
6.6 Maintenance contracts are in full force and effect in respect of all
assets of the Company which it is normal or prudent to have maintained
by independent or specialist contractors
6.7 Details of all contracts entered into by the Company for the maintenance
of any of the Company's assets are included in the Disclosure Letter or
have been disclosed to the
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Purchaser in writing prior to the date of this agreement
6.8 All assets used in connection with the business of the Company are owned
by it absolutely and are held free from any lease hire hire purchase or
conditional sale agreement bill of sale or other agreement for payment
on deferred terms
6.9 No circumstance has arisen or is likely to arise in relation to any
asset held by the Company under a lease or similar agreement whereby the
rental payable has been or is likely to be increased and in
particular all such assets have at all relevant times been used for a
qualifying purpose within the meaning of the CAA 1990 Section 39
6.10 The assets owned by the Company together with assets held under the hire
purchase lease or rental agreements listed in the Disclosure Letter or
which have been disclosed to the Purchaser in writing prior to the date
of this agreement comprise all assets necessary for the continuation of
the business of the Company as presently carried on
6.11 The Subsidiaries are the only subsidiaries of the Company and the
particulars set out in Schedule 3 are true and complete. The shares in
the Subsidiaries are held and owned as shown in Schedule 3 free from all
Incumbrances and with all attached rights and the Company has no other
interest in any other company and has never owned or held any other
shares or The Company is not the holder or beneficial owner of and has
not agreed to acquire any class
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of any shares or other securities of any other corporation (whether
incorporated in England and Wales or elsewhere) other than the shares
of one or more of the Subsidiaries
7 Insurances
7.1 There are existing valid policies of insurance for full replacement
values against all liabilities risks and losses (including but not
limited to the losses caused by any unlawful act on the part of any
person) against which it is normal or prudent to insure in respect of
all property owned by and in the business carried on by the Company
7.2 All premiums due in respect of the Company's insurance policies have
been paid in full
7.3 Nothing has been done or has been omitted to be done which could result
in any of the Company's insurance policies being or becoming void or
voidable
7.4 The Vendors are not aware of any circumstances which would or might
entitle the Company to make a claim under any of its insurance policies
or which would or might be required under any of its insurance policies
to be notified to the insurers
8 Disputes/litigation
8.1 The Company is not engaged whether as plaintiff or defendant or
otherwise in any litigation criminal or arbitration proceedings before
any court tribunal statutory or governmental body department board or
agency and no litigation criminal or arbitration proceedings are pending
or threatened by or against the Company and having made due and careful
inquiries the Vendors do not know of any facts
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which are likely to give rise to the same or which are likely to give
rise to proceedings in respect of which the Company would be liable to
indemnify any person concerned
8.2 The Company is not 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 nor are there any facts or circumstances which (with or without
the giving of notice or lapse of time) would be likely to result in the
Company becoming subject to such an order or judgment or being required
to be a party to any such undertaking or assurance
8.3 None of the Vendors the Company the directors of the Company or any
of its employees is the subject of any investigation inquiry process or
request for information in respect of any aspect of the activities of
the Company by any governmental or European Communities body department
board or agency or by any organisation charged with the supervision of
any activities from time to time engaged in by the Company and no such
procedures are pending or threatened and having made due and careful
inquiries the Vendors do not know of any facts which are likely to give
rise to any such procedure
8.4 There is no dispute with any revenue or other official department in the
United Kingdom or elsewhere in relation to the affairs of the Company
and there are no facts which may give rise to such dispute
8.5 There are no claims pending or threatened or capable of
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arising against the Company by any employee or workman or third party in
respect of any accident or injury which are not fully covered by
insurance
8.6 The Company has not manufactured and/or sold products which are or have
or will become in any material respect faulty or defective or which do
not comply in any material respect with any warranties or
representations expressly or (whether by statute or otherwise) impliedly
made by the Company
8.7 The Company has not accepted any liability or obligation to service
repair maintain take back or otherwise do or do anything in respect of
any articles or stock that would apply after any such article or stock
has been delivered
by it
8.8 There has been no default by the Company under any agreement trust deed
instrument or any arrangement to which the Company is a party and no
threat or claim of default has been made and is outstanding and there is
nothing which could cause:
8.8:1 any such agreement or arrangement to be terminated or rescinded by
any other party or
8.8:2 their terms to be worsened or the Company prejudiced as a result
of anything done or omitted or permitted to be done by the Vendors or
the Company
9. Compliance with statutes and licences
9.1 The Company has obtained all licences consents approvals permissions
permits test and other certificates and authorities (public or private)
necessary for the carrying
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on of its business in the places and in the manner in which such
business is now carried on all of which are valid and subsisting and the
Vendors know of no reason or of any facts or circumstances which (with
or without the giving of notice or lapse of time) would be likely to
give rise to any reason why any of them should be suspended cancelled
revoked or not renewed
9.2 The Company has established procedures under and has complied with all
requirements from time to time in force under the Health and Safety at
Work etc Act 1974 and all regulations made under that Act
9.3 The Company has conducted and is conducting its business in all respects
in accordance with all applicable laws and regulations (whether of the
United Kingdom or elsewhere)
9.4 The Company has complied in all respects with the provisions of the Data
Protection Act 1984 and all regulations made under that Act and has
established procedures to ensure continued compliance with all such
legislation
9.5 The Company has not received any notice from either the Data Protection
Registrar or a Data subject alleging non-compliance with the data
protection principles or prohibiting the transfer of data nor has
any individual claimed or will have the right to claim compensation from
the Company under the Data Protection Act 1984 for loss or unauthorised
disclosure of data
9.6 No consumer credit agreement or consumer hire agreement made by the
Company as creditor or owner or in respect of
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which it is the supplier under a debtor-creditor supplier agreement or
linked transaction has been made in breach of the Consumer Credit Act
1974 or the regulations made under that Act
10 TRADING POSITION
10.1 Since the Accounting Date:
10.1:1 there has been no material adverse change (nor is any such
material change expected) in the position or prospects of the Company or
in the value or state of the assets or amount or nature of the
liabilities of the Company as compared with the position disclosed in
the Audited Accounts
10.1:2 the Company has not disposed of any assets or assumed or
incurred any outstanding capital commitment or any material liabilities
(whether actual or contingent) otherwise than in the ordinary course of
carrying on its business (and for this purpose disposals of fixed assets
fixed and loose plant and machinery fixtures and fittings vehicle and
office equipment shall be deemed to be not in the ordinary course of
business)
10.1:3 the business of the Company has been carried on in the ordinary
and usual course of business without interruption and so as to maintain
the same as a going concern
10.2 The turnover of the Company's business to date is not materially less
than it was for the corresponding period in the financial year ending on
the Accounting Date (treating the turnover in that corresponding period
as increased by
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the same proportion as the prices charged by the Company have increased
since that period) and to the extent that the business of the Company is
seasonal the patterns of trading of the Company is not materially
different to the pattern of trading observed during each of the [3
years] ending on the Accounting Date
10.3 The overheads of the Company's business (including the direct costs of
materials purchases and manufacturing) to date are not materially
greater as a proportion of turnover than the proportion in the
corresponding period in the financial year ending on the Accounting Date
10.4 The value of work-in-progress and the value of orders and inquiries
received by the Company in respect of which work has not yet commenced
or a contractual obligation to perform has not yet been entered into are
not materially less than those values for the corresponding time in the
financial year ending on the Accounting Date (treating those values as
increased by the same proportion as the prices charged by the Company
have increased since that corresponding time)
10.5 The Company's business has not been materially and adversely affected by
the loss of any important customer or source of supply
10.6 There has been no major change in the nature or conduct of the business
carried on by the Company or the number size or market share of its
competitors during the 3 years prior to the date of this agreement
10.7 The Company is entitled to carry on the business now
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carried on by it and carried on by it during the 3 years prior to the
date of this agreement without any conflict with any valid right of any
other person firm or company
10.8 No substantial part of the business of the Company is carried on or is
required to be carried on with the agreement or consent of a third party
nor is there any agreement which significantly restricts the field in
which the Company carries on business
10.9 The Company has not committed or omitted to do any act or thing which
could give rise to any fine or penalty nor is the Company party to any
agreement practice or arrangement which in whole or in part:
10.9:1 contravenes the provisions of the Trade Descriptions Acts 1968
and 1972
10.9:2 would or might result in a reference of a consumer trade
practice (within the meaning of the Fair Trading Act 1973) or be liable
to reference to the Consumer Protection Advisory Committee under Part II
of that Act or which is the subject matter of a report to or of an order
by the Secretary of State under that Act
10.9:3 contravenes or is invalidated (in whole or in part) by or is
subject to registration under the Restrictive Trade Practices Acts 1976
and 1977
10.9:4 contravenes any provisions of the EEC Treaty or any regulation
or other enactment made under that Treaty or
10.9:5 contravenes any other anti-trust anti-monopoly or anti-cartel
legislation or regulations
10.10 The Company has not engaged in any course of conduct
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which amounts to an anti-competitive practice within the meaning of the
Competition Act 1980 or which is unlawful by virtue of the Resale Prices
Act 1976
10.11 No agreement arrangement or other practice of the Company is or has been
the subject of an investigation report or decision by the Director
General of Fair Trading the Monopolies and Mergers Commission or the
Commission of European Communities or has been the subject of a judgment
from the Restrictive Practices Court nor has the Company received any
process notice communication or request for information by or on behalf
of the Director General of Fair Trading the Monopolies and Mergers
Commission the Secretary of State for Trade and Industry or the
Commission of the European Communities relating to any aspect of the
business of the Company
11 CONTRACTS AND ARRANGEMENTS
11.1 There are not now outstanding with respect to the Company or to which
the Company is a party:
11.1:1 any long term unusual or onerous contract or any contract not
made in the ordinary course of business and at Completion there will not
be any and there are no contracts or obligations practices arrangements
or agreements outstanding of a nature or magnitude calling for special
attention
11.1:2 any joint venture consortium or other partnership arrangement
or agreement
11.1:3 any arrangements contractual or otherwise between the Company
and any third party which will or may in
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accordance with its terms be terminated as a result of any change in the
central management or shareholders of the Company or of the sale and
purchase provided for in this agreement or of compliance with any other
provision of this agreement
11.1:4 any arrangements contractual or otherwise which constitute or
involve breaches or violations of or default with respect to the
requirements or conditions of any statute treaty regulation or bye-law
or other obligation of the United Kingdom or any foreign country
relating to the Company or the carrying on of its business
11.1:5 any contract for services (other than contracts for the supply
of electricity gas water telecommunications or normal office services)
11.1:6 any power of attorney contract of agency or distributorship or
subsisting licence
11.1:7 (excepting guarantees or warranties implied by law with respect
to goods or services supplied or performed by the Company in the
ordinary course of business) any guarantee warranty undertaking or
contract for indemnity or for suretyship under which the Company is
under a prospective or contingent liability
11.1:8 any agreement or arrangement entered into by the Company
otherwise than by way of bargain at arms length or on arms length terms
and in the ordinary course of the Company's business
11.1:9 any contracts or arrangements of whatever nature binding on the
Company which cannot be terminated without
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giving rise to any liabilities whatever on the part of the Company by
the Company giving 3 months' notice or less
11.1.10 any agreement or arrangement which cannot readily be
fulfilled or performed by the Company in accordance with its terms and
without undue or unusual expenditure or effort or without making a loss
11.1:11 any agreement containing covenants limiting or excluding its
right to do business and/or compete in any area or any field or with any
person firm or company
11.1:12 any agreement or arrangement which the Vendors or the Company
know or believe to be invalid or in respect of which there are grounds
for its determination rescission avoidance or repudiation (whether by
the Company or any other party)
11.1:13 any agreement or arrangement which involves or is likely to
involve obligations or liabilities which by reason of their nature or
magnitude ought reasonably to be made known to an intending purchaser of
the Shares
11.2 The Vendors have no knowledge information or belief that since the
Accounting Date or after Completion or as a result of the proposed
acquisition of the Company by the Purchaser:
11.2:1 any supplier of the Company has ceased or will cease supplying
the Company or may substantially reduce its supplies to the Company or
11.2:2 any customer of the Company has terminated or will terminate
any contract with the Company or cease or materially reduce its business
with it
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11.3 To the best of the knowledge information and belief of the Vendors there
do not exist any special facts or circumstances which might lead to a
restriction impediment or cessation of the manufacture and/or
distribution of any products presently manufactured and/or distributed
or planned to be manufactured and/or distributed by the Company
11.4 No offer tender or the like given or made by the Company on or before
the date of this agreement and still outstanding is capable of giving
rise to a contract merely by a unilateral act of a third party
12 INTELLECTUAL PROPERTY RIGHTS
12.1 All patents, trade marks, registered designs, design rights,
applications for any of the foregoing, copyrights, trade or business
names, inventions, processes, know-how and other industrial property
rights ('Intellectual Property Rights') purported to be used or required
by the Company are in full force and effect and are vested in and
beneficially owned by the Company free from Incumbrances
12.2 The Disclosure Letter lists all such or The Vendors have disclosed to
the Purchaser in writing prior to the date of this agreement details of
all Intellectual Property Rights in respect of which the Company has
been registered as proprietor or in respect of which application for
registration has been made. None of the Intellectual Property Rights
is being used claimed opposed or attacked by any other person nor does
the use of such Intellectual Property Rights or any part of them
infringe the
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Intellectual Property Rights owned or enjoyed by any third party
12.3 There are no Intellectual Property Rights owned or used by the Company
capable of registration which have not been so registered or in respect
of which application for registration has not been made and is pending
12.4 None of the Intellectual Property Rights owned or used by the Company is
the subject of any claim opposition attack assertion or other
arrangement of whatever nature which does or may impinge upon their use
validity enforceability or ownership by the Company and there are no
grounds or other circumstances which may give rise to the same
12.5 The Company is not using any process which involves the exercise of
rights owned by third parties or gives rise to a liability to pay
compensation under the Patents Act 1977 or makes use of information
confidential to a third party except under valid licences from such
third parties all of which are in full force and effect and are listed
in the Disclosure Letter
12.6 No licences or registered user or other rights have been granted or
agreed to be granted to any third party in respect of such Intellectual
Property Rights
12.7 No disclosure has been made to any person other than the Purchaser of
any industrial know-how or the financial or trade secrets of the Company
except properly and in the ordinary course of business and on the
footing that such disclosure is to be treated as being of a
confidential nature
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12.8 No act has been done or has been omitted to be done to entitle any
authority or person to cancel forfeit or modify any Intellectual
Property Rights
12.9 The Company does not carry on business under any name other than Rotec
Chemicals Limited
12.10 The Company has complied in all respects with the requirements of the
Companies Acts with regard to company names and business names and such
names do not infringe the rights of any third party
13 EMPLOYEES
13.1 The replies to the employment inquiries included in the Disclosure
Letter ('the Employment Replies') are true and accurate in all respects
13.2 Full particulars of the names and addresses dates of birth dates of
commencement of employment or appointment to office salaries and terms
and conditions of employment of all of the employees and officers of the
Company including all remuneration payable (including accrued holiday
pay) participation in benefit schemes such as medical expenses permanent
health insurance pension company car etc any profit sharing commission
incentive or discretionary bonus arrangements to which the Company is a
party (whether legally binding on the Company or not) and all other
benefits provided which the Company is bound to provide (whether now or
in the future) to each officer and employee of the Company are set out
fully and accurately in the Employment Replies
13.3 There are not now outstanding:
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13.3:1 any service agreements or contracts between the Company and any
of its directors officers executives or employees which cannot be
terminated by the Company by 12 weeks' notice or less without giving
rise to a claim for damages or compensation (other than a statutory
redundancy payment)
13.3:2 any recognition or other agreement or arrangement (whether or
not legally binding) between the Company and any trade union or other
body representing its employees
13.3:3 any liabilities of the Company for industrial training levy or
for any other statutory or governmental levy or charge
13.4 The Vendors are not aware of any outstanding claim against the Company
by any person who is now or has been an officer or employee of the
Company and no disputes have during the preceding 3 years arisen between
the Company and any material number or category of employees and there
are no present circumstances which are likely to give rise to any such
dispute
13.5 The Company has at all times complied as respects all its employees with
the Employment Protection (Consolidation) Act 1978 as amended and the
Company is not under any present future or contingent liability to pay
compensation for loss of office or employment to any ex-officer or
ex-employee and no payments are now due by the Company under the
Employment Protection (Consolidation) Act 1978
13.6 Since the Accounting Date no change has been made in the rate of
remuneration or the endowment or pension benefits
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of any director or employee or in the terms of employment of any officer
or senior executive. No negotiations for any increase in the
remuneration or benefits of any officer or employee of the Company are
current or likely to take place within 6 months after Completion
13.7 None of the following are in existence and there are no proposals for
any of the following:
13.7:1 profit sharing schemes
13.7:2 share option schemes
13.7:3 'phantom' share option schemes
13.7:4 profit related pay schemes
13.7:5 employee share ownership trusts under the Finance Act 1989
13.7:6 employee benefit trusts
14 PENSIONS
14.1 In this clause the following words and expressions shall have the
following meanings:
14.1:1 'Defined Benefit Scheme' means a scheme under which the amount
of some or all of the benefits payable to or in respect of a member of
the scheme is calculated in accordance with a formula which takes
account of the service of the member to retirement death or withdrawal
and the remuneration of the member averaged over his service at or close
to his retirement death or withdrawal
14.1:2 'Defined Contribution Scheme' means a scheme under which the
amount of the benefits or the amount of the benefits other than some or
all of the benefits payable on death before becoming a pensioner payable
to or in
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respect of a member of the scheme is calculated by reference to the
contributions made to the scheme by and in respect of the member
14.1:3 'Personal Pension Scheme' means any personal pension scheme
approved or provisionally approved for the purposes of ICTA 1988 Part
XIV Chapter IV to which contributions have been made or are intended to
be made pursuant to any agreement arrangement custom or practice
14.1:4 'Vendors' Pension Scheme' means (name) established by the
interim trust deed dated (date) and made between (parties)
14.2 Full and complete particulars of all obligations of and promises made by
the Company (whether legally enforceable or not and whether or not
approved or capable of approval by the Inland Revenue for the purposes
of ICTA 1988 Part XIV Chapter 1) to pay any gratuity or to provide
retirement death disability sickness accident termination of employment
(whether voluntary or not) or other like benefit or to contribute to or
participate in any scheme or any arrangement providing any such benefits
for or in respect of any employee of the Company have been disclosed to
the Purchaser in the Disclosure Letter or in writing prior to the date
of this agreement
14.3 In relation to the Vendors' Pension Scheme full details [are contained
in or annexed to the Disclosure Letter including (without limitation)
the following:
14.3:1 copies of all agreements deeds plans announcements policies or
other arrangements and rules
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governing or relating to the Vendors' Pension Scheme
14.3:2 copies of all explanatory literature (including in particular
booklets) issued to employees of the Company who are or may become
members of the Vendors' Pension Scheme
14.3:3 a copy of the report of the most recent actuarial valuation of
the Vendors' Pension Scheme together with copies of any written
supplementary actuarial advice relating to the funding of the Vendors'
Pension Scheme
14.3:4 details of any proposed amendment to the Vendors' Pension
Scheme which has been announced or is being considered
14.3:5 details of any discretionary increases to pensions in payment
under the Vendors' Pension Scheme granted in the (number) years prior to
the date of this agreement
14.3:6 details of any discretionary practices which may have led any
person to expect additional benefits in a given set of circumstances
14.3:7 copies of all policies effected with and agreements with any
insurance company for the purposes of the Vendors' Pension Scheme
14.3:8 particulars of the assets of the Vendors' Pension Scheme by
reference to the categories listed in the Occupational Pension Schemes
(Disclosure of Information) Regulations 1986 Schedule 3 including
particulars of any self-investment (as defined in those Regulations)
and of any investment in which more than 5% of the total value of the
net assets of the Vendors' Pension Scheme is invested
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14.3:9 a list of the active members pensioners and deferred pensioners
of the Vendors' Pension Scheme with all particulars of them relevant to
their membership of the Vendors' Pension Scheme and necessary to
establish their entitlements to benefits and
14.3:10 a copy of any agreement with any person providing services of
any nature in connection with the Vendors' Pension Scheme including
without limitation investment management or advisory services
administration and data-processing services
14.4 No discretion or power has been exercised under the Vendors' Pension
Scheme to:
14.4:1 augment benefits
14.4:2 admit to membership any individual who would not otherwise have
been eligible for admission to membership
14.4:3 admit to membership any individual member or group of members
on terms which provided for or envisaged the payment of a transfer value
or a transfer of assets from another scheme to the Vendors' Pension
Scheme in a case in which the payment or transfer has not been made or
has not been made in full
14.4:4 provide a benefit which would not otherwise be provided
14.4:5 pay a contribution which would not otherwise have been paid or
14.4:6 in the (number) year period ending on the date of this
agreement pay a transfer value or make a transfer of assets to another
scheme the amount or value of which was
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greater than the cash equivalent to which the individual acquired a
right under the Social Security Pensions Act 1975 Schedule 1A Part II
14.5 All benefits (other than a refund of contributions from the Vendors'
Pension Scheme) payable under the Vendors' Pension Scheme on the death
of the member or during periods of sickness or disability of the member
are at the date of this agreement fully insured under a policy effected
with an insurance company of good repute and each member has been
covered for such insurance by such insurance company at its normal rates
and on its normal terms for persons in good health and all insurance
premiums payable have been paid and the Vendor does not know of any
reason why payment of such benefits should be refused
14.6 The Vendors' Pension Scheme is approved as an exempt approved scheme
within the meaning of ICTA 1988 Part XIV Chapter 1 and each employee of
the Company who has been admitted to or promised admission to membership
of the Vendors' Pension Scheme has been admitted or promised admission
on terms which are consistent with such continued approval and the
Vendor is not aware of any reason why such approval should be withdrawn.
No payment or repayment of any of the assets of the Vendors' Pension
Scheme has been made to the Company or to any employee in the Vendors'
Pension Scheme since the date of the most recent actuarial valuation
disclosed to the Purchaser
14.7 The trustees of the Vendors' Pension Scheme have legal title to all the
assets of the Vendors' Pension Scheme and
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there are no incumbrances over any such assets
14.8 At the date of this agreement there is no contribution due but unpaid
nor any amount to be transferred into the Vendors' Pension Scheme which
remains outstanding
14.9 Since the date of the most recent actuarial valuation of the Vendors'
Pension Scheme contributions have been made to the scheme at a rate or
rates not lower than that or those recommended in the report of the
actuarial valuation
14.10 The Vendors' Pension Scheme is a Defined Benefit Scheme which is
sufficiently and effectively funded on an on-going basis using actuarial
assumptions which are within the range of generally accepted actuarial
practice in relation to all relevant factors (which assumptions include
without limitation those specified in paragraph 14.1 1 below) to ensure
all benefits currently prospectively and contingency payable under the
Vendors' Pension Scheme at least to the extent to which they have
accrued at Completion
14.11 The assumptions referred to in paragraph 14.10 above include the
following:
14.11:1 the members to whom the benefits relate remain in pensionable
employment under the Vendors' Pension Scheme until their normal pension
date under the Vendors' Pension Scheme subject to reasonable assumptions
as to withdrawal early retirement or death
14.11:2 each member's remuneration used for determining benefits under
the Vendors' Pension Scheme shall be increased in respect of the period
from Completion to the member's normal pension date or earlier assumed
date of
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withdrawal early retirement or death at a rate which is consistent with
the assumption as to the yield on investments and
14.11:3 provision shall be made to reflect the recent practice of the
Vendors' Pension Scheme with regard to the provision of increases to
pensions in payment and in deferment
[14.12 The Vendors Pension Scheme is a Defined Contribution Scheme and no
assurance promise or guarantee (whether oral or written) has been made
or given to any member of the Vendors' Pension Scheme of any particular
level or amount of benefits (other than insured lump sum death in
service benefits) to be provided for or in respect of him under the
Vendors' Pension Scheme on retirement death or leaving service
14.13 The Company may terminate any obligation it may have to contribute to
the Vendors' Pension Scheme without incurring any liability to any
member of the Vendors' Pension Scheme under any agreement or arrangement
with the member]
14.14 The Vendors' Pension Scheme is a contracted-out scheme for the purposes
of the Social Security Pensions Act 1975 and has been administered in
accordance with the contracting-out requirements of Part II of that Act.
The Company [holds or is named in] a current contracting-out certificate
issued in relation to the Vendors' Pension Scheme and the Vendor is not
aware of any reason why the certificate should be withdrawn or the
Company's name removed
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14.15 There is set out in or annexed to the Disclosure Letter a statement of
the basis on which the Company has undertaken to contribute to each
scheme which has been disclosed and which is a Personal Pension Scheme
and the rate and the amount of the contributions in respect of each
member of such scheme made in the 3 year period ending on the date of
this agreement
14.16 No assurance promise or guarantee (whether oral or written) has been
made or given to any member of any disclosed scheme which is a Personal
Pension Scheme of any particular level or amount of benefits to be
provided for in respect of him under such disclosed scheme on retirement
death or leaving service. The Company may terminate any obligation it
may have to contribute to any such disclosed scheme being a Personal
Pension Scheme without incurring any liability to any member of such
scheme under any agreement or arrangement with the member
15 THE PROPERTIES
15.1 The Properties comprise all the freehold and leasehold properties owned
by the Company or occupied by it under licence or in which the Company
has any other interest
15.2 The Company has a good marketable and unassailable title to and has
vacant possession of each of the Properties
15.3 The Company is the legal and beneficial owner of each of the Properties
15.4 The information contained in Schedule 4 as to the tenure of each of the
Properties the principal terms of the leases or licences held by the
Company and the principal terms of the
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tenancies or licences subject to which the Properties are held is true
and accurate in all respects
15.5 Each of the Properties and their title deeds are free from any mortgage
charge rent charge lien incumbrance or other third party right whether
in the nature of security or otherwise
15.6 There is no option or agreement for sale mortgage charge (whether
specific or floating) lien lease agreement for lease condition
restrictive covenant or any other incumbrance in respect of the
Properties or any part of them (except as set out in Schedule 4) and the
Properties are not subject to the payment of any outgoings (except the
usual rents rates and taxes) nor are there any persons in unlawful
possession or occupation of or who have or claim any rights or easements
of any kind in respect of the Properties or any part of them adverse to
the estate interest right or title of the Company
15.7 The rent collected by the Company in respect of such part or parts of
the Properties as have been let will not exceed the rent legally payable
and recoverable under the terms and conditions of their letting and all
subsisting legislation and the tenants under the leases set out in
Schedule 4 have observed all covenants and conditions contained in
such leases and have not at any time been in breach of their terms
15.8 There are not in respect of the Properties or any part of them:
15.8:1 any outstanding notices or orders issued by or
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agreement with any local or other authority
15.8:2 any proceedings in respect of any infringement of the building
bye-laws or any monetary claim or liability (contingent or otherwise)
under Town & Country Planning legislation or regulations or otherwise
15.8:3 any enforcement or stop notice under the Town and Country
Planning legislation or relevant regulations or
15.8:4 any order or resolution for the compulsory acquisition of the
Properties or any part of them by any authority or any notice for
closing demolition clearance or requisition of the Properties and the
Vendors are not aware of any proposals in relation to any of the matters
referred to in this paragraph or any other circumstances known which
might result in any such order notice or proceedings being made or
served or which may otherwise affect any of the Properties
15.9 The Properties have been constructed for purposes permitted under the
provisions of the Town and Country Planning legislation orders and
regulations applicable to them and in accordance with the requirements
of the relevant local or other interested authorities which have been
fully complied with and the user or intended user of them is as of right
and/or the permitted user of them for the purposes of such legislation
orders and regulations and it is not likely to be adversely affected by
planning proposals nor is it other than the indicated primary use under
approved development plans for the relevant area in which the
Properties are situated
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15.10 The Company in whom title is vested:
15.10:1 has paid all rent insurance service charges and other outgoings
that may be payable in respect of the leasehold Properties and
15.10:2 has performed and observed all covenants (whether in relation
to freehold or leasehold land) conditions agreements statutory
requirements planning consents bye-laws orders and regulations affecting
the Properties and requiring observance or performance by it and no
notice of any breach of any such matters has been received
15.11 No structural or other material defects have appeared in respect of or
affected the buildings and structures on or comprising the Properties
any additions or fixtures annexed to or any part of the Properties and
all such buildings and structures are in good and substantial repair and
condition and the Company has incurred no liability for dilapidations in
respect of any leasehold Properties
15.12 In respect of all buildings comprised in the Properties to which any
enactment regulation or order relating to protection against or means
of escape from fire applies all requirements of such enactment
regulation or order and of any notice or order have been complied with
to the satisfaction of the district surveyor and other appropriate
officer and no order prohibiting the occupation of a building or part of
it has been made under such enactment regulation or order and no issue
of such notices or orders has been intimated to the Company
15.13 There is no other matter of which the Vendors are or ought
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to be aware on reasonable inquiry and which adversely affects the value
of the Properties or casts any doubt on the right or title of the
Company to them which should be revealed to a purchaser of the Shares of
the Company
15.14 Since the Accounting Date the Company has not acquired or disposed of
any land or buildings or any estate interest right or title in any land
or buildings
15.15 The Company has at all times complied with the Factories Act 1961 the
Public Health Acts 1875 to 1961 the Offices Shops and Railway Premises
Act 1963 the Control of Pollution Act 1974 and the Health and Safety at
Work etc Act 1974 and the Clean Air Act 1993
15.16 No high alumina cement, blue asbestos cement, wood wool formers, calcium
chloride or other deleterious material has been employed in the
construction or conversion of the Properties or any part of them or any
addition to them
15.17 The Company has not at any rime assigned or otherwise disposed of any
leasehold property of which it was first or subsequent lessee
15.18 All capital allowances rating reliefs and other benefits received by the
Company in respect of the Properties were granted pursuant to a proper
and valid claim and leave no scope for demand for recovery from the
Company
16 Environmental matters
16.1 No Environmental Authorisations are required to be in force or obtained
in connection with the Company's continued use of the Properties or the
conduct of its existing businesses or The Company has obtained the
Environmental
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Authorisations listed in Schedule 8 and true and complete copies of all
Environmental Authorisations held by the Company are contained in the
Disclosure Letter
16.2 The Environmental Authorisations constitute all the Environmental
Authorisations required under Environmental Legislation to be obtained
in connection with the use of the Properties or the conduct of the
Company's businesses
16.3 Each of the Environmental Authorisations held by the Company is in full
force and effect and no fees or charges are outstanding in respect of
them
16.4 No claim of any violation breach or infringement of Enviromnental
Legislation has been made against the Company
16.5 No proceeding or other action of whatever nature is pending or is
threatened or under consideration seeking the suspension revocation
enforcement prohibition variation or limitation of any Environmental
Authorisation or seeking to impose any penalty applicable under any
Environmental authorisation or related legislation
16.6 The continuing conduct of the businesses of the Company or use of the
Properties by the Company will not give rise to any claim proceeding or
action under any Environmental Legislation
16.7 There are no facts or circumstances nor have there been any 'substantial
changes' to a 'prescribed process' (as those terms are defined in the
Environmental Protection Act 1963) which will or are likely to result in
any of the Company's Environmental Authorisations being suspended
revoked varied or limited or which may prejudice their renewal
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16.8 No appeals are pending or being contemplated in respect of the refusal
of or conditions contained in any of the Company's Environmental
Authorisations or any action taken in respect of any Environmental
Authorisation
16.9 The Company has no reason to believe that those Environmental
Authorisations which have not yet been granted and are pending will not
be granted within a reasonable period of time
16.10 There has been and is no breach of any of the Environmental
Authorisations or Environmental Legislation
16.11 The existence and use of the Properties machinery and other property
employed in the conduct of the businesses of the Company has been and is
in accordance with the Environmental Authorisations and Environmental
Legislation
16.12 There are in relation to the businesses of the Company and/or the
Properties no past or present events conditions circumstances activities
practices incidents actions or plans which interfere with or prevent
compliance or which give rise to any common law or legal liability or
otherwise form the basis of any claim action suit proceeding hearing or
investigation related to matters arising under or pursuant to the
Environmental Legislation
16.13 There has been no spill discharge leak emission injection escape deposit
or release of any kind on the Properties or into the environment whether
from the Properties or otherwise of any substances material or waste
(whether solid liquid or gaseous) capable of causing harm to the health
of living organisms or the environment or other
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interference with the ecological systems of which living organisms form
part and in the case of man includes offence caused to any of his senses
or harm to his property related to the businesses of the Company other
than those releases permissible under the Environmental Authorisations
held by the Company or Environmental Legislation
16.14 There is not currently and there has not been on the Properties any spin
leakage discharge release or deposit (whether to water land sewage
systems or air or a combination of these) of any substance material or
waste (whether solid liquid or gaseous) which:
16.14:1 is capable of causing harm to the health of living organisms
or the environment or other interference with the ecological systems of
which living organisms form part and which in the case of man includes
offence caused to any of his senses or harm to his property or
16.14:2 which may inhibit or restrict or make materially more costly
any operation of the businesses of the Company or the occupation of or
redevelopment of the Properties or any part of them by reason of
contamination or otherwise
16.15 No notice order judgment demand or letter requiring the taking of
remedial or other action under or pursuant to the Environmental
Legislation has been served on or received by the Company
16.16 The Company has no indebtedness obligation or liability absolute or
contingent in respect of the Environmental Legislation with respect to
the storage treatment clean-up or disposal of any pollutant contaminant
substance material
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or waste (whether solid liquid or gaseous)
16.17 Neither the Company or the Properties nor the businesses of the Company
have been the subject of any environmental audit any evaluation
assessment study or test
17 Taxation
17.1 General
17.1:1 All returns computations and payments which should be or should
have been made by the Company for any fiscal purpose have been prepared
on a proper basis and submitted within the prescribed time limits and
are up-to-date and correct none of them is now the subject or likely to
be the subject of any dispute with the Inland Revenue and will not give
rise to any disallowance of relief allowance deduction or credit or any
assessment (including any claim by the Inland Revenue for any penalty
interest surcharge or fine) and no taxation authority has investigated
or indicated that it intends to investigate the tax affairs of the
Company
17.1:2 An Taxation liabilities of the Company including contingent and
deferred liabilities as at the Accounting Date are fully provided for in
the Audited Accounts
17.1:3 The books and records of the Company are up-to-date and contain
sufficient detail in appropriate form to enable the Taxation liability
of the Company to be established and to determine the Tax consequences
which would arise on any disposal or realisation of any asset owned at
the Accounting Date or acquired since that date but before Completion
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17.1:4 No event has occurred which will result in the Company becoming
liable to pay or to bear any Taxation which is primarily or directly
chargeable against or attributable to any person firm or company other
than the Company
17.1:5 The execution or completion of this agreement will not result in
any profit or gain being deemed to accrue to the Company for Taxation
purposes. [As at the Accounting Date the Company had available for
setting off against future income profits or gains reliefs aggregating
in total as detailed in the Disclosure Letter against the name of the
Company
17.1:6 All rents interest annual payments and other sums of an income
nature paid during or in respect of the 3 years ending on the Accounting
Date or payable by the Company or which the Company is under an
obligation to pay in the future are wholly allowable as deductions or
charges in computing profits for the purposes of corporation tax
17.1:7 The Company has not made any payment to or provided any benefit
for any officer or employee during the 3 years ended on the Accounting
Date which is not allowable as a deduction in calculating the profits of
the Company for Taxation purposes in the accounting period in which it
was paid
17.1:8 Since the Accounting Date the Company has not been involved in
any transaction which has given or may give rise to a liability to
Taxation on the Company (or would have given or might give rise to such
a liability but for
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the availability of any relief allowance deduction or credit) other than
corporation tax on normal trading income of the Company (and not
chargeable gains or deemed income) arising from transactions entered
into in the ordinary hours of business
17.1:9 Since the date of the last accounts which have been agreed with
the Inland Revenue the Company has not been engaged in any transaction
or arrangement in respect of which there may be substituted for the
consideration given or received by the Company a different consideration
for Taxation purposes
17.1:10The Company has not during the 3 years ending on the Accounting
Date made any claim under:
17.1:10.1 ICTA 1988 Section 242 (set-off of losses etc
against surplus franked investment income) or
17.1:10.2 FCTA 1988 Section 584 (relief for unrefundable
overseas income)
17.2 PAYE and other withholding tax
17.2:1 An income tax under the PAYE system and payments due in respect
of employees' contributions to National Insurance have been deducted
from all payments made or treated as made by the Company and (together
with any employer's contribution) have been duly paid by the Company to
the Inland Revenue in the appropriate manner and the Company has
complied with all its reporting obligations in connection with the
benefits provided for employees and directors of the Company
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17.2:2 All payments by the Company which ought to have been made under
deduction of Tax have been so made and the Company has (if required by
law to do so) accounted to the Inland Revenue for the Tax so deducted
including in particular any under the tax deduction scheme contained in
ICTA 1988 Part XIII Chapter IV (sub-contractors in the construction
industry)
17.3 Financing
17.3:1 The Company has not at any time after 5 April 1965 repaid or
agreed to repay or redeemed or agreed to redeem or purchased or agreed
to purchase any shares of any class of its issued share capital
17.3:2 The Company has not at any time after 5 April 1965 capitalised or
agreed to capitalise in the form of shares or debentures any profits or
reserves of any class or description or passed or agreed to pass any
resolution to do so
17.3:3 No securities (within the meaning of ICTA 1988 Section 254(1))
issued by the Company and remaining in issue at the date of this
agreement were issued in circumstances such that the interest payable
on them falls to be treated as a distribution under ICTA 1988 Section
209(2)(d) and (e)
17.3:4 The Company has not made or received any distribution which is an
exempt distribution within ICTA 1988 Sections 213-218 (demergers)
17.3:5 The Company has not received any capital distribution to which
the provisions of ICTA 1988 Section
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346 (capital distribution of chargeable gains recovery of tax from
shareholders) could apply
17.3:6 The Company has not issued any shares to which the provisions of
ICTA 1988 Sections 249-251 and 254 (scrip dividends) could apply nor
does the Company own any such shares
17.3:7 The Company has not since the Accounting Date made any payment
which is or will be treated as a distribution for Taxation purposes
17.4 Groups
17.4:1 The Disclosure Letter contains particulars of all elections made
by the Company under ICTA 1988 Section 247 (group dividends and
interest) and all such elections are now in force or The Company has not
made or purported to make any elections under ICTA 1988 Section 247
(group dividends and interest) and the Company has not paid any dividend
without paying advance corporation tax or made any payment without
deduction of income tax in the circumstances specified in Section 247(4)
of that Act
17.4:2 The Disclosure Letter contains particulars of all arrangements
and agreements relating to group relief (as defined by ICTA 1988 Section
402) to which the Company is or has been or becomes before Completion a
party and
17.4:2.1 all claims by the Company for group relief were
when made and are now valid and have been or will
be allowed by way of relief from corporation tax
17.4:2.2 the Company has not made nor is liable to
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make nor will before Completion become liable to
make any payments under any such arrangement or
agreement save in consideration for the surrender
of group relief allowable to the Company by way of
relief from corporation tax and
17.4:2.3 the Company has received all payments due to it
under any such arrangement or agreement for
surrender of group relief made by it or The Company
has not received or surrendered nor purported to
receive or surrender any group relief (as defined
in ICTA 1988 Section 402)
17.4:3 The Disclosure Letter contains particulars of all arrangements
and agreements to which the Company is or has been or will before
Completion become a party relating to the surrender of advance
corporation tax made or received by the Company under ICTA 1988 Section
240 and:
17.4:3.1 the Company has not paid nor is liable to pay for
the benefit of any advance corporation tax save in
consideration for such surrender which has been or
will be set-off against the Company's liability to
corporation tax and
17.4:3.2 the Company has received all payments due to it
under any such arrangement or agreement for all
surrenders of advance corporation tax made by it or
The Company has neither
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made nor received nor purported to make or receive
any surrender of the benefit of advance corporation
tax under ICTA 1988 Section 2401
17.4:4 No shares owned by the Company are held as trading
stock
17.5 Close company provisions
The Company is not nor has it been in respect of any accounting period ended
within the 6 years prior to the Accounting Date a close company within the
meaning of ICTA 1988 Section 414
or
17.5:1 Accounts (together with reports of the directors) in respect of
all accounting periods ended within the 6 years ending on the date of
this agreement have been transmitted to the Company's Inspector of Taxes
pursuant to ICTA 1988 Schedule 19 Paragraph 16 together with the
additional information thereby required and the Inspector of Taxes has
either intimated that he proposes to make no apportionment in respect of
any such period or has failed within 3 months of any such transmission
to notify his intention to make an apportionment
17.5:2 The information and particulars supplied to the Inspector of
Taxes under the said Paragraph 16 were such as to make full and accurate
disclosure of all facts and considerations which were material to be
known by him in respect of any such transmission
or
No apportionment within ICTA 1988 Section 423 has ever been
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made or threatened against the Company nor are any facts or
circumstances known to the Vendors which indicate that any such
apportionment is likely or
17.5:1 The Company has at all times up to exchange of this agreement
been a 'trading company' or a 'member of a trading group' as defined in
ICTA 1988 Schedule 19 Paragraph 7
17.5:2 The Company is not and never has been a close investment holding
company as defined in ICTA 1988 Section 13A
17.5:3 No loan or advance within ICTA 1988 Section 419 has ever been
made by the Company nor has the Company released or written off or
agreed to release or write off the whole or any part of any such loan or
advance
17.5:4 The Company does not have any interest whether direct or
indirect in any company on the disposal of the assets of which a
liability could arise under TCGA 1992 Section 13 (non-resident company
which would be close if resident)
17.6 Capital gains tax
17.6:1 If each of the capital assets of the Company were disposed of
for a consideration equal to the book value of that asset in or adopted
for the purpose of the Audited Accounts no liability to corporation tax
on chargeable gains would arise by reason of any such disposal
17.6:2 Full details of all assets currently owned by the Company in
relation to which any charge to Tax might at any time within the next 6
years arise under TCGA 1992 Sections
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178-181 (company ceasing to be member of a group):
17.6:2.1 on the sale of the Company pursuant to this
agreement or
17.6:2.2 on the sale of any company which is at the date of
this agreement a subsidiary of the Company are
(together with the current allowable expenditure in
relation to each of such assets) set out in the
Disclosure Letter
17.6:3 The Company does not own any shares or securities acquired as a
'new holding' under the provisions of TCGA 1992 Sections 126-130 as
extended by TCGA 1992 Sections 132, 135 and 136
17.6:4 The Company has not made any such election as is referred to in
TCGA 1992 Section 35(5) (31 March 1982 rebasing)
17.6:5 The Company has not engaged in any transactions which may
hereafter result in an adjustment being made under TCGA 1992 Sections
29, 30, 31, 32, 33 or 34 of the consideration received on any future
disposal (value shifting)
17.6:6 On any disposal by the Company of shares in any of its
subsidiaries the relevant allowable base cost for capital gains purposes
will not be reduced by virtue of TCGA 1992 Sections 182-184 (removal
or restriction of indexation allowance in certain circumstances)
17.6:7 The Company has not made a claim or election under any of the
following:
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17.6:7.1 TCGA 1992 Section 279 (foreign assets delayed
remittance) 23 (capital sums compensation and
insurance money) 24 (assets lost or destroyed or
whose value becomes negligible) or 48
(consideration due after time of disposal)
17.6:7.2 TCGA 1992 Section 242 (small part disposals) 243
(disposal of authority with compulsory purchase
powers) 244 (part disposal consideration exceeding
allowable expenditure) 247 (roll-over on compulsory
acquisition) 152 or 153 (roll-over on replacement
of business assets) or 161(3) (appropriation to
trading stock) nor has any claim under those
sections been made by any other company so as to
affect the base cost of any of the Company's assets
for the purpose of calculating chargeable gains
17.6:8 The Company is not entitled to any capital loss to which TCGA
1992 Section 18(3) applies (transactions between connected persons)
17.6:9 The Company has not acquired benefits under any policy of
assurance otherwise than as original beneficial owner
17.6:10 No gain chargeable to corporation tax will accrue to the
Company on the disposal of any debt owing to the Company
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<PAGE> 111
17.7 CAPITAL ALLOWANCES
17.7:1 The book value of each of the assets of the Company in or
adopted for the purpose of the Audited Accounts does not exceed the
written down value of such asset for the purposes of the CAA 1990
17.7:1.1 No restrictions under the CAA 1990 Sections 5, 75
and 76 are applicable. No balancing charge
pursuant to the CAA 1990 Sections 24 and 34-36 or
otherwise will be made on the Company on any
disposal of any or all such assets for a
consideration equal to or less than the value of
such asset or assets in the Audited Accounts
17.7:1.2 No transaction has been entered into by virtue of
which the CAA 1990 Sections 75 or 157 is applicable
17.7:2 None of the assets for which a capital allowance has been or is
capable of being made to the Company has been disposed of or ceased to
be used for the purpose of its trade since the Accounting Date
17.7:3 None of the assets expenditure on which has qualified for a
capital allowance under the CAA 1990 Part 1 Chapters 1 or II (industrial
buildings) has at any time since such expenditure was incurred been used
otherwise than as an industrial building or structure as defined in the
CAA 1990 Section 18
17.8 VALUE ADDED TAX
17.8:1 For the purposes of this paragraph 'the VAT legislation' means
VATA 1994 and all regulations made or
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imposed under it and any other statutes or other provisions relating to
VAT
17.8:2 The Company is registered as a taxable person for the purposes
of the VAT legislation
17.8:3 The Company has complied in all respects with the VAT
legislation and has made and maintained full complete correct and up-
to-date records invoices and other documents appropriate or requisite
for the purposes of such legislation
17.8:4 The Company is not in arrears with any payment or returns due
under the VAT legislation and has not in the past 3 years been in
default in respect of any accounting period as the terms 'default' and
'accounting period' are used in the Finance Act 1985 Section 19(1) (the
default surcharge) nor has it received any warning within Section 21 (1
A) of that Act
17.8:5 The Company is not liable to any abnormal or non-routine
payment of VAT or to any forfeiture or penalty or to the operation of
any penal provision and has not been required by the Commissioners of
Customs & Excise to give security
17.8:6 All transactions by and between members of the Company's Group
have been made in accordance with a valid VAT group election and the
Company will not be required to make good any default by any other
member of such Group in relation to VAT
17.8:7 The Company is not and will not become liable for VAT by virtue
of VATA 1994 Section 47 (agent manager or
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factor of any person who is not resident in the United Kingdom)
17.8:8 The Company has not been partially exempt for any VAT
accounting period at any time in the 5 years prior to Completion and
will not in respect of supplies invoiced to it prior to Completion be
denied credit for any input tax
17.8:9 Neither the Company nor any company of which the Company is a
relevant associate within the meaning of VATA 1994 Schedule 10 Paragraph
3(7)(election to waive exemption) has elected to waive exemption under
Paragraph 2 of that Schedule in relation to any land except as disclosed
in the Disclosure Letter and any such elections have effect
17.8:10 No notice has been received by the Company and the Company is
not aware of anything which indicates that the grant to the Company of
any interest in or right over land or of any licence to occupy land is
and will continue to be other than an exempt supply
17.8:11 The Company owns no assets which are treated as capital items
the input tax on which may be subject to adjustment in accordance with
the VAT capital goods scheme
17.8:12 The Company has not during the last 10 years acquired any
assets in circumstances described in VATA 1994 Section 44(1) (transfer
of business as a going concern)
17.9 Stamp duty
All documents in the possession or under the control of the Company to which it
has been a party and which attract stamp duty or stamp duty reserve tax have
been properly stamped. No
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<PAGE> 114
documents are presently subject to adjudication of claims for exemption or
relief and there are no circumstances which may result in the Company becoming
liable for any interest or penalties
17.10 Anti-avoidance
17.10:1 All particulars furnished to the Inland Revenue and its response
in connection with any application for any consent or clearance on
behalf of the Company under any of the following provisions:
TCGA 1992 Section 139 (company reconstruction transfer of assets)
TCGA 1992 Sections 135 and 136 (company reconstructions)
ICTA 1988 Sections 703-709 (transactions in securities) and
ICTA 1988 Section 776 (transactions in land)
17.10:1.1 are included in the Disclosure Letter
17.10:1.2 fully and accurately disclosed all facts and
circumstances material to the decision of the
Inland Revenue and:
17.10:1.2:1 any such consent or clearance as was given is valid
and effective and
17.10:1.2:2 any transaction for which such consent or clearance
has previously been obtained has been carried into
effect (if at all) only in accordance with the
terms of the relevant application and consent or
clearance
17.10:2 The Company has not in the 6 years preceding the date of this
agreement been a party to any transaction in respect of which the
Company its officers directors or
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<PAGE> 115
advisers considered that there was a risk that the Company could be
liable to Taxation:
17.10:2.1 under the provisions of ICTA 1988 Part XVII
(anti-avoidance) or
17.10:2.2 as a result of the principles enunciated by the
House of Lords in Furniss (Inspector of Taxes) v
Dawson' and concluded that such a risk was too
remote to make provision for it in the relevant
accounts of the Company
17.10:3 The Company has not been a party to or otherwise involved in any
transaction scheme or arrangement to which any of the following
provisions could apply:
17.10:3.1 ICTA 1988 Sections 116 (partnerships involving
companies) 395 (leasing contracts and company
reconstructions) 404 (group relief dual resident
companies) and 41 0 (group relief 'arrangements')
17.10:3.2 ICTA 1988 Section 240(1 1) (ACT surrender
'arrangements') and
17.10:3.3 ICTA 1988 Section 399 (dealings in commodity
futures)
17.10:4 The Company has not without the prior consent of HM Treasury
caused permitted or entered into any of the transactions specified in
ICTA 1988 Section 765 (migration etc of companies)
17.10:5 The Company does not have and never has had any interest in a
controlled foreign company as defined in ICTA 1988 Section 747
115
<PAGE> 116
17.11 Inheritance tax
17.11:1 The Company has made no transfer of value within the IHTA 1984
Sections 94 or 99
17.11:2 No person has the power under the IHTA 1984 Section 212 to raise
any capital transfer tax or inheritance tax by the sale of or charge
over any of the Company's assets
17.11:3 There is no unsatisfied liability to capital transfer tax or
inheritance tax attached or attributable to the assets of the Company or
the shares of the Company and neither the assets nor the Shares are
subject to any Inland Revenue charge as is mentioned in the IHTA 1984
Section 237
18 Vendors' interests
18.1 No Vendor or Associate or person connected with any Vendor has any
interest (direct or indirect) in any other company or business which
competes or has competed or is in the future likely to compete or has a
close trading relationship with any business now carried on by the
Company or intends to acquire any such interest
18.2 No indebtedness (actual or contingent) and no contract or arrangement is
outstanding between the Company and any Vendor or director of the
Company or any person connected with any Vendor or such director or in
which any Vendor or director or persons connected with them are or may
be interested (directly or indirectly)
18.3 No person is entitled to receive from the Company any finder's fees
brokerage or other commission in connection with the sale and purchase
of the Shares under this agreement
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<PAGE> 117
18.4 There is not now outstanding and there has not at any time during the
past 3 years been outstanding any contract or arrangement to which the
Company is a party and in which any Vendor or any director of the
Company is or has been interested whether directly or indirectly
18.5 The Company is not a party to nor has its profits or financial position
during the past 3 years been affected by any contract or arrangement
which was not of an entirely arm's length nature
19 Good standing
19.1 No receiver administrative receiver or administrator has been appointed
nor any notice given petition presented or order made for the
appointment of any such person over the whole or any part of the assets
or undertaking of the company or any of the Vendors
19.2 No petition has been presented no order has been made and no resolution
has been passed for the winding up of the Company or for the appointment
of a liquidator or provisional liquidator of the Company
19.3 No voluntary arrangement has been proposed or is in force under the
Insolvency Act 1986 Section 1 in respect of the Company
19.4 The Company has not stopped payment nor is it insolvent or unable to pay
its debts as and when they fall due
19.5 No unsatisfied judgment is outstanding against the Company and no demand
has been served on the Company under the Insolvency Act 1986 Section
123(1)(a)
19.6 No distress execution or other process has been levied in
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<PAGE> 118
respect of the Company which remains undischarged nor is there any
unfulfilled or unsatisfied judgment or court order outstanding against
the Company
19.7 There are not pending or in existence any investigations or inquiries by
or on behalf of any governmental or other body in respect of the affairs
of the Company
19.8 None of the activities or contracts or rights of the Company is ultra
vires unauthorised invalid or unenforceable or in breach of any contract
or covenant
19.9 The Company has at all times carried on business and conducted its
affairs in all respects in accordance with its memorandum and articles
of association for the time being in force and any other documents to
which it is or has been a party
19.10 The Company is empowered and duly qualified to carry on business in all
jurisdictions in which it now carries on business
20 The Subsidiaries
None of the Subsidiaries:
20.1 has ever traded or is currently trading
20.2 owns or holds (whether or not in a nominee capacity) any assets (other
than cash in respect of amounts contributed by way of paid up share
capital)
20.3 has or has ever had any liabilities of any nature whatever whether
actual or contingent or otherwise and including any of a Taxation nature
20.4 has or has ever had any employees or is under any actual or contingent
liability to any former employee
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21 Miscellaneous
21.1 The Company does not carry on or have a place of business at any branch
or other location (whether in the United Kingdom or elsewhere) other
than at and from the Properties
21.2 All title deeds and agreements to which the Company is a party and any
other documents in the enforcement of which the Company is interested
have been duly stamped and all such deeds and documents owned by or
which ought to be in the possession of the Company are in the possession
of the Company
21.3 All information contained in the Disclosure Letter and all information
or documents concerning the Company supplied in writing to the Purchaser
its Solicitors or accountants by the Company or the Vendors or its or
their agents during the course of negotiations leading to execution of
this agreement was when given true accurate and complete in all material
respects and there is no fact or matter which has not been disclosed in
writing which renders any such information or documents untrue or
misleading at the date of this agreement or which on the basis of the
utmost good faith ought to be disclosed to an intending purchaser of the
Shares
21.4 The Vendors have not procured or permitted any act or omission prior to
Completion which would render untrue or inaccurate as at Completion [the
Disclosure Letter or] any Warranties
21.5 There are fully and accurately disclosed in the Disclosure Letter all
matters which:
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<PAGE> 120
21.5:1 are necessary to qualify the statements set out in this schedule
in order for such statements when so qualified to be fair accurate and
not misleading
21.5:2 which might materially and adversely affect the future value of
the Shares
21.5:3 which would otherwise materially affect the decision of a
purchaser to purchase the Shares on the terms of this agreement
21.6 References in the preceding paragraphs of this schedule to 'the Company'
shall be construed as a reference to the Company and each Group Company
to the intent that each of the foregoing paragraphs of this schedule
shall have effect as if in relation to each Group Company the respective
name of that Group Company was substituted for references to 'the
Company'
SCHEDULE 7
Pension Provisions
To be included in the Disclosure Letter
SCHEDULE 8
Environmental Authorisations
To be included in the Disclosure Letter
SCHEDULE 9
Vendors' Protection provisions
1. The liability of the Vendors in relation to the Vendors' Warranties
shall cease on the nine month anniversary of the Completion Date save as
regards any alleged specific breach of which notice in writing
(containing details of the event or circumstance giving rise to the
breach the basis upon which the Purchaser is making a claim
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against the Vendors and the total amount of liability which results) has
been given to the Vendors prior to that anniversary.
2. The Vendors shall not be liable for any Warranty Claim unless their
aggregate liability (or what would be their liability apart from this
paragraph) exceeds L.100,000.
3. The total liability of the Vendors under the Vendors' Warranties and the
Deed of Indemnity shall not in any event exceed the cash consideration
paid under clause 5.1.1(a).
4. In the event of any Warranty Claim being established the Vendors shall
be entitled to set off against the amount of any depletion in or
reduction in the value of the assets of the Company giving rise to the
Claim the amount by which (after adjustment where appropriate for
Taxation in respect of revenue items) the position of the Company (taken
as a whole) in respect of any other matter is established to be better
than as warranted (after adjustments where appropriate for Taxation).
5. If the Purchaser and the Company or any of them are entitled to make a
claim in respect of any act event or default both under the Vendors'
Warranties and under the Deed of Indemnity the claim shall be made first
under the Vendors' Warranties and any amount payable to the Purchaser or
the Company under the Deed of Indemnity shall be reduced to the extent
of the claim.
Signed by the said
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EXECUTED AND DELIVERED as a Deed )
by the said RON IAN KLIENE ) /s/ RON IAN KLIENE
in the presence of:- )
Witness: Julie Peck
Address: 55 Headlands
Kettering
Northants
Occupation: Solicitor
EXECUTED AND DELIVERED as a Deed )
by the said JOY YVONNE KLIENE ) /s/ JOY YVONNE KLIENE
in the presence of:- )
Witness: Julie Peck
Address: 55 Headlands
Kettering
Northants
Occupation: Solicitor
EXECUTED AND DELIVERED as a Deed )
by the said JOHN STUART KLIENE ) /s/ JOHN STUART KLIENE
in the presence of:- )
Witness: Julie Peck
Address: 55 Headlands
Kettering
Northants
Occupation: Solicitor
EXECUTED AND DELIVERED as a Deed )
by the said VALERIE EVELYN KLIENE ) /s/ VALERIE EVELYN KLIENE
in the presence of:- )
Witness: Julie Peck
Address: 55 Headlands
Kettering
Northants
Occupation: Solicitor
EXECUTED AND DELIVERED as a Deed )
by the said TREVOR RICHARD BROWN ) /s/ TREVOR RICHARD BROWN
in the presence of:- )
Witness: Julie Peck
Address: 55 Headlands
Kettering
Northants
Occupation: Solicitor
EXECUTED AND DELIVERED as a Deed )
by the said JENNIFER ANN BROWN ) /s/ JENNIFER ANN BROWN
in the presence of:- )
Witness: Julie Peck
Address: 55 Headlands
Kettering
Northants
Occupation: Solicitor
)
EXECUTED AND DELIVERED as a Deed ) /s/ R. KLIENE
by the said ROTEC CHEMICALS LIMITED ) /s/ J. KLIENE
acting by a Director and the Secretary )
or two Directors
R. Kliene
Director
Director/Secretary J. Kliene
EXECUTED AND DELIVERED as a Deed )
by ASHER OSCAR PACHOLDER ) /s/ ASHER OSCAR PACHOLDER
duly authorised signature of the said )
ICO INC
