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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): September 27, 1996
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ERC Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-14439 76-0382879
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(Commission File Number) (IRS Employer Identification No.)
15835 Park Ten Place, Suite 115, Houston, Texas 77084
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 398-8901
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. Acquisition or Disposition of Assets.
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On September 27, 1996, ERC Industries, Inc., a Delaware corporation (the
"Purchaser"), acquired 100% of the issued and outstanding capital shares of
Seaboard Lloyd Limited (the "Company"), a private company incorporated in
Scotland under the Companies Acts of the United Kingdom. The Purchaser acquired
the shares of the Company from VSEL Limited, a company incorporated in England
under the Companies Acts of the United Kingdom (the "Seller") in a privately
negotiated transaction. The acquisition was concluded pursuant to the terms of
a Share Sale and Purchase Agreement dated September 27, 1996 (the "Purchase
Agreement"), by and between the Purchaser and Seller.
The business of the Company and its subsidiaries has been the manufacture,
supply, repair, maintenance and refurbishment of wellheads, xmas trees, gate
valves, choke valves, clamped pipe connectors, actuators, electric feed through
systems for downhole pumps and subsea ball and check valves, all as used in the
oil and gas industry (the "Business"). The Company's Business is operated in
facilities located in Cumbernauld, Scotland. The Purchaser plans to continue to
operate the Business of the Company in substantially the same manner as it was
operated prior to the acquisition.
The Purchaser paid the Seller a purchase price of $1,580,000 cash for the
capital shares of the Company. The source of the funds for the purchase was
approximately $1,080,000 in cash on hand and $500,000 borrowed under its
existing line of credit with a major bank. The line of credit is in place until
June 1997, and borrowings under the line of credit bear interest at the bank's
prime rate minus one-half percent. Current borrowings under the line of credit
are $700,000.00. The line of credit is collateralized by trade accounts
receivable and inventory, and the terms of the line of credit restrict the
Purchaser from paying cash dividends.
The Seller also agreed, for a period of twenty-four months from the closing
date, and subject certain exceptions, not to compete with the Company in the
Business. The Purchaser intends to account for the transaction as a purchase.
ITEM 7. Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired:
AT THIS TIME IT IS IMPRACTICABLE TO PROVIDE THE REQUIRED CONSOLIDATED
FINANCIAL STATEMENTS FOR THE COMPANY; THEREFORE, THE REQUIRED FINANCIAL
STATEMENTS WILL BE FILED WITH THE COMMISSION NO LATER THAN DECEMBER 12, 1996.
Page 2 of 4 Pages
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(b) Pro forma Financial Information:
AT THIS TIME IT IS IMPRACTICABLE TO PROVIDE THE REQUIRED PROFORMA FINANCIAL
INFORMATION REQUIRED PURSUANT TO ARTICLE 11 OF REGULATION S-X; THEREFORE, ALL
REQUIRED PROFORMA FINANCIAL INFORMATION WILL BE FILED WITH THE COMMISSION NO
LATER THAN DECEMBER 12, 1996.
(c) Exhibits:
10.1 Purchase Agreement
Page 3 of 4 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ERC Industries, Inc.
By:____________________________________________
Wendell R. Brooks
President and Chief Executive Officer
Date: November 11, 1996
Page 4 of 4 Pages
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SHARE SALE AND PURCHASE AGREEMENT
PARTIES:--
(1) VSEL LIMITED a company incorporated in England under the Companies Acts of
the United Kingdom (Company Number 1957765) and having its registered office
at Barrow-in-Furness, Cumbria, LA14 1AF ("the Vendor") (further referred to
in Part 1 of the Schedule).
(2) ERC INDUSTRIES, INC. a company incorporated in the United States of America
under the laws of the State of Delaware and having its principal place of
business at 15835 Park Ten Place, Suite 115, Houston, Texas, United States
of America ("the Purchaser").
RECITALS:--
(A) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
entire issued share capital of Seaboard Lloyd Limited, a private company
incorporated in Scotland under the Companies Acts of the United Kingdom
(Company Number SC106505) brief details of which are set out in Part 2 of
the Schedule ("the Company"); and
(B) The Vendor and the Purchaser wish to record the terms of their agreement in
writing.
OPERATIVE PROVISIONS:--
1. INTERPRETATION AND DEFINITIONS
1.1 In this Agreement the following words and expressions shall have the
following meanings:--
"Accounts" means the audited profit and loss accounts of the Company and the
Subsidiaries for the year ended 31st March 1996 and audited balance sheet of
the Company and the Subsidiaries as at 31st March 1996;
"Associate" means any spouse, brother, sister or linear ascendant or
descendant of an individual and any company which is directly or indirectly
controlled (within the meaning of Section 840 of ICTA) by one or more of the
foregoing;
"Affiliate" means any (i) subsidiary, subsidiary undertaking or holding
company of a company and (ii) any other subsidiary or subsidiary undertaking
of such holding company, but excluding (in respect of the Vendor) in each
case the Company and the Subsidiaries;
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"Bank Guarantee" means the guarantee granted by the Vendor in favour of National
Westminster Bank plc on 6 October 1992;
"Business Day" means any day other than a day which is (i) a Saturday or Sunday
(ii) a bank holiday in Scotland or England or (iii) a public holiday throughout
Scotland or throughout England;
"Claim" means any claim in respect of any breach of Warranty or claim made under
the indemnity set out in Clause 7.1, or claim under the Tax Covenant;
"CAA" means the Capital Allowances Act 1990;
"CA" means the Companies Act 1985;
"Companies Acts" means the Companies Acts 1985 and 1989 of the United Kingdom;
"Completion" means completion of the sale and purchase of the Sale Shares in
accordance with Clause 4 and "Completion Date" has the meaning set down in
Clause 4.1;
"Customer Claim" means any claim made by any customer of the Company against the
Company for breach of contract, negligence or breach of statutory duty or made
under any warranty, guarantee or indemnity granted by the Company to the
customer, where the relevant act or omission occurred prior to the Completion
Date;
"Disclosure Letter" means a letter from the Vendor to the Purchaser setting out
exceptions to the Warranties dated the same date of execution of this Agreement
and accepted by the Purchaser including the Schedule thereto;
"FA" followed by a year means the Finance Act of the year in question;
"FRS" means Financial Reporting Standard;
"FSA" means the Financial Services Act 1986;
"Group Companies" means the Company and the Subsidiaries and "Group Company"
shall be construed accordingly;
"Heritable Property" means 2 Old Quarry Road, Westfield, Cumbernauld which is
referred to in Part 7 of the Schedule;
"Intellectual Property Rights" means patents, patent applications, trade marks,
trade names, copyright and design rights
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"Intra-Group Guarantees" means the Bank Guarantee and the Performance
Guarantees;
"ICTA" means the Income and Corporation Taxes Act 1988;
"IHTA" means the Inheritance Tax Act 1984;
"Last Accounts Date" means 1st March, 1996;
"Leasehold Property" means the three properties held on leasehold by the Company
which are referred to in Part 7 of the Schedule;
"Performance Guarantees" means the guarantees or indemnities granted by the
Vendor in relation to the obligations of the Company details of which are set
out in Part 8 of the Schedule;
"Properties" means the Heritable Property and the Leasehold Properties;
"Relevant Employee" means any past or present employee or officer of the Company
or the Subsidiaries;
"Sale Shares" has the meaning set down in Clause 2.1;
"Scheme A" means the Legal & General pension scheme operated for the benefit of
C Hart;
"Scheme B" means the Legal & General pension scheme operated for the benefit of
S McCulloch;
"Scheme C" means the Legal & General pension scheme operated for the benefit of
K A W Taggart;
"Subsidiaries" means the subsidiary companies of the Company details of which
are set out in Part 2 of the Schedule;
"SSAP" means Statement of Standard Accounting Practice;
"Tax Covenant" means the covenant set out in Part 6 of the Schedule;
"Taxation" has the meaning given to it in the Tax Covenant;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"TMA" means the Taxes Management Act 1970;
"VATA" means the Value Added Tax Act 1994;
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"Warranties" means the warranties given by the Vendor to the Purchaser in
terms of Clause 6.1 and in Parts 4 and 5 of the Schedule;
"Woodside Petroleum Claim" means the claim made by Woodside Petroleum (W.A.
Oil) Pty Limited on 16th August 1995 against the Company; and
"in the agreed terms" means in the form of an agreed draft initialled or
signed for identification purposes by the parties hereto.
1.2. In this Agreement, unless otherwise specified or the context otherwise
requires:--
1.2.1. reference to the Agreement shall include the recitals and any
schedules to this Agreement;
1.2.2. reference to a Clause is to a clause of this Agreement;
1.2.3. reference to a Schedule is to a schedule to this Agreement;
1.2.4. reference to a Paragraph is to a paragraph in the relevant Schedule;
1.2.5. words importing any gender shall include the other genders;
1.2.6. words importing natural persons shall include corporations and vice
versa;
1.2.7. words importing the singular only shall include the plural and vice
versa;
1.2.8. any word or expression the definition of which is contained or
referred to in CA, FSA, TMA or ICTA shall have the same meaning as
set out in that definition (the definition to prevail being that
contained in the statute appearing first in the foregoing list where
the same word or expression is defined in more than one of these
statutes);
1.2.9. reference to any statute, regulation, directive, treaty or part
thereof shall be construed as reference thereto as amended or re-
enacted prior to the date hereof for the time being in force, shall
(where the context requires and so far as liability thereunder may
exist) be construed as including references to any provision of
which they are re-enactments and shall be construed as including
references to any order, instrument, regulation or other subordinate
legislation made pursuant thereto prior to the date hereof.
1.3. In construing this Agreement the ejusdem generis rule shall not apply and
accordingly the interpretation of general words shall not be restricted by
being preceded by words indicating a particular class of acts, matters or
things or being followed by particular examples.
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1.4. In the Agreement the headings to Clauses and Paragraphs are included for
convenience only and shall not affect the construction of this Agreement.
2. SALE AND PURCHASE
2.1 Subject to the terms of this Agreement the Vendor shall sell, and the
Purchaser, relying on the Warranties, the indemnity given in Clause 7.1,
the Tax Covenant and also relying on the provisions regarding the
protection of goodwill set down in Clause 8 shall purchase the 2,810,000
Ordinary Shares of (POUNDS)1.00 each in the Company in issue ("the Sale
Shares"), which shares together comprise the entire issued share capital of
the Company.
2.2 The Sale Shares shall be sold with all rights attached thereto at
Completion.
2.3 The Purchaser shall not be obliged to complete the purchase of any of the
Sale Shares unless the purchase of all of the Sale Shares is completed
simultaneously but completion of the purchase of some of the Sale Shares
shall not affect the rights of the Purchaser with respect to the others.
3. CONSIDERATION
3.1 The consideration payable for the Sale Shares shall be ONE MILLION POUNDS
((POUNDS)1,000,000.00) STERLING in aggregate which shall be divided equally
amongst the Sale Shares.
3.2 If any payment is made by the Vendor to the Purchaser or vice versa
pursuant to a Claim made by the Purchaser or the Vendor pursuant to this
Agreement, the payment shall so far as possible be made by way of reduction
of or, as the case may be, addition to the consideration paid for the
Shares and that consideration shall accordingly be deemed to have been
adjusted by the amount of such payment.
4. COMPLETION
4.1 Completion of the sale and purchase of the Sale Shares shall take place at
1 Stanhope Gate, London, W1A 1EH immediately after the signing of this
Agreement.
4.2 The provisions of Part 3 of the Schedule set out the detailed arrangements
for Completion and shall apply hereto as if they were incorporated herein.
4.3 At or prior to Completion, the Vendor shall take all reasonable steps to
ensure that Craig Hart (the present Sales and Marketing Director of the
Company who is employed by the Vendor and whose services are provided to
the Company by the Vendor) delivers to the Purchaser a letter in the agreed
terms in terms of which he agrees to the transfer of his employment from
the Vendor to the Company.
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4.4 At or prior to Completion the Vendor shall ensure that Neil MacDonald (the
present Chairman of the Company) executes and delivers to the Purchaser a
Letter of Conformation confirming that he has no claims against the Company
or the Subsidiaries.
4.5. At Completion the Purchaser shall, subject to compliance by the Vendor with
the obligations incumbent on them in Paragraphs 3.1 to 3.4 of the Schedule,
transfer to a bank account nominated by the Vendor by way of electronic
transfer of funds the sum of (POUNDS)1,000,000.
4.6. The Purchaser shall not be entitled to rescind this Agreement after
Completion.
5 DISCHARGE OF GUARANTEES
5.1. At, or with the Vendor's consent following, Completion the Purchaser
undertakes to the Vendor to use its best endeavours to obtain the release
of the Vendor and its Affiliates from the Intra-Group Guarantees (obtaining
comparable guarantees from the Purchaser if required) and, pending such
release, to indemnify and keep indemnified the Vendor and its Affiliates
against all amounts paid by it to any third party pursuant to the Intra-
Group Guarantees in respect of any liability of any Group Company (and all
costs incurred in connection with such liability) whether arising before or
after Completion.
6. WARRANTIES BY THE VENDOR
6.1 The Vendor warrants to the Purchaser that:--
6.1.1 the Vendor has full power and authority to enter into and perform
this Agreement which constitute binding obligations on it in
accordance with its terms subject to the operation of law as
regards the availability of equitable remedies and matters of
public policy and the application of the relevant statutory
provisions including those regarding insolvency, limitation periods
and competition matters;
6.1.2 the Sale Shares constitute the whole of the issued and allotted
share capital of the Company and are fully paid or credited as
fully paid;
6.1.3 there is not any pledge, option, lien, charge or other encumbrance
on, over or affecting the Sale Shares and there is no agreement or
arrangement to give or create any such encumbrance and no claim has
been made by any person to be entitled to any of the foregoing;
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6.1.4. the Vendor will be entitled to transfer the full legal and
beneficial ownership of the Sale Shares to the Purchaser on the
terms of this Agreement without the consent of any third party;
6.1.5. the Subsidiaries listed in Part 2 of the Schedule are all the
present Subsidiaries of the Company;
6.1.6. the information in Part 2 of the Schedule relating to the Company
and the Subsidiaries is true, accurate and complete in all respect;
6.1.7. the Company is the sole beneficial owner of the shares in the
Subsidiaries of the Company listed in Part 2 of the Schedule free
from any pledge, option, lien, charge or other encumbrance.
6.2. The Vendor further warrants to the Purchaser that subject as provided in
this Agreement and save as fairly disclosed in the Disclosure Letter, or
any matter expressly provided for under this Agreement and subject to any
matters done or omitted to be done prior to the date hereof at the written
request of the Purchaser, the Warranties are true and accurate in all
respects as at the date hereof;
6.3. The Provisions of Part 9 of the Schedule shall apply as if they were
incorporated herein
7. INDEMNITY BY THE VENDOR
7.1. The Vendor hereby undertakes to the Purchaser and the Company to hold
harmless and to indemnify the Company from and against any losses suffered
by the Company arising from the Woodside Petroleum Claim;
7.2. If the Purchaser suffers loss as a result of the Woodside Petroleum Claim
it will take all reasonable steps to minimise its loss and will fully
consult with the Vendor in relation to the steps that can be taken to
minimise that loss. The Vendor and the Purchaser will carry out such
consultation in good faith and with due regard to the other party's
commercial interests.
7.3. The indemnity given by the Vendor in Clause 7.1. will only be capable of
being enforced by the Purchaser if and to the extent that the aggregate
amount claimed under the indemnity and under all other Claims made by the
Purchaser against the Vendor exceeds (POUNDS)115,000.
7.4. The provisions of Clause 9.1. will apply in relation to claims under the
indemnity given in Clause 7.1. as they apply to claims made by the
Purchaser under the Warranties.
7.5. The provisions of Clause 9.6, Clauses 9.9 to 9.13 and Clauses 9.15 and
9.16 will apply in relation to claims made by the Purchaser under the
indemnity given in Clause 7.1.
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8. PROTECTION OF GOODWILL
8.1 For the purposes of this Clause 8, the following words and expressions
shall have the following meanings:-
"Business" means the business of the manufacture, supply, repair,
maintenance and refurbishment of wellheads, xmas trees, gate valves, choke
valves, clamped pipe connectors, actuators, electric feed through (EFT)
systems for downhole pumps, subsea ball and check valves, in each case for
use in the oil and gas industry, as such business is carried on at the date
hereof by the Company at the Properties:
"Restricted Period" means 24 calendar months from the Completion Date: and
"Prohibited Area" means the United Kingdom, France, Belgium, Holland,
Germany, Denmark, Sweden, Norway, Italy, Saudi Arabia, Kuwait, Bahrain,
Qatar, United Arab Emirates, Iran Libya Syria, Malaysia, Australia, India,
United States of America, Venezuela, Colombia, Argentina, Brazil and their
dependencies, territorial waters and continental shelf sectors.
8.2 The Vendor and the Purchaser acknowledge that, in order to protect the
legitimate business interests of the Purchaser and the Vendor it is
reasonable for the Purchaser and the Vendor to enter into the provisions of
this Clause 8.
8.3 The Vendor undertakes to the Purchaser with the intent of securing to the
Purchaser the full benefit and value of the goodwill and connections of the
Company, and by way of further consideration for the obligations of the
Purchaser under this Agreement that (except with the previous consent in
writing of the Purchaser or except as contemplated in the Agreement):-
8.3.1 it will during the Restricted Period and within the Prohibited Area
either solely or jointly or in partnership or association with or as
director, manager, agent, employee, consultant or representative of
or for any other person, firm or company carry on or be engaged in
any business competing with the Business, provided that nothing
contained in this Clause 8.3.1. shall preclude the Vendor from
holding any shares or loan capital (not exceeding 20% of the shares
or loan capital of the class concerned then in issue) in any company
competing with the Business whose shares are listed or dealt in on a
recognised investment exchange:
8.3.2 it will not during the Restricted Period either on its or their own
behalf or for any other person, firm, company or other undertaking
solicit or endeavour to entice away from the Company any person who
is an employee, servant, director, officer, agent or consultant of
the Company at the Completion Date who received a salary or fee of
not less than
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(POUNDS)30,000 from the Company in the 12 calendar months preceding the
month in which the Completion Date falls whether or not such person would
commit a breach of contract by reason of leaving service; provided that
this restriction shall not apply to the placing of job advertisements in
national or local newspapers or the notification of vacancies to
employment agencies.
8.3.3 it will not following the Completion Date, divulge or use to the
detriment of the Business any, trade secret or other confidential
information of the Company relating to the Business except:-
8.3.3.1 information which has become public knowledge otherwise than
through breach of this Clause 8.3.3;
8.3.3.2 to its professional advisers and to officers or employees of the
Vendor or any Affiliate of the Vendor whose province it is to
know the same.
8.3.3.3 as required by law of any competent authority;
8.3.3.4 to comply with its obligations pursuant to this Agreement.
8.3.4 it will not following the Completion Date represent itself as being in
any way connected with the Company or the Business;
8.3.5 it will not, (in so far as it can reasonably do so) procure that no
Affiliate of the Vendor will at any time hereafter in relation to a trade
or business competitive with the Business at Completion carry on business
under the name "Seaboard", "Telektron" and "Forsac" or any other name
intended or likely to be confused therewith.
8.4 Nothing in Clause 8.3 shall prevent the Vendor or any Affiliate of the
Vendor from:-
8.4.1 carrying on or developing any of their present businesses
anywhere in the world which are not substantially similar to the
Business;
8.4.2 acquiring or holding any interest in any joint venture (whether
incorporated or unincorporated) except where such joint venture
is an Affiliate owned up to 61 per cent or more by the Vendor;
or
8.4.3 acquiring the whole of any part of a body corporate or business,
or of any direct or indirect interest in the whole or any part
of a body corporate or business, the acquisition, holding or
carrying on of which would otherwise amount to a breach of
Clause 8.3, except where more than 50 per cent of the turnover
of the business of the body corporate or business directly or
indirectly acquired as set out in the latest available audited
accounts of that body corporate or business is derived from
activities which are substantially similar to the Business in
which case the Vendor shall use its reasonable endeavours to
procure the disposal
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of that part of the Business which but for this provision would
cause it to be in breach of the said restriction.
8.5 The Purchaser undertakes to the Vendor that it will procure that the names
or logos mentioned in Clause 8.5.1 below are removed from the Properties,
sales literature or other assets of any Group Company within thirty days
following Completion and desist from using stationery, invoices etc of a
Group Company from Completion, and that neither the Purchaser nor any
Affiliate of the Purchaser will:-
8.5.1 after Completion, carry on business of any kind whatsoever under the
names "General Electric Company", "GEC", "VSEL" or "Vickers" or any
other names or combination of names capable of confusion therewith
or use such names in any way whatsoever or any logo associated
therewith; or
8.5.2 after Completion, represent itself or permit itself to be
represented or held out as being in any way connected with or
authorised by the Vendor or any Affiliate of the Vendor.
8.6 In the event that any restriction in this Clause 8 shall be found to be
unenforceable for whatever reason but would be valid if some part thereof
were deleted, or the period or area of application reduced, such
restriction shall apply with such modification as may be necessary to make
it valid and effective and the remaining restrictions shall continue to
bind the Vendor and the Purchaser.
9. VENDOR PROTECTION
9.1 Subject to Clause 9.2, the liability of the Vendor under the Warranties
given in Part 4 of the Schedule shall cease on the second 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
against the Vendor and an estimate of the total amount of liability which
results) has been given to the Vendor prior to that second anniversary.
9.2 The liability of the Vendor under the Warranties given in Part 5 of the
Schedule, under the indemnity given in Clause 7.1 and under the Tax
Covenant shall cease on the sixth 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 against the Vendor and
an estimate of the total amount of liability which results) has been given
to the Vendor prior to that anniversary.
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9.3 The total aggregate liability of the Vendor under the Warranties, the
indemnity set out in Clause 7.1 and the Tax Covenant shall not in any event
exceed (POUNDS)1,000,000.00.
9.4 The Vendor shall not be liable for any Claim:-
9.4.1 unless the aggregate amount of the liability of the Vendor for all
substantiated Claims exceeds (POUNDS)75,000 (in which event the
Vendor shall be liable for the excess);
9.4.2 in respect of any substantiated individual Claim the liability of
the Vendor in respect of such substantiated Claim is less than
(POUNDS)7,500 (and all such Claims will be disregarded for the
purposes of Clause 9.4.1)
and for this purpose substantiated means as determined by a Court with
competent jurisdiction or pursuant to a legally binding settlement between
the Vendor and the Purchaser.
9.5 The Vendor shall not be liable for any Claim in respect of any fact,
matter, event or circumstance to the extent that allowance, provision or
reserve has been made for such fact, matter, event or circumstance in the
Accounts or to the extent that payment or discharge of the relevant matter
has been taken into account therein or to the extent that such matter was
specifically referred to in the notes to such Accounts.
9.6 The Vendor shall not be liable for any Claim which would not have arisen
but for an act, omission or transaction carried out after the date of
Completion by the Purchaser or any of the Group Companies, their respective
directors, employees or agents or successors in title otherwise than in the
ordinary course of business of such Group Companies as carried on up to
Completion or pursuant to any legal obligation entered into by any of the
Group Companies prior to Completion.
9.7 The Vendor shall not be liable in respect of any Claim to the extent that
such Claim is attributable to, or such Claim is increased as a result of,
any legislation not in force at the date hereof or to any change of law,
regulation, directive requirement or administrative practice or any change
in rates of tax, which in each case is not in force at the date hereof.
9.8 Nothing in this Agreement shall in any way restrict or limit the general
obligation at law of the Purchaser and each of the Group Companies to
mitigate any loss or damage which it may suffer in consequence of any
breach by the Vendor of the terms of this Agreement.
9.9 If the Vendor pays to the Purchaser an amount in discharge of a Claim and
the Purchaser or any Group Companies subsequently recovers (whether by
payment, discount, credit, relief or otherwise) from a third party a sum
which is referable to the matter giving rise to the Claim, the Purchaser
shall (or, as
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appropriate, shall procure that the relevant Group Company shall)
forthwith repay the Vendor:-
9.9.1 an amount equal to the sum recovered from the third party (or the
value of the relief obtained, calculated by reference to the
amount saved) less any reasonable out-of-pocket costs incurred by
the Purchaser or the relevant Group Company in recovering the
same; or
9.9.2 if the figure resulting under Clause 9.9.1 above is greater than
the amount paid by the Vendor to the Purchaser or the relevant
Group Company in respect of the relevant Claim or the aggregate
payments previously made by the Vendor in respect of all Claims,
such lesser amounts as shall have been so paid by the Vendor.
9.10 If any Claim shall arise by reason of some liability which at the time
that the Claim is notified to the Vendor is contingent only, the Vendor
shall not be under any obligation to make any payment to the Purchaser in
respect of such Claim until such time as the contingent liability ceases
to be so contingent.
9.11 The Purchaser agrees with the Vendor that is shall not be entitled to
recover damages or obtain payment, reimbursement, restitution or
indemnity more than once in respect of any one shortfall, damage,
deficiency, breach or other set of circumstances which give rise to one
or more Claim and for this purpose recovery by the Purchaser or any Group
Company shall be deemed to be a recovery by each of them.
9.12 Upon any Claim being made, or notification from the Purchaser to the
Vendor pursuant to Clause 9.1 of any third party claim, potential claim,
matter or event which might lead to such a Claim being made, the
Purchaser shall, and shall procure that each of the Group Companies
shall:-
9.12.1 make available to the Vendor and any professional advisers
appointed by the Vendor such access to the personnel of the
relevant Group Company and to any relevant records and
information as the Vendor or its professional advisers may
reasonably request in connection with such Claim or third party
claim, potential claim, matter or event; and
9.12.2 take all reasonable steps to procure that the auditors (both past
and then current) of the relevant Group Company make available
their audit working papers in respect of audits of the relevant
Group Company's accounts for any relevant accounting period in
connection with such claim or third party claim, potential claim,
matter or event. Such access shall be required only at reasonable
times and on reasonable notice.
9.13 If the Purchaser becomes aware of any third party claim, potential claim,
matter of event (a "third party claim") which might lead to a Claim being
made the Purchaser:-
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9.13.1 shall procure that notice of such third party claim is promptly
given to the Vendor;
9.13.2 shall not make (or, as appropriate, shall procure that the
relevant Group Company shall not make) any admission of
liability, agreement or compromise with any person, body or
authority in relation to any such third party claim without the
prior written agreement of the Vendor;
9.13.3 (subject to being indemnified to is reasonable satisfaction by
the Vendor against all legal fees and other expenses reasonably
and properly incurred by the Purchaser or the relevant Group
Company) shall take (or, as appropriate, shall procure that the
relevant Group Company shall take) such action as the Vendor may
reasonably request to avoid, dispute, resist, appeal, compromise
or defend such third party claim or any adjudication in respect
of that third party claim; and
9.13.4 if so required by the Vendor in writing, shall ensure (or, as
appropriate, shall procure that the relevant Group Company shall
ensure), at the request in writing of the Vendor, that the Vendor
is placed in a position to take over the conduct of all
proceedings and/or negotiations of whatsoever nature arising in
connection with the third party claim in question and provide
(or, as appropriate, procure that the relevant Group Company
provides) such information and assistance as the Vendor may
reasonably require in connection with the preparation for and
conduct of such proceedings and/or negotiations.
9.14 A breach of Warranty which is capable of remedy shall not entitle the
Purchaser to compensation except to the extent that:-
9.14.1 the Vendor is given written notice of such breach; and
9.14.2 such breach is not remedied within 30 days after the date on
which such notice is served on the Vendor.
9.15 Where any Group Company of the Purchaser is entitled to recover from some
other person any sum in respect of any liability, loss or damage which is
the subject of a Claim against the Vendor or for which such a Claim could
be made (and whether before or after the Vendor has made payment
hereunder), the Purchaser shall (or, procure that the relevant Group
Company shall):-
9.15.1 promptly notify the Vendor and provide such information as the
Vendor may require relating to such liability or dispute and the
steps taken or to be taken by the Purchaser or the relevant Group
Company in connection with it;
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9.15.2 (subject to being indemnified to its reasonable satisfaction by
the Vendor against all legal fees and other expenses reasonably
and properly incurred by the Purchaser or the relevant Group
Company) before seeking to recover any amount from the Vendor
under this Agreement, first take all such steps as the Vendor may
reasonably require to enforce such recovery; and
9.15.3 keep the Vendor informed of the progress of any action taken and
thereafter any Claim against the Vendor shall be limited (in
addition to the limitations on the liability of the Vendor
referred to in this clause) to the amount by which the loss or
damage suffered by the Purchaser as a result of such breach shall
exceed the amount so recovered (less any legal fees and other
expenses reasonably and properly incurred in enforcing such
recovery).
9.16 The Vendor shall not be liable in respect of any Claim to the extent that
the amount of such Claim is recoverable under any policy of insurance in
force at the date of this Agreement or would have been so recoverable if
the policies of insurance effected by or for the benefit of the Group
Companies had been maintained after Completion at the same levels of
cover as those existing at Completion.
9.17 The Vendor shall not be liable for any Claim to the extent that such
Claim arises or is increased as a result of any change made after
Completion in any accounting or taxation policies or practice, or the
length of any accounting period of tax purposes, of any of the Group
Companies, the Purchaser or any other company in the same group of
companies as any of the Group Companies or the Purchaser.
9.18 The Vendor shall not be liable for any Claim of and to the extent that
the Purchaser was aware at the date of this Agreement:-
(a) of the facts, matters, events or circumstances which are the subject
matter of the Claim; and
(b) that those facts, matters, events or circumstances amounted or were
likely to amount to a breach of any of the Warranties as at the date
of this Agreement.
9.19 The Vendor shall not be liable in respect of any Claim to the extent that
it relates to the Environment unless it is brought under paragraph 4.11
of Part 4 of the Schedule, to the extent that it relates to Taxation
unless it is brought under Part 5 of the Schedule or under the Tax
Covenant, to the extent that it relates to any of the Properties unless
it is brought under paragraph 4.8 of Part 4 of the Schedule, or, to the
extent that it relates to intellectual property unless it is brought
under paragraph 4.6 of Part 4 of the Schedule, or to the extent that it
relates to any other matter unless it is brought under some other
paragraphs of Part 4 of the Schedule or under the indemnity given in
Clause 7.1.
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10 GROUP RELIEF
10.1. The Purchaser agrees and accepts that all tax losses arising in the
Company in relation to the financial year ended on 31st March 1996 and in
relation to all previous years have been utilised or will be available
for utilisation by the Vendor (or an Affiliate of the Vendor other than
the Group Companies) for the purposes of group relief under ICTA Part X,
Chapter IV and the Purchaser undertakes to the Vendor to procure that the
Company claims in full all reliefs and allowances available for such
periods and that neither the Purchaser nor the Company will take any steps
which might reduce the tax losses available for such periods.
10.2. The Vendor agrees and accepts that any tax losses arising in the Company
in relation to all financial periods commencing on or after 1 April 1996
will be available for utilization by the Purchaser (or an Affiliate of the
Purchaser) for the purposes of group relief under ICTA Part X Chapter IV
and the Vendor undertakes to the Purchaser that after Completion it will
take no steps which might prejudice the availability of such tax losses to
the Purchaser or its Affiliates.
11. RECORDS
The Vendor (or its duly authorised agents) shall during the period of 7
years after Completion be entitled to be given access by the Purchaser
during normal business hours and subject to reasonable notice to any books
and records (including information stored on computer) as Vendor may
reasonably require to the extent such books and records relate to any
Group Company and the period prior to the Completion Date and the Vendor
(or its agent) shall at its own expense be entitled to take extracts and
copies therefrom.
12. ANNOUNCEMENTS
12.1 No party to this Agreement shall make any press or media announcement or
issue any press or media statement or press or media release with respect
to this Agreement or any matter contained herein without obtaining the
prior written agreements of the other party to the contents thereof and
the manner and timing of its presentation and publication; or unless an
announcement is required by the rules and regulations of a recognised
stock exchange or by law in which event the Vendor of the Purchaser as the
case may be shall consult the Purchaser or the Vendor as the case may be
about the nature and content of such announcement.
12.2 The parties shall take all reasonable steps to ensure that their
employees, advisers, agents, affiliates and associates adhere to the
provisions of Clause 12.1. of this Agreement.
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13. ASSIGNATION AND TRANSFER
13.1 Except as provided in Clause 13.2. below, no party shall be entitled
without the prior written consent of the other party to assign or transfer
the benefit or burden of the Agreement or any right and/or obligation
under the Agreement.
13.2 The Purchaser may, upon giving prior written notice to the Vendor, assign
the whole (but not part) of the benefit of this Agreement to another
subsidiary of John Wood Group PLC for so long only as that transferee
remains a subsidiary of John Wood Group PLC PROVIDED THAT before such
assignee ceases to be a subsidiary of John Wood Group PLC, the Purchaser
will procure that the benefit of the whole (but not part) of the benefit
of this Agreement is assigned (upon giving further written notice to the
Vendor) to another subsidiary of John Wood Group PLC (any such further
assignment to be subject to the same conditions as aforesaid) AND PROVIDED
FURTHER THAT such assignment does not impose any greater liability on the
Vendor.
13.3. Subject as set out above this Agreement shall be binding on, and shall
ensure for the benefit of, any person to whom any right and/or obligation
is validly assigned or transferred.
14. FURTHER ASSURANCE
The parties undertake to each other that they shall from time to time
after execution of this Agreement execute such further documents and do
such further acts and things as may reasonably be required for the purpose
of ensuring that any transfer of title or other interest in any form of
property provided for in this Agreement is fully and properly implemented
in accordance with the Agreement.
15. FULL FORCE AND EFFECT
Notwithstanding delivery of any document by one party to another pursuant
to this Agreement each and every right and obligation of the parties under
this Agreement shall, except in so far as fully performed by such
delivery, continue in full force and effect.
16. NON PROSECUTION OF CONTRACTUAL RIGHTS AND WAIVERS
No failure on the part of either party to exercise, and no delay on its
part in exercising, any right or remedy under this Agreement will operate
as a waiver thereof, nor will any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy.
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17. COSTS
The parties shall each pay their own costs and outlays in connection with
the preparation, execution and carrying into effect of this Agreement and
for the avoidance of doubt, the Purchaser shall pay all stamp duty and
stamp duty reserve tax (if any) on the transfer of the Sale Shares and any
document to be entered into pursuant to this Agreement.
18. ENTIRE AGREEMENT
This Agreement and the Disclosure Letter together constitute the entire
agreement and understanding between the parties in connection with the sale
and purchase of the Sale Shares. It is agreed that:-
neither party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of any other party which is
not expressly set out or referred to in this Agreement.
a party may claim in contract for breach of Warranty under this
Agreement but otherwise shall have no claim or remedy in respect of
misrepresentation (whether negligent or otherwise) or untrue
statement made by the other party;
this clause shall not exclude any liability for fraudulent
misrepresentation.
19. VARIATIONS
No variation of this Agreement shall be effective unless made in writing
and duly executed by all of the parties to this Agreement.
20. NOTICES
20.1. Any notice or other communication to be given by one party to
another under, or in connection with the matters contemplated by,
this Agreement shall be communicated to that other party at the
address recorded in the details of parties in the Agreement or to
such others address in the United Kingdom as may from time to time
be specified by the relevant party to the others, by notice given in
accordance with this Clause 20, for the purpose of this Clause 20.1
20.2 Any notice or other communication to be given by one party to
another party, or in connection with the matters contemplated by,
the Agreement
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shall be in writing and shall be given by letter delivered by hand
or sent by first class prepaid recorded delivery or registered post
or by facsimile.
20.3. Any notice or communication to be served on the Vendor shall be
addressed to The Secretary, The General Electric Company Plc, 1
Stanhope Gate, London, W1A 1EH, Tel: 00 44 (0) 171 493 8484, Fax: 00
44 (0) 171 493 1974; and
20.4. Any notice or communication to be served on the Purchaser shall be
addressed to Mr. Wendell Brooks, President, ERC Industries, Inc.,
15835 Park Ten Place, Suite 115, Houston, Texas 77084, USA, Tel 001
713 398 8901, Fax 001 713398 8086.
21. GOVERNING LAW AND JURISDICTION
21.1 This Agreement is governed by, and shall be construed in accordance
with, the law of Scotland.
21.2 Subject to Clause 21 below the parties submit to the non-exclusive
jurisdiction of the Scottish Courts.
21.3. The Purchaser shall at all times maintain an agent for service of
process and any other documents in proceedings in Scotland or any
proceedings in connection with the Agreement. Such agent shall be
Hugh Fraser, Group Head of Legal, John Wood Group PLC, Greenwell
Road, East Tullos Industrial Estate, Aberdeen, AB12 3AX, and any
writ, judgement or other notice of legal process shall be
sufficiently served on the Purchaser if delivered to such agent at
its address for the time being. The Purchaser undertakes not to
revoke the authority of the above agent and, if for any reason, the
Vendor requests the Purchaser to do
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so, it shall promptly appoint another such agent with an address in
Scotland and advise the Vendor thereof.
SIGNED for and on behalf of
VSEL LIMITED
at London
on Sept. 27, 1996
by /s/ Richard Anthony Robinson
and /s/ M. John Bruell
two authorised signatories of VSEL Limited
SIGNED for and on behalf of
ERC INDUSTRIES, INC.
at London
on 9-27-96
by /s/ Don Patrick Geiger
and /s/ Hugh Fraser
two authorised signatories of ERC INDUSTRIES, Inc
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