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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) May 13, 1996 (April 30,1996)
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Gundle/SLT Environmental, 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)
1-9307 22-2731074
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(Commission File Number) (IRS Employer Identification No.)
19103 Gundle Road, Houston, Texas 77073
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 443-8564
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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.
On April 30, 1996, GSE (UK) Limited, a United Kingdom company and an
indirect wholly-owned subsidiary of Gundle/SLT Environmental, Inc., a Delaware
corporation (the "Company"), acquired all of the outstanding capital stock (the
"Stock") of SGS Holdings Limited, a United Kingdom company ("SGS") for a cash
consideration of Pound Sterling 3,208,314 and the assumption of certain
obligations of SGS. SGS manufactures synthetic lining material and will
continue to be utilized in this capacity by the Company. The Stock was
acquired from R.A. Young, J.R. Young and S.E. Mitchell (collectively, the
"Sellers"). The amount of the consideration was determined through direct
negotiation with the Sellers and was paid out of general working capital of the
Company.
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ITEM 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
At the present time, it is impracticable to provide financial
statements specified in Rule 3-05(b) of Regulation S-X for the business
acquired. Such financial statements will be filed as soon as practicable but
not later than 60 days from the date of this report.
(b) Pro Forma Financial Information
At the present time, it is impracticable to provide pro forma
financial information required pursuant to Article 11 of Regulation S-X. Such
pro forma financial information will be filed as soon as practicable but not
later than 60 days from the date of this report.
(c) Exhibits
The following exhibits, from which schedules and attachments have been
omitted and will be furnished to the Commission upon its request, are filed
with this report on Form 8-K:
10.1 Agreement for the acquisition of the whole of the issued share
capital of SGS Holdings Limited dated April 30, 1996, between
GSE (UK) Limited and R. A. Young, Esq., J. R. Young, Esq., and
Mrs. S. E. Mitchell.
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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.
GUNDLE/SLT ENVIRONMENTAL, INC.
By: \s\ Roger J. Klatt
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Roger J. Klatt
Chief Financial Officer
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EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Numbered Page
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<S> <C> <C>
10.1 Agreement for the acquisition of the whole of the issued share
capital of SGS Holdings Limited dated April 30, 1996, between GSE
(UK) Limited and R. A. Young, Esq., J. R. Young, Esq., and Mrs. S. E.
Mitchell.
</TABLE>
The exhibits, as filed, omit certain exhibits and schedules. The Company will
provide a copy of any omitted exhibit or schedule upon request of the
Securities and Exchange Commission, subject to the Company's right to request
confidential treatment of any requested schedule.
5
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DATED 1996
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R.A. YOUNG ESQ
- and -
J.R. YOUNG ESQ
- and -
MRS S.E. MITCHELL
- and -
GSE (UK) LIMITED
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A G R E E M E N T
for the acquisition of the whole
of the issued share capital of
SGS HOLDINGS LIMITED
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AGREEMENT
DATE: 1996
PARTIES:
1. THE SEVERAL PERSONS whose names and addresses are set out in column
(1) of Part A of Schedule 1 ("the Vendors"); and
2. GSE (UK) LIMITED (Company Number 2886396) whose registered office is
situate at Dorchester House, 56 Church Street, Weybridge, Surrey KT13
8DR ("the Purchaser").
RECITALS:
(A) Each of the Vendors desires to sell and the Purchaser wishes to
purchase the Shares (as defined below) for the consideration and upon
the terms and subject to the conditions hereinafter contained.
(B) The Vendors have made representations to the Purchaser in the terms
set out in Clause 5 and Schedules 3 and 5 with the intention that the
Purchaser should enter into this Agreement in reliance upon such
representations and warranties.
OPERATIVE PROVISIONS:
1. Definitions and Interpretation
1.1 In this Agreement (unless the context otherwise requires) the
following expressions shall have the following meanings:
"Last Accounts" means the audited financial statements of
each of the Company and SGS as at the Last
Accounts Date including a balance sheet,
profit and loss account, notes and a
directors' report for the twelve months
ending on the Last Accounts Date;
"Last Accounts Date" means 31st December 1995;
"CA 1985" means the Companies Act 1985;
"CAA" means the Capital Allowances Act 1990;
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"Closing Accounts" means the accounts for the Company for the
four month period from the 1st January 1996
to 30th April 1996 comprising a profit and
loss account and a balance sheet;
"Company" means SGS Holdings Limited, a private company
limited by shares incorporated in England and
Wales with number 866646 on the 15th December
1965 under the Companies Acts having at the
date hereof an authorised share capital of
L.300,280 divided into 300,000 Ordinary Shares
of L.1 each and 5,600 "B" Shares of 5 pence
each of which 252,000 Ordinary Shares and
5,600 "B" Shares have been issued and are
fully paid;
"Company's Accountants" means Messrs Finn-Kelcey & Chapman of Ashford
House, County Square, Ashford, Kent TN23 1YB;
"Companies Acts" means the CA 1985, the Company Securities
(Insider Dealing) Act 1985, the Companies
Consolidation (Consequential Provisions) Act
1985 the former Companies Acts (within the
meaning of CA 1985 s. 735 (1)) and the
Companies Act 1989;
"Completion" means completion of the sale and purchase of
the Shares in accordance with the provisions
of Clause 4;
"Covenantors" means the persons defined as such in the Tax
Indemnity;
"Directors" means the persons stated as such in Schedule
2;
"Directors Scheme" means the Butyl Products Limited Directors'
Retirement benefits Scheme created by Deed of
Trust dated 26th March 1986 between Butyl
Products Limited (1), R E Knights, M A
Grayburn
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(2) and Federated Pension Schemes (3);
"Disclosure Letter" means the letter of even date herewith
written by the the Vendors qualifying the
warranties contained in Clause 5 (but
excluding for the avoidance of doubt the
warranty at clause 5.1.8) and Schedules 3 and
5 hereof and the Tax Covenant and delivered
to the Purchaser on or before the execution
and delivery of this Agreement;
"Environmental
Legislation" means: -
(a) 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 rules, regulations, ordinances,
orders, notices and directives made
thereunder of the European Community, the
United Kingdom Parliament and bodies deriving
authority therefrom;
(b) judicial and administrative
interpretation of each of the foregoing;
"Environmental
Authorisations" mean and include any permits, consents,
licences, authorisations and approvals
required by the Group Companies under the
Environmental Legislation;
"Escrow Letter" means a letter of even date herewith from the
parties hereto to the Vendors' Solicitors and
the Purchaser's Solicitors in the agreed
form;
"Final Salary Scheme" means the Butyl Products Ltd Retirement
Benefit Scheme created by a Declaration of
Trust made 27th day of March 1974 by Butyl
Products Limited;
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"Group Companies" means the Company and SGS;
"ICTA 1988" means the Income and Corporation Taxes Act
1988;
"Industrial Property" means patents, trade marks, service marks,
registered designs, trade names, copyright
and applications for any of the foregoing;
"Know-how" means all information (including that
comprised in or derived from formulae,
techniques, designs, specifications,
drawings, component lists, manuals,
instructions and catalogues) relating to:
(i) the production of goods or the provision
of services;
(ii) the design, selection, procurement,
construction, installation or use
of any plant, machinery or other equipment;
(iii) tooling design;
(iv) the repair, service or rectification of
products or plant;
(v) the supply, storage, assembly or packing
of raw materials, components or partly
manufactured or finished products; or
(vi) quality control, testing or
certification;
"Liabilities" means all:-
(a) obligations; and
(b) debts; and
(c) liabilities including (but not limited
to) contingent, unascertained or potential
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liabilities; and
(d) claims or rights of third parties against
the Company existing at the date hereof or
arising in the future which relate to acts or
omissions prior to the date of Completion
including (but not limited to) claims brought
by the trustees of the Butyl Products Limited
Retirement Benefits Scheme or any former
employees of the Company who are or were or
claim to be entitled to be members of that
scheme;
whatsoever relating to the Company (but not
(for the avoidance of doubt) SGS) whether in
connection with the carrying on of its
business, in respect of the property rights
and assets used enjoyed or exercised in
connection therewith or otherwise relating to
the period prior to Completion save for the
creditor set out in the balance sheet of the
Closing Accounts;
"Marketing Information" means all information relating to the
marketing of any products or services
(including customer names and lists, sales
targets, sales statistics, market share
statistics, marketing surveys and reports,
marketing research and any advertising or
other promotional materials);
"the Planning Acts" shall mean the Consolidating Acts as defined
by section 1(1) of the Planning
(Consequential Provisions) Act 1990 and all
other Acts of Parliament and all regulations
and orders in force at the date hereof;
"Properties" means all or any (or any part or parts) of
the freehold and leasehold properties short
particulars whereof are set out in Schedule
4;
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"Purchaser's Group" means Gundle/SLT Environmental, Inc its
subsidiary companies and all bodies corporate
which are now associated with it and, subject
to Completion hereof, the Company and SGS;
"Purchaser's
Solicitors" means Messrs Guillaume & Sons of 56 Church
Street, Weybridge, Surrey KT14 7DH;
"Retention Fund" means the sum of L.269,500 to be dealt with
in accordance with the provisions of the
Escrow Letter;
"RTPA" means the Restrictive Trade Practices Act
1976;
"Schemes" means the Directors' Scheme the 1992 Scheme
and the Final Salary Scheme;
"Shares" means all the 252,000 Ordinary Shares of L.1
each and all the 5,600 "B" Shares of 5 pence
each in the Company all of which are
beneficially owned by the Vendors and the
Transferors in the proportions set opposite
their respective names in columns 3 and 4 of
Schedule 1;
"SGS" means SGS Geosystems Limited a private
company limited by shares incorporated in
England and Wales with number 1786050 on 25th
January 1984;
"Subsidiary" has the meaning ascribed to it in CA 1985
Section 736;
"Taxation" means all forms of taxation, duties, imposts
and levies whatsoever and whenever imposed
and whether of the United Kingdom or
elsewhere and without prejudice to the
generality of that expression includes:
(a) income tax, corporation tax (including
advance corporation
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tax) petroleum revenue tax, capital gains
tax, inheritance tax, stamp duty, rates,
value added tax, customs and other import
duties and national insurance contributions
and any payment whatsoever which the Company
may be or become bound to make to any person
as a result of any enactment relating to
taxation and any other taxes duties or levies
supplementing or replacing any of the above;
(b) all costs, charges, interest, fines,
penalties and expenses incidental or relating
to any Taxation;
"Tax Covenant" means the deed of tax covenant to be entered
into on Completion by the Covenantors and the
Purchaser and being in the agreed form;
"TCGA" means the Taxation of Chargeable Gains Act
1992;
"Transferors" means the persons whose names and addresses
are set out in Part B of Schedule 1;
"VATA" means the Value Added Tax Act 1994;
"Vendor's Solicitors" means Messrs Donne Mileham & Haddock of
Frederick Place, Brighton, East Sussex BN1
1AT;
"Warranties" means the representations and warranties of
the Vendors set out in Clause 5 and Schedules
3 and 5;
"1992 Scheme" means the Butyl Products Limited (1992)
Retirement Benefits Scheme created by a
Declaration of Trust made 24th day of July
1992 between Butyl Products Limited and Butek
Limited;
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1.2 The Schedules to this Agreement form part of this Agreement and
shall have the same force and effect as if expressly set out in the
operative part of this Agreement and any reference to this Agreement
shall include the Schedules.
1.3 Unless the context otherwise requires, in this Agreement:
1.3.1 words and expressions defined in the Companies Acts shall
bear the same respective meanings;
1.3.2 words denoting the masculine gender shall include the
feminine and neuter genders and words denoting the
singular shall include the plural and vice versa;
1.3.3 reference to any statute or statutory provision shall
include any statute or statutory provision which has
amended or replaced it and shall include any subordinate
legislation made under the relevant statute;
1.3.4 a body corporate shall be deemed to be associated with
another body corporate only if it is a holding company or
a subsidiary or a subsidiary of a holding company of that
other;
1.3.5 a person shall be deemed to be connected with another if
that person is connected with another within the meaning
of Section 839 of the Taxes Act; and
1.3.6 reference to writing shall include typewriting, printing,
lithography, photography, telex and fax messages and
other modes of reproducing words in a legible and
non-transitory form.
1.4 Headings are for convenience only and shall not affect the
construction of this Agreement.
1.5 In construing this Agreement:
1.5.1 the rule known as the "ejusdem generis rule" shall not
apply and accordingly general words introduced by the
word "other" shall not be given a restrictive meaning by
reason of the fact that they are preceded by words
indicating a particular class of acts, matters or things,
and
1.5.2 general words shall not be given a restrictive
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meaning by reason of the fact that they are followed by
particular examples intended to be embraced by the
general words.
1.6 Any obligation imposed by, or resulting from the execution of, this
Agreement (including any obligation resulting from any of the
warranties contained in Clause 5 and Schedules 3 and 5 proving to be
untrue or misleading or being breached) which is undertaken by more
than one person shall be a joint and several obligation of each of
the persons who has undertaken it.
1.7 Reference to Clauses sub-clauses and Schedules are (unless otherwise
stated) to Clauses sub-clauses of and Schedules to this Agreement.
1.8 Any document expressed to be "in the agreed form" means a document
in a form agreed by and (for the purposes of identification) signed
by or on behalf of the parties and attached hereto but if the
contents of such document shall by agreement between the parties
before Completion be altered or added to the expression "in the
agreed form" shall extend to such document.
2. Sale and Purchase
2.1 Subject to the terms and conditions of this Agreement each of the
Vendors will sell and will procure that the Transferors will sell
with full title guarantee and the Purchaser will purchase with
effect from Completion the number of Shares set opposite the names
of the Vendors and the Transferors in columns (3) and (4) of Schedule
1 free from all claims liens charges equities and encumbrances and
with all rights and advantages attached belonging or accruing
thereto (excluding any dividend or other distribution declared paid
or made prior to the date hereof by reference to a record date on or
prior to the date hereof).
2.2 Each of the Vendors hereby waives (and shall procure that each of
the Transferors waive) any pre-emption rights in respect of the
Shares conferred on it (or them in the case of the Transferors) by
the Articles of Association of the Company or pursuant to any other
agreement relating to the Shares.
2.3 The Purchaser shall not be obliged to complete the purchase of any
of the Shares unless the purchase of all the Shares is completed
simultaneously.
3. Consideration
3.1 The total purchase consideration for the Shares which
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shall be apportioned among the Vendors and the Transferors in the
proportions set opposite their respective names in Columns (5) and
(6) of Schedule 1 shall be the sum of Pound Sterling 3,208,314;
3.2 The Purchaser will pay and discharge on behalf of SGS the sum of
Pound Sterling 180,000 owed by SGS to Dr. William O'Neill and the sum
of Pound Sterling 20,000 in full and final settlement of all sums
payable by SGS to Dr. William O'Neill under the consultancy agreement
dated 22nd April 1993 (as amended).
4. Completion
4.1 Completion shall take place at the offices of the Vendors'
Solicitors or at such other place as the parties may agree on the
date of this Agreement, when all the transactions mentioned in the
following sub-clauses shall take place.
4.2 On Completion:
4.2.1 the Vendors shall deliver to the Purchaser:
4.2.1.1 instruments of Transfer in respect of the
Shares duly executed by the respective
registered holders thereof in favour of the
Purchaser together with the Share Certificates
therefor;
4.2.1.2 such waivers consents or other documents as
may be required to give a good title to the
Shares and to enable the Purchaser or its
nominee to become the registered holder
thereof; and
4.2.1.3 the Tax Covenant duly executed by each
Covenantor;
4.2.1.4 the Certificate of Incorporation (and any
Certificates of Incorporation on Change of
Name) of each Group Company;
4.2.1.5 the Common Seal and the Statutory Books of
each Group Company complete and up to date
together with copies of the Memorandum and
Articles of Association of the Company;
4.2.1.6 the resignation of the auditors of each Group
Company (to be effective from the date of
delivery to the registered office of the
respective Group Company)
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confirming that the auditors have no
outstanding claim of any kind against the
respective Group Company and containing a
statement under CA 1985 s.394 (1) that there
are no such circumstances as are mentioned in
that section;
4.2.1.7 written confirmation from the Vendors that
there are no subsisting guarantees given by
any Group Company in their favour and that
none of the Vendors are indebted to any Group
Company or vice versa;
4.2.1.8 letter of release from Barclays Bank Plc
relating to the guarantee given by the Company
of the indebtedness of Butyl Products Limited;
4.2.1.9 copies of all novation agreements relating to
product warranties given by the Company; and
4.2.1.10 an agreement of accord and satisfaction in the
agreed form duly signed by Dr William O'Neill.
4.2.2 The Vendors will procure that:
4.2.2.1 Mr John Anthony Coulson will enter into an
employment contract with SGS in the agreed
form;
4.2.2.2 a board meeting of the Company will be held at
which:
(a) the Purchaser will be registered
(subject only to due stamping) in
the Register of members of the
Company as the registered holder of
the Shares pursuant to such
Instruments of Transfer;
(b) the Company shall revoke all
existing bank mandate authorities to
bankers in respect of the operation
of the Bank Accounts of the Company
and give authority in favour of such
persons as the Purchaser may
nominate to operate such accounts;
(c) the Directors of the Company shall
validly appoint to the Board thereof
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such person or persons as the
Purchaser may nominate; and
(d) upon such appointment forthwith
cause the Directors and the
Secretary of the Company to retire
from all their offices and
employments with each Group Company
save in the case of SGS, Mr John
Anthony Coulson each delivering to
the Purchaser a letter under seal
resigning his office as Director of
the Company and SGS and
acknowledging that he has no claim
outstanding for compensation for
loss of office redundancy unfair
dismissal, pension or any claim
under the Employment Protection
(Consolidation) Act 1978 or other
claim whatsoever;
(e) the resignation of the Directors and
Secretary and of the auditors shall
be accepted and such persons/firms
shall be appointed as the new
Secretary and auditors as the
Purchaser may nominate;
4.2.3. The parties shall deliver to the Vendors' Solicitors and
the Purchaser's Solicitors the Escrow Letter.
4.2.4 Subject to the performance by the Vendors of all their
obligations hereunder there shall be delivered by the
Purchaser:-
4.2.4.1 to the Vendors' Solicitors (who are authorized
to receive the same and delivery to whom shall
be a good discharge to the Purchaser) the sum
Pound Sterling 3,138,814 by telegraphic
transfer; and
4.2.4.2 to the Vendors' Solicitors and the Purchaser's
Solicitors jointly to hold subject to the
terms of the Escrow Letter the sum of Pound
Sterling 269,500 by telegraphic transfer; and
4.2.4.3 to the Vendors a duly executed copy of the Tax
Covenant and a certified copy of a board
resolution of the Purchaser approving the
execution of this Agreement.
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5. Vendor's Warranties
5.1 The Vendors jointly and severally warrant to the Purchaser (as
trustee for itself and any other company in the Purchaser's Group to
whom the share capital of SGS and/or the Company may have been
transferred in accordance with the provisions of Clause 18.1) that:
5.1.1 each Vendor has full power and authority to enter into
and perform this Agreement and the Tax Covenant which
constitute or when executed will constitute binding
obligations on him or her in accordance with their
respective terms;
5.1.2 the Shares constitute the whole of the issued and
allotted share capital of the Company and are fully paid
or credited as fully paid;
5.1.3 there is no pledge, lien, charge or other encumbrance on,
over or affecting the Shares and there is no agreement or
arrangement to give or create any such encumbrance and no
claim has been or will be made by any person to be
entitled to any of the foregoing;
5.1.4 the Vendors are entitled to sell and transfer to the
Purchaser the full legal and beneficial ownership of the
Shares, free from all liens charges and encumbrances on
the terms of this Agreement without the consent of any
third party;
5.1.5 The Disclosure letter sets out full particulars of any of
the Shares which were, or represent assets which were,
the object of a transfer at an undervalue (within the
meaning of the Insolvency Act 1986 s.339) and:-
(a) at the time of the transfer the donor was not
insolvent within the meaning of s.341(3) of that Act; and
(b) the transfer was not made for, or partly for, the
purpose of putting assets beyond the reach, or otherwise
prejudicing the interests of creditors within the meaning
of s.423 of Insolvency Act 1986;
5.1.6 the information contained in Schedule 2 relating to the
Company and SGS is true and accurate in all respects;
5.1.7 the Warranties in this Clause 5 and in Schedules
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3 and 5 are true and accurate in all respects and save in
respect of the warranty given in Clause 5.1.8 of this
Agreement are given subject only to matters clearly and
accurately disclosed in the Disclosure Letter;
5.1.8 the Company has no Liabilities;
5.1.9 the contents of the Disclosure Letter are true and
accurate in all respects, and clearly and accurately
disclose every matter to which they relate and copies of
all accompanying documents are true and accurate in all
respects and complete.
5.2 Each of the Warranties is without prejudice to any other Warranty.
5.3 The rights and remedies of the Purchaser in respect of any breach of
the Warranties shall not save as provided in this Agreement be
affected by Completion, by the liquidation or winding up of the
Company by any investigation made by it or on its behalf into the
affairs of any Group Company, by its rescinding or failing to
rescind this Agreement in accordance with Clause 5.5, or failing to
exercise or delaying the exercise of any right or remedy, or by any
other event or matter, except a specific and duly authorised written
waiver or release, and no single or partial exercise of any right or
remedy shall preclude any further or other exercise.
5.4 None of the information supplied by any Group Company or any of its
officers and employees or its professional advisers to any of the
Vendors or their 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 any Group
Company, shall be deemed a representation, warranty or guarantee of
its accuracy by that Group Company or any of its officers and
employees to the Vendors, and the Vendors undertake (in the event of
any claim being made against any of them in connection with the sale
of the Shares to the Purchaser) not to make any claim against any of
the Group Companies and their respective officers and employees
which they might otherwise have in respect of it.
5.5 If the Purchaser shall fail to acquire title to any of the Shares in
accordance with Clause 2 the Purchaser may notwithstanding
Completion rescind this Agreement by notice in writing to the
Vendors. Subject thereto
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the Purchaser shall not under any circumstances have any right to
rescind this Agreement following Completion.
6. Vendors' protection
The provisions of Schedule 6 shall apply.
7. Restrictions on Vendors' business activities
7.1 For the purpose of assuring to the Purchaser the full benefit of the
business and goodwill of SGS, each of the Vendors undertakes by way
of further consideration for the obligations of the Purchaser under
this Agreement that he or she will not for a period of five (5)
years after Completion either solely or jointly:-
7.1.1 without the prior written consent of the Purchaser carry
on or be concerned or interested either directly or
indirectly and whether as a shareholder or otherwise
howsoever in any company firm or business carrying on the
business of the manufacture of wide width plastic
geomembranes or the installation of synthetic lining
systems acquired from third parties of a surface area in
excess of 10,000 square meters into solid waste
management systems provided always that the Vendors or
any company connected with them shall not be restricted
in any way in relation to the installation of synthetic
linings purchased from the Purchaser or SGS or any
company in the Purchaser's Group;
7.1.2 solicit canvass or secure the employment of any person
who at the date of Completion was an employee of SGS; nor
7.1.3 assist any other person to do any of the foregoing
things.
7.2 Each Vendor undertakes that he will not at any time after
Completion:
7.2.1 disclose to any other person any Know-how, Computer
Know-how or Marketing Information used by SGS in
connection with its business during the two years
immediately preceding the date of Completion unless:
7.2.1.1 such Know-how, Computer Know-how or Marketing
Information has entered the
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public domain otherwise than by reason of the
actor default of any Vendor or was used by the
Company in the business previously carried on
by the Company before the Last Accounts Date
7.2.1.2 the Vendor concerned is requested in writing
so to do by the Purchaser or by any competent
authority in the exercise of a legal power;
nor
7.2.2 use any trade or business name or any part thereof used
by SGS or any other name intended or likely to be
confused with any such trade name.
7.3 The Vendors will for a period of five (5) years give the Purchaser
the opportunity to sell to the Vendors or any company connected with
them all of its requirements for geotechnical materials and products
subject to availability, price and other terms being competitive.
The terms and conditions of any sale will be negotiated in good
faith among the parties.
7.4 Each Vendor agrees that the undertakings contained in this clause
are reasonable and are entered into for the purpose of protecting
the goodwill of the business of each Group Company and that
accordingly the benefit of the undertakings contained in this clause
may be assigned by the Purchaser in accordance with Clause 18.1.
7.5 Each undertaking contained in this clause shall be construed as a
separate undertaking and if one or more of the undertakings
contained in this Clause is held to be against the public interest
or unlawful or in any way an unreasonable restraint of trade the
remaining undertakings shall continue to bind the Vendors.
7.6 No provision of this Agreement or of any agreement or arrangement of
which this Agreement forms part by virtue of which this Agreement or
the agreement or arrangement of which it forms part is subject to
registration (if such be the case) under the RTPA shall take effect
until the day after particulars of this Agreement or of the
agreement or arrangement of which it forms part (as the case may be)
have been furnished to the Directors General of Fair Trading
pursuant to Section 24 of the RTPA.
8. Pensions
8.1 Each of the parties hereto shall comply with the
-16-
<PAGE> 18
requirements pertaining to that party set out in Schedule 5.
9. Purchaser's warranties
9.1 The Purchaser warrants to the Vendors that it has full power and
authority to enter into and perform this Agreement and the Tax
Covenant which constitute or when executed will constitute binding
obligations on it in accordance with their respective terms.
9.2 The Purchaser undertakes to procure that following Completion the
Company will not trade
10. Vendors' Indemnity
The Vendors hereby jointly and severally covenant to pay on demand to the
Purchaser (and its successors and assigns) an amount equal to all losses,
damages, liabilities, claims and expenses including (but not limited to) legal
expenses which may be brought against, incurred, suffered or sustained by the
Purchaser or the Company as a result of the Warranty set out in Clause 5.1.8
above being untrue.
11. Announcements
11.1 No announcement or circular in connection with the subject matter of
this Agreement shall be made or issued by or on behalf of the
Vendors or the Purchaser without the prior approval of the other
such approval not to be unreasonably withheld or delayed.
12. Waiver
12.1 Any liability to the Purchaser under this Agreement including (but
no limited to) the Warranties may in whole or in part be released
waived compounded or compromised and time or indulgence given by the
Purchaser in its absolute discretion as regards any of the Vendors
under such liability without in any way prejudicing or affecting its
rights against the other Vendors under the same or like liability
whether joint or several or otherwise.
13. Remedies for Breach
13.1 Any remedy conferred on the Purchaser for breach of this Agreement
(including the breach of any of the Warranties) shall be in addition
to and without prejudice to all other rights and remedies available
to it and no exercise or failure to exercise such right shall
constitute a waiver by the Purchaser or any such right or remedy.
-17-
<PAGE> 19
14. Post Completion
14.1 Completion shall not in any way prejudice or affect the operation of
the provisions of this Agreement which contemplate or are capable of
post completion operation and accordingly all those provisions
(including but not limited to the Warranties and all indemnities and
other undertakings contained in or entered into pursuant to this
Agreement) shall continue in full force and effect after Completion
subject to the limitations and other provisions contained in this
Agreement.
15. Costs
15.1 Each party to this Agreement shall pay its own costs of and
incidental to this Agreement and the sale and purchase hereby agreed
to be made, PROVIDED THAT if the Purchaser shall lawfully exercise
its right under Clause 5.5 to rescind this Agreement the Vendors
shall (without prejudice to any other rights which the Purchase may
have against the Vendors) indemnify the Purchaser against all
expenses and costs incurred in investigating the affairs of the
Company and in the preparation of this Agreement.
16. Notices
16.1 Any document notice claim or demand under this Agreement may be
served by leaving it or sending it by facsimile, prepaid recorded
delivery or registered post to the address and attention of the
relevant party which in the case of the Vendor's is as set out in
Schedule 1 and in the case of the Purchaser for the attention of Mr
W E Coxall of Guillaume & Sons Dorchester House 56 Church Street
Weybridge Surrey KT13 8DR (or as otherwise notified from time to
time hereunder). Any notice so served by facsimile or post shall be
deemed to have been received:-
(a) in the case of facsimile twelve (12) hours after the time
of despatch; and
(b) in the case of recorded delivery or registered post
seventy two (72) hours from date of posting.
17. Entire Agreement
17.1 This Agreement with the documents referred to herein constitutes the
entire agreement between the parties with respect to the subject
matter hereof and no variation of the provisions hereof shall be
effective unless in writing signed by (or by some person duly
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<PAGE> 20
authorized by) each of the parties.
18. General
18.1 This Agreement shall be binding on and shall enure for the benefit
of each party's successors in title but shall not be assignable save
that the Purchaser may assign the benefit of the Warranties, the Tax
Covenant the indemnity set out in Clause 10 and the covenants in
Clause 7 to any member of the Purchaser's Group to whom the share
capital of the Company and/or SGS may have been transferred.
19. Further Assurance
19.1 The Vendors shall do and execute and shall use all reasonable
endeavors to procure any other necessary party to do and execute all
such further acts things deeds and documents as may be reasonably
necessary to give effect to the terms of this Agreement.
20. Governing Law
20.1 This Agreement shall be governed by and construed in accordance with
English Law and the parties hereby submit to the non-exclusive
jurisdiction of the English Courts as regards any claim or matter
arising under this Agreement.
IN WITNESS whereof the parties hereto have executed this Agreement as a Deed
the day and year first above written
-19-
<PAGE> 21
SCHEDULE 1
Particulars of the Vendors
--------------------------
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name and Address Number of Number of Consideration Consideration
of Vendor Ordinary "B" Shares for Ordinary for B Shares
Shares held held Shares (Pound (Pound Sterling)
Sterling)
PART A
------
<S> <C> <C> <C> <C>
Robert Arthur
Young Esq 84,278 3771 1,072,884 188.55
Barrow Green Farm
Haxted Road
Lingfield
Surrey RH7 6DE
John R
Young Esq 94,349 1082 1,201,090 54.10
Kingswood Farm
Tandridge Lane
Lingfield
Surrey
Mrs Sally E
Mitchell 44,118 747 561,635 37.35
Orchard Cottage
Park Farm
Lingfield
Surrey
PART B
------
Mrs S M Young 3,085 39,273
Barrow Green Farm
as above
Mrs P M Young 3,085 39,273
Kingswood Farm
as above
A J Mitchell Esq 3,085 39,273
Orchard Cottage
as above
A J Mitchell Esq
and Mrs S E
Mitchell 20,000 254,606
Orchard Cottage
as above
- ----------------------------------------------------------------------------------------------------------------
Total 252,000 5600 3,208,034 280
</TABLE>
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<PAGE> 22
SCHEDULE 2
Part I
Basic information concerning the Company
<TABLE>
<S> <C> <C>
1. Registered number : 866646
2. Date of incorporation : 15th December 1965
3. Place of incorporation : England
4. Address of registered office : 11 Radford Crescent
Billericay Essex CM12 ODW
5. Class of Company : Private
6. Authorized share capital : Pound Sterling 300,280
7. Issued Shared capital : Pound Sterling 252,280
8. Directors : R.A. Young of Barrow
Full Names Green Farm, Hasted Road,
Lingfield
Surrey RH7 6DE
R.E. Knights of High Den
Bakers Lane, Danbury,
Essex CM3 4NS and
9. Secretary: : R A Young of Barrow Green Farm, Haxted Road,
Full Names Lingfield, Surrey RH7 6DE
10. Accounting Reference Date : 31.12
11. Auditors : Finn-Kelcey & Chapman Ashford House, County Square,
Ashford Kent TN23 17B ENGLAND
12. Tax residence : England
13. Charges: : Legal charge dated 27.11.91 in favour of Barclays Bank
Plc
Part II
Basic information concerning SGS
1. Registered number : 1786050
</TABLE>
-21-
<PAGE> 23
<TABLE>
<S> <C> <C>
2. Date of incorporation : 25th January 1994
3. Place of incorporation : England
4. Address of registered office : 11 Radford Crescent
Billericay Essex CM12 ODW
5. Class of Company : Private
6. Authorized share capital : Pound Sterling 100,000
7. Issued Shared capital : Pound Sterling 100,000
8. Directors : R A Young of Barrow Green Farm, Haxted Road, Lingfield
Full Names Surrey RH7 6DE
J A Coulson of Wheeley Hall Cottage,
Broomhill Lane, Woolpit, Bury St Edmunds Suffolk IP50
9SH
9. Secretary: : R A Young of Barrow Green Farm, Haxted Road, Lingfield
Full Names Surrey RH7 6DE
10. Accounting Reference Date : 31.12
11. Auditors : Finn-Kelcey & Chapman Ashford House, County Square
Ashford, Kent TN23 17B
12. Tax residence : England
13. Charges: : Legal Charge dated 2.12.91 over land and buildings at
Fordham Road in favour of Barclays Bank plc
Debenture dated 2.12.91 in favour of Barclays Bank plc
Legal Charge dated 2.12.91 over land adjoining Fordham
Road Soham in favour of Barclays Bank plc
</TABLE>
-22-
<PAGE> 24
SCHEDULE 3
Warranties
PART 1 TAXATION WARRANTIES
1. Returns and Clearances
1.1 All returns, computations and payments which should have been made
by any Group Company for any Taxation purpose have been made
within the requisite periods and are up to date, correct and on a
proper basis and none of them is the subject of any dispute with
the Inland Revenue or other Taxation authorities.
1.2 All particulars furnished to the Inland Revenue or other Taxation
authorities, in connection with the application for any consent or
clearance on behalf of any Group Company fully and accurately
disclosed all facts and circumstances material to the decision of
the Inland Revenue or such other authorities; any such consent or
clearance is valid and effective; and 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 relative application and consent or clearance.
1.3 No Group Company has taken any action which has had the result of
altering, prejudicing or in any way disturbing for any period
commencing after the Last Accounts Date any arrangement or
agreement which it has previously negotiated with the
Commissioners of Inland Revenue, the Commissioners of Customs and
Excise or other Taxation authorities
2. PAYE and other deductions from payments made
2.1 Each Group Company has properly operated the PAYE system by
deducting tax, as required by law, from all payments made, or
treated as made, to its employees or former employees, and
accounting to the Inland Revenue for all tax so deducted and made
full annual returns of all expenses and benefits provided for its
employees or former employees.
2.2 Each Group Company has complied in all respects with the
provisions of the following sections, and all regulations made
under any of those sections, and has made and accounted for all
such deductions and retentions as should have been made by virtue
of
-23-
<PAGE> 25
those sections and regulations:
TMA 1970, s 70 (Method of charging non-residents) and s 79
(Profits from branch or agency);
ICTA 1988, s 43 (Non-residents);
ICTA 1988, s 123 (Foreign dividends):
ICTA 1988, s 349 (Payments not out of profits or gains brought
into charge to income tax, and annual interest and s 350 (Charge
to tax where payments made under s 349);
ICTA 1988, s 524 (Taxation of receipts from sale of patent
rights);
ICTA 1988, s 536 (Taxation of royalties where owner abroad);
ICTA 1988, s 555 to 558 (Entertainers and sportsmen):
ICTA 1988, s 559 to 567 (Sub-contractors in the construction
industry);
ICTA 1988, s 582 (Funding bonds issued in respect of interest on
certain debts);
ICTA 1988, s 733 (Persons entitled to exemptions);
ICTA 1988, s 737 (Manufactured dividends: treatment of tax
deducted);
ICTA 1988, s 777(Provisions supplementary to sections 775 and 776)
2.3 No Group Company has received a notice under ICTA 1988, s 23
(Collection from lessees and agents) which remains outstanding
2.4 The Disclosure Letter contains full particulars of all elections
in force in relation to any Group Company under ICTA 1988, s 247
(Dividends etc. paid by one member of a group to another) and no
assessment may be made under that section on any Group Company in
respect of advance corporation tax which ought to have been paid
or income tax which ought to have been deducted
3. Penalties
3.1 No Group Company has paid or, since the Last Accounts
-24-
<PAGE> 26
Date, become liable to pay any penalty or interest charged by
virtue of the provisions of TMA 1970 or any other Taxation
Statute.
3.2 No Group Company has ever been the subject of an investigation or
discovery by or involving the Inland Revenue special office or
enquiry branch and so far as the Vendors are aware there are no
circumstances existing which make it likely that an investigation
or discovery will be made.
4. Taxation claims, liabilities and reliefs
4.1 There are set out in the Disclosure Letter, with express reference
to this clause, full details of all matters relating to Taxation
in respect of which any Group Company (either alone or jointly
with any other person) has an outstanding entitlement:
4.1.1 to make any claim (including a supplementary claim) for relief
under any Taxation Statute;
4.1.2 to make any election for one type of relief, or one basis, system
or method of Taxation, as opposed to another;
4.1.3 to make any appeal (including a further appeal) against an
assessment to Taxation;'
4.1.4 to make any application for the postponement of Taxation.
4.2 No Group Company has made or is entitled to make a claim under
TCGA, s.24(2) (Assets lost or destroyed, or whose value becomes
negligible) or s 48 (Consideration due after time of disposal).
4.3 No Group Company is, or so far as the Vendors are aware will
become, liable to pay, or make reimbursement or indemnity in
respect of, any Taxation in consequence of the failure by any
other person (not being a Group Company, the Purchaser or any
other Company in the Purchaser's Group) to discharge that Taxation
within any specified period or otherwise, where such Taxation
relates to profit, income or gain, transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur
(whether wholly or partly) prior to Completion.
5. Distributions and payments
5.1 No Group Company has since 5 April 1965 capitalised or agreed to
capitalise, in the form of redeemable
-25-
<PAGE> 27
shares or debentures, any profits or reserves of any class or
description.
5.2 No security, within the meaning of ICTA 1988, s 254
(Interpretation of Part VI (Company distributions, tax credits
etc.)) issued by any Group Company and outstanding at today's date
was issued in such circumstances that the interest payable on it,
or any other payment in respect of it, falls to be treated as a
distribution under ICTA 1988, s 209 (Meaning of "distribution").
5.3 No rents, interest, annual payments or other sums of an income
nature paid, or payable, since the Last Accounts Date by any Group
Company or which any Group Company is at the date hereof under an
obligation to pay in the future, are wholly or partially
disallowable as deductions or charges in computing profits or
against profits, for the purposes of corporation tax, by reason of
the provisions of ICTA 1988, s 74 (General rules as to deductions
not allowable), s 338 (Allowance of charges on income), s 770
(Sales etc. at an undervalue or overvalue), s 125 (Annual
payments for non-taxable consideration), s 779 (Sale and
lease-back: limitation on tax reliefs), s 781 (Assets leased to
traders and others), s 787 (Restriction of relief for payments of
interest) or otherwise.
5.4 No Group Company has received a capital distribution to which the
provisions of TCGA, s 189 (Capital distribution of chargeable
gains: recovery from shareholder) could apply.
5.5 No Group Company has incurred expenditure which was not or will
not be wholly deductible in computing, or against, profits as a
trading expense or expense of management, or as a charge on
income, or in computing income for the purposes of Schedule A,
except for expenditure on the acquisition of an asset to be held
otherwise than as stock-in-trade, details of which are set out in
the Disclosure Letter
6. Losses and ACT
6.1 No Group Company has any loss available to carry forward.
7. Close companies
7.1 Each Group Company is, and has been during the six years ended on
the Last Accounts Date, a close company as defined in ICTA 1988,
s. 414 (Close
-26-
<PAGE> 28
companies).
7.2 No Group Company has, at any time, ceased to carry on the trade,
or the business of holding investments, of which immediately prior
to such time its activities wholly or mainly consisted.
7.3 No distribution within ICTA 1988, s 418 ("Distribution" to include
certain expenses of close companies) has been made by any Group
Company.
7.4 No outstanding loan to a Group Company was made to it for the
acquisition of the first business, undertaking or property of a
substantial character acquired by it.
7.5 No loan or advance within ICTA 1988, Pt XI, Ch II (Changes to tax
in connection with loans) has been made, or agreed to, by a Group
Company and no Group Company has, since the Last Accounts Date,
released or written off the whole or part of the debt in respect
of any such loan or advance.
8. Group relief and surrender of surplus ACT
8.1 The Group Companies comprise a group for the purposes of ICTA
1988, s 402 (Surrender of relief between members of groups and
consortia) and there is nothing in ICTA 1988, s 410 (Arrangements
for transfer of company to another group or consortium) which
precludes any Group Company from being regarded as a member of
such group.
8.2 No Group Company has, since the Last Accounts Date, made or agreed
to make, otherwise than to or from another Group Company:
8.2.1 a surrender of, or claim for, group relief pursuant to ICTA 1988,
Pt X, Ch IV (Group relief);
8.2.2 a surrender of any amount of surplus advance corporation tax
pursuant to ICTA 1988, s 240 (Set-off of company's surplus ACT
against subsidiary's liability to corporation tax).
8.3 No Group Company is liable to make or entitled to receive a
payment for group relief or for the surrender of advance
corporation tax, otherwise than to or from another Group Company.
8.4 No Group Company has made, or received, a payment for group relief
or for the surrender of advance corporation tax (otherwise than
to, or from, another
-27-
<PAGE> 29
Group Company) which may be liable to be refunded in whole or in
part.
8.5 No Group Company is restricted in relation to the surrendering of
group relief by the provisions of ICTA 1988, s 404 (Limitation of
group relief in relation to certain dual resident companies).
9. Acquisitions from group members
9.1 No Group Company owns any asset which was acquired (other than for
market value) from another company which was, at the time, a
member of the same group of companies (as defined in TCGA s 170
(Groups of companies: definitions)) as the relevant Group Company,
and which owned that asset otherwise than as a trading stock
within TCGA, s 173 (Transfers within a group: trading stock).
9.2 The execution or completion of this agreement will not result in
any profit or gain being deemed to accrue to a Group Company for
Taxation purposes, whether pursuant to TCGA, s 179 (Company
ceasing to be a member of a group) or otherwise.
10. Replacement of business assets
10.1 No Group Company has made a claim under TCGA, S 175 (Replacement
of business assets by members of a group) or TCGA, ss 22 (Capital
sums: compensation and insurance money), 247 (Roll-over relief on
compulsory acquisition), 152 (Roll-over relief) 153 (Assets only
partly replaced) or 154 (New assets which are depreciating assets)
which would affect the amount of the chargeable gain or allowable
loss which would, but for such claim, have arisen on a disposal of
any of its assets.
11. Capital allowances
11.1 All expenditure which any Group Company has incurred or may incur
under any subsisting commitment on the provision of machinery or
plant has qualified or will qualify (if not deductible as a
trading expense of a trade carried on by the relevant Group
Company) for writing-down allowances under CAA, Part II (Income
tax and corporation tax: capital allowances).
11.2 All capital allowances made or to be made to each Group Company in
respect of capital expenditure incurred prior to today's date, or
to be incurred
-28-
<PAGE> 30
under any subsisting commitment, have been made, or will be made,
in taxing its trade.
11.3 Since the Last Accounts Date no Group Company has done, or omitted
to do, or agreed to do, or permitted to be done, any act as a
result of which there may be made a balancing charge under CAA, s
24 (Writing-down allowances and balancing adjustments) or there
may be any recovery of excess relief within CAA, Part II Chapter V
(New expenditure on leased assets and on certain vehicles).
11.4 No Group Company is or may be in dispute with any person (not
being a Group Company) as to the entitlement to capital allowances
under CAA Part II Chapter VI (Entitlement to allowances for
machinery and plant which are fixtures).
12. Unremittable income and capital gains
12.1 No Group company has either received or become entitled to any
income which is "unremittable income" within the meaning of ICTA
1988, s 584 (Relief for unremittable overseas income) or any gain
to which the provisions of TCGA, s 279 (Foreign assets: delayed
remittances) could apply.
13. Demergers and purchase of own shares
13.1 No Group Company has been engaged in, or been a party to, any of
the transactions set out in ICTA 1988, ss 213 to 218 (Demergers),
or has made or received a chargeable payment as defined in s 214
(Chargeable payments connected with exempt distributions).
13.2 No Group Company has redeemed, repaid or purchased or agreed to
redeem, repay or purchase, any of its own shares.
14. Transfer of Overseas Trade
14.1 No Group Company has transferred a trade, carried on by it outside
the United Kingdom through a branch or agency, to a company not
resident in the United Kingdom, in circumstances such that a
chargeable gain may be deemed to arise at a date after the
transfer under TCGA, s 140 (Postponement of charge on transfer of
assets to non-resident company).
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<PAGE> 31
15. Transactions not at arm's length
15.1 No Group Company has carried out, or been engaged in, any
transaction or arrangement to which the provisions of ICTA 1988, s
770 (Sale etc. at an undervalue or overvalue) as extended by s 773
(Interpretation of ss 770 and 771) have been or may be applied.
15.2 No Group Company owns or has agreed to acquire, any asset or has
received or agreed to receive any services or facilities
(including without limitation the benefit of any licences or
agreements) the consideration for the acquisition or provision of
which was or will be in excess of its market value, or otherwise
than on an arm's length basis.
15.3 No Group Company has disposed of or acquired any asset in such
circumstances that the provisions of TCGA s 17 (Disposals and
acquisitions treated as made at market value) could apply.
16. Base values and acquisition costs
16.1 If each of the capital assets of the Group Companies was disposed
of at Completion for a consideration equal to the book value of
that asset in, or adopted for the purpose of, the Last Accounts,
no liability to corporation tax on chargeable gains or balancing
charge under CAA would arise; and, for the purpose of determining
the liability to corporation tax on chargeable gains, there shall
be disregarded any relief and allowances available to the Group
Company other than amounts falling to be deducted under TCGA, s 38
(Expenditure: general).
16.2 No election has been made under TCGA, s 35 (Assets held on 31
March 1982) for capital gains and losses on all the assets held by
any Group Company on 31 March 1982 to be computed by reference
only to their market value on that date.
16.3 No Group Company has, since the Last Accounts Date, engaged in any
transaction in respect of which there may be substituted, for any
purpose of Taxation, a different consideration for the actual
consideration given or received by such Group Company.
16.4 In determining the liability to corporation tax on chargeable
gains in respect of any assets which has been acquired or provided
by a Group Company, or which a Group Company has agreed to acquire
or
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<PAGE> 32
provide (whether conditionally, contingently or otherwise):
16.4.1 the sums allowable as a deduction will be determined solely in
accordance with the provisions of TCGA s 38 (Acquisition and
disposal costs, etc);
16.4.2 the amount or value of the consideration, determined pursuant to
TCGA s 38(l) (a) will not be less than the amount or value of the
consideration actually given by the Group Company for that asset;
16.4.3 the amount of any expenditure on enhancing the value of that
asset, determined pursuant to TCGA, s 38(l)(b), will not be less
than the amount or value of all expenditure actually incurred by
the Group company on that asset.
16.5 No asset owned, or agreed to be acquired, by a Group Company
(other than plant and machinery in respect of which it is entitled
to capital allowances) is a wasting asset within TCGA, s 44)
(Wasting assets).
17. Chargeable gains
17.1 No Group Company is owed a debt (not being a debt on a security)
upon the disposal or satisfaction of which a liability to
corporation tax on chargeable gains will arise by reason of the
provisions of TCGA s 251 (Debts).
17.2 No Group Company has claimed or is entitled to claim under TCGA s
253 or 254 (Relief in respect of loans to traders) that an
allowable loss has accrued in respect of any loan made by it.
17.3 No Group Company owns rights, or an interest in rights, under a
policy of assurance or contract for a deferred annuity on the life
of any person of which it is not the original beneficial owner.
17.4 No part of the consideration given by a Group Company for a new
holding of shares (within the meaning of TCGA s 126 (Application
of ss 78 to 81)) will be disregarded by virtue of the proviso to
TCGA s 128(2).
17.5 No asset owned by a Group Company has been the subject of a deemed
disposal under TCGA Sched 2 (Assets held on 6 April 1965) so as to
restrict the extent to which the gain or loss, over the period of
ownership, may be apportioned by reference to straightline growth.
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<PAGE> 33
18. Capital losses and limited partnerships
18.1 No Group Company has incurred a capital loss to which the
provisions of TCGA s 18 (Transactions between connected persons)
are applicable.
18.2 No Group Company is treated as a limited partner for the purposes
of ICTA 1988, s 118 (Restriction on relief: companies).
19. Gifts involving Group Companies
19.1 No Group company has held, or holds, shares in a company (not
being another Group Company) which has made any such transfer as
is referred to in TCGA s 125 (Shares in close company transferring
assets at an undervalue); and no Group Company has received any
assets by way of gift as mentioned in TCGA s 282 (Gifts: recovery
from donee).
20. Tax Avoidance
20.1 No Group Company has, since the Last Accounts Date, engaged in, or
been a party to, any scheme or arrangement of which the main
purpose, or one of the main purposes, was the avoidance of, or a
reduction in liability to, Taxation; and, without prejudice to the
generality of the foregoing, no Group Company has been a party to,
or otherwise involved in, any transaction to which any of the
following provisions could apply:
CAA s 75 (Capital allowances: effect of sales between connected
persons, sale and lease-back etc);
TCGA s 106 (Disposal of shares and securities within prescribed
period of acquisition);
TCGA s 29 (Value shifting);
CAA s 159 (Time when capital expenditure is incurred);
ICTA 1988, s 56 (Transactions in deposits with and without
certificates or in debts);
ICTA 1988, s 240 (Set-off company's surplus ACT against
subsidiary's liability to corporation tax);
ICTA 1988, s 399 (Dealings in commodity futures etc:
-32-
<PAGE> 34
withdrawal of loss relief);
ICTA 1988, s 410 (Arrangements for transfer of company to another
group or consortium); s 395 (Leasing contracts and company
reconstructions); and s 116 (Arrangements for transferring
relief);
ICTA 1988, s 729 (Sale and purchase of securities); and S 730
(Transfers of income arising from securities);
ICTA 1988, s 731 to 735 (Purchase and sale of securities);
ICTA 1988, s 736 (Company dealing in securities: distribution
materially reducing value of holding);
ICTA 1988, s 1737 (Manufactured dividends: treatment of tax
deducted);
ICTA 1988, s 774 (Transactions between dealing company and
associated company);
ICTA 1988, s 779 (Sale and lease-back: limitation on tax reliefs);
ICTA 1988, s 781 (Assets leased to traders and others);
ICTA 1988, s 786 (Transactions associated with loans or credit).
20.2 No Group Company has, since the Last Accounts Date, been a party
to any transaction to which any of the following provisions have
been, or could, be applied other than transactions in respect of
which all necessary consents or clearances have been obtained;
TCGA s 139 (Company reconstruction or amalgamation; transfer of
assets);
ICTA 1988, ss 703 to 709 (Cancellation of tax advantages from
certain transactions in securities);
ICTA 1988, s 765 (Migration etc. of companies);
ICTA 1988, s 776 (Transactions in land: taxation of capital
gains);
TCGA ss 135-138 (Company reconstructions and amalgamations).
21. Depreciatory transactions
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<PAGE> 35
21.1 No allowable loss, which may accrue on the disposal by any Group
Company of any asset, will be reduced by reason of the provisions
of TCGA s 176 (Transactions in a group) or s 281 (Dividend
stripping) and no chargeable gain or allowable loss arising on
such a disposal will be adjusted pursuant to the provisions of
TCGA ss 30-34 (Value shifting further provisions)
22. Sale and leaseback of land
22.1 No Group Company has, since the Last Accounts Date, entered into
any transaction to which the provisions of ICTA 1988, s 780 (Sale
and lease-back: taxation of consideration received) have been, or
could be, applied.
23. Stock Dividends
23.1 No Group Company has issued any share capital to which the
provisions of ICTA 1988, s 249 (Stock dividends treated as income)
or TCGA s 141 Stock divends: consideration for new holding) could
apply, nor does any Group Company own any such share capital.
24. Foreign loan interest
24.1 No Group Company has received foreign loan interest on which
double taxation relief will, or may, be restricted under ICTA
1988, s 798 (Interest on certain overseas loans).
25. Value added tax
25.1 Each Group Company:
25.1.1 has duly registered and is a taxable person for the purposes of
value added tax;
25.1.2 has complied, in all material respects, with all statutory
requirements, orders, provisions, directions or conditions
relating to value added tax;
25.1.3 maintains complete, correct and up to date records (in all
material respects) for the purposes of the applicable legislation;
25.1.4 is not in arrears with any payment or returns thereunder, or
liable to any abnormal or non-routine payment, or any forfeiture
or penalty, or to the operation of any penal provision;
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25.1.5 has not been required by the Commissioners of Customs and Excise to
give security;
25.1.6 has not applied for treatment as a member of a group which
includes any company other than the Group Companies;
25.1.7 is not, and has not agreed to become, an agent, manager or factor
(for the purposes of VATA, s 47 or 48 Agents, etc.)) of any person
who is not resident in the United Kingdom.
25.2 The Disclosure Letter contains full particulars of any claim for
bad debt relief made, or which may be made, by any Group Company
under VATA s 36 (Refund of tax in cases of bad debts).
25.3 No Group Company has, during the period of twelve or twenty-four
months respectively preceding today's date, received a surcharge
liability notice under VATA s 59 (The default surcharge) or a
penalty liability notice under VATA s 64 (Persistent
misdeclaration resulting in understatements or overclaims).
26. Inheritance Tax
26.1 No transfer of value (as defined in IHTA 1984, s 3 (Transfers of
value) has at any time been made by any Group Company.
26.2 There is not outstanding any Inland Revenue charge for unpaid
inheritance tax (as provided by IHTA 1984, ss 237 and 238 (Inland
Revenue charge for unpaid tax)) over any asset of any Group
Company, or in relation to any shares in the capital of any Group
Company.
26.3 There are not in existence any circumstances whereby any such
power as is mentioned in IHTA 1984, s 212 (powers to raise tax)
could be exercised in relation to any shares, securities or other
assets of any Group company, or could be exercised but for s
204(6) (Limitation of liability).
PART 2 PROPERTY WARRANTIES
1. Title
1.1 The Properties comprise all the properties owned, occupied or
otherwise used in connection with their businesses by the Group
Companies.
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1.2 SGS is the legal and beneficial owners of the Properties.
1.3 SGS owns no properties whether as freeholder or tenant save for the
Properties
1.4 The information contained in Schedule 4 as to the tenure of each
of the Properties held by SGS, and of all the mortgages and
charges that encumber the Properties is accurate in all respects.
2. Encumbrances
2.1 The Properties are not subject to any outgoings, other than
general rates, water rates, and insurance premiums and, in the
case of leasehold properties, rent and any other monies that may
be due from the tenant to the landlord under the terms of the
respective leases
2.2 The Properties are not subject to any restrictive covenants,
stipulations, easements, profits a prendre, wayleaves, licenses,
grants, restrictions, overriding interests or other such rights
vested in third parties save those that have been registered at
H.M. Land Registry and appear on the respective titles of the
estates concerned or have been otherwise disclosed.
2.3 Where any such matters as are referred to in Clauses 2.1 and 2.2
have been disclosed in the Disclosure Letter, the obligations and
liabilities imposed and arising under them have to the best of the
Vendor's knowledge information and belief been fully observed and
performed, and any payments in respect of them due and payable
have been duly paid.
2.4 The Properties are not subject to any option, right of pre-emption
or right of first refusal.
2.5 Each of the Properties is free from any tenancy or occupation
licence howsoever called
3. Planning matters
3.1 The leasehold property named as "Property A" in Schedule 4 is used
for storage and distribution.
3.2 The freehold property named as "Property B" in Schedule 4 is used
for a purpose within Class B of the Schedule to the Town and
Country Planning (Use Classes) Order 1987.
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3.3 No complaint has been received by SGS of any failure by it to
comply with planning permissions, orders, and regulations issued
under the Planning Acts, and building regulation consents and
bye-laws for the time being in force with respect to SGS' use of
each of the Properties.
3.4 To the best of the Vendors' knowledge information and belief all
development charges, monetary claims and liabilities under the
Planning Acts or any other such legislation (if any) have been
discharged and no such liability, contingent or otherwise, is
outstanding.
4. Statutory obligations
4.1 To the best of the Vendors' knowledge information and belief
compliance is being made and has at all times been made with all
applicable statutory and by-law requirements with respect to the
Properties and in particular (but without limitation) with
requirements as to fire precautions and with the Public Health
Acts, the Offices, Shops, and Railway Premises Act 1963 and the
Factory Acts.
4.2 To the best of the vendors' knowledge information and belief there
is no outstanding and unobserved or unperformed obligation with
respect to the Properties necessary to comply with the
requirements (whether formal or informal) of any competent
authority exercising statutory or delegated powers.
4.3 There are not in force or required to be in force any licences
whether under the Licensing Act 1964 or otherwise which apply to
any of the Properties.
5. Adverse orders
5.1 To the best of the Vendors' knowledge information and belief there
are no compulsory purchase notices, orders or resolutions
affecting any of the Properties not presently registered as a
local land charge at the offices of the East Cambridgeshire
District Council prior to the 1st day of March 1996 nor to the
best of SGS's knowledge information and belief are there any
circumstances likely to lead to any being made.
5.2 To the best of the Vendors' knowledge information and belief there
are no closing, demolition or clearance orders, enforcement
notices or stop notices affecting the Properties, nor to the best
of the Vendors information and belief are there any circumstances
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likely to lead to any being made.
6. Condition of the Properties
6.1 There are no disputes with any adjoining or neighbouring owner
with respect to boundary walls and fences, or with respect to any
easement, right or means of access to the Properties.
6.2 The principal means of access to the Properties are over roads
which have been taken over by the local or other highway authority
and which are maintainable at the public expense
6.3 Each of the Properties enjoys the main services of water, drainage,
electricity and gas.
7. Insurance
7.1 The Properties are insured in their respective full reinstatement
values and against third party and public liabilities to an
adequate extent.
7.2 All premiums payable in respect of insurance policies with respect
to the Properties which have become due have been duly paid, and
no circumstances have arisen which would vitiate or permit the
insurers to avoid such policies.
7.3 The information in the Disclosure Letter with respect to insurance
policies is up to date and true and accurate in all respects.
PART 3 COMMERCIAL WARRANTIES
1. Preliminary
1.1 Details of SGS
1.1.1 The Company, is the sole beneficial owner of all the issued or
allotted shares of SGS and all such shares are fully paid or
credited as fully paid.
1.1.2 No pledge, lien, charge or encumbrance exists, and there is no
agreement to create one, of or affecting any of the shares of SGS
1.2 Directors and shadow directors
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1.2.1 The only directors of the Group Companies are the persons whose
names are listed in relation to each Group Company in Schedule 2.
1.2.2 No person is a shadow director (within the meaning of CA 1985, a 741)
of a Group Company but is not treated as one of its directors for
all the purposes of CA 1985.
1.3 Subsidiaries and branches
1.3.1 No Group Company:
1.3.1.1 is the holder or beneficial owner of or has agreed to
acquire any share or loan capital of any other company
(whether incorporated in the United Kingdom or elsewhere)
other than SGS;
1.3.1.2 has outside the United Kingdom any branch, agency or
place of business, or any permanent establishment (as
that expression is defined in the relevant double
taxation relief order current at today's date).
1.4 Options over Group Companies' capital
1.4.1 Save as provided in this agreement, there are no agreements or
arrangements in force which provide for the present or future issue,
allotment or transfer of, or grant to any person the right (whether
conditional or otherwise) to call for the issue, allotment or
transfer of, any share or loan capital of any Group Company
(including any option or right of pre-emption or conversion).
1.5 New issues of capital
1.5.1 Save as provided in this agreement, no share or loan capital has
been issued or allotted, or agreed to be issued or allotted by any
Group Company since the Trust Accounts Date.
1.6 Commissions
1.6.1 No one is entitled to receive from any Group Company any finder's
fee, brokerage or other commission in connection with the sale
and purchase of the Shares under this agreement.
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1.7 Memoranda and Articles of Association statutory books and
resolutions
1.7.1 The copy of the Memorandum and Articles of Association of each
Group Company attached to the Disclosure Letter is accurate and
complete in all respects and has embodied in it, or annexed to it,
a copy of every such resolution as is referred to in CA 1985, s
380(2).
1.7.2 The register of members and other statutory books of each Group
Company have been properly kept and contain an accurate and
complete record of the matters with which they should deal.
1.7.3 No notice or allegation has been received that any of the
statutory books of any Group Company is incorrect or should be
rectified.
1.7.4 Since the Last Accounts Date no alteration has been made to the
Memorandum or Articles of Association of any Group Company and no
resolution of any kind of any Group Company has been passed by its
shareholders (other than resolutions relating to routine business
at annual general meetings).
1.8 Documents filed
1.8.1 All returns, particulars, resolutions and documents required by CA
1985 or any other legislation to be filed with the Registrar of
Companies, or any other authority, in respect of each Group
Company have been duly filed and were correct, and due compliance
has been made with all the provisions of CA 1985, and other legal
requirements, in connection with the formation of each Group
Company, the allotment or issue of shares, debentures and other
securities, the payment of dividends and the conduct of its
business.
1.8.2 All charges in favour of any Group Company have (if appropriate)
been registered in accordance with the provisions of CA 1985, Pt
XII.
1.9 Possession of documents
1.9.1 All title deeds relating to the assets of each Group Company, and
an executed copy of all current agreements to which any Group
Company is a party, and the original copies of all other documents
which are owned by, or which ought to be in the possession of, any
Group Company are in its possession.
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1.10 Investigations
1.10.1 There are not in existence and no notice has been received of any
investigations or enquiries by, or on behalf of, any governmental
or other body in respect of the affairs of any Group Company.
2. Accounts
2.1 The Last Accounts
2.1.1 The Last Accounts were prepared in accordance with the historical
cost convention; and the bases and policies of accounting, adopted
for the purpose of preparing the Last Accounts, are the same as
those adopted in preparing the audited accounts of each Group
Company in respect of the three last preceding accounting periods.
2.1.2 The Last Accounts:
2.1.2.1 give a true and fair view of the assets and
liabilities of each Group Company at the Last
Accounts Date and its profits for the financial
period ended on that date;
2.1.2.2 comply with the requirements of CA 1985;
2.1.2.3 comply with all current SSAPs applicable to a United
Kingdom company;
2.1.2.4 are not affected by any extraordinary, exceptional or
non-recurring item;
2.1.2.5 properly reflect the financial position of each Group
Company as at their date;
2.1.2.6 fully disclose all the assets of each Group Company
as at their date;
2.1.2.7 to the extent required by CA 1985 and the relevant
SSAPs make proper provision or reserve for all
liabilities and capital commitments of each Group
Company outstanding at the Last Accounts Date,
including contingent, unquantified or disputed
liabilities;
2.1.2.8 make provision or reserve, in accordance with the
principles set out in the notes included in the Last
Accounts, for all Taxation liable to be assessed on
each Group Company, or for which it may be
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accountable, in respect of the period ended on the
Last Accounts Date.
2.1.3 No amount included in the Last Accounts in respect of any asset,
whether fixed or current exceeds its purchase price or production
cost (within the meaning of CA 1985, Sched 4), or (in the case of
current assets) its net realisable value at the Last Accounts
Date.
2.1.4 The Closing Accounts have been prepared on a basis consistent with
the Last Accounts and in accordance with UK Generally Accepted
Accounting Practice.
2.2 Caluation of stock in trade and work in progress
2.2.1 In the Last Accounts and in the accounts of each Group Company for
the three preceding financial years the stock in trade and work in
progress of each Group Company have been treated in accordance
with SSAP 9.
2.2.2 In the Last Accounts all redundant, obsolete and slow-moving stock
in trade has been written off or written down as appropriate
2.3 Depreciation of Fixed assets
2.3.1 In the Last Accounts and in the accounts of each Group Company for
the three preceding financial years, the fixed assets of each
Group Company have been depreciated in accordance with SSAP 12.
2.4 Deferred taxation
2.4.1 Where provision for deferred Taxation is not made in the Last
Accounts, full details of the amounts of deferred Taxation have
been disclosed in the Disclosure Letter.
2.5 Accounting reference date
2.5.1 The accounting reference date of each Group Company for the
purposes of CA 1985, s 224 is, and has at all times, been 31st
December.
2.6 Book debts
2.6.1 No part of the amounts included in the Last Accounts, or
subsequently recorded in the books of any Group Company, as owing
by any debtors (subject to any
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provisions made in the Last Accounts) is overdue by more than
twelve weeks, or has been released 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 relevant Group Company as irrecoverable in whole
or in part.
2.6.2 The amounts due from debtors as at Completion (less the amount of
any relevant provision or reserve, determined on the same basis as
that applied in the Last Accounts and disclosed in the Disclosure
Letter) will so far as the Vendors are aware be recoverable in
full within twelve (12) months of Completion and none of those
debts is subject to any counter-claim or set off, except to the
extent of any such provision or reserve.
2.7 Books and records
2.7.1 All the accounts, books, ledgers, financial and other records, of
whatsoever kind, of each Group Company:
2.7.1.1 are in its possession;
2.7.1.2 have been fully, properly and accurately kept and
completed;
2.7.1.3 do not contain any material inaccuracies or
discrepancies of any kind;
2.7.1.4 comply with the provision of s. 221 of CA 1985.
3. Finance
3.1 Capital commitments
3.1.1 There were no commitments on capital account outstanding at the
Last Accounts Date and, since the Last Accounts Date, no Group
Company has made, or agreed to make, any capital expenditure, or
incurred or agreed to incur any capital commitments, nor has it
disposed of, or realised, any capital assets or any interest in
such assets.
3.2 Dividends and distributions
3.2.1 Since the Last Accounts Date no dividend or other distribution (as
defined in ICTA 1988, Pt III and S 418) has been or is treated as
having been, declared, paid or made by any Group Company.
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3.2.2 All dividends or distributions declared, made or paid by each
Group Company have been declared, made or paid in accordance with
its Articles of Association and the applicable provisions of CA
1985.
3.3 Bank and other borrowings
3.3.1 Full details of all limits on any Group Company's bank overdraft
facilities are accurately set out in the Disclosure Letter.
3.3.2 The total amount borrowed by each Group Company from each of its
bankers does not exceed its respective overdraft facilities.
3.3.3 The total amount borrowed by each Group Company (as determined in
accordance with the provisions of the relevant instrument) does
not exceed any limitation on its borrowing powers contained in its
Articles of Association, or in any debenture or other deed or
document binding upon it.
3.3.4 No Group Company has outstanding, or has agreed to create or
issue, any loan capital; nor has it factored any of its debts, or
engaged in financing of a type which would not require to be shown
or reflected in the Last Accounts, or borrowed any money which it
has not repaid, save for borrowings not exceeding the amounts
shown in the Last Accounts.
3.3.5 No Group Company has, since the Last Accounts Date, repaid or
become liable to repay, any loan or indebtedness in advance of its
stated maturity.
3.3.6 No Group Company has received notice (whether formal or informal)
from any lenders of money to any Group Company, requiring
repayment or intimating the enforcement by the lender of any
security which it may hold over any assets of any Group Company.
3.4 Loans by and debts due to Group Companies
3.4.1 No Group Company has lent any money which has not been repaid to
it, or owns the benefit of any debt (whether or not due for
payment) other than debts which have arisen in the ordinary course
of its business; and no Group Company has made any loan or
quasi-loan contrary to CA 1985.
3.4.2 No Group Company has made a loan, which remains outstanding, on
terms entitling it to receive a rate
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of interest varying with, or a share of, the profits of a business.
3.5 Liabilities
3.5.1 There are no liabilities (including contingent liabilities) which
are outstanding on the part of SGS other than those liabilities
disclosed in the Last Accounts or incurred, in the ordinary and
proper course of trading, since the Last Accounts Date.
3.5.2 There has been no exercise, purported exercise or claim for any
charge, lien, encumbrance or equity over any of the fixed assets
of any Group Company; and there is no dispute directly or
indirectly relating to any such fixed assets.
3.5.3 No Group Company has been the tenant of, or a guarantor in respect
of, any leasehold property, other than the Properties.
3.6 Bank accounts
3.6.1 Statements of the bank accounts of each Group Company, and of the
credit or debit balances as at a date not more than seven days
before today's date have been supplied to the Purchaser.
3.6.2 Since the date of each statement, there have been no payments out
of the account to which the statement relates, except for payments
in the ordinary and proper course of business; and the balances on
current accounts are not substantially different from the balances
shown on such statements.
3.7 Continuation of facilities
3.7.1 In relation to all debentures, acceptance credits, overdrafts,
loans or other financial facilities outstanding or available to
any Group Company (referred to in this clause as "facilities");
3.7.1.1 the Disclosure Letter sets out full details of them
and there are attached to it accurate copies of all
documents relating to the facilities;
3.7.1.2 there has been no contravention of, or non-compliance
with, any provision of any of the documents;
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3.7.1.3 no steps for the early repayment of any indebtedness
have been taken or threatened;
3.7.1.4 none of the facilities is dependent on the guarantee
or indemnity of, or any security provided by, a third
party other than a Group Company
3.8 Government grants
3.8.1 No Group Company has applied for, or received, any grant, subsidy
or financial assistance from any government department or agency
or any local or other authority.
4. Trading and Contracts
4.1 Changes in business activities and financial position since Last
Accounts Date.
4.1.1 Since the Last Accounts Date:-
4.1.1.1 the business of SGS has been continued in the
ordinary and normal course;
4.1.1.2 the Company has not traded;
4.1.1.3 no management fees have been taken or agreed to be
taken from any Group Company.
4.2 Vendors' interests and liabilities to Group Companies
4.2.1 Save as set out in the Disclosure Letter the Vendors, and their
Associates, do not have any rights or interests, directly or
indirectly, in any businesses other than those now carried on by
the Group Companies, which are at the date hereof competitive with
the businesses of the Group Companies, save as registered holder
or beneficial owner of any class of securities of any company
which is listed on The Stock Exchange or dealt in on the Unlisted
Securities Market, and in respect of which a Vendor, with his
Associates, holds and is beneficially interested in less than five
per cent of any single class of the securities in that company.
4.2.2 There is no outstanding indebtedness of any Vendor, or his
Associates, to a Group Company.
4.3 Effect of sale of Shares
4.3.1 Compliance with the terms of this agreement does not
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and will not:
4.3.1.1 conflict with, or result in the breach of, or
constitute a default under, any of the terms,
conditions or provisions of any agreement or
instrument to which any Group Company is a party, or
any provision of the memorandum or articles of
association of any Group Company or any encumbrance,
lease, contract, order, judgment, award, injunction,
regulation or other restriction or obligation of any
kind or character by which or to which any asset of
any Group Company is bound or subject;
4.3.1.2 relieve any person from any obligation to any Group
Company (whether contractual or otherwise or enable
any person to determine any such obligation, or any
right or benefit enjoyed by any Group Company, or to
exercise any right, whether under an agreement with,
or otherwise in respect of, any Group Company;
4.3.1.3 result in the creation, imposition, crystallisation
or enforcement of any encumbrance whatsoever on any
of the assets of any Group Company;
4.3.1.4 result in any present or future indebtedness of any
Group Company becoming due, or capable of being
declared due and payable prior to its stated
maturity.
4.4 Conduct of businesses in accordance with memoranda and articles of
association
4.4.1 Each Group 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.
4.4.2 Each Group Company is empowered and duly qualified to carry on
business in all jurisdictions in which it now carries on business.
4.5 Joint ventures and partnerships
4.5.1 No Group Company is, or has agreed to become, a member of any
joint venture consortium, partnership
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or other unincorporated association; and no Group Company is, or
has agreed to become, a party to any agreement or arrangement for
sharing commissions or other income.
4.6 Arrangements relating to the management and business
4.6.1 There are no arrangements or understandings (whether legally
enforceable or not) between a Group Company and any person who is
a shareholder, or the beneficial owner of any interest, in the
Group Company, or in any company in which the Group Company is
interested, or any Associate of any such person, relating to the
management of any Group Company's business, or the appointment or
removal of directors of any Group Company, or the ownership or
transfer of ownership or the letting of any of the assets of any
Group Company, or the provision, supply or purchase of finance,
goods, services or other facilities to, by or from any Group
Company, or relating in any other manner to its affairs.
4.7 Agency agreements and agreements restricting business
4.7.1 No Group Company is a party to any agency, distributorship,
marketing, purchasing, manufacturing or licensing agreement or
arrangement, or any restrictive trading or other agreement or
arrangement pursuant to which any part of its business is carried
on, or which in any way restricts its freedom to carry on the
whole, or any part, of its business in any part of the world in
such manner as it thinks fit.
4.7.2 No Group Company is a party to any undertaking or assurances given
to any court or governmental agency, which is still in force.
4.8 Unfair trade and restrictive practices
4.8.1 No Group Company has committed, or omitted to do, any act or thing
which could give rise to any fine or penalty; and no Group Company
is a party to any agreement, practice or arrangement which, in
whole or in part:
4.8.1.1 contravenes the provisions of the Trade Descriptions
Act 1968;
4.8.1.2 contravenes the provisions of the Fair
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Trading Act 1973, Part XI;
4.8.1.3 would, or might, result in a reference of a "consumer
trade practice", within the meaning of the Fair
Trading Act 1973, s 13, or be liable to reference to
the Consumer Protection Advisory Committee under part
II of the said Act;
4.8.1.4 contravenes the provisions of the Consumer Credit Act
1974;
4.8.1.5 contravenes or is invalidated (in whole or in part)
by or is subject to registration under, the
Restrictive Trade Practices Acts 1976 and 1977;
4.8.1.6 contravenes or is invalidated (in whole or in part)
by the provisions of the Resale Prices Act 1976;
4.8.1.7 contravenes any provisions of the Treaty of Rome;
4.8.1.8 contravenes any other anti-trust, anti-monopoly or
anti-cartel legislation or regulations.
4.8.2 No Group Company has engaged in any anti-competitive practice as
defined in the Competition Act 1980.
4.9 Litigation, disputes and winding up
4.9.1 No Group Company is engaged in any litigation or arbitration
proceedings, as plaintiff or defendant and there are no
proceedings pending or threatened, either by or against any Group
Company.
4.9.2 There is no dispute with any revenue, or other official,
department in the United Kingdom or elsewhere, in relation to the
affairs of any Group Company.
4.9.3 There are no claims pending or threatened against any Group
Company, by an employee or workman or third party, in respect of
any accident or injury, which are not fully covered by insurance.
4.9.4 No Group Company is insolvent or unable to pay its debts within
the meaning of the Insolvency Act 1986, s 123.
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4.9.5 No order has been made, or petition presented or resolution passed
for the winding-up of any Group Company; nor has any distress,
execution or other process been levied in respect of any Group
company which remains undischarged; nor is there any unfulfilled
or unsatisfied judgment or court order outstanding against any
Group company.
4.10 Compliance with statutes
4.10.1 No Group Company, and none of its officers, agents or employees
(during the course of their duties) has committed or omitted to
do, any act or thing, the commission or omission of which is in
contravention in any material respect of any act, order,
regulation or the like (whether of the United Kingdom or
elsewhere) giving rise to any fine, penalty, default proceedings
or other liability on the part of the Group Company.
4.10.2 Each Group Company has conducted and is conducting its business in
all material respects in accordance with all applicable laws and
regulations, whether of the United Kingdom or elsewhere.
4.11 Documents stamped
4.11.1 All documents which in any way affect the right, title or interest
of any Group company in or to any of its property, undertaking, or
assets or to which a Group Company is a party and which attract
stamp duty have been duly stamped within the requisite period for
stamping.
4.14 Business names
4.12.1 No Group Company uses a name for any purpose other than its full
corporate name.
4.13 Transactions involving directors
4.13.1 No Group Company has been a party to any transaction to which any
of the provisions of CA 1985, s 320 or s 321 may apply.
4.14 Powers of attorney and authority
4.14.1 No power of attorney given by any Group Company is in force.
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4.14.2 There are not outstanding any authorities (express or implied) by
which any person may enter into any contract or commitment to do
anything on behalf of a Group Company other than a contract or
commitment in the ordinary course of business.
4.15 Licences and consents
4.15.1 Save in respect of planning in relation to the Properties no
licences or consents including (but not limited to) Environmental
Authorisations are necessary for the proper carrying on of each
Group Company's business.
4.15.2 No Group Company is in breach of any of the terms or conditions of
its planning licences or consents.
4.15.3 No Group Company carries on investment business within the meaning
of the Financial Services Act 1986, s 1.
4.16 Subsisting contracts
4.16.1 The Disclosure Letter contains accurate particulars of all the
contracts and other engagements whether written or oral which
involve an aggregate outstanding expenditure by the relevant Group
Company of Pound Sterling 30,000 or more to which any Group
Company is a party at today's date.
4.16.2 No Group Company is a party to any contract, transaction,
arrangement or liability which:
4.16.2.1 is of an unusual or abnormal nature, or outside the
ordinary and proper course of business;
4.16.2.2 is for a fixed term of more than six months;
4.16.2.3 is of a long-term nature (that is, unlikely to have
been fully performed in accordance with its terms,
more than six months after the date on which it was
entered into or undertaken);
4.16.2.4 involves, or is likely to involve, the supply of
goods the aggregate sales value of which will
represent in excess of 10 per cent of the turnover
for the preceding financial year of the relevant
Group
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Company;
4.16.2.5 is a contract for hire or rent, hire purchase, or
purchase by way of credit sale or periodical payment;
4.16.3 There is not now outstanding in respect of any Group Company any
agreement for the supply of services or for agency.
4.17 Defaults under agreements by Group Company
4.17.1 SGS is not at the date hereof
4.17.1.1 in default under any agreement or covenant to which
it is a party, or in respect of any other obligations
or restrictions binding upon it;
4.17.1.2 in default under any obligations existing by reason
of membership of any association or body;
4.17.2 No threat or claim of default, under any agreement, instrument or
arrangement to which SGS is a party,has been made, and is
outstanding, against SGS.
4.17.3 The Company is not:-
4.17.3.1 in default under any agreement or covenant to which
it is a party, or in respect of any other obligations
or restrictions binding upon it;
4.17.3.2 in default under any obligations existing by reason
of membership of any association or body;
4.17.3.3 liable in respect of any representation or warranty
(whether express or implied) or any matters giving
rise to a duty of care, on the part of the Company.
4.17.4 No threat or claim of default, under any agreement, instrument or
arrangement to which the Company is a party, has been made, and is
outstanding, against the Company.
4.18 Other party's defaults
4.18.1 So far as the Vendors are aware no party to any agreement with, or
under an obligation to, any Group
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company is in default, being a default which would be material in
the context of the financial or trading position of such Group
Company.
4.19 Defective products
4.19.1 SGS does not now nor has it since the date of its incorporation
ever installed any synthetic lining products;
4.19.2 SGS has now and has at all times had product liability insurance of
no less than Pound Sterling 1,000,000 in respect of all countries
into which it has sold its products;
4.19.3 In respect of all products manufactured sold or supplied by SGS,
SGS has never made any claim under such product liability
insurance nor been engaged in any litigation as a result of such
products being defective or faulty.
4.19.4 None of the Group Companies has received a prohibition notice,
notice to warn or a suspension notice under the Consumer
Protection Act 1987.
4.20 Service liabilities
4.20.1 No Group Company is subject to any liability or obligation (save
as may be implied by law) to service, repair, maintain, take back
or otherwise do or not to do anything in respect of any goods that
have been delivered by it.
4.21 Purchase and sales from or to one party
4.21.1 Neither more than 25 per cent of the aggregate amount of all the
purchases, nor more than 25% of the aggregate amount of all the
sales, of any Group Company are obtained, or made from or to the
same supplier or customer (including any person in any way
connected with such supplier or customer).
4.22 Data Protection
4.22.1 Each Group Company has, if required to do so under the Data
Protection Act 1984, duly registered as a data user and full
particulars of the registrations are set out in the Disclosure
Letter.
4.22.2 Each Group Company has complied with the data protection
principles set out in the Data Protection Act 1984.
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4.22.3 No individual has claimed, or will have a right to claim,
compensation from any Group Company under the Data Protection Act
1984.
4.23 Guarantees and Indemnities
4.23.1 There is not now outstanding in respect of any Group Company any
guarantee or agreement for indemnity or for suretyship given by,
or for the accommodation of, such Group Company.
4.24 Insider Contracts
4.24.1 There is not outstanding, and there has not at any time during the
three years prior to today's date been outstanding, any contract
or arrangement to which any Group Company is a party and which any
vendor, or any Associate of any Vendor, or any director of any
Group Company, or any Associate of any such director, is or has
been interested, whether directly or indirectly.
4.24.2 No Group Company is a party to, nor have its profits or financial
position during the three years prior to day's date been affected
by, any contract or arrangement which is not of an entirely arm's
length nature.
4.25 Management Reports
4.25.1 There have been no reports, concerning any Group Company, by
financial or management consultants within the period of three
years prior to today's date which disclose potential or unrecorded
liabilities not disclosed in the accounts.
5. Employment
5.1 Employees and terms of employment
5.1.1 Full particulars of the identities, dates of commencement of
employment, or appointment to office and terms and conditions of
employment of all the employees and officers of each Group
Company, including without limitation profit sharing, commission
or discretionary bonus arrangements, are fully and accurately set
out in the Disclosure Letter.
5.1.2 There are no agreements or other arrangements
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(whether or not legally binding) between any Group Company and any
trade union or other body representing employees.
5.1.3 No contract of service exists between any Group Company and a
director or employee in relation to which any relevant
requirements of CA 1985, s 319 have not been fulfilled.
5.1.4 No past employee of any Group Company has a right to return to
work or has a right to be reinstated or re-engaged under the
Employment Protection (Consolidation) Act 1978.
5.2 Bonus Schemes
5.2.1 There are no schemes in operation by, or in relation to, any Group
Company under which any employee of any Group Company is entitled
to a commission or remuneration of any other sort, calculated by
reference to the whole or part of the turnover, profits or sales
of any Group Company.
5.3 Changes in remuneration
5.3.1 Since the Last Accounts Date or (where employment or holding of
office commenced after the beginning of such period) since the
commencing date of such employment or holding of office:
5.3.1.1 no change has been made in the rate of remuneration,
or the emoluments or pension benefits, of any
officer, ex officer or senior executive of any Group
Company (a senior executive being a person in receipt
of remuneration in excess of Pound Sterling 20,000
per annum);
5.3.1.2 no change has been made in any other terms of
employment of any such officer or senior executive.
5.3.2 No Group Company is bound or accustomed to make any payments other
than in respect of remuneration or emoluments of employment or
pension benefits, to or for the benefit of, any officer or
employee of any Group Company, or any of their Associates.
5.3.3 No negotiations for any increase in the remuneration or benefits
of any officer or employee of any Group Company are current or
scheduled in accordance with custom and practice to take place
within six months,
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after the date of Completion according to previous practice.
5.4 Termination of contracts of employment
5.4.1 All subsisting contracts of service, to which any Group Company is
a party are determinable at any time on three months' notice or
less without compensation (other than compensation in accordance
with the Employment Protection (Consolidation) Act 1978, as
amended by the Employment Act 1982).
5.4.2 No executive of any Group Company, who is in receipt of
remuneration in excess of Pound Sterling 20,000 per annum, and no
officer of any Group Company has given or received notice
terminating his employment, except as expressly contemplated in
this Agreement.
5.5 Industrial disputes and negotiations
5.5.1 No Group Company, and none of their respective employees, is
involved in any industrial dispute.
5.6 Industrial agreements
5.6.1 No Group Company has entered into any recognition agreement with a
trade union nor has it done any act which might be construed as
recognition.
5.7 Pensions
5.7.1 Save for the Schemes no Group Company is under any legal or moral
liability or obligation, or a party to an ex gratia arrangement or
promise, to pay pensions, gratuities, superannuation allowances or
the like, or otherwise to provide "relevant benefits" within the
meaning of ICTA 1988, s 612(l), to or for any of its past or
present officers or employees or their dependants; and there are
no retirement benefit, or pension or death benefit, or similar
schemes or arrangements in relation to, or binding on, any Group
Company or to which any Group Company contributes.
5.7.2 Full particulars of the Schemes are contained in, or annexed to
the Disclosure Letter, including without limitation, true copies
of the trust deeds and latest actuarial report and full and
accurate details of the assets, funding arrangements and current
membership.
5.7.3 The Schemes are exempt approved schemes within the meaning of ICTA
1988, s 592 and there is no reason why approval may be withdrawn.
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6. Assets
6.1 Ownership of assets
6.1.1 The Group Companies owned at the Last Accounts Date, and had good
and marketable title to, and (except for current assets
subsequently sold or realised in the ordinary and proper course of
business) still own and have good and marketable title to, all the
assets included in the Last Accounts and to all assets acquired
since the Last Accounts Date and not subsequently sold or realised
as aforesaid.
6.1.2 No Group Company has created, or granted, or agreed to create or
grant, any security interest or other encumbrance in respect of
any of the fixed assets included in the Last Accounts, or acquired
or agreed to be acquired since the Last Accounts Date, save in the
ordinary and proper course of its business.
6.1.3 Save as disclosed in the Last Accounts, none of the property,
assets, undertaking, goodwill or uncalled capital of any Group
Company is subject to any option, charge, lien or encumbrance, or
right of pre-emption, or any agreement or commitment to give or
create any of the foregoing, and are all the sole unencumbered
absolute property of the Group Company.
6.2 Stocks and work in progress
6.2.1 The stock of raw materials, packaging materials and finished goods
now held is not excessive and is adequate in relation to the
current trading requirements of the business of SGS; and none of
it is obsolete, slow moving unusable, unmarketable or
inappropriate or of limited value in relation to the current
business of any Group Company; and no contracts are outstanding
which are likely to result in the foregoing not being true.
6.2.2 The stock in trade of each Group Company is in good condition and
is capable of being sold by it in the ordinary course of its
business, in accordance with its current price list, without
rebate or allowance to a purchaser.
6.3 Insurance
6.3.1 All the stock-in-trade and the assets and undertaking of SGS of an
insurable nature is, and has at all material times been insured in
amounts representing
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their full replacement or reinstatement value against fire and
other risks normally insured against by persons carrying on the
same business as that carried on by it.
6.3.2 Each Group Company is now, and has at all material times been,
adequately covered against accident, damage, injury, third party
loss (including product liability), loss of profits and other
risks which the Company's brokers have advised are normally
insured against by persons carrying on the same business as that
carried on by it.
6.3.3 All the insurances of the Group Companies are currently in full
force and effect, and so far as the Vendors are aware nothing has
been done or omitted to be done which could make any policy of
insurance void or voidable.
6.3.4 No claim is outstanding, or may be made, under any of the policies
and so far as the Vendors are aware no circumstances exist which
are likely to give rise to such a claim.
6.4 Plant in working order
6.4.1 The plant, machinery, equipment and vehicles used in connection
with the business of each Group Company:
6.4.1.1 have been regularly and properly maintained;
6.4.1.2 are in the possession and control of, and are the
absolute property of, the relevant Group Company,
save for those items the subject of the hire
purchase, leasing or rental agreements listed in the
Disclosure Letter
6.4.2 Copies of all maintenance contracts entered into by Group
Companies are disclosed in the Disclosure Letter and such
contracts are in full force and effect.
6.5 Industrial property rights
6.5.1 The business of SGS as now carried on, does not so far as the
Vendors are aware infringe any Industrial Property right of any
other person
6.5.2 No Group Company has (save in the ordinary and normal course of
business) disclosed, or permitted
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to be disclosed, or undertaken or arranged to disclose, to any
person other than the Purchaser any of its know-how, trade secrets,
confidential information, price lists or lists of customers or
suppliers.
6.5.3 No Group Company is a party to any secrecy agreement or agreement
which may restrict the use or disclosure of information.
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SCHEDULE 4
Particulars of the Properties
<TABLE>
<S> <C>
Property A
Description 37 Regal Drive, Soham, District of East
Cambridgeshire, County of Cambridge
Tenure Leasehold - lease date 22nd September 1995 made between Anthony
Leonard Foster (1) and SGS Geosystems Limited (2)
Charges a Debenture - with Barclays Bank plc and made 2nd December 1991
Property B
Description Land and buildings to the north of Fordham Road being Ex APV
Works Soham, District of East Cambridgeshire, County of Cambridge
Tenure Freehold, registered at H.M. Land Registry with freehold title
absolute under title number CB142586
Charges Two - Legal Charge, and a Debenture - both with Barclays Bank plc
and made 2nd December 1991
Property C
Description Land at the north east side of Fordham Road/Regal Drive, Soham,
District of East Cambridgeshire, County of Cambridge
Tenure Leasehold - underlease dated 2nd December 1991 made between
Satellite Extrusions Limited (1) and Satellite Geosystems Limited
(2), registered at H.M. Land Registry with leasehold title
absolute under title number CB142577
Charges Two - Legal Charge, and a Debenture - both with Barclays Bank
plc and made 2nd December 1991
</TABLE>
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SCHEDULE 5
Pension Provisions and Warranties
1. In respect of those employees employed by SGS no employees other
than those employees listed with contribution rates beside their
names in the Disclosure Documents participate or are entitled to
participate or have been promised that they may participate in a
pension scheme arising from their employment or are entitled to
receive a pension from their employment on their retirement or are
entitled to life assurance under the provisions of either the
Directors' Scheme, the 1992 Scheme or from their employer.
2. The rate at which SGS is required to contribute to the 1992 Scheme
in the case of certain employees' of SGS and to John Coulson's
personal scheme is listed and stated in the Disclosure Documents.
3. No employees of SGS have received any indication that their
benefit under the Schemes is to be linked in any way to or
targeted at a level linked to the employee's final salary.
4. No employees of SGS have been members of a final salary pension
scheme pursuant to their employment with either the Company or SGS
other than John Coulson and Rosemarie Coulson.
5. Neither the Company nor SGS have received a loan from the
Directors' Scheme part or all of which remains outstanding.
6. There are no unfunded pensions in payment either by the Company or
SGS other than those to Derek White, Keith Wade and Maureen Fry
and there have been no representations of or promises of pensions
which are unfunded to employees of either the Company or SGS. This
Warranty shall not extend to the deficit in funding (if any) in
the Final Salary Scheme.
7. There has been no unequal treatment of either male and female
employees or full and part-time employees in connection with
employees being permitted to participate in any pension scheme
operated by the Company or SGS nor any unequal treatment of either
male and female employees or full and part-time employees of the
Company and SGS in the rules, administration or application of any
pension scheme of either Company or SGS.
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9. All sums due to the Trustees of the Directors' Scheme and the 1992
Scheme from SGS and the Company in respect of any period prior to
and including the date of Completion have been paid.
10. Deeds of change of principal employer from the Company to Butyl
Products Limited have been executed in respect of the Directors'
Scheme, the 1992 Scheme and the Final Salary Scheme in the form
annexed to the Disclosure Letter.
11. No members of the Final Salary Scheme (apart from John and
Rosemarie Coulson) whether active deferred or pensioners are or
have been employees of SGS.
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SCHEDULE 6
Vendor Protection
1. The Purchaser acknowledges that it has not been induced to enter
into this Agreement by nor has it relied upon any representation
or warranty other than the Warranties contained in this Agreement
given by the Vendors.
2. Any payments made by the Vendors to the Company or the Purchaser
pursuant to the Warranties or under the Tax Covenant or otherwise
pursuant to this Agreement shall be deemed to have reduced the
amount of consideration received by the Vendors for the Shares
sold by him pursuant hereto.
3. The Vendors liability in respect of the Company (but not for the
avoidance of doubt SGS) under the Warranties, the Tax Covenant and
the Indemnity in Clause 10 shall not be limited by any of the
provisions of this Schedule 6 save that the Vendors shall not be
liable in relation to a claim under the Warranties relating to the
Company for and to the extent of the taxation provided for in the
Closing Accounts.
4. The Vendors shall not be liable under the Warranties or under the
Tax Covenant in so far as they relate to SGS save for liability
under Clauses 2.4, 2.5 and 2.6 of the Tax Covenant which shall be
unlimited:-
4.1 To the extent that the subject of the claim is
provided or reserved for in the accounts of SGS for
the year ending 31st December 1995 or has been
included in calculating creditors or deducted in
calculating debtors in the accounts of SGS for the
year ending 31st December 1995.
4.2 To the extent that a claim arises:-
4.2.1 wholly or partly from an act or
omission occurring at the request of or
with the written consent of the
Purchaser or (on or after completion)
SGS;
4.2.2 wholly or partly from an act or
omission compelled by law;
4.2.3 wholly or partly as a result of any
increase in rates of taxation since
31st December 1995;
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4.2.4 wholly or partly as a result of the
passing of an enactment or other
government regulation with
retrospective effect.
4.3 To the extent that the subject of the claim:-
4.3.1 has been or is made good without cost
to the Purchaser or SGS;
4.3.2 is recoverable by SGS by insurance or
would have been recoverable but for any
change in the terms of insurance since
the date of this Agreement.
5. The Purchaser shall not be entitled to recover the same loss in
respect of any act event or default under both the Warranties and
the Tax Covenant.
6. The Vendors shall not be liable in respect of any claim relating
to SGS under the Warranties and/or the Tax Covenant unless the
same shall have been made before the third anniversary of
Completion in respect of the Warranties or before the date which
is 6 years after the date hereof hereof in respect of the Tax
Covenant, in each case by notice in writing to the Vendors giving
sufficient details of the claim to enable the Vendors to identify
the matter giving rise to the claim.
7. The aggregate liability of the Vendors in respect of all claims
under the Warranties and the Tax Covenant in respect of SGS shall
in no event exceed the sum of Pound Sterling 3,208,314.
8. No amount shall be payable by the Vendors in respect of any claim
or claims under the Warranties and/or the Tax Covenant in respect
of SGS unless and to the extent that the aggregate cumulative
liability of the Vendors in respect of all such claims exceeds
Pound Sterling 30,000.
9. Where the Purchaser and/or the Company are at any time entitled to
recover from some other person any sum in respect of any matter
giving rise to a claim in respect of SGS under the Warranties
and/or the Tax Covenant or under any of the other provisions of
this Agreement the Purchaser shall and shall procure that the
Company shall undertake all reasonable steps to enforce such a
recovery prior to taking any action (other than notifying the
Vendors of the claim) against the Vendors and in the event that
the Purchaser or the Company shall recover any amount from such
other person the amount of the claim against the Vendors shall be
reduced by the amount recovered.
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10. If the Vendors pay at any time to the Purchaser any amount
pursuant to a claim in respect of the Warranties and/or the Tax
Covenant and the Purchaser, SGS or the Company subsequently
becomes entitled to recover from some other person any sum in
respect of any matter giving rise to such claim the Purchaser
shall procure that the Company or SGS shall take all necessary
steps to enforce such a recovery and shall forthwith repay to the
Vendors so much of the amount paid by them to the Purchaser as
does not exceed the sum recovered from such other person less all
costs, charges and expenses incurred by the Purchaser, SGS or the
Company in recovering that sum from such other person.
11. The Purchaser shall notify the Vendors within thirty (30) days of
becoming aware of a matter likely to give rise to a claim under
the Warranties and shall procure that SGS shall take such action
as the Vendors may require (at the Vendors' expense) in relation
to such claim and in particular to rescind dispute or compromise
such claim.
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SIGNED as a Deed )
by R.A. YOUNG )
--------------------)
Witness:
Name:
Address:
Occupation
SIGNED as a Deed )
by J.R. YOUNG )
--------------------)
Witness:
Name:
Address:
Occupation:
SIGNED as a Deed )
by S.E. MITCHELL )
--------------------)
Witness:
Name:
Address:
Occupation:
SIGNED as a Deed )
by GSE (UK) LIMITED )
--------------------)
by
Director
Director/Secretary
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