<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 13, 1997
SNYDER COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-12145 52-1983617
------------------------ ------- ----------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
</TABLE>
Two Democracy Center, 6903 Rockledge Drive
15th Floor, Bethesda, Maryland 20817
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(301) 468-1010
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 13, 1997, Snyder Communications Inc., a Delaware corporation
(the "Registrant"), acquired all of the issued share capital of Bounty Group
Holdings Limited, a United Kingdom company ("Bounty") in exchange for 1,483,240
shares of its common stock, $.001 par value. The Registrant also redeemed all
of Bounty's outstanding long-term debt, including mandatorily redeemable
preference shares for approximately $11.7 million in cash. Bounty will operate
as a wholly owned subsidiary of the Registrant. This transaction has been
accounted for as a pooling of interests for accounting and financial reporting
purposes. The consideration received by the Bounty shareholders and the other
material terms of the transaction were determined through arms'-length
negotiation between the Registrant and Bounty.
Also, on July 14, 1997, the Registrant consummated a merger (the
"Merger") whereby Snyder Acquisition Corp., an Illinois corporation and wholly
owned subsidiary of the Registrant, was merged with and into Sampling
Corporation of America, an Illinois corporation ("SCA"), with SCA surviving the
Merger as a wholly owned subsidiary of the Registrant. The Registrant issued
1,549,172 shares of its common stock, $.001 par value, in exchange for all of
the issued and outstanding SCA common stock. The Merger has been accounted for
as a pooling of interests for accounting and financial reporting purposes. The
consideration received by the stockholder of SCA and the other material terms
of the Merger were determined through arms'-length negotiation between the
Registrant and SCA.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits.
2.1 Agreement for the sale and purchase of all the issued share capital of
Bounty Group Holdings Limited
2.2 Agreement and Plan of Merger by and among Snyder Communications, Inc.,
Snyder Acquisition Corp., Sampling Corporation of America and the
Stockholder of Sampling Corporation of America
99.1 Press release issued on July 15, 1997
<PAGE> 3
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 thereunto duly authorized.
SNYDER COMMUNICATIONS, INC.
(Registrant)
Date: July 28, 1997 /s/ MICHELE D. SNYDER
----------------- -------------------------------
Michele D. Snyder
Vice Chairman, President
and Chief Operating Officer
Date: July 28, 1997 /s/ A. CLAYTON PERFALL
----------------- -------------------------------
A. Clayton Perfall
Chief Financial Officer
<PAGE> 1
EXHIBIT 2.1
AGREEMENT
FOR THE SALE AND PURCHASE OF
ALL THE ISSUED SHARE CAPITAL OF
BOUNTY GROUP HOLDINGS LIMITED
Weil, Gotshal & Manges
<PAGE> 2
CONTENTS
SECTION PAGE
SECTION 1 INTERPRETATION.............................................2
SECTION 2 SALE AND PURCHASE OF THE SHARES AND LOAN STOCK.............6
SECTION 3 CONSIDERATION..............................................7
SECTION 4 CONDITIONS PRECEDENT.......................................7
SECTION 5 WARRANTIES.................................................8
SECTION 6 LIMITATIONS...............................................10
SECTION 7 [INTENTIONALLY BLANK].....................................12
SECTION 8 COMPLETION................................................12
SECTION 9 RETENTION.................................................14
SECTION 10 PROTECTIVE COVENANTS.....................................16
SECTION 11 TAX COVENANT.............................................17
SECTION 12 PURCHASER'S WARRANTIES...................................17
SECTION 13 WITHHOLDING TAX AND GROSSING UP..........................17
SECTION 14 LIABILITY................................................17
SECTION 15 ENTIRE AGREEMENT.........................................17
SECTION 16 VARIATION................................................17
SECTION 17 ASSIGNMENT...............................................17
SECTION 18 ANNOUNCEMENTS............................................18
SECTION 19 COSTS....................................................18
SECTION 20 PARTIAL INVALIDITY.......................................18
SECTION 21 RESTRICTIVE TRADE PRACTICES ACT..........................18
SECTION 22 REMEDIES AND WAIVERS.....................................18
SECTION 23 FURTHER ASSURANCE........................................19
SECTION 24 NOTICES..................................................19
SECTION 25 GOVERNING LAW............................................20
SECTION 26 JURISDICTION.............................................20
SECTION 27 COUNTERPARTS.............................................20
SCHEDULE 1
THE COMPANY AND THE SUBSIDIARIES....................................21
SCHEDULE 2
DETAILS OF SUBSIDIARIES ............................................29
SCHEDULE 3
THE WARRANTIES .....................................................54
SCHEDULE 4
PROPERTY DETAILS....................................................85
SCHEDULE 5
TAX COVENANT........................................................88
SCHEDULE 6
PURCHASER'S WARRANTIES..............................................95
<PAGE> 3
THIS AGREEMENT is made on 14 July 1997 between:
(1) The persons listed in Part A of Schedule 1 (each a "SELLER" and
together the "SELLERS");
(2) Snyder Communications, Inc. whose principal place of business is at Two
Democracy Center, 6903 Rockledge Drive, Bethesda, MD20817 (the
"PURCHASER");
WHEREAS:
(A) Bounty Group Holdings Limited (the "COMPANY") is a private company
limited by shares incorporated in England and Wales certain details of
which are set out in Part A of Schedule 1.
(B) The Purchaser has made a general offer (the "OFFER") to the holders of
all the issued share and loan capital and Loan Stock of the Company,
including all the ordinary shares of the Company, to purchase the
entire issued share and loan capital and Loan Stock of the Company on
the terms and conditions set out herein.
IT IS AGREED as follows:
SECTION 1 INTERPRETATION
CLAUSE 1.1 In this Agreement, including the Schedules hereto:
"ACCOUNTS" means the audited consolidated accounts for the financial year ended
on the Accounts Date comprising:
(A) the audited balance sheet of the Company (and the audited consolidated
balance sheet, if any, of the Company and its subsidiary undertakings)
as at the Accounts Date; and
(B) the audited profit and loss account of the Company (and the audited
consolidated profit and loss account, if any, of the Company and its
subsidiary undertakings) in respect of the financial year ended on the
Accounts Date,
together with any notes, directors' or auditors' reports or statements included
in or annexed to them;
"ACCOUNTS DATE" means 31 December 1996;
"ARTICLES OF ASSOCIATION" means the articles of association of the Company;
"ASSOCIATED COMPANIES" means the companies of which details are set out in Part
C of Schedule 2;
"BUSINESS DAY" means a day (excluding Saturdays) on which banks generally are
open in London and Washington D.C. for the transaction of normal banking
business;
"CASH CONSIDERATION" bears the meaning ascribed to it in Clause 3.3;
"CERTIFICATE OF TITLE" means the certificates of title from the Seller's
Solicitors relating to the Freehold Properties;
<PAGE> 4
"CLAIM" means any claim for breach by a Warrantor of any Warranty or any claim
under the Tax Covenant;
"COMPANIES ACT" means the Companies Act 1985, as amended;
"COMPLETION" means completion of the sale and purchase of the Shares under this
Agreement;
"COMPLETION DATE" means the date on which Completion occurs;
"CONDITIONAL EXCHANGE AGREEMENT" means the deeds in the agreed form between the
EBT and the optionholders who have been granted options over the shares held in
the trust of which EBT is the trustee;
"CONFIDENTIALITY UNDERTAKING" means the Confidential Disclosure Agreement
entered into on 29 April 1997 between the Purchaser and the Company;
"CONSIDERATION" means the Share Consideration and the Cash Consideration;
"CONSIDERATION SHARES" means unregistered shares of common stock of the
Purchaser having a par value of $0.001;
"COSTS" means liabilities, losses, damages, costs (including legal costs) and
expenses, in each case of any nature whatsoever;
"DEFERRED SHARES" means all the issued Deferred Shares of the Company;
"DISCLOSURE LETTER" means the letter in the agreed form from the Warrantors to
the Purchaser executed and delivered immediately before the signing of this
Agreement;
"DORMANT COMPANIES" means Diss Building & Maintenance Services Limited, Stork
Nursery Supplies Limited, Babylove Limited, Baby Junction Limited, Bounty Group
Limited, Bounty Vision Limited, Diss Fulfilment Services (Ireland) Limited,
Globalvision Limited and Revelfax Limited, the Waveney Glass Company Limited,
Bounty Holdings Inc., Bounty Publications Inc., Stork Nursery Supplies Inc. and
Bounty Giftpax Inc.;
"EBT" means Bounty Group Employee Share Scheme Trustee Ltd, a Seller;
"FINANCIAL YEAR" shall be construed in accordance with section 223 of the
Companies Act;
"FREEHOLD PROPERTIES" means the freehold properties of the Group, particulars of
which are set out in items 1 to 3 (inclusive) of Schedule 4;
"GROUP" means the Company and the Subsidiaries;
"GROUP COMPANY" means the Company or any other member of the Group;
"HOLDING COMPANY" shall be construed in accordance with sections 736 and 736A of
the Companies Act;
"IHTA" means the Inheritance Tax Act 1984;
"INSOLVENCY ACT" means the Insolvency Act 1986;
<PAGE> 5
"INTELLECTUAL PROPERTY RIGHTS" means patents, trade marks, service marks, trade
names, design rights, copyright (including rights in computer software), rights
in know-how and other intellectual property rights, in each case whether
registered or unregistered and including applications for the grant of any such
rights and all rights or forms of protection having equivalent or similar effect
anywhere in the world;
"LEASEHOLD PROPERTIES" means the leasehold properties of the Group particulars
of which are set out in items 4 to 7 of Schedule 4;
"LOAN STOCK" means the Series A (10%), C(8%), D(7%) and E(0%) unsecured loan
stock of the Company due 2002, 2006, 2006 and 2008, respectively;
"MANAGEMENT ACCOUNTS" means the unaudited management accounts of the Company for
the period commencing on the Accounts Date and ending on the Management Accounts
Date;
"MANAGEMENT ACCOUNTS DATE" means 30 April 1997;
"OPERATIONS LETTER" means the letter in the agreed form from the Purchaser to
the directors of the Company and the Warrantors relating to the operations of
the Company after Completion;
"ORDINARY SHARES" means the ordinary shares of 10p each in the capital of the
Company;
"PENSION SCHEME" means the defined contribution pension schemes constituted by a
deed, dated 29 July 1994, between Bounty Services Limited, Austin Haines and
others;
"PROPERTIES" means the Freehold Properties and the Leasehold Properties;
"PREFERRED ORDINARY SHARES" means the cumulative preferred ordinary shares of
10p each in the capital of the Company;
"PURCHASER'S ACCOUNTANTS" means Arthur Andersen L.L.P.;
"PURCHASER'S GROUP" means the Purchaser and its subsidiaries;
"PURCHASER'S SOLICITORS" means Weil, Gotshal & Manges of 99 Bishopsgate, London
EC2M 3XD;
"REDEEMABLE PREFERENCE SHARES" means the cumulative redeemable preference shares
of (pound)1 each in the capital of the Company;
"RETENTION" bears the meaning ascribed to it in Clause 9.1;
"RETENTION BENEFICIARIES" means the Sellers other than EBT, Roderick
Hopewell-Smith, the Second Brown Shipley Fund, Holgar Brandt and Pearl Carter;
"SCHEDULES" means Schedules 1 to 6 to this Agreement and SCHEDULE shall be
construed accordingly;
"SECOND BROWN SHIPLEY FUND" means Second Brown Shipley Fund and Second Brown
Shipley Fund II, limited partnerships registered in England and Wales with
numbers LP3872 and LP3961 respectively acting through their general partner
Brown Shipley Development Capital Limited and which hold shares through their
nominee, Founders Court Nominees Limited;
<PAGE> 6
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended;
"SECURITY INTEREST" means any security interest of any nature whatsoever
including, without limitation, any mortgage, charge, pledge, lien, assignment by
way of security or other encumbrance;
"SELLERS' ACCOUNTANTS" means Coopers & Lybrand of The Atrium, St. Georges
Street, Norwich NR3 1AG;
"SELLERS' SOLICITORS" means SJ Berwin & Co of 222 Grays Inn Road, London WC1X
8HB;
"SHARES" means all the issued Redeemable Preference Shares, Ordinary Shares,
Preferred Ordinary Shares and Deferred Shares immediately prior to Completion
following Conversion;
"SNYDER EXCHANGE PRICE" means $26.19375;
"STOCKHOLDERS" means the holders of the Loan Stock identified as such in Part B
of Schedule 1;
"SUBSIDIARIES" means the companies, details of which are set out in Part B of
Schedule 2;
"SUBSIDIARY" and "SUBSIDIARIES" shall be construed in accordance with sections
736 and 736A of the Companies Act;
"SUBSIDIARY UNDERTAKING" shall be construed in accordance with section 258 of
the Companies Act;
"TAX, TAX LIABILITY AND TAXATION AUTHORITY" have the meanings given to them in
the Tax Covenant;
"TAXES ACT" means the Income and Corporation Taxes Act 1988;
"TAX COVENANT" means the tax covenants set out in Schedule 5 and forming part of
this Agreement;
"TAX CLAIM" means any claim for breach of any of the Tax Warranties or under the
Tax Covenant;
"TAX WARRANTIES" means the warranties set out in Part E of Schedule 3;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"UK GAAP" means generally accepted accounting principles in the UK;
"US$" means the lawful currency of the United States of America;
"VAT" means value added tax;
"VATA" means the Value Added Tax Act 1994;
"WARRANTOR LIABILITY" means any liability of the Warrantors in respect of any
Claims;
"WARRANTIES" means the warranties set out in Schedule 3 and "WARRANTY" means any
one of them; and
<PAGE> 7
"WARRANTORS" means each of Sinclair Stewart, Allan Hayward, Paul D'Inverno,
Robert Egleton, Roger Graffy and Nicholas Hopewell-Smith.
CLAUSE 1.2 In this Agreement, unless the context otherwise requires:
(A) references to "PERSONS" shall include individuals, bodies corporate
(wherever incorporated), unincorporated associations and partnerships;
(B) the headings are inserted for convenience only and do not affect the
interpretation of this Agreement;
(C) any reference to an "ENACTMENT" is a reference to it as from time to
time amended, consolidated or re-enacted (with or without modification)
and includes all instruments or orders made under such enactment;
(D) any statement qualified by the expression "TO THE BEST KNOWLEDGE OF THE
WARRANTORS" or "SO FAR AS THE WARRANTORS ARE AWARE" or any similar
expression shall, except where further qualified by the expression
"actual" be deemed to include an additional statement that it has been
made after all reasonable enquiries of the Directors of the Company,
the Sellers' Solicitors and Coopers & Lybrand;
(E) any reference to a document "IN THE AGREED FORM" is to the form of the
relevant document agreed between the parties and for the purpose of
identification initialled by each of them or on their behalf (in each
case with such amendments as may be agreed by or on behalf of the
Sellers and the Purchaser);
(F) a person shall be deemed to be connected with another if that first
person is connected with another within the meaning of section 839 of
the Taxes Act;
(G) references to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or
any other legal concept shall, in respect of any jurisdiction other
than England, be deemed to include the legal concept which most nearly
approximates in that jurisdiction to the English legal term;
(H) words denoting the singular noun shall denote the plural noun and vice
versa and words denoting one gender shall denote all genders; and
(I) references to the Sellers include a reference to each of them.
SECTION 2 SALE AND PURCHASE OF THE SHARES AND LOAN STOCK
CLAUSE 2.1 Each of the Sellers hereby agrees to sell, and the Purchaser
agrees to purchase, the Shares indicated as held immediately prior to Completion
following conversion set opposite such Seller's name in Part A of Schedule 1
with effect from the close of business on the Completion Date. Each of the
Sellers other than EBT and Spread Trustee Company Limited and each of the
Sellers selling as trustee shall sell the Shares with full title guarantee. EBT
and Spread Trustee Company Limited and each of the Sellers selling as a trustee
shall sell the Shares with limited title guarantee. Each of the Stockholders
hereby agree to sell, and the Purchaser agrees to purchase, the Loan Stock with
effect from close of business on Completion Date. Each of the Stockholders shall
sell the Loan Stock with full title guarantee The Shares and Loan Stock shall be
sold free from all Security Interests, options, equities, claims and other third
party rights, together with all rights attaching to them.
<PAGE> 8
CLAUSE 2.2 The Loan Stock shall be acquired together with the benefit of
all interest accrued thereon. The Company shall have paid all outstanding
dividends on the Redeemable Preference Shares, Preferred Ordinary Shares and
Preference Shares immediately prior to Completion.
SECTION 3 CONSIDERATION
CLAUSE 3.1 The total consideration for the sale of the Shares other than
the Redeemable Preference Shares (the "SHARE CONSIDERATION") shall
be(pound)30,000,000 less(pound)7,073,250.
CLAUSE 3.2 The Share Consideration shall be satisfied by the allotment
and issue credited as fully paid of :
(a) 1,108,529 Consideration Shares to the holders of the
Ordinary Shares at Completion in the proportions shown in Part C of
Schedule 1;
(b) 1 Consideration Share to the holders of the Deferred Shares at
Completion in the proportions shown in Part C of Schedule 1;
(c) 374,710 Consideration Shares to the holders of the
Preferred Ordinary Shares at Completion in the proportions shown in
Part C of Schedule 1.
CLAUSE 3.3 The consideration for the Redeemable Preference Shares and the
Loan Stock (the "CASH CONSIDERATION") shall be (pound)6,915,504 which shall be
satisfied by a cash payment to the Sellers' Solicitors at Completion. The
Sellers' solicitors are hereby authorised to receive the Cash Consideration on
behalf of the relevant Sellers and Stockholders and to give a good discharge for
the same. The Cash Consideration shall be apportioned as to (pound)750,000 to
the Redeemable Preference Shares and as to (pound)6,165,503 to the Loan Stock.
CLAUSE 3.4 If any payment (including a transfer of Consideration or
Snyder Shares from the Retention) is made by the Sellers to the Purchaser under
or in respect of any breach of this Agreement (including, without limitation,
any payment pursuant to any Claim or any indemnity contained in this Agreement,
and any payment under the Tax Covenant), such payment or transfer shall so far
as possible be treated as a reduction in the price paid for the Shares.
SECTION 4 CONDITIONS PRECEDENT
CLAUSE 4.1 Completion of the sale and purchase of the Shares and Loan
Stock shall be conditional upon
(A) the Conditional Exchange Agreement having been signed and exchanged by
all the parties thereto
(B) written consents to the change of control constituted by the sale of
Shares being given to the relevant company in the Group by each of the
following:
(I) Mothercare Group; and
(II) Bank of Scotland;
<PAGE> 9
(C) This Agreement having been executed by the Purchaser and by the holders
of not less than nine-tenths in value of each of the Ordinary Shares,
the Deferred Shares and the Preferred Ordinary Shares respectively.
CLAUSE 4.2 The Purchaser may in its absolute discretion, at any time,
waive any or all of the Conditions Precedent either in whole or in part by
written notice to the Sellers.
CLAUSE 4.3 Each of the parties undertakes to use all reasonable
endeavours to ensure that the Conditions Precedent are fulfilled as soon as
reasonably practicable and in any event by not later than 31 July 1997.
CLAUSE 4.4 If all the Conditions Precedent have not been fulfilled (or
waived) on or before the date specified in Clause 4.3, this Agreement shall
automatically terminate and neither party (provided such party shall have used
all reasonable endeavours as provided in Clause 4.3) shall have any claim of any
nature whatsoever against the other party under this Agreement (save in respect
of its accrued rights arising from any prior breach of this Agreement).
SECTION 5 WARRANTIES
CLAUSE 5.1 The Warrantors warrant to the Purchaser in the terms of the
Warranties (subject to the matters fairly and reasonably disclosed in the
Disclosure Letter and subject to the matters reasonably apparent from an
inspection of the documents listed in and annexed to the Disclosure Letter) and
acknowledge that the Purchaser has entered into this Agreement in reliance upon
the Warranties.
CLAUSE 5.2 Each of the Warranties is separate and independent and (save
as expressly provided to the contrary) shall not be limited or restricted by
(A) reference to any other Warranty; or
(B) anything in this Agreement or the Tax Covenant.
CLAUSE 5.3 The Warrantors agree to waive the benefit of all rights (if
any) which the Warrantors may have against any Group Company, or any present or
former officer or employee of any such company, on whom the Warrantors may have
relied in agreeing to any term of this Agreement or any statement set out in the
Disclosure Letter and the Warrantors undertake not to make any claim in respect
of such reliance.
CLAUSE 5.4 The Warrantors undertake to notify the Purchaser in writing
promptly if any of them becomes aware of any circumstance arising after the date
of this Agreement which would cause any Warranty (if the Warranties were
repeated with reference to the facts and circumstances then existing) to become
untrue, inaccurate or misleading in any respect which is material to the
financial or trading position of the Group taken as a whole.
CLAUSE 5.5 Each of the Sellers severally warrants to the Purchaser that:
(A) such Seller has the requisite power and authority to enter into and
perform this Agreement;
(B) there is no pledge, lien or other encumbrance on, over, or affecting
the Shares or Loan Stock of such Seller 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;
<PAGE> 10
(C) this Agreement constitutes and imposes valid legal and binding
obligations on such Seller fully enforceable in accordance with its
terms;
(D) it is the sole legal owner of the Shares and Loan Stock hereby agreed
to be sold by it free from all Security Interests, options, equities,
claims and other third party rights (including rights of pre-emption)
of any nature whatsoever save for those set out in the Articles of
Association of the Company or otherwise disclosed expressly in the
Disclosure Letter.
CLAUSE 5.6 Each of the Sellers acknowledges that (I) the Consideration Shares
have not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except pursuant to a registration or in transactions exempt from the
registration requirements of the Securities Act and (II) the Purchaser will
instruct its secretary not to register any transfer of Consideration Shares
unless the Purchaser shall have received an opinion of counsel reasonably
acceptable to it that the foregoing legal requirements have been met.
CLAUSE 5.7 Each of the Sellers hereby covenants to the Purchaser that it will
not (I) transfer, sell or otherwise dispose of any Consideration Shares or (II)
sell or otherwise reduce its risk (within the meaning of the Securities and
Exchange Commission's Financial Reporting Release No.1., "Codification of
Financial Reporting Policies," Section 201.01 [47 F.R. 21028] (May 17, 1982)
with respect to any Consideration Shares, in each case until after such time
(the "DELIVERY TIME") as consolidated financial statements which reflect at
least 30 days of post-agreement combined operations of the Purchaser and the
Company and/or the Group have been published by the Purchaser, except as
permitted by Staff Accounting Bulletin No. 76 issued by the United States
Securities and Exchange Commission.
CLAUSE 5.8 Each of the Sellers understands that the Purchaser may issue stop
transfer instructions to its transfer agents with respect to the Consideration
Shares and that a restrictive legend will be placed on the certificates
delivered to such Seller evidencing the Consideration Shares in substantially
the following form:
"This certificate and the shares represented hereby have not
been registered under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered or sold
within the United States or to, or for the account or benefit
of U.S. persons except pursuant to a registration or in
transactions exempt from the registration requirements of the
Securities Act."
CLAUSE 5.9 Any Warrantor Liability shall be discharged by the transfer by the
Warrantors to the Purchaser of Snyder Shares. Absent fraud, any such obligations
to transfer Snyder Shares shall be discharged subject to and in accordance with
the provisions of Clause 9. Accordingly, in the absence of fraud by a Warrantor,
he shall not be required to pay or satisfy any Claim otherwise than in
accordance with Clause 9. The number of Snyder Shares required to be transferred
shall be calculated as follows:
X
---------------------
n Snyder Shares = Snyder Exchange Price
<PAGE> 11
Where: "n Snyder Shares" is the number of Snyder Shares
required to be transferred to the Purchaser under this Clause
5.9; and
"X" is the relevant Warrantor Liability expressed in U.S.$ at
the exchange rate prevailing at the time the Claim is
satisfied.
Save in the case of fraud by a Warrantor, under no circumstances shall any
Warrantor liability be satisfied other than by a transfer of Snyder Shares
subject to and in accordance with Clause 9.
SECTION 6 LIMITATIONS
CLAUSE 6.1 The Warrantors shall not be liable for any Claim unless they receive
from the Purchaser written notice containing reasonable details of the basis for
the Claim including the Purchaser's reasonable estimate (on a without prejudice
basis) of the amount of such Claim on or before the earlier of (i) the date of
publication of audited accounts of the Company for the year ending 31 December
1997 and (ii) 14 July 1998 and legal proceedings shall have been commenced by
service of a statement of claim within six months thereafter.
CLAUSE 6.2 The Warrantors shall not be liable for any individual Claim unless
the liability of the Warrantors in respect of such claim exceeds (pound)10,000
and accordingly any such Claim shall be disregarded for all purposes. The
Warrantors shall not be liable for any Claim unless the aggregate amount of the
liability of the Warrantors for all allowable Claims exceeds (pound)150,000 (in
which event the Purchaser shall be entitled to claim the whole amount of such
allowable Claims and not merely the excess).
CLAUSE 6.3 The aggregate amount of the Warrantor Liability for all Claims shall
not exceed that part of the Share Consideration which is the subject of the
Retention pursuant to Clause 9.
CLAUSE 6.4 None of the limitations contained in Clauses 6.1, 6.2 or 6.3 shall
apply so as to protect any Warrantor in respect of any breach of any Warranty
which (or the delay in discovery of matters giving rise to such Claim) is the
consequence of fraud by such Warrantor.
CLAUSE 6.5 If the Purchaser becomes aware that any claim has been made against
any Group Company by a third party after Completion which is likely to result in
the Purchaser being entitled to make a Claim in respect of a breach of any
Warranty:
(A) the Purchaser shall give notice of such claim to the Warrantors as soon
as reasonably practicable and shall procure that the relevant Group
Company shall give the Warrantors all reasonable facilities to
investigate any such claim;
(B) the Purchaser shall not, and shall procure that the relevant Group
Company shall not, make any admission of liability, agreement or
compromise in relation to such claim (the "SETTLEMENT") except with the
prior written agreement of the Warrantors which shall not be
unreasonably withheld or delayed, provided that no such consent shall
be required if, in the reasonable opinion of the Purchaser, the conduct
of the business of the relevant Group Company would be materially
affected by any failure to make an immediate Settlement;
(C) the Purchaser shall cause the relevant Group Company to take such
action as the Warrantors shall reasonably request to avoid, resist or
compromise any such claim (subject to the relevant Group Company being
entitled to employ its own legal advisers and being indemnified and
secured to its reasonable satisfaction by the Warrantors against all
losses, costs, damages and expenses, including the reasonable fees of
its legal advisers, incurred in connection with such claim) provided
that the Purchaser shall not be required to take any action which is,
in its reasonable opinion, likely materially to interfere with the
conduct of the business of any Group Company;
<PAGE> 12
(D) the Purchaser shall cause the relevant Group Company to consult as
fully as is reasonably practicable with the Warrantors as regards the
conduct of any proceedings arising out of such claim.
CLAUSE 6.6 The Purchaser shall promptly reimburse, by way of re-transfer of any
shares the subject of the Retention which have previously been transferred to
Snyder in satisfaction of a Claim, to the Warrantors:
(A) all amounts (not exceeding the aggregate sum paid by the Warrantors in
respect of any Claim) for which any of the Warrantors shall have become
liable in respect of any Claim which is subsequently recovered by the
Purchaser or a member of the Group (as the case may be) from any
insurance company or other third party (including without limitation
any Taxation Authority); and
(B) to the extent that the Purchaser or a Group Company will benefit from
any corresponding benefit or relief or credit for Tax purposes which
arises as a result of a Tax Liability which is the subject of a Claim,
the amount of any such corresponding benefit or relief or credit, and
for the purposes of this Clause 6.6(b) a benefit, relief or credit only
arises after the Purchaser or a member of the Group is relieved of an
obligation to make a payment of tax or receives a repayment of tax, in
either case, which would not have occurred but for the benefit, relief
or credit.
Reference to any Claim being "paid" includes a transfer of Snyder shares from
the Retention pursuant to Clause 9.
CLAUSE 6.7 No Claims shall be valid or made against any of the Warrantors:
(A) to the extent that such Claim occurs or is increased (I) by reason of
any transaction, event, act, arrangement, occurrence or omission which
occurs after the date of this Agreement outside the ordinary course of
business and which the Purchaser was, or ought to have been, aware
would give rise to such a Claim and neither pursuant to a legally
binding obligation entered into on or before the date of this Agreement
nor as a result of the disclosure of any matter to any Taxation
Authority or (II) by reason of any matter which would not have arisen
but for the coming into force of any legislation not in force at the
date of this Agreement or (III) the withdrawal of any relief, allowance
or concession available at the date of this Agreement (whether or not
such legislation or withdrawal purports to be effective retrospectively
in whole or in part) or (IV) as a result of any increase in any rate of
Tax or by reason of any change occurring after the date of this
Agreement in Inland Revenue published practice or (V) by reason of any
change occurring after the date of this Agreement in any principle of
common law (whether or not any of the aforegoing purports to be
effective retrospectively in whole or in part);
(B) to the extent that a member of the Group is entitled to claim indemnity
against any loss or damage suffered by it arising out of a breach
giving rise to a Claim, under the terms of any insurance policy for the
time being in force provided that the Warrantors shall indemnify the
Purchasers in respect of any increased premium arising as a result
thereof in the current and next following financial year;
<PAGE> 13
(C) to the extent that note, allowance, provision or reserve has been made
in the Accounts in respect of the matter to which such liability
relates or such matter was taken into account when preparing the
Accounts;
(D) to the extent that such Claim arises as a result of any change in the
basis of accounting or tax computation of any member of the Group after
Completion;
(E) to the extent that there are Reliefs (as defined in the Tax Covenant)
or rights to repayment of tax in a member of the Group (other than a
relief or right to repayment to which paragraph (b) of the definition
of "TAX LIABILITY" in the Tax Covenant refers) available (whether by
surrender or otherwise) to be set against the Tax to which the Claim
relates;
(F) based upon a liability which is contingent only unless and until such
contingent liability becomes an actual liability and is due and
payable;
(G) based upon a liability arising from the ordinary course of normal
business of any member of the Group occurring, or in respect of any
profits, income or gains earned accrued or received after the Accounts
Date and before Completion excluding those matters referred to in
Clause 3.1.2 (a) to (g) of the Tax Covenant;
(H) if such liability only arises by virtue of the unavailability, loss or
non existence of any Relief presumed to be or to have been available in
computing any provision for tax which appears (or would otherwise have
appeared) in the Accounts or which arose by reference to events
occurring or income profits or gains accruing before Completion; or
(I) which consists of a liability to account for income tax arising under
PAYE as a result of the exercise of any options granted pursuant to the
Conditional Exchange Agreement and/or any liability to capital gains
tax of EBT arising pursuant to the exercise of any such option or any
related disposal of shares by EBT (not including the shares hereby sold
by EBT).
CLAUSE 6.8 The Purchaser shall only be entitled to recover once for the loss
suffered as a result of a single act or omission which constitutes a breach of
one or more of the Warranties and another term(s) of this Agreement, or
constitutes a breach of one or more of the Warranties or another term(s) of this
Agreement and gives rise to a claim under the Tax Covenant.
CLAUSE 6.9 The Purchaser acknowledges that in entering this Agreement it is
relying on the Warranties and not upon any other warranties, undertakings or
representations of any description given by or on behalf of any of the
Warrantors, the Seller's Solicitors or other agents or advisers and the
Purchaser hereby warrants, represents and undertakes to the Sellers that as at
the date of this Agreement it knows of no breach of any of the Warranties or
matter which gives rise to a claim under the Tax Covenant or any other matter
that might give rise to a Claim.
SECTION 7 [INTENTIONALLY BLANK]
SECTION 8 COMPLETION
CLAUSE 8.1 The sale and purchase of the Shares and Loan Stock shall be completed
at the offices of the Sellers' solicitors immediately after the signing of this
Agreement or on such later date as may be agreed between the Sellers and the
Purchaser following the fulfilment (or waiver) of all the Conditions Precedent
(and, in any event, within fourteen (14) days after such fulfilment or waiver).
The events referred to in the following provisions of this Section 8 shall take
place on Completion.
<PAGE> 14
CLAUSE 8.2 The Sellers shall procure the delivery to the Purchaser of:
(A) duly executed transfers into the name of the Purchaser or such other
person as the Purchaser may direct in respect of all of the Shares and
Loan Stock, together with their respective share and Loan Stock
certificates;
(B) share certificates in respect of all of the issued shares in the
capital of each of the Subsidiaries, together with duly executed
transfers into the name of the Purchaser or its nominee in respect of
any shares in such Subsidiaries owned by but not held in the name of a
Group Company;
(C) duly executed transfers into the name of the Purchaser or such other
person as the Purchaser may direct in respect of all of the issued
shares in the capital of each of the Associated Companies registered in
the name of the Seller, together with the relative share certificates,
and share certificates in respect of all of the issued shares in the
capital of each of the Associated Companies registered in the name of
any Group Company;
(D) an original of the Tax Covenant duly executed by the Warrantors;
(E) the Certificates of Incorporation, Common Seal, Share Register and
Share Certificate Book (with any unissued share certificates) and all
minute books and other statutory books (which shall be written-up to
but not including Completion) of the Company and of each Group Company;
(F) all such other documents (including any necessary waivers of
pre-emption rights or other consents) as may be required to enable the
Purchaser and/or such other person as the Purchaser may direct to be
registered as the holder(s) of the Shares;
(G) a power of attorney in the agreed form duly executed as a deed by each
registered holder of the Shares;
(H) a letter of resignation in the agreed form duly executed as a deed by
Roy Parker and Brian Levy as directors of the Company and any
subsidiaries of which they are directors;
(I) service agreements in the agreed form between the Company and Sinclair
Stewart, Paul D'Inverno, Roger Graffy, Allan Hayward, Robert Egleton
and Nick Hopewell-Smith duly executed by the parties thereto;
(J) copies of a resolution of the Board of Directors (certified by a duly
appointed officer as true and correct) of each corporate Seller
authorising the execution of and the performance by that Seller of its
obligations under this Agreement and each of the other documents to be
executed by that Seller;
(K) the Certificates of Title; and
<PAGE> 15
(L) a counterpart of the Registration Rights Agreement duly executed by
each of the parties thereto, other than the Purchaser.
CLAUSE 8.3 The Sellers shall procure that resolutions of the Boards of Directors
of the Company and each Group Company are passed by which the following business
is transacted to the extent necessary:
(A) the registration (subject to their being duly stamped) of the transfers
in respect of the Shares and Loan Stock referred to in Clause 8.2(a)
and 8.2(b) is approved;
(B) the resignations of the persons referred to in Clause 8.2(h) are
accepted;
(C) the registrations of the transfers of the nominee shares in the
Subsidiaries are approved;
(D) the service agreements referred to in Clause 8.2(i) are approved.
CLAUSE 8.4 The Purchaser shall (I) in satisfaction of the Share Consideration,
cause the Consideration Shares to be allotted to the Sellers and the Sellers'
name to be entered in the register of members of the Purchaser in the
proportions set out in Part A of Schedule 1 and (II) cause the Cash
Consideration and amounts payable under Clause 19.2 to be paid to the Sellers'
Solicitors by telegraphic transfer. On Completion, the Purchaser will deliver to
the Sellers' Solicitors:
(A) a counterpart of the Registration Rights Agreement duly executed by the
Purchaser;
(B) the opinion letter referred to in Schedule 6;
(C) the Operations Letter duly signed for and on behalf of the Purchaser;
(D) a copy of a board resolution of the Purchaser approving the
transactions contemplated by this Agreement.
Within fourteen days of being notified by the Sellers' Solicitors of the names
of the persons in whose names the Consideration Shares should be registered, the
Purchaser shall deliver certificates in respect of the Consideration Shares
(other than those subject to the Retention) to the Sellers' Solicitors.
CLAUSE 8.5 Payment of the Cash Consideration, delivery of the certificates for
the Consideration Shares and performance of its obligations under the
Registration Rights Agreement shall constitute a good discharge for the
Purchaser of its obligations under Clause 3.
CLAUSE 8.6 Options over its Snyder Shares to be granted by the EBT will continue
to be governed by the terms of the existing Bounty Share Scheme, as amended.
SECTION 9 RETENTION
CLAUSE 9.1 On the Completion Date the Purchaser shall retain 9.75 per cent of
the Consideration Shares which each of the Retention Beneficiaries is entitled
to receive rounded down to the nearest whole number (the "RETENTION"), such
Consideration Shares to be held in trust for the Retention Beneficiaries subject
to and in accordance with the terms of this Section 9. Each of the Retention
Beneficiaries agrees that his entitlement to his proportionate part of the
Retention shall be available to satisfy Claims for which any of the Warrantors
are liable hereunder and each of the Retention Beneficiaries waives all and any
rights of counterclaim, set-off, indemnity or contribution against or from the
Warrantors in respect of any Claim which is satisfied from such entitlement,
except in the case of any fraud by a Warrantor.
<PAGE> 16
CLAUSE 9.2 Subject to Clause 9.3, the Purchaser shall release the balance of the
Retention to the Warrantors on the date referred to in Clause 6.1 (the
"RETENTION RELEASE DATE").
CLAUSE 9.3 If prior to the Retention Release Date any Claim for which the
Warrantors would be liable hereunder shall be admitted in writing by the
Warrantors or the liability of the Warrantors for any Claim shall be established
by the Purchaser pursuant to a final judgment of the High Court, the amount due
to the Purchaser shall be paid by a transfer of Consideration Shares of
equivalent value to that portion of the Claim for which the Retention
Beneficiaries would be liable from the Retention to the Purchaser (insofar as
the value of the Retention is sufficient to satisfy that portion of the Claim),
pro rata to the Retention Beneficiaries' respective holdings of Consideration
Shares forming part of the Retention on the Completion Date (the "RETENTION
PROPORTIONS").
CLAUSE 9.4 For the purposes of this clause 9 each Consideration Share forming
the Retention shall at all times prior to the Retention Release Date be deemed
to have a value equal to the Snyder Exchange Price.
CLAUSE 9.5 If, before the Retention Release Date, the Purchaser has made a bona
fide Claim which is unresolved by the Retention Release Date, the Purchaser
shall retain Consideration Shares of equal value to that portion of the Claim
for which the Retention Beneficiaries are liable hereunder or (if of less value)
all the Consideration Shares remaining in the Retention. A Claim shall not be
deemed to have been properly made for the purpose of this Clause 9.5 unless the
Purchaser provides to the Warrantors a certificate giving details of the
circumstances giving rise to the Claim and the amount claimed.
CLAUSE 9.6 If any Consideration Shares are retained after the Retention Release
Date in accordance with Clause 9.5, the Purchaser shall continue to retain such
Consideration Shares pending the settlement or resolution of the Claim or until
such time as the Warrantors cease to be liable for the Claim. When any Claim is
settled or resolved or the Warrantors cease to be liable therefor and the amount
payable (if any) to the Purchaser is determined, the amount due to the Purchaser
(if any) shall be paid by a transfer of Consideration Shares of equivalent value
to the Claim from the Retention to the Purchaser in the Retention Proportions
(insofar as the value of the Consideration Shares is sufficient to satisfy the
Claim) and the balance of Consideration Shares shall be delivered to the
Retention Beneficiaries in the Retention Proportions.
CLAUSE 9.7 The Retention Beneficiaries acknowledge that they shall not be at
liberty to make any disposition of any of the Consideration Shares forming the
Retention unless and until such shares have been released to the Warrantors in
accordance with the provisions of Clause 9.
CLAUSE 9.8 The Warrantors and the Purchaser agree that all and any rights of the
Warrantors against the Purchaser in respect of repayment, indemnification,
counterclaim or re-imbursement, pursuant to clauses 6.6, 6.7 or otherwise
pursuant to this Agreement or the Tax Covenant ("RIGHTS") are held by the
Warrantors on trust for the Retention Beneficiaries in the Retention Proportions
and the Warrantors shall account to the Retention Beneficiaries for their
entitlement to the same, and in the same proportions, subject only to the
following, to which the Retention Beneficiaries consent and agree:
<PAGE> 17
(A) the deduction from the proceeds of Rights, all reasonable costs,
expenses and fees incurred in exercising or enforcing Rights; and
(B) the Retention Beneficiaries giving to the Purchaser or the relevant
Group Company all indemnities and securities for costs and undertaking
and complying with all other obligations to which Rights are under this
Agreement made subject.
CLAUSE 9.9 All retentions and releases of the Retention shall be held by or
delivered, released or paid by the Purchaser (as the case may be) for or to the
Retention Beneficiaries in the Retention Proportions.
CLAUSE 9.10 The remedies of the Purchaser to retain and receive transfers of the
Retention hereunder shall, absent fraud, comprise the only remedy available to
the Purchaser against the Warrantors or Retention Beneficiaries in respect of
any Claim pursuant to this Agreement or the Tax Covenant.
SECTION 10 PROTECTIVE COVENANTS
CLAUSE 10.1 The Warrantors shall not (whether alone or jointly with another and
whether directly or indirectly) carry on or be engaged or (except as the owner
for investment of securities dealt in on a stock exchange and not exceeding 3
per cent. in nominal value of the securities of that class) interested in any
Competing Business during a period of three years for Sinclair Stewart and two
years for all other Warrantors, in each case, after Completion. For this
purpose, "COMPETING BUSINESS" means a business:
(A) which involves any business carried on by any Group Company or any
member of the Purchaser's Group as at Completion; and
(B) which is carried on within Europe, the United States of America or the
area in which any Group Company carries on business as at Completion.
CLAUSE 10.2 The Sellers shall not within a period of three years for Sinclair
Stewart and two years for all other Warrantors after Completion, directly or
indirectly, solicit or endeavour to entice away from any Group Company, offer
employment to or employ, or offer or conclude any contract for services with,
any person who was employed by any Group Company in skilled or managerial work
at any time during the three years prior to Completion.
CLAUSE 10.3 Except so far as may be required by law and in the circumstances
only after prior consultation with the Purchaser, the Sellers shall not at any
time disclose to any person or use to the detriment of any Group Company any
trade secret or other confidential or proprietary information which it holds in
relation to any Group Company or its affairs.
CLAUSE 10.4 The Warrantors in relation to Clause 10.1 to 10.3 and Second Brown
Shipley Fund in relation to Clause 10.2 acknowledge and agree that each of
Clauses 10.1, 10.2 and 10.3 constitutes an entirely separate and independent
restriction and that the duration, extent and application of each restriction
are no greater than is reasonable and necessary for the protection of the
interests of the Purchaser but that, if any such restriction shall be adjudged
by any court or authority of competent jurisdiction to be void or unenforceable
but would be valid if part of the wording thereof were to be deleted and/or the
period thereof were to be reduced and/or the area dealt with thereby were to be
reduced, the said restriction shall apply within the jurisdiction of that court
or competent authority with such modifications as are necessary to make it valid
and effective.
<PAGE> 18
SECTION 11 TAX COVENANT
CLAUSE 11.1 The provisions of the Tax Covenant shall have effect on Completion.
SECTION 12 PURCHASER'S WARRANTIES
CLAUSE 12.1 The provisions of Schedule 6 shall have effect on Completion.
SECTION 13 WITHHOLDING TAX AND GROSSING UP
CLAUSE 13.1 All sums payable by the Sellers under this Agreement (which payment
shall be satisfied in the manner specified in Clause 5.9) shall be paid free and
clear of all deductions or withholdings unless the deduction or withholding is
required by law.
SECTION 14 LIABILITY
CLAUSE 14.1 All warranties, representations, indemnities, covenants, agreements
and obligations, given or entered into by more than one person in this Agreement
are, save for Clause 2.1 where the obligations are several obligations of each
such Seller in relation to its Shares or Loan Stock, as the case may be, given
or entered into jointly and severally.
SECTION 15 ENTIRE AGREEMENT
CLAUSE 15.1 This Agreement, the Disclosure Letter, the Tax Covenant and the
documents in the agreed form together constitute the entire agreement and
understanding between the parties in connection with the sale and purchase of
the Shares and the Loan Stock. This Agreement shall, with effect from Completion
supersede the Confidentiality Undertaking which shall cease to have any further
force or effect. It is agreed that
(A) no party has entered into this Agreement in reliance upon any
representation, warranty or undertaking which is not set out or
referred to in this Agreement; and
(B) absent fraud, no party will have any remedy in respect of any untrue
statement made to it or its representatives or agents, upon which it or
they relied and such party's only remedy will be for breach of
contract;
(C) absent fraud, this Clause shall not exclude any liability for
fraudulent misrepresentation.
SECTION 16 VARIATION
CLAUSE 16.1 No variation of this Agreement (or of any of the documents in the
agreed form referred to herein) shall be valid unless it is in writing and
signed by or on behalf of each of the parties to this Agreement (or any such
document). The expression "variation" shall include any variation, supplement,
deletion or replacement however effected.
SECTION 17 ASSIGNMENT
CLAUSE 17.1 It is agreed and acknowledged by the Sellers that this Agreement
enures to the benefit of any successor of the Purchaser by operation of law
<PAGE> 19
following a merger transaction and that the Purchaser may at any time sell or
otherwise transfer all or any of the Shares and/or Loan Stock to any other
member of the Purchaser's Group. Accordingly, the Warrantors agree that the
benefit of the Warranties may be assigned (in whole or in part) by the Purchaser
without the consent of (but with notice to) the Warrantors to, and may be
enforced by, any member of the Purchaser's Group which is the legal and
beneficial owner for the time being of any or all of the Shares as if it were
the Purchaser under this Agreement, but subject to the limitations, exclusions
and exceptions set out in this Agreement and provided that such assignee remains
a member of the Purchaser's Group.
CLAUSE 17.2 Subject to Clause 17.1 neither party shall be entitled to assign the
benefit of any provision of this Agreement without the prior written approval of
the other party.
SECTION 18 ANNOUNCEMENTS
CLAUSE 18.1 No announcement or circular in connection with the existence or the
subject matter of this Agreement shall be made or issued by or on behalf of the
Sellers or the Purchaser without the prior written approval of the Warrantors,
the Second Brown Shipley Fund and the Purchaser during any period prior to or
within three (3) months after Completion. This shall not affect any announcement
or circular required by law or the rules of any stock exchange. SECTION 19 COSTS
CLAUSE 19.1 Subject to Clause 19.2, each of the parties shall pay its own Costs
incurred in connection with the negotiation, preparation and implementation of
this Agreement.
CLAUSE 19.2 The Purchaser will upon or as soon as practicable after Completion
pay the fees of the Sellers' Solicitors, Levy's, Wilson, Sonsini, Goodrich &
Rosati, Coopers & Lybrand and 3i Corporate Finance Limited in the amounts
specified in the fees letter in the agreed form.
SECTION 20 PARTIAL INVALIDITY
CLAUSE 20.1 PARTIAL INVALIDITY If, at any time, any provision hereof is or
becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or impaired
thereby.
SECTION 21 RESTRICTIVE TRADE PRACTICES ACT
CLAUSE 21.1 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
under the Restrictive Trade Practices Act 1976 shall take effect until the day
after particulars of this Agreement (or of the Agreement or arrangement of which
it forms part) shall have been delivered to the Director General of Fair Trading
pursuant to section 24 of the Act.
SECTION 22 REMEDIES AND WAIVERS
CLAUSE 22.1 REMEDIES AND WAIVERS No failure by the Purchaser or any Seller or
Warrantor to exercise, nor any delay by the Purchaser or any Seller or Warrantor
in exercising any right or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy prevent any
further or other exercise thereof or the exercise of any other right or remedy.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
<PAGE> 20
SECTION 23 FURTHER ASSURANCE
CLAUSE 23.1 Each of the parties shall do or procure to be done all such further
acts and things, and execute or procure the execution of all such other
documents, as the other parties may from time to time reasonably require,
whether on or after Completion, for the purpose of giving to such other parties
the full benefit of all of the provisions of this Agreement.
CLAUSE 23.2 The Sellers and Warrantors shall procure that there is made
available to the Purchaser (subject, prior to Completion, to compliance by the
Purchaser with the terms of the Confidentiality Undertaking) at such time(s) and
place(s) as the Purchaser may reasonably direct all information in the
possession or under the control of the Sellers or Warrantors which the Purchaser
may from time to time reasonably require, whether before or after Completion, in
relation to the business and affairs of the Group, subject to the Purchaser
bearing any reasonable costs (including legal and accounting fees) incurred in
connection with the production of any such information.
SECTION 24 NOTICES
CLAUSE 24.1 COMMUNICATIONS IN WRITING Each communication to be made hereunder
shall be made in writing and, unless otherwise stated, shall be made by fax or
letter.
CLAUSE 24.2 DELIVERY Any communication or document to be made or delivered by
one person to another pursuant to this Agreement shall (unless that other person
has by not less than 14 days' written notice to the other specified another
address) be made or delivered to that other person at the address identified
below and shall be deemed to have been made or delivered when despatched (in the
case of any communication made by fax) or (in the case of any communication made
by letter) when left at the address or (as the case may be) three days after
being deposited in the post or postage prepaid or with an international courier
in an envelope addressed to it at that address.
Sellers' address for Notices:
c/o S J Berwin & Co
222 Grays Inn Road
London WC1X 8HB
Attention: Martin Bowen (Ref: 11B8312.56)
Facsimile: +44 171 533 2000
Purchaser's address for Notices:
Snyder Communications, Inc.
Two Democracy Centre
6903 Rockledge Drive
Bethesda, MD 208170
USA
Attention: Chief Financial Officer
Facsimile: +1 301 571 7985
<PAGE> 21
SECTION 25 GOVERNING LAW
CLAUSE 25.1 ENGLISH LAW This Agreement, other than Schedule 6, shall be governed
by, and shall be construed in accordance with, English law.
SECTION 26 JURISDICTION
CLAUSE 26.1 ENGLISH COURTS Each of the parties hereto irrevocably agrees that
the courts of England shall have jurisdiction to hear and determine any suit,
action or proceedings, and to settle any disputes, which may arise out of or in
connection with this Agreement (respectively "PROCEEDINGS" and "DISPUTES") and,
for such purposes, irrevocably submits to the jurisdiction of such courts.
CLAUSE 26.2 APPROPRIATE FORUM The parties irrevocably waive any objection which
it might now or hereafter have to the courts referred to in Clause 26.1 (English
Courts) being nominated as the forum to hear and determine any Proceedings and
to settle any Disputes and agrees not to claim that any such court is not a
convenient or appropriate forum.
CLAUSE 26.3 SERVICE OF PROCESS The Warrantors agree that the process by which
any Proceedings are begun may be served on it by being delivered in connection
with any Proceedings in England, to the Sellers' Solicitors (ref: Martin Bowen:
ref/11B8312.56). If the appointment of the person mentioned in this Clause 26.3
ceases to be effective in respect of the Warrantors, the Warrantors shall
immediately appoint a further person in England to accept service of process on
its behalf in England and, failing such appointment within 15 days, the
Purchaser shall be entitled to appoint such a person by notice to the
Warrantors. Nothing contained herein shall affect the right to serve process in
any other manner permitted by law.
CLAUSE 26.4 NON-EXCLUSIVE SUBMISSIONS The submission to the jurisdiction of the
courts referred to in Clause 26.1 (English Courts) shall not (and shall not be
construed so as to) limit the right of the parties to the Proceedings in any
other court of competent jurisdiction nor shall the taking of Proceedings in any
one or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted by
applicable law.
CLAUSE 26.5 CONSENT TO ENFORCEMENT The parties hereby consent generally in
respect of any Proceedings to the giving of any relief or the issue of any
process in connection with such Proceedings including the making, enforcement or
execution against any property whatsoever (irrespective of its use or intended
use) or any order or judgment which may be made or given in such Proceedings.
SECTION 27 COUNTERPARTS
CLAUSE 27.1 COUNTERPARTS This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE> 22
SCHEDULE 1
PART A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES HELD PRIOR TO COMPLETION SHARES HELD IMMEDIATELY PRIOR TO COMPLETION
FOLLOWING CONVERSION
- ------------------ -------------- ---------- ----------- ------------- ---------- --------- -------- -------- ---------- -----------
ORDINARY CONVERTIBLE REDEEMABLE PREFERRED ORDINARY DEFERRED REDEEMABLE PREFERRED
DEFERRED PREFERENCE PREFERENCE ORDINARY SHARES PREFERENCE ORDINARY
- ------------------ -------------- ---------- ----------- ------------- ---------- --------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Roderick Yaxley Hall 62,500 62,500
Hopewell-Smith Yaxley
Eye, Suffolk
- ------------------ -------------- ---------- ----------- ------------- ---------- --------- -------- -------- ---------- -----------
Nicholas Brundish Manor 812 812
Hopewell-Smith Brundish
Nr Woodbridge
Suffolk
IP13 8BL
- ------------------ -------------- ---------- ----------- ------------- ---------- --------- -------- -------- ---------- -----------
Sinclair Shepherd 2 Mornington 43,150 43,150
Stewart New Road,
Digswell,
Welwyn, Herts
AL6 0JA
- ------------------ -------------- ---------- ----------- ------------- ---------- --------- -------- -------- ---------- -----------
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES HELD PRIOR TO COMPLETION SHARES HELD IMMEDIATELY PRIOR TO COMPLETION
FOLLOWING CONVERSION
- ------------------ --------------- -------- ----------- ---------- ---------- ---------- -------- -------- ------------- -----------
ORDINARY CONVERTIBLE PREFERENCE REDEEMABLE PREFERRED ORDINARY DEFERRED REDEEMABLE PREFERRED
DEFERRED PREFERENCE ORDINARY SHARES PREFERENCE ORDINARY
- ------------------ --------------- -------- ----------- ---------- ---------- ---------- -------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Spread Trustee PO Box 119, 16,770 8,960 25,730
Co. Ltd Commerce House,
(AH Settlement) St Peter Port,
Guernsey, CI
- ------------------ --------------- -------- ----------- ---------- ---------- ---------- -------- -------- ------------- -----------
Spread Trustee PO Box 119, 21,916 8,960 30,876
Co. Ltd Commerce House,
(P D'I Settlement) St Peter Port,
Guernsey, CI
- ------------------ --------------- -------- ----------- ---------- ---------- ---------- -------- -------- ------------- -----------
35,838
Founders Court Founders Court, Preference 750,000 126,315 37,500 750,000 126,315
Nominees Limited Lothbury
(nominee for London EC2R 1,662
Second Brown Deferred
Shipley Fund)
- ------------------ --------------- -------- ----------- ---------- ---------- ---------- -------- -------- ------------- -----------
Holger Brandt 65232 5,000 5,000
Taunnusstein
Panoramastrasse
10
Germany
- ------------------ --------------- -------- ----------- ---------- ---------- ---------- -------- -------- ------------- -----------
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES HELD PRIOR TO COMPLETION SHARES HELD IMMEDIATELY PRIOR TO COMPLETION
FOLLOWING CONVERSION
- ------------------- ---------------- -------- ----------- ---------- ---------- --------- -------- -------- ------------- ----------
ORDINARY CONVERTIBLE PREFERENCE REDEEMABLE PREFERRED ORDINARY DEFERRED REDEEMABLE PREFERRED
DEFERRED PREFERENCE ORDINARY SHARES PREFERENCE ORDINARY
- ------------------- ---------------- -------- ----------- ---------- ---------- --------- -------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pearl Lynda Carter Heywood Grange, 16,185 16,185
Burston Road,
Diss, Norfolk
IP22 3SX
- ------------------- ---------------- -------- ----------- ---------- ---------- --------- -------- -------- ------------- ----------
Roger Edmund 20 Marlborough 33,953 8,959 42,912
Graffy Road, Chiswick,
London W4 4ET
- ------------------- ---------------- -------- ----------- ---------- ---------- --------- -------- -------- ------------- ----------
Robert John Meadow End, 35,586 8,959 44,545
Egleton Brooke Gardens,
Brookes,
Norwich
NR15 1JN
- ------------------- ---------------- -------- ----------- ---------- ---------- --------- -------- -------- ------------- ----------
Bounty Group Bounty House, 33,350 33,350
Employee Share Vinces Road,
Scheme Trustee Ltd Diss,
Norfolk IP22 3QH
- ------------------- ---------------- -------- ----------- ---------- ---------- --------- -------- -------- ------------- ----------
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES HELD PRIOR TO COMPLETION SHARES HELD IMMEDIATELY PRIOR TO COMPLETION
FOLLOWING CONVERSION
- ----------------- ----- -------- ----------- ---------- ---------- --------- -------------- ---------- ------------- -------------
ORDINARY CONVERTIBLE PREFERENCE REDEEMABLE PREFERRED ORDINARY DEFERRED REDEEMABLE PREFERRED
DEFERRED PREFERENCE ORDINARY SHARES PREFERENCE ORDINARY
- ----------------- ----- -------- ----------- ---------- ---------- --------- -------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Paul 14,090 14,090
D'Inverno
Settlement
(Paul D'Inverno,
Maureen D'Inverno
and Keith John
Mansfield*)
- ----------------- ----- -------- ----------- ---------- ---------- --------- -------------- ---------- ------------- -------------
The Allan Hayward 5,628 5,628
Settlement of
23/6/97
(A Hayward,
Louise Hayward
and Joanne
Catherine
Harrison*)
- ----------------- ----- -------- ----------- ---------- ---------- --------- -------------- ---------- ------------- -------------
The Allan Hayward 20,102 20,102
No.2 Settlement
of
27/6/97
(A Hayward,
Louise Hayward
and Keith John
Mansfield*)
- ----------------- ----- -------- ----------- ---------- ---------- --------- -------------- ---------- ------------- -------------
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES HELD PRIOR TO COMPLETION SHARES HELD IMMEDIATELY PRIOR TO COMPLETION FOLLOWING
CONVERSION
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ORDINARY CONVERTIBLE PREFERENCE REDEEMABLE PREFERRED ORDINARY DEFERRED REDEEMABLE PREFERRED
DEFERRED PREFERENCE ORDINARY SHARES PREFERENCE ORDINARY
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
The Molly
Settlement of 2,811 2,811
23/6/97
(R Graffy, Dinah
Louise Graffy,
Keith Mansfield*)
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
The Robert 6,494 6,494
Egleton
Settlement of
24/6/97
(R Egleton,
Sandra Muriel
Egleton,
Alexander George
Munro*)
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
MLM Graffy (Bare
Trust) 2,868 2,868
(R Graffy,
Christopher Henry
Avery and Dinah
Louise Graffy*)
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
OJM Graffy (Bare
Trust) 2,868 2,868
(R Graffy,
Christopher Henry
Avery and Dinah
Louise
Graffy*)
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
Sinclair Stewart
Interest in 6,850 6,850
Possession
Trust-1
(S Stewart, Avril
Marjorie Stewart,
Keith Mansfield*)
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
C I Egleton 140 140
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
N A Egleton 140 140
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
L V Egleton 140 140
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
The Emmadin Trust 6,494 6,494
(Paul D'Inverno,
Maureen
D'Inverno, Keith
Mansfield*)
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
TOTAL 337,847 35,838 35,838 750,000 126,315 373,685 35,838 750,000 126,315
===== Preference
1,662
Deferred
- ------------------- ---------- ------------ ----------- ---------- ---------- -------------- ----------- ------------- -------------
</TABLE>
<PAGE> 27
- --------------------------------------------------------------------------------
SCHEDULE 1
- --------------------------------------------------------------------------------
PART B
LOAN STOCK
MEMBER (POUND) LOAN STOCK
Second Brown Shipley Fund 3,100,000 'A'
R Hopewell-Smith 2,050,000 'D'
86,000 'E'
Mrs Hopewell-Smith 86,000 'E'
Sinclair Stewart 240,000 'C'
Mrs Stewart 350,000 'C'
Pearl Carter 30,000 'C'
Roger Graffy 65,000 'C'
Robert Egleton 140,000 'C'
---------------
3,100,000 'A'
825,000 'C'
2,050,000 'D'
172,000 'E'
<PAGE> 28
SCHEDULE 1
PART C
ALLOCATION OF CONSIDERATION SHARES
<TABLE>
<CAPTION>
- --------------------- ------------------------------------------------------------------ ------------------------
SELLERS ALLOCATION OF CONSIDERATION RETENTION
SHARES
- --------------------- ------------------------------------------------------------------ ------------------------
AMONGST HOLDERS OF AMONGST HOLDERS AMONGST HOLDERS OF
ORDINARY SHARES OF DEFERRED PREFERRED ORDINARY
SHARES SHARES
- --------------------- --------------------- ---------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Roderick
Hopewell-Smith Nil
[185,405]
===================
(12.5%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Nicholas
Hopewell-Smith [2,409] 235
(0.162%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Sinclair Shepherd
Stewart [128,004] 11,616
====================
(8.63%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Spread Trustee Co.
Ltd (AH [76,328] 7,442
====================
Settlement) (5.146%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Spread Trustee Co.
Ltd (PD'I [91,593] 8,930
====================
Settlement) (6.175%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Founders Court 1
Nominees Limited (100%) [374,710]
===================
(nominee for Nil
Second Brown (100%)
Shipley Fund)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Holger Brandt Nil
[14,832]
===================
(1%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Pearl Lynda Carter 48,013 Nil
(3.237%)
- --------------------- --------------------- ---------------------- --------------------- ------------------------
Roger Edmund Graffy 127,298 12,412
(8.582%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
Robert John Egleton
[132,142] 12,884
(8.909%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
Bounty Group Nil
Employee Share [98,932]
===================
Scheme Trustee Ltd (6.67%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
The Paul D'Inverno
Settlement (Paul [41,798] 4,075
===================
D'Inverno, Maureen (2.818%)
D'Inverno and
Keith John
Mansfield)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
The Allan Hayward
Settlement of [16,695] 1,628
===================
23/6/97 (A (1.126%)
Hayward, Louise
Hayward and Joanne
Catherine Harrison)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
The Allan Hayward
No.2 Settlement [59,632] 5,814
of 27/6/97 (A (4.02%)
Hayward, Louise
Hayward and Joanne
Catherine Harrison)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
The Molly
Settlement of [8,339] 813
===================
23/6/97 * (0.562%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
The Robert [19,264] 1,878
===================
Egleton
Settlement of (1.299%)
24/6/97 R Egleton
*
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
MLM Graffy (Bare [8,508] 830
Trust) R Graffy (0.574%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
OJM Graffy (Bare
Trust) R Graffy [8,508] 830
(0.574%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
Sinclair Stewart
Interest in
Possession Trust- [20,320] 1,981
I S Stewart * (1.37%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
C I Egleton [415] 40
(0.028%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
N A Egleton [415] 40
(0.028%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
L V Egleton [415] 40
(0.028%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
The Emmadin Trust
P D'Inverno * [19,264] 1,878
(1.299%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
[1,108,529] 1 (100%) [379,710] 73,356
=========================
(100%)
(100%)
- --------------------- --------------------- ---------------------- ---------------------- -----------------------
</TABLE>
* See Part A for full names of Sellers
<PAGE> 29
SCHEDULE 2
PART A
DETAILS OF THE COMPANY
NB: (BEFORE CONVERSIONS TO TAKE PLACE ON OR SHORTLY BEFORE COMPLETION)
<TABLE>
<CAPTION>
<S> <C>
1. NAME: BOUNTY GROUP HOLDINGS LIMITED (FORMERLY PRINTSPEEDY
LIMITED)
2. DATE OF INCORPORATION: 11/7/95
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private Holding Company
5. REGISTERED NUMBER: 3078619
6. REGISTERED OFFICE: Bounty House, Vinces Road, Diss, Norfolk, IP22 3HQ
7. DIRECTORS: Roger Edmund Graffy, Allan Hayward, Nicholas John
Hopewell-Smith, Brian Francis Levy, Roy David Parker,
Sinclair Shepherd Stewart, Paul Anthony D'Inverno, Robert
John Egleton
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: (pound)806,381.50 divided into 750,000 Redeemable preference
shares, 35,838 convertible preference shares, 126,315
preferred ordinary shares, 364,162 ordinary shares 1,662
deferred shares and 35,838 convertible deferred shares.
10. ISSUED CAPITAL: as shown in Schedule 1
11. ACCOUNTING REFERENCE DATE: 31st December
12. AUDITORS: Coopers & Lybrand
13. TAX RESIDENCE: England and Wales
14. SUBSIDIARIES: Bounty Holdings Limited, Bounty Services Limited, Bounty
Publications Limited, Diss Fulfilment Services Limited,
Bounty Services (Ireland) Limited
15. MORTGAGES AND CHARGES: Fixed and Floating Charge dated 3 June 1997 securing all
monies due to Bank of Scotland, being a fixed and
floating charge on the undertaking, property and assets
of present and future and a fixed charge on all book and
other debts.
</TABLE>
<PAGE> 30
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C>
1. NAME: BOUNTY HOLDINGS LIMITED
2. DATE OF INCORPORATION: 04/11/85
3. PLACE OF INCORPORATION: England and Wales.
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 01954191
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Paul Anthony D'Inverno, Robert John Egleton, Roger Edmund
Graffy, Allan Hayward, Roderick Hopewell-Smith, Brian
Francis Levy, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 77,264 Ordinary Shares
2 Deferred Shares
10. ISSUED CAPITAL: 77,266 (Value of(pound)7,728.40)
77,264 Ordinary Shares
2 Deferred Shares
11. REGISTERED SHAREHOLDERS: Bounty Group Holdings Limited - (100%)
12. ACCOUNTING REFERENCE DATE: 31st December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: England and Wales
15. SUBSIDIARIES: Diss Building & Maintenance Services Limited, Stork
Nursery Supplies Limited, Babylove Limited, Baby Junction
Limited, Bounty Group Limited, Bounty Vision Limited,
Diss Fulfilment Services (Ireland) Limited, Globalvision
Limited, Revelfax Limited, Bounty Group Employee Share
Scheme Trustee Limited, Bounty Publications, Inc. and
Stork Nursery Supplies, Inc.
16. MORTGAGES AND CHARGES: [1. Fixed and Floating Charge dated 03/06/97
Amount Secured: All monies due or to become due
from the Company to the Bank on
any account whatsoever
Property Charged: Undertaking and all property and
assets present and future
including uncalled capital, book
debts.
In favour of: The Governor and Company of the
Bank of Scotland
[2. Legal Mortgage dated 03/06/97
Amount Secured: All monies due or to become due
from the Company to the Bank on
any account whatsoever
Property Charged: Land and buildings at Vinces
Road, Diss, Norfolk together with
all fixtures and fittings now or
at any time hereafter on the
property, the benefits of all
rights, licenses and the goodwill
relating to the Property or in
relation to the business or
undertaking from time to time
carried on at the property
In favour of: The Governor and Company of the
Bank of Scotland
3. Legal Mortgage dated 03/06/97
Amount Secured: All monies due or to become due
from the [ ] to the Bank
on any account whatsoever.
Property Charged: 3 Theobald Court, Theobald
Street, Borehamwood,
Hertfordshire with the benefit of
all right and licenses shares or
membership rights any goodwill of
any business raised and other
money payable.
In favour of: The Governor and Company of the
Bank of Scotland
4. Legal Mortgage dated 03/06/97
Amount Secured: All monies due or to become due
from the Company to the Bank on
any account whatsoever.
Property charged: Land and buildings on the SE side of Vinces
Road Industrial Estate, Diss, Norfolk with
the benefit of all rights and licences
shares or membership rights goodwill rental
and other money payable and all other
payments.
In favour of: The Governor and Company of the
Bank of Scotland
</TABLE>
<PAGE> 31
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY SERVICES LIMITED
2. DATE OF INCORPORATION: 08/06/59
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 00631367
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Roger Edmund Graffy, Allan Hayward, Nicholas John
Hopewell-Smith, Roderick Hopewell-Smith, Sinclair
Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 10,000 Ordinary Shares of (pound)1 each
2,000 6% Preference Shares of (pound)1 each
10. ISSUED CAPITAL: 3,000 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Group Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31st December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: United Kingdom
15. SUBSIDIARIES: None
16. MORTGAGES AND CHARGES: Fixed and Floating Charge dated 03/06/97 securing all
monies due to Bank of Scotland
being a fixed and floating
charge on the undertaking,
property and assets present
and future and on all book and
other debts.
</TABLE>
<PAGE> 32
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: DISS BUILDING AND MAINTENANCE SERVICES (FORMERLY WAVENEY
HOLDINGS LIMITED AND DISS FULFILMENT SERVICES LIMITED)
2. DATE OF INCORPORATION: 21/01/81
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 01540196
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Roderick Hopewell-Smith, Sinclair Shepherd
Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 1,000 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31st December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
16. MORTGAGES AND CHARGES: Fixed and Floating Charge dated 03/06/97 securing all
monies due to Bank of Scotland being a fixed and floating
charge on the undertaking, property and assets present
and future and on all book and other debts.
</TABLE>
<PAGE> 33
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: DISS FULFILMENT SERVICES LIMITED
2. DATE OF INCORPORATION: 30/12/77
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 01346272
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Carl Fisher, Robert John Egleton, Allan Hayward, Sinclair
Shepherd Stewart, Paul D'Inverno
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 120 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Group Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
16. MORTGAGES AND CHARGES: Fixed and Floating Charge dated 03/06/97 securing all
monies due to Bank of Scotland being a fixed and floating
charge on the undertaking, property and assets present
and future and on all book and other debts of the Company.
</TABLE>
<PAGE> 34
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY PUBLICATIONS LIMITED
2. DATE OF INCORPORATION: 24/04/94
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 00802587
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Paul Anthony D'Inverno, Robert Egleton, Allan
Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of (pound)1 each
10. ISSUED CAPITAL: 162
11. REGISTERED SHAREHOLDERS: Bounty Group Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31st December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: United Kingdom
15. SUBSIDIARIES: None
16. MORTGAGES AND CHARGES: Fixed and Floating Charge dated 03/06/97 securing all
monies due to Bank of Scotland
being a fixed and floating
charge on the undertaking,
property and assets, present
and future, and all book and
other debts of the Company
</TABLE>
<PAGE> 35
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: STORK NURSERY SUPPLIES LIMITED (FORMERLY THERLSTER
LIMITED, AND KIDDY MAIL LIMITED)
2. DATE OF INCORPORATION: 20/7/79
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 1438831
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 135 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: Babylove Limited, Babyjunction Limited
</TABLE>
<PAGE> 36
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BABYLOVE LIMITED (FORMERLY CUPOLA CLOTHING LIMITED)
2. DATE OF INCORPORATION: 06/12/85
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 01969606
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 100 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Stork Nursery Supplies Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 37
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY GROUP LIMITED
2. DATE OF INCORPORATION: 20/05/79
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 01421955
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Roderick Hopewell-Smith, Sinclair Shepherd
Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 100 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 100 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 38
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: REVELFAX LIMITED
2. DATE OF INCORPORATION: 21/03/94
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 02910941
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 2 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 39
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: GLOBAL VISION LIMITED (FORMERLY AIMFORD LIMITED, BOUNTY
GIFT PAX LIMITED, BOUNTY SERVICES LIMITED AND BOUNTY
GROUP LIMITED)
2. DATE OF INCORPORATION: 02/09/88
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 02292652
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 2 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 40
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY VISION LIMITED (FORMERLY BINGFORD LIMITED)
2. DATE OF INCORPORATION: 02/09/88
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 01593569
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Roderick Hopewell-Smith, Sinclair Shepherd
Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 3,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 3,000 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 41
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BABY JUNCTION LIMITED (FORMERLY LIBERTY FASHIONS LIMITED)
2. DATE OF INCORPORATION: 30/05/86
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 02024190
6. REGISTERED OFFICE: P.O. Box 20, Owen Road, Diss, Norfolk, IP22 3HH
7. DIRECTORS: Allan Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 2 Ordinary Shares
11. REGISTERED SHAREHOLDERS: Stork Nursery Supplies Limited (100%)
12. ACCOUNTING REFERENCE DATE: 31 December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: UK
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 42
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: DISS FULFILMENT SERVICES (IRELAND) LIMITED (FORMERLY DISS
FULFILMENT SERVICES LIMITED)
2. DATE OF INCORPORATION: 9/3/93
3. PLACE OF INCORPORATION: IRELAND
4. CLASS OF COMPANY: Private
5. REGISTERED NUMBER: 200132
6. REGISTERED OFFICE: 66 Broomhill Road Tallaght, Dublin 24 Rep of Ireland
7. DIRECTORS: Allan Hayward, Sinclair Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary shares of(pound)1
10. ISSUED CAPITAL: 2 Ordinary shares
11. REGISTERED SHAREHOLDERS: Bounty Group Holdings Limited - 1 Share
Bounty Holdings Limited - 1 Share
12. ACCOUNTING REFERENCE DATE: 31st December
13. AUDITORS: Coopers & Lybrand
14. TAX RESIDENCE: Ireland and United Kingdom
15. SUBSIDIARIES: None
</TABLE>
<PAGE> 43
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY PUBLICATIONS INC.
2. PLACE OF INCORPORATION: Delaware, USA
3. CLASS OF COMPANY: Corporation of the State of Delaware, USA
4. REGISTERED NUMBER: Recorded in the State of Delaware in Corporation Book
Z129, page 8
5. REGISTERED OFFICE: The Prentice-Hall Corporation System Inc,
32 Loockerman Square, Suite L-100
County of Kent, Dover
Delaware, 19901
6. DIRECTORS: Robert John Egleton, Allan Haywood, Sinclair Stewart,
Brian Yap
7. SECRETARY: Eleanor Demirkaya
8. AUTHORISED CAPITAL: 1,500
9. ISSUED CAPITAL: 480
10. REGISTERED SHAREHOLDERS: Bounty Holdings Ltd - 400 sale shares of Preferred stock
Bounty Holdings Inc.- 70 shares of common stock
Robert John Egleton - 10 shares of common stock
11. AUDITORS: None
12. MORTGAGES AND CHARGES: Has filed a petition for relief under the United Stated
Bankruptcy Code
</TABLE>
<PAGE> 44
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY GIFT PAX INC.
2. PLACE OF INCORPORATION: Delaware, USA
3. CLASS OF COMPANY: A Corporation of the State of Delaware, USA
4. REGISTERED NUMBER: Recorded in the State of Delaware in Corporation Book
H118, page 152
5. REGISTERED OFFICE: The Prentice-Hall Corporation System Inc.
32 Loockerman Square, Suite L-100, County of Kent, Dover,
Delaware, 19901
6. DIRECTORS: Allan Hayward, Sinclair Stewart, Brian Yap
7. SECRETARY: Eleanor Demirkaya
8. AUTHORISED CAPITAL: 3,500 shared of common stock
9. ISSUED CAPITAL: 2,290 shares
10. REGISTERED SHAREHOLDERS: Bounty Holdings Ltd - 2,200 preferred stock
Bounty Holdings Inc - 90 common stock
11. AUDITORS: None
12. MORTGAGES AND CHARGES: Currently operating under a confirmed plan of
reorganisation pursuant to the United States Bankruptcy
Code. Security interests in assets of the corporation
are held by Baybank, 7 New England Executive Park,
Burlington, MA 01803 in the amount of $294,115.47 and
Patricia Przywora, RD#3, Box 137A Milford, New Jersey
08848 in the amount of $26,638.00.
</TABLE>
<PAGE> 45
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: STORK NURSERY SUPPLIES, INC.
2. DATE OF INCORPORATION: Delaware
3. PLACE OF INCORPORATION: Delaware, USA
4. CLASS OF COMPANY: Corporation of the State of Delaware, USA
5. REGISTERED NUMBER: Recorded in the State of Delaware in Corporation Book
H118, page 158
6. REGISTERED OFFICE: The Prentice-Hall Corporation System, Inc., 32 Loockerman
Square Suite L-100, County of Kent, Dover, Delaware 19901
7. DIRECTORS: Sinclair Stewart, Allan Hayward, Brian Yap
8. SECRETARY: Eleanor Demirkaya
9. AUTHORISED CAPITAL: 1,000 shares of common stock
10. ISSUED CAPITAL: 90 shares
11. REGISTERED SHAREHOLDERS: Bounty Holdings Ltd - 75 sale shares of preferred stock
Stephen Paul Tollman - 15 common stock
</TABLE>
<PAGE> 46
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY GROUP EMPLOYEE SHARE SCHEME TRUSTEE LTD
2. DATE OF INCORPORATION: 22 November 1994
3. PLACE OF INCORPORATION: England
4. CLASS OF COMPANY: Private company limited by shares
5. REGISTERED NUMBER: 2993192
6. REGISTERED OFFICE: Bounty House, Vinces Road, Diss, Norfolk IP22 3HQ
7. DIRECTORS: Allan Hayward, Sinclair Shepherd Stewart
8. SECRETARY: Carl Fisher, Allan Hayward
9. AUTHORISED CAPITAL: 1,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 2
11. REGISTERED SHAREHOLDERS: Bounty Holdings Limited
12. ACCOUNTING REFERENCE DATE: 31 December
16. MORTGAGES AND CHARGES: Debenture dated 30 June 1997 in favour of the Governor
and Company of the Bank of Scotland consisting of fixed
and floating charges over the undertaking and/or property and
assets past and future including goodwill both debts uncalled
capital buildings fixtures, fixed plant and machinery.
</TABLE>
<PAGE> 47
SCHEDULE 2
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C>
1. NAME: BOUNTY SERVICES (IRELAND) LIMITED
2. DATE OF INCORPORATION: 1 June 1977
3. PLACE OF INCORPORATION: Ireland
4. CLASS OF COMPANY: Private company limited by shares
5. REGISTERED NUMBER: 58938
6. REGISTERED OFFICE: 66 Broomhill Road, Tallaght, Dublin 24, Ireland
7. DIRECTORS: Sinclair Shepherd Stewart, Carl John Fisher
8. SECRETARY: Allan Hayward, Carl John Fisher
9. AUTHORISED CAPITAL: (pound)20,000 divided into 20,000 Ordinary Shares of(pound)1 each
10. ISSUED CAPITAL: 100 Ordinary Shares of(pound)1 each
11. REGISTERED SHAREHOLDERS: Bounty Group Holdings Limited
</TABLE>
<PAGE> 48
SCHEDULE 2
PART C
DETAILS OF ASSOCIATED COMPANIES
<TABLE>
<S> <C>
1. NAME: MUSIC LINE LIMITED
2. DATE OF INCORPORATION: 12 February 1996
3. PLACE OF INCORPORATION: England and Wales
4. CLASS OF COMPANY: Private limited company
5. REGISTERED NUMBER: 3157938
6. REGISTERED OFFICE: Bounty House, Vinces Road, Diss, Norfolk IP22 3HQ
7. DIRECTORS: Allan Hayward, Barnard Hamilton Phillip Spratt
8. SECRETARY: Barnard Spratt
9. AUTHORISED CAPITAL: 40,010 divided into 40,000 ordinary 'C' shares, 8
ordinary 'A' shares and 2 ordinary 'B' shares of (pound)1 each
10. ISSUED CAPITAL: 8 'A' ordinary shares
2 'B' ordinary shares
900 'C' ordinary shares
11. REGISTERED SHAREHOLDERS: Ted D Bear 4 'A' shares - 400 'C' shares
Bounty Group Holdings Ltd - 4 'A' shares, 400 'C' shares
R Harding Williams - 2 'B' shares, 100 'C' shares
12. ACCOUNTING REFERENCE DATE: 31 December
</TABLE>
<PAGE> 49
SCHEDULE 2
PART C
DETAILS OF ASSOCIATED COMPANIES
<TABLE>
<S> <C>
1. NAME: BOUNTY SERVICES LIMITED (NEW ZEALAND)
2. DATE OF INCORPORATION: 28 June 1994
3. PLACE OF INCORPORATION: New Zealand
4. REGISTERED NUMBER: CH 650295
5. REGISTERED OFFICE: Bullock Taylor & Sheldon
Clear House, 155 Worcester Street
Christchurch, New Zealand
6. DIRECTORS: Anne Elizabeth Ellen Darby Barrett, Michael Arthur,
Barrett, Allan Hayward
7. SECRETARY: Michael Arthur Barrett
8. AUTHORISED CAPITAL: NZ$247,500 divided into 120,000 'A' shares (convertible
redeemable preferred) of NZ$1 each
127,000 'B' shares (redeemable preferred shares) of NZ$1
each and 500 ordinary shares of NZ$1 each
9. ISSUED CAPITAL:
10. REGISTERED SHAREHOLDERS: 63,500 'B' shares - Anne Elizabeth Ellen Darby Barratt
= ==
63,500 'B' shares - Michael
Arthur Barratt 120,000 'A'
shares - Bounty Group Holdings
Limited (30,000 of which are
redeemable on 30.6.97) 120
ordinary shares - Bounty Group
Holdings Limited
11. ACCOUNTING REFERENCE DATE:
12. AUDITORS: Bullock Taylor & Sheldon, Chartered Accountants,
Christchurch, New Zealand
</TABLE>
<PAGE> 50
SCHEDULE 2
PART C
DETAILS OF ASSOCIATED COMPANIES
<TABLE>
<S> <C>
1. NAME: AMERICAN SAMPLING INC.
2. DATE OF INCORPORATION: 17 December 1991
3. PLACE OF INCORPORATION: Delaware, USA
4. CLASS OF COMPANY: A Delaware Corporation Federal Tax Identification Number
22-314 1747
</TABLE>
<PAGE> 51
SCHEDULE 3
THE WARRANTIES
PART A : GENERAL
INFORMATION
INFORMATION PROVIDED BY WARRANTORS
DISCLOSURE
1.1 The facts and matters set out in the Disclosure Letter are in all
material respects true, accurate and not misleading.
THE GROUP
THE COMPANY AND THE SHARES
2.1 (A) All of the Shares are fully-paid or properly credited as fully-paid.
(B) The information in respect of the Company set out in Part A of Schedule
2 is accurate.
(C) All transfers of Shares that have taken place since 2 June 1997 have
been between the transferor and a member of the transferor's immediate
family or Trustees holding on trusts established for the benefit of
such members of the transferor's immediate family.
THE SUBSIDIARIES
2.2(A) The Company is (or a Subsidiary is) the sole legal and beneficial owner
of the whole of the issued share capital of each of the Subsidiaries
free from all security interests, options, equities, claims or other
third party rights (including, without limitation, rights of
pre-emption) of any nature whatsoever.
(B) The information in respect of each of the Subsidiaries set out in Part
B of Schedule 2 is accurate.
(C) Bounty Holdings, Inc., Bounty Publications Inc., Stork Nursery Inc. and
Bounty Giftpax Inc. are in good standing in their respective States of
Incorporation.
THE ASSOCIATED COMPANIES
2.3(A) The Company is (or a Group Company is) the beneficial owner of the
issued shares of each of the Associated Companies identified in Part C
of Schedule 2 free from all security interests, options, equities,
claims or other third party rights (including, without limitation,
rights of pre-emption) of any nature whatsoever.
(B) The information in respect of each of the Associated Companies set out
in Part C of Schedule 2 is accurate.
<PAGE> 52
OTHER INTERESTS
2.4 No Group Company owns or has any interest of any nature whatsoever in any
shares, debentures or other securities issued by any undertaking other than the
Subsidiaries or the Associated Companies.
FINANCIAL MATTERS
ACCOUNTS
3.1(A) The Accounts give a true and fair view of the state of affairs of the
Company and its subsidiary undertakings as at the Accounts Date and of
their results for the financial year ended on the Accounts Date.
(B) Without limiting the generality of paragraph (A):
(I) the Accounts of each Group Company either make full provision for or
disclose all liabilities (whether actual, contingent or disputed and
including financial lease commitments and pension liabilities) which
should properly be disclosed, all outstanding capital commitments and
all known bad or doubtful debts of the relevant Group Company as at the
Accounts Date, in each case in accordance with UK GAAP;
(II) the Accounts were (save to the extent stated otherwise in the Accounts)
prepared under the historical cost convention, complied with the
requirements of all relevant laws then in force and with all statements
of standard accounting practice (or financial reporting standards) and
UK GAAP then in force;
(III)all work-in-progress valued in the Accounts of each Group Company was
valued at figures not exceeding the amounts which could in the
circumstances existing at the Accounts Date reasonably be expected to
be realised in the normal course of carrying on the business of the
relevant Group Company;
(IV) the method of valuing stock and work-in-progress and the basis of
depreciation and amortisation adopted in the Accounts of each Group
Company were the same as those adopted in the Accounts of the relevant
Group Company for the financial year preceding the financial year ended
on the Accounts Date;
(V) so far as the Warrantors are aware the rate of depreciation adopted by
each Group Company in the Accounts was sufficient for each of the fixed
assets of the relevant Group Company and its subsidiary undertakings to
be written down to estimated realisable value by the end of its useful
life;
(VI) except as stated in its Accounts, no changes in the accounting policies
were made by any Group Company in any of its two (2) financial years
ended on the Accounts Date;
(VII)the results shown by the Accounts were not (except as therein
disclosed) affected by any extraordinary or exceptional item or by any
other factor rendering such results for all or any of such periods
unusually high or low.
<PAGE> 53
MANAGEMENT ACCOUNTS
3.2(A) The unaudited Management Accounts were properly prepared in a manner
consistent with that adopted in the preparation of its management
accounts for all periods ended during the twelve months prior to the
Accounts Date.
(B) Having regard to the purpose for which such unaudited Management
Accounts were prepared, they are not misleading in any material respect
and neither materially over-state the value of the assets nor
materially under-state the liabilities of any Group Company as at the
dates to which they were drawn up and do not materially over-state the
profits of any Group Company in respect of the period to which they
relate.
POSITION SINCE ACCOUNTS DATE
3.3(A) Since the Accounts Date:
(I) the business of each Group Company has been carried on in the
ordinary and usual course consistent with past practices and
no Group Company has made or agreed to make any payment other
than routine payments in the ordinary and usual course of
trading;
(II) no dividend or other distribution (within the meaning of
section 209, 210, or 418 of the Taxes Act) has been declared,
paid or made by any Group Company (except for any dividends
provided for in the Accounts of that Group Company);
(III) no share or loan capital has been allotted or issued or agreed
to be allotted or issued by any Group Company (other than to
another Group Company);
(IV) there has been no material change in the level of
borrowing or in the working capital requirements of any
Group Company;
(V) all transactions between each Group Company and the Sellers or
any officer or director thereof have been on arm's length
terms;
(VI) no contract, liability or commitment (whether in respect of
capital expenditure or otherwise) has been entered into by any
Group Company which is of a long term or unusual nature or
which involved or could involve an obligation of a material
nature or magnitude (a liability for expenditure in excess of
(pound)20,000 being included as MATERIAL for this purpose);
(VII) no Group Company has (whether in the ordinary and usual course
of business or otherwise) acquired or disposed of, or agreed
to acquire or dispose of, any business or any asset having a
value in excess of (pound)100,000;
(VIII) no debtor has been released by any Group Company on terms that
it pays less than the book value of its debt and no debt in
excess of (pound)20,000 owing to any Group Company has been
deferred, subordinated or written off or has proved to any
extent irrecoverable;
(IX) no change has been made in terms of employment, including
pension fund commitments, by any Group Company (other than
those required by law) which could increase the total staff
costs of the Group by more than (pound)100,000 per annum or
the remuneration of any one director or employee by more than
(pound)20,000 per annum;
<PAGE> 54
(X) there has been no material increase or decrease in the levels
of debtors or creditors or in the average collection or
payment periods for the debtors and creditors respectively;
(XI) no Group Company has repaid any borrowing or indebtedness in
advance of its stated maturity;
(XII) there has been no material reduction in the cash balances
of any Group Company since the last Accounts Date; and
(XIII) no resolution of the members of any Group Company has been
passed whether in general meeting or otherwise (other than
resolutions relating to the routine business of annual general
meetings).
ACCOUNTING AND OTHER RECORDS
3.4(A) The statutory books, books of account and other records of each Group
Company:
(I) are up-to-date and have been maintained in accordance with
Section 223 of the Companies Act and UK GAAP on a proper and
consistent basis;
(II) comprise complete and accurate records of all information
required to be recorded therein;
(III) are in its possession or under its control.
(B) All accounts, documents and returns required by law to be delivered or
made by any Group Company to the Registrar of Companies or any other
authority have been duly and correctly delivered or made.
ACCOUNTING REFERENCE DATE
3.6 The accounting reference date of each Group Company under section 224 of the
Companies Act is, and during the last two years always has been, the date
specified in Schedule 1 in respect of that Group Company.
DORMANT COMPANIES
3.7 None of the Dormant Companies has any liabilities or obligations either
direct or indirect, matured or unmatured, absolute or contingent or otherwise.
<PAGE> 55
DEBT POSITION
DEBTS OWED TO THE GROUP
4.1(A) There are no debts owing to any Group Company other than:
(I) (pound)68,000 due from Music Line Limited; and
(II) trade debts incurred in the ordinary and usual course of
business which do not exceed (pound)200,000 in aggregate for
the Group as a whole (and none of which exceeds
(pound)50,000).
(B) The book debts shown in the Accounts of each Group Company have
realised, or will realise within a period of three (3) months from the
Accounts Date, their nominal amount less any specific provision for bad
or doubtful debts included in such Accounts.
DEBTS OWED BY THE GROUP
4.2(A) The Disclosure Letter contains or annexes details of all borrowing or
indebtedness in the nature of borrowing (including, without limitation,
any indebtedness for moneys borrowed or raised under any acceptance
credit, bond, note, bill of exchange or commercial paper, finance
lease, hire purchase agreement, trade bills (other than those on terms
normally obtained), forward sale or purchase agreement or conditional
sale agreement or other transaction having the commercial effect of a
borrowing).
(B) No Group Company has received any notice to repay under any agreement
relating to any borrowing or indebtedness in the nature of borrowing
which is repayable on demand.
(C) There has not occurred any event of default or any other event or
circumstance which would entitle any person to call for early repayment
under any agreement relating to any borrowing or indebtedness of any
Group Company or to enforce any security given by any Group Company
(or, in either case, any event or circumstance which with the giving of
notice and/or the lapse of time and/or a relevant determination would
constitute such an event or circumstance).
(D) The Management Accounts provide for all material trade debts incurred
by members of the Group in the ordinary and usual course of business
since the Accounts Date.
REGULATORY MATTERS
LICENCES
5.1(A) Each Group Company has obtained all material licences, permissions,
authorisations and consents required for carrying on its business
<PAGE> 56
effectively in the places and in the manner in which such business is
now carried on (other than in connection with Properties and
environmental matters, warranted pursuant to Parts B and C of this
Schedule 3).
(B) The licences, permissions, authorisations and consents referred to in
paragraph (A) are in full force and effect, are not limited in duration
or subject to any unusual or onerous conditions and have been complied
with in all material respects.
(C) To the best knowledge of the Warrantors, there are no circumstances
which indicate that any of the licences, permissions, authorisations or
consents referred to in paragraph (A) will or are likely to be revoked
or not renewed, in whole or in part, in the ordinary course of events
(whether as a result of the acquisition of the Shares by the Purchaser
or otherwise).
COMPLIANCE WITH LAWS
5.2(A) Each Group Company has conducted its business and corporate affairs in
accordance with its Memorandum and Articles of Association and in all
material respects with all applicable laws and regulations (whether of
the United Kingdom or any other jurisdiction).
(B) No Group Company is in default of any order, decree or judgment of any
court or any governmental or regulatory authority (whether of the
United Kingdom or any other jurisdiction).
COMPETITION AND FAIR TRADING LAWS
5.3(A) No Group Company is a party to (or is concerned in) any agreement,
arrangement, concerted practice or course of conduct which (I) is
registerable under the provisions of the Restrictive Trade Practices
Act 1976 (as amended); or (II) contravenes the provisions of the Resale
Prices Act 1976; or (III) falls within Article 85 and/or Article 86 of
the Treaty of Rome; or (IV) falls within Article 53 and/or Article 54
of the Agreement on the European Economic Area; or (V) otherwise
infringes the competition legislation or practice of any other
jurisdiction.
(B) No Group Company has received any process, notice or other
communication (formal or informal) by or on behalf of the Office of
Fair Trading (whether under the Fair Trading Act 1973, the Competition
Act 1980 or otherwise), the Monopolies and Mergers Commission, the
Secretary of State for Trade and Industry or the Commission of the
European Communities, the EFTA Surveillance Authority or any other
authority having jurisdiction in competition matters in relation to any
aspect of the business of any Group Company or any agreement,
arrangement, concerted practice or course of conduct to which any Group
Company is, or is alleged to be, a party.
(C) So far as the Warrantors are actually aware, no Group Company is
involved in any practice or agreement as a result of which it is likely
to receive any such process, notice or communication as is referred to
in paragraph (B).
(D) No Group Company is subject to any order or judgment given by any court
or governmental or regulatory authority, or party to any undertaking or
assurance given to any such court or authority, in relation to
competition matters which is still in force.
5.4 No Group Company makes any sales into the US.
<PAGE> 57
THE GROUP'S ASSETS
OWNERSHIP
6.1(A) For the purpose of this Warranty 6.1, ASSETS shall not include the
Properties, to which the provisions of Part B of this Schedule shall
apply.
(B) Each of the assets included in the Accounts of each Group Company or
acquired by it since the Accounts Date (other than assets sold in the
ordinary course of business) is legally and beneficially owned by that
Group Company. Those assets are not the subject of any security
interest or any assignment, equity, option, right of pre-emption, right
of first refusal, royalty, factoring arrangement, leasing or hiring
agreement, hire purchase agreement, conditional sale or credit sale
agreement, agreement for payment on deferred terms or any similar
agreement or arrangement (or any agreement or obligation, including a
conditional obligation, to create or enter into any of the foregoing)
except for:
(I) any hire or lease agreement in the ordinary course of business
involving expenditure of less than (pound)50,000 per annum
(where the aggregate expenditure of the Group under all such
agreements is less than (pound)200,000 per annum);
(II) title retention provisions in respect of goods and
materials supplied to the Group in the ordinary course of
business; and
(III) the security interests, if any, reflected in the Accounts of
any Group Company and liens arising in the ordinary course of
business by operation of law.
POSSESSION AND THIRD PARTY FACILITIES
6.2(A) All of the assets owned by each Group Company, or in respect of which
any Group Company has a right of use, are in the possession or under
the control of that Group Company.
(B) Where any assets are used but not owned by any Group Company or any
facilities or services are provided to any Group Company by any third
party not being a member of the Group, so far as the Warrantors are
aware there has not occurred any event of default or any other event or
circumstance which may entitle any such third party to terminate any
agreement or licence in respect of the provision of such facilities or
services (or any event or circumstance which with the giving of notice
and/or the lapse of time and/or a relevant determination would
constitute such an event or circumstance).
ADEQUACY OF ASSETS
6.3(A) The assets owned or used by each Group Company and the facilities and
services to which each Group Company has a contractual right include
all rights, properties, assets, facilities and services necessary or
desirable for the carrying on of the business of that Group Company in
the manner in which it is currently carried on.
(B) The assets of the Company and the facilities and services to which the
Company has a contractual right include all assets, facilities and
services necessary to enable the Company to conduct its business after
Completion in the same manner in all material respects as it was
conducted immediately prior to Completion.
<PAGE> 58
(C) No Group Company depends in any material respect upon the use of assets
owned by, or facilities or services provided by, any Warrantor save in
the course of employment or as a director or other officer (where
applicable).
The Warranty in this paragraph 6.2, 6.3 shall not apply to the Properties
CONDITION
6.4 All the plant, machinery, equipment and vehicles used by such Group Company
are in a good state of repair, having regard to their age and use and normal
wear and tear excepted.
PLANT REGISTERS
6.5 The plant registers of each Group Company comprise a complete and accurate
record of all the plant, machinery, equipment and vehicles owned by that Group
Company as at 30 April 1997.
INSURANCES
6.6(A) There is set out in the Disclosure Letter a summary of the insurances
maintained by or covering members of the Group. Such insurances are in
full force and effect and so far as the Warrantors are actually aware,
there are no circumstances which will lead to any liability under such
insurance being avoided by the insurers or the premiums being increased
and Completion will not have the effect of terminating, or entitling
any insurer to terminate, cover under any such insurance.
(B) No claim is outstanding by any Group Company under any such policy of
insurance and, to the best knowledge of the Warrantors, there are no
circumstances now existing which will give rise to such a claim.
INTELLECTUAL PROPERTY RIGHTS
REGISTERED RIGHTS
7.1(A) The Disclosure Letter contains true, complete and accurate lists of all
Intellectual Property Rights registered or applied to be registered in
any jurisdiction which are held or beneficially owned by each Group
Company. The relevant Group Company is the sole legal owner of such
Intellectual Property Rights.
(B) No act has been done or omitted to be done and so far as the Warrantors
are aware no event has occurred or is likely to occur which may render
any of such Intellectual Property Rights subject to revocation,
compulsory licence, cancellation or amendment or may prevent the grant
or registration of a valid Intellectual Property Right pursuant to a
pending application.
CHARGES
7.2 The Intellectual Property Rights which are owned or otherwise used by a
Group Company are not subject to any mortgage, charge, lien or other security
interest.
<PAGE> 59
INFRINGEMENT
7.3(A) So far as the Warrantors are aware none of the operations of the Group
infringe, or are likely to infringe, any rights held by any third party
or involve the unauthorised use of confidential information disclosed
to any Group Company (or any member of the Retained Group) in
circumstances which might entitle a third party to make a claim against
a Group Company.
(B) No claim has been made by any third party within the immediately
preceding 24 months which alleges any infringing act or process which
would fall within paragraph (A) above or which otherwise disputes the
right of any Group Company to use any Intellectual Property Rights
relating to its business and the Warrantors are not aware of any
circumstances (including any act or omission to act) likely to give
rise to such a claim.
(C) So far as the Warrantors are aware there exists no actual or threatened
infringement by any third party of any Intellectual Property Rights
held or used by a Group Company (including misuse of confidential
information) or any event likely to constitute such an infringement nor
has a Group Company (or any member of the Retained Group) knowingly
acquiesced in the unauthorised use by any third party of any such
Intellectual Property Rights.
EMPLOYEE CLAIMS
7.4 No claims have been made or threatened by employees or ex-employees to
receive any payment or right in respect of any Intellectual Property Rights used
by any Group Company.
INTELLECTUAL PROPERTY LICENCES
7.5(A) Details of all licences granted to or by any Group Company in respect
of the Intellectual Property Rights referred to in Clause 7.1(a) are
set out in the Disclosure Letter including details of any limit as to
time or right of termination affecting the use of the Intellectual
Property Right.
(B) No Group Company is in material default under any licence, sub-licence
or assignment granted to it in respect of any Intellectual Property
Rights used by any Group Company.
LOSS OF RIGHTS
7.6 No Intellectual Property Rights owned or used by a Group Company and no
licence of Intellectual Property Rights of which a Group Company has the benefit
will be lost, or rendered liable to any right of termination or cessation by any
third party, by virtue of the acquisition by the Purchaser of the Shares.
CONFIDENTIAL INFORMATION
7.7 Where information of a confidential nature has been developed or acquired by
any Group Company for the purposes of its business in the two (2) year period
prior to the date of this Agreement, such information (except insofar as it has
fallen into the public domain through no fault of a Group Company or any member
of the Retained Group) has been kept strictly confidential and has not been
disclosed otherwise than in furtherance of the Group Company's businesses or
subject to an obligation of confidentiality being imposed on the person to whom
the information was disclosed. The Warrantors are not aware of any breach of
such confidentiality obligations by any third party.
<PAGE> 60
RECORDS AND SOFTWARE
7.8(A) All the accounting records and systems (including but not limited to
computerised accounting systems) of the Group are recorded, stored,
maintained or operated or otherwise held by a Group Company and are not
wholly or partly dependent on any facilities or systems which are not
under the exclusive ownership or control of a Group Company.
(B) Each Group Company is licensed to use all software necessary to enable
it to continue to use its computerised records for the foreseeable
future in the same manner in which they have been used prior to the
date of this Agreement and (save in respect of standard packaged
software) does not share any user rights in respect of such software
with any other person.
7.9 BRAND NAMES
(A) Full details of all trade and service marks (whether registered or
not), logos, device marks and designs used or applied by each Group
Company on or used in relation to any goods or services which any Group
Company makes or provides are as listed in the Disclosure Letter and
all such details are true, accurate and complete.
(B) The relevant Group Company is the full and sole legal and beneficial
owner of the registered trade and/or service marks set out in Section
M4.1 of the Disclosure Documents annexed to the Disclosure Letter (the
"TRADE MARKS"). The Trade Marks are subsisting and are registered in
the name of the relevant Group Company set out in Section M4.1 of the
Disclosure Documents annexed and the Trade Marks are not the subject to
and so far as the Warrantors are aware are not vulnerable to any
proceedings for cancellation or rectification.
(C) The relevant Group Company is the full and sole legal and beneficial
owner of the trade names, get-ups and styles set out or referred to in
Section M4.1 of the Disclosure Documents annexed to the Disclosure
Letter as well as the trade name represented by its corporate name
(collectively the "TRADE NAMES").
(D) The Company is entitled to use the trade and service marks, trade
names, get-ups and styles set out or referred to in Section M4.1 of the
Disclosure Documents annexed to the Disclosure Letter (collectively the
"LICENSED MARKS") under licence or registered user agreement from the
parties named therein, and full copies of the relevant agreements are
as set out in Section M4.1 of the Disclosure Documents annexed to the
Disclosure Letter, and there are no other terms, express or implied,
which apply thereto.
(E) So far as the Warrantors are aware no third party is in a position to
prevent the use of any Trade Mark, Application, or Licensed Mark
(collectively known as the "BRAND NAMES") on the type of products or
services now sold or provided by any Group Company or otherwise in
connection with the Business as currently operated by any Group
Company.
(F) No Group Company has licensed or otherwise authorised any Third Party
to use names (without any associated design or device) which include
the Brand Names or words or devices similar to the Brand Names on any
goods or services within the classes in which the Brand Names are
registered or are now used, nor does any Third Party have any right to
call for such a licence or authorisation.
<PAGE> 61
(G) None of the Brand Names is subject to any pledges, liens, charges,
encumbrances, equities, rights to acquire or options in favour of any
Third Party.
(H) After its registration (if registered) each of the Trade Marks was used
within two years of its registration and has not since been unused for
any period exceeding two years.
(I) So far as the Warrantors are aware there is and has been no
infringement of any of the Brand Names by and Third Party.
(J) So far as the Warrantors are aware none of the Brand Names infringe the
rights of any Third Party, nor so far as the Warrantors are aware is
there any reason why a Third Party would be likely to challenge the use
of the Brand Names under any trade mark, passing off, unfair
competition, copyright or analogous laws.
(K) The Warranties in this clause 7.9 shall apply in respect of the United
Kingdom and all other jurisdictions where products or services of the
Business have been sold or supplied by any Group Company under the
relevant Brand names at any time during the period of two years ended
on the date hereof.
7.10 COPYRIGHT, MORAL RIGHTS AND UNREGISTERED DESIGN RIGHT
(A) Subject to the provisions of clause 7.10(b), the Company is the full
and sole legal and beneficial owner of all copyright and unregistered
design rights in materials in which copyright and unregistered design
rights subsist which are used in connection with the Business (the
"COPYRIGHT").
(B) Each Group Company is entitled to use the copyright and unregistered
design rights in those materials in which the Company does not own the
copyright and unregistered design rights under licence from the parties
owning the same.
(C) The Company has not licensed, sub-licensed or otherwise authorised any
Third Party to use the copyright or Licensed Copyright nor does any
Third Party have any right to call for such a licence or authorisation,
save as listed in Section M4.2-M4.4 of the Disclosure Documents annexed
to the Disclosure Letter, and full copies of the relevant agreements
referred to therein have been supplied to the Purchaser as referred to
in the Disclosure Letter, and there are no other terms, express or
implied, which apply thereto.
(D) None of the Copyright or Licensed Copyright is subject to any pledges,
liens, charges, encumbrances, equities, rights to acquire or options
granted by a Group Company in favour of any third party.
(E) So far as the Company is aware there is and has been no infringement of
any of the Copyright or Licensed Copyright by any Third Party.
(F) So far as the Companies are aware none of the Copyright or Licensed
Copyright infringes the rights of any Third Party.
(G) The Warranties in this clause 7.10 shall apply in respect of the United
Kingdom and all other jurisdictions where products or services of the
Business have been manufactured, sold or supplied by the Company at any
time during the period of three years ending on the date hereof.
<PAGE> 62
DATA PROTECTION
7.11 No Group Company has received any notice or has been engaged in any
correspondence with the Data Protection Registrar relating directly or
indirectly to the activities of any Group Company and its compliance with the
Data Protection Act 1984. Each Group Company has taken all necessary steps to
comply wit the Data Protection Act 1984 and no Group Company has received any
notice relating to subject access rights under the Data Protection Act 1984.
CONTRACTUAL MATTERS
MATERIAL CONTRACTS
8.1 There is not outstanding any agreement or arrangement to which
any Group Company is a party containing terms:
(A) which, by virtue of the acquisition of the Shares by the Purchaser or
other performance of the terms of this Agreement:
(I) enable any other party to be relieved of any obligation or
become entitled to exercise any right of termination,
cancellation or acceleration or any right of pre-emption or
other option); or
(II) will result in any Group Company being expressly in conflict,
violation or default under the express terms of any such
agreement or arrangement or losing any benefit, right or
licence which it currently enjoys or in a liability or
obligation of any Group Company being created or increased; or
(B) which will result in any Group Company becoming liable for any finder's
fee, brokerage or other commission in connection with the acquisition
of the Shares by the Purchaser;
(C) entered into otherwise than by way of a bargain at arm's length;
(D) (without prejudice to sub-paragraph (C) above) to which any of the
provisions of section 320, 322 or 330 of the Companies Act may apply;
(E) which require (or confer any right to require) the allotment or issue
of any shares, debentures or other securities of any Group Company now
or at any time in the future;
(F) which establish any guarantee, indemnity, suretyship, form of comfort
or support (whether or not legally binding) given by any Group Company
in respect of the obligations or solvency of any third party (other
than another Group Company or Associated Company);
(G) pursuant to which any Group Company has sold or otherwise disposed of
any company business or assets in circumstances such that it remains
subject to any liability (whether contingent or otherwise) which is not
fully provided for in its Accounts;
<PAGE> 63
(H) which establish any partnership or profit (or loss) sharing agreement
or arrangement to which any Group Company is a party or any joint
venture or consortium other than pursuant to trading arrangements in
the ordinary course;
(I) any power of attorney given by any Group Company or any other authority
which would enable any person not employed by any Group Company to
enter into any contract or commitment on behalf of any Group Company;
(J) which involves or is likely to involve (I) expenditure by any Group
Company in excess of (pound)200,000 or (II) obligations or restrictions
of any Group Company of an unusual or exceptional nature or magnitude
and not in the ordinary and usual course of business;
(K) which is a currency and/or interest rate swap agreement, asset swap,
future rate or forward rate agreement, interest cap, collar and/or
floor agreement or other exchange or rate protection transaction or
combination thereof or any option with respect to any such transaction
or any other similar transaction to which any Group Company is a party;
(L) which is a recognition, procedural or other agreement between any Group
Company and any recognised independent trade union;
(M) which restrains any Group Company from carrying on business in any part
of the world;
(N) which is a bid, tender, proposal or offer which, if accepted, would
result in any Group Company becoming a party to any agreement or
arrangement of a kind described in sub-paragraphs (A) to (M) above.
DEFAULTS
8.2(A) No Group Company is in default under any agreement to which it is a
party and, to the best knowledge of the Warrantors, there are no
current circumstances which will give rise to any such default.
(B) To the best knowledge of the Warrantors, no party with whom any Group
Company has entered into any agreement or arrangement is in default
under such agreement or arrangement and there are no current
circumstances which will give rise to any such default.
TRADING RELATIONSHIPS
8.3 During the twelve months preceding the date of this Agreement no significant
customer of or supplier to any Group Company has ceased to deal with that Group
Company or has indicated in writing an intention to cease to deal with that
Group Company.
<PAGE> 64
PRINCIPAL SUPPLIERS AND CUSTOMERS
8.4 No supplier or customer (including any person connected in any way with
any such supplier or customer) accounts either for more than ten per
cent. of the aggregate value of all purchases or for more than ten per
cent. of the aggregate value of all sales of any Group Company.
GRANTS
8.5 No Group Company has done or agreed to do anything as a result of which, and
the acquisition of the Shares by the Purchaser or other performance of the terms
of this Agreement is not likely to have the result that, either:
(A) any investment or other grant or allowance paid to any Group Company is
or will be liable to be refunded in whole or in part; or
(B) any such grant or allowance for which application has been made by any
Group Company will not be paid or will be reduced.
CHANGE OF CONTROL PAYMENTS
CLAUSE 8.6 Neither the Company nor any Warrantors are a party to any agreement
under which any payment will be made to any third party in consequence of the
transactions contemplated by this Agreement, other than to the Sellers'
professional advisers.
LITIGATION AND INVESTIGATIONS
LITIGATION
9.1(A) Except as plaintiff in the collection of debts arising in the ordinary
course of business (none of which exceeds (pound)20,000 and which do
not exceed (pound)200,000 in aggregate), no Group Company is a
plaintiff or defendant in or otherwise a party to any litigation,
arbitration or administrative proceedings which are in progress or
threatened or pending by or against or concerning any Group Company or
any of its assets.
(B) So far as the Warrantors are actually aware no governmental or official
investigation or inquiry concerning any Group Company is in progress or
pending.
(C) The Warrantors are not aware of any current circumstances which are
likely to give rise to any such proceeding, investigation or inquiry as
is referred to in paragraph (A) or paragraph (B).
DIRECTORS AND EMPLOYEES
EMPLOYEES
10.1(A) The Disclosure Letter sets out or refers to a list of all employees of
each Group Company showing, by reference to appropriate grades or
categories, the remuneration payable and other principal benefits which
the Company is bound to provide.
(B) No Group Company has entered into any arrangements regarding any future
variation in any contract of employment in respect of any of its
directors and employees or any agreement imposing an obligation on the
Group Company to increase the basis and/or rates of remuneration and/or
the provision of other benefits in kind to or on behalf of any of its
directors or employees at any future date.
<PAGE> 65
AGREEMENTS
10.2 Except as specified in the Disclosure Letter, there is not in existence any
written or unwritten contract of employment with a director or an employee of
any Group Company (or any contract for services with any person) which cannot be
terminated by three (3) months' notice or less without giving rise to a claim
for damages or compensation (other than a statutory redundancy payment or
statutory compensation for unfair dismissal).
COMPLIANCE
10.3 Each Group Company has in relation to each of its employees (and so far as
relevant to each of its former employees) complied in all material respects with
all statutes, regulations, codes of conduct, collective agreements, terms and
conditions of employment, orders and awards relevant to their conditions of
service or to the relations between it and its employees (or former employees,
as the case may be) or any recognised trade union.
DISPUTES
10.4(A) No dispute has arisen within the last two (2) years between any Group
Company and a material number or category of its employees (or any
trade union or other body representing all or any of such employees)
and there are no present circumstances which are likely to give rise to
any such dispute.
(B) So far as the Warrantors are actually aware, there are no enquiries or
investigations affecting any Group Company (and none pending or
threatened) by the Equal Opportunities Commission or the Commission for
Racial Equality or similar authority in any other jurisdiction.
INCENTIVE SCHEMES
10.5 Except as specified in the Disclosure Letter, no Group Company has in
existence (or is proposing to introduce) any share incentive scheme, share
option scheme or profit sharing, bonus, commission or other incentive scheme for
all or any of its directors or employees.
PAYMENTS ON TERMINATION
10.6 Except to the extent (if any) to which provision or allowance has been made
in the Accounts of each Group Company:
(A) no outstanding liability has been incurred by any Group Company which
has not been satisfied in full for breach of any contract of employment
or for services or redundancy payments, protective awards, compensation
for wrongful dismissal or unfair dismissal or for failure to comply
with any order for the reinstatement or re-engagement of any employee
or for any other liability accruing from the termination of any
contract of employment or for services;
(B) no gratuitous payment has been made or benefit given (or promised to be
made or given) by any Group Company in connection with the actual or
proposed termination or suspension of employment, or variation of any
contract of employment, of any present or former director or employee
of any Group Company.
<PAGE> 66
REDUNDANCIES
10.7 No Group Company has within the period of one (1) year preceding the
date of this Agreement:
(A) given notice of any redundancies to the relevant Secretary of State or
started consultations with any independent trade union under the
provisions of Part IV of the Trades Union Labour Relations
(Consolidation) Act 1992 or failed to comply with any such obligation
under the said Part IV;
(B) been a party to any "relevant transfer" (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981) or failed to
comply with any duty to inform and consult any independent trade union
under the said Regulations.
EFFECT OF SALE
10.8 To the best knowledge of the Warrantors, no officer of any Group Company
intends to resign as a result of the acquisition of the Shares by the Purchaser
or other performance of the terms of this Agreement.
BREACH OF COVENANT
10.9 No Group Company is in breach of any material covenant, restriction,
stipulation or other obligation affecting the employment or health or safety of
staff at or conduct of the business of any Group Company upon the Properties.
INSOLVENCY ETC.
11.1 No order has been made, petition presented or meeting convened for the
purpose of considering a resolution for the winding up of any Group Company or
for the appointment of any provisional liquidator. No petition has been
presented for an administration order to be made in relation to any Group
Company, and no receiver (including any administrative receiver) has been
appointed in respect of the whole or any part of any of the property, assets
and/or undertaking of any Group Company.
11.2 No composition in satisfaction of the debts of any Group Company, or scheme
of arrangement of its affairs, or compromise or arrangement between it and its
creditors and/or members or any class of its creditors and/or members, has been
proposed, sanctioned or approved.
11.3 No distress, distraint, charging order, garnishee order, execution or other
process has been levied or applied for in respect of the whole or any part of
any of the property, assets and/or undertaking of any Group Company.
11.4 All charges in favour of any Group Company required to be registered in
accordance with the provisions of sections 395 and 398 of the Companies Act have
been so registered or comply with all necessary formalities as to registration
or otherwise in any foreign jurisdiction.
<PAGE> 67
11.5 No person who now is, or who at any time within the last three years was, a
director or officer of any Group Company is, or at any material time was,
subject to any disqualification order under the Companies Act, the Insolvency
Act or the Company Directors Disqualification Act 1986.
11.6 No events or circumstances analogous to any of those referred to
in Warranties 11.1 to 11.5 have occurred in any jurisdiction outside England.
INSURANCE
12.1 So far as the Warrantors are aware all the assets of each Group Company of
an insurable nature are, and have at all material times been, insured in amounts
representing their full replacement or reinstatement value against fire and
other risks reasonable to be insured against by persons carrying on a similar
type of business as that carried on by it.
12.2 Each Group Company is, and has at all material times been, adequately
insured against accident, damage, third party loss (including product
liability), loss of profits and other risks reasonable to be insured against by
persons carrying on a similar type of business as that carried on by it.
12.3 So far as the Warrantors are actually aware nothing has been done or
omitted or has occurred which could make a policy of insurance taken out by a
Group Company void or voidable or which is likely to result in an increase in
premium.
12.4 No claim is outstanding, or so far as the Warrantors are aware may be made,
under any of the policies and so far as the Warrantors are aware no
circumstances currently exist which are likely to give rise to a claim.
<PAGE> 68
PART B: PROPERTY WARRANTIES
1. GENERAL
(A) The Properties comprise all the land and buildings owned, occupied or
used by any Group Company or so far as the Warrantors are aware in
which any Group Company has any rights or interest.
(B) The information in respect of the Properties set out in Schedule 4 is
true and accurate.
2. POSSESSION
(A) Save as mentioned or referred to in the Disclosure Letter, there are no
leases, underleases, tenancies or licences affecting any of the
Leasehold Properties nor is there any agreement to grant the same.
(B) A Group Company is in possession of the whole of the Leasehold
Properties, none of which is vacant, and so far as the Warrantors are
aware no other person is in or entitled to occupation of any of the
Properties.
3. TITLE
(A) Each of the Group Companies is the legal and beneficial owner of each
of the Leasehold Properties shown under its name in Schedule 4.
(B) In relation to each of the Properties all relevant deeds and documents
are in its possession or under its control (except for those Properties
subject to the mortgages or charges referred to in the Disclosure
Letter, in which case they are held by the first mortgagees or chargees
therein mentioned).
(C) So far as the Warrantors are aware no person has or claims a lien over
any of the Leasehold Properties or any relevant deeds or documents.
4. ADVERSE INTERESTS
Except as specified or referred to in the Disclosure Letter, so far as the
Warrantors are aware the Leasehold Properties are free from any:
(A) security interest, option, right of pre-emption or matter registerable
but not registered as a local land charge;
(B) over-riding interest (as defined in Section 70 of the Land Registration
Act 1925);
(C) right of occupation or enjoyment by any third party or the public, nor
is any such right being acquired;
and there is no agreement to create any of the foregoing.
<PAGE> 69
5. EASEMENTS ETC.
So far as the Warrantors are aware no Group Company has experienced any
difficulty in the use of rights of way, drainage and services required for the
current use of the relevant Leasehold Property.
6. OUTGOINGS
(A) The Leasehold Properties are not subject to the payment of any
outgoings other than the usual rates and taxes and the rent and other
outgoings (if any) due pursuant to the relevant leases.
(B) There is no outstanding liability for any rent, rates or taxes demanded
in respect of any of the Leasehold Properties.
7. FIXTURES AND FITTINGS
All fixtures, fittings, plant and equipment at the Leasehold Properties are the
absolute property of the Group free from any encumbrance.
8. DISPUTES
So far as the Warrantors are aware, there are no current or anticipated notices,
actions, disputes or complaints relating to or in respect of the Leasehold
Properties or their use, nor so far as the Warrantors are aware are there any
circumstances rendering any of the foregoing likely.
9. PLANNING MATTERS
(A) No Group Company is aware of any complaint or notice of failure to
comply with all town and country planning legislation and conditions
and any legislation intended to control or regulate the construction,
demolition, alternation or use of land or buildings or to preserve or
protect the national heritage and any orders, regulations, consents or
permissions made or granted under any of the same ("PLANNING
LEGISLATION").
(B) The Leasehold Properties are currently used only for the respective
purposes specified in Schedule 4.
10. COSTS
So far as the Warrantors are aware, no Group Company is for any reason
anticipating the expenditure of any material sum of money in respect of any of
the Leasehold Properties.
11. COMPULSORY ACQUISITION
So far as the Warrantors are aware, there is no resolution or proposal for the
compulsory acquisition of the Leasehold Properties or any means of access
thereto or egress therefrom.
<PAGE> 70
12. BREACH OF COVENANT
So far as the Warrantors are aware (and other than in relation to the state of
repair and condition of the Leasehold Properties), no Group Company is in breach
of any covenant, restriction, stipulation or other obligation affecting any of
the Leasehold Properties.
13. CONTINGENT LIABILITIES
Other than the leases of the Leasehold Properties referred to in Schedule 4, no
Group Company is actually or contingently liable as an original contracting
party to, or is a guarantor of any party to, or otherwise contractually liable
in respect of any lease or leasehold property or licence connected therewith
entered into during the period of ten years prior to the date hereof and the
Warrantors are not aware of any such actual or contingent liability in respect
of any guarantee or lease or licence entered into prior to the above period.
14. LEASEHOLD PROPERTIES
14.1 In relation to the Leasehold Properties:-
(A) so far as the Warrantors are aware (and other than in relation
to the state of repair and condition of the Leasehold
Properties), covenants, conditions and agreements contained in
the relevant leases, on the part of the landlord and the
tenant, have been complied with;
(B) no Group Company has received any complaint alleging any
breach or any refusal to accept rent;
(C) no rent is or should be currently under review;
(D) so far as the Warrantors are aware, there are no current
notices given by the landlord or the tenant or proceedings
pursuant to the Landlord and Tenant Act 1954 or otherwise;
(E) save as mentioned in the Disclosure Letter, the security of
tenure provisions of Part II of the Landlord and Tenant Act
1954 are not excluded;
(F) so far as the Warrantors are aware solicitors were instructed
to act for the relevant Group Company on the grant of each
lease and all consents required for the granting of the lease
were duly obtained.
15. CERTIFICATES OF TITLE
So far as the Warrantors are aware the Company has provided SJ Berwin & Co with
all information concerning the Freehold Properties relevant to the preparation
of the Certificates of Title. So far as the Warrantors are aware, the
Certificates of Title are true and accurate in all material respects.
<PAGE> 71
PART C: ENVIRONMENTAL WARRANTIES
1. INTERPRETATION
In this Part:
(A) ENVIRONMENTAL LAWS shall mean and include the following, each as in
existence at the Completion Date:
(I) all European Community, national or local statutes, codes, or
other laws or legislation concerning health, safety or
Environmental Matters which are applicable to any Group
Company Activity or to the Properties and all rules,
regulations, ordinances, orders, notices and directives made
thereunder;
(II) judicial and administrative interpretation of each of the
foregoing.
(B) ENVIRONMENTAL APPROVALS shall mean and include the permits, consents,
licences and other authorisations and approvals required under the
Environmental Laws to be obtained in connection with the use of the
Properties or in connection with any Group Company Activity.
(C) ENVIRONMENTAL MATTERS shall mean and include in relation to any Group
Company Activity and the Properties all matters related to pollution or
protection of the environment other than matters related to Town and
Country Planning but including noise; emissions, discharges and
releases of Hazardous Substances into air, water, sewage systems and
land; and the manufacture, processing, distribution, use, treatment,
storage, disposal, transport and handling of Hazardous Substances.
(D) GROUP COMPANY ACTIVITY shall mean and include any business or other
activity of any nature whatsoever which has been carried on by a Group
Company or which is being carried on by a Group Company at the
Completion Date.
(E) HAZARDOUS SUBSTANCES shall mean pollutants, contaminants and hazardous,
flammable and toxic substances materials and waste whether solid,
liquid or gaseous, the generation, transportation, storage, treatment,
use or disposal of which gives rise to a substantial risk of causing
danger to man or any other living organism or of causing material
damage to the environment or public health.
2. ENVIRONMENTAL APPROVALS
The Disclosure Letter includes a list of all the Environmental Approvals held by
the Group so far as the Warrantors are aware:
(A) so far as the Warrantors are aware no proceeding or other action of
whatever nature is pending, or so far as the Warrantors are aware is
threatened or under consideration seeking the suspension, revocation or
variation or limitation of any such Environmental Approval or seeking
to impose any penalty applicable under such Environmental Approval or
related legislation;
(B) so far as the Warrantors are aware there are no facts or circumstances
arising from any Group Company Activity or the action of any competent
authority which will or are likely to result in any such Environmental
Approval being suspended, revoked, varied or limited or which may
prejudice their renewal;
<PAGE> 72
(C) no appeals are pending or being contemplated in respect of the refusal
of or conditions contained in any Environmental Approval or any action
taken in respect of any Environmental Approval.
3. COMPLIANCE WITH ENVIRONMENTAL APPROVALS AND ENVIRONMENTAL LAWS
(A) No Group Company is aware of any notice or complaint of failure to
comply with any of the Environmental Approvals or Environmental Laws
nor that the existence and use of the Leasehold Properties, machinery
and other property employed in the conduct of any Group Company
Activity has not been or is not in accordance with the Environmental
Approvals and Environmental Laws.
(B) No Group Company has received notice, order, judgement or demand letter
in relation to any of the Leasehold Properties requiring the taking of
remedial or other action in relation to Environmental Matters.
(C) So far as the Warrantors are aware, there is not currently and there
has during the ownership by the relevant Group Company not been on the
Leasehold Properties any spill, leakage, discharge, release or deposit
(whether to water, land, sewage systems or air or a combination of
these) of any Hazardous Substance other than those releases permitted
under the Environmental Approvals or Environmental Laws.
(D) So far as the Warrantors are aware, there has during the ownership by
the relevant Group Company been no spill, discharge, leak, emission,
injection, escape, deposit or release of any kind on the Leasehold
Properties or into the environment from the Properties, of any
Hazardous Substances other than those releases permissible under the
Environmental Approvals or Environmental Laws.
(E) So far as the Warrantors are aware, at Completion the Seller does not
have any present liability with respect to the storage, treatment,
clean-up or disposal of any Hazardous Substances at any of the
Leasehold Properties (including, without limitation, any such liability
in respect of any current Environmental Law regarding such clean-up or
disposal).
4. ENVIRONMENTAL AUDIT
So far as the Warrantors are aware neither the Properties nor any Group Company
Activity has been the subject of any Environmental Audit, defined as any
environmental evaluation, assessment or study other than such as has been
disclosed to the Purchaser.
<PAGE> 73
PART D: PENSION WARRANTIES
1. Apart from the Bounty Services and Associated Companies Directors
Pension Fund (`the Directors Scheme')and the Company's Group Personal
Pension Scheme (`the PPS's) (together the Disclosed Schemes), the
Company is not under any legal or moral liability or obligation, or a
party to any ex gratia arrangement or promise, to pay or otherwise to
provide "relevant benefits" within the meaning of Section 612 of the
Taxes Act to or for any of its past or present officers or employees or
their dependents; and there are no retirement benefit or pension or
death benefit or similar schemes or arrangements in relation to or
binding on the Company or to which the Company contributes nor has any
proposal been announced or promise made to establish any such
agreement, arrangement or practice.
2. There is no obligation on the Company to pay any contributions or
expenses to or in respect of the Disclosed Schemes after Completion.
3. There have been disclosed to the Purchaser, or its advisers all
material particulars of the Directors Scheme reasonably required to
permit the Purchaser to form a true and fair view of it and the
benefits (including contingent benefits) provided or to be provided
under it including true and complete copies of:-
(a) the trust deeds and rules currently governing the Directors
Scheme;
(b) all announcements to members of the Directors Scheme which
amend any of the provisions referred to in (a) above;
(c) the latest trustees' reports and audited financial statements
relating to the Directors Scheme;
(d) the last actuarial report relating to the Directors Scheme;
(e) a list of all past and present members of the Directors Scheme
with details of their respective Members Funds.
4. So far as the Vendors are aware,
(a) no employee or former employee of the Company has been
excluded from, or has had benefits limited under, a Disclosed
Scheme whether directly or indirectly on grounds of sex or
because of part-time employment; and,
(b) the Directors Scheme complies with all the requirements of the
Pensions Act.
5. There has been no breach of trust in respect of the Directors Scheme
and all exercises or purported exercises of a power or discretion in
relation to the Directors Scheme (including, without limitation, the
power of amendment) have been proper and valid exercises of those
powers.
6. No undertaking or assurance (whether or not constituting a legally
binding commitment) has been given to any employee or former employee
of the Company about the continuation of the Disclosed Schemes or any
alteration to or exception from their terms or the increase or
improvement of benefits.
<PAGE> 74
7. The Company has observed and performed all provisions of the Disclosed
Scheme which apply to it. There are not, at the date of this agreement,
any outstanding contributions or expenses due to the Disclosed Scheme
from the Company or any employee, or former employee of the Company.
8. The Disclosed Schemes are exempt approved within the meaning of Section
592 Taxes Act and so far as the Warranties are aware there are no facts
or circumstances which may cause the withdrawal of any such approval by
the Inland Revenue.
9. There are no civil, criminal or arbitration proceedings in progress,
pending or threatened in relation to the Disclosed Schemes whether
against the Company, the Vendors, the Disclosed Scheme or its trustees;
and so far as the Vendors are aware, there are no investigations,
inquiries, complaints or disciplinary proceedings by or before any
government body, the Pensions Ombudsman or The Occupational Pensions
Regulatory Authority concerning the Disclosed Scheme and none are
pending or threatened.
10. The Directors Scheme is not contracted-out of the State Earnings
Related Pension Scheme;
11. None of the assets of the Disclosed Scheme is an employer related
investment (within the meaning of section 40 Pensions Act 1995).
12. No payment to which Section 602 Taxes Act applies has been made out of
the funds which are held for the purposes of the Disclosed Scheme.
<PAGE> 75
PART E: TAX WARRANTIES
1. RETURNS, CLAIMS AND DISPUTES ETC
1.1 Each Group Company has properly and punctually made, or caused
to be made, all computations and returns, given all notices,
supplied all relevant information required to be supplied and
submitted all claims and disclaimers assumed to have been made
at the Accounts Date to the relevant Taxation Authority.
1.2 All such information, computations, returns and notices were
and to the best of the knowledge of the Warrantors remain
complete and accurate.
1.3 There is no dispute, or to the best of the knowledge of the
Warrantors any facts or circumstances likely to give rise to
any dispute, between any Group Company and any Taxation
Authority and no Group Company has been the subject of an
investigation by any Taxation Authority or received any
written indication that any such Taxation Authority intends to
investigate its affairs.
1.4 To the best of the knowledge of the Warrantors, no event has
occurred or is likely to occur which could give rise to a
claim under the Tax Covenant.
1.5 Since the Accounts Date, no Group Company has incurred nor is
it liable to incur any expenditure or pay any rent, interest,
annual payment or other sum which is not wholly deductible in
computing taxable profits.
1.6 Each Group Company has duly and punctually paid or accounted
for all Tax (including Tax required to be deducted or withheld
from payments) for which it is liable and is under no
liability to pay any fine, penalty, interest or other charge
in connection with any non-payment of or claim for Tax.
1.7 The Disclosure Letter contains details of all concessions,
arrangements and agreements with any Taxation Authority which
affect or otherwise relate to the liability to Taxation of any
Group Company and no action has been taken by or on behalf of
any Group Company or has been or to the best of the
Warrantors' knowledge could be taken by any other person which
has adversely affected or could adversely affect such
concessions, arrangements or agreements.
2 VAT
2.1 The Company is a registered and taxable person for the purpose
of VATA, is not registered, or required to register, in any
other jurisdiction and has fully complied with all provisions,
regulations, orders and directions relating to VAT.
2.2 All input VAT incurred by each Group Company is fully
recoverable.
<PAGE> 76
2.3 There are no outstanding notices from the Commissioners of
Customs and Excise in respect of any late submission of VAT
returns or late payment of VAT by any Group Company.
2.4 All VAT and duties payable in respect of any assets (including
trading stock) imported or owned by any Group Company have
been paid in full.
2.5 No circumstances exist whereby any Group Company is or, to the
best of the Warrantors' knowledge, is likely to become liable
for VAT as an agent or otherwise under section 47 or section
48 VATA.
2.6 No Group Company has been required to give security under
paragraph 4 Schedule 11 VATA.
2.7 No Group Company has made an election under paragraph 2
Schedule 10 VATA in respect of any property nor has any Group
Company received notice of such an election from the holder of
any interest immediately superior to that held by the Group
Company in respect of any property.
2.8 Since 1 April 1989, no Group Company has occupied or otherwise
had any interest in a building or civil engineering works
within the meaning of paragraph (a) Item 1 Group 1 Part II
Schedule 9 VATA.
2.9 There are no circumstances in which the provisions of
paragraph 6 Schedule 10 VATA may apply to any Group Company.
2.10 No Group Company owns assets to which Part XV of the Value
Added Tax Regulations 1995 applies.
2.11 No Group Company has ever acquired a business in circumstances
such that the provisions of Section 49 VATA and article 5 of
the Value Added Tax (Special Provisions) Order 1995 applied.
2.12 No Group Company has, within the two years ending on
Completion, been served with any penalty liability notice
under section 64 VATA or any surcharge liability notice under
section 59 VATA or been issued with any written warning under
section 76(2) VATA.
3 PAYE, NI AND WITHHOLDING TAX
3.1 Each Group Company has complied promptly and in full with all
legislation and regulations relating to PAYE, national
insurance contributions and the taxation of employee benefits
including (without limitation) in respect of notional
payments.
3.2 No Group Company has been notified that any PAYE audit or
visit by the Department of Social Security will be or is
expected to be made.
<PAGE> 77
3.3 The Disclosure Letter contains full particulars of any amounts
payable after Completion pursuant to an obligation entered
into before Completion as a result of which any Group Company
will or may be required to withhold or deduct amounts of or in
respect of Tax (excluding payments due under the PAYE system).
3.4 No Group Company has made any payments to which section 559(1)
Taxes Act applies.
3.5 Each Group Company has properly and punctually made or caused
to be made, all Returns and accounted for all tax for which it
is liable in respect of a profit-related pay scheme , to the
relevant Taxation Authority, for each Accounts Date up to and
including 31 December 1996.
3.6 No Group Company has made payments to employees without
deduction of tax that should have been withheld.
4. CAPITAL GAINS/CAPITAL ALLOWANCES
4.1 No Group Company has acquired any asset (excluding shares in
another Group Company) otherwise than at market value as at
the time of acquisition and there are no circumstances in
which any Group Company has incurred or may incur a loss or
liability pursuant to sections 17, 29 or 30 TCGA.
4.2 The amount at which assets (other than the shares in a Group
Company) are included in the Accounts are such that on a
disposal of any such asset for a consideration equal to such
amount (disregarding any right to make an election or to claim
any allowances or relief other than one allowable under
Section 38 of the TCGA), no liability to corporation tax would
arise and no balancing charge would be made on any Group
Company under the Capital Allowances Act 1990.
4.3 No Group Company has made claims under Sections 152 to 154
TCGA in respect of any asset and no claim has been made or may
be made by any other person (including under Sections 165 or
175 of the TCGA) which affects or could affect the
consideration for the acquisition of any such asset which
would be taken into account in computing any liability to
corporation tax on a subsequent disposal of that asset.
4.4 No Group Company has been a party to any transaction involving
securities or shares to which section 106 TCGA applies or may
apply.
4.5 No election under Section 35(5) TCGA applies to any assets of
any Group Company.
4.6 Each Group Company retains sufficient records to calculate the
Tax arising on any disposal or realisation of any asset (other
than the shares in a Group Company) owned at the Accounts Date
or acquired since that date.
4.7 No Group Company has, at any time, been a party to or
otherwise involved in any transaction to which the provisions
of section 176 or 177 TCGA applied .
<PAGE> 78
5. CLOSE COMPANIES
No Group Company is or has ever been a close company within the meaning
of section 414 Taxes Act.
6. CAPITAL ALLOWANCES
6.1 Full disclosure has been made in the Disclosure Letter by
reference to this Warranty of all payments in excess of
(pound)5,000 made by any Group Company since the Accounts Date
which are neither wholly deductible in computing taxable
profits nor capital expenditure qualifying for capital
allowances.
6.2 Since the Accounts Date, each Group Company has not done,
omitted to do, agreed to do or permitted to be done any act as
a result of which there may be made either a balancing charge
or any recovery of excess relief within the provisions of the
Capital Allowances Act 1990.
6.3 The Company has not incurred (and is not liable to incur)
expenditure to which the provisions of Chapter IVA of Part II
of the Capital Allowances Act 1990 (long-life assets) could
apply.
7. DISTRIBUTIONS
7.1 No Group Company has made any distribution within the meaning
of section 209 of the Taxes Act save as provided in its
Accounts and has not made any distribution to which the
provisions of Schedule 7 of the Finance Act 1997 could apply.
7.2 No Group Company has made a capital distribution within the
meaning of section 122(5) TCGA or to which section 189 TCGA
applies.
7.3 No Group Company has made any repayment of share capital to
which Section 210 of Taxes Act applies or made any bonus issue
or otherwise issued share capital paid up otherwise than by
receipt of new consideration within the meaning of Part VI of
Taxes Act.
7.4 There are no securities of any Group Company in issue or which
any Group Company is or may be required to issue, any payment
in respect of which falls to be treated as a distribution for
the purposes of section 209 Taxes Act.
8. INHERITANCE TAX
8.1 No person has by virtue of section 212 IHTA 1984 any power of
sale, mortgage or charge in respect of any share in or asset
of any Group Company.
8.2 There is no outstanding Inland Revenue charge under section
237 IHTA 1984 over the assets of or the shares in any Group
Company.
<PAGE> 79
9. STAMP DUTY AND STAMP DUTY RESERVE TAX
9.1 All documents in the possession or control of any Group
Company or in respect of which any Group Company has any
interest have been duly and properly stamped and there is no
document which confers on any Group Company any right which is
outside the United Kingdom and which if brought into the
United Kingdom would be liable to stamp duty.
9.2 No Group Company has entered into any agreement whereby it is
or may become liable to stamp duty reserve tax.
10. LOAN RELATIONSHIPS
10.1 No Group Company is entitled to the benefit of any debt other
than as original creditor.
10.2 No Group Company is the debtor pursuant to any loan
relationship:
10.2(a) to which the provisions of paragraph 2 Schedule 9 Finance Act
1996 (late interest) have applied; or
10.2(b) which has an unallowable purpose within the meaning of
paragraph 13 Schedule 9 Finance Act 1996 (loan relationship
for unallowable purposes).
10.3 No Group Company is party to any loan relationship;
10.3(a) to which paragraph 11 Schedule 9 of the Finance Act 1996
applies or may apply (transactions not at arm's length); or
10.3(b) to which sections 92 (convertible securities etc), 93
(relationships linked to the value of chargeable assets) or 94
(indexed gilt-edged securities) Finance Act 1996 apply.
11. GROUP MATTERS
11.1 Full details of all assets currently owned by any Group
Company in respect of which as a result of a transaction or
event occurring on or before Completion:
(a) a charge may arise on the sale of the Company pursuant to this
Agreement or
(b) a charge may arise on any Group Company ceasing to be a member
of the same group of companies as any other company in the six
years following Completion
under section 179 TCGA (company ceasing to be a member of the
group) are set out in the Disclosure Letter.
<PAGE> 80
11.2 No Group Company has agreed to make nor is entitled to receive
any payment for group relief or surplus advance corporation
tax or repayment of Taxation surrendered by it or to it to or
by a company which is not a Group Company which remains
unpaid.
11.3 No Taxation is or may be payable by any Group Company pursuant
to section 190 TCGA in respect of any chargeable gain which
accrued or will accrue prior to Completion and no Group
Company has at any time within the two years ending at
Completion transferred any assets other than trading stock to
any company which at the time of disposal was a member of the
same group (as defined in section 170 of the TCGA) as the
Company.
11.4 No Group Company has paid any dividend without accounting for
advance corporation tax or made any payment without deducting
income tax in circumstances such that advance corporation tax
ought to have been accounted for or income tax ought to have
been deducted.
12. MISCELLANEOUS
12.1 No Group Company has lost or will lose any entitlement to
relief under sections 37, 87 or 399 Taxes Act.
12.2 Full details have been disclosed of any charities payroll
deduction scheme within the meaning of section 202 Taxes Act
or any qualifying donation within the meaning of section 339
Taxes Act operated or made by any Group Company.
13. RESIDENCY
13.1 No Group Company has in the last 6 years entered into any
transaction to which section 765 Taxes Act applied or failed
to comply with the requirements of section 765A Taxes Act.
13.2 Each Group Company is, and always has been, resident only in
the United Kingdom for Taxation purposes and is not liable to
Taxation other than in the United Kingdom.
14. ANTI AVOIDANCE
No Group Company has been a party to or otherwise involved in any
transaction scheme or arrangement to which it could be liable under
Sections 34 to 39 or Part XVII of the Taxes Act or the sole or main
purpose or one of the main purposes of which was avoiding or deferring
a Tax liability or in relation to which it considered or was advised
that there was a risk that any Group Company could be liable to Tax or
increased Tax as a result of the case of Furniss-v-Dawson.
<PAGE> 81
SCHEDULE 4
PROPERTY DETAILS
<TABLE>
<CAPTION>
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
DESCRIPTION GROUP COMPANY TITLE TITLE NOS. LEASE TERM CURRENT RENT
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
<S> <C> <C> <C> <C> <C>
1 Bounty House, Bounty Freehold NK121254, Principal N/A
Vinces Road, Holdings Ltd NK133247 N/A
Diss,
Norfolk
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
2 Land at Vinces Road, Bounty Holdings Ltd Freehold Pending 1st N/A N/A
Industrial Estate, registration
Owen Road,
Diss,
Norfolk
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
3 3 Theobald Court, Bounty Holdings Ltd Freehold HD255128 N/A N/A
Theobald Street,
Borehamwood, Herts
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
4 66 Broomhill Road, Bounty Services Leasehold - 20/4/92 to 24/6/2016 IR(pound)25,000 p
Tallaght Industrial Estate, (Ireland) Ltd
Tallaght,
Ireland
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
5 3 Park View, Bounty Services Ltd Leasehold - 1/5/97 to 30/4/2002 (pound)6,400 pa
Whitley Bay
Tyne and Wear
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
6 Plot 3, Bounty Services Ltd Leasehold - 3 years from 11/2/97 (pound)37,500 pa
Court Industrial Estate,
Vinces Road,
Diss,
Norfolk
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
7 Ground Floor, Unit 2, Bounty Publications Ltd Leasehold - 4/10/95 to 30/9/98 (POUND)18,655
Flag Business Exchange,
Vicarage Farm Road,
Peterborough
- - --------------------------- ----------------------- ---------- ------------ -------------------- -------------------
</TABLE>
<PAGE> 82
SCHEDULE 5
TAX COVENANT
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Schedule except where the context otherwise requires:-
1.1.1 words and phrases defined elsewhere in this Agreement
(except where otherwise provided or expressly defined
in this Schedule) have the same meaning when used in
this Schedule;
1.1.2 the words and phrases set out in the first column
have the meanings set out in the second column:-
THE AGREEMENT the Agreement dated the same date as this
Schedule between (1) the Warrantors and
others and (2) the Purchaser for the sale
and purchase of the whole of the issued
share capital of the Company;
DEMAND includes any document issued or action taken
by or on behalf of any Taxation Authority
from which it appears that the Company has
incurred or may have incurred a Tax
Liability ;
COMPANY Bounty Group Holdings Limited (registered
no: 030786) registered in England and Wales
whose registered office is at Bounty House,
Vinces Road, Diss, Norfolk, IP22 3HQ;
EVENT any transaction act failure or omission of
any kind or change of circumstances whether
or not the Company is a party, the death of
any party and the earning, accrual or
receipt of any income profits or gains of
any description for any Tax purposes and
from any source;
RELIEF any relief, loss, allowance, credit, set off
or deduction in respect of Tax or taken into
account in computing income profit or gains
for the purposes of any Tax
TAX any tax, duty, impost, levy, charge or
withholding in the nature of tax, whether of
the United Kingdom or elsewhere in the world
, and any payment which the Company may be
or become bound to make to any person in
respect of Tax (including, without
limitation, any obligation to repay any
payment received for group relief or the
surrender of advance corporation tax or
refunds of tax) and any fine, penalty or
interest relating to any of the above or to
any failure to make any return or supply any
information in each case regardless of
whether such Tax is directly or primarily
chargeable against or attributable to the
Company or any other person, firm or company
and whether or not there is a right of
recovery against another person;
<PAGE> 83
TAXATION AUTHORITY Inland Revenue, HM Customs & Excise the
Department of Social Security or any other
revenue, customs, fiscal, governmental,
statutory, state, provincial, local
government or municipal authority, body or
person whether of the United Kingdom or
elsewhere in the world competent to impose,
administer or collect Tax;
TAX LIABILITY means:-
(a) a liability to make an
actual or increased
payment in respect of Tax
in which case the Tax
Liability is the amount of
the payment or increased
payment;
(b) the set off of any Relief
arising in respect of any
period commencing after
Completion or any Event
occurring after Completion
in each case against a
liability to make a
payment in respect of Tax
in respect of which the
Warrantors would otherwise
have been liable under
this Schedule, in which
case the Tax Liability
shall be the amount of Tax
which would have been
payable but for such set
off;
(c) any amount, not otherwise
falling within (a) or (b),
payable by the Company in
respect of Tax pursuant to
an indemnity, covenant,
guarantee, mortgage,
charge or other instrument
entered into by the
Company other than in the
ordinary course of
business as carried on at
Completion.
1.2 HEADING AND CLAUSES
The headings in this Schedule shall not affect its
interpretation and references in this Schedule to Clauses
(unless expressly provided otherwise) are to clauses of this
Schedule.
1.3 "PURCHASER"
References to the "Purchaser" shall, where the benefit of this
Schedule has been assigned in accordance with the restrictions
contained in Section 17 of the Agreement, mean the person or
persons for the time being entitled to the benefit of this
Schedule.
<PAGE> 84
1.4 EJUSDEM GENERIS
General words shall not be given a restrictive meaning because
they are followed by particular examples intended to be
embraced by the general words.
1.5 GENERAL
1.5.1 References to an Event occurring on or before a
particular date or in respect of a particular period
shall include an Event which is deemed for Tax
purposes to have occurred on or before or in respect
of that period;
1.5.2 References to income, profits or gains earned,
accrued or received shall include income profits or
gains treated as or deemed for Tax purposes to be
earned, accrued or received.
1.5.3 Reference to an Event occurring on or before
Completion shall be deemed to include any combination
of two or more Events only the first or some of which
occurred on or before Completion but only if the
Event or Events occurring after Completion is or are:
(a) the completion of the disposal by the
Company of any capital asset which
was contracted to be sold by the Company
before Completion;
(b) the satisfaction of a condition to which
the disposal by the Company of any capital
asset pursuant to a contract entered into
before Completion was subject (in which
event the disposal shall, for the purposes
of this Schedule, be treated as having been
made before Completion and any Tax
Liability arising from such disposal shall
be treated as having arisen before
Completion);
(c) the death of any individual who, in the
seven years preceding his death, was the
donor of any asset owned by the Company at
Completion;
(d) the failure of any Company which was at any
time prior to Completion a member of the
same group of Companies as the Company to
discharge a liability to Taxation within a
specified period or prior to the expiry of
such period;
(e) the bringing into the United Kingdom of any
document relating to any asset owned by the
Company at Completion and executed prior to
Completion outside the United Kingdom;
(f) the making of any chargeable payment (as
defined in section 214 1988 Taxes Act) in
respect of any exempt distribution (as
defined in section 213 1988 Taxes Act)
occurring prior to Completion.
<PAGE> 85
1.6 COMPANY
Unless the context otherwise requires the expression "the
Company" includes each of the Subsidiaries so that this
Schedule shall apply to each Subsidiary as if it were the
Company.
2. COVENANT
2.1 COVENANT TO PAY
Subject as provided in this Schedule each of the Warrantors
covenants with the Purchaser to account to the Purchaser, but
only in the manner and to the extent provided for in clause
5.9 and section 6 of the Agreement, for an amount equal to the
amount of:
2.1.1 any Tax Liability which arises by reason of or in
consequence of any Event which occurred on or before
Completion whether or not such Tax Liability has been
discharged on or before Completion; and
2.1.2 any Tax Liability of the Company under Sections 190
and 191 TCGA, Section 132 Finance Act 1988, Section
214 Taxes Act 1988 or Section 96 (8) Finance Act 1990
which would not have arisen but for any act, omission
or change in circumstances of any company (other than
the Company) which was at any time before Completion
a member of the same group of companies as the
Company for any Tax purpose;
2.1.3 any Tax Liability of the Company arising under
Section 767A Taxes Act 1988 in respect of corporation
tax assessed on any company and remaining unpaid
where the company in question was on or prior to
Completion under the control of any person who has at
any time prior to Completion also had control of the
Company (within the meaning in Section 767B of the
Taxes Act 1988);
2.1.4 any depletion in the assets or increase in the
liabilities of the Purchaser or the Company as a
result of any inheritance tax which:
(a) is at Completion a charge on any of the
Shares or assets of the Company or gives
rise to a power to sell, mortgage or charge
any of the Shares or assets of the Company;
or
(b) after Completion becomes a charge on or
gives rise to a power to sell, mortgage or
charge any of the Shares or assets of the
Company, being a liability in respect of
inheritance tax payable as a result of the
death of any person (whenever occurring)
within seven years after a transfer of value
or a deemed transfer of value where such
transfer of value or deemed transfer of
value occurred on or before Completion; or
(c) arises as a result of a transfer of value
occurring on or before Completion (whether
or not in conjunction with the death of any
person whenever occurring) made by or to the
Company;
<PAGE> 86
2.1.5 any Tax Liability of the Company in respect of any
supply for the purposes of Value Added Tax whenever
made by any company other than a Subsidiary which was
a member of the same group of companies (within the
meaning of Section 43 of the Value Added Tax Act
1994) as the Company at any time on or before
Completion;
2.1.6 any reasonable costs or expenses properly incurred or
payable by the Company or the Purchaser in connection
with any matter for which a claim is made under this
Schedule in respect of which the Warrantors are
ultimately liable under this Schedule.
2.2 INHERITANCE TAX
2.2.1 For the avoidance of doubt any payment made by the
Purchaser or the Company to discharge or remove any
charge or power to sell, mortgage or charge shall give
rise to a depletion in the assets of the Purchaser or
the Company and notwithstanding any provision in this
Schedule the Purchaser or the Company may disregard
any right to pay tax in instalments in discharging or
removing a charge or power.
2.2.2 Section 213 of the Inheritance Tax Act 1984 shall not
apply in relation to any payments to be made by the
Warrantors under this Schedule.
3. EXCLUSIONS
3.1 The Warrantors shall not be liable under this
Schedule in respect of any Tax Liability to the
extent that it arises in the ordinary course of
normal business of the Company after the Accounts
Date and before Completion excluding the following:
(a) the acquisition, disposal or supply or
deemed acquisition, disposal or supply of
any assets, goods, services or business
facilities of any kind (including the
lending of money and letting, hiring or
licensing of any tangible or intangible
property) for a consideration deemed for Tax
purposes to be different to that actually
received, to the extent of the difference
only;
(b) any Event which may result in the Company
becoming liable to pay or bear Tax
chargeable directly or primarily against or
attributable directly or primarily to
another person;
(c) the failure to deduct and/or account for
Tax;
(d) the making of any distribution or deemed
distribution including the paying of any
dividend;
(e) any Event to which Part XVII of the Taxes
Act 1988 applies;
<PAGE> 87
(f) the disposal of any capital asset;
(g) a company ceasing to be a member of a group
for any Tax purposes on or before
Completion.
3.2 The provisions of clauses 5.9 and Section 6 (except
clause 6.5) and section 9 of the Agreement shall apply
to limit or exclude the liability of the Warrantors
under this Schedule or to give the Warrantors a right
of reimbursement as if such provisions were expressly
set out in this Schedule.
4. PROCEDURE
4.1 NOTIFICATION OF CLAIMS
If after Completion the Purchaser becomes aware of a Demand
which could give rise to a liability under this Schedule it
shall ensure that notice of the Demand is given to the
Warrantors as soon as reasonably practicable (and in any event
within 21 days after receiving the same) and the Purchaser
shall consult with the Warrantors as to the action to be taken
in respect of such Demand and shall take or ensure that the
Company takes such action as the Warrantors may reasonably
request subject to the Warrantors indemnifying and securing
the Purchaser and the Company (as the case may be) to its
reasonable satisfaction against all losses, costs, damages and
expenses, including interest on overdue Tax, which may be
incurred as a result of it or them taking such action PROVIDED
THAT the compliance of the Purchaser and/or the Company with
the provisions of this clause 4 shall not be a condition
precedent to the liability of the Warrantors under this
Schedule and PROVIDED FURTHER THAT the Warrantors shall not be
entitled to the conduct of proceedings in the name of the
Company.
4.2 COMPROMISE
The Purchaser or the Company may admit, compromise, settle,
discharge or otherwise deal with any Demand without reference
to the Warrantors if the Warrantors delay unreasonably in
making any such request as is mentioned in Clause 4.1 and in
particular shall not be obliged to appeal against any Tax
assessment unless (having given written notice of the receipt
of the assessment) it has received such a request from the
Warrantors within 15 Business Days or if it is alleged by any
Taxation Authority that the Company has committed acts or made
omissions in relation to the Taxation in question which may
constitute fraud or dishonest conduct.
4.3 NO PREJUDICIAL ACTION
Neither the Purchaser nor the Company shall be required to
take any action which will materially increase its liability
to Tax in respect of any period arising after Completion.
<PAGE> 88
4.4 DUE COMPLIANCE WITH PROCEDURE
The Purchaser and/or the Company shall be taken to have
complied with the provisions of this Clause if it has
notified, consulted with and, if appropriate, bona fide acted
in accordance with the instructions or approval of any one of
the Warrantors.
5. TAXES
PAYMENTS TO BE MADE GROSS
All payments or transfers made by the Warrantors under this Schedule
shall be made gross, free of any rights of counterclaim or set off and
without any deductions or withholdings of any nature, except as may be
required by law.
6. DUE DATE FOR PAYMENT
All payments or transfers to be made by the Warrantors under this
Schedule shall be made in accordance with Section 9 of the Agreement.
<PAGE> 89
SCHEDULE 6
1. REPRESENTATIONS AND WARRANTIES.
The Purchaser represents and warrants to, and agrees with, The
Sellers, as of the date hereof and with respect to this
Agreement, as follows:
(a) ORGANIZATION; STANDING AND POWER. Each of the Purchaser and
its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of organization and has all requisite power and
authority to own, lease and operate its properties and to
carry on its businesses as now being conducted and is duly
qualified to do business and is in good standing in each
jurisdiction where the failure to be so qualified would have a
material adverse effect on the Purchaser and its subsidiaries.
The Purchaser has delivered to the Sellers complete and
correct copies of its certificate of incorporation and bylaws
as amended to the date hereof.
(b) CAPITAL STRUCTURE. As of the date hereof the authorized
capital stock of the Purchaser consists of 200,000,000 shares
of Common Stock, par value $.001 per share ("Common Stock"),
and 5,000,000 shares of Preferred Stock, par value $.001 per
share. At the close of business on July 8, 1997, 37,528,014
shares of Common Stock were outstanding. The shares of Common
Stock to be issued to the Sellers pursuant to this Agreement,
when issued in accordance with the documents to be executed
and delivered by the Purchaser in connection with this
Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and issued in compliance with applicable
federal and state securities laws.
(c) AUTHORITY. The Purchaser has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated thereby. The execution and delivery
of this Agreement, and the consummation of the transactions
contemplated thereby, have been duly authorized by all
necessary corporate action on the part of the Purchaser. This
Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance
with its terms except as enforcement may be limited by
bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific
performance, is subject to the discretion of the court before
which any proceeding therefor may be brought. The execution
and delivery of this Agreement do not, and the consummation of
the transactions contemplated thereby will not, conflict with
or result in any violation of, or default under, or give rise
to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under any
provision of the certificate of incorporation or by-laws of
the Purchaser or any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the
Purchaser or its properties or assets, other than any such
conflicts, violations or defaults which individually or in the
<PAGE> 90
aggregate do not have a material adverse effect on the
Purchaser. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state,
local or foreign government, or any agency or instrumentality
thereof, is required by or with respect to the Purchaser in
connection with the execution and delivery of this Agreement
by the Purchaser or the consummation by the Purchaser of the
transactions contemplated thereby.
(d) SEC DOCUMENTS. The Purchaser has filed all required forms,
reports and documents with the Securities and Exchange
Commission (the "SEC") since September 30, 1996, each of which
has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, each as in
effect on the dates such forms, reports and documents were
filed. The Purchaser has heretofore delivered and made
available to the Sellers, in the form filed with the SEC
(including any amendments thereto), all reports or
registration statements filed by the Purchaser with the SEC
since September 24, 1996 (the "Company SEC Reports"). None of
such forms, reports or documents, including, without
limitation, any financial statements or schedules included or
incorporated by reference therein (but excluding exhibits),
contained, when filed, any untrue statement of a material fact
or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated
financial statements of the Purchaser included in the
Purchaser SEC Reports complied as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto and fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto), the
consolidated financial position of the Purchaser and its
consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial
position for the periods then ended (subject, in the case of
the unaudited interim financial statements, to normal year-end
adjustments). Since the date of the most recently filed
Company SEC Report, there has been no material adverse change
in the properties, business, results of operations or
condition (financial or otherwise) of the Purchaser and its
subsidiaries taken as a whole or any material change in the
accounting principles utilized by the Purchaser and its
subsidiaries.
2. OPINION DELIVERY REQUIREMENT. It shall be a condition to
the obligation of the Sellers to consummate the sale of their
shares of the Company to the Purchaser pursuant to this
Agreement that the Sellers shall have received from Weil,
Gotshal & Manges LLP, counsel to the Purchaser, an opinion to
the following effect:
(a) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its
business as now being conducted.
(b) The shares of the Purchaser's Common Stock to be issued
pursuant to this Agreement have been duly authorized and, when
issued as contemplated by this Agreement, will be validly
issued, fully paid and nonassessable and free of preemptive
rights pursuant to law or in the Purchaser's certificate of
incorporation.
<PAGE> 91
(c) The Purchaser has all requisite corporate power and authority
to execute and deliver this Agreement and to perform its
obligations thereunder. The execution, delivery and
performance of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated
thereby have been duly authorized by all necessary corporate
action on the part of the Purchaser.
(d) The execution and delivery of this Agreement, the consummation
of the transactions contemplated thereby and compliance by the
Purchaser with the provisions thereof will not conflict with,
constitute a default under or violate (i) any of the terms,
conditions or provisions of the certificate of incorporation
or by-laws of the Purchaser, (ii) any of the terms, conditions
or provisions of any material document, agreement or other
instrument to which the Purchaser is a party or by which it is
bound of which counsel is aware, (iii) any New York, Delaware
corporate or federal law or regulation (other than federal and
state securities or blue sky laws, as to which we express no
opinion) or (iv) any judgment, writ, injunction, decree, order
or ruling of any court or governmental authority binding on
the Purchaser of which counsel is aware.
(e) No consent, approval, waiver, license or authorization or
other action by or filing with any New York, Delaware
corporate or federal governmental authority is required in
connection with the execution and delivery by the Purchaser of
this Agreement or the consummation by the Purchaser of the
transactions contemplated thereby, except as may be required
under applicable federal and state securities or blue sky
laws.
The foregoing opinion shall be limited to United States
federal law, the laws of the State of New York and Delaware
corporate law and shall be subject to other customary
limitations and qualifications.
3. MISCELLANEOUS. This Schedule 6 shall be governed by and
construed in accordance with the laws of the State of New York
without regard to conflicts of law principles. The
representations and warranties made herein shall survive the
execution and delivery of this Agreement.
<PAGE> 92
AS WITNESS, this Agreement has been executed as a Deed by the Parties the day
and the year first before written.
<TABLE>
<S> <C>
Signed by Roy D. Parker )
)
for and on behalf of )
BROWN SHIPLEY DEVELOPMENT )
CAPITAL LIMITED as General )
Partner of SECOND BROWN )
SHIPLEY FUND (LP3872) and )
SECOND BROWN SHIPLEY )
FUND II (LP 3961) in the presence of: M.J. Bowan ) /s/ Roy D. Parker
Solicitor London, WCI
Signed by the said )
RODERICK HOPEWELL-SMITH ) /s/ Roderick Hopewell-Smith
in the presence of: M.J. Bowan ) as Attorney
Solicitor London WCI
Signed by the said )
SINCLAIR SHEPHERD STEWART )
for himself and as Trustee of The Sinclair )
Stewart Interest in Possession Trust - 1 )
in the presence of: S. O'Reilly ) /s/ S. S. Stewart
Solicitor WCI
Signed by the said )
ALLAN HAYWARD )
for himself and as Trustee of The Allan )
Hayward Settlement of 23/6/97 and The )
Allan Hayward No. 2 Settlement of 27/6/97 )
in the presence of: M.J. Bowan ) /s/ Allan Hayward
Signed by the said )
PAUL ANTHONY D'INVERNO )
for himself and as Trustee of the )
Emmadin Trust and the Paul D'Inverno )
Settlement )
in the presence of: S. O'Reilly ) /s/ Paul D'Inverno
Solicitor WCI
</TABLE>
<PAGE> 93
<TABLE>
<S> <C>
Signed by the said )
PEARL LYNDA CARTER by Allan Hayward ) /s/ Allan Hayward
in the presence of: M.J. Bowan ) as Attorney
Signed by the said )
ROGER EDMUND GRAFFY )
for himself and as Trustee of The Molly )
Settlement, The Maya Louise Mylchreest )
Graffy Bare Trust and The Oliver James )
Mylchreest Graffy bare trust )
in the presence of: L.J. West-Knight ) /s/ Roger Graffy
Signed by the said )
ROBERT JOHN EGLETON )
for himself and as Trustee of The Robert )
Egleton Settlement )
in the presence of: M.J. Bowan ) /s/ Robert Egleton
Solicitor, London WCI
Signed by S. Stewart and )
A. Hayward )
for and on behalf of )
BOUNTY GROUP EMPLOYEE )
SHARE SCHEME TRUSTEE ) /s/ S. Stewart, Director
LIMITED in the presence of: M.J. Bowan ) /s/ Allan Hayward, Director
Signed by the said )
HOLGER BRANDT by S. Stewart ) /s/ S. Stewart
in the presence of: M.J. Bowan ) as Attorney
Signed by the said )
) /s/ John Fewkes, Director
for and on behalf of )
SPREAD TRUSTEE COMPANY )
LIMITED as Trustee of The Allan Hayward )
Life Interest Settlement ) /s/ Roger Le Hegarat, Authorized Signatory
in the presence of: ) for COSIGN LIMITED, Company Secretary
</TABLE>
<PAGE> 94
<TABLE>
<S> <C>
Signed by the said )
) /s/ John Fewkes, Director
for and on behalf of )
SPREAD TRUSTEE COMPANY )
LIMITED as Trustee of The Paul D'Inverno )
Life Interest Settlement ) /s/ Roger Le Hegarat, Authorized Signatory
in the presence of: ) for COSIGN LIMITED, Company Secretary
Signed by the said )
NICHOLAS HOPEWELL-SMITH )
in the presence of: M.J. Bowan ) /s/ Nicholas Hopewell-Smith
Signed by the said )
CAREY INGE EGLETON )
in the presence of: M.J. Bowan ) /s/ Carey Egleton
Signed by the said )
NATALIE ALEXANDRA EGLETON )
in the presence of: S. O'Reilly ) /s/ N. Egleton
Solicitor WCI
Signed by the said )
LUCIE VICTORIA EGLETON )
in the presence of: S. O'Reilly ) /s/ L. Egleton
Solicitor WCI
Signed by the said )
AVRIL MARJORIE STEWART )
as Trustee of the Sinclair Stewart Interes )
in Possession Settlement - 1 )
in the presence of: S. O'Reilly ) /s/ Avril M. Stewart
Solicitor WCI
</TABLE>
<PAGE> 95
<TABLE>
<S> <C>
Signed by the said )
KEITH JOHN MANSFIELD )
as Trustee of: )
The Emmadin Trust )
The Paul D'Inverno Settlement )
The Allan Hayward No. 2 Settlement of )
27/6/97 )
in the presence of: M.J. Bowan ) /s/ Keith Mansfield
Signed by the said )
MAUREEN D'INVERNO )
as Trustee of: )
The Emmadin Trust )
The Paul D'Inverno Settlement )
in the presence of: S. O'Reilly ) /s/ M. M. D'Inverno
Signed by the said )
LOUISE HAYWARD )
as Trustee of: )
The Allan Hayward No. 2 Settlement of )
27/6/97 and The Allan Hayward Settlement )
of 23/6/97 ) /s/ Martin J. Bowan
in the presence of: S. O'Reilly ) as Attorney
Signed by the said )
JOANNE CATHERINE HARRISON )
as Trustee of: )
The Allan Hayward Settlement of 23/6/97 )
in the presence of: S. O'Reilly ) /s/ Joanne Catherine Harrison
Solicitor
Signed by the said )
DINAH LOUISE GRAFFY )
as Trustee of: )
The Molly Settlement )
for The Maya Louise Mylchreest Graffy (bare )
trust) )
for The Oliver James Mylchreest Graffy (bare )
trust) )
in the presence of: L.J. West-Knight ) /s/ Dinah Louise Graffy
</TABLE>
<PAGE> 96
<TABLE>
<S> <C>
Signed by the said )
CHRISTOPHER HENRY AVERY )
as Trustee of: )
The Molly Settlement )
for The Maya Louise Mylchreest Graffy (bare )
trust) )
for The Oliver James Mylchreest Graffy (bare )
trust) )
in the presence of: C. J. Smilton ) /s/ C. H. Avery
Signed by the said )
SANDRA MURIEL EGLETON )
as Trustee of The Robert Egelton )
Settlement )
in the presence of: M.J. Bowan ) /s/ S. M. Egleton
Solicitor, WCI
Signed by the said )
ALEXANDER GEORGE MUNRO )
as Trustee of The Robert Egelton )
Settlement ) /s/ Martin J. Bowan
in the presence of: S. O'Reilly ) as Attorney
Signed by )
duly authorised for and on behalf of )
SNYDER COMMUNICATIONS, INC. ) /s/ A. Clayton Perfall, CFO
in the presence of: ) /s/ Michele D. Snyder, Pres. / C.O.O.
</TABLE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SNYDER COMMUNICATIONS, INC.
AND
SNYDER ACQUISITION CORP.
AND
SAMPLING CORPORATION OF AMERICA
AND
THE STOCKHOLDER OF SAMPLING CORPORATION OF AMERICA
JULY 13, 1997
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as
of this 13th day of July 1997, by and among Snyder Communications, Inc., a
Delaware corporation ("Snyder"), Snyder Acquisition Corp., an Illinois
corporation and wholly-owned subsidiary of Snyder ("SAC"), Sampling Corporation
of America, an Illinois corporation ("SCA"), and Steven M. Kaplan, the sole
stockholder of SCA (the "Stockholder"). Snyder, SAC, SCA and the Stockholder
are referred to collectively herein as the "Parties" and each individually as a
"Party."
RECITALS:
WHEREAS, the Stockholder is the record and beneficial owner of all of
the issued and outstanding capital stock of SCA; and
WHEREAS, the Parties hereto desire to consummate a merger (the
"Merger") whereby SAC will be merged with and into SCA and SCA will be the
surviving corporation in the Merger, upon the terms and subject to the
conditions of this Agreement and in accordance with the Business Corporation
Act of 1983 of the State of Illinois (the "Illinois BCA"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), pursuant to which each issued
and outstanding share of SCA common stock shall be converted into the right to
receive shares of Snyder common stock.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms Defined in this Agreement. As used in this Agreement,
the following terms shall have the respective meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504, or any similar group defined under a similar provision of
state, local or foreign law.
"Agreement" has the meaning set forth in the preface above.
-1-
<PAGE> 3
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms the basis for any specified
consequence.
"Closing" has the meaning set forth in Section 2.3 below.
"Closing Date" has the meaning set forth in Section 2.3 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of SCA or Snyder, if any, that is not already generally
available to the public.
"Disclosure Schedule" has the meaning set forth in the first
paragraph of Article 5 below.
"Effective Time" has the meaning set forth in Section 2.2 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) tax-qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) tax-qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Deposit" has the meaning set forth in Section 11.6 below.
-2-
<PAGE> 4
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 5.7 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Illinois BCA" has the meaning set forth in the second paragraph of
the Recitals above.
"Indemnification Threshold" has the meaning set forth in Section 11.5
below.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
"Knowledge" means the knowledge of the Stockholder after reasonable
investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means, as to any Party, a material adverse
effect on the business, properties, operations, condition or future prospects
(financial or otherwise) of such Party.
"Merger" shall mean the merger of SAC with and into SCA in accordance
with the terms of this Agreement.
-3-
<PAGE> 5
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 5.7 below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
5.7 below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 5.7
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"NYSE" means the New York Stock Exchange.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Party" or "Parties has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section
406 and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 3.1(c) below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Restricted Period" has the meaning set forth in Section 8.5(a) below.
"SAC" has the meaning set forth in the preface above.
"SCA" has the meaning set forth in the preface above.
"SCA Articles of Merger" has the meaning set forth in Section 2.2
below.
"SCA Common Share Certificate" has the meaning set forth in Section
3.1(a) below.
"SCA Common Shares" means the shares of the common stock, no par
value, of SCA.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
-4-
<PAGE> 6
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Share Consideration" has the meaning set forth in Section 3.1(a)
below.
"Snyder" has the meaning set forth in the preface above.
"Snyder Common Shares" shall mean the shares of common stock, par
value $0.001, of Snyder.
"Snyder Share Price" has the meaning set forth in Section 3.1(d)
below.
"Stockholder" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2.1
below.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 11.3 below.
"Transaction Costs" means any fees, costs or expenses incurred by the
Stockholder or SCA in connection with this Agreement and the transactions
contemplated hereby including investment banking, accounting and legal fees
and expenses. Transaction Costs include all fees, costs or expenses identified
on Schedule 1.1 as costs related to the Transaction which, as reflected
therein, total $1,086,789.50. Transaction Costs do not include any of the
fees, costs or expenses identified on Schedule 1.1 as "SCA costs."
-5-
<PAGE> 7
ARTICLE 2
MERGER; EFFECTIVE TIME; CLOSING; SURVIVING CORPORATION
2.1 Merger. Subject to the terms and conditions of this Agreement
and the Illinois BCA, at the Effective Time, SAC and SCA shall consummate the
Merger in which (i) SAC shall be merged with and into SCA and the separate
corporate existence of SAC shall thereupon cease, (ii) SCA shall be the
successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Illinois and (iii) the separate corporate
existence of SCA with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The corporation surviving
the Merger is sometimes hereinafter referred to as the "Surviving Corporation".
The Merger shall have the effects set forth in the Illinois BCA.
2.2 Effective Time. On the Closing Date, subject to the terms and
conditions of this Agreement, SAC and SCA shall (i) cause to be executed
Articles of Merger in the form required by the Illinois BCA (the "SCA Articles
of Merger"), and (ii) cause the SCA Articles of Merger to be filed with the
Illinois Secretary of State as provided in the Illinois BCA. The Merger shall
become effective at (i) such time as the SCA Articles of Merger have been duly
filed with the Illinois Secretary of State or (ii) such other time as is agreed
upon by the Stockholder and Snyder and specified in the and the SCA Articles of
Merger. Such time is hereinafter referred to as the "Effective Time".
2.3 The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Shaw,
Pittman, Potts & Trowbridge, 2300 N Street, N.W., Washington, D.C. 20037,
commencing at 8:00 a.m. local time on July 14, 1997 subject to the fulfillment
or waiver of the conditions set forth in Article 9 or such other place or time
or on such other date as Snyder and the Stockholder may agree or as may be
necessary to permit the fulfillment or waiver of the conditions set forth in
Article 9 (the "Closing Date"). In the event that Closing has not occurred by
July 21, 1997, this Agreement is subject to termination pursuant to Section
10.2 hereof.
2.4 Surviving Corporation. The articles of incorporation, bylaws
and directors and officers of the Surviving Corporation shall be as follows:
(a) The articles of incorporation of SCA, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided therein and under
the Illinois BCA.
(b) The bylaws of SAC, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation.
(c) The directors and officers of SAC immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
from and after the Effective Time until their successors have been duly
elected, appointed or qualified or until their earlier death, resignation or
removal in accordance with the articles of incorporation and by-laws of the
Surviving Corporation.
-6-
<PAGE> 8
ARTICLE 3
SHARE CONSIDERATION; PAYMENT OF SHARE CONSIDERATION
3.1 Share Consideration; Conversion or Cancellation of SCA Common
Shares in Merger.
(a) At the Effective Time, by virtue of the Merger and without any
action by the Parties, all of the outstanding SCA Common Shares (i) shall be
converted into the right to receive the aggregate number of Snyder Common
Shares (the "Share Consideration") equal to the quotient derived by dividing
the Purchase Price by the average closing price of a Snyder Common Share,
rounded to the nearest cent, as reported on the NYSE over the five (5) trading
days immediately preceding the date of this Agreement and (ii) shall cease to
be outstanding and (iii) shall be canceled and retired and shall cease to
exist, and the Stockholder, as the holder of certificates representing such SCA
Common Shares (the "SCA Common Share Certificates"), shall cease to have any
rights with respect thereto, except the right to receive Snyder Common Shares
therefor upon the surrender of such certificates in accordance with this
Section 3.1(a) and cash in lieu of fractional Snyder Common Shares as set forth
in Section 3.3. At the Effective Time, each outstanding share of common stock,
$.01 par value, of SAC shall be converted into one share of common stock of the
Surviving Corporation, as such shares of common stock are constituted
immediately following the Effective Time.
(b) Prior to Closing, the Stockholder and SCA shall provide Snyder
with the amount of the Transaction Costs incurred in connection with the
Merger, including all such costs paid, accrued or to be accrued and paid in the
future. In the event that Transaction Costs exceed such amount, the amount
of such excess shall be the responsibility of, and paid by, the Stockholder.
(c) For purposes of this Agreement, the term "Purchase Price"
shall mean (i) the sum of $39,000,000 and SCA's net income for the period from
January 1, 1997 through June 30, 1997 minus (ii) the sum of all Transaction
Costs and the $265,000 distribution made by SCA in March 1997.
(d) For purposes of this Agreement, the term "Snyder Share Price"
shall mean the average closing price of a Snyder Common Share, rounded to the
nearest cent, as reported on the NYSE over the five (5) trading days
immediately preceding the date of this Agreement.
3.2 Delivery and Payment of Share Consideration.
(a) At Closing or as soon as possible thereafter, Snyder shall
deliver to the Stockholder two duly endorsed certificates, one of which
represents ninety percent (90%) of the Snyder Common Shares to be issued in
payment of the Share Consideration pursuant to Section 3.1 and one of which
represents ten percent (10%) of the Snyder Common Shares to be issued in
payment of the Share Consideration pursuant to Section 3.1.
(b) The certificate representing ten percent (10%) of the Snyder
Common Shares to be issued in payment of the Share Consideration shall be
deposited into the escrow contemplated
-7-
<PAGE> 9
by Section 11.6 of this Agreement, together with stock powers duly endorsed in
blank by the Stockholder.
3.3 Fractional Snyder Common Shares. No certificates representing
fractional Snyder Common Shares shall be issued upon surrender of any SCA
Common Share Certificates. In lieu of any fractional Snyder Common Shares,
there shall be paid to each holder of SCA Common Shares who otherwise would be
entitled to receive a fractional Snyder Common Shares an amount of cash
(without interest) determined by multiplying such fraction by the Snyder Share
Price.
3.4 Transfer of SCA Common Shares.
(a) No transfers of SCA Common Shares shall be made on the stock
transfer books of SCA after the date of this Agreement.
(b) The Stockholder agrees not to transfer any SCA Common Shares
after the date of this Agreement and before the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE STOCKHOLDER
The Stockholder represents and warrants to Snyder and SAC that the
statements contained in this Article 4 are correct and complete as of the date
hereof with respect to himself:
4.1 Authorization of Transaction. The Stockholder has full power
and authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Stockholder, enforceable in accordance with its terms and
conditions. To the Knowledge of the Stockholder no filing of a notification
pursuant to the Hart-Scott-Rodino Act is required in connection with the
transactions contemplated herein. The Stockholder does not otherwise need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement, except in connection with causing
the filing of the SCA Articles of Merger by SCA.
4.2 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Stockholder is subject,
or (ii) result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Stockholder is a party
or by which he is bound or to which any of his assets is subject.
-8-
<PAGE> 10
4.3 Investment. The Stockholder (i) understands that the Snyder
Common Shares to be acquired by such Stockholder pursuant to this Agreement
will not be registered under the Securities Act, or under any state securities
laws, and will be exchanged in reliance upon federal and state exemptions for
transactions not involving a public offering, (ii) is acquiring the Snyder
Common Shares solely for his own account for investment purposes, and not with
a view towards the distribution thereof, (iii) is a sophisticated investor with
knowledge and experience in business and financial matters, (iv) has received
certain information concerning Snyder, including, without limitation, (A) the
most recent annual report on Form 10-K, (B) the most recent quarterly reports
on Form 10-Q, (C) current reports on Form 8-K dated June 2, 1997, in each case
as filed by Snyder under the Securities Exchange Act, and (D) the most recent
annual report to stockholders of Snyder, and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding Snyder Common Shares, and (v) is able to bear the economic
risk and lack of liquidity inherent in holding Snyder Common Shares which have
not been registered under the Securities Act.
4.4 SCA Common Shares. The Stockholder holds of record and owns
beneficially seventy-five (75) SCA Common Shares, which represent all of the
issued and outstanding capital stock of SCA. Such shares are owned, free and
clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Stockholder is not a party to any option, warrant, purchase
right, or other contract or commitment that could require such Stockholder to
sell, transfer, or otherwise dispose of any of the SCA Common Shares (other
than pursuant to this Agreement) or is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any of the SCA
Common Shares.
4.5 HSR Requirements. The Stockholder understands that no filing
will be made in connection with this transaction under the Hart-Scott-Rodino
Act based on the Stockholder's representation that his "investment assets,"
"voting securities" and "income producing properties," collectively, as defined
or used in the Hart-Scott-Rodino Act or the related rules and regulations
thereunder do not exceed $10.0 million for all applicable periods under the
Hart-Scott-Rodino Act.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES CONCERNING SCA
The Stockholder and SCA jointly and severally represent and warrant to
Snyder and SAC that the statements contained in this Article 5 are correct and
complete as of the date hereof, except as set forth in the disclosure schedule
delivered by the Stockholder and SCA to Snyder and SAC on the date hereof (the
"Disclosure Schedule"). Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with
particularity. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty
-9-
<PAGE> 11
made herein (unless the representation or warranty has to do with the existence
of the document or other item itself). The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained
in this Article 5.
5.1 Organization, Qualification, and Corporate Power. SCA is a
corporation duly organized, validly existing, and in good standing under the
laws of Illinois. SCA is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the failure to so qualify or obtain authorization would
not have a Material Adverse Effect on SCA. Except as set forth in Section
5.1(a) of the Disclosure Schedule, SCA has full corporate power and authority
and all licenses, permits, and authorizations necessary to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Section 5.1(b) of the Disclosure Schedule lists the directors and
officers of SCA. SCA has delivered to Snyder and SAC correct and complete
copies of the articles of incorporation and by-laws of SCA (as amended to
date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of SCA in
the forms in which they have been provided to Snyder are correct and complete.
SCA is not in default under or in violation of any provision of its articles of
incorporation or by-laws.
5.2 Capitalization. The entire authorized capital stock of SCA
(the "SCA Common Shares") consists of 10,000 shares of common stock, no par
value, of which seventy-five (75) shares are issued and outstanding. No SCA
Common Shares are held in treasury. All of the issued and outstanding SCA
Common Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Stockholder as set forth in
Section 5.2 of the Disclosure Schedule. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require SCA to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to SCA. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the SCA Common Shares.
5.3 Authorization of Transaction. SCA has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of SCA, enforceable in accordance with
its terms and conditions. SCA is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement, except in connection with the filing of the SCA
Articles of Merger.
5.4 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which SCA is subject or any
provision of the charter or bylaws of SCA or (ii) except for the consent
required in connection with the Proctor & Gamble Master Sampling and
Distribution Agreement (which consent shall have been obtained
-10-
<PAGE> 12
prior to Closing) result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which SCA is a party or by which
it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets).
5.5 Title to Assets. SCA has good title to, or a valid leasehold
interest in, the properties and assets used by it, located on its premises, or
shown on the Most Recent Balance Sheet acquired after the date thereof, free
and clear of all Security Interests, except for properties and assets disposed
of in the Ordinary Course of Business since the date of the Most Recent Balance
Sheet.
5.6 Subsidiaries. SCA does not have any Subsidiaries, operating
or otherwise.
5.7 Financial Statements.
(a) SCA has delivered (collectively, the "Financial Statements")
to Snyder its (i) compiled balance sheets and statements of income and cash
flow as of and for the fiscal years ended December 31, 1994, and December 31,
1995; (ii) audited balance sheet and statements of earnings and retained
earnings and cash flows as of and for the fiscal year ended December 31, 1996
(the "Most Recent Fiscal Year End"); and (iii) unaudited balance sheets and
statements of income, changes in stockholders' equity, and cash flow (the "Most
Recent Financial Statements") as of and for the six (6) months ended June 30,
1997 (the "Most Recent Fiscal Month End"). The Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of SCA as of such dates and the results of operations of
SCA for such periods, and are consistent with the books and records of SCA
(which books and records are correct and complete in all material respects).
(b) SCA's net income for the six (6) months ended June 30, 1997 was
$926,185.56.
5.8 Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any Material Adverse Effect
with respect to SCA. Since that date:
(a) SCA has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(b) except as set forth in Schedule 5.8(b), SCA has not entered
into any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more than $50,000
or outside the Ordinary Course of Business;
(c) no party (including SCA) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) to which SCA is a party or
by which it is bound;
-11-
<PAGE> 13
(d) SCA has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(e) SCA has not made any capital expenditure (or series of related
capital expenditures) involving more than $50,000;
(f) SCA has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);
(g) SCA has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
(h) SCA has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(i) SCA has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
(j) SCA has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the articles of
incorporation or by-laws of SCA;
(l) SCA has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of its capital
stock;
(m) except for dividends paid in January 1997 in the amount of
$1,800,000 and for dividends paid in March 1997 in the amount of $265,000, SCA
has not declared, set aside, or paid any dividend or made any distribution with
respect to its capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(n) SCA has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(o) SCA has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside the
Ordinary Course of Business;
(p) except for the execution of an employment agreement with Julie
Jacobsen, the extension of employment agreements with Holly Graham and Steve
Ludkowski, the amendment of an employment agreement with Jesse Reif and the
commitment to pay a $20,000 bonus to Kevin Reed upon completion of an assigned
project, SCA has not entered into any employment
-12-
<PAGE> 14
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(q) SCA has not granted any increase in the base compensation of
any of its directors, officers, and employees outside the Ordinary Course of
Business;
(r) SCA has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees (or
taken any such action with respect to any other Employee Benefit Plan);
(s) SCA has not made any other change in employment terms for any
of its directors, officers, and employees outside the Ordinary Course of
Business or in the terms of its agreements with any independent contractors;
(t) SCA has not made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business;
(u) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving SCA; and
(v) SCA is not under any legal obligation, whether written or
oral, to do any of the foregoing.
5.9 Undisclosed Liabilities. SCA does not have any Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to
any Liability), except for (i) Liabilities set forth on the face of the Most
Recent Balance Sheet and (ii) Liabilities which have arisen after the Most
Recent Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law and none of which exceeds $50,000 individually).
5.10 Legal Compliance. SCA has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against it alleging any failure
so to comply.
5.11 Tax Matters.
(a) SCA has filed all Tax Returns that it was required to file,
including, without limitation, any Tax Returns required to be filed with any
state. All such Tax Returns were correct and complete in all respects. All
Taxes owed by SCA (whether or not shown on any Tax Return) have been paid. SCA
currently is not the beneficiary of any extension of time within which to file
any Tax Return, except for extensions of time until September 15, 1997, to file
its 1996 S
-13-
<PAGE> 15
Corporation Federal and Illinois income tax returns. No claim has ever been
made by an authority in a jurisdiction where SCA does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of SCA that arose in connection with any failure
(or alleged failure) to pay any Tax.
(b) SCA has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) The Stockholder does not expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of SCA either (A) claimed or
raised by any authority in writing or (B) as to which Stockholder has
Knowledge. Section 5.11(c) of the Disclosure Schedule lists all federal,
state, local, and foreign income Tax Returns filed with respect to SCA for
taxable periods ended on or after December 31, 1991, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit. SCA has made available to Snyder correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by SCA since December
31, 1991.
(d) SCA has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) SCA has not filed a consent under Code Section 341(f)
concerning collapsible corporations. SCA has not made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. SCA has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). SCA
has disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Code Section 6662. SCA is not a party to any Tax
allocation or sharing agreement. SCA (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was SCA) or (B) has any Liability for the
Taxes of any Person (other than SCA) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(f) Pursuant to an election effective on January 1, 1995, SCA (1)
has been treated and has been entitled to have been treated at all times during
taxable year 1995 and thereafter as an "S Corporation" within the meaning of
Section 1362(a) of the Code and corresponding provisions of state and local law
and (ii) has not been since January 1, 1995 and is not now subject to any
federal, state or local tax on any of its income, except for the Illinois
Replacement Tax.
5.12 Real Property. Section 5.12 of the Disclosure Schedule lists
and describes briefly all real property owned, leased or subleased to SCA. SCA
has delivered to Snyder correct and
-14-
<PAGE> 16
complete copies of the real estate leases and subleases listed in Section 5.12
of the Disclosure Schedule (as amended to date). With respect to each real
estate lease and sublease listed in Section 5.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(b) no consent is required with respect to any lease or sublease
as a result of this Agreement, and the actions contemplated by this Agreement
will not result in the change of any terms of any lease or sublease or
otherwise affect the ongoing validity of any lease or sublease;
(c) no party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(d) no party to the lease or sublease has repudiated any provision
thereof;
(e) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(f) with respect to each sublease, the representations and
warranties set forth in subsections (a) through (e) above are true and correct
with respect to the underlying lease;
(g) SCA has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and permits)
required by SCA in connection with the operation thereof and have been operated
and maintained by SCA in accordance with all applicable material laws, rules,
and regulations; and
(i) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities.
5.13 Intellectual Property.
(a) SCA owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used in the
operation of the businesses of SCA as presently conducted. Each item of
Intellectual Property owned or used by SCA immediately prior to the Closing
hereunder will be owned or available for use by the Surviving Corporation on
identical terms and conditions immediately subsequent to the Closing hereunder.
(b) To their knowledge, SCA has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and neither the Stockholder nor the directors
and officers (and employees with
-15-
<PAGE> 17
responsibility for Intellectual Property matters) of SCA has ever received any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that SCA must
license or refrain from using any Intellectual Property rights of any third
party). To their Knowledge, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of SCA.
(c) SCA has no patent or registration which has been issued to SCA
with respect to any of its Intellectual Property.
(d) Section 5.13(d) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that SCA uses
pursuant to license, sublicense, agreement, or permission. SCA has delivered to
Snyder and SAC correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date).
(e) To their knowledge, nothing will materially interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued
operation of its business as presently conducted.
5.14 Tangible Assets. SCA owns or leases all buildings, machinery,
equipment, and other tangible assets used in the conduct of its business as
presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from all material defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used. With the exception of any licensed or
leased assets used by SCA, the Most Recent Balance Sheet sets forth all of the
assets necessary to conduct SCA's business as it is currently being conducted
and as it is contemplated to be conducted in the future.
5.15 Contracts. Section 5.15 of the Disclosure Schedule lists the
following contracts and other agreements to which SCA is a party:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $50,000 per annum;
(b) any agreement concerning a partnership or joint venture;
(c) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(d) except with respect to this transaction, any agreement
concerning confidentiality or noncompetition;
(e) any agreement with the Stockholder and his Affiliates;
-16-
<PAGE> 18
(f) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(g) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $50,000 or providing severance benefits;
(h) any agreement under which it has advanced or loaned any amount
to any of its directors, officers and employees outside the Ordinary Course of
Business; or
(i) any agreement under which SCA is performing services for
customers or clients providing for payments in excess of $50,000 per annum or
any agreement under which SCA is receiving services providing for payments in
excess of $50,000 per annum.
The Stockholder and SCA have made available, and delivered if requested, to
Snyder and SAC a correct and complete copy of each written agreement listed in
Section 5.15 of the Disclosure Schedule (as amended to date) and a written
summary setting forth the terms and conditions of each oral agreement, if any,
referred to in Section 5.15 of the Disclosure Schedule. With respect to each
such agreement: (A) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any
provision of the agreement.
5.16 Notes and Accounts Receivable. All notes and accounts
receivable of SCA are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and fully
collectible in accordance with their terms at their recorded amounts and shall
be collectible, subject only to the reserve for bad debts set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of SCA.
5.17 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of SCA, except as delivered to the Internal Revenue
Service in support of SCA's application for a determination letter.
5.18 Insurance. Section 5.18 of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which SCA has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past five years: (i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name of
each covered insured; (iii) the policy number, the period of coverage and
whether such policy is presently in effect; (iv) the scope (including an
indication of whether the coverage was on a claims made, occurrence, or
-17-
<PAGE> 19
other basis) and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and (v) a description of any
retroactive premium adjustments or other loss-sharing arrangements. With
respect to each insurance policy presently in effect: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) unless modified,
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither SCA nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. SCA has been covered
during the past five years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Section 5.18 of the Disclosure Schedule describes any self-insurance
arrangements affecting SCA.
5.19 Litigation. Section 5.19 of the Disclosure Schedule sets
forth each instance in which SCA (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator. None
of the actions, suits, proceedings, hearings, and investigations set forth in
Section 5.19 of the Disclosure Schedule could result in any Material Adverse
Effect on SCA. The Stockholder has no Basis to believe that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened
against SCA.
5.20 Employees. To the Knowledge of the Stockholder and to the
knowledge of SCA, no executive, key employee, or group of employees currently
has any plans to terminate employment with SCA independently of or as a result
of this Agreement. SCA has not committed any unfair labor practice. Neither
the Stockholder nor SCA has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of SCA. The Disclosure Schedule sets forth the names of
all employees necessary in order to conduct SCA's business as it is currently
being conducted and as it is contemplated to be conducted in the future.
5.21 Employee Benefits.
(a) Section 5.21(a) of the Disclosure Schedule lists each Employee
Benefit Plan that SCA maintains or to which SCA contributes.
(b) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(c) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, and Summary Plan Descriptions) have
been filed or distributed
-18-
<PAGE> 20
appropriately with respect to each such Employee Benefit Plan. The requirements
of Part 6 of Subtitle B of Title 1 of ERISA and of Code Section 4980B have been
met with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of SCA. All required premiums or
other payments for all periods ending on or before the Closing Date have been
paid with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(e) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code Section
401(a) and has received, a favorable determination letter from the Internal
Revenue Service reflecting its current compliance with the Code.
(f) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any Multiemployer
Plan), subject to Title IV of ERISA, equals or exceeds the present value of all
vested and nonvested Liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee Pension Benefit
Plan terminating on the date for determination.
(g) SCA has made available, and delivered, if requested, to Snyder
correct and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which implement
each such Employee Benefit Plan.
(h) With respect to each Employee Benefit Plan that SCA maintains
or ever has maintained or to which it contributes, ever has contributed, or
ever has been required to contribute:
(i) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer Plan), subject to
Title IV of ERISA, has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted or
threatened.
(ii) There have been no non-exempt Prohibited
Transactions with respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the
assets of any such Employee Benefit
-19-
<PAGE> 21
Plan (other than routine claims for benefits) is pending or threatened. The
Stockholder has no Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(iii) SCA has not incurred, and neither the
Stockholder nor the directors and officers (and employees with responsibility
for employee benefits matters) of SCA has any reason to expect that SCA will
incur, any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(i) SCA does not contribute to and has never contributed to or
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(j) SCA does not maintain or ever has maintained or contributes,
ever has contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Section
4980B).
5.22 Guaranties. SCA is not a guarantor or otherwise is liable for
any Liability or obligation (including indebtedness) of any other Person.
5.23 Environment, Health, and Safety.
(a) SCA has complied in all material respects with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against it alleging any failure so to comply. Without
limiting the generality of the preceding sentence, SCA has obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(b) SCA does not have any Liability and has not handled or
disposed of any substance, arranged for the disposal of any substance, except
as set forth in Schedule 5.23(b), exposed any employee or other individual to
any substance or condition, or owned or operated any property or facility in
any manner that could form the Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
SCA giving rise to any Liability for damage to any site, location, or body of
water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental,
Health, and Safety Law.
-20-
<PAGE> 22
(c) All properties and equipment used in the business of SCA has
been free of asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances.
5.24 Customers. The names and addresses of all customers of SCA
during fiscal year 1996 and all customers known as of the Closing Date who have
been customers during fiscal 1997 are listed in the Disclosure Schedule. All
contracts and agreements with such customers are valid, effective and
enforceable and the Disclosure Schedule sets forth all customers who have
account balances that are in excess of ninety (90) days past due.
5.25 Relationships with Customers and Suppliers. The Stockholder
and SCA believe that SCA's relationships with its existing customers are sound,
and there is no Basis to believe that any of SCA's primary customers are
considering materially and adversely changing the manner in which they
currently conduct business with SCA. SCA knows of no written or oral
communication, fact, event or action which exists or has occurred within one
hundred twenty (120) days prior to the date of this Agreement which would
indicate that any of the following are planning to terminate or materially
reduce its business with SCA:
(i) any current customer of SCA which accounted
for over 1% of total net sales of SCA for 1996; or
(ii) any current supplier to SCA of items
essential to the conduct of the business, which items cannot be replaced at
comparable cost and the loss of which would have an adverse effect on SCA.
Since the Most Recent Balance Sheet Date, (A) SCA has retained all
sales personnel employed in connection with the operation of the business and
(B) no customer (or group of customers) purchasing in the aggregate of $50,000
in products and services on a yearly basis has terminated its relationship with
SCA.
5.26 Employee and Stockholder Indebtedness. The Disclosure
Schedule sets forth all indebtedness to SCA of the Stockholder or the officers,
directors or employees of SCA.
5.27 Product Liability. Except to the extent covered by insurance,
SCA has no liability (and, to the Knowledge of SCA and the Stockholder, there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against SCA giving rise to
any liability) arising out of any injury to individuals or property as a result
of the ownership, possession or use of any product manufactured, sold, leased
or delivered by SCA.
5.28 Bank Accounts. The Disclosure Schedule sets forth all bank
accounts and marketable securities (both debt and equity) of SCA.
5.29 Related Party Agreements. The Disclosure Schedule sets forth
all agreements between (i) SCA and its employees and (ii) SCA and the
Stockholder.
-21-
<PAGE> 23
5.30 Change in Control. SCA is not a party to any contract or
arrangement, including, without limitation, any agreement or contract with an
advertiser or supermarket, which contains a "change in control," "potential
change in control" or similar provision, and the consummation of the
Acquisition shall not (either alone or upon the occurrence of additional acts
or events) result in any payment or payments becoming due from SCA to any
person or give any person the right to terminate or alter the provisions of any
agreement to which SCA is a party.
5.31 Disclosure. The representations and warranties contained in
this Article 5 do not contain any untrue statement of a material fact or to the
Knowledge of the Stockholder or the knowledge of SCA omit to state any material
fact necessary in order to make the statements and information contained in
this Article 5 not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SNYDER AND SAC
Snyder and SAC jointly and severally represent and warrant to SCA that
the statements contained in this Article 6 are correct and complete as of the
date hereof:
6.1 Organization of Snyder and SAC. Snyder is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. SAC is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Illinois. Snyder, and each of its
Subsidiaries, is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required except
where a failure to so qualify or obtain authorization would not have a Material
Adverse Effect on Snyder and its Subsidiaries, taken as a whole. Snyder and
each subsidiary has full corporate power and authority and all licenses,
permits and authorization necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
6.2 Capital Stock. The authorized capital stock of Snyder
consists of 120,000,000 shares of common stock, $.001 par value (the "Snyder
Common Shares"), of which 37,528,014 shares are outstanding as of June 30,
1997, and 5,000,000 shares of preferred stock, of which no shares are
outstanding as of June 30, 1997. Since June 30, 1997, Snyder has not issued
any shares of capital stock except pursuant to the exercise of options
outstanding on such date to purchase Snyder Common Shares. All outstanding
Snyder Common Shares are, and all Snyder Common Shares issuable under stock
option plans of Snyder will be when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable. Except
for the 6,567,402 Snyder Common Shares reserved for issuance pursuant to stock
option plans of Snyder, there are outstanding on the date hereof no options,
warrants, calls, rights, commitments or any other agreements of any character
to which Snyder is a party or by which it may be bound, requiring it to issue,
transfer, sell, purchase, register, redeem or acquire any shares of capital
stock or any securities or rights convertible into, exchangeable for or
evidencing the right to subscribe for or acquire any shares of its capital
stock. Snyder has no shareholder rights plan or any other plan of a similar
nature in effect.
-22-
<PAGE> 24
6.3 Authorization for Common Stock. The Snyder Common Shares
issued in payment of the Purchase Price will, when issued, be duly authorized,
validly issued, fully paid and nonassessable, and no stockholder of Snyder will
have any preemptive right or similar rights of subscription or purchase in
respect thereof. The Snyder Common Shares issued in payment of the Purchase
Price will, subject to the accuracy of the Stockholder's representations
contained in Section 4.3 hereof, be exempt from registration under the
Securities Act and will be registered or exempt from registration under all
applicable state securities laws. The Snyder Common Shares issued in payment
of the Purchase Price will, when issued, be approved for listing on the NYSE,
subject to official notice of issuance.
6.4 Authorization of Transaction. Each of Snyder and SAC has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its respective obligations hereunder.
The execution and performance of this Agreement has been duly authorized by
Snyder's and SAC's Board of Directors constitutes the valid and legally binding
obligation of Snyder, enforceable in accordance with its terms and conditions.
Assuming that the information provided by the Stockholder is correct, to the
Knowledge of Snyder, no filing is required under the applicable requirements
under the Hart-Scott-Rodino Act. Neither Snyder nor SAC need otherwise give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement, except in connection with the
federal securities laws and any applicable "Blue Sky" or state securities laws.
6.5 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either Snyder or SAC is
subject or any provision of its articles of incorporation or by-laws or (ii)
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which either Snyder or SAC is a party or by
which it is bound or to which any of its assets is subject.
6.6 Brokers' Fees. Neither Snyder nor SAC has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
6.7 New York Stock Exchange. Snyder is in compliance in all
material respects with its NYSE Listing Agreement.
6.8 SEC Filings; Financial Statements.
(a) Snyder has filed and made available to the Stockholder, if
requested, all forms, reports and other filings required to be filed by Snyder
with the SEC, other than registration statements on Form S-8 (collectively, the
"SEC Reports"). The SEC Reports (i) at the time filed,
-23-
<PAGE> 25
complied in all material respects with the applicable requirements of the
Securities Act and the Securities Exchange Act, as the case may be, and (ii)
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated in the SEC Reports
or necessary in order to make the statements in the SEC Reports, in the light
of the circumstances under which they were made, not misleading. None of
Snyder's Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the SEC Reports, including any SEC
Reports files after the date of this Agreement until the Closing, complied or
will comply as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was or will be prepared
in accordance with GAAP for the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted for presentation in Quarterly Reports on Form 10-Q), and fairly
presented or will fairly present the consolidated financial position of Snyder
as at the respective dates and the consolidated results of its operations and
cash flows for the periods indicated.
6.9 Litigation. Neither Snyder nor any of its Subsidiaries are
subject to any outstanding injunction, judgment, order, decree, ruling or
charge or is a party or to the knowledge of Snyder is threatened to be made a
party to any action, suit, proceeding, hearing or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator.
6.10 Reorganization Treatment. At the time of the closing of this
transaction, Snyder will be in control of SCA within the meaning of Section
368(c) of the Code, and Snyder has no plan nor intention to cause SCA after the
closing of this transaction to issue additional shares of stock of SCA that
would result in Snyder losing control of SCA within the meaning of Section
368(c) of the Code. Snyder has no plan nor intention to reacquire any of its
stock issued in this transaction, nor to liquidate SCA, merge SCA into another
corporation, make any extraordinary distribution in respect of its stock in
SCA, sell or otherwise dispose of its stock in SCA nor cause SCA to sell or
otherwise dispose of any of the assets of SCA acquired in this transaction,
except for dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code. Immediately after the closing of
this transaction, Snyder intends to cause SCA to continue the historic business
of SCA and to use a significant portion of the historic business assets of SCA
in a business. Snyder is not an investment company as defined in Section
368(a)(2)(F)(iii) of the Code.
6.11 Certain Tax Elections. Snyder hereby acknowledges and agrees
that neither Snyder nor SCA will make an election pursuant to Section 338 of
the Code (including, without limitation, an election pursuant to Section
338(h)(10) of the Code) with respect to the transactions set forth in the
Agreement.
-24-
<PAGE> 26
ARTICLE 7
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
7,1 General. Each of the Parties will use his or its reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Article 9 below).
7.2 Notices and Consents. The Stockholder and SCA shall give any
notices to third parties and shall use their reasonable best efforts to obtain
any third party consents that Snyder and SAC may reasonably request in
connection with the matters referred to in Section 4.1 and 5.4 above. Each of
the Parties shall give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the matters
referred to in Section 6.4 above.
7.3 Maintenance of Business; Prohibited Acts. During the period
from the date of this Agreement to the Effective Time, the Stockholder will
not, and will not cause SCA to, take any action that adversely affects the
ability of SCA (i) to pursue its business in the ordinary course, (ii) to seek
to preserve intact its current business organizations (iii) to keep available
the service of its current officers and employees and (iv) preserve its
relationships with customers, suppliers and others having business dealings
with it; and the Stockholder will not allow SCA to, without Snyder's prior
written consent:
(a) issue, deliver, sell, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, delivery, sale, disposition or
pledge or other encumbrances of (i) any additional shares of its capital stock
of any class (including the SCA Common Shares), or any securities or rights
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock or any other securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock, or (ii) any other securities in respect of, in lieu of or in
substitution for SCA Common Shares outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities (including the
SCA Common Shares);
(c) split, combine, subdivide or reclassify any shares of its
capital stock or otherwise make any dividends, distributions or other payments
to the Stockholder in his capacity as a stockholder of SCA;
(d) (i) grant any increases in the compensation of any of its
directors, officers or executives or grant any increases in compensation to any
of its employees, (ii) pay or agree to
-25-
<PAGE> 27
pay any pension retirement allowance or other employee benefit not required or
contemplated by any Employee Benefit Plan as in effect on the date hereof to
any such director, officer or employee, whether, past or present, (iii) enter
into any new or amend any existing employment or severance agreement with any
such director, officer or employee, except as approved by Snyder in its sole
discretion, (iv) pay or agree to pay any bonus to any director, officer or
employee (whether in the form of cash, capital stock or otherwise), or (v)
except as may be required to comply with applicable law, amend any existing, or
become obligated under any new Employee Benefit Plan, except in the case of (i)
through (v) inclusive, under and pursuant to the employment agreements referred
to in Section 9.1(d);
(e) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization;
(f) make any acquisition, by means of merger, consolidation or
otherwise, of any direct or indirect ownership interest in or assets comprising
any business enterprise or operation;
(g) adopt any amendments to its articles of incorporation or
by-laws;
(h) incur any indebtedness for borrowed money or guarantee such
indebtedness or agree to become contingently liable, by guaranty or otherwise,
for the obligations or indebtedness of any other person or make any loans,
advances or capital contributions to, or investments in, any other corporation,
any partnership or other legal entity or to any other persons, except for bank
deposits and other investments in marketable securities and cash equivalents
made in the ordinary course of its business;
(i) engage in the conduct of any business the nature of which is
materially different from the business in which SCA is currently engaged;
(j) enter into any agreement providing for acceleration of payment
or performance or other consequence as a result of a change of control of SCA;
(k) forgive any indebtedness owed to SCA or convert or contribute
by way of capital contribution any such indebtedness owed;
(l) authorize or enter into any agreement providing for management
services to be provided by SCA to any third-party or an increase in management
fees paid by any third-party under existing management agreements;
(m) mortgage, pledge, encumber, sell, lease or transfer any
material assets of SCA except with the prior written consent of Snyder or as
contemplated by this Agreement,
(n) authorize or announce an intention to do any of the foregoing,
or enter into any contract, agreement, commitment or arrangement to do any of
the foregoing; or
-26-
<PAGE> 28
(o) perform any act or omit to take any action that would make any
of the representations made above inaccurate or materially misleading as of the
Effective Time.
7.4 Full Access. Each of the Parties shall permit representatives
of the other Parties to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of such Party
to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to such Party.
7.5 Notice of Developments. The Stockholder and SCA on the one
hand and Snyder on the other shall give prompt written notice to the other
party of any material adverse development causing a breach of any of their
respective representations and warranties in Article(s) 4, 5 or 6 above. No
disclosure by any Party pursuant to this Section 7.5, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
7.6 Reorganization. From and after the date hereof and prior to
the Effective Time, except for the transactions contemplated or permitted
herein, none of SCA, SAC, the Stockholder or Snyder shall knowingly take any
action that would be inconsistent with the representations and warranties made
by it herein, including, but not limited, to knowingly taking any action, or
knowingly failing to take any actions, that is known to cause disqualification
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code.
7.7 Exclusivity. Neither the Stockholder nor SCA shall (i)
solicit, initiate, or encourage the submission of any proposal or offer from
any Person relating to the acquisition of any capital stock or other voting
securities or any substantial portion of the assets of SCA (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Stockholder shall not vote his SCA Common Shares in favor of
any such acquisition structured as a merger, consolidation, or share exchange.
The Stockholder and SCA shall notify Snyder immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
ARTICLE 8
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing:
8.1 General. In the event that at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Article 11 below). The Stockholder acknowledges and agrees that
from and after the Closing, the
-27-
<PAGE> 29
Surviving Corporation and Snyder will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to SCA.
8.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving SCA, each of the other Parties will cooperate
with him and his counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Article 11
below).
8.3 Transition. The Stockholder will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of SCA from maintaining the
same business relationships with the Surviving Corporation after the Closing as
it maintained with SCA prior to the Closing.
8.4 Confidentiality. The Stockholder will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
Snyder or destroy, at the request and option of Snyder, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession. In the event that the Stockholder is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, the Stockholder will notify Snyder
promptly of the request or requirement so that Snyder may seek an appropriate
protective order or waive compliance with the provisions of this Section 8.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Stockholder is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
then the Stockholder may disclose the Confidential Information to such
tribunal; provided, however, that the disclosing Stockholder shall use his best
efforts to obtain, at the request of Snyder, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Snyder shall designate.
8.5 Covenant Not to Compete.
(a) For a period of five years from and after the Closing Date
(the "Restricted Period"), except as may otherwise be agreed in writing by
Snyder and the Surviving Corporation, the Stockholder agrees to refrain, alone,
or as a partner, member, employee or agent of any partnership, or as an
officer, employee, agent, director, stockholder or investor of any corporation
(except as to not more than two percent (2%) of the outstanding stock of any
corporation the securities of which are traded on a regular basis on a
nationally recognized securities exchange or quoted on a regular basis on the
automated quotation system of the National Association of
-28-
<PAGE> 30
Securities Dealers, Inc. and except for any Snyder Common Shares), or in any
other individual or representative capacity, from directly or indirectly
owning, managing, operating or controlling, or participating in the ownership,
management, operation or control of, or working for or providing consulting
services (including, without limitation, consulting services without fee or
other compensation) to, or permitting the use of his name by, or lending money
to, any business or activity within the United States which is or which becomes
during the Restricted Period directly or indirectly engaged in any business
that is the same or similar to any of the businesses conducted by the Surviving
Corporation as of the Closing Date.
(b) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 8.5 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
8.6 Non-solicitation.
(a) The Stockholder and any entity controlled by him or with which
it is associated (as the terms "control" and "associate" are defined under the
Securities Exchange Act) shall not, during the Restricted Period, directly or
indirectly, solicit, interfere with, hire, offer to hire or induce any person,
who is or was an officer or employee of SCA or any Affiliate of SCA (other than
secretarial and clerical personnel) during the 12-month period prior to the
date hereof, to discontinue his or her relationship with SCA or the Surviving
Corporation or such Affiliate or to accept employment by, or enter into a
business relationship with, any other entity or person.
(b) The Stockholder and any entity controlled by him or with which
he is associated (as the terms "control" and "associate" are defined under the
Securities Exchange Act) shall not, during the Restricted Period, directly or
indirectly, (i) solicit, interfere with, induce or entice away any person or
entity that is or was a client, customer or agent of SCA or any Affiliate
during the 12-month period prior to the date hereof, or (ii) in any manner
persuade or attempt to persuade any such person or entity (A) to discontinue a
business relationship with SCA or the Surviving Corporation or such Affiliate,
or (B) to enter into a business relationship with any other entity or person
which would be detrimental to SCA or the Surviving Corporation in any respect.
8.7 Snyder Common Shares. Each certificate issued to the
Stockholder representing the Snyder Common Shares will be imprinted with a
legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN
RELIANCE UPON THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION
4(2) OF THE 1933 ACT AND
-29-
<PAGE> 31
REGULATION D OF THE RULES AND REGULATIONS PROMULGATED UNDER THE 1933
ACT, AND IN RELIANCE UPON THE REPRESENTATION BY THE HOLDER THAT THEY
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
RESALE OR FURTHER DISTRIBUTION. SUCH SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, DELIVERED AFTER SALE, HYPOTHECATED, NOR WILL ANY ASSIGNEE
OR ENDORSEE HEREOF BE RECOGNIZED AS AN OWNER HEREOF BY THE ISSUER FOR
ANY PURPOSE, UNLESS A REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SHARES SHALL THEN BE IN
EFFECT OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL OF THE
ISSUER.
If Stockholder desires to transfer any of the Snyder Common Shares
received in connection with this Merger, other than in a registered offering or
pursuant to a sale which counsel for Snyder confirms is in compliance with Rule
144 of the Securities Act, Stockholder must first furnish Snyder with (i) a
written opinion satisfactory to Snyder in form and substance from counsel
reasonably satisfactory to Snyder to the effect that the Stockholder may
transfer the Snyder Common Shares as desired without registration under the
Securities Act and (ii) a written undertaking executed by the desired
transferee reasonably satisfactory to Snyder in form and substance agreeing to
be bound by the restrictions on transfer contained herein.
8.8 Certain Tax Matters.
(a) Tax Periods Ending on or Before the Closing Date. Snyder
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns, if any, for SCA for all periods ending on or prior to the Closing Date
which are filed after the Closing Date. Snyder shall permit the Stockholder to
review and comment on each such Tax Return described in the preceding sentence
prior to filing. The Stockholder acknowledges that he is liable for Taxes, if
any, not accrued on the June 30 Balance Sheet of SCA with respect to such
periods.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Snyder shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of SCA for Tax periods which begin before the Closing
Date and end after the Closing Date. The Stockholder acknowledges that he is
liable for the portion of such Taxes, if any, not accrued on the June 30
Balance Sheet which relates to the portion of such Taxable period ending on the
Closing Date. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates
to the portion of such Taxable period ending on the Closing Date shall (x) in
the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (y) in the case of any Tax
based upon or related to income or receipts be deemed equal to the amount which
-30-
<PAGE> 32
would be payable if the relevant Taxable period ended on the Closing Date. Any
credits relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of SCA.
(c) Cooperation on Tax Matters.
(i) Snyder, SCA and the Stockholder shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Stockholder agrees (A) to retain all books
and records with respect to Tax matters pertinent to SCA relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Snyder, any extensions
thereof) of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (B) to give
the other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so request,
Snyder or the Stockholder, as the case may be, shall allow the other party to
take possession of such books and records.
(ii) Snyder and the Stockholder further agree,
upon request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Stockholder when due, and the Stockholder will, at his own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees.
8.9 Continuity of Interest. The Stockholder does not intend to
dispose of any of the Snyder Common Shares received in the transaction in a
manner that would cause the transaction to violate the continuity of
stockholder interest requirement set forth in Treas. Reg. Section 1.368-1(b).
8.10 Share Consideration. The Stockholder intends to retain at
least one-half of the Snyder Common Shares received by the Stockholder on the
Closing Date for a period of 365 days following the Closing Date.
8.11 Listing. Snyder shall use its best efforts to effect, at or
before the issuance of any Snyder Common Shares issued pursuant to Section 2.1,
authorization for listing or quotation of such Snyder Common Shares on the
NYSE, subject to official notice of issuance.
-31-
<PAGE> 33
8.12 Pooling of Interests. Neither the Stockholder nor SCA shall
not take any action which to their knowledge would prevent the transactions
contemplated by this Agreement from being accounted for as a pooling of
interests for financial reporting purposes.
8.13 Assignment of Receivables. In the event that Snyder makes,
and is paid by the Stockholder with respect to, an indemnity claim under
Section 11.1 hereof based on the inaccuracy of any of the representations
contained in Section 5.16 hereof, including a claim based on the
uncollectibility of any notes or accounts receivable of SCA, then Snyder agrees
to assign to the Stockholder the accounts receivable that have given rise to
the claim (but only in a face amount equal to the amount that Snyder has
received from the Stockholder in connection with such claim).
ARTICLE 9
CONDITIONS TO OBLIGATION TO CLOSE
9.1 Conditions to Each Party's Obligation. The respective
obligations of Snyder, SAC, SCA and the Stockholder to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at
or prior to the Closing Date of each of the following conditions, which
conditions may be waived upon the written consent of Snyder and the
Stockholder:
(a) Governmental Approvals. The Parties shall have received all
material authorizations, consents, and approvals of governments and
governmental agencies, if any, required in connection with the consummation of
this Agreement.
(b) No Injunction or Proceedings. There shall not be in effect
any action, suit, or proceeding pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge that would, in the
reasonable judgment of Snyder or SCA, (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of Snyder to own the capital stock of the Surviving
Corporation, (D) affect adversely the right of the Stockholder to own the
capital stock of Snyder, or (E) affect adversely the right of the Surviving
Corporation or Snyder to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge is in effect).
(c) No Suspension of Trading, Etc. At the Effective Date, there
shall be no suspension of trading in Snyder Common Shares on the NYSE,
declaration of a banking moratorium by federal or state authorities or any
suspension of payments by banks in the United States (whether mandatory or not)
or of the extension of credit by lending institutions in the United States, or
commencement of war or other international, armed hostility or national
calamity directly or indirectly involving the United States, which war,
hostility or calamity (or any material acceleration or worsening thereof), in
the sole judgment of Snyder, would have
-32-
<PAGE> 34
a Material Adverse Effect on SCA or, in the sole judgment of the Stockholder,
would have a Material Adverse Effect on Snyder.
(d) Registration Rights Agreement. The registration rights
agreement, in substantially the form attach hereto as Exhibit B, shall have
been executed and delivered by the parties thereto.
(e) Escrow Agreement. Snyder and the Stockholder shall have
executed and delivered counterparts of the Escrow Agreement in the form
attached hereto as Exhibit C, together with any counterparts signed by the
Escrow Agent and blank stock powers executed by the Stockholder with respect to
the Snyder Common Shares to be held in the Escrow Deposit.
9.2 Conditions to Obligation of Snyder and SAC. The obligations
of Snyder and SAC to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) the Stockholder shall have delivered to Snyder and SAC the
stock certificate representing the SCA Common Shares duly endorsed in blank;
(b) the Stockholder and SCA shall have delivered to Snyder and SAC
a certificate to the effect that:
(i) the representations and warranties set forth
in Article 4 and Article 5 above are true and correct in all material respects
at and as of the Closing Date;
(ii) the Stockholder and SCA have performed and
complied with all of their covenants hereunder in all material respects at and
as of the Closing Date; and
(iii) no action, suit, or proceeding is pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge that
would (A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely the right of Snyder
to own the capital stock of the Surviving Corporation, or (D) affect adversely
the right of the Surviving Corporation to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
is in effect);
(c) Snyder and SAC shall have received an opinion dated as of the
Closing Date from Schoenberg, Fisher, Newman & Rosenberg, Ltd., counsel to the
Stockholder and SCA, substantially in the form set out in Exhibit D;
(d) Snyder and SAC shall have received an opinion from KPMG Peat
Marwick, certified public accountants for SCA and the Stockholder, addressed to
Snyder, and dated as of
-33-
<PAGE> 35
the Closing Date, to the effect that SCA is eligible to participate in a
transaction to be accounted for as a pooling of interest for financial
reporting purposes.
(e) The Stockholder shall have certified that the written
assurances previously provided to Snyder's accountants, Arthur Andersen LLP, by
the Stockholder regarding the ability of SCA to participate in a transaction to
be accounted for as a pooling of interest for financial reporting purposes
continue to be true and accurate as of the Closing Date;
(f) Snyder shall have received the resignations, effective as of
the Closing, of each director and officer of SCA other than those whom Snyder
shall have specified in writing prior to the Closing;
(g) Snyder shall have received satisfactory evidence that all
bonus plans under which officers, directors or employees of SCA are
beneficiaries, except those that are contractually committed and disclosed on
Schedule 9.2(g) hereof, have been terminated as of the Closing Date; and
(h) the Stockholder shall have delivered to Snyder any consents
from the third parties set forth in the Disclosure Schedule in connection with
Section 42 and Section 5.4.
Snyder may waive any condition specified in this Section 9.2 if it executes a
writing so stating at or prior to the Closing.
9.3 Conditions to Obligation of the Stockholder. The obligation
of the Stockholder to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) Snyder and SAC shall have delivered to the Stockholder a
certificate setting forth the resolutions adopted by Snyder's Board of
Directors authorizing the execution and performance of this Agreement by Snyder
and to the effect that:
(i) the representations and warranties set forth
in Article 6 above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) Snyder and SAC shall have performed and
complied with all of its covenants hereunder in all material respects through
the Closing; and
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
-34-
<PAGE> 36
(b) the Stockholder shall have received an opinion dated as of the
Closing Date from Shaw, Pittman, Potts & Trowbridge, counsel to Snyder,
substantially in the form set out in Exhibit F.
(c) At Closing, SCA or Snyder shall pay to Alex. Brown and Sons
Incorporated the amount of $971,072 in cash representing the payment in full of
the transaction fee and all out-of-pocket expenses pursuant to the terms of the
Alex. Brown engagement letter dated March 31, 1997.
The Stockholder may waive any condition specified in this Section 9.3 if he
executes a writing so stating at or prior to the Closing.
ARTICLE 10
TERMINATION
10.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by the Stockholder or the stockholder of
SAC, respectively, by the mutual written consent of Snyder and the Stockholder.
10.2 Termination by Either Snyder or Stockholder. This Agreement
may be terminated and the Merger may be abandoned (a) by action of the Board of
Directors of Snyder in the event of a failure of a condition to the obligations
of Snyder and SAC, respectively, set forth in Section 9.2 of this Agreement
which remains unfulfilled as of July 21, 1997; (b) by the Stockholder in the
event of a failure of a condition to the obligations of the Stockholder set
forth in Section 9.3 of this Agreement which remains unfulfilled as of July 21,
1997; or (c) if a United States federal or state court of competent
jurisdiction or United States federal or state governmental agency shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such other, decree, ruling or other action shall have
become final and non-appealable; and provided, in the case of a termination
pursuant to clause (a) or (b) above, that the terminating party shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
referred to in said clause.
10.3 Effect of Termination and Abandonment. In the event of
termination of this Agreement pursuant to this Article 10, no party hereto (or
any of its directors or officers) shall have any liability or further
obligation to any other party to this Agreement to proceed with the Closing,
except that nothing herein will relieve any party from liability for any breach
of this Agreement.
-35-
<PAGE> 37
ARTICLE 11
INDEMNIFICATION
11.1 Indemnity Obligations of the Stockholder. Subject to Section
11.4 and Section 11.5, the Stockholder hereby agrees to indemnify and hold
Snyder and the Surviving Corporation harmless from, and to reimburse Snyder and
the Surviving Corporation for, any Snyder Indemnity Claims arising under the
terms and conditions of this Agreement. For purposes of this Agreement, the
term "Snyder Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, obligation, suit, action, fee, cost or expense of any nature
whatsoever resulting from (i) any breach of any representation and warranty of
the Stockholder or SCA which is contained in this Agreement or any Schedule,
Exhibit or certificate delivered pursuant thereto; (ii) any breach or
non-fulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Stockholder or SCA which are contained in or made
pursuant to this Agreement; and (iii) all interest, penalties and costs and
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) arising out of or related to any indemnification made under this
Section 11.1.
11.2 Indemnity Obligations of Snyder. Snyder hereby agrees to
indemnify and hold the Stockholder harmless from, and to reimburse the
Stockholder for, any Stockholder Indemnity Claims arising under the terms and
conditions of this Agreement. For purposes of this Agreement, the term
"Stockholder Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, suit, action, fee, cost or expense of any nature whatsoever incurred
by the Stockholder resulting from (i) any breach of any representation and
warranty of Snyder which is contained in this Agreement or any Schedule,
Exhibit or certificate delivered pursuant thereto; (ii) any breach or
non-fulfillment of, or failure to perform, any of the covenants, agreements or
undertakings of Snyder which are contained in or made pursuant to the terms and
conditions of this Agreement; and (iii) all interest, penalties, costs and
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) arising out of or related to any indemnification made under this
Section 11.2.
11.3 Notification of Claims. Subject to the provisions of Section
11.4 and Section 11.5, in the event of the occurrence of an event which any
party asserts constitutes a Snyder Indemnity Claim or a Stockholder Indemnity
Claim, as applicable, such party shall provide the indemnifying party with
prompt notice of such event and shall otherwise make available to the
indemnifying party all relevant information which is material to the claim and
which is in the possession of the indemnified party. If such event involves
the claim of any third party (a "Third-Party Claim"), the indemnifying party
shall have the right to elect to join in the defense, settlement, adjustment or
compromise of any such Third-Party Claim, and to employ counsel to assist such
indemnifying party in connection with the handling of such claim, at the sole
expense of the indemnifying party, and no such claim shall be settled, adjusted
or compromised, or the defense thereof terminated, without the prior consent of
the indemnifying party unless and until the indemnifying party shall have
failed, after the lapse of a reasonable period of time, but in no event more
than thirty (30) days after written notice to it of the Third-Party Claim, to
join in the defense, settlement, adjustment or compromise of the same. An
indemnified party's failure to give timely notice or to furnish the
indemnifying party with any relevant data and documents in
-36-
<PAGE> 38
connection with any Third-Party Claim shall not constitute a defense (in part
or in whole) to any claim for indemnification by such party, except and only to
the extent that such failure shall result in any material prejudice to the
indemnifying party. If so desired by any indemnifying party, such party may
elect, at such party's sole expense, to assume control of the defense,
settlement, adjustment or compromise of any Third-Party Claim, with counsel
reasonably acceptable to the indemnified parties, insofar as such claim relates
to the liability of the indemnifying party, provided that such indemnifying
party shall obtain the consent of all indemnified parties before entering into
any settlement, adjustment or compromise of such claims, or ceasing to defend
against such claims, if as a result thereof, or pursuant thereto, there would
be imposed on an indemnified party any material liability or obligation not
covered by the indemnity obligations of the indemnifying parties under this
Agreement (including, without limitation, any injunctive relief or other
remedy). In connection with any Third-party claim that any indemnifying party
has elected to assume the control of as contemplated by the preceding sentence,
the indemnified party shall have the ability to employ counsel to monitor the
defense of such claim; provided that the costs of such counsel shall be borne
by the indemnified party unless the indemnifying party is asserting that any
portion of such claim is not covered by the indemnity obligation, in which case
the indemnifying party shall also bear the costs of counsel for the indemnified
party. In connection with any Third-Party Claim, the indemnified party, or the
indemnifying party if it has assumed the defense of such claim pursuant to the
preceding sentence, shall diligently pursue the defense of such Third-Party
Claim.
11.4 Survival. All representations and warranties, and, except as
otherwise provided in this Agreement, all covenants and agreements of the
parties contained in or made pursuant to this Agreement, and the rights of the
parties to seek indemnification with respect thereto, shall survive the Closing
Date. Such representations and warranties, and the rights of the parties to
seek indemnification with respect thereto, shall expire on the earlier of (i)
the date of issuance of the report of and Snyder's independent accountants with
respect to the audited consolidated financial statements of the Surviving
Corporation and Snyder for the fiscal year ending December 31, 1997 or (ii) the
first anniversary of the Closing Date.
11.5 Limitations. Any claim by an indemnified party against any
indemnifying party under this Agreement shall be payable by the indemnifying
party only in the event, and to the extent, that the accumulated amount of the
claims in respect of such indemnifying party's obligations to indemnify under
this Agreement shall exceed $250,000 in the aggregate (the "Indemnification
Threshold"). Notwithstanding the foregoing, any breaches of Section 5.7(b) or
any covenant or obligation with respect to a misstatement of the Transaction
Costs shall not be subject to the Indemnification Threshold.
11.6 Escrow. The Stockholder shall deposit into escrow, with the
Escrow Agent named in the Escrow Agreement, ten percent of the Snyder Common
Shares (such deposit being referred to as the "Escrow Deposit") issued in
connection with the Merger. Until such time as payment of the aggregate amount
of Snyder Indemnity Claims in excess of the Indemnification Threshold which
have been definitively resolved to be payable in favor of Snyder (or the
Surviving Corporation for the benefit of Snyder or SAC) shall have exhausted
the Escrow Deposit, all Snyder Indemnity Claims shall be satisfied first out of
the Snyder Common Shares
-37-
<PAGE> 39
held in the Escrow Deposit, as further provided under the terms of the Escrow
Agreement. For purposes hereof, all Snyder Common Shares returned to Snyder in
settlement of any Snyder Indemnity Claims under the Escrow Agreement shall be
valued at the Snyder Share Price. At such time as the aggregate amount of
Snyder Indemnity Claims in excess of the Indemnification Threshold which have
been definitively resolved to be payable in favor of Snyder (or the Surviving
Corporation for the benefit of Snyder or SAC) shall exceed the Escrow Deposit,
the Stockholder shall thereafter be liable to Snyder (or the Surviving
Corporation for the benefit of Snyder or SAC) for such claims. To the extent
not inconsistent with pooling of interest restrictions, the liability of the
Stockholder for Snyder Indemnity Claims after exhaustion of the Escrow Deposit
may be satisfied, at the election of the Stockholder, through (i) the delivery
of Snyder Common Shares to Snyder, such shares to be valued at the Snyder Share
Price, (ii) the payment of cash or (iii) any combination of such Snyder Common
Shares (valued at the Snyder Share Price) and cash.
11.7 Snyder Payment of Stockholder Indemnity Claims.
Notwithstanding anything to the contrary herein, any liability of Snyder and
SAC under this Agreement for Stockholder Indemnity Claims shall be satisfied
solely through the issuance of additional Snyder Common Shares, such additional
Snyder Common Shares to be valued at the Snyder Share Price.
11.8 Aggregate Indemnification Obligation. Notwithstanding
anything contained in this Article 11 to the contrary, the indemnification
obligations of the Stockholder shall not exceed $20,000,000.
ARTICLE 12
MISCELLANEOUS
12.1 Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of Snyder and the Stockholder; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its best efforts to
advise the other Parties prior to making the disclosure). Subject to the
foregoing proviso, the Parties shall cooperate in the preparation of a joint
press release to be issued subsequent to the Closing.
12.2 No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
12.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
-38-
<PAGE> 40
12.4 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his rights, interests, or obligations hereunder without the prior
written approval of Snyder and the Stockholder; provided, however, that Snyder
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases Snyder nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
12.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
-39-
<PAGE> 41
If to SCA or the Stockholder:
Steven M. Kaplan
4338 DiPaolo Center
Glenview, IL 60025
Telecopy: (847) 296-7041
With a copy to:
Schoenberg, Fisher, Newman & Rosenberg, Ltd.
222 South Riverside Plaza
Suite 2100
Chicago, IL 60606
Attention: Bruce E. Bell
Telecopy: (312) 648-1212
If to Snyder and SAC:
Mr. A. Clayton Perfall
Chief Financial Officer
Snyder Communications, Inc.
6903 Rockledge Drive, 15th Floor
Bethesda, Maryland 20817
Telecopy: (301) 571-6271
With a copy to:
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
Attn: Thomas H. McCormick, Esq.
Telecopy: (202) 663-8007
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.
12.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE
-40-
<PAGE> 42
OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.
12.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Snyder and the Stockholder. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
12.11 Expenses. Each of the Parties will bear his, her or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
12.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
12.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
12.14 Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
-41-
<PAGE> 43
forth in Section 12.15 below), in addition to any other remedy to which they
may be entitled, at law or in equity.
12.15 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the State of Delaware, in
any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court.
12.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
-42-
<PAGE> 44
SNYDER:
SNYDER COMMUNICATIONS, INC.
By: /s/ A. Clayton Perfall
--------------------------------------------
A. Clayton Perfall
Chief Financial Officer
SAC: SNYDER ACQUISITION CORP.
By: /s/ A. Clayton Perfall
--------------------------------------------
A. Clayton Perfall
Vice President
SCA:
SAMPLING CORPORATION OF AMERICA
By: /s/ Steven M. Kaplan
--------------------------------------------
Steven M. Kaplan
President
STOCKHOLDER:
/s/ Steven M. Kaplan
-----------------------------------------------
Steven M. Kaplan
-43-
<PAGE> 1
[SNYDER COMMUNICATIONS, INC. LETTERHEAD]
FOR IMMEDIATE RELEASE
Contact:
Snyder Communications, Inc. Dewe Rogerson Inc.
Clay Perfall Jeffrey Luth
Chief Financial Officer Media: Kathryn Corbett
(301) 571-6270 (212) 688-6840
SNYDER COMMUNICATIONS COMPLETES AMERICAN LIST CORP. ACQUISITION
EXPANDS SNYDER'S ACCESS TO YOUTH MARKET; COMBINED DATABASE TO EXCEED 50 MILLION
(Bethesda, MD, July 11, 1997) -- Snyder Communications, Inc. (NYSE: SNC) and
American List Corp. (AMEX: AMZ) today announced that Snyder has completed the
previously announced acquisition of American List in a transaction which will
be accounted for as a pooling of interests. Snyder acquired American List in
exchange for approximately 5.1 million shares of Snyder stock. The transaction
is expected to be accretive to Snyder's 1997 and 1998 earnings per share.
Trading of American List common stock on the American Stock Exchange will cease
as of the close of business on July 11, 1997. American List shareholders will
receive documentation instructing them how to exchange certificates formerly
representing shares of American List common stock for Snyder common stock.
Based in Mineola, NY, American List reported net revenues of $18.5 million and
net income of $6.7 million for the fiscal year ended February 28, 1997.
American List will remain headquartered in Mineola and will operate as a
division of Snyder Communications. Snyder has entered into employment
agreements with all key members of American List's management group, including
Martin Lerner, its President and founder.
"The acquisition of American List brings Snyder an additional proprietary
database that includes more than 30 million students and young adults, and it
is highly complementary to our strategy of securing delivery channels and
access to high-value market segments," commented Daniel M. Snyder, Chairman and
Chief Executive Officer of Snyder Communications. "The combination of Snyder
and American List creates a targeted marketing organization with a database
exceeding 50 million of the most sought-after consumers, including youths;
multicultural consumers; people experiencing lifestyle changes, including newly
diagnosed diabetics and heart patients, and working parents."
-more-
<PAGE> 2
Snyder Communications, Inc. Page 2
"We are very enthusiastic about this combination and expect to derive
significant operating synergies in two broad ways. First, we will be in a
strong position to offer existing customers of American List a degree of
integrated, targeted marketing that is simply unmatched in the industry.
American List earned revenue of more than $18 million last year from the rental
of its databases. The amounts spent by its clients to design and implement
direct marketing campaigns using that data, however, significantly eclipsed
that amount. It is our intention, working in concert with American List, to
provide a greater portion of these implementation services to American List's
key clients. Second, we expect to leverage our access to other proprietary
consumer data by capitalizing on American List's strength in marketing database
resources through its own client relationships."
Martin Lerner, President of American List, said, "We are excited to be in
partnership with Snyder, a company that shares our commitment to growth and
service. Joining forces with Snyder presents a unique opportunity for American
List to expand the size and reach of our business, and enhance the value of the
services we offer our customers. We look forward to working with the Snyder
management team to ensure that the synergistic benefits of this combination are
achieved rapidly."
American List Corp. develops, maintains and markets one of the largest and most
comprehensive databases of high school, college, and pre-school through junior
high school students in the United States, currently containing information on
approximately 30 million individuals. The Company rents database lists to
direct marketers for use primarily in direct mail and telemarketing programs.
During the fiscal year ended February 28, 1997, the Company rented its lists to
approximately 3,800 customers, including financial institutions, list brokers
and advertising agencies, retailers and educational institutions.
Snyder Communications is a leading worldwide provider of fully integrated
outsourced marketing solutions for the Fortune 500. Snyder identifies
high-value, targeted consumers; designs and implements marketing programs to
reach them; initiates and closes sales on behalf of its clients; and provides
customer care and retention services. Snyder's resources include proprietary
databases of targeted consumers and small business groups, marketing program
consultants, field sales representatives, inbound and outbound teleservice
representatives, proprietary product sampling programs, WallBoard(R)
information displays and direct mail and fulfillment capabilities. Snyder has
over 4,000 employees and representatives in offices throughout the United
States and the United Kingdom.
# # #
