<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
OCTOBER 3, 1997
Date of Report (Date of earliest event reported)
COMMISSION FILE NUMBER: 0-21499
SPECIALTY CATALOG CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3253301
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
21 BRISTOL DRIVE
SOUTH EASTON, MASSACHUSETTS 02375
(Address of principal executive offices)
TELEPHONE NUMBER (508) 238-0199
(Registrant's telephone number, including area code)
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<PAGE>
SPECIALTY CATALOG CORP.
INDEX
Page No.
ITEM 2. ACQUISITION OF ASSETS 3 - 4
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS 4
SIGNATURES 5
2
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
On October 3, 1997, Daxbourne International Limited (the "Buyer"), a wholly
owned subsidiary of SC Corporation, which in turn is the principal operating
subsidiary of Specialty Catalog Corp. (the "Registrant"), accepted an offer to
acquire the assets of Daxbourne Limited, Postinstant Limited and MC Hairways
Limited (collectively, the "Sellers").
The Sellers are an affiliated group, known collectively as "The Daxbourne
Group". The Daxbourne Group is a leading retailer of women's wigs, hairpieces
and related products in the U.K. The Daxbourne Group distributes wigs and
hairpieces under its Jacqueline Collection, Pretty Woman and Natural Image
brands, and has established a strong presence in the U.K. through catalog,
retail and wholesale distribution channels. The Sellers had net sales of
approximately 3,120,000(Pounds) ($4,993,000) for its fiscal year ended April 30,
1997.
The Daxbourne Group retained the services of Livingstone Guarantee to
search for a buyer for the company. Dawnay, Day Corporate Finance Limited
("Dawnay Day") received a copy of the Offering Memorandum prepared by
Livingstone Guarantee, and referred the potential acquisition to, among other
potential buyers, the Registrant. Mr. Guy Naggar, Chairman of Dawnay, Day and
Co. Limited, the parent of Dawnay Day, owns a significant portion of the
Registrant's common stock and is also a member of the Registrant's board of
directors.
Once the Registrant was identified as a potential buyer, the Registrant
entered into an agreement whereby Dawnay Day agreed to act as the investment
advisor for the Registrant in connection with the transaction. Dawnay Day's fee
for initiating the transaction and acting as the Registrant's advisor, which was
negotiated on an arms-length basis, was based on the Lehman formula and would be
paid only on completion of a transaction. Based on the purchase price, the fee
amounted to 112,500(Pounds) ($180,000) and was paid by the Registrant upon
completion of the transaction. Dawnay Day was also reimbursed for its out-of-
pocket expenses, which amounted to 622(Pounds) ($995). There were no other
material relationships relating to this transaction.
As part of this transaction, the Registrant has acquired substantially all
of the inventory, real property, physical plant and equipment and other assets
used in connection with the Sellers' business. Such assets were used in the
ordinary course of the Sellers' business as described above, and the Registrant
anticipates that the Buyer will continue such uses.
As aggregate consideration for this acquisition, the Company (i) paid
2,250,000(Pounds) ($3,600,000) at the closing of the transaction (the
"Closing"), (ii) agreed to assume certain liabilities of the Sellers totaling
approximately 162,000(Pounds) ($259,200), and (iii) agreed to pay
300,000(Pounds) ($480,000), without interest, on the one year anniversary of the
closing. Such aggregate consideration is subject to possible increase or
decrease upon the completion of certain accounts within three months of the
Closing to determine the working capital at September 28, 1997.
3
<PAGE>
The Registrant financed this acquisition through its senior facility with
BankBoston N.A., which was increased from an $11 million U.S. facility to a $15
million combined U.S. and U.K. facility. The amount outstanding under this
facility prior to the closing of the transaction was approximately $6,200,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The financial statements of the acquired company and the Pro Forma
financial statements shall be filed via amendment to this current report on Form
8-K within sixty days hereof. The following documents are filed as exhibits to
this current report on Form 8-K.
Exhibit No. Description
----------- -----------
2.1 Terms of Offer made by Daxbourne Limited,
Postinstant Limited and MC Hairways Limited to
Daxbourne International Limited.
2.2 The Offer Letter from Daxbourne Limited,
Postinstant Limited and MC Hairways Limited
addressed to Daxbourne International Limited.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPECIALTY CATALOG CORP.
Dated: October 17, 1997 /s/ Steven L. Bock
------------------------------------
Steven L. Bock
Chairman and Chief Executive Officer
5
<PAGE>
EXHIBIT 2.1
DATED 1997
- ----------------------------------------------------------------------------
TERMS OF OFFER MADE BY
DAXBOURNE LIMITED, POSTINSTANT LIMITED
AND MC HAIRWAYS LIMITED
to
DAXBOURNE INTERNATIONAL LIMITED
--------------------------
for the sale and purchase of the
assets and certain liabilities
of Daxbourne Limited
and its subsidiary companies
--------------------------
- --------------------------------------------------------------------------------
Dibb Lupton Alsop
125 London Wall
LONDON
EC2Y 5AE
Tel: 0345 26 27 28
Fax: 0171 600 1650
<PAGE>
CONTENTS
Page Number
1 DEFINITIONS AND INTERPRETATION 1
------------------------------
2 SALE AND PURCHASE OF BUSINESS 8
-----------------------------
3 GUARANTEE 8
---------
4 ACCEPTANCE 8
----------
5 COMPLETION 9
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6 COMPLETION ACCOUNTS 10
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7 ADJUSTING PAYMENT 10
-----------------
8 WARRANTIES 10
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9 VENDORS' PROTECTION 11
-------------------
10 CONTRACTS 13
---------
11 CREDITORS AND LIABILITIES 13
-------------------------
12 DEBTS 15
-----
13 EMPLOYEES 15
---------
14 PROPERTIES 17
----------
15 USE OF VENDORS' NAMES 17
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16 VALUE ADDED TAX 17
---------------
17 BUSINESS RECORDS 18
----------------
18 VENDORS' COVENANTS 18
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19 FURTHER ASSURANCE 20
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20 ANNOUNCEMENTS 20
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21 COSTS 20
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22 SUCCESSORS AND ASSIGNMENT 20
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23 ENTIRE AGREEMENT 21
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24 TIME FOR PERFORMANCE 21
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<PAGE>
25 NOTICES 21
-------
26 MEMORANDUM CONTINUES IN FORCE 21
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27 SEVERABILITY 21
------------
28 WAIVER 21
------
29 VARIATIONS 22
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30 GOVERNING LAW 22
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SCHEDULE 1 23
- ----------
Contracts 23
SCHEDULE 2
- ----------
The Warranties 24
1 Disclosure of Information 24
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2 Capacity and Ownership 24
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3 Accounts 25
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4 Position since Accounts Date 26
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5 Taxation 27
--------
6 Business Name 28
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7 Licences and Consents 28
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8 Properties and Environmental Matters 28
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9 Assets 32
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10 Debts, Stock and Work in Progress 33
---------------------------------
11 Insurance 33
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12 Records 34
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13 Confidential Information 34
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14 Intellectual Property 34
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15 Computer Systems 35
----------------
16 Employees 36
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17 Contracts 38
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18 Trading 39
-------
19 Joint Ventures Etc. 40
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20 Litigation Offences and Compliance with
---------------------------------------
Statures 40
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21 Restrictive Agreements 40
----------------------
22 Computer Systems - Millennium Compliance 41
----------------------------------------
SCHEDULE 3 43
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PART 1 43
------
Completion Accounts 43
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PART 2 44
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Accounting policies to be adopted in the Completion
---------------------------------------------------
Accounts 44
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SCHEDULE 4 45
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PART 1 45
------
The Properties 45
--------------
PART II 45
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Terms and conditions of sale of the Properties 45
<PAGE>
AGREED FORM DOCUMENTS
- ---------------------
1 Accounts
2 Completion Board Minutes of the Purchaser and the Guarantor
3 Management Accounts
4 Release(s) of bank guarantees and charges
5 Letter(s) of non-crystallisation
6 Deed of Guarantee
7 Consultancy Agreement
8 Deed of Covenant
<PAGE>
THIS OFFER IS MADE BY
(1) DAXBOURNE LIMITED (Company No. 1320298), POSTINSTANT LIMITED (Company No.
1559076) and MC HAIRWAYS LIMITED (Company No. 2758010) ("THE VENDORS"); to
(2) DAXBOURNE INTERNATIONAL LIMITED (Company No. 3369640) ("THE PURCHASER")
A. This document ("the Memorandum") records the terms of an offer for the sale
and purchase of the Business as a going concern and certain of the assets
and liabilities used or incurred in connection with the Business.
B. The Purchaser shall acquire the Business as a going concern with effect
from the start of business on 29 September 1997. In determining the
consideration hereunder the Buyer will take over all receivables and will
assume all undischarged liabilities as of that date. The purchase price
reflects the cash that is estimated to be required to discharge such
liabilities. The parties shall ensure that banking, bookkeeping and
accounting arrangements are made to reflect this economic effect.
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this document the following words and expressions shall (except
where the context otherwise requires) have the following meanings:
Accountants means the Vendors' Accountants and the
Purchaser's Accountants
Accounts means the audited accounts of Daxbourne
and the Subsidiaries comprising (inter
alia) the balance sheet and the profit
and loss account for the period as at and
to the Accounts Date the notes and the
cash flow statement relating thereto and
the reports of the directors and auditors
thereon
Accounts Date means 30 April 1997
Assets means all the assets, contracts and
rights owned or used in connection with
the Business including without limitation
the Stock, Fixed and Loose Plant and
Machinery, Goodwill, Debts, the benefit
of insurance claims, Properties,
Intellectual Property but excluding the
Excluded Assets
Business means the entire business of the Vendors,
including without limitation, the sale
and distribution of wigs, hairpieces,
haircare and other products as carried on
by the Vendors at the date of this
document
Business Day means a day other than a Saturday or
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<PAGE>
Sunday on which banks are open for
business in London
Cash means the cash in hand and at bank owned
by the Vendors at the Effective Date
Company or "Daxbourne" means Daxbourne Limited, one of the
Vendors
Companies Acts means the 1985 Act the 1989 Act and the
Companies Consolidation (Consequential
Provisions) Act 1985
Completion means the performance of all the
obligations of the parties hereto set out
in Clause 5
Completion Accounts means the statement of Net Asset Value
as at the Effective Date to be prepared
pursuant to Clause 6 and as agreed or
determined in accordance with the
provisions of Schedule 6
Completion Date means the date hereof
Computer Systems means the computer systems used by or
for the benefit of the Group at the date
hereof, or computer processors,
associated and peripheral equipment,
computer programs, technical and other
documentation and data entered into or
created by the foregoing from time to
time
Confidential means all information concerning or
Information relating to the Business details of
which are not in the public domain
Consideration means the consideration for the Assets
set out in Clause 4
Consulting Agreement means an agreement to be entered into
at Completion between the Purchaser and
Mr. M Stannard
Contracts means all the contracts entered into
on or before the date hereof by the
Vendors in connection with the
Business more particularly described
in Schedule 1
Creditors means persons to whom the
Liabilities are owed
Debtors means persons by whom the Debts are
owed
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Debts means all the book and other debts
arising out of or attributable to the
operation of the Business owed to the
Vendors at the Completion Date
including the right to receive payment
for goods despatched or delivered and
services rendered before the
Completion Date but not invoiced
before such date but excluding all
loans between the Vendors
Deed of Guarantee means the deed containing guarantees
to be given by Mr. M Stannard and S.C.
Corporation in the agreed form
pursuant to Clause 3
Disclosed Scheme(s) means the retirement benefit scheme(s)
details of which are set out in the
Disclosure Letter
Disclosure Letter means the letter of even date from the
Vendors' Solicitors to the Purchaser's
Solicitors relating to the Warranties
together with any documents annexed
thereto
Effective Date means the opening of business of 29
September 1997
Employees means those employees of the Vendors
whose employment is transferred to the
Purchaser and whose names and details
are set out in the agreed bundle
attached to the Disclosure Letter
Encumbrances means any interest or equity of any
person (including, without limitation,
any right to acquire, option or right
of pre-emption, any mortgage, charge,
pledge, lien, assignment,
hypothecation, security interest,
title retention or any other security
agreement or arrangement affecting
property but excluding goods supplied
or to be supplied subject to usual
retention of title provisions), of any
kind (or rights in it)
Excluded Assets means the Cash and Jaguar XJS and
Toyota Celica motor vehicles
registration number MJS 38 and L454
RMG respectively and all shares in the
Subsidiaries and Tax credits
Excluded Employees means Mr. M Stannard and Mrs. V
Stannard
Excluded Liabilities means all those liabilities of the
Vendors at the date hereof in relation
to taxation, VAT,
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pension liabilities contributions and
other obligations in relation to pension
entitlements, all payments referred to in
paragraph 16.6 of the Disclosure Letter
and all fines, costs, claims, penalties,
expenses and interest incurred in
connection therewith
Fixed Plant and Machinery the fixed plant and machinery owned by
the Vendors and used in connection
with the Business and physically
attached to the Properties
Goodwill the goodwill of the Business together
with the exclusive right of the
Purchaser to represent itself as
carrying on the Business in succession
to the Vendors and to carry on the
Business under the Names
Group means Daxbourne and its subsidiary
undertakings as at the Completion Date
and references to a "member of the
Group" or a "Group Member" shall be
construed accordingly
Independent Accountants means Grant Thornton; the Independent
Accountants shall act as experts (not
arbitrators) and their decision
(including as to costs) (except in the
case of manifest error) shall be final
and binding on the parties
Intellectual Property means patents, inventions, know-how,
trade secrets and other confidential
information, registered designs,
copyrights, design rights, rights
affording equivalent protection to
copyright and design rights,
topography rights, trade marks,
service marks, business names, trade
names, moral rights, registration or
an application to register any of the
aforesaid items, rights in the nature
of any of the aforesaid items in any
country, rights in the nature of
unfair competition rights and rights
to sue for passing-off
Liabilities means all liabilities of the Vendors
incurred in connection with the
Business before the Effective Date
other than the Excluded Liabilities
Loose Plant and Machinery all the loose plant equipment
machinery tools motor vehicles
furniture trade utensils and other
chattels owned or used in connection
with the Business at the Effective
-4-
<PAGE>
Date whether or not physically located
at the Properties
Management Accounts means the unaudited balance sheet(s)
and profit and loss account(s) of the
Vendors and the Subsidiaries in the
agreed form (containing year on year
comparisons) as at and for the period
from the day after the Accounts Date
to the end of July 1997 together with
sales figures only for the months of
August and September 1997
Names means the words "Daxbourne", "Natural
Image", "Postinstant", "MC Hairways"
"Jacqueline Collection" "Pretty Woman"
and all other names the subject of
Intellectual Property rights
Net Asset Value means the valuation of net assets of
the Business as at the Effective Date
as shown in the Completion Accounts
Offer means the offer further terms of which
are contained herein
Outstanding Cheques cheques drawn by the Vendors prior to
the Effective Date and unpaid as at
the date hereof
PAYE means tax payable under Section 203
Taxes Act and regulations made
thereunder
Properties means the freehold and leasehold land
and premises described in Schedule 7
Purchaser's Accountants means Deloitte & Touche of Hill House,
1 Little New Street, London EC4A 1TR
Purchaser's Solicitors means Dibb Lupton Alsop of 125 London
Wall London EC2Y 5AE
Sale and Purchase means the agreement formed by the
Agreement acceptance of the Offer
Stock the stock in trade of finished and
unfinished goods raw materials and
work in progress owned by the Vendors
for the purposes of the Business as at
the Completion Date (including items
which although supplied to the Vendors
under reservation of title by the
suppliers are under the control of the
Vendors)
Subsidiaries means Postinstant Limited and MC
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<PAGE>
Hairways Limited
Tax Authority means the Commissioners of Inland
Revenue, the Commissioners of Customs
and Excise, the Contributions Agency,
any local authority or any other
authority, whether of the United
Kingdom or other state (including the
European Union) having the power or
authority to levy or collect tax, as
such term is defined herein
"taxation" includes income tax (including income
or "tax" tax required to be deducted or
withheld from or accounted for in
respect of any payment) corporation
tax (including advance corporation tax
and amounts assessed under the
provisions of Section 419 of the Taxes
Act) capital gains tax estate duty
inheritance tax capital transfer tax
VAT landfill tax excise duties customs
duties and other import duties capital
duty stamp duty reserve tax
development land tax national
insurance contributions insurance
premium tax local rates and taxes the
council tax the National Non-Domestic
Rate and all taxes on gross or net
income profits or gains receipts sales
use occupation franchise value added
personal property and any other tax
duty charge impost withholding
contribution or levy of any nature
whatsoever for the time being charged
assessed levied or payable whether to
any Tax Authority and any penalty
charge fine or interest payable in
connection with any such taxation
Taxation Statutes includes any statute statutory
instrument enactment law by-law
regulation or legislative provision
providing for or imposing any charge
assessment or levy to taxation
including for the avoidance of doubt
any directives and regulations adopted
by the Council of the European
Communities
Taxes Act means the Income and Corporation
Taxes Act 1988
1985 Act means the Companies Act 1985
1989 Act means the Companies Act 1989
VAT means value added tax
VATA means the Value Added Tax Act 1994
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<PAGE>
VAT Regs means the Value Added Tax Regulations
1995 (SI 1995/2518)
Vendors' Accountants means Linington & Company of 83 High
Street, Caterham, Surrey CR3 5UF
Vendors' Solicitors means Curry Ch Hausmann Popeck of 17A
Welbeck Way, London W1M 7PE
Warranties means the representations warranties
and undertakings contained or referred
to in Clause 8 and Schedule 4
Warranty Claim means a claim or claims made in
respect of any breach or breaches of
Warranty
1.2 Any reference in this document to any provision of any Act of
Parliament shall include reference to any subordinate legislation (as
defined in the Interpretation Act 1978) made pursuant thereto and
shall be deemed to be a reference to such Act of Parliament or
subordinate legislation as amended modified or re-enacted and any
reference to any provision of any such Act or subordinate legislation
shall also include where appropriate any provision of which it is a
re-enactment (whether with or without modification).
1.3 In this document words importing the masculine gender only include the
feminine and neuter genders and words importing the singular number
only include the plural and vice versa.
1.4 Unless otherwise stated references to Clauses sub-clauses and
Schedules are references to Clauses and sub-clauses of and Schedules
to this document. The Schedules form part of this document.
1.5 The Index and Clause headings are for ease of reference only and shall
not affect the construction or interpretation of this document.
1.6 References to persons shall include bodies corporate unincorporated
associations and partnerships.
1.7 References to the parties hereto include their respective successors
in title permitted assigns and legal personal representatives.
1.8 Words and expressions defined in or for the purposes of the Companies
Acts and the Taxes Act shall where the context permits bear the same
meanings in this document other than in the Taxation Warranties where
words and expressions defined in or for the purposes of the Taxes Act,
the TCGA, the CAA, any Finance Act or the VATA shall where the context
permits bear the same meanings in the Taxation Warranties.
1.9 A person shall be deemed to be connected with another if that person
is so connected within the meaning of Section 839 of the Taxes Act.
1.10 References to writing shall include typewriting printing lithography
photography telex and fax messages and other modes of reproducing
words in a legible and non-transitory form.
-7-
<PAGE>
1.11 Where any statement is qualified by the expression "to the best of the
knowledge information and belief of the Vendors" or "so far as the
Vendors are aware" or any similar expression it shall relate solely to
the knowledge of Mr. M Stannard who shall be deemed to have knowledge
of:-
1.11.1 anything of which he ought reasonably to have knowledge
given his particular position in and responsibilities to the
Group and his relationship with the business of each member of
the Group; and
1.11.2 anything of which he would have had knowledge had he made
due and careful enquiry immediately before giving the
Warranties.
1.12 Where any statement is qualified by the expressions "so far as the
Vendors are actually aware" or any similar expression relating to the
actual knowledge of the Vendors it shall be deemed to refer to the
------
actual knowledge of Mr. M Stannard having made no enquiries on the
matter to which the statement relates.
1.13 The "agreed form" in relation to any document means the form agreed
between the parties to this document and for the purposes of
identification only initialed by or on behalf of the parties.
2. SALE AND PURCHASE OF BUSINESS
-----------------------------
2.1 Subject to the terms of this document and on the basis of the
Warranties the Vendors shall sell with full title guarantee as a going
concern and the Purchaser shall purchase all of the Assets and the
Business free from all Encumbrances and all with effect from the
opening of business on the Effective Date and together with all rights
of any nature which have become attached to them or accrued in respect
of them.
2.2 The Purchaser shall assume liability to pay to the Creditors the
Liabilities as and when they become due.
2.3 Nothing herein contained shall operate so as to impose on the
Purchaser any obligations or liabilities in respect of other assets or
liabilities of the Vendors except as specifically provided in this
document.
3. GUARANTEE
---------
The parties shall procure that there shall be executed and delivered to
each other on the Completion Date a Deed of Guarantee in the agreed form.
4. ACCEPTANCE
----------
4.1 Acceptance shall be made immediately once the Vendors have completed
their obligations pursuant to clause 5.2 by the payment of the sum of
(Pounds)1,750,000 by electronic funds transfer forthwith on the date
of completion. The Purchaser shall make a further payment of
(Pounds)300,000 on the anniversary of the Completion Date. Each
payment shall be made to the Vendors' solicitors and receipt by them
shall be an absolute discharge to the Purchaser.
4.2 If the Purchaser has issued and served proceedings on the Vendors
specifying precisely the amount claimed in respect of a Warranty Claim
the Purchaser shall (without prejudice to its other rights hereunder)
be entitled to set-off such
-8-
<PAGE>
amount (and no further amounts) against the (Pounds)300,000 to be paid
pursuant to subclause 4.1 provided that any monies withheld which
shall be agreed or determined to be in excess of the amount equal to
satisfy the claim in full shall incur interest at 3% above the base
rate of Barclays Bank PLC from time to time from the date when due
until the date of actual payment.
5. COMPLETION
----------
5.1 Completion of the sale and purchase of the Business and Assets shall
take place on the Completion Date at the office of the Purchaser's
Solicitors.
5.2 At Completion the Vendors shall:-
5.2.1 insofar as they are able to do so permit the Purchaser to assume
the conduct of the Business and possession of those of the
Assets capable of passing by delivery and the Purchaser will
carry on the Business with effect from the Completion Date;
5.2.2 insofar as they are able to do so complete the sale to the
Purchaser of the Properties subject to the terms contained in or
referred to in Schedule 7.
5.2.3 deliver or make available to the Purchaser:-
5.2.3.1 duly executed assignments in the agreed form of the
Intellectual Property Contracts;
5.2.3.2 all lists of customers and suppliers books of account
and records whether stored on hard copy or on computer
and computer programs relating to the Business;
5.2.3.3 all the designs and drawings plans technical and sales
publications advertising material and other technical
and sales matter of the Vendors in relation to the
Business together with any plates blocks negatives and
other like material relating thereto;
5.2.3.4 certified copies of the Special Resolutions to change
the name of the Vendors in accordance with Clause 15;
5.2.3.5 letters of non-crystallisation in the agreed form in
respect of the Assets duly executed by Lloyds Bank Plc
together with duly executed documents referred to in
7.1 of Schedule 4; and
5.2.3.6 the Consultancy Agreement, the Deed of Guarantee and
the Deeds of Covenant (in the agreed form) duly
executed by all parties except the Purchaser; and
5.2.3.7 consents in relation to the Owen Owen and House of
Fraser concessions, the National Health Service
contract and the insurance arrangements in relation to
the Business all in agreed form
-9-
<PAGE>
5.3 Upon fulfillment by the Vendors of their obligations under Clause 5.2
the Purchaser shall deliver to the Vendors duly executed counterparts
of the documents referred to in Clauses 5.2.3.1 and 5.2.3.6.
5.4 The Purchaser shall not be obliged to complete the purchase of any of
the Assets unless the purchase of all the Assets is completed in
accordance with this document.
5.5 The Vendors shall use their best endeavours (including the payment of
all of the landlords costs and expenses) to pursue all requisite
licenses and consents to permit the completion as soon as possible
after the Completion Date of all Properties not transferred at
Completion provided the Purchaser shall co-operate and assist the
Vendors at the Purchaser's expense. Following Completion and upon
request by the Purchaser the Vendors will execute and deliver such
assignments of other of the Assets in a form to be agreed with them as
the Purchaser shall reasonably require.
6. COMPLETION ACCOUNTS
-------------------
The Purchaser shall produce Completion Accounts in accordance with Schedule
6.
7. ADJUSTING PAYMENT
-----------------
7.1 If the Completion Accounts show the Net Asset Value is less than
(Pounds)637,000, then the amount of such shortfall plus (Pounds)25,000
shall be paid to the Purchaser by the Vendors as a refund or part
refund of the Cash Consideration.
7.2 If the Completion Accounts show the Net Asset Value is more than
(Pounds)687,000 then the amount of such excess plus (Pounds)25,000
shall be paid to the Vendors by the Purchaser as additional Cash
Consideration.
7.3 Any such sums required to be paid under clause 7.1 above shall be paid
within fourteen days of written notice of such sum being given to the
relevant party. In the event of such payment not being paid within
such period, it shall bear interest at 3% above the base rate of
Barclays Bank PLC from time to time.
8. WARRANTIES
----------
8.1 The Vendors hereby represent warrant and undertake to the Purchaser
that at the date of this document each of the statements set out in
Schedule 4 are true and accurate in all respects and not misleading
and the Vendors hereby acknowledge that they have made those
statements with the intention of inducing the Purchaser to acquire the
Assets and that the Purchaser has been induced to acquire the Assets
on the basis of and in reliance upon them.
8.2 Each of the Warranties shall be construed as a separate and
independent warranty and (save where expressly provided to the
contrary) shall not be limited or restricted by reference to or
inference from any other term of this document or any other Warranty.
8.3 The rights and remedies of the Purchaser in respect of any breach of
any of the Warranties shall continue to subsist notwithstanding
Completion save where any Warranty has been performed or discharged on
Completion.
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<PAGE>
8.4 The Vendors hereby agree with the Purchaser to waive any right which
they may have in respect of any misrepresentation inaccuracy or
omission in or from any information or advice supplied or given by any
employee or officer of any Group Company in enabling them to give the
Warranties or to prepare the Disclosure Letter.
9. VENDORS' PROTECTION
-------------------
9.1 Save in the case of fraud or willful non-disclosure and
notwithstanding anything contained in this document any liability of
the Vendors in respect of any Warranty Claim shall be limited by the
provisions of this clause.
9.2 The Vendors shall not be liable in respect of any Warranty Claim to
the extent that the matter or matters giving rise to such claim are
expressly disclosed in the Disclosure Letter with sufficient
particularity so as to provide a reasonably accurate description or
account of the matter being disclosed (notwithstanding that only brief
particulars and/or part only of a document has or a series of
documents have been supplied) so as to enable a prudent purchaser to
make a reasonable assessment of the legal and commercial significance
of the matter being disclosed.
9.3 The total aggregate liability of the Vendors for Warranty Claims
including all proper and reasonable costs and expenses in relation to
any such claim shall not exceed (Pounds)2,062,500.
9.4 The Vendors shall not be liable in respect of any Warranty Claim
unless and until the aggregate liability for all claims exceeds
(Pounds)27,500 but once any such claim or claims have been made in
excess of such amount all Warranty Claims (including the first
(Pounds)27,500) may be pursued.
9.5 Any individual claim not exceeding (Pounds)1,000 shall be discounted
in calculating the aggregate liability of the Vendors for the purposes
of paragraph 9.4.
9.6 The Vendors shall have no liability in respect of a Warranty Claim
unless written notice (specifying the substance and quantification of
the claim and the matter giving rise thereto) of such claim is given
to the Vendors within ninety (90) days after discovery of the same by
the Purchaser.
9.7 The Vendors shall have no liability in respect of Warranty Claims
unless written notice (specifying the substance and quantification of
the claim and the matter giving rise thereto) of such claim shall have
been given to the Vendors on or before the second anniversary of the
date hereof in respect of the Warranties.
9.8 The Vendors shall not have any liability in respect of Warranty
Claims:-
9.8.1 To the extent that provision or reserve in respect thereof was
expressly made in the Accounts or the Management Accounts or to
the extent that payment or discharge of any such claim was taken
into account in the Accounts or the Management Accounts.
9.8.2 In respect of which any reserve or provision has been made in
the Accounts or the Management Accounts and which is
insufficient only by reason of any increase in the rates of
taxation made on or after the
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<PAGE>
date to which the Accounts or the Management Accounts have been
made up and whether or not with retrospective effect.
9.8.3 For which the Vendors are or may become primarily liable as a
result of transactions in the ordinary course of their business
after the date to which the Accounts or the Management Accounts
have been made up.
9.8.4 To the extent that such liability would not have arisen but for
any alteration enactment or re-enactment of any act of
parliamentary or statutory instrument or other legislative act
which occurs or has effect after the Completion Date.
9.8.5 Which would not have arisen but for a voluntary act or
transaction after the Completion Date which could reasonably
have been avoided or was carried out by the Purchaser (or its
successors) after the Completion Date otherwise than in the
ordinary course of business.
9.8.6 In respect of any matter in relation to which the Purchaser
after the Completion Date shall have expressly waived its rights
in writing.
9.8.7 If and to the extent that any Warranty Claim occurs as a result
of or is otherwise attributable to the Purchaser after
Completion disclaiming any part of the benefit of capital or
other allowances against Taxation claimed on or before the
Accounts Date.
9.9 Any claim by the Purchaser under the Warranties may be issued against
the Vendors but shall be capable of being pursued only if the
Purchaser shall have first taken all steps reasonably available to it
against any third parties as may be appropriate in respect of the
matter to which such claim relates and then only to the extent that
the loss incurred by the Purchaser as a result of the matter to which
the claim relates shall not have been fully satisfied on a full
indemnity basis.
9.10 If the Vendors pay to the Purchaser any amount in respect of any
breach of the Warranties and the Purchaser subsequently recovers from
a third party a sum which is directly and solely referable to that
breach or payment or shall subsequently receive any benefit which is
directly and solely referable to that breach and which has not been
taken into account in computing the liability of the Vendors and would
have reduced such liability had it been so taken into account the
Purchaser shall repay the Vendors so much of the amount paid by the
Vendors or such referable benefit received as represents the
difference between the amount due to the Purchaser and the amount
recovered from the third party (if any) net of expenses and tax.
9.11 If the Purchaser becomes aware of any claim or potential claim which
might in the reasonable opinion of the Purchaser give rise to such a
claim under the Warranties the Purchaser shall forthwith notify the
Vendors in writing of such claim and the Purchaser shall procure that
all requisite information, documents and facilities shall promptly be
made available to the Vendors or the Vendors' professional advisers
for such purposes and the Purchaser shall not accept or pay or
compromise any such claim without the prior consent in writing of the
Vendors (such consent not to be unreasonably withheld).
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<PAGE>
9.12 The amount of any Warranty Claim shall take into account the amount of
any relief from Taxation arising by virtue of the loss or damage in
respect of which the claim was made.
9.13 Nothing contained in this clause or in Clause 8 shall derogate from
the Purchaser's obligation to use reasonable endeavours to mitigate
any loss which it suffers in consequence of any breach of the
Warranties or the Taxation Warranties.
9.14 If, in respect of any Warranty Claim the liability of the Vendors is
contingent, then the Vendors shall not be under any obligation to make
any payment to the Purchaser until such time as the contingent
liability ceases to be contingent and becomes actual.
9.15 Where the Purchaser is entitled to recover from its insurers any sum
in respect of any matter giving rise to a Warranty Claim then any
monies so recovered (net of any increased premium attributable to the
claim) shall be set off against the corresponding claim against the
Vendors.
10. CONTRACTS
---------
10.1 Insofar as the benefit subject to the burden of any of the Contracts
cannot effectively be transferred to the Purchaser (whether by
assignment novation or otherwise) without the consent of a third party
and such consent has not been obtained at or prior to Completion:-
10.1.1 the Vendors and the Purchaser shall use all reasonable
endeavours to obtain such consent as soon as practicable;
10.1.2 unless and until any such contract has been transferred to the
reasonable satisfaction of the Purchaser the Purchaser shall
for its own benefit and to the extent that the contract in
question permits without constituting a breach thereof perform
on behalf of the Vendors (but at the Purchaser's expense) all
the Vendors' obligations and the Vendors will co-operate with
the Purchaser (at the Purchaser's expense) in any reasonable
arrangements designed to provide for the Purchaser the
benefits under any such contracts including the enforcement of
any and all rights of the Vendors thereunder;
10.1.3 if the Vendors shall require the Purchaser shall enter into
novation agreements with the other parties to any of such
contracts to the intent that thenceforth the Purchaser shall
be in a direct contractual relationship with such other
parties and the Vendors' obligations in respect of such
contracts shall be at an end.
10.2 The Vendors shall promptly refer to the Purchaser all inquiries
relating to the Business and assign to the Purchaser all orders
relating to the Business which the Vendors may receive after the
Completion Date.
11. CREDITORS AND LIABILITIES
-------------------------
11.1 The Vendors shall settle out of their own resources all of the
Outstanding Cheques forthwith upon presentation.
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<PAGE>
11.2 Upon becoming aware of any claim against the Vendors pursuant to the
Liabilities the Vendors will promptly give notice of it to the
Purchaser and shall not take any steps without the approval of the
Purchaser (save where they are in receipt of legal proceedings
(including a statutory demand or winding up petition) and the Vendors
reasonably are of the view that they must act immediately in which
case they shall inform the Purchaser immediately thereafter and in the
meantime may take such steps as they shall deem appropriate. The
Vendors shall if so requested by the Purchaser and so far as it is
able promptly supply to the Purchaser written details of all trade and
other creditors of the Business subsisting at the Completion Date.
11.3 Unless otherwise expressly provided nothing in this Agreement shall
make the Purchaser liable in respect of anything done or omitted to be
done by the Vendors prior to the Effective Date and the Vendors shall
indemnify the Purchaser in full for and against any reasonable claims
costs expenses or liabilities whatsoever and howsoever arising
incurred or suffered by the Purchaser in connection with any of the
Excluded Liabilities the including reasonable costs incurred by the
Purchaser in settling any claim in respect of such debts obligations
or liabilities. This indemnity shall extend without limitation to all
legal expenses and other professional fees reasonably and properly
incurred by the Purchaser.
11.4 With effect from the Effective Date the Purchaser shall:-
11.4.1 discharge all of the Liabilities as they fall due;
11.4.2 observe and perform or procure to be observed and performed
all the obligations of the Vendors under the Contracts except
insofar as such obligations should have been performed by the
Vendors before the Effective Date and except insofar as such
obligations have not been fully and effectively transferred to
the Purchaser whether by assignment, novation or otherwise
(save in respect of the Properties) and it is not possible for
the Purchaser to perform or procure the performance thereof
without constituting a breach of the contract concerned;
11.4.3 assume responsibility for payment for all goods delivered or
services received under the Contracts after the Effective Date
and which do not form part of the Stock whether the invoices
for such goods or services are received before or after the
Effective Date;
11.4.4 Unless otherwise expressly provided nothing in this Agreement
shall make the Vendors liable in respect of anything done or
omitted to be done by the Purchaser after the Completion Date
and the Purchaser shall indemnify the Vendors in full for and
against any claims costs expenses or liabilities whatsoever
and howsoever arising incurred or suffered by the Vendors in
connection with any acts or defaults of the Purchaser in
connection with the Business and the Assets and the
Liabilities following Completion including reasonable costs
incurred by the Vendors in settling any claim in respect of
such debts obligations or liabilities. This indemnity shall
extend without limitation to all legal expenses and other
professional fees reasonably and properly incurred by the
Vendors.
11.5 With effect from the Completion Date all complaints received by the
Vendors or the Purchaser from customers of the Business in relation to
goods supplied or
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<PAGE>
services rendered prior to the Completion Date (including warranty
claims arising in the normal course of the Business) shall be dealt
with as follows:-
11.5.1 all such complaints shall be promptly referred in the first
instance to the Purchaser who may elect in respect of any such
complaint either:-
11.5.1.1 to endeavour to resolve it and to supply any
replacement goods and carry out any remedial services
accordingly; or
11.5.1.2 to refer it to the Vendors who shall be responsible at
the expense of the Purchaser for resolving the same;
11.5.2 each party will provide any information or assistance
reasonably requested by the other in dealing with complaints
under this Clause;
11.5.3 the Vendors will not make any admission of liability in
relation to any complaint without the Purchaser's prior
consent.
12. DEBTS
-----
The Vendors will take all such steps as the Purchaser shall reasonably
request (including where necessary taking any legal proceedings in its name
but at the expense of the Purchaser and/or requesting the debtors to make
payments directly to the Purchaser) to assist in the collection of the
Debts. The Vendors will hold any payments which they receive in respect of
the Debts upon trust for the Purchaser and will account to the Purchaser
for the same on a weekly basis without any deduction or set-off.
13. EMPLOYEES
---------
13.1 The Purchaser acknowledges that pursuant to The Transfer of
Undertakings (Protection of Employment) Regulations 1981 ("the
Regulations") at the Completion Date it will become the employer of
the Employees but not the Excluded Employees . The Vendors will not
terminate the contracts of employment of any of the Employees without
the prior written consent of the Purchaser.
13.2 The Purchaser shall indemnify the Vendors in full for and against all
claims costs expenses or liabilities whatsoever and howsoever arising
incurred or suffered by the Vendors including without limitation all
legal expenses and other professional fees (together with any VAT
thereon) in relation to:-
13.2.1 the termination by the Purchaser of the employment of any of
the Employees; or
13.2.2 anything done or omitted to be done by the Purchaser in
respect of any of the Employees which is deemed to have been
done by the Purchaser by virtue of the Regulations
provided that such costs claims expenses and liabilities are not
payable solely as a result of any act or omission of the Vendors.
13.3 The Vendors shall indemnify the Purchaser in full for and against all
claims, costs, expenses or liabilities whatsoever howsoever and if
incurred or suffered by the Purchaser including without limitation all
legal expenses and other
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<PAGE>
professional fees (together with any VAT thereon) in relation to the
termination of the employment of the Excluded Employees provided that
such costs claims expenses and liabilities are not payable solely as a
result of any act or omission of the Purchaser.
13.4 All salaries and other emoluments including holiday pay taxation and
national insurance contributions and contributions to retirement
benefit schemes relating to the Employees shall be borne by the
Vendors up to and including the Effective Date and by the Purchaser
with effect from the Effective Date (save for Excluded Liabilities)
and all necessary apportionments shall be made.
13.5 13.5.1 The Vendors shall indemnify and keep indemnified the Purchaser
in respect of the amount of any liability arising from any of
the Relevant Events (as defined below) whether or not
sustainable at law brought against the Purchaser by any person
who was at any time prior to Completion a director or other
-----------
officer or employee of the company or the Subsidiaries, or a
current, former or surviving spouse of any such person, or a
Trustee in respect of benefit payable on any such person's
death, retirement or leaving service or relating to any
transfer payment in respect of the accrued past service rights
of any such person (in any such case) and the Vendors shall
indemnify and keep indemnified the Purchaser in respect of any
liability to such persons for damages, loss or compensation,
and in respect of such reasonable actuarial or legal fees
reasonably and properly incurred by the Purchaser in
connection with any of the Relevant Events.
13.5.2 The "Relevant Events" are these.
13.5.2.1 Any actual or alleged failure of the Company, the
Subsidiaries or the Trustees (for whatever cause and
whether or not by inadvertence) to have observed the
terms of the pension Scheme's eligibility rules,
namely Rule 2 of the Rules of the Daxbourne Limited
Pension and Life Assurance Scheme governed by a
Definitive Trust Deed and Rules of 23rd March 1990
("the Disclosed Scheme") ignoring for this purpose
any future amendment to Rule 2 of the Rules of the
Disclosed Scheme.
13.5.2.2 Any actual or alleged failure of the Company, the
Subsidiaries or the Trustees (for whatever cause and
whether or not by inadvertence) to operate the
Disclosed Scheme before or after Completion in
accordance with the trusts, powers and provisions of
the Disclosed Scheme and subject to all applicable
laws and including any claim made to the Pensions
Ombudsman under Part X Pension Schemes Act 1993.
13.5.2.3 Any civil penalty imposed by OPRA or monetary loss
suffered in connection with any other sanction
imposed by OPRA on the Purchaser in respect of the
Disclosed Scheme.
13.5.3 The Purchaser shall upon becoming aware of any action, claim,
proceeding or demand which may qualify as a Relevant Event or
any threat thereof promptly give notice in writing to Michael
Stannard (acting on behalf of the Vendors and whose receipt of
the same
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<PAGE>
is accepted by the Vendors as being deemed receipt by all of
them) together with all information from time to time in the
Purchaser's possession or control which relates to the
Relevant Event or threat thereof and the Purchaser shall take
such action including taking or defending legal proceedings
(subject to the Vendors prior agreement to pay all legal fees
reasonably and properly incurred in taking or defending such
proceedings) as the Vendors may reasonably by written notice
request in respect of any such Relevant Event or threat
thereof.
13.5.4 13.5.4.1 The Purchaser shall not and shall procure that none
of its officers or employees will admit liability in
respect of or settle or compromise any claim or
demand for damages, loss or compensation in respect
of a Relevant Event without the prior written
consent of the Vendors.
13.5.4.2 In the event that any person shall institute
proceedings against the Purchaser in respect of a
Relevant Event and in respect of which the Purchaser
shall claim to be indemnified by the Vendors then
the Purchaser shall (subject to the Vendors prior
agreement to pay all legal fees reasonably and
properly incurred in taking or defending such
proceedings) take such action to defend or
compromise such proceedings or appeal any judgment
(if any) made against it as the Vendors shall
require which shall be consistent with the
Purchaser's legal responsibilities and in a manner
which shall not be materially detrimental to its
commercial interests.
13.5.4.3 The Purchaser shall and shall procure that its
officers shall at all times maintain strictly
confidential and shall not disclose to any person
(save to the Vendors or as required by law but only
to the extent so required or with the prior written
consent of the Vendors) all information relating to
the Disclosed Scheme and any claim or demand in
respect of a Relevant Event.
14. PROPERTIES
----------
The Properties shall be sold and purchased hereunder on the terms and
conditions set out in Schedule 7.
15. USE OF VENDORS' NAMES
---------------------
15.1 The Vendors shall procure that at Completion the name of each of the
Vendors shall be changed to a name acceptable to the Purchaser and so
as not to include any of the Names or to suggest any connection with
the Business and the Vendors agree that they will not at any time
thereafter use or (so far as it is able) permit the use of any name or
names identical or similar to such names or any colourable imitation
thereof in connection with any activity whatsoever.
15.2 The Vendors will cease to use on Completion all business stationery
catalogues price lists brochures and other documents bearing the
Names.
16. VALUE ADDED TAX
---------------
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<PAGE>
16.1 The Vendors and the Purchaser recognise that the various
considerations set out in this Agreement are exclusive of VAT as the
parties apprehend that the sale of the Assets is a supply of goods to
which the provisions of [Article 5] Value Added Tax (Special
Provisions) Order 1995 apply and both the Vendors and the Purchaser
are taxable persons within the meaning of the Value Added Tax Act
1994. The Vendors and the Purchaser shall procure that their value
added tax returns and dealings with HM Customs and Excise are
consistent with this view.
16.2 If demand is made upon the Vendors by HM Customs and Excise for VAT in
respect of any supply of the Assets the consideration payable by the
Purchaser shall be increased by a sum equal to the VAT so demanded
("the VAT payment").
16.3 The Purchaser shall make payment in cleared funds of the VAT payment
on the later of:-
16.3.1 the Business Day following the date of the receipt by the
Purchaser of VAT invoices from the Vendors in respect of the
VAT payment; and
16.3.2 the Business Day before the date on which the Vendors are
obliged by law to account for output tax to HM Customs &
Excise in respect of supplies made under this Agreement.
17. BUSINESS RECORDS
----------------
17.1 The Vendors will provide the Purchaser with copies of all the VAT
records of the Business required by Section 49(1)(b) Value Added Tax
Act 1994 to be preserved by the Purchaser together with all other
records and documents in relation to the Business which it is not
required by law to retain. Each party shall make available to the
other for inspection and copying (at the expense of the requesting
party) all records and documents which the other has a legitimate
business interest to inspect and/or copy.
17.2 The Vendors will provide the Purchaser with copies of all records and
other information required by the Purchaser for the purposes of the
Capital Goods Scheme in Part XV Value Added Tax Regulations 1995
(SI1995/2518) and any adjustments thereunder.
17.3 The Purchaser shall for a period of not less than 6 years from the
Completion Date preserve the records delivered to it by the Vendors
and upon reasonable notice during normal business hours make them
available to the Vendors or their agents.
18. VENDORS' COVENANTS
------------------
18.1 Each of the Vendors jointly and severally undertakes to and covenants
with the Purchaser that it will (save with the consent in writing of
the Purchaser) not at any time after Completion:-
18.1.1 use or procure or cause the use of any name or names identical
or similar to or including the Names or any colourable
imitation thereof in connection with any activity whatsoever;
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18.1.2 (save as required by law) disclose or divulge to any person
other than to officers or employees of the Purchaser or use
other than for the benefit of the Purchaser any Confidential
Information which may be within or have come to his knowledge
and he shall assist the Purchaser (at the Purchaser's cost and
expenses) to prevent such publication, disclosure or use of
any Confidential Information;
18.1.3 do or say anything which is likely or intended to damage the
goodwill or reputation of the Vendor or any other member of
the Group or which may lead any person to cease to do business
with the Purchaser on substantially equivalent terms to those
previously offered or lead any person not to engage in
business with the Purchaser.
18.2 Each of the Vendors severally undertakes to and covenants with the
Purchaser that it will not for a period of 5 years after Completion
either on their own behalf or jointly with or as manager advisor
consultant or agent for any other person directly or indirectly:-
18.2.1 approach canvass solicit or otherwise act with a view to
enticing away from or seeking in competition with any business
of the Purchaser the custom of any person who at any time
during the period of 24 months preceding the Completion Date
has been a customer of the Vendor or any other member of the
Group and during such period it shall not use its knowledge of
or influence over any such customer to or for its own benefit
or the benefit of any other person carrying on business in
competition with the Purchaser or otherwise use its knowledge
of or influence over any such customer to the detriment of the
Purchaser;
18.2.2 seek to contract with or engage (in such a way as to adversely
affect the business of the Purchaser as carried on at the date
of this document) any person who has contracted with or
engaged to manufacture, assemble, supply or deliver products,
goods, materials or services to the Vendor or any other member
of the Group at any time during the period of 24 months prior
to the date of this document;
18.2.3 approach canvass solicit engage or employ or otherwise
endeavour to entice away any person who at any time during the
period of 24 months preceding the Completion Date or (if
later) the date of his ceasing to be employed by the Vendor
shall be or shall have been an employee, officer or manager of
the Vendor with a view to the specific knowledge or skills of
such person being used by or for the benefit of any person
carrying on business in competition with the business carried
on by the Purchaser;
18.2.4 be engaged concerned or interested whether as an employee or
in any other capacity in carrying on any business in
competition with the business carried on by the Vendor or any
of the Subsidiaries as carried on at the date of this document
in any territory in which such business was carried on at such
date.
18.3 Each of the covenants contained in sub-clauses 18.1 and 18.2 shall
constitute an entirely separate and independent restriction on each of
the Vendors.
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<PAGE>
18.4 Nothing in this Clause 18 shall prohibit any of the Vendors from
holding shares or stock quoted or dealt in on an approved EC market
(as defined in the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995) so long as not more than 5%
of the shares or stock of any class of any one company is so held.
18.5 The Vendors hereby agree and acknowledge that the restrictions
contained in this Clause 18 are reasonable and necessary to assure to
the Purchaser the full value and benefit of the Assets but in the
event that any such restriction shall be found to be void or
unenforceable but would be valid and effective if some part or parts
thereof were deleted such restriction shall apply with such deletion
as may be necessary to make it valid effective and enforceable.
18.6 Notwithstanding any other provision of this document no provision by
virtue of which this document or any agreement or arrangement of which
it forms part is registrable under the Restrictive Trade Practices
Acts 1976 and 1977 shall take effect until such time as particulars
thereof shall have been furnished to the Director General of Fair
Trading. The parties shall use all reasonable endeavours to procure
the furnishing of such particulars as soon as possible after the
signing of this document.
19. FURTHER ASSURANCE
-----------------
Upon and up to six months after Completion the Vendors shall at the expense
and request of the Purchaser do and execute or procure to be done and
executed all such acts deeds documents and things as may be necessary to
give effect to this document.
20. ANNOUNCEMENTS
-------------
No announcement communication or circular in connection with the subject
matter of this document shall be made (whether prior to or after the
Completion Date) by or on behalf of the parties hereto without the prior
approval of the other or others (such approval not to be unreasonably
withheld or delayed) save for:-
20.1 announcements to employees customers suppliers and agents of the
Vendors and/or the Purchaser and/or any company which is a member of
the same group as the Purchaser in such form as may be reasonably
required by the Purchaser; and
20.2 such announcements as may be required by the NASDAQ, SEC or other USA
regulatory authority.
21. COSTS
-----
Each of the parties shall bear and pay its own legal accountancy and other
fees and expenses incurred in and incidental to the preparation and
implementation of this document and of all other documents in the agreed
form referred to herein and such shall be ignored for the purposes of the
Completion Accounts.
22. SUCCESSORS AND ASSIGNMENT
-------------------------
This document shall be binding upon and enure for the benefit of the
personal representatives or successors in title of the parties hereto and
the benefit of the Warranties may not be assigned in whole or in part
without the prior written consent of
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<PAGE>
the Vendors (such consent not to be unreasonably withheld) save that the
Purchaser may assign the benefit of the Warranties to any company within
the same group of companies as the Purchaser without the consent of the
Vendors.
23. ENTIRE AGREEMENT
----------------
This document and any documents in the agreed form constitute the entire
agreement between the parties in connection with their subject matter.
24. TIME FOR PERFORMANCE
--------------------
As regards any time date or period mentioned in this document time shall be
of the essence.
25. NOTICES
-------
25.1 Any notice to be given pursuant to the terms of this document shall be
given in writing to the party due to receive such notice (in the case
of a company) at its registered office from time to time or (in the
case of an individual) at the address set out in this document or such
other address as may have been notified for the purpose to the other
parties hereto in accordance with this Clause. Notice shall be
delivered personally or sent by first class pre-paid recorded delivery
or registered post (air mail if overseas) or by facsimile transmission
and shall be deemed to be given in the case of delivery personally on
delivery and in the case of posting (in the absence of evidence of
earlier receipt) 48 hours after posting (6 days if sent by air mail)
and in the case of facsimile transmission on completion of the
transmission Provided that the sender shall have received printed
confirmation of transmission.
25.2 Daxbourne Limited is expressly authorised to act as agent for the
Subsidiaries in relation to all matters arising out of this document
and, accordingly, without limitation, notice to Daxbourne Limited
shall, where appropriate, constitute valid and binding notice on each
of the Subsidiaries.
26. MEMORANDUM CONTINUES IN FORCE
-----------------------------
This document shall remain in full force and effect so far as concerns any
matter remaining to be performed at Completion and notwithstanding that
Completion shall have taken place.
27. SEVERABILITY
------------
The invalidity illegality or unenforceability of any provision of this
document shall not affect the continuation in force of the remainder of
this document.
28. WAIVER
------
No failure to exercise or delay in exercising any right or remedy under
this document shall constitute a waiver thereof and no waiver by one party
of any breach or non-fulfillment by the other party or parties of any
provision of this document shall be deemed to be a waiver of any subsequent
or other breach of that or any other provision hereof. No single or
partial exercise of any right or remedy under this document shall preclude
or restrict the further exercise of any such right or remedy. The rights
and
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<PAGE>
remedies of the parties provided in this document are cumulative and
not exclusive of any rights and remedies provided by law.
29. VARIATIONS
----------
No variation of this document or any document in the agreed form shall be
valid unless it is in writing and signed by or on behalf of each of the
parties hereto.
30. GOVERNING LAW
-------------
This document shall be governed by and construed in accordance with the
laws of England and the parties hereby submit to the non-exclusive
jurisdiction of the High Court of Justice in England in relation to any
claim, dispute or difference which may arise hereunder together with all
other contracts (including, but not limited to, order for the supply or
sale of goods which are neither long term nor outside the ordinary course
of the business of the Vendors but excluding any contracts or liabilities
therefore which would comprise Excluded Liabilities.
-22-
<PAGE>
SCHEDULE 1
----------
Contracts
---------
Each of the following contracts:
PARTIES DESCRIPTION DATE
------- ----------- ----
Daxbourne Limited and NHS Supply of wigs to NHS May 1997
Supplies
Owen Owen plc and Daxbourne Concession 12 March 1997
Limited
House of Fraser (Stores) Concession 22 February 1995
Limited and Daxbourne Limited
David Morgan - Cardiff Concession Unknown
Debenhams - Manchester Concession Unknown
Jenners - Edinburgh Concession Unknown
Pearsons - Enfield Concession Unknown
Wildings - Newport Concession Unknown
Shield Pest Control Limited Pest Control May 1990
and Daxbourne Limited
PHS Limited and Daxbourne Waste treatment 28 March 1996
Limited
Mr. C Lincroft and Daxbourne Computer consultant 11 September 1997
Limited
PRIAM Limited and Daxbourne Computer software 16 December 1996
Limited
Radius Computer Maintenance Computer maintenance 12 May 1997
Limited and Daxbourne Limited
P C Calliston and Daxbourne Health & Safety Consultant 17 April 1996
Limited
-23-
<PAGE>
SCHEDULE 2
----------
THE WARRANTIES
--------------
In this Schedule references to "a" or "the" Vendor shall constitute a separate
warranty in respect of each Vendor.
1. DISCLOSURE OF INFORMATION
-------------------------
1.1 There are fully and accurately disclosed in the Disclosure Letter all
matters:-
1.1.1 which are reasonably necessary to qualify the statements set out
in the following paragraphs of this Schedule in order for such
statements when so qualified to be fair accurate and not
misleading; and
1.1.2 which might otherwise reasonably affect the willingness of the
Purchaser to purchase the Assets or to purchase them for the
consideration and upon the terms set out in this document.
1.2 All information which has been given by any of the directors or
officers or professional advisers of the Vendors to any of the
directors or officers or professional advisers of the Purchaser in the
course of the negotiations leading to the signing of this document was
when given true complete and accurate in all material respects and
there is no fact or matter not disclosed in writing to the Purchaser
which renders any such information materially untrue inaccurate or
misleading.
1.3 The facts set out in the Disclosure Letter and Schedules 1, 2 and 3 of
this document are true and accurate in all respects as at the date
hereof.
2. CAPACITY AND OWNERSHIP
----------------------
2.1 The Vendors have full power and authority to enter into and perform
this document which constitutes binding obligations on each of the
Vendors in accordance with its terms.
2.2 None of the Vendors nor any person connected with any Vendor has any
interest directly or indirectly in any business other than that now
carried on by the Group which is or is likely to be or become
competitive with the business now carried on by the Group.
2.3 The Vendors are entitled to sell and transfer the full legal and
beneficial ownership in the Assets to the Purchaser and such sale will
not result in any breach of or default under any agreement or other
obligation binding upon the Vendors or any of them or any of their
respective property.
2.4 There is no litigation arbitration prosecution administrative or other
legal proceedings or dispute in existence or threatened against any of
the Vendors in respect of the Assets or the Vendors' entitlement to
dispose of the Assets and there are no facts known to the Vendors or
any of them which might give rise to any such proceedings or any such
dispute.
2.5 During the three years preceding the date hereof none of the Vendor's
assets have been the subject of a transaction at an undervalue within
the meaning of Part IX or Part VI Insolvency Act 1986.
-24-
<PAGE>
3. ACCOUNTS
--------
3.1 The Accounts have been prepared in accordance with the requirements of
the relevant statutes and on a basis consistent with that adopted in
the preparation of the audited accounts of the Vendor for each of the
last 3 preceding financial years of the Vendor and in accordance with
all Financial Reporting Standards statements of standard accounting
practice and generally accepted accounting principles and practices in
the United Kingdom and give a true and fair view of the assets and
liabilities of the Vendor as at the Accounts Date and its profits and
losses for the relevant period ended on the Accounts Date and without
limiting the generality of the foregoing:-
3.1.1 the Accounts disclose all the assets and either make full
provision or reserve for or as appropriate disclose all accruals
and liabilities whether actual contingent unquantified or
disputed and all capital commitments whether actual or
contingent of the Vendor as at the Accounts Date;
3.1.2 any slow-moving stock included in the Accounts has been written
down appropriately and any damaged redundant obsolete or
unsaleable stock has been wholly written off and the value
attributed to the remaining stock and work in progress does not
exceed the lower of cost or net realisable value as at the
Accounts Date;
3.1.3 the audited balance sheets and profit and loss accounts of the
Vendor for each of the last 3 preceding financial years of the
Vendor ended on the Accounts Date complied with the requirements
of all relevant laws then in force and with all statements of
standard accounting practice and bearing an unqualified audit
report and all Financial Reporting Standards and generally
accepted accounting principles and practices of the United
Kingdom then in force;
3.1.4 the rate of depreciation adopted in the audited balance sheets
of the Vendor for each of the last 3 preceding financial years
of the Vendor ended on the Accounts Date was sufficient for each
of the fixed assets of the Vendor to be written down to nil by
the end of its useful life;
3.1.5 except as stated in the audited balance sheets and profit and
loss accounts of the Vendor for each of the last 3 preceding
financial years of the Vendor ended on the Accounts Date no
changes in the policies of accounting have been made therein for
any of those 3 financial years and the method of valuing stock
and work in progress and the basis of depreciation and
amortisation adopted has been consistent during each of these 3
financial years;
3.1.6 the profits shown by the audited profit and loss accounts of the
Vendor for each of the last 3 preceding financial years ended on
the Accounts Date have not (except as therein disclosed) been
affected by any extraordinary or exceptional item or by any
other factor rendering such profits for all or any of such
periods unusually high or low;
3.1.7 sufficient provision has been made in a deferred taxation
account for any corporation tax on chargeable gains and
balancing charges which would arise on a sale of all fixed
assets at the values attributed to them in the
-25-
<PAGE>
Accounts and the value of none of the value of none of the
assets is overstated in the Accounts;
3.1.8 no value has been attributed to any type or category of stock
which has previously been attributed no value;
3.1.9 no asset (whether fixed intangible investment or current) has
been revalued upwards in the Accounts and no intangible asset
has been brought into the Accounts;
3.1.10 no surplus on any pension arrangements has been written back
or brought into reserves and full provision has been made for
pension obligations in accordance with SSAP24.
3.2 The Management Accounts have been carefully prepared on a basis
consistent with the previous monthly management accounts of the Vendor
and in accordance with the accounting policies applied to the Accounts
and give a fair view in all respects of the assets and liabilities
profits and losses of the Vendor for the period as at and to the end
of the month immediately preceding the Completion Date and there are
no liabilities actual, contingent or otherwise not reasonably provided
for, noted or otherwise referred to therein which would require
providing for or being disclosed or noted if such accounts were
audited.
4. POSITION SINCE ACCOUNTS DATE
----------------------------
4.1 Since the Accounts Date the business of the Vendor has been carried on
in the ordinary and usual course and so as to maintain the same as a
going concern; and there has been no deterioration either in turnover
or in the financial or trading position or in the prospects of the
Vendor.
4.2 Without prejudice to the generality of paragraph 4.1 since the
Accounts Date:-
4.2.1 the Vendor has not acquired or disposed of or agreed to acquire
or dispose of any business or any material asset or assumed or
acquired any material liability (including a contingent
liability) otherwise than in the ordinary course of business;
4.2.2 the Vendor has paid its creditors in accordance with their
respective credit terms and/or there are no amounts owing by the
Vendor which are properly due and have been overdue for more
than 4 weeks;
4.2.3 no debtor has been released by the Vendor on terms that he pays
less than the book value of his debt and no debt owing to the
Vendor has been deferred subordinated or written off or has
proved to any extent irrecoverable and all book debts at the
date hereof are good and in the normal course of events will be
recoverable in full on their respective due dates in the
ordinary course;
4.2.4 neither the turnover nor the expenses (direct and indirect) nor
the trading position nor the margin of profitability of the
Vendor shows any material deterioration by comparison with the
turnover expenses trading position and margin of profitability
of the Vendor for the corresponding period in its last completed
accounting reference period;
-26-
<PAGE>
4.2.5 there has not been any material change in the assets or
liabilities (including contingent liabilities) of the Vendor as
shown in the Accounts except for changes arising from routine
payments and from routine supplies of goods or of services in
the normal course of trading save as expressly disclosed in the
Management Accounts;
4.2.6 all payments receipts and invoices of the Vendor have been fully
and accurately recorded in the books of the Vendor;
4.2.7 no supplier to or customer of the Vendor who accounted for more
than 5 per cent of the Vendor's annual turnover in the last
financial year has ceased to trade with the Vendor or notified
the Vendor of its intention to do so.
5. TAXATION
--------
TAX RETURNS AND COMPLIANCE
--------------------------
5.1 The Vendor has at all times submitted within the requisite period all
relevant and required computations and information to all relevant Tax
Authorities and has made (or before Completion will have made) all
returns which should be made by the Vendor for the purpose of taxation
before Completion.
5.2 All the aforesaid computations and returns are up to date and are
complete and accurate and leave no material matter unresolved with any
Tax Authority regarding the taxation affairs of the Vendor and the
Vendor nor any director or officer of the Vendor (in his capacity as
such) is under any liability or is likely to become liable to pay any
penalty interest surcharge or fine in connection with taxation. None
of the aforesaid computations or returns is or is likely to be the
subject of a dispute with any Tax Authority.
STAMP DUTY AND SDRT
-------------------
5.3 All documents in the possession or under the control of the Vendors or
to the production of which the Vendors are entitled and which are
necessary to establish the title of the Vendors to any asset and which
in the United Kingdom or elsewhere attract either stamp duty or
require to be stamped with a particular stamp denoting that no duty is
chargeable or that the document has been produced to the appropriate
authority have been properly stamped and no such documents which are
outside the United Kingdom would attract stamp duty if they were
brought into the United Kingdom.
VALUE ADDED TAX
---------------
5.4 The Vendors have complied in all respects with all VAT legislation and
guidance published by all relevant Tax Authorities in any form
whatsoever and have made and obtained full complete correct and up-
to-date records and invoices and other documents appropriate or
requisite for the purposes of such legislation and guidance including
without prejudice to the generality of the foregoing in relation to
acquisitions made from and supplies made to persons outside the UK and
are not in arrears with any payments or returns thereunder or liable
to any abnormal or non-routine payment or default surcharge or any
forfeiture or penalty or to the operation of any penal provision and
have not been required by the Commissioners of Customs and Excise to
give security under paragraph 4 of
-27-
<PAGE>
Schedule 11 VATA and the Vendors are a registered and taxable person
for the purposes of such legislation and have not at any time been
treated as a member of a group for such purposes and no application
for it to be so treated has at any time been made.
5.5 No tenancy, lease or licence to occupy any property held by the Vendor
is or will become a developmental tenancy, developmental lease or
developmental licence within the meaning of paragraph (b) of Item 1 of
Group 1 (Land) Schedule 9 VATA.
5.6 The Vendors are not operating any special arrangement or scheme
relating to VAT.
6. BUSINESS NAME
-------------
The Vendors do not use any name for any purpose other than its full
corporate name.
7. LICENSES AND CONSENTS
---------------------
The Vendors have obtained all licenses permissions authorisations and
consents required for the proper carrying on of its business (full details
of which are set out in the Disclosure Letter). All such licenses
permissions authorisations and consents are in full force and effect; the
Vendors are not in breach of any of the terms and conditions attached
thereto and there are no circumstances which indicate that any of such
licenses permissions authorisations or consents may be revoked or not
renewed in the ordinary course of events is the Vendors actually aware of
any circumstances which indicate that equivalent licenses permissions
authorisations or consents on no less favourable terms would not be granted
to the Vendors following the acquisition of the Shares by the Purchaser.
8. PROPERTIES AND ENVIRONMENTAL MATTERS
------------------------------------
TITLE
-----
8.1 The Properties comprise:-
8.1.1 all the land and premises owned or occupied by the Vendor; and
8.1.2 all the estate interest right and title whatsoever (including
for the avoidance of any doubt interests in the nature of
options) of the Vendor in respect of any land or premises.
8.2 Those of the Properties which are occupied or used by the Vendor in
connection with any business carried on by the Vendor are so occupied
or used by right of ownership or under lease or licence and the terms
of any such lease or licence permit such occupation and use.
8.3 The Vendor is the legal and beneficial owner of the Properties and all
fixtures and fittings at the Properties are the absolute property of
the Vendor free from Encumbrances.
8.4 All of the Properties acquired by the Vendor since 1st July 1995 have
been acquired with the benefit of the covenants implied by the
expression "with full title guarantee".
-28-
<PAGE>
8.5 The information contained in Schedule 7 as to the tenure of the
Properties the principal terms of the leases or licenses under which
the same are occupied or used by the Vendor and the principal terms of
the tenancies or licenses subject to and with the benefit of which the
Properties are held is true and accurate in all respects.
8.6 Where the title to any of the Properties is unregistered it is
properly constituted by and can be deduced from duly stamped documents
of title which are in the possession or under the control of the
Vendor. No event has occurred in consequence of which registration
should have been effected at HM Land Registry.
8.7 Where the title to any of the Properties is registered the Vendor is
shown on the register thereof at HM Land Registry as the proprietor
with absolute title and the Land Certificate in respect of each of
such Properties is in the possession or under the control of the
Vendor.
ENCUMBRANCES
------------
8.8 The Properties are free from any mortgage debenture or charge (whether
specific or floating legal or equitable) rent charge lien or other
encumbrance securing the repayment of monies or other obligation or
liability whether of the Vendor or any other party.
8.9 The Properties are not subject to any liability for the payment of any
outgoings other than national non-domestic rates water and sewerage
services charges and insurance premiums and in the case of leasehold
properties rents and service charges.
8.10 So far as the Vendors is aware the Properties are not subject to any
covenants restrictions stipulations easements profits a prendre
wayleaves licenses grants exceptions or reservations overriding
interests or other such rights the benefit of which is vested in third
parties nor any agreement to create the same.
8.11 Where any such matters as are referred to in paragraphs 8.8, 8.9 and
8.10 have been disclosed in the Disclosure Letter the obligations and
liabilities imposed and arising under them have been fully observed
and performed and all payments in respect of them due and payable have
been duly paid.
8.12 There is no person who is in occupation (other than pursuant to any of
the tenancies referred to in Schedule 7) or who has or claims any
rights or easements of any kind in respect of the Properties adversely
to the estate interest right or title of the Vendor therein.
PLANNING MATTERS
----------------
8.13 For the purposes of sub-paragraphs 8.13 to 8.29 (inclusive) of this
paragraph 8 "the Planning Acts" means
The Town and Country Planning Act 1990
The Planning (Listed Buildings and Conservation Areas) Act 1990
The Planning (Hazardous Substances) Act 1990
The Planning (Consequences Provisions) Act 1990
The Planning and Compensation Act 1991
-29-
<PAGE>
as the same are from time to time varied or amended and any other
statute or subordinate legislation relating to planning matters.
8.14 So far as the Vendors are actually aware the use of each of the
Properties is the permitted or lawful use for the purposes of the
Planning Acts (and no notice of any breach thereunder has been
received) and no such use is subject to planning conditions of an
onerous or unusual nature (including any of a personal or temporary
nature).
STATUTORY OBLIGATIONS
---------------------
8.15 So far as the Vendors are actually aware compliance is being made and
has at all times been made with all applicable statutory and byelaw
requirements with respect to the Properties and in particular (but
without limitation) with requirements as to fire precautions and means
of escape in case of fire and with requirements under the Public
Health Acts the Housing Acts the Highways Acts the Offices Shops and
Railway Premises Act 1963 the Health and Safety at Work etc. Act 1974
the Factory Acts and the London Building Acts and no notice of any
breach of such statutes has been received.
8.16 There is no outstanding and unobserved or unperformed obligation with
respect to the Properties necessary to comply with the requirements
(whether formal or informal) of any competent authority exercising
statutory or delegated powers and the Vendor does not anticipate that
it will be obliged to incur the expenditure of any substantial sum of
money within the next two years for such purpose.
ADVERSE ORDERS
--------------
8.17 The Vendors are not actually aware of any compulsory purchase notices
orders or resolutions affecting the Properties nor are the Vendors
aware of any circumstances likely to lead to any being made.
CONDITION OF THE PROPERTIES
---------------------------
8.18 The buildings and other structures on the Properties are in reasonably
good and substantial repair and fit for the purposes for which they
are presently used.
8.19 Each of the Properties has sufficient utility services required to
operate the business.
8.20 The Vendors are not actually aware that any building or structure on
the Properties has at any time been affected by structural damage or
electrical defects or by timber infestation rising damp or disease.
LEASEHOLD PROPERTIES
--------------------
8.21 So far as the Vendors are actually aware the Vendor has paid the rent
and observed and performed the covenants on the part of the lessee and
the conditions contained in any leases (which expression includes
underleases) under which the Properties are held and the last demands
for rent (or receipts if issued) were unqualified and all such leases
are valid and in full force.
8.22 So far as the Vendors are actually aware all licenses consents and
approvals required from the lessors and any superior lessors under the
leases of the
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<PAGE>
Properties and from their respective mortgagees (if any) have been
obtained and the covenants on the part of the lessee contained in such
licenses consents and approvals have been duly performed and observed.
8.23 The Vendors are not actually aware of any notices negotiations or
proceedings pending in relation to rent reviews nor is any rent liable
at the date hereof to be reviewed and time is not of the essence in
respect of any steps to be taken in the conduct of rent reviews.
8.24 So far as the Vendors are actually aware there is not outstanding and
unobserved or unperformed any obligation necessary to comply with any
notice or other requirement given by the lessor under any leases of
the Properties.
8.25 There are no circumstances which would entitle any such lessor to
exercise any powers of entry or take possession or which would
otherwise restrict the continued possession and enjoyment of the
Properties.
8.26 The Vendor is in actual occupation of all parts of the Properties and
the security of tenure provisions of Part II of the Landlord and
Tenant Act 1954 are not excluded nor is the right to compensation for
disturbance and no notices have been served or received under Section
25 or Section 26 of such Act.
TENANCIES
---------
8.27 The Disclosure Letter contains full and complete details of all
tenancies to which the Vendor is a party.
8.28 No notices have been served or received under Section 25 or Section 26
of the Landlord and Tenant Act 1954 nor are there any outstanding
notices (whether served by or on behalf of the Vendor or by or on
behalf of the occupational tenants or other occupants) of any other
nature.
8.29 No tenant or licensee has commuted any rent or licence fee or made any
payment thereof before the due date therefor and no rent reviews are
currently being negotiated.
ENVIRONMENTAL MATTERS
---------------------
8.30 So far as the Vendors is actually aware, neither the Vendor nor any of
its officers, agents or employees (during the course of their
employment with the Vendor) have committed, whether by act or
omission, any breach of legal requirements for the protection of the
environment or of human health or amenity, and so far as the Vendors
is aware, they have conformed at all times with all relevant codes of
practice, guidance notes, standards and other advisory material issued
by any competent authority.
8.31 The Vendor has not, so far as the Vendors is actually aware, received
any notice, order or other communication from any relevant authority
in respect of the Vendor's business, failure to comply with which
would constitute breach of any legal requirements (or compliance with
which could be secured by further proceedings) and so far as the
Vendors is aware, there are no circumstances which might give rise to
such notice, order or other communication being received or of any
intention on the part of such authority to give such notice.
-31-
<PAGE>
8.32 So far as the Vendors is actually aware, there is no actual or
potential liability on the part of the Vendor arising from any
activities or operations of the Vendor or the state or condition of
any properties now or formerly owned or occupied by the Vendor or
facilities now or formerly used by the Vendor and in particular
(without limitation) any such liability in respect of: injury to
persons; damage to land or personal property; public or private
nuisance; liability for waste or other substances; and damage to or
impairment of the environment including living organisms.
8.33 So far as the Vendors is actually aware, no notice or other
communication has been received from any relevant authority relating
to the physical condition of any site now or formerly owned or
occupied by the Vendor nor is there any circumstance likely to give
rise to the service of any such notice or communication.
8.34 No site now or formerly owned or occupied by the Vendor has, so far as
the Vendors is actually aware, been used for the deposit of waste
controlled by any legislation during the ownership or occupation of
the Vendor and neither the Vendors nor the Vendor is aware of any such
use before its ownership or occupation.
8.35 So far as the Vendors is actually aware, the Vendor has properly
carried out and made all such assessments or plans as are required by
law in relation to the Vendor's subsidences, processes, operations and
wastes (including without limitation those relating to hazardous
substances, accident hazards, releases to the environment and noise).
GENERAL MATTERS
---------------
8.36 There is no other matter of which the Vendors is aware and which
materially adversely affects the value of any of the Properties or
casts any doubt on the right or title of the Vendor thereto which
should be revealed to the Purchaser.
8.37 Any replies given by or on behalf of the Vendors and/or the Vendors to
enquiries before contract raised by or on behalf of the Purchaser
relating in any way to the Properties are materially true complete and
accurate in all material respects and contain all information known or
available to the Vendors.
9. ASSETS
------
9.1 The Vendor is the legal and beneficial owner having possession of and
with good and marketable title to all the property and assets which
are described and included in the Accounts as at the Accounts Date
and/or in the books of account or records of the Vendor or which are
used in connection with the business of the Vendor or which are in the
reputed ownership of the Vendor or are situated on the Properties and
all the assets required to carry on the business of the Vendor are
owned by and are in the possession or under the control of the Vendor.
9.2 None of the assets referred to in paragraph 9.1 are the subject of any
assignment royalty overriding royalty factoring arrangement leasing or
hiring agreement hire purchase agreement for payment on deferred terms
or any similar agreement or arrangement.
-32-
<PAGE>
9.3 The Vendor has not created any option right to acquire mortgage pledge
charge lien or other form of security or encumbrance or equity of any
nature on over or affecting any part of the assets referred to in
paragraph 9.1 and there is no agreement or commitment to give or
create any of the foregoing and no claim has been made by any person
to be entitled to any of the foregoing.
9.4 All the plant machinery equipment and vehicles owned or used by the
Vendor is in good repair and working order and has been regularly and
properly maintained and no substantial repairs are in hand or are
necessary and none of the plant machinery equipment or vehicles is out
of date dangerous inefficient unsuitable or in need of renewal or
replacement or fails to comply with all the applicable safety
standards.
9.5 The plant registers of the Vendor comprise a complete and accurate
record of all the plant machinery equipment and vehicles owned or used
by the Vendor and necessary for the continuation of the business of
the Vendor.
10. DEBTS, STOCK AND WORK IN PROGRESS
---------------------------------
10.1 All the stock of raw materials packaging materials and finished goods
is of satisfactory quality and in good repair and condition and is
capable of being sold on an arm's length basis in accordance with the
Vendor's current price list without rebate or allowance and none of
such stock is damaged obsolete or unsaleable.
10.2 The stock referred to in paragraph 10.1 is sufficient for the normal
requirements of the business of the Vendor having regard to current
orders included in the current contracts with customers of the Vendor.
10.3 The work in progress is at its normal level for the time of year
having regard to current orders included in the current contracts with
customers of the Vendor.
10.4 The book debts shown in the Accounts have realised or will realise
within a period of 28 days from the Accounts Date their nominal amount
less any reserve for bad or doubtful debts included in the Accounts
and the book debts incurred since the Accounts Date and which are
outstanding at the Effective Date will realise within 90 days from the
Completion Date (or sooner if default is caused by the insolvency of
the debtor) their nominal amounts less any reserve or provision for
bad or doubtful debts shown in the Accounts.
10.5 The Vendor is not owed any sums other than trade debts incurred in the
ordinary course of business.
11. INSURANCE
---------
11.1 Full details of all insurance policies effected by the Vendor or by
any other person in relation to any of the Vendor's assets have been
disclosed to the Purchaser in a schedule of insurance policies
detailing scope of cover, premiums and all other relevant material and
all such details contained in this schedule are true and correct in
all material respects and all such insurance policies are currently in
full force and effect.
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<PAGE>
11.2 All premiums payable in respect of all insurance policies which have
become due have been duly paid and no circumstances have arisen which
would vitiate or permit the insurers to avoid such policies.
12. RECORDS
-------
All the accounts, books, registers, ledgers and financial and other
material records of whatsoever kind of the Vendor (including all invoices
and other records required for VAT purposes) have been properly and
accurately kept and compiled; there are no material inaccuracies or
discrepancies of any kind contained or reflected therein and they give and
reflect a true and fair view at the date the record was made of the
financial, contractual and trading position of the Vendor and of its plant
and machinery, fixed and current assets and liabilities (actual and
contingent), debtors, creditors and stock-in-trade and work-in-progress.
13. CONFIDENTIAL INFORMATION
------------------------
13.1 The Vendor does not use any processes and is not engaged in any
activities which involve the misuse of any confidential information
belonging to any third party.
13.2 The Vendor is not aware of any actual or alleged misuse by any person
of any of its Confidential Information.
13.3 The Vendor has not disclosed to any person any of its Confidential
Information except where such disclosure was properly made in the
normal course of the Vendor's business and was made subject to an
agreement under which the recipient is obliged to maintain the
confidentiality of such Confidential Information and is restrained
from further disclosing or using it other than for the purposes for
which it was disclosed by the Vendor.
13.4 Confidential Information used by the Vendor is kept strictly
confidential and the Vendor operates and fully complies with
procedures which maintain such confidentiality, which confidentiality
has not been breached.
14. INTELLECTUAL PROPERTY
---------------------
14.1 A schedule of Intellectual Property rights owned by the Vendor or in
respect of which it holds any interest or right of any nature whatever
has been disclosed to the Purchaser, and the contents thereof are true
and accurate in all material respects.
14.2 The Vendor is the sole unencumbered legal and beneficial owner and,
where registered, the sole registered proprietor of all the
Intellectual Property used in its business ("the Vendor's Intellectual
Property").
14.3 The material particulars as to ownership registration (and
applications therefor) of the Vendor's Intellectual Property,
including priority and renewal dates where applicable, are set forth
in the Disclosure Letter and such details are complete and correct.
Such Intellectual Property comprises all Intellectual Property which
the Purchaser will require in order fully to carry on and exploit the
business of the Vendor as at the Completion Date and deal with the
assets of the Vendor.
14.4 The Vendor's Intellectual Property is not the subject of any pending
or threatened proceedings for opposition cancellation revocation or
rectification or
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<PAGE>
claims from employees and there are no facts or matters which might
give rise to any such proceedings.
14.5 The Vendor has taken all steps necessary or desirable for the full
protection of all the Vendor's Intellectual Property and all rights
therein including without limitation applying for and maintaining in
force all possible letters patent trade marks service marks and
copyright registrations and registered designs in all relevant
countries.
14.6 All application and renewal fees and costs and charges regarding the
Vendor's Intellectual Property due on or before Completion have been
duly paid in full.
14.7 Save for those agreements listed in the Disclosure Letter, the Vendor
has not entered into any agreement arrangement or understanding
(whether legally enforceable or not) for the licensing or otherwise
permitting or authorising the use or exploitation of the Vendor's
Intellectual Property or which prevent restrict or otherwise inhibit
the Vendor's freedom to use and exploit the Vendor's Intellectual
Property.
14.8 None of the Vendor's Intellectual Property is currently being
infringed by any third party or has been so infringed in the 6 year
period preceding Completion and no third party has threatened any such
infringement.
14.9 Save for those agreements listed in the Disclosure Letter the carrying
on of the Vendor's business or businesses as presently constituted
does not require any licences or consents from or the making of
royalty or similar payments to any third party and the Vendor is not
engaged in any activities which and none of the Vendor's processes or
products infringe any Intellectual Property belonging to any third
party. All such listed agreements (and each provision thereof) are
valid and subsisting and not restricted in any way and the Vendor is
not in breach of any of the provisions thereof.
14.10 There are no outstanding claims against the Vendor for infringement
of any Intellectual Property used (or which has been used) by it and
no such claims have been settled by the giving of any undertakings
which remain in force.
15. COMPUTER SYSTEMS
----------------
15.1 A schedule of the Computer Systems has been supplied by the Vendor to
the Purchaser, and the information contained therein is materially
true and accurate in all respects.
15.2 The Computer Systems have been satisfactorily maintained and have the
benefit of the maintenance agreements specified in the Disclosure
Letter.
15.3 The Computer Systems are sufficient to run the business of the Vendor
in a satisfactory and proper manner.
15.4 In the event that any person providing maintenance or support services
for the Computer Systems ceases or is unable to do so, the Vendor has
all necessary rights to obtain the source code and all related
technical and other information to procure the carrying out of such
services by the Vendor's own employees or by a third party.
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<PAGE>
15.5 The Vendor has adequate procedures to ensure internal and external
security of the Computer Systems including procedures for taking and
storing, on-site and off-site, back-up copies of computer programs and
data.
15.6 None of the Vendor's records systems controls data or information are
recorded stored maintained operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic
mechanical or photographic processes whether computerised or not)
which (including all means of access thereto and therefrom) are not
under the exclusive ownership and direct control of the Vendor.
16. EMPLOYEES
---------
16.1 None of the officers or employees of the Vendor has given or received
notice terminating his employment or will be entitled to give notice
as a result of the provisions of this document.
16.2 Full particulars of the terms and conditions of employment (whether in
writing or oral) of all the officers or employees of the Vendor
(including without limitation all remuneration incentives bonuses
expenses profit sharing arrangements and other payments share option
schemes and other benefits whatsoever payable) are set out in the
Disclosure Letter.
16.3 There is not in existence any contract of employment with any director
or employee of the Vendor (or any contract for services with any
individual) which cannot be terminated by the Vendor giving 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).
16.4 In relation to each of the present officers or employees of the Vendor
(and so far as relevant to each of its former employees) the Vendor
has:-
16.4.1 complied with all obligations imposed on it by Articles of the
Treaty of Rome European Commission Regulations and Directives
and all statutes regulations and codes of conduct relevant to
the relations between it and its employees or it and any
recognised trade union;
16.4.2 maintained adequate and suitable records regarding the service
of each of its employees;
16.4.3 complied with all collective agreements and customs and
practices for the time being dealing with such relations or
the conditions of service of its employees; and
16.4.4 complied with all relevant orders and awards made under any
statute affecting the conditions of service of its employees.
16.5 The Vendor is not involved in any disputes and there are no
circumstances which may result in any dispute involving any of the
officers or employees or former employees of the Vendor.
16.6 There is not outstanding any agreement or arrangement to which the
Vendor is party for profit sharing or for payment to any of its
officers or employees or former employees of bonuses or for incentive
payments or other similar matters.
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<PAGE>
16.7 Since the Accounts Date no change has been made in the terms of
employment by the Vendor (other than those required by law) of any of
the officers or employees of the Vendor.
16.8 The Vendor has not entered into any recognition agreement with a trade
union nor has it done any act which may be construed as recognition.
16.9 The Vendor has complied with all recommendations, if any, made by the
Advisory Conciliation and Arbitration Service and with all awards and
declarations made by the Central Arbitration Committee.
16.10 There is no agreement arrangement scheme or obligation (whether
legal or moral) for the payment of any pensions allowances lump sums
or other like benefits on retirement or on death or during periods of
sickness or disablement for the benefit of any of the officers or
employees of the Vendor or former officers or employees or for the
benefit of dependants of such persons save as disclosed in the
Disclosure Letter.
16.11 No amounts due to or in respect of any of the officers or employees
or former employees of the Vendor (including PAYE and national
insurance and pension contributions) are in arrear or unpaid.
16.12 No monies or benefits other than in respect of contractual
emoluments are payable to any of the officers or employees of the
Vendor and there is not at present a claim occurrence or state of
affairs which may hereafter give rise to a claim against the Vendor
arising out of the employment or termination of employment of any
employee or former employee for compensation for loss of office or
employment or otherwise and whether under the Employment Rights Act
1996 Equal Pay Act 1970 Sex Discrimination Act 1975 Sex
Discrimination Act 1986 or any other Act or otherwise.
16.13 Other than the Disclosed Scheme there is not in operation, and no
proposal has been announced to enter into or establish, any agreement,
arrangement, custom or practice (whether legally enforceable or not or
whether or not approved by the Board of Inland Revenue for the
purposes of Chapter I of Part XIV of the Taxes Act) to which the
Vendor or the Subsidiaries contribute (or promises to provide on an
unfunded basis) for the payment of, any pensions, allowances, lump
sums or other like benefits on retirement, death, termination of
employment (whether voluntary or not) or during periods of sickness or
disablement, for the benefit of any officers, former officers,
employees or former employees of the Vendor or the Subsidiaries or for
the benefit of the dependants of any such person.
16.14 Full details of the Disclosed Scheme have been given to the
Purchaser in the form of:
16.14.1 true and complete copies of all agreements, deeds and
rules governing or relating to the Disclosed Scheme;
16.14.2 copies of the explanatory literature issued to any
members or former members or persons who may become
members of the Disclosed Scheme and any agreements
between the Vendor and/or Subsidiaries and any member,
former member or prospective member relating to the
provision of benefits under the Disclosed Scheme;
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<PAGE>
16.14.3 copies of any announcement issued to any members of the
Disclosed Scheme in respect of benefit improvements or
other amendments not yet incorporated into the
documentation of the Disclosed Scheme;
16.14.4 details of the active members, pensioners and deferred
pensioners of the Disclosed Scheme with all particulars
of them relevant to their membership of the Disclosed
Scheme and necessary to establish their entitlements to
benefits;
16.15 There are no disputes under the internal dispute resolution
procedure which remain unresolved or complaints made by reference to
the Disclosed Scheme to the Pensions Ombudsman, OPAS, the Industrial
Tribunal or the Court.
17. CONTRACTS
---------
17.1 Details of all long term contracts and any contracts not in the
ordinary course to which the Vendor is a party are contained in
Schedule 1 and have been disclosed to the Purchaser in the Agreed
Bundle and the details contained therein are true and accurate in all
respects.
17.2 A schedule of all retail concessions including the terms and
conditions thereof (where such information is known to the Vendors)
has been disclosed to the Purchaser in the Agreed Bundle and the
details contained therein are true and accurate in all respects.
17.3 There is not outstanding in connection with the business of the
Vendor:-
17.3.1 any agreement or arrangement between the Vendor and any third
party which the signature or performance of this document will
contravene or under which the third party will acquire a right
of termination or any option as a result of the signature or
performance of this document;
17.3.2 any agency distributorship marketing purchasing manufacturing
or licensing agreement or arrangement or any restrictive
trading or other agreement or arrangement pursuant to which
any part of the business of the Vendor has been carried on;
17.3.3 any agreement or arrangement between the Vendor and any other
company which is a member of the Group;
17.3.4 any agreement or arrangement entered into by the Vendor
otherwise than by way of bargain at arm's length; or
17.3.5 any sale or purchase option or similar agreement or
arrangement affecting any of the assets of the Vendor or by
which the Vendor is bound.
17.4 None of the agreements or contracts to which the Vendor is a party
contain any unusual or onerous terms to be observed or performed by
the Vendor and none of such agreements or contracts are unusual
unprofitable (that is to say known to have been likely to result in a
loss to the Vendor on completion of performance) or of a long term
nature (that is to say incapable of performance in accordance with its
terms within 3 months after the date on which it was
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<PAGE>
entered into or undertaken) or involve or may involve obligations
which by reason of their material nature or magnitude ought to be made
known to the Purchaser.
17.5 Neither the Vendor nor any party with whom the Vendor has entered into
any agreement or contract is in default being a default which would
have a material and adverse effect on the financial or trading
position or prospects of the Vendor and there are no circumstances
likely to give rise to such a default.
17.6 No breach of contract event or omission has occurred which would
entitle any third party to terminate any contract to which the Vendor
is a party or to call in any money before the date on which payment
thereof would normally or otherwise be due and the Vendor has not
received notice of intention to terminate any of such agreements or
contracts.
17.7 The Vendors has no reason to believe that any customer or supplier of
the Vendor or other person dealing with the Vendor will refuse to
continue to deal with the Vendor or the Purchaser or will deal with it
on a smaller scale than at present as a result of the change of
control of the Vendor to be effected pursuant to this document.
17.8 The Disclosure Letter contains full details of all agreements
arrangements or contracts (whether oral or in writing) made between
the Vendor and any employee or client or customer of the Vendor other
than in the ordinary course of business.
18. TRADING
-------
18.1 Since the Accounts Date the Vendor has been trading at a volume and
level reasonably comparable with the respective volumes and levels of
the same periods during each of the two preceding years and the
Vendors are not aware of any matter or circumstance which has affected
or is likely to affect adversely the volume or level of trading of the
Vendor.
18.2 There is not outstanding any liability or claim against the Vendor nor
are there any deficiencies or defects or breach of contract which
could result in any claim being made against the Vendor in relation to
any goods or services for which the Vendor has been or is or may be or
become liable or responsible in the course of its business and without
prejudice to the generality of the foregoing no dispute exists between
the Vendor and any customer client or supplier thereof nor are there
any circumstances which are believed likely to give rise to any such
dispute.
18.3 The Vendor has not given any guarantee or warranty or made any
representation in respect of goods or services supplied or contracted
to be supplied by it save for any guarantee or warranty implied by law
and (save as aforesaid) has not accepted any liability or obligation
in respect of any goods or services that would apply after any such
goods or services have been supplied by it.
18.4 None of the activities or businesses of the Vendor requires any
licence authorisation or consent which has not been obtained on a
permanent and unconditional basis.
18.5 The Vendor is not restricted by contract from carrying on any activity
in any part of the world.
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18.6 Other than in the ordinary course of business no offer tender or the
like is outstanding which is capable of being converted into an
obligation of the Vendor by an acceptance or other act of some other
person.
19. JOINT VENTURES ETC.
-------------------
The Vendor is not:-
19.1 a party to any joint venture consortium partnership or profit sharing
arrangement or agreement; or
19.2 a member of any partnership trade association society or other group
whether formal or informal and whether or not having a separate legal
identity and no such body is relevant to or has any material influence
over the business of the Vendor as now carried on.
20. LITIGATION OFFENCES AND COMPLIANCE WITH STATUTES
------------------------------------------------
20.1 Otherwise than as plaintiff in the collection of debts arising in the
ordinary course of business (none of which exceed (Pounds)1,000) the
Vendor is not plaintiff defendant or otherwise a party to any
litigation arbitration or administrative proceedings which are in
progress or are threatened or pending by or against or concerning the
Vendor or any of its assets; the Vendor is not being prosecuted for
any criminal offence and no governmental or official investigation or
inquiry concerning the business or officers of the Vendor or any of
its assets is in progress or pending and there are no circumstances
which are likely to give rise to any such proceedings investigation or
inquiry.
20.2 Neither the Vendor nor any of its officers agents or employees (during
the course of their duties in relation to the business of the Vendor)
has committed or omitted to do any act or thing the commission or
omission of which is or could be in contravention of any statutory
obligation or any other law of the United Kingdom or any other country
giving rise to any fine penalty default proceedings or other liability
in relation to the business or officers of the Vendor or any of its
assets or any judgment or decision which would materially affect the
reputation or goodwill of the Vendor in relation to the Assets.
21. RESTRICTIVE AGREEMENTS
----------------------
21.1 There are no agreements in force restricting the freedom of the Vendor
to provide and take goods and services by such means and from and to
such persons as it may from time to time think fit.
21.2 During the 3 years immediately preceding the Completion Date, the
Vendor has not been party to any agreement, arrangement, concerted
practice or course of conduct which:-
21.2.1 is or ought to be or ought to have been or requires to be
registered under the Restrictive Trade Practices Acts 1976 and
1977 or contravenes the provisions of the Resale Prices Act
1976 or is or has been the subject of any inquiry,
investigation or proceeding under any of these Acts; or
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<PAGE>
21.2.2 is or has been the subject of an inquiry, investigation,
reference or report under the Fair Trading Act 1973 (or any
previous legislation relating to monopolies or mergers) or the
Competition Act 1980; or
21.2.3 contravenes Article 85(1) or 86 of the Treaty of Rome or which
has been notified to the Commission of the European Community
for an exemption or in respect of which an application has
been made to the said Commission for a negative clearance or
infringes any regulation or other enactment made under Article
87 of the said Treaty or is or has been the subject of any
inquiry, investigation or proceeding in respect thereof; or
21.2.4 has or is intended to have or is likely to have the effect of
restricting, distorting or preventing competition in
connection with the production, supply or acquisition of goods
in the United Kingdom or any part of it or the supply or
securing of services in the United Kingdom or any part of it;
or
21.2.5 is by virtue of its terms or by virtue of any practice for the
time being carried on in connection therewith a "Consumer
Trade Practice" within the meaning of Section 13 of the Fair
Trading Act 1973 and susceptible to or under reference to the
Consumer Protection Advisory Committee or the subject matter
of a report to the Secretary of State or the subject matter of
an Order by the Secretary of State under the provisions of
Part II of that Act; or
21.2.6 infringes any other competition, anti-restrictive trade
practice, anti-trust or consumer protection law or legislation
applicable in the United Kingdom or elsewhere and not
specifically mentioned in this paragraph 21.
21.3 The Vendor has not given any assurance or undertaking to the
Restrictive Practices Court or the Director General of Fair Trading or
the Secretary of State for Trade and Industry or the Commission or the
Court of Justice of the European Communities or any other court,
person or body and is not subject to any act, decision, regulation or
other instrument made by any of them relating to any matter referred
to in this paragraph 21.
21.4 The Vendor is not in default or in contravention of any article, act,
decision, regulation or other instrument or of any undertaking
relating to any matter referred to in this paragraph 21 ("the Anti-
Trust Rules") and has received no complaint or threat to complain
under or referring to the Anti-Trust Rules from any person and has not
received any request for information, investigation or objection
relating to the Anti-Trust Rules or been party to any proceedings to
which the Anti-Trust Rules (or any of them) were pleaded or relied
upon.
21.5 The Vendor is not in a dominant position in any market in any
substantial part of the EEC for the purposes of Article 86 of the
Treaty of Rome.
22. COMPUTER SYSTEMS - MILLENNIUM COMPLIANCE
----------------------------------------
22.1 Prior to purchasing the Computer Systems it was represented to the
Vendor that the Computer Systems are fully "millennium compliant" and
will not cease to be so at any time before, during or after the year
2000 and the details of such
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<PAGE>
representation have been or will be fully disclosed to the Purchaser
prior to Completion. For the purposes of this warranty, "millennium
compliant" means that neither the performance nor the functionality of
the Computer Systems is or will be affected by dates before, during or
after the year 2000.
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SCHEDULE 3
----------
PART 1
------
COMPLETION ACCOUNTS
-------------------
1. The Purchaser shall prepare Completion Accounts.
2. The Completion Accounts shall be prepared in accordance with the terms of
this schedule by the Purchaser and shall be delivered to the Vendors as soon
as practicable after Completion but in any event not later than 3 months
from the Completion Date.
3. The Completion Accounts shall comprise a statement of the Net Asset Value of
the Business as at the Effective Date (excluding, for the avoidance of
doubt, the Excluded Assets and the Excluded Liabilities).
4. The Completion Accounts shall be prepared using the accounting principles,
bases, policies and methods set out in Part 2 of this Schedule and otherwise
in accordance with the principles, bases, policies and methods adopted in
the Accounts.
5. The Vendors shall procure that the Vendor's Accountants shall within 30 days
of receipt of the draft Completion Accounts (which shall have been received
within the period referred to in paragraph 2 above) confirm whether or not
they shall propose adjustments to the draft Completion Accounts, and the
Purchaser shall procure that the Vendor's Accountants are given all such
assistance and access to all such information as they may reasonably require
in order to enable them to reach their decision.
6. If the Vendors' Accountants confirm that they have no suggested amendments
to the draft Completion Accounts they shall issue a report to that effect
or, if the Vendors' Accountants fail to confirm whether or not they have any
suggested amendments to the Completion Accounts within the period of 30 days
referred to in paragraph 5 above, then the draft Completion Accounts shall
constitute the Completion Accounts for the purposes of this document. If
they confirm that they have proposed adjustments to the draft Completion
Accounts within the period of 30 days referred to in paragraph 5, then the
Vendors and the Purchaser shall, within the period of 14 days of such
confirmation, seek to agree the proposed adjustments.
7. In the event of any dispute between the Vendors and the Purchaser, or any
dispute between the Vendors' Accountants and the Purchaser's Accountants, as
to any matter relevant to the draft Completion Accounts being notified by
the Vendors or Vendors' Accountants to the Purchaser or the Purchaser's
Accountants or by the Purchaser or the Purchaser's Accountants to the
Vendors or the Vendors' Accountants (as the case may be) within the period
of 30 days referred to in paragraph 5 and remaining unresolved at the expiry
of the period of 14 days referred to in paragraph 6 then such dispute shall
be referred to the Independent Accountants within 5 working days of such
failure or notification or dispute who shall determine the Completion
Accounts. The fees of any such firm of Independent Accountants shall be
paid by the Vendors and/or the Purchaser in the proportions determined by
the Independent Accountant. Any firm appointed hereunder shall act as
experts and not as arbitrators and their determination shall be binding on
the parties.
8. Upon the agreement (or determination under paragraph 7 of any matter
disputed) of the Completion Accounts:
8.1 the Accountants shall jointly sign a report specifying the Net Asset
Value as deduced from the Completion Accounts;
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8.2 the Accountants shall deliver copies of their report (with the
accounts to which they refer annexed) to the Vendors and the Purchaser
whereupon the terms of Clause 7 of the Memorandum shall apply.
PART 2
------
ACCOUNTING POLICIES TO BE ADOPTED IN THE COMPLETION ACCOUNTS
------------------------------------------------------------
The Completion Accounts shall be produced on the same basis as the Accounts save
that where the policies adopted in the Accounts conflict with UK GAAP then UK
GAAP shall prevail, and in addition shall:
1. ignore any ACT asset arising from any dividend paid;
2. not revalue fixed assets;
3. make no provision for corporation tax; and
4. ignore all intercompany debt within the Group.
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SCHEDULE 4
----------
PART I
------
THE PROPERTIES
--------------
<TABLE>
<CAPTION>
OWNER ADDRESS TENURE LEASE TERM
<S> <C> <C> <C>
Daxbourne Ltd
1. 9 Fenning Street Freehold
London SE1 3QR
2. 57 St Thomas Street Leasehold Commencement date 17th
London SE1 April 1995 - terminable on
six months' notice from
either side
3. 60 Low Friar Street Leasehold Five years from 1st
(a.k.a. 12 Friars October 1994
Court)
Newcastle upon Tyne
NE1 5XE
4. 72a Greenmarket Leasehold Commencement date 2nd
Newcastle upon Tyne February 1991, terminable
on six months' notice from
either side
5. 6 Thackeray Street Leasehold 10 years from 19th
London W8 December 1996
</TABLE>
PART II
-------
TERMS AND CONDITIONS OF SALE OF THE PROPERTIES
----------------------------------------------
In this part of this schedule the following terms shall have the following
meanings:
"the Freehold Property" the Property referred to in Entry 1 of part I of this
schedule.
"the Leasehold Properties" the Leasehold Properties referred to in Entries 3
and 5 of Part I of this schedule.
"the Licence Properties" the Leasehold Properties referred to in Entries 2 and
4 of Part I of this schedule.
1. Vacant possession of the whole of the Properties shall be given on
Completion.
2. The Twentieth Edition of the National Conditions of Sale (except Conditions
3 5(3)(iii) 15(2) and 15(3) and 15(4) thereof and Conditions 21(2) and 21(3)
thereof shall be deemed to be incorporated in this Agreement so far as they
are applicable to a sale by private treaty and are not varied by or
inconsistent with the conditions herein contained but the prescribed rate of
interest shall be four per centum per annum above the base rate from time to
time of National Westminster Bank plc.
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<PAGE>
3. Title to the Freehold Property will be deducted in accordance with Section
110 of the Land Registration Act 1925. Title to the Leasehold Properties
will commence with the leases referred to in Part I of this schedule.
4. The Freehold Property and the Leasehold Properties are sold subject to all
Local Land Charges registered or capable of registration before on or after
the date hereof and to all regulations and requirements of any Local or
Public Authority or Board and to all regulations provisions designations
requirements resolutions or schemes (if any) arising under the Town and
Country Planning Acts or regulations made thereunder and the Vendor will not
be required to indemnify the Purchaser in respect of any matter to which the
sale is made subject to this clause.
5. The Vendor sells the Freehold Property and the Leasehold Property with full
title guarantee.
6. The Leasehold Properties are sold subject to the rents reserved by and the
covenants referred to in the relevant leases (as referred to in Part I of
this scheme ("the Leases"). The Purchaser having been furnished with copies
of the Leases shall not be entitled to raise any objection thereto or
requisition thereon. The assignments to the Purchaser shall contain express
provisos and agreements pursuant to Condition 11(7) of the National
Conditions of Sale and covenants by the Purchaser to pay the rent reserved
by and to observe and perform the covenants and conditions contained in the
Leases and to indemnify the Vendors against all actions and claims in
respect thereof. The Purchaser shall not be entitled to proof of or to
raise any objection or requisition of whatsoever nature with regard to any
interest in reversion expectant upon the Lease.
7. THE FREEHOLD PROPERTY
---------------------
7.1 Completion of the Sale and Purchase of the Freehold Property shall
take place on Completion and the Vendors shall on Completion hand over
to the Purchaser the Charge Certificate for title number SGL285669
together with an undertaking to forward to the Purchaser's Solicitors
as soon as it is received from Lloyds Bank Plc a duly completed Form
53 in relation to the discharge of the registered charge referred to
in Entry 1 of the Charges Register of that title and the consent of
Lloyds Bank plc to the transfer of the Freehold Property in connection
with the restriction set out in Entry number 2 of the Proprietorship
Register of that title.
7.2 The consideration for the Transfer of the Freehold Property shall be
(Pounds)200,000.
8. THE LEASEHOLD PROPERTIES
------------------------
8.1 The Vendors shall at their own cost use their best endeavours to
obtain as soon as possible after the date hereof the requisite
consents of the Landlords in relation to the Leasehold Properties in
connection with the assignment of the Leasehold Properties to the
Purchaser.
8.2 The Purchaser shall use its best endeavours to assist the Vendor in
obtaining the consents referred to in paragraph 8.1 of this schedule
and shall provide all reasonably necessary information to the relevant
Landlord and shall enter in to any reasonably required direct
covenants with the relevant Landlords and procure the giving of such
guarantees or a rent deposit not exceeding six months' rent in favour
of the relevant Landlords as such Landlords may reasonably require
(not including director's guarantees) in connection with the obtaining
of the consents referred to in paragraph 8.1.
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8.3 Completion of the assignment of the Leasehold Properties shall take
place immediately on the relevant Landlord's consents have been
obtained in accordance with paragraphs 8.1 and 8.2 of this schedule.
On completion of the relevant assignments the Vendor shall deliver to
the Purchaser the relevant original leases or certified copies
accompanied by an appropriate statutory declaration of loss and
ancillary and supplemental documents including the relevant Landlord's
consent to the assignment. The consideration for the assignments of
the Leasehold Properties shall be (Pounds)1 in each case.
8.4 The Vendor shall keep the Purchaser fully informed (including the
provision of copy correspondence and other relevant material) as to
the progress of the Vendors' applications for consents in accordance
with this schedule.
8.5 If the relevant consents of the Landlords have not been granted within
3 months of the date hereof then the Purchaser shall be entitled
(provided it has obtained the written advice of Counsel of at lease 5
years call to the effect that such consents have been unreasonably
withheld or have been proffered subject to unreasonable conditions and
that there is more than a 50 per cent chance of a Court of competent
jurisdiction making a declaration to that effect) to require the
Vendors to apply to such Court for such a declaration and the Vendors
shall then make such an application forthwith and diligently pursue
such application until either the relevant consents are granted to the
reasonable satisfaction of the Purchaser or until the Purchaser so
agrees in writing.
8.6 If (save to the extent that this arises due to the Vendors' breach of
its obligations herein) the requisite Landlord's consents have not
been granted within 9 months of the date hereof and provided that the
Purchaser shall have fully complied with and discharged its duties
herein in relation to the securing of relevant Landlord's consent then
the sale and purchase of the relevant Leasehold Properties shall
lapse.
8.7 Pending the grant of the requisite Landlord's consents or the lapse
referred to in paragraph 8.6 above the following provisions shall
apply in relation to the use occupation and responsibility of the
Leasehold Properties.
8.7.1 The Vendors shall pay all monies properly due to the Landlord of
the Leasehold Properties (including all rents, service charges,
interest, insurance rent and any other periodical or other
payment) under the terms of the Leases, provided that the
Vendors shall have received the equivalent sums from the
Purchaser.
8.7.2 The Vendors shall not assign underlet charge surrender or
otherwise deal with its interest in the Leasehold Properties to
any party (save for to the Purchaser under the terms of this
Agreement) and shall not (save where the Purchaser at its
absolute discretion so agrees in writing) vary the Leases
(whether formally or by informal action) or serve any notices
thereunder or agree any revision of rents payable thereunder.
The Vendors shall within 5 working days forward to the Purchaser
copies of any notices of breach or other notices received by it
from the relevant Landlord in connection with the Leases and
shall keep the Purchaser fully informed as to any disputes or
negotiations with such Landlords in relation to the Leases.
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8.7.3 The Vendors shall at the reasonable request and cost of the
Purchaser take any necessary action to enforce the obligations
of the Landlords of the Leasehold Properties and shall serve any
such notices (as Tenant) on such Landlords which the Vendor is
entitled to serve in accordance with the terms of the relevant
Leases.
8.7.4 The Purchaser shall (unless and until the relevant Landlords
take enforcement action in relation to a breach of covenant on
the part of the Vendors in allowing the Purchaser in to such
occupation) be entitled to exclusively occupy and use the
Leasehold Properties and shall do so as a licensee of the
Vendors and shall perform and observe all covenants on the part
of the lessee contained in the relevant Leases (save that the
payment of monies due to the relevant Landlord shall be paid to
the Vendors) as contained in the relevant leases PROVIDED THAT
the Purchaser shall not during the period of its occupation of
the Leasehold Properties as licensee as aforesaid be obliged to
put or keep the Leasehold Properties in any better state or
condition as they are in as at the date hereof and shall not
undertake any works or alterations of the Leasehold Properties.
8.7.5 In consideration of such occupation and use of the Leasehold
Properties the Purchaser shall pay to the Vendor on demand such
sums as the Vendors shall be required to properly pay to the
Landlords of the Leasehold Properties in accordance with the
terms of the relevant Leases. The Purchaser shall be given
credit (or reimbursed as appropriate) for any payments made in
accordance with this paragraph 8.7.5 when the relevant
assignment is completed or when the licence to occupy expires in
relation to any payment made in the nature of payments in
advance.
8.7.6 The licence to use and occupy the Leasehold Properties shall
expire on the date of the relevant assignment of the Leasehold
Properties or on the date of any enforcement action taken by the
relevant Landlord to procure the vacation of the relevant
Leasehold Properties by the Purchaser or on lapse of the sale
and purchase of the Leasehold Properties or on the determination
of the relevant leases under which the Leasehold Properties are
held by the Vendors. The Vendors and the Purchaser shall use
their respective reasonable endeavours not to disclose to the
relevant Landlord the fact of any occupation and use by the
Purchaser of the Leasehold Properties in accordance with the
terms of this schedule or otherwise.
9. THE LICENCE PROPERTIES
----------------------
9.1 As from the date hereof the provisions of paragraphs 8.7.1 - 8.7.5
(inclusive) of this schedule shall apply to the Licence Properties as
they do to the Leasehold Properties save that references to "the
Leases" shall be references to the Leases referred to in items 2 and 4
in Part I of this schedule.
9.2 The licence to occupy and use the Licence Properties shall expire on
the date of any enforcement action being taken by the relevant
Landlord to procure the vacation of the relevant Licence Properties by
the Purchaser or on the date on which the relevant Leases in respect
of the Licence Property determine in accordance with the provisions
thereof.
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<PAGE>
9.3 The Vendors shall use their reasonable endeavours not to disclose
(unless already intentionally disclosed by the Purchaser) the fact of
the occupation and use by the Purchaser of the Licence Properties in
accordance with the terms of this schedule or otherwise.
9.4 The Purchaser shall from the date hereof fully indemnify the Vendors
against all claims and demands in respect of the Purchaser's use and
occupation of the Licence Properties and the obligations to pay the
rent reserved and to observe and perform the covenants and conditions
contained in the Leases to the Licence Properties.
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<PAGE>
EXHIBIT 2.2
DAXBOURNE LIMITED
POSTINSTANT LIMITED
MC HAIRWAYS LIMITED
Daxbourne International Limited 3 October 1997
c/o Dibb Lupton Alsop
125 London Wall
London EC2Y 5AE
Dear Sirs
We hereby offer to sell to you the Assets all of which are defined in the
attached memorandum on the terms and conditions and with the benefit of the
rights but subject to the obligations set out in the attached memorandum.
You may accept this offer by payment to Curry Ch Hausmann Popeck client account
with National Westminster Bank plc, Charing Cross Branch, client account no.
04309324, sort code 60-40-05 of the offer sum payable in accordance with the
terms of the offer.
Yours faithfully
MJ STANNARD
for and on behalf of
Daxbourne Ltd.,
Postinstant Ltd. and
MC Hairways Ltd.
