BIG FLOWER PRESS HOLDINGS INC
8-K, 1997-10-03
COMMERCIAL PRINTING
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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                               ------------------


                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


      Date of report (Date of earliest event reported): September 18, 1997


                         BIG FLOWER PRESS HOLDINGS, INC.
               (Exact Name of Registrant as Specified in Charter)

             New York                      1-14084              13-376-8322
(State or Other Jurisdiction            (Commission            (IRS Employer
       of Incorporation)                File Number)         Identification No.)

3 East 54th Street, New York, New York                           10022
(Address of Principal Executive Offices)                      (Zip Code)

       Registrant's telephone number, including area code: (212) 521-1600


                                  PAGE 1 OF 74
<PAGE>


ITEM 2.    ACQUISITION OR DISPOSITION OF ASSETS.

         Pursuant to an Agreement, dated September 18, 1997 (the "Agreement"),
the Registrant, through a wholly-owned subsidiary, acquired all of the
outstanding capital stock of Olwen Direct Mail, Limited ("Olwen"), a
privately-owned direct marketing company with 1996 sales of approximately U.S.
$30 million, from all of the shareholders of Olwen. The Registrant paid an
aggregate of (pound)20.8 million (approximately U.S. $33.3 million) in cash in
consideration for this stock, which purchase price was determined through
arms-length negotiations. On September 18, 1997, the Registrant issued a press
release, a copy of which is attached as an exhibit hereto and is incorporated by
reference herein in its entirety, announcing the acquisition.

         Olwen, headquartered in South London, England, specializes in
full-service direct mail preparation including prepress, printing,
personalization, finishing and mailing, as well as database services such as
response analysis and target customer profiling. In addition to the UK facility,
Olwen operates a database management operation and international direct mail
group in Baltimore, Maryland.

         The source of the cash consideration was general working funds, as well
as proceeds from a (pound)27.0 million revolving credit facility.

ITEM 7.    FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

         (a) & (b) It is impracticable to provide this information at this time.
The required information will be filed as soon as practicable, but not later
than 60 days after the date of filing of this report on Form 8-K.

         (c) The following exhibits are filed herewith:

Exhibit
Number     Description
- ------     -----------

2.1        Agreement, dated September 18, 1997, between Big Flower
           Limited and Peter Rivett, Andrew Ruddle and 3i Group PLC.

99.1       Registrant's press release, dated September 18, 1997




                                  PAGE 2 OF 74
<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.

                                            BIG FLOWER PRESS HOLDINGS, INC.


Date: October 3, 1997                       By: /s/ Irene B. Fisher
                                                -------------------
                                                   Irene B. Fisher
                                                   Vice President and
                                                   Associate General Counsel





                                  PAGE 3 OF 74
<PAGE>


                                  EXHIBIT INDEX



                                                                   Sequentially
Exhibit No.    Description                                         Numbered Page
- -----------    -----------                                         -------------
       2.1     Agreement, dated September 18, 1997, between Big          5
               Flower Limited and Peter Rivett, Andrew Ruddle
               and 3i Group PLC.

       99.1    Registrant's press release, dated September 18, 1997     73




                                  PAGE 4 OF 74




                            Dated 18 September 1997






                               BIG FLOWER LIMITED

                                    - and -

                                  PETER RIVETT

                                    - and -

                                 ANDREW RUDDLE

                                    - and -

                                  3i GROUP PLC






                                   AGREEMENT

                          for the sale and purchase of
                          all of the issued shares of
                           Olwen Direct Mail Limited






                              ASHURST MORRIS CRISP
                                Broadwalk House
                                5 Appold Street
                                London EC2A 2HA

                               Tel: 0171-638-1111
                               Fax: 0171-972-7990

                               JAS/KEM/566B00035


                                  PAGE 5 OF 74
<PAGE>
                                    CONTENTS
CLAUSE                                                                   PAGE

1. INTERPRETATION...........................................................1
2. SALE AND PURCHASE........................................................4
3. COMPLETION...............................................................6
4. WARRANTIES...............................................................8
5. PROTECTION OF GOODWILL..................................................12
6. CONFIDENTIAL INFORMATION................................................14
7. ANNOUNCEMENTS...........................................................14
8. COSTS...................................................................15
9. 3i GROUP LOAN...........................................................15
10. EFFECT OF COMPLETION...................................................15
11. FURTHER ASSURANCES.....................................................15
12. ENTIRE AGREEMENT.......................................................16
13. VARIATIONS.............................................................16
14. WAIVER.................................................................16
15. INVALIDITY.............................................................17
16. NOTICES................................................................17
17. COUNTERPARTS...........................................................18
18. GOVERNING LAW AND JURISDICTION.........................................18
SCHEDULE 1.................................................................20
Particulars relating to the Company........................................20
SCHEDULE 2.................................................................21
Particulars relating to Subsidiaries.......................................21
SCHEDULE 3.................................................................25
The Warranties.............................................................25
SCHEDULE 4.................................................................56
Form of Release............................................................56
SCHEDULE 5.................................................................57
The Properties.............................................................57
SCHEDULE 6.................................................................58
Deed of Indemnity..........................................................58



                                  PAGE 6 OF 74
<PAGE>

THIS AGREEMENT is made on 18 September 1997

BETWEEN:-

(1)     BIG FLOWER LIMITED (No.3435268) whose registered office is at Broadwalk
        House, 5 Appold Street, London EC2A 2HA (the "Purchaser"); and

(2)     (i)    PETER RIVETT of 15/37 Milson Road, Cremorne Point, NSW 2090,
               Australia ("Rivett");

        (ii)   ANDREW RUDDLE of The Barn, Sunt Farm, Caterfield Lane, Staffhurst
               Wood, Oxted, Surrey ("Ruddle"); and

        (iii)  3i GROUP PLC (No: 397156) whose registered office is at 91
               Waterloo Road, London SE1 8AP ("3i Group")

        (together, the "Vendor(s)" as the context admits).

THE PARTIES AGREE AS FOLLOWS:-

1.   INTERPRETATION

1.1  In this agreement the following words and expressions and abbreviations
     have the following meanings, unless the context otherwise requires:-

     "Accounts" means the audited financial statements of each Group Company as
     at and for the financial period ended on the Accounts Date;

     "Accounts Date" means 30 June 1997;

     "associated company" has the meaning given to it in sections 416 et seq.
     TA;

     "Board" means the board of directors of the Company;

     "Business Day" means a day (excluding Saturdays) on which banks generally
     are open in both London and New York for the transaction of normal banking
     business;

     "Company" means Olwen Direct Mail Limited No. 2545971;

     "Completion" means the completion of the sale and purchase of the Shares in
     accordance with clause 5;

     "Completion Date" means the date on which Completion occurs;

     "Confidential Information" means all information relating to any Group
     Company's business, or financial or other affairs (including future plans
     and targets of any Group Company) which is not publicly available or
     generally known;

     "Disclosure Letter" means a letter of today's date together with the
     attachments thereto addressed by the Vendors' Solicitors to the Purchaser
     disclosing exceptions to the Warranties;


                                  PAGE 7 OF 74

<PAGE>

     "Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien,
     hypothecation, trust, right of set-off or other third party right or
     interest (legal or equitable) including any right of pre-emption,
     assignment by way of security, reservation of title or any other security
     interest or adverse claim of any kind however created or arising or any
     other agreement or arrangement (including a sale and repurchase
     arrangement) having similar effect;

     "Escrow Account" means the interest bearing deposit account in the joint
     names of the Vendors' Solicitors and the Purchaser's Solicitors at National
     Westminster Bank PLC of 15 Bishopsgate, London, Sort Code: 50-00-00,
     Account Number 45224692.

     "Escrow Amount" means the sum of (pound)2,000,000 to be paid by the
     Purchaser in cash at Completion into the Escrow Account;

     "Group" means the Company and the Subsidiaries and "Group Company" means
     any one of them;

     "Intellectual Property" means any and all patents, trade marks, rights in
     designs, get up, trade, business or domain names, copyrights and topography
     rights (whether registered or not and any applications to register or
     rights to apply for registration of any of the foregoing), rights in
     inventions, know-how, trade secrets and other confidential information,
     rights in databases and all other intellectual property rights of a similar
     or corresponding character which may now or in the future subsist in any
     part of the world;

     "Permit" means a permit, licence, consent, approval, certificate,
     qualification, specification, registration and other authorisation and a
     filing of a notification report or assessment necessary in any jurisdiction
     for the proper and efficient operation of each Group Company's business,
     its ownership, possession, occupation or use of an asset or the execution
     and performance of this agreement;

     "Properties" means the properties described in schedule 5 or any part or
     parts thereof and "Property" shall mean any one of them;

     "Purchaser's Group" means the Purchaser, its holding companies and the
     subsidiary undertakings and associated companies from time to time of such
     holding companies, all of them and each of them as the context admits;

     "Purchaser's Solicitors" means Ashurst Morris Crisp of Broadwalk House, 5
     Appold Street, London EC2A 2HA;

     "Related Person" means in relation to any party its holding companies and
     the subsidiary undertakings and associated companies from time to time of
     such holding company, or connected persons, all of them and each of them as
     the context admits;

     "Relief" means any loss relief, allowance, exemption, set-off, deduction,
     credit or right to repayment of taxation;

     "Rivett Shares" means the 75,000 shares in the Company held by Rivett;


                                  PAGE 8 OF 74

<PAGE>

     "Ruddle Shares" means the 1513 shares in the Company held by Ruddle;

     "3i Shares" means the 25,000 shares in the Company held by 3i Group;

     "Shares" means the 3i Shares and Rivett Shares and Ruddle Shares taken
     together amounting to all of the issued shares in the capital of the
     Company;

     "Subsidiary" means a subsidiary undertaking of the Company specified in
     schedule 2 and "Subsidiaries" means all those subsidiary undertakings;

     "TA" means the Income and Corporation Taxes Act 1988;

     "Tax Deed" means a deed of indemnity in the agreed terms;

     "Vendor Associate" means each of the Vendors, any holding company of a
     Vendor and any subsidiary undertaking or associated company of such Vendor
     or holding company and any persons connected with any of them within the
     meaning of section 839 of the TA or any company associated with them
     (excluding the Group Companies) as the context admits;

     "Vendors' Solicitors" means Church Adams Tatham of Chatham Court, Lesbourne
     Road, Reigate, Surrey RH2 7FN;

     "Warranties" means the warranties set out in schedule 3.

1.2  In this agreement unless otherwise specified, reference to:-

     (a) a "subsidiary undertaking" is to be construed in accordance with
         section 258 of the Companies Act 1985 and a "subsidiary" or "holding
         company" is to be construed in accordance with section 736 of that Act;

     (b) a document in the "agreed terms" is a reference to that document in the
         form approved and for the purposes of identification signed by or on
         behalf of each party;

     (c) "FA" followed by a stated year means the Finance Act of that year;

     (d) "includes" and "including" shall mean including without limitation;

     (e) a "party" means a party to this agreement and includes its assignees
         (if any) and/or the successors in title to substantially the whole of
         its undertaking and, in the case of an individual, to his or her estate
         and personal representatives;

     (f) a "person" includes any person, individual, company, firm, corporation,
         government, state or agency of a state or any undertaking (whether or
         not having separate legal personality and irrespective of the
         jurisdiction in or under the law of which it was incorporated or
         exists);

     (g) a "statute" or "statutory instrument" or "accounting standard" or any
         of their provisions is to be construed as a reference to that statute
         or statutory instrument or accounting standard or such provision as the
         same may have been amended or re-enacted before the date of this
         agreement;


                                  PAGE 9 OF 74

<PAGE>

     (h) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs of
         and schedules to this agreement;

     (i) "writing" includes any methods of representing words in a legible form
         (other than writing on an electronic or visual display screen) or in
         other non-transitory form;

     (j) words denoting the singular shall include the plural and vice versa and
         words denoting any gender shall include all genders;

     (k) any statute, statutory instrument, regulation, by-law or other
         requirement of English law and to any English legal term for any
         action, remedy, method of judicial proceeding, legal document, legal
         status, procedure, court, official or any legal concept or doctrine or
         other expression shall in respect of any jurisdiction other than
         England be deemed to include that which most nearly approximates in
         that jurisdiction to the English term;

     (l) any time of day is reference to time in London, England.

1.3  The schedules form part of the operative provisions of this agreement and
     references to this agreement shall, unless the context otherwise requires,
     include references to the schedules.

1.4  The index to and the headings and the descriptive notes in brackets
     relating to provisions of taxation statutes in this agreement are for
     information only and are to be ignored in construing the same.

1.5  Any question of whether a person is connected with another shall be
     determined in accordance with section 839 of the TA (except that in
     construing section 839 "control" has the meaning given by section 840 or
     section 416 of the TA so that there is control whenever section 840 or 416
     requires) which shall apply in relation to this agreement as it applies in
     relation to the TA.

2.   SALE AND PURCHASE

2.1  Upon the terms and subject to the conditions of this agreement, each of the
     Vendors severally as legal and beneficial owner and with full title
     guarantee shall sell and the Purchaser shall purchase the Rivett Shares,
     the Ruddle Shares and the 3i Shares respectively with effect from
     Completion. Each Vendor hereby warrants and undertakes to the Purchaser
     that the shares he or it is selling are sold free from any Encumbrance and
     together with all benefits and rights now or hereafter attached thereto
     including the right to all dividends and other distributions declared made
     or paid after the Accounts Date in respect of the Shares.

2.2  Each of the Vendors hereby waives any rights or restrictions conferred upon
     them which may exist in relation to the transfer or sale of the Shares
     under the articles of association of the Company or otherwise.


                                  PAGE 10 OF 74

<PAGE>

2.3  The Purchaser shall not be obliged to complete the purchase of any of the
     Shares unless the Vendors complete the sale of all of the Shares
     simultaneously, but completion of the purchase of some Shares shall not
     affect the rights of the Purchaser with respect to its rights to the other
     Shares.

2.4  The consideration for the sale and purchase of the Shares shall be
     (pound)20.8 million in aggregate.

     The consideration shall be divided amongst the Vendors in the proportions
     74.757 per cent Rivett, 1.648 per cent Ruddle and 23.595 per cent 3i Group.

     The Purchaser may deduct from the consideration due to Rivett any amount
     for which he is liable to the Purchaser or any subsidiary of the Purchaser,
     including the Company or any of its subsidiaries.

     At Completion out of the net consideration due to Rivett the Purchaser will
     pay into the Escrow Account a sum representing the Escrow Amount.

     At Completion the Purchaser will pay the remaining sums due to the Vendors
     to the Vendors' Solicitors or to 3i Group, as specified in clause 3.5.

2.5  If the Purchaser shall not have notified Rivett in writing of any claims
     under the Warranties or the Tax Deed or any other provision of this
     agreement on or before the date falling one year after the Completion Date,
     the Escrow Amount (together with accrued interest earned thereon) shall be
     released to Rivett. If the Purchaser shall have so notified Rivett in
     writing of any such claim(s), then the Purchaser's reasonable estimate of
     the aggregate amounts so claimed (disregarding, for this purpose, clause
     4.9) shall be retained in the Escrow Account pending final determination of
     such claim(s) and any balance (together with accrued interest earned on
     such balance) shall be released to Rivett. Upon final determination of the
     total amount(s) due to the Purchaser such amounts shall (to the extent that
     there are funds available in the Escrow Account) be paid forthwith to the
     Purchaser. Any payments to the Purchaser from the Escrow Account shall for
     the avoidance of doubt be without prejudice to the Purchaser's right to
     payment of any further amounts which cannot be satisfied from the Escrow
     Account. Any balance held in the Escrow Account after such final
     determination and payment to the Purchaser (together with all accrued
     interest earned thereon) shall be released to Rivett PROVIDED ALWAYS that
     no payment shall be made under any circumstances to Rivett from the Escrow
     Account before the date falling one year after the Completion Date.

     For the purposes of this clause 2.5 only, any claim in respect of which
     notice shall have been given in accordance with clause 4.8 shall be deemed
     to have been finally determined in favour of Rivett if proceedings in
     respect of such claim have not been issued and served on Rivett not later
     than the expiry of the period of 12 months after the date of the said
     notice.

2.6  Interest earned on amounts held in the Escrow Account shall not be released
     other than in accordance with clause 2.5. Any amounts to be released to
     Rivett shall be subject to deduction of tax thereon or other amounts (if
     any) required by law to be deducted in respect thereof.


                                  PAGE 11 OF 74
<PAGE>

2.7  Rivett and the Purchaser confirm that they have irrevocably instructed
     their respective solicitors to operate the Escrow Account in accordance
     with this clause 2.

3.   COMPLETION

3.1  Completion shall take place at the offices of the Purchaser's Solicitors
     immediately after the execution of this agreement.

3.2  On Completion the Vendors shall deliver to or, if the Purchaser shall so
     agree, make available to the Purchaser:-

     (a) transfers in common form relating to all the Shares duly executed in
         favour of the Purchaser (or as it may direct);

     (b) share certificates relating to the Shares;

     (c) any waivers or consents by members of any Group Company or other
         persons which the Purchaser has specified prior to Completion so as to
         enable the Purchaser or its nominees to be registered as the holders of
         the Shares and any shares of Subsidiaries or a representation from the
         Vendors that no such waivers or consents are required;

     (d) (i)    service agreements in the agreed terms with Mr A Fisher,
                Mr A Ruddle and Mr P Croft;

         (ii)   the resignation of Mr Fisher as secretary of each Group Company;
                and

        (iii)   the resignations of all directors of Olwen International Direct
                Mail Inc from their offices as directors (but they will other-
                wise remain as employees of that company on the same terms).


     (e) the written resignations of the auditors of each Group Company
         (effective from Completion) containing an acknowledgement that they
         have no claim against any Group Company for compensation for loss of
         office, professional fees or otherwise and a statement under section
         394(1) of the Companies Act 1985;

     (f) the Tax Deed duly executed by Rivett;

     (g) all land certificates, charge certificates, leases, title deeds and
         other documents relating to the Properties (except to the extent that
         the same are in the possession of mortgagees pursuant to mortgages
         disclosed in schedule 5 in which case copies will be provided);

     (h) the common seals, certificates of incorporation and statutory books,
         share certificate books and cheque books of each Group Company;


                                  PAGE 12 OF 74

<PAGE>

     (i) to the extent not in the possession of any Group Company, all books of
         account or references as to customers and/or suppliers and other
         records and all insurance policies in any way relating to or concerning
         the businesses of any Group Company;

     (j) to the extent not in the possession of any Group Company, all licences,
         consents, permits and authorisations obtained by or issued to any Group
         Company or any other person in connection with the business carried on
         by any of them and such contracts, deeds or other documents (including
         assignments of any such licences) as shall have been required by the
         Purchaser's Solicitors prior to the date hereof;

     (k) duly executed transfers of each share in the Subsidiaries not
         registered in the name of any Group Company in favour of the Company
         (or as the Purchaser may direct);

     (l) share certificates relating to all of the issued shares in the capital
         of each of the Subsidiaries; and

     (m) a release in the form set out in Schedule 4 duly executed as a deed, in
         a form satisfactory to the Purchaser, releasing each Group Company from
         any liability whatsoever (actual or contingent) which may be owing to a
         Vendor Associate by any Group Company.

     3i shall have no liability under this clause 3.2 save in respect of the 3i
     Shares under paragraphs (a), (b) and (c).

3.3  At or prior to Completion (and prior to the taking effect of the
     resignations of the directors referred to in clause 3.2(d) above) each of
     the Vendors shall procure the passing of board resolutions of each Group
     Company:-

     (a) sanctioning for registration (subject where necessary to due stamping)
         the transfers in respect of the Shares and any shares to which clause
         3.2(k) refers;

     (b) appointing such persons as are specified by the Purchaser to be the
         directors and secretary of each Group Company;

     (c) revoking all mandates to bankers and giving authority in favour of the
         directors appointed under clause 3.3(b) above or such other persons as
         the Purchaser may nominate to operate the bank accounts thereof;

     (d) changing the accounting reference date of each Group Company to 31
         December;

     (e) resolving that the Company and the persons named in clause 3.2(d)(i)
         enter into service agreements in the agreed terms.

3.4  Each of Rivett and Ruddle shall procure that at Completion:-

     (a) there is repaid all sums (if any) owing to any Group Company by any
         Vendor Associate (other than another Group Company) or by the directors
         of any Group Company or any of their connected persons and whether or
         not such sums are due for repayment and that there remain no
         outstanding transactions between any Group Company and any Vendor
         Associate;


                                  PAGE 13 OF 74

<PAGE>

     (b) each Group Company is released from any guarantee, indemnity, bond,
         letter of comfort or Encumbrance or other similar obligation given or
         incurred by it which relates in whole or in part to debts or other
         liabilities or obligations, whether actual or contingent, of any person
         other than a Group Company;

         and prior to such repayment or release Rivett and Ruddle undertake to
         the Purchaser (on behalf of itself and as trustee on behalf of each
         Group Company) to keep each Group Company fully indemnified against any
         failure to make any such repayment or any liability arising under any
         such guarantee, indemnity, bond, letter of comfort or Encumbrance.

3.5  Upon compliance by the Vendors with the provisions of clauses 3.2, 3.3 and
     3.4 and in accordance with clause 2.4 the Purchaser shall:-

     (a) provide for the transfer of a sum representing the Escrow Amount to the
         Escrow Account and so that notification by National Westminster Bank
         PLC of receipt of such sum shall be a good discharge to the Purchaser;

     (b) provide for the bank transfer of the remaining sums due to Rivett and
         Ruddle (being(pound)13,892,240) under clause 2.4 to the Vendors'
         Solicitors at National Westminster Bank PLC of 126 High Holborn, London
         W1V 6QB. Sort Code: 60-30-06, Account No. 01322648 and so that receipt
         by such bank of such amount shall be a good discharge to the Purchaser;
         and

     (c) provide for the bank transfer of(pound)4,822,169 of the sums due to 3i
         Group under clause 2.4 to its account at Royal Bank of Scotland plc,
         Corporate Banking office, PO Box 450, 5-10 Great Tower Street, London.
         Sort Code: 16-04-00T, Account Name: 3i Group plc UK Investment, Account
         No: 20014158, ref: CFC/230272 and of the remainder of(pound)85,591 due
         to 3i Group in accordance with (b) above.

     (d) deliver to Rivett a counterpart of the Tax Deed duly executed by the
         Purchaser.

3.6  If in any respect the obligations of the Vendors are not complied with on
     Completion the Purchaser may:-

     (a) defer Completion to a date not more than 28 days after Completion (and
         so that the provisions of this clause 3, apart from this clause 3.6(a),
         shall apply to Completion as so deferred); or

     (b) proceed to Completion so far as practicable (without prejudice to its
         rights hereunder).

4.   WARRANTIES

4.1  Rivett warrants with the Purchaser in the terms of all the Warranties set
     out in schedule 3.

     Rivett acknowledges that he gives the Warranties with the intention of
     inducing the Purchaser to enter into this agreement and that the Purchaser
     does so in reliance on the Warranties.

4.2  Any information (including the Accounts) supplied by or on behalf of any
     Group Company to or on behalf of the Vendors in connection with the
     Warranties, the Disclosure Letter or


                                  PAGE 14 OF 74

<PAGE>

     otherwise in relation to the business and affairs of any Group Company
     shall not constitute a representation or warranty or guarantee as to the
     accuracy thereof by any Group Company and each of Rivett and Ruddle and 3i
     Group undertakes to the Purchaser (on behalf of itself and as trustee of
     each Group Company and their respective directors, employees, agents and
     advisers) that it will not bring any and all claims which it might
     otherwise have against any Group Company or any of their respective
     directors, employees, agents or advisers in respect thereof.

4.3  Without restricting the rights of the Purchaser or the ability of the
     Purchaser to claim damages on any basis available to it if Rivett is in
     breach of any of the Warranties he shall pay to the Purchaser on demand the
     amount necessary to put the Purchaser and the Group into the position which
     would have existed if the said Warranties had not been breached together
     with all costs and expenses reasonably incurred by the Purchaser and any
     Group Company as a result of such breach.

4.4  Each of the Warranties shall be construed as a separate warranty and
     (unless expressly provided to the contrary) shall not be limited by the
     terms of any of the other Warranties or by any other term of this
     agreement.

4.5  Rivett shall not be under any liability under the Warranties in relation to
     any matter forming the subject matter of a claim thereunder to the extent
     that the same are disclosed in the Disclosure Letter. No letter, document
     or other communication shall constitute a disclosure for the purposes of
     the Warranties except and to the extent that the same is expressly referred
     to in the Disclosure Letter.

4.6  No information relating to the Group of which the Purchaser has knowledge
     (actual or constructive) other than that contained in or referred to in
     this agreement and/or included in the Disclosure Letter and no
     investigation by or on behalf of the Purchaser shall prejudice any claim by
     the Purchaser under the Warranties or reduce any amount recoverable
     thereunder.

4.7  Each of Rivett and Ruddle shall give to the Purchaser all such information
     and documentation relating to the Group as the Purchaser shall reasonably
     require to enable it to satisfy itself as to whether there has been any
     breach of the Warranties.

4.8  Save in the case of fraud or fraudulent concealment by Rivett, Rivett shall
     be under no liability in respect of any claim under the Warranties and any
     such claim shall be wholly barred and unenforceable unless written notice
     of such claim setting out reasonable details of the relevant claim
     (including the grounds on which such claim is based) shall have been served
     upon Rivett by the Purchaser:-

     (a) in the case of a claim under the Warranties' (other than the Warranties
         relating to Tax), by not later than 5.00 p.m. on the third anniversary
         of the date hereof;

     (b) in the case of a claim under the Warranties relating to Tax by not
         later than 5.00 p.m. on the seventh anniversary of the date hereof;

4.9  Save in the case of fraud or fraudulent concealment Rivett shall not be
     liable in respect of all and any claims made by the Purchaser under the
     Warranties or under the Tax Deed (excluding


                                  PAGE 15 OF 74

<PAGE>

     claims under clauses 2.1(a)(iv) and (v) of the Tax Deed) unless and until
     the aggregate cumulative liability of Rivett in respect of all such claims
     (excluding claims under such clauses 2.1(a)(iv) and (v)) exceeds
     (pound)150,000 in which event Rivett shall be liable for the entire amount
     of such liability insofar as it exceeds (pound)50,000.

4.10 Save in the case of fraud or fraudulent concealment the aggregate liability
     of Rivett in respect of all claims under this agreement and the Tax Deed
     shall not in any circumstances exceed (pound)15,549,456.

4.11 Where the Purchaser and/or the Company is or is likely to be entitled to
     recover from some other person any sum in respect of any matter giving rise
     to a claim for breach of the Warranties then the Purchaser shall procure
     that reasonable steps are taken to enforce such recovery and if any sum is
     so recovered then either the amount payable by Rivett in respect of that
     claim shall be reduced by an amount equal to the sum so recovered (less the
     reasonable costs and expenses of recovering it and any taxation payable by
     the Purchaser or the Company as a result of its receipt) or (if an amount
     shall already have been paid by Rivett in respect of that claim) there
     shall be repaid to Rivett the lesser of:

     (a) the amount so paid by Rivett; and

     (b) the amount so recovered (less in either case the reasonable costs and
         expenses of its recovery and any taxation payable by the Purchaser or
         the Company as a result of its receipt).

4.12 Without prejudice to the generality of clause 4.11 the provisions of clause
     4.11 shall apply where the Company is entitled to recover from its insurers
     (in respect of insurance effected on or before the Completion Date) any sum
     in respect of any matter giving rise to a claim under the Warranties

4.13 Rivett shall have no liability (or such liability shall be reduced) in
     respect of any claim for breach of any of the Warranties:

     (a) if and to the extent that provision or reserve for or in respect of the
         liability or other matter giving rise to such claim has been made in
         the Accounts

     (b) save in respect of section 57 and schedule 22 of the Environmental
         Protection Act 1995, if and to the extent that such claim occurs or is
         increased as a result of any change in legislation after the date of
         this agreement (or any legislation not in force at the date of this
         agreement) which takes effect retrospectively or the withdrawal after
         the date of this agreement of any published concession or published
         general practice previously made by the Inland Revenue or other taxing
         authority

     (c) if and to the extent that such claim occurs or is increased as a result
         of any increase in the rate of taxation from that in force at the date
         of this agreement

     (d) if and to the extent that any breach of the Warranties occurs as a
         result of or is otherwise attributable to the Purchaser or any Group
         Company disclaiming any part of the benefit of capital or other
         allowances against taxation claimed or proposed to be


                                  PAGE 16 OF 74

<PAGE>

         claimed on or before the date of this agreement save where such
         disclaimer was contemplated in computing the provision for taxation in
         the Accounts.

     (e) if and to the extent that such claim would not have arisen or would
         have been reduced or eliminated but for the failure or omission on the
         part of the Purchaser or any Group Company to make any claim election
         surrender or disclaimer or give notice or consent or do any other thing
         under the provisions of any enactment or regulation relating to
         taxation after Completion the making giving or doing of which was taken
         into account in computing the provision for taxation in the Accounts
         and was notified to the Purchaser prior to the date of this agreement

     (f) if and to the extent that such claim relates to a liability for
         Taxation which would not have arisen but for any winding up or
         cessation or change in the nature after the Completion Date of any
         trade or business carried on by the Company except to the extent that
         such winding up or cessation or change in nature is occasioned by the
         facts or circumstances giving rise to one or more claims under the
         Warranties

     (g) if and to the extent such claim would not have arisen but for a change
         of accounting policy or accounting practice of any Group Company after
         Completion other than one required to comply with the provisions of UK
         GAAP currently in force.

     (h) if and to the extent that any Relief (other than a Relief that has been
         reflected in the net assets of the Company as shown by the Accounts) of
         the Company arising in respect of an accounting period ended on or
         before Completion is available to relieve or mitigate such claim or
         liability for Taxation

     (i) if and to the extent that it arises as a result of any change after
         Completion in the date to which the Company makes up its accounts

4.14 The amount of any claim for breach of the Warranties 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 and also the amount
     of any Taxation in respect of the receipt of the sums claimed for breach.

4.15 Nothing in this clause 4 shall derogate from the Purchaser's obligation to
     mitigate any loss which it suffers in consequence of a breach of the
     Warranties.

4.16 For the avoidance of doubt the Purchaser shall not be entitled to recover
     damages in respect of any claim for breach of the Warranties and/or of the
     covenants contained in the Tax Deed to the extent that to do so would
     involve recovery more than once in respect of the same loss or damage

4.17 Any amount payable by Rivett to the Purchaser in satisfaction of any claim
     under the Warranties or under the Tax Deed shall be treated as a reduction
     by that amount of the price paid by the Purchaser for the Rivett Shares.


                                  PAGE 17 OF 74

<PAGE>

4.18 The Purchaser shall upon it or the Company becoming aware of any matter or
     event ("the Matter") which might give rise to a claim under the Warranties
     give notice in writing to Rivett of the Matter as soon as is reasonably
     practicable.

4.19 The Purchaser shall provide and shall procure that each Group Company will
     provide to Rivett and his professional advisers reasonable access to
     premises and relevant personnel and to any relevant assets documents and
     records within their power possession or control for the purpose of
     investigating the Matter and enabling Rivett to take such action as
     referred to in the following paragraph and shall allow Rivett and his
     advisers to take copies of any relevant documents or records subject in
     each case to keeping the same confidential and using them only in relation
     to minimising Rivett's liabilities regarding the Matter.

4.20 The Purchaser shall and shall procure that the Company will take such
     action and institute and conduct such proceedings on behalf of the
     Purchaser or the Company as Rivett may reasonably request in writing to
     dispute resist appeal compromise defend remedy or mitigate the Matter or to
     enforce against any third party the rights of the Company in relation to
     the Matter (save where the Purchaser reasonably demonstrates that to do so
     would be reasonably forseeably likely to result in the loss to the Group of
     any customer accounting for 2% or more of the anticipated turnover of the
     Group in the then current financial period) subject to Rivett fully
     indemnifying and securing the Purchaser and each Group Company to the
     reasonable satisfaction of the Purchaser against all reasonable costs and
     expenses incurred as a result of any action taken pursuant to this
     sub-clause

4.21 Save as provided in the preceding paragraph, the Purchaser shall not and
     shall procure that the Company will not admit liability in respect of or
     compromise or settle the Matter without the prior written consent of Rivett
     (such consent not to be unreasonably withheld or delayed)

5.   PROTECTION OF GOODWILL

5.1  Each of Rivett and Ruddle hereby respectively undertakes that (except as
     otherwise agreed in writing with the Purchaser) he will not either solely
     or jointly with any other person (either on their own respective accounts
     or as the agent of any other person):-

     (a) for the Relevant Period from Completion carry on or be engaged or
         concerned or (except as the holder of shares in a listed company which
         confer not more than five per cent. of the votes which can generally be
         cast at a general meeting of the company) interested directly or
         indirectly in a business which competes in the United Kingdom with the
         type of business carried on by any member of the Group at Completion in
         the United Kingdom;

     (b) for the Relevant Period from Completion solicit or accept the custom of
         any person in respect of goods or services competitive with those
         manufactured or supplied by any member of the Group prior to
         Completion, such person having been a customer of the Company in
         respect of such goods or services during such period;

     (c) for the Relevant Period from Completion induce, solicit or endeavour to
         entice any person who during the period of 12 months prior to
         Completion was an employee of


                                  PAGE 18 OF 74

<PAGE>

         any member of the Group occupying a senior or managerial position or
         any position involving data management or sales likely (in the opinion
         of the Purchaser) to be:-

         (i)   in possession of Confidential Information relating to; or

         (ii)  able to influence the customer relationships or connections of;
               or

         (iii) otherwise crucial to the operation of the business of

         any member of the Group to leave the service or employment of any
         member of the Group; or

     (d) use any trade name (including the expression "Olwen") used by any
         member of the Group at any time during the three years immediately
         preceding the date of this agreement or any other name intended or
         likely to be confused with any such trade name.

5.2  Each of Rivett and Ruddle agrees that the undertakings contained in this
     clause 5 are reasonable and are entered into for the purpose of protecting
     the goodwill of the business of each member of the Group and that
     accordingly the benefit of the undertakings may be assigned by the
     Purchaser and its successors in title without the consent of Rivett or
     Ruddle.

5.3  Each undertaking contained in this clause 5 is and shall be construed as
     separate and severable and if one or more of the undertakings is held to be
     against the public interest or unlawful or in any way an unreasonable
     restraint of trade or unenforceable in whole or in part for any reason the
     remaining undertakings or parts thereof, as appropriate, shall continue to
     bind Rivett and Ruddle.

5.4  If any undertaking contained in this clause 5 shall be held to be void but
     would be valid if deleted in part or reduced in application, such
     undertaking shall apply with such deletion or modification as may be
     necessary to make it valid and enforceable. Without prejudice to the
     generality of the foregoing, a period (as the same may previously have been
     reduced by virtue of this clause 5.4) shall take effect as if reduced by
     six months until the resulting period shall be valid and enforceable.

5.5  The references in this clause 5 to the Relevant Period means 3 years in
     respect of Rivett and 2 years in respect of Ruddle.

5.6  In the event that Ruddle is wrongfully dismissed from his employment with
     the Company, he shall no longer be bound by clause 5.1(a), (b) or (c).

5.7  No provision of this agreement, by virtue of which this agreement is
     subject to registration (if such be the case) under the Restrictive Trade
     Practices Act 1976 (unless this agreement is a non-notifiable agreement
     pursuant to section 27A of that Act), shall take effect until the day after
     particulars of this agreement have been furnished to the Director-General
     of Fair Trading pursuant to section 24 of that Act. For this purpose the
     expression "this agreement" includes any agreement or arrangement of which
     this agreement forms part and which is registrable or by virtue of which
     this agreement is registrable.


                                  PAGE 19 OF 74

<PAGE>

6.   CONFIDENTIAL INFORMATION

6.1  Each of the Vendors shall:-

     (a) not use or disclose to any person Confidential Information; and

     (b) use all reasonable endeavours to prevent the use or disclosure of
         Confidential Information by any person other than by members of the
         Purchaser's Group.

6.2  Clause 6.1 does not apply to:-

     (a) disclosure of Confidential Information to or at the written request of
         the Purchaser;

     (b) use or disclosure of Confidential Information required (as determined
         by written opinion of independent counsel reasonably satisfactory to
         the Purchaser) to be disclosed by law or any regulatory authority;

     (c) disclosure of Confidential Information to professional advisers for the
         sole purpose of advising the Vendors with respect to this agreement but
         the Vendors shall ensure that, prior to such disclosure, such
         professional advisers give an undertaking on similar terms to the
         undertaking in clause 6.1 to keep the information confidential; or

     (d) Confidential Information which becomes generally known other than by
         the Vendors' breach of clause 6.1.

7.   ANNOUNCEMENTS

7.1  No announcement of the making of this agreement nor its terms nor those of
     the Heads of Agreement entered into in relation to this Agreement shall be
     made by or on behalf of the Vendors save with the approval of the Purchaser
     unless disclosure is:-

     (a) to the Vendors' professional advisers for the sole purpose of advising
         that party with respect to this agreement; or

     (b) required (as determined by written opinion of independent counsel
         reasonably satisfactory to the Purchaser) by law or some regulatory
         body and disclosure shall then only be made by that party:-

         (i)   after it has taken all such steps as may be reasonable in the
               circumstances to agree the contents of such announcement with the
               other party before making such announcement and provided that any
               such announcement shall be made only after as much advance notice
               to the other parties as commercially practicable; and

         (ii)  to the person or persons and in the manner required (as
               determined by written opinion of independent counsel reasonably
               satisfactory to the Purchaser) by law or any regulatory authority
               or as otherwise agreed between the parties; or


                                  PAGE 20 OF 74

<PAGE>

     (c) by 3i Group in the form of a brochure sent to potential investee
         companies and referring only to the fact of 3i Group's investment in
         the Company and its subsequent realisation (without any reference to
         prices).

7.2  The restrictions contained in clause 7.1 shall apply without limit of time
     and whether or not this agreement is terminated.

8.   COSTS

     Unless expressly otherwise provided in this agreement each of the parties
     shall bear its own legal, accountancy and other costs, charges and expenses
     connected with the sale and purchase of the Shares.

9.   3i GROUP LOAN

     3i Group agrees with the Purchaser that it will waive the 3 month interest
     charge (due under the terms of its loan to the Company on a change of
     control of the Company) upon such loan becoming repayable as a result of
     the acquisition of the Company by the Purchaser.

10.  EFFECT OF COMPLETION

10.1 The terms of this agreement (insofar as not performed at Completion and
     subject as specifically otherwise provided in this agreement) shall
     continue in force after and notwithstanding Completion.

10.2 The remedies of the Purchaser in respect of any breach of any of the
     Warranties shall continue to subsist notwithstanding Completion.

11.  FURTHER ASSURANCES

11.1 Following Completion each of the Vendors shall from time to time forthwith
     upon request from the Purchaser at the Vendors' expense do all acts and/or
     execute all such documents in a form reasonably satisfactory to the
     Purchaser for the purpose of vesting in the:-

     (a) Purchaser the full legal and beneficial title to the:-

         (i)   Shares and otherwise giving the Purchaser the full benefit of
               this agreement; and

         (ii)  Intellectual Property used by the Company except where such
               Intellectual Property is the subject of licences to the Company
               as at the date hereof; and

     (b) Company title to the Properties or insofar as any consent or licence
         may be required by reason of the transactions set out in this agreement
         or otherwise to enable any of the Properties to continue to be vested
         with title as aforesaid in the Company when under the ownership or
         control of the Purchaser or other person being entitled for the time
         being to the benefit of the Warranties.


                                  PAGE 21 OF 74

<PAGE>

12.  ENTIRE AGREEMENT

12.1 Each party on behalf of itself and as agent for each of its Related Persons
     acknowledges and agrees with the other party (each such party acting on
     behalf of itself and as agent for each of its Related Persons) that:-

     (a) this agreement together with any other documents referred to in this
         agreement (together the "Transaction Documents") constitute the entire
         and only agreement between the parties and their respective Related
         Persons relating to the subject matter of the Transaction Documents;

     (b) neither it nor any of its Related Persons have been induced to enter
         into any Transaction Document in reliance upon, nor have they been
         given, any warranty, representation, statement, assurance, covenant,
         agreement, undertaking, indemnity or commitment of any nature
         whatsoever other than as are expressly set out in the Transaction
         Documents and, to the extent that any of them have been, it (acting on
         behalf of itself and as agent on behalf of each of its Related Persons)
         unconditionally and irrevocably waives any claims, rights or remedies
         which any of them might otherwise have had in relation thereto;

     PROVIDED THAT the provisions of this clause 12 shall not exclude any
     liability which any of the parties or, where appropriate, their Related
     Persons would otherwise have to any other party or, where appropriate, to
     any other party's Related Persons or any right which any of them may have
     to rescind this agreement in respect of any statements made fraudulently by
     any of them prior to the execution of this agreement or any rights which
     any of them may have in respect of fraudulent concealment by any of them.

13.  VARIATIONS

     This agreement may be varied in a manner adverse to a party hereto only by
     a document signed by that party and the Purchaser.

14.  WAIVER

14.1 A waiver of any term, provision or condition of, or consent granted under,
     this agreement shall be effective only if given in writing and signed by
     the waiving or consenting party and then only in the instance and for the
     purpose for which it is given.

14.2 No failure or delay on the part of any party in exercising any right, power
     or privilege under this agreement shall operate as a waiver thereof, nor
     shall any single or partial exercise of any such right, power or privilege
     preclude any other or further exercise thereof or the exercise of any other
     right, power or privilege.

14.3 No breach of any provision of this agreement shall be waived or discharged
     in a manner adverse to a party hereto except with the express written
     consent of that party and the Purchaser.

14.4 The rights and remedies herein provided are cumulative with and not
     exclusive of any rights or remedies provided by law.


                                  PAGE 22 OF 74

<PAGE>

15.  INVALIDITY

     If any provision of this agreement is or becomes invalid, illegal or
     unenforceable in any respect under the law of any jurisdiction:-

     (a) the validity, legality and enforceability under the law of that
         jurisdiction of any other provision; and

     (b) the validity, legality and enforceability under the law of any other
         jurisdiction of that or any other provision,

     shall not be affected or impaired in any way.

16.  NOTICES

16.1 Any notice, demand or other communication given or made under or in
     connection with the matters contemplated by this agreement shall be in
     writing and shall be delivered personally or sent by fax or prepaid first
     class post (air mail if posted to or from a place outside the United
     Kingdom):-

     In the case of the Purchaser to:-

     Big Flower Press Holdings Inc.
     3 East 54th Street
     New York
     N.Y. 10022
     USA
     Fax: 001 212 521 1640
     Attention: General Counsel

     In the case of 3i Group to:-

     3i Group plc
     91 Waterloo Road
     London
     SE1 8XP
     Fax: 0171 928 3131
     Attention: J.C. Murphy

     In the case of Rivett to:-

     Peter Rivett, Esq.
     15/37 Milson Road
     Cremorne Point
     NSW 2090
     Australia

     And to the Vendors' Solicitors (for the attention of Mr M Crooks) on Fax:
     01737 248249


                                  PAGE 23 OF 74

<PAGE>

     In the case of Ruddle to:-

     Andrew Ruddle
     The Barn
     Sunt Farm
     Caterfield Lane
     Staffhurst Wood
     Oxted
     Surrey

     and shall be deemed to have been duly given or made as follows:-

     (a) if personally delivered, upon delivery at the address of the relevant
         party;

     (b) if sent by first class post within the UK, two Business Days after the
         date of posting;

     (c) if sent by air mail, ten Business Days after the date of posting; and

     (d) if sent by fax, when received during normal hours of business in the
         place of receipt);

     provided that if, in accordance with the above provision, any such notice,
     demand or other communication would otherwise be deemed to be given or made
     outside 9.00 a.m. - 2.00 p.m. such notice, demand or other communication
     shall be deemed to be given or made at 9.00 a.m. on the next Business Day.

16.2 A party may notify the other party to this agreement of a change to its
     name, relevant addressee, address or fax number for the purposes of clause
     16.1 provided that such notification shall only be effective on:-

     (a) the date specified in the notification as the date on which the change
         is to take place; or

     (b) if no date is specified or the date specified is less than five
         Business Days after the date on which notice is given, the date falling
         five Business Days after notice of any such change has been given.

17.  COUNTERPARTS

     This agreement may be executed in any number of counterparts which together
     shall constitute one agreement. Any party may enter into this agreement by
     executing a counterpart and this agreement shall not take effect until it
     has been executed by all parties.

18.  GOVERNING LAW AND JURISDICTION

18.1 This agreement (and any dispute, controversy, proceedings or claim of
     whatever nature arising out of or in any way relating to this agreement or
     its formation) shall be governed by and construed in accordance with
     English law.

18.2 Each of the parties to this agreement irrevocably agrees that the courts of
     England shall have exclusive jurisdiction to hear and decide any suit,
     action or proceedings, and/or to settle any


                                  PAGE 24 OF 74

<PAGE>

     disputes, which may arise out of or in connection with this agreement
     (respectively, "Proceedings" and "Disputes") and, for these purposes, each
     party irrevocably submits to the jurisdiction of the courts of England.

18.3 Each party irrevocably waives any objection which it might at any time have
     to the courts of England being nominated as the forum to hear and decide
     any Proceedings and to settle any Disputes and agrees not to claim that the
     courts of England are not a convenient or appropriate forum for any such
     Proceedings or Disputes and further irrevocably agrees that a judgment in
     any Proceedings or Disputes brought in any court referred to in this clause
     18 shall be conclusive and binding upon the parties and may be enforced in
     the courts of any other jurisdiction.

18.4 Without prejudice to any other permitted mode of service the parties agree
     that service of any writ, notice or other document ("Documents") for the
     purpose of any Proceedings begun in England shall be duly served upon it if
     delivered personally or sent by registered post, in the case of:-

     (a) the 3i Group to 91 Waterloo Road, London SE1 8XP (marked for the
         attention of J.C. Murphy);

     (b) Rivett to any partner for the time being of the Vendors' Solicitors;

     (c) Ruddle to Andrew Ruddle at The Barn, Sunt Farm, Caterfield Lane,
         Staffhurst Wood, Oxted, Surrey; and

     (d) the Purchaser to 3 East 54th Street, New York, N.Y. 10022, USA (marked
         for the attention of General Counsel)

     or such other person and address in England and/or Wales as the respective
     Vendor shall notify the Purchaser in writing or vice versa from time to
     time.

18.5 Clause 18.4(b) has effect irrespective of whether, as between the Vendors'
     solicitors and Rivett, the Vendors' solicitors have, or continue to have,
     any authority to act on Rivett's behalf; and no failure or mistake by the
     Vendors' solicitors (including a failure to notify Rivett of the service of
     any process or to forward any process to Rivett) shall invalidate any
     proceedings or judgment.

IN WITNESS whereof this agreement has been executed on the date first above
written.


                                  PAGE 25 OF 74

<PAGE>

                                   SCHEDULE 1
                      Particulars relating to the Company

Company:                                   Olwen Direct Mail Limited

Company Number:                            2545971

Status:                                    Trading

Registered Office:                         1-2 Stafford Cross, Stafford Road,
                                           Croydon, Surrey

Accounting Reference Date:                 30 June

Shares:

        Authorised share capital:          (pound)120,000
        Issued and fully paid up capital:  75,000 ordinary shares of (pound)1
                                           25,000 A ordinary shares of (pound)1
                                           1513 C ordinary shares of (pound)1

Directors:                                 Angus Fisher
                                           Andrew Ruddle
                                           Peter Croft
                                           Mark Gamber

Company Secretary:                         Angus Fisher

Shareholders:                              Rivett  75,000  ordinary
                                           3i Group        25,000  A ordinary
                                           Ruddle  1513    C ordinary


                                  PAGE 26 OF 74

<PAGE>


                                   SCHEDULE 2
                      Particulars relating to Subsidiaries

Subsidiary 1

Company:                                   Olwen Press Limited

Company Number:                            1628956

Status:                                    Dormant since 30 June 1996

Registered Office:                         1-2 Stafford Cross, Stafford Road,
                                           Croydon

Accounting Reference Date:                 30 June

Shares:

        Authorised Capital:                (pound)50,000
        Issued and fully paid up capital:  (pound)50,000


Directors:                                 Andrew Ruddle

Company Secretary:                         Angus Fisher

Shareholders:                              Olwen Direct Mail Limited -
                                                   49,999 shares
                                           Peter Rivett - 1 share


                                  Subsidiary 2

Company:                                   Olwen Data Management Limited

Company Number:                            2435079

Status:                                    Dormant since 30 June 1990

Registered Office:                         1-2 Stafford Cross, Stafford Road,
                                              Croydon

Accounting Reference Date:                 30 June

Shares:

        Authorised capital:                (pound)20,000
        Issued and fully paid up capital:  (pound)100

Directors:                                 Mark Gamber

Company Secretary:                         Angus Fisher

Shareholders:                              Olwen Direct Mail Limited - 99 shares
                                           Peter Rivett - 1 share


                                  PAGE 27 OF 74

<PAGE>

                                  Subsidiary 3

Company:                                   Olwen Graphic Services Limited

Company Number:                            2824166

Status:                                    Dormant since 30 June 1995

Registered Office:                         1-2 Stafford Cross, Stafford Road,
                                              Croydon

Accounting Reference Date:                 30 June

Shares:

        Authorised capital:                (pound)100
        Issued and fully paid up capital:  (pound)100

Directors:                                 Andrew Ruddle

Company Secretary:                         Angus Fisher

Shareholders:                              Olwen Direct Mail Limited - 99 shares
                                           Peter Rivett - 1 share


                                  Subsidiary 4

Company:                                   Olwen Envelopes Limited

Company Number:                            1963984

Status:                                    Dormant since 30 June 1996

Registered Office:                         1-2 Stafford Cross, Stafford Road,
                                              Croydon

Accounting Reference Date:                 30 June

Shares:

        Authorised capital:                (pound)10,000
        Issued and fully paid up capital:  (pound)10,000

Directors:                                  Andrew Ruddle

Company Secretary:                          Angus Fisher

Shareholders:                               Olwen Direct Mail Limited -
                                                9,999 shares
                                            Peter Rivett - 1 share


                                  PAGE 28 OF 74

<PAGE>

                                  Subsidiary 5

Company:                                   Olwen Mailing Services Limited

Company Number:                            2343143

Status:                                    Dormant since 30 June 1996

Registered Office:                         1-2 Stafford Cross, Stafford Road,
                                              Croydon

Accounting Reference Date:                 30 June

Shares:

        Authorised capital:                (pound)20,000
        Issued and fully paid up capital:  (pound)20,000

Directors:                                 Angus Fisher
                                           Andrew Ruddle

Company Secretary:                         Angus Fisher

Shareholders:                              Olwen Direct Mail Limited -
                                              20,000 shares


                                  Subsidiary 6

Company:                                   Olwen International Direct Mail Inc.

Company Number:                            270642

Status:                                    U.S. Corporation registered in the
                                              State of Maryland

Registered Office:                         100 East Pratt Street, Suite 1520,
                                              Baltimore, Maryland 21202

Accounting Reference Date:                 30 June

Shares:

        Authorised capital:                US$100,000
        Issued and fully paid up capital:  US$100,000

Directors:                                 Wesley Brook
                                           Angus Fisher
                                           Andrew Ruddle
                                           Mark Gamber
                                           Graham Sanford

Company Secretary:                         Angus Fisher

Shareholders:


                                  PAGE 29 OF 74

<PAGE>

        Name:                              Olwen Direct Mail Limited

        Address:                           1-2 Stafford Cross, Stafford Road,
                                           Croydon CR9 4PD

        Shares:                            100,000 shares


                                  PAGE 30 OF 74

<PAGE>

                                   SCHEDULE 3
                                 The Warranties

For the purpose of this schedule 3 Company means Olwen Direct Mail Limited and
includes the Subsidiaries, all of them and each of them as the context admits.

Any Warranty expressed to be given "to the best of Rivett's knowledge and
belief" or "so far as Rivett is aware" or otherwise qualified by reference to
the knowledge of Rivett shall not be qualified in the manner stated unless
Rivett establishes that he has made all reasonable enquiries of the directors,
employees and agents of each Group Company and relevant third parties to
establish the truth and accuracy of that Warranty.

In this schedule 3 the following words have the following meanings, unless the
context otherwise requires:-

"Activities" means any activity, operation or process carried out by the Company
at any property whether or not currently owned, occupied or used by the Company;

"Claim for Tax" means any of the following:-

     (a) any liability to make a payment of Tax and any claim, assessment,
         demand, notice or other document issued or action taken by or on behalf
         of any person, authority or body whatsoever and of whatever country,
         including any Tax Authority, which claims payment of Tax;

     (b) any non-availability or loss of or reduction of any Relief (including
         in particular a right to repayment);

"distribution" means a distribution as defined by sections 209 to 211
(inclusive) of the TA and section 418 of the TA;

"Environment" means any and all living organisms (including man), ecosystems,
property and the media of air (including air in buildings, natural or man-made
structures, below or above ground), water, (as defined in section 104(1) of the
Water Resources Act 1991 and within drains and sewers) and land (including under
any water as described above and whether above or below surface);

"Environmental Consent" means any consent, approval, permit, licence, order,
filing, authorisation, exemption, registration, permission, reporting or notice
requirement and any related agreement required under any Environmental Law;

"Environmental Laws" means all international, EU, national, federal, state or
local statutes, (which for the avoidance of doubt shall include section 57 and
Schedule 22 of the Environment Act 1995 and the guidance and regulations adopted
under those provisions,) bylaws, orders, regulations or other law or subordinate
legislation or common law, all orders, ordinances, decrees or regulatory codes
of practice, circulars, guidance notes and equivalent controls concerning the
protection of human health or which have as a purpose or effect the protection
or prevention of harm to the Environment or health and safety which are binding
in relation to the Properties and/or upon the Company in the relevant
jurisdiction in which the Company has been or is operating (including by the
export of its products, or its waste thereto) on or before Completion;

"ERA" means the Employment Rights Act 1996;


                                  PAGE 31 OF 74

<PAGE>

"Hazardous Substance" means any natural or artificial substance (whether solid,
liquid, gas, noise, ion, vapour, electromagnetic or radiation, and whether alone
or in combination with any other substance) which is capable of causing harm to
or have a deleterious effect on the Environment, being a nuisance, or which
restricts or makes more costly the use, development, ownership or occupation of
any Properties;

"ITA" means the Inheritance Tax Act 1984;

"L&T Covenants Act" means the Landlord and Tenant (Covenants) Act 1995;

"Leases" means all the leases in respect of which the Company is under any
obligation or has any liability or is a party, as specified in Schedule 5;

"Substantial Customer" means a customer accounting for more than five per cent.
of the Group's sales in the financial year ended on the Accounts Date;

"Substantial Supplier" means a supplier accounting for more than five per cent.
of the Group's purchases in the financial year ended on the Accounts Date;

"Tax" or "tax" means any tax, and any duty, contribution, impost, withholding,
levy or charge in the nature of tax, whether domestic or foreign, and any fine,
penalty surcharge or interest connected therewith and includes corporation tax,
advance corporation tax, income tax (including income tax required to be
deducted or withheld from or accounted for in respect of any payment), national
insurance and social security contributions, capital gains tax, inheritance tax,
value added tax, customs excise and import duties, stamp duty, stamp duty
reserve tax, insurance premium tax, air passenger duty, rates and water rates,
land fill tax, petroleum revenue tax, advance petroleum revenue tax, gas levy
and any other payment whatsoever which any person is or may be or become bound
to make to any person and which is or purports to be in the nature of taxation;

"Taxation Authority" means any local, municipal, governmental, state, federal or
fiscal, revenue, customs or excise authority, body, agency or official anywhere
in the world having or purporting to have power or authority in relation to Tax
including the Inland Revenue and HM Customs and Excise;

"Taxation Statutes" means all statutes, statutory instruments, orders,
enactments, laws, by-laws, directives and regulations, whether domestic or
foreign decrees, providing for or imposing any Tax;

"TCGA" means the Taxation of Chargeable Gains Act 1992;

"TMA" means the Taxes Management Act 1970;

"Transfer Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;

"TULR(C)A" means the Trade Union and Labour Relations (Consolidation) Act 1992;

"VATA" means the Value Added Tax Act 1994 and "VAT legislation" means VATA and
all regulations and orders made thereunder;

"Waste" means waste including anything which is discarded or which the holder
intends or is required to discard and anything which is abandoned, unwanted or
surplus irrespective of whether it is capable of being recovered or recycled or
has any value such that there is likely to be a breach of


                                  PAGE 32 OF 74

<PAGE>


Environmental Law or such that any investigation, treatment or remediation of
any of the Properties is or would be required or would be undertaken by a
prudent owner or occupier.

1.   VENDOR'S CAPACITY

     [Deleted]

2.   THE COMPANY, THE SHARES AND THE SUBSIDIARIES

2.1  Incorporation and Existence

     The Company and each of the Subsidiaries are limited companies incorporated
     under English law and have been in continuous existence since
     incorporation. Each of the Group Companies has full corporate power and
     authority to conduct its respective business as to the extent now conducted
     and to own, use and lease its assets and Properties.

2.2  The Shares

     (a) The Shares are the entire issued shares of the Company.

     (b) The Company has not allotted any shares other than the Shares and the
         Shares are fully paid or credited as fully paid.

     (c) There is no Encumbrance in relation to any unissued shares in the
         capital of the Company. No Group Company is under any obligation
         (whether actual or contingent) to sell, charge or otherwise dispose of
         any of the Shares or any interest therein to any person.

     (d) Other than this agreement, there is no agreement, arrangement or
         obligation requiring the creation, allotment, issue, sale, transfer,
         redemption or repayment of, or the grant to a person of the right
         (conditional or not) to require the allotment, issue, sale, transfer,
         redemption or repayment of, a share in the capital of the Company
         (including an option or right of pre-emption or conversion).

2.3  The Subsidiaries

     (a) The Company does not have any subsidiary undertakings other than the
         Subsidiaries. Each of the Subsidiaries is a wholly-owned subsidiary of
         the Company (unless otherwise indicated in schedule 2) and each of the
         shares of each such company has been properly allotted and issued and
         is fully paid or credited as fully paid.

     (b) There is no Encumbrance in relation to any of the shares or unissued
         shares in the capital of any of the Subsidiaries. No person has claimed
         or can claim to be entitled to an Encumbrance in relation to any of the
         shares of any of the Subsidiaries and no Group Company is under any
         obligation (whether actual or contingent) to sell, charge or otherwise
         dispose of any shares in any of the Subsidiaries or any interest
         therein to any person.

     (c) Other than this agreement, there is no agreement, arrangement or
         obligation requiring the creation, allotment, issue, sale, transfer,
         redemption or repayment of, or the grant


                                 PAGE 33 OF 74

<PAGE>

         to a person of the right (conditional or not) to require the allotment,
         issue, sale, transfer, redemption or repayment of, a share in the
         capital of any of the Group Companies (including an option or right of
         pre-emption or conversion).

     (d) The Company does not own any shares or stock in the capital of nor does
         it have any beneficial or other interest in any company or business
         organisation other than the Subsidiaries nor does the Company control
         or take part in the management of any other company or business
         organisation.

3.   ACCOUNTS

     3.1 General

     (a) The Accounts show a true and fair view in all respects of the:-

         (i)   assets, liabilities (including contingent and unmatured),
               financial position and state of affairs at the Accounts Date; and

         (ii)  the profits and losses for the financial year ended on the
               Accounts Date.

         of the Company (or of the Group to the extent that they are
         consolidated accounts).

     (b) The Accounts have been prepared and audited in accordance with the
         standards, principles and practices specified on the face of the
         Accounts applied on a consistent basis and subject thereto in
         accordance with the law and applicable standards, principles and
         practices generally accepted in the United Kingdom consistently
         applied.

     (c) The Accounts have been prepared on a basis consistent with the basis
         upon which all audited accounts of the Company have been prepared in
         respect of the three years before the Accounts Date.

3.2  Liabilities

     The Accounts make full provision or reserve for or disclose all liabilities
     (including all contingent or deferred liability to Tax) of the Company
     whether actual, contingent or otherwise.

3.3  Extraordinary and Exceptional Items

     The results shown by the audited profit and loss account of the Company and
     the consolidated audited profit and loss accounts of the Group for each of
     the three financial years of the Company and the Group ended on the
     Accounts Date have not (except as disclosed in those accounts) been
     affected by an extraordinary, exceptional or non-recurring item or by any
     other matter making the profits or losses for a period covered by any of
     those accounts unusually high or low.

     The Company's financial projections for the 12 month period to 30 June
     1998, as annexed to the Disclosure Letter, have been compiled after due and
     careful enquiry and on reasonable


                                  PAGE 34 OF 74

<PAGE>

     bases consistent with the basis upon which the Accounts have been prepared
     and all assumptions on which such projections are based, are reasonable
     assumptions and are disclosed in such projections.

3.4  Off Balance Sheet Financing

     No member of the Group is engaged in any financing (including the incurring
     of any borrowing or any indebtedness in the nature of acceptances or
     acceptance credits) of a type which would not be required to be shown or
     reflected in the Accounts.

3.5  Accounting and Other Records

     (a) The books of account and all other records of the Company (including
         any which it may be obliged to produce under any contract now in force)
         are up-to-date, in its possession and do not contain or reflect any
         material inaccuracy or omission in accordance with the law and
         applicable standards, principles and practices generally accepted in
         the United Kingdom.

     (b) All deeds and documents (properly stamped where stamping is necessary
         for enforcement thereof) (excluding deeds and documents relating to the
         Properties) belonging to the Company or which ought to be in the
         possession of the Company are in the possession of the Company.

3.6  Accounting Reference Date

     The accounting reference date of the Company under section 224 of the
     Companies Act 1985 is, and during the last six years has always been, 30
     June.

3.7  Management Accounts

     The Management Accounts of the Company for the period ended 31 August 1997
     in the agreed terms have been prepared by the Company on a basis (including
     standards, principles and practice) consistent with the Accounts and with
     due care and attention, show with reasonable accuracy the state of affairs
     and profit and loss of the Company as at and for the period in respect of
     which they have been prepared and the balance sheet of the Company as at
     such date but it is hereby acknowledged that they are not prepared on a
     statutory basis.

4.   CHANGES SINCE THE ACCOUNTS DATE

4.1  General

     Since 30 June 1997:-

     (a) the Company has carried on its business prudently and in the ordinary
         and usual course, consistent with past practice and so as to maintain
         the business as a going concern;

     (b) there has been no material adverse change in the financial or trading
         position or prospects of the Company; and


                                  PAGE 35 OF 74

<PAGE>

     (c) there has been no material reduction in the value of those fixed assets
         specified in the Accounts, to the extent still owned by the Company.

4.2  Specific

     Since 30 June 1997:-

     (a) the Company has not, other than in the ordinary course of trading and
         consistent with past practice:-

         (i)   disposed of, or agreed to dispose of, an asset; or

         (ii)  assumed or incurred, or agreed to assume or incur, a liability,
               obligation or expense (actual or contingent);

         and in the case of a disposal or agreement to dispose of an asset for
         an amount which is lower than book value or an open market arm's length
         value, whichever is the higher;

     (b) the Company has not acquired or agreed to acquire an asset for an
         amount which is higher than open market arm's length value;

     (c) the Company has not made, or agreed to make, or incurred, or agreed to
         incur, a commitment or connected commitments involving capital
         expenditure exceeding in total (pound)75,000;

     (d) no Substantial Supplier or Substantial Customer has ceased or
         substantially reduced its trade with the Company or has altered the
         terms of trade to the Company's disadvantage and, to the best of
         Rivett's knowledge, this will not happen in the foreseeable future;

     (e) the Company has not declared, paid or made a dividend or other
         distribution (including a distribution within the meaning of the TA) on
         any class or classes of share capital except to the extent provided in
         the Accounts;

     (f) no resolution of the shareholders of the Company has been passed
         (except for those representing the ordinary business of an annual
         general meeting or as provided for in this agreement);

     (g) the Company has not repaid or redeemed share or loan capital, or made
         (whether or not subject to conditions) an agreement or arrangement or
         undertaken an obligation to do any of those things;

     (h) the Company has not repaid any sum in the nature of borrowings in
         advance of any due date or made any loan or incurred any indebtedness
         (including in each case inter group) other than in the ordinary course
         of trading; and


                                  PAGE 36 OF 74

<PAGE>

     (i) the Company has not paid nor is under an obligation to pay any service,
         management or similar charges or any interest or amount in the nature
         of interest to any other person or incurred any liability to make such
         a payment or made any payment to any Vendor Associate whatsoever.

     (j) the Company has not incurred or paid any liability (which expression
         shall include any matter which would fall to be treated as a provision)
         outside the normal course of trading; and

     (k) the Company has not incurred or paid any liability for solicitors,
         accountancy, surveyors, valuers, or other professional advisers' fees.

5.   ASSETS

5.1  Title and Condition

     (a) There are no Encumbrances, nor has the Company agreed to create any
         Encumbrances, over any part of its undertaking or assets and each asset
         used or usable by the Company (tangible or intangible) is:-

         (i)   legally and beneficially owned by the Company; and

         (ii)  where capable of possession, in the possession of the Company.

     (b) The Company owns each asset (tangible or intangible) necessary for the
         operation of its business as currently conducted and without limitation
         no rights (other than rights as shareholders in the Company) relating
         to the business of the Company are owned or otherwise enjoyed by or on
         behalf of any Vendor Associate or any other person.

5.2   Hire Purchase and Leased Assets

     Copies of any bill of sale or any hiring or leasing agreement, hire
     purchase agreement, credit or conditional sale agreement, agreement for
     payment on deferred terms or any other similar agreement to which the
     Company is a party are included in the Agreed Bundle referred to in the
     Disclosure Letter.

5.3  Debts

     Except to the extent to which specific provision or reserve has been made
     in the Accounts Rivett is not aware of any circumstances which could result
     in any indebtedness owed to the Company and whether included in Accounts or
     arising since 30 June 1997 not being paid in full and none of such debts
     has been factored, sold or agreed to be sold by the Company.

6.   INTELLECTUAL PROPERTY

6.1  General

     (a) The Company is the sole and absolute legal and beneficial owner of all
         Intellectual Property used in connection with its business.


                                  PAGE 37 OF 74

<PAGE>

     (b) The Intellectual Property used by the Company in connection with its
         business is free from Encumbrances and, in the case of Confidential
         Information, any disclosure obligation and is subsisting, valid,
         exercisable and enforceable and all steps have been taken diligently
         for the maintenance and protection of unregistered Intellectual
         Property owned by the Company.

6.2  [deleted]

6.3  Licences

     (a) The terms of all licences or rights which have been granted by the
         Company or which the Company or a Vendor Associate intends to enter
         into for the purposes of the business of the Company or which are being
         currently negotiated or other agreement or consents or undertakings
         entered into by the Company or Vendor Associate relating to the
         Intellectual Property owned by or licensed to the Company are set out
         in the Disclosure Letter and unless disclosed neither the Company nor
         any Vendor Associate is obliged to enter into any such agreement
         relating to the business of the Company. So far as Rivett is aware
         there has been or is no breach nor is there any fact or matter which
         would or may create a breach of such licences or undertakings.

     (b) The terms of all licences or rights granted to the Company or which the
         Company or a Vendor Associate intends to enter into for the purposes of
         the business of the Company or which are being currently negotiated or
         other agreement or consents or undertakings entered into by the Company
         or a Vendor Associate relating to the Intellectual Property used in the
         business of the Company are set out in the Disclosure Letter and
         neither the Company nor any Vendor Associate is obliged to enter into
         any such agreement relating to the business of the Company. So far as
         Rivett is aware there has been or is no breach nor is there any fact or
         matter which would or may create a breach of such licences or
         undertakings.

6.4  Infringement

     (a) The use by the Company of any Intellectual Property used in the
         business of the Company does not and is not likely to infringe and the
         processes or methods employed, services provided, the business
         conducted and the products used, manufactured and dealt in or supplied
         by the Company do not nor did they at the time used, manufactured,
         dealt in or supplied infringe the Intellectual Property of any other
         person.

     (b) No proceedings, claims or complaints have been brought or threatened in
         writing or otherwise by any third party or competent authority in
         relation to the Intellectual Property owned by or licensed to the
         Company including any concerning title subsistence validity or
         enforceability or grant of any right or interest in such Intellectual
         Property.

     (c) So far as Rivett is aware no third party is infringing or misusing or
         threatening to infringe or misuse the Intellectual Property owned by or
         licensed to the Company.


                                  PAGE 38 OF 74

<PAGE>

     (d) The Company is not subject to any injunction, undertaking or court
         order or order of any other authority of competent jurisdiction not to
         use or restricting the use of any Intellectual Property.

6.5  Confidential Agreements

     Save as contained in the Agreed Bundle, the Company has not and no Vendor
     Associate of Rivett has entered into any confidentiality or other agreement
     or is subject to any duty which restricts the free use or disclosure of any
     information used in the business of the Company and there is no breach of
     any such agreement or duty.

7.   EFFECT OF SALE

7.1  Neither the execution nor performance of this agreement or any document to
     be executed at or before Completion will:-

     (a) result in the Company losing the benefit of a Permit or an asset,
         licence, grant, subsidy, right or privilege which it enjoys at the date
         of this agreement in any jurisdiction; or

     (b) conflict with, or result in a breach of, or give rise to an event of
         default under, or require the consent of a person under, or enable a
         person to terminate or accelerate or otherwise grant to any person any
         additional rights under, or relieve a person from an obligation under,
         an agreement, arrangement or obligation to which the Company is a party
         or a legal or administrative requirement in any jurisdiction; or

     (c) result in any Substantial Customer being entitled to or, so far as
         Rivett is aware, cease dealing with the Company or to reduce its
         existing level of business or to change the terms upon which it deals
         with the Company; or

     (d) result in any Substantial Supplier being entitled to or, so far as
         Rivett is aware, cease supplying to the Company or to reduce its
         supplies to or to change the terms upon which it supplies the Company;

     (e) result in any officer or senior employee leaving the Company or result
         in such a person having any additional rights to payments or benefits
         from the Company; or

     (f) make the Company liable to offer for sale, transfer or otherwise
         dispose of or purchase or otherwise acquire any assets, including
         shares held by it in other bodies corporate under their articles of
         association or any agreement or arrangement.

8.   CONSTITUTION

8.1  Memorandum and Articles

     The memorandum and articles of association of the Company in the form set
     out in the Agreed Bundle are true, correct and complete and have embodied
     therein or annexed thereto copies of all resolutions and agreements as are
     referred to in section 380 of the Companies Act 1985, and all amendments
     thereto (if any) were duly and properly made.


                                  PAGE 39 OF 74

<PAGE>

8.2  Register of Members

     The register of members of the Company has been properly kept and contains
     true and complete records of the members from time to time of the Company
     and the Company has not received any notice or allegation that any of them
     is incorrect or incomplete or should be rectified.

8.3  Powers of Attorney

     The Company has not executed any power of attorney or conferred on any
     person other than its directors, officers and employees any authority to
     enter into any transaction on behalf of or to bind the Company in any way
     and which power of attorney remains in force or was granted or conferred
     within three years of the Completion Date.

8.4 Statutory Books and Filings

     (a) The statutory books of the Company are up to date, in its possession
         and are true and complete in all material respects in accordance with
         the law.

     (b) All resolutions, annual returns and other documents required to be
         delivered to the Registrar of Companies (or other relevant company
         registry or other corporate authority in any jurisdiction) have been
         properly prepared and filed and are true and complete and the common
         seal of the Company is in its possession.

9.   INSURANCE

9.1  Policies

     The Disclosure Letter contains a true and complete list of each current
     insurance and indemnity policy in respect of which the Company has an
     interest (together the "Policies"). So far as Rivett is aware each of the
     Policies is valid and enforceable and is not void or voidable. So far as
     Rivett is aware there are no circumstances which might make any of the
     Policies void or voidable or lead any claim under the Policies to be
     avoided by the insurers.

9.2  Claims

     No claim is outstanding under any of the Policies and so far as Rivett is
     aware no matter exists which might give rise to a claim under any of the
     Policies.

9.3  Premiums

     So far as Rivett is aware the Company has not done or omitted to do
     anything which might result in an increase in the premium payable under any
     of the Policies.

10.  CONTRACTUAL MATTERS

10.1 Validity of Agreements


                                  PAGE 40 OF 74

<PAGE>

     (a) So far as Rivett is aware each contract to which the Company is a party
         is in full force and effect and constitutes a legal, valid and binding
         agreement, enforceable in accordance with its terms. So far as Rivett
         is aware there exists no invalidity of, or ground for termination,
         avoidance or repudiation of, or a claim or incidence of breach in
         respect of, an agreement, arrangement or obligation to which the
         Company is a party. So far as Rivett is aware no party with whom the
         Company has entered into an agreement, arrangement or obligation has
         given notice of its intention to terminate or claim a breach, or has
         sought to repudiate or disclaim, the agreement, arrangement or
         obligation.

     (b) No party with whom the Company has entered into an agreement or
         arrangement is in material breach of the agreement or arrangement. So
         far as Rivett is aware no matter exists which might give rise to such
         breach.

     (c) So far as Rivett is aware the Company is not in material breach of any
         agreement or arrangement. So far as Rivett is aware no matter exists
         which might give rise to such breach but nothing in this clause shall
         constitute a warranty as to the condition of the Properties.

10.2  Standard Terms and Conditions

     A copy of the standard terms and conditions of business of the Company are
     annexed to the Disclosure Letter and the Company has not entered into an
     agreement or arrangement with any of its ten biggest customers (ranked by
     turnover) different from these.

10.3 Supply Contracts

     Full and accurate details of all agreements or arrangements for the supply
     of stock, raw materials, products or goods to or by the Company which
     involve or are likely to involve the supply of goods the aggregate sale
     value of which will represent in excess of five per cent. of the turnover
     for the financial year of the Company ended on the Accounts Date are
     contained in the Disclosure Letter and copies included in the Agreed
     Bundle.

10.4 Material Agreements

     (a) Save for those contained in the Agreed Bundle the Company is not a
         party to and is not liable under any contract, transaction, arrangement
         or liability which involves, or is likely to involve obligations or
         liabilities which, by reason of their nature or magnitude, ought
         reasonably to be made known to an intending purchaser of the Shares
         including any which:-

         (i)   is of an unusual or abnormal nature, or outside the ordinary and
               proper course of business;

         (ii)  is of a long-term nature (that is, unlikely to have been fully
               performed, in accordance with its terms, more than six months
               after the date on which it was entered into or undertaken);


                                  PAGE 41 OF 74

<PAGE>

         (iii) is incapable of termination in accordance with its terms, by the
               Company, on 60 days' notice or less;

         (iv)  cannot readily be fulfilled or performed by the Company on time
               without undue or unusual expenditure of money, effort or
               personnel;

         (v)   involves payment by the Company by reference to fluctuations in
               the index of retail prices, or any other index or in the rate of
               exchange for any currency;

         (vi)  involves an aggregate outstanding expenditure or other liability
               by the Company of more than (pound)50,000 (in the case of a
               one-off payment) or (pound)100,000 per annum; or

         (vii) restricts its freedom to engage in any activity or business or
               confines its activity or business to a particular place;

     (b) The Company is not a party to and is not liable under:-

         (i)   an agreement, arrangement or obligation by which the Company is a
               member of a joint venture, consortium, partnership or association
               (other than a bona fide trade association); or

         (ii)  a distributorship, agency, marketing, licensing or management
               agreement or arrangement.

10.5 Contracts with Connected Persons

     Save for service contracts disclosed in or annexed to the Disclosure
     Letter, there is, and during the three years ending on the date of this
     agreement there has been, no agreement or arrangement (legally enforceable
     or not) to which the Company is or was a party and in which any Vendor
     Associate, a director or former director of any Vendor Associate or a
     person connected with any of them is or was interested in any way. The
     Company does not owe any obligation or sum to, nor is it owed any
     obligation or sum by, nor does it and neither will it immediately after
     Completion have any contractual or other arrangements of any sort with any
     Vendor Associate and nor does any Vendor Associate owe such obligation or
     sum to the Company.

10.6 Conditions and Warranties in Respect of Goods or Services

     Except for a condition or warranty implied by law or contained in its
     standard terms of business or otherwise given in the usual course of
     trading, the Company has not given a condition or warranty, or made a
     representation, in respect of goods or services supplied or agreed to be
     supplied by it, or accepted an obligation that could give rise to a
     liability after the goods or services have been supplied by it.

11.  INFORMATION TECHNOLOGY

11.1 Information Technology


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<PAGE>

     In the twelve months prior to the date hereof the Company has not suffered
     and so far as Rivett is aware no other person has suffered any failures or
     bugs in or breakdowns of any computer hardware or software used in
     connection with the business of the Company which have caused any
     substantial disruption or interruption in or to its use and Rivett does not
     know nor is Rivett aware of any fact or matter which may so disrupt or
     interrupt or affect the use of such equipment following the acquisition by
     the Purchaser of the Shares pursuant to this agreement on the same basis as
     it is presently used.

11.2 None of the software or technical manuals used by the Company has been
     copied wholly or substantially from any material in which the Company does
     not own copyright.

11.3 All computer systems, excluding software, used in the business of the
     Company are owned and operated by and are under the control of the Company
     and are not wholly or partly dependent on any facilities which are not
     under the exclusive ownership, operation or control of the Company. No
     action will be necessary to enable such systems to continue to be used in
     the business of the Company to the same extent and in the same manner as
     they have been used prior to the date hereof.

11.4 The Company is validly licensed to use the software used in its business
     and no action will be necessary to enable it to continue to use such
     software to the same extent and in the same manner as they have been used
     prior to the date hereof.

12.  LIABILITIES

12.1 Continuance of Facilities

     Full and accurate details of all overdrafts, loans or other financial
     facilities outstanding or available to the Company are set out in the
     Disclosure Letter and whether or not of a type which would be required to
     be shown in or reflected in the Accounts (including any indebtedness for
     moneys borrowed or raised under any acceptance credit, bond, note, bill of
     exchange or commercial paper, finance lease, hire purchase agreement, trade
     bills (other than those on terms normally obtained) forward sale or
     purchase agreement or conditional sale agreement or other transaction
     having the commercial effect of a borrowing) and copies of all documents
     relating to such matters are annexed to the Disclosure Letter. No Vendor
     Associate has done anything whereby the continuance of any such facilities
     in full force and effect might be affected or prejudiced.

12.2 Bank Accounts

     A statement of all the bank accounts of the Company and of the credit or
     debit balances on such accounts as at a date not more than seven days
     before the date of this agreement has been supplied to the Purchaser. The
     Company does not have any other bank or deposit accounts (whether in credit
     or overdrawn) not included in such statement. Since such statement there
     have been no payments out of any such accounts except for routine payments
     and the balances on current account are not now substantially different
     from the balances shown on such statements.

12.3 Guarantees and Indemnities


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     (a) The Company is not a party to and is not liable (including
         contingently) under a guarantee, indemnity or other agreement to secure
         or incur a financial or other obligation with respect to another
         person's obligation.

     (b) No part of the loan capital, borrowing or indebtedness in the nature of
         borrowing of the Company is dependent on the guarantee or indemnity of,
         or security provided by, another person (other than a Group Company).

12.4 Events of Default

     No event has occurred or is subsisting or been alleged or so far as Rivett
     is aware is likely to arise which:-

     (a) constitutes an event of default, or otherwise gives rise to an
         obligation to repay, or to give security under an agreement relating to
         borrowing or indebtedness in the nature of borrowing (or will do so
         with the giving of notice or lapse of time or both) or gives any person
         any additional rights to accelerate, modify or do otherwise under such
         agreement;

     (b) will lead to an Encumbrance constituted or created in connection with
         borrowing or indebtedness in the nature of borrowing, a guarantee, an
         indemnity or other obligation of the Company becoming enforceable (or
         will do so with the giving of notice or lapse of time or both); or

     (c) will, with the giving of notice and/or lapse of time, constitute or
         result in a default or the acceleration of any obligation under any
         agreement or arrangement to which the Company is a party or by which it
         or any of its properties, revenues or assets is bound.

12.5 Grants

     The Company is not liable to repay an investment or other grant or subsidy
     made to it by any person (including the Department of Trade and Industry or
     its predecessor). No matter (including the execution and performance of
     this agreement) exists which might entitle a body to require repayment of,
     or refuse an application by the Company for, the whole or part of a grant
     or subsidy.

13.  PERMITS

13.1 Compliance with Permits

     The Company has obtained and complied with the terms and conditions of each
     Permit (full and accurate details of which are contained in the Disclosure
     Letter).

13.2 Status of Permits

     Each Permit is valid, binding and in full force and effect, and the Company
     is not in default under any Permit. There are no pending or threatened
     proceedings which might in any way affect the Permits and Rivett is not
     aware of any other reason why any of them should be suspended, threatened
     or revoked or be invalid.


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<PAGE>

14.  INSOLVENCY

14.1 Winding up

     No order has been made, petition presented or resolution passed for the
     winding up of the Company or for the appointment of a provisional
     liquidator to the Company.

14.2 Administration

     No administration order has been made and no petition for an administration
     order has been presented in respect of the Company.

14.3 Receivership

     No receiver, receiver and manager or administrative receiver has been
     appointed of the whole or part of the Company's business or assets.

14.4 Compromises with creditors

     (a) No voluntary arrangement under section 1 of the Insolvency Act 1986 has
         been proposed or approved in respect of the Company.

     (b) No compromise or arrangement under section 425 of the Companies Act
         1985 has been proposed, agreed to or sanctioned in respect of the
         Company.

     (c) The Company has not entered into any compromise or arrangement with its
         creditors or any class of its creditors generally.

14.5 Insolvency

     The Company is not unable to pay its debts within the meaning of section
     123 of the Insolvency Act 1986 (but for this purpose ignoring the reference
     to "if it is proved to the satisfaction of the court that" in section
     123(1)(e) and 123(2)).

14.6 Payment of Debts

     The Company has not stopped paying its debts as they fall due or delayed
     paying the same beyond the standard terms.

14.7 Distress etc.

     No distress, execution or other process has been levied on an asset of the
     Company.

14.8 Unsatisfied Judgments

     There is no unsatisfied judgment or court order outstanding against the
     Company.

14.9 Striking Out


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     No action is being taken by the Registrar of Companies to strike the
     Company off the register under section 652 of the Companies Act 1985.

15.  LITIGATION AND COMPLIANCE WITH LAW

     All references to the Company in this paragraph 15 should be deemed to
     include the Company's officers, agents and employees to the extent that the
     Company may be liable for their acts or defaults.

15.1 Litigation

     (a) Neither the Company nor a person for whose acts or defaults the Company
         may be vicariously liable is involved, or has during the two years
         ending on the date of this agreement been involved, in a civil,
         criminal, arbitration, administrative or other proceeding in any
         jurisdiction. So far as Rivett is aware no civil, criminal,
         arbitration, administrative or other proceeding in any jurisdiction is
         pending or threatened by or against the Company or a person for whose
         acts or defaults the Company may be vicariously liable.

     (b) So far as Rivett is aware, no matter exists which might give rise to a
         civil, criminal, arbitration, administrative or other proceeding in any
         jurisdiction involving the Company or a person for whose acts or
         defaults the Company may be vicariously liable.

     (c) There is no outstanding judgment, order, decree, arbitral award or
         decision of a court, tribunal, arbitrator or governmental agency in any
         jurisdiction against the Company or a person for whose acts or defaults
         the Company may be vicariously liable and in relation to such judgment,
         order, decree, award or decision the Company would be liable for such
         persons acts or defaults.

15.2 Compliance with Law

     So far as Rivett is aware the Company has conducted its business and dealt
     with its assets in all material respects in accordance with all applicable
     legal and administrative requirements in any jurisdiction.

15.3 Investigations

     The Company is not and has not been subject to any investigation, enquiry
     or disciplinary proceeding (whether judicial, quasi-judicial or otherwise)
     in any jurisdiction and none is pending or threatened, and neither has it
     received any request for information from, any court or governmental
     authority (including any national competition authority and the Commission
     of the European Communities and the EFTA Surveillance Authority) under any
     anti-trust or similar legislation in any jurisdiction. So far as Rivett is
     aware no matter exists which might give rise to such an investigation,
     enquiry, proceeding or request for information.

15.4 Competition Law


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<PAGE>

     (a) The Company is not nor has been a party to or concerned in any
         agreement or arrangement, or conducted itself (whether by omission or
         otherwise) in a manner, which:-

         (i)   could give rise to an investigation by the Office of Fair Trading
               or the Monopolies and Mergers Commission under the Fair Trading
               Act 1973;

         (ii)  has been or is required to be furnished to the Director General
               of Fair Trading pursuant to the Restrictive Trade Practices Acts
               1976 and 1977;

         (iii) contravenes the provisions of the Resale Prices Act 1976;

         (iv)  contravenes the provisions of the Trade Descriptions Acts 1968
               and 1972;

         (v)   constitutes an anti-competitive practice within the meaning of
               the Competition Act 1980;

         (vi)  constitutes a breach of any relevant undertaking, order,
               assurance or other measure made under the Fair Trading Act 1973,
               the Restrictive Trade Practices Acts 1976 and 1977, the Resale
               Prices Act 1976, the Trade Descriptions Acts 1968 and 1972, or
               the Competition Act 1980;

         (vii) infringes Articles 85 and/or 86 of the Treaty of Rome or their
               equivalent provisions under the European Economic Area Agreement
               or any other anti-trust or similar legislation in any
               jurisdiction; or

         (viii) is registrable, unenforceable or void (whether in whole or in
               part) or renders it liable to civil, criminal or administrative
               proceedings by virtue of any anti-trust, anti-monopoly,
               anti-cartel, consumer law or any other similar legislation in any
               jurisdiction.

     (b) The Company has not given an undertaking or written assurance (whether
         legally binding or not) to any court or governmental authority
         (including any national competition authority and the Commission of the
         European Communities and the EFTA Surveillance Authority) under any
         anti-trust or similar legislation in any jurisdiction.

     (c) The Company is not subject to an order, regulation or decision made by
         any court or governmental authority (including any national competition
         authority and the Commission of the European Communities and the EFTA
         Surveillance Authority) under any anti-trust or similar legislation in
         any jurisdiction.

     (d) The Company is not and has not been a party to or concerned in any
         agreement, arrangement or concerted practice in respect of which an
         application for negative clearance and/or an exemption has been made to
         the Commission of the European Communities or the EFTA Surveillance
         Authority.

15.5 Unlawful Payments


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     Neither the Company nor a person for whose acts or defaults the Company may
     be vicariously liable has:-

     (a) induced a person to enter into an agreement or arrangement with the
         Company by means of an unlawful or immoral payment, contribution, gift
         or other inducement;

     (b) offered or made an unlawful or immoral payment, contribution, gift or
         other inducement to a government official or employee; or

     (c) directly or indirectly made an unlawful contribution to a political
         activity.

16.  BROKERAGE OR COMMISSIONS

     No person is entitled to receive from the Company (or from the Purchaser as
     a result of any action or omission by the Company) a finder's fee,
     brokerage or commission in connection with this agreement or anything in it
     and the Company is not liable to pay any sums whatsoever or give any
     benefit to any of its directors, employees, agents and advisers in
     connection with the sale of the Shares and no Vendor Associate is liable to
     pay any sum whatsoever or give any benefit to any of the Company's
     directors or employees in connection with the sale of the shares.

17.  DIRECTORS AND EMPLOYEES

17.1 Particulars of Officers

     The particulars of all employees annexed to the Disclosure Letter show the
     names, job title, date of commencement of employment, date of birth and
     period of continuous employment (calculated in accordance with chapter 1 of
     part XIV of the ERA) of every employee of the Company and contain details
     of negotiations which have taken place in this calendar year concerning pay
     for all such employees.

17.2 Remuneration and Benefits

     The particulars of all employees annexed to the Disclosure Letter show all
     remuneration and other benefits:-

     (a) actually provided; and

     (b) which the Company is bound to provide (whether now or in the future)

     to each director, officer and employee of the Company and are true and
     complete and include particulars of and details of participation in all
     profit sharing, incentive, bonus, commission, share option, medical,
     permanent health insurance, directors' and officers' insurance, travel,
     car, redundancy and other benefit schemes, arrangements and understandings
     (the "Schemes") operated for all or any employees or former employees of
     the Company or their dependants whether legally binding on the Company or
     not.

17.3 Terms and Conditions


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<PAGE>

     (a) The Disclosure Letter contains copies of all the standard terms and
         conditions, staff handbooks and policies which apply to employees of
         the Company and identifies which terms and conditions apply to which
         employees.

     (b) There are no terms and conditions in any contract with any director,
         officer or employee of the Company pursuant to which such person will
         be entitled to receive any payment or benefit or such person's rights
         will change as a direct consequence of the transaction contemplated by
         this agreement.

     (c) There are no service agreements or contracts of employment between the
         Company and any of its directors, officers or employees containing any
         provision in addition to the matters required to be contained therein
         under section 1 of the ERA.

     (d) All employees of the Company have received a written statement of
         particulars of their employment as required by section 1 of the ERA.

17.4 Operation of the Schemes

     (a) The Schemes have at all times been operated in accordance with their
         governing rules or terms and all applicable laws and all documents
         which are required to be filed with any regulatory authority have been
         so filed and all tax clearances and approvals necessary to obtain
         favourable tax treatment for the Company and/or the participants in the
         Schemes have been obtained and not withdrawn and no act or omission has
         occurred which has or could prejudice any such tax clearance and/or
         approval.

     (b) No past or present director, officer, employee or any dependant thereof
         or any other participant in any Scheme has made any claim against the
         Company in respect of any Scheme and no event has occurred which could
         or might give rise to any such claim.

17.5 Notice Periods

     The terms of employment or engagement of all employees, agents, consultants
     and professional advisers of the Company are such that their employment or
     engagement may be terminated by not more than the statutory minimum period
     of notice given at any time without liability for any payment including by
     way of compensation or damages (except for unfair dismissal or a statutory
     redundancy payment).

17.6 Changes since the Accounts Date

     Since 30 June 1997 the Company has not made, announced or proposed any
     changes to the emoluments or benefits of or any bonus to any of its
     directors, officers or employees and the Company is under no obligation to
     make any such changes with or without retrospective operation.

17.7 Loans

     There are no amounts owing or agreed to be loaned or advanced by the
     Company to any directors, officers and employees of the Company (other than
     amounts representing


                                  PAGE 49 OF 74

<PAGE>

     remuneration accrued due for the current pay period, accrued holiday pay
     for the current holiday year or for reimbursement of expenses).

17.8 Notice of Termination and Leave of Absence

     (a) Since the Accounts Date, no director, officer or employee of the
         Company has given or received notice to terminate his employment.

     (b) There are no directors, officers or employees of the Company who are on
         secondment, maternity leave or absent on grounds of disability or other
         leave of absence (other than normal holidays or absence of no more than
         one week due to illness).

17.9 Payment up to Completion

     All salaries and wages and other benefits of all employees of the Company
     have, to the extent due, been paid or discharged in full.

17.10 Industrial Relations

     (a) No directors, officers or employees of the Company are members of a
         trade union, staff association or any other body representing workers
         and no such union, association or body is recognised by the Company for
         the purposes of collective bargaining.

     (b) The Disclosure Letter contains copies of and full details of all rights
         and liabilities relating or pursuant to any collective agreements
         (whether with a trade union, staff association or any other body
         representing workers and whether legally binding or not) concerning the
         Company.

     (c) Within the three years preceding the date hereof the Company has not
         been engaged or involved in any trade dispute (as defined in section
         218 of the TULR(C)A) with any employee, trade union, staff association
         or any other body representing workers and no event has occurred which
         could or might give rise to any such dispute and no industrial action
         involving employees of the Company, official or unofficial, is now
         occurring or threatened nor has any industrial relations or employment
         matter been referred either by the Company or its employees or by any
         trade union staff association or any other body representing workers to
         ACAS for advice, conciliation or arbitration.

17.11 Claims by Employees

     No past or present director, officer or employee of the Company or any
     predecessor in business has any claim or right of action against the
     Company including any claim:-

     (a) in respect of any accident or injury which is not fully covered by
         insurance; or

     (b) for breach of any contract of services or for services; or

     (c) for loss of office or arising out of or connected with the termination
         of his office or employment


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     and no event or inaction has occurred which could or might give rise to any
     such claim.

17.12 Enquiries and Discrimination

     (a) There are no enquiries or investigations existing, pending or
         threatened affecting the Company in relation to any directors, officers
         or employees by the Equal Opportunities Commission, the Commission for
         Racial Equality or the Health and Safety Executive or any other bodies
         with similar functions or powers in relation to workers and no grounds
         for such enquiries or investigations exist.

     (b) There are no terms or conditions under which any director, officer or
         employee of the Company is employed, nor has anything occurred or not
         occurred prior to Completion that may give rise to any claim for sex
         discrimination, race discrimination, disability discrimination or equal
         pay or other discrimination of any kind either under domestic United
         Kingdom or European Law whether by such director, officer or employee
         or a prospective director, officer or employee or otherwise and no
         grounds for such a claim exists.

17.13 Compliance with Laws

     (a) The Company has complied in all material respects with all relevant
         provisions of the Treaty of Rome, EC Directives, statutes, regulations,
         codes of conduct, collective agreements, terms and conditions of
         employment, orders, declarations and awards relevant to the Company's
         directors, officers and employees or the relations between the Company
         and any trade union, staff association or any other body representing
         workers.

     (b) There are no training schemes, arrangements or proposals, whether past
         or present, in respect of which a levy may henceforth become payable by
         the Company under the Industrial Training Act 1982 and pending
         Completion no such schemes, arrangements or proposals will be
         established or undertaken.

17.14 Transfer Regulations

     The Company has not entered into any agreement and no event has occurred
     which may involve the Company in the future acquiring any undertaking or
     part of one such that the Transfer Regulations may apply thereto.

17.15 Duty to Inform and Consult

     The Company has complied with its obligations to inform and consult with
     trade unions and other representatives of workers and to send notices to
     the Secretary of State pursuant to sections 188 to 194 of the TULR(C)A and
     regulations 10 and 11 of the Transfer Regulations.

17.16 Records


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     The Company has maintained adequate and suitable records regarding the
     service of its directors, officers and employees and such records comply
     with the requirements of the Data Protection Act 1984.

17.17 Business is conducted by Employees

     The Company has not entered into any agreement or arrangement for the
     management or operation of its business or any part thereof other than with
     its employees.

18.  PROPERTIES

18.1 All Property

     The Properties comprise all the freehold and leasehold land owned, used or
     occupied by and all the rights vested in the Company and all agreements
     whereby the Company has any financial entitlement relating to any land at
     the date hereof.

18.2 No Other Liabilities

     The Company has no actual or contingent obligations or liabilities (in any
     capacity including as principal contracting party or guarantor) in relation
     to any lease, licence or other interest in, or agreement relating to, land
     apart from the Properties.

18.3 Replies to Enquiries

     All disclosures and replies to enquiries and requisitions relating to the
     Properties made or given by or on behalf of Rivett or the Company to the
     Purchaser or the Purchaser's Solicitors are now and will at Completion be
     complete and correct in all material respects.

18.4 Accuracy of Information

     All the information produced to or given in writing to the Purchaser or the
     Purchaser's Solicitors by the Vendors' Solicitors in respect of or relating
     to the Properties (including replies to enquiries and requisitions) in the
     course of negotiations leading up to the execution of this agreement is
     true and accurate and Rivett is not aware of any fact, matter or thing
     which has not been disclosed to the Purchaser or the Purchaser's Solicitors
     which makes any such information untrue or misleading at the date of this
     agreement.

19.  PENSIONS

19.1 Pension arrangements disclosed

     The Company is under no obligation or commitment, nor is it a party to any
     custom or practice, to pay, provide or contribute towards any "relevant
     benefits" within the meaning of section 612 of the TA (ignoring the
     exception therein) or sickness or disability benefits to or in respect of
     any person and has not at any time participated in or contributed towards
     any scheme or arrangement which has as its purpose or one of its purposes
     the provision of any such benefits.


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19.2 Ex gratia pensions etc.

     The Company has not made or proposed any voluntary or ex gratia payments to
     any person in respect of any relevant benefit (as defined in paragraph 19.1
     of this schedule).

19.3 Contributions to personal pensions

     The Company has no contractual liability to make any contributions to any
     personal pension scheme or any retirement annuity contract of any employee
     or director or to make any payment of remuneration specifically referrable
     to contributions payable by any employee or director under such scheme or
     contract.

20.  TAXATION

INFORMATION AND RETURNS

20.1 Returns

     The Company has made all returns and supplied all information and given all
     notices to the Inland Revenue or other Taxation Authority as reasonably
     requested or required by law within any requisite period and all such
     returns and information and notices were in all material respects up to
     date correct and on a proper basis and none of them is or is likely to be
     the subject of a material dispute.

20.2 Disclosures

     So far as Rivett is aware all statements and disclosures made to any
     Taxation Authority in connection with any provision of the Taxation
     Statutes whatsoever were when made and remain complete and accurate in all
     material respects.

20.3 Clearances

     No action has been taken by the Company in respect of which any consent or
     clearance from the Inland Revenue or other Taxation Authority was required
     except in circumstances where such consent or clearance was validly
     obtained and where any conditions attaching thereto were met and will,
     immediately following Completion, continue to be met.

PROVISION FOR AND PAYMENT OF TAX

20.4 General

     The Accounts make full provision or reserve in respect of any period ended
     on or before the Accounts Date for all Tax assessed or liable to be
     assessed on the Company or for which it is accountable at the Accounts Date
     whether or not the Company has or may have any right of reimbursement
     against any other person including Tax in respect of property (of whatever
     nature) income, profits or gains held, earned, accrued or received by or to
     any person on or before the Accounts Date or by reference to any event
     occurring, act done or circumstances existing on or before that date
     including distributions made down to such date or provided for


                                  PAGE 53 OF 74

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     in the Accounts and proper provision has been made and shown in the
     Accounts for deferred Tax in accordance with generally accepted accounting
     principles.

20.5 Payment of Tax

     The Company has duly and punctually paid all Tax (including Tax required to
     be deducted or withheld from payments) to the extent that the same ought to
     have been paid and is not liable nor has it within three years prior to the
     date hereof been liable to pay any penalty or interest in connection
     therewith.

20.6 Pay As You Earn

     The Company has properly operated the PAYE system deducting Tax as required
     by law from all payments to or treated as made to or benefits provided for
     employees, ex-employees or independent contractors of the Company
     (including any such payments within section 134 of the TA) and duly
     accounted to the Inland Revenue for Tax so deducted and has complied with
     all its reporting obligations to the Inland Revenue in connection with any
     such payments made or benefits provided, and no PAYE audit in respect of
     the Company has been made by the Inland Revenue nor has the Company been
     notified that any such audit will be made.

20.7 Secondary Liability

     No transaction or event has occurred in consequence of which the Company is
     or may be held liable for any Tax or deprived of relief or allowances
     otherwise available to it in consequence of any Tax or may otherwise be
     held liable for or to indemnify any person in respect of any Tax, where
     some other company or person is or may become primarily liable for the Tax
     in question (whether by reason of any such other company being or having
     been a member of the same group of companies or otherwise).

CORPORATION TAX

20.8 Deductions

     The Company has not since the Accounts Date made any payment or incurred
     any liability to make any payment in either case, of a revenue nature which
     could be disallowed as a deduction in computing the taxable profits of the
     Company or as a charge on the Company's income including any payment which
     could be disallowed under sections 74 (general rules as to deductions not
     allowable), 125 (annual payments for non-taxable consideration), 338-340
     (allowance of charges on income), 779-785 (leased assets) or 787
     (restriction of relief for payments of interest) of the TA.

20.9 Sales at Undervalue/Overvalue

     All transactions entered into by the Company have been entered into on an
     arm's length basis and the consideration (if any) charged or received or
     paid by the Company on all transactions entered into by it has been equal
     to the consideration which might have been expected to be charged, received
     or paid (as appropriate) between independent persons dealing at arm's


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     length and no notice or enquiry pursuant to section 770 of the TA or the
     transfer pricing provisions of any arrangements made under section 788 of
     the TA (relief by agreement with other countries) has been made in
     connection with any of such transactions.

20.10 Loan Relationships

     The Company is and has since the Accounts Date been taxed on an authorised
     accruals basis of accounting in relation to all loan relationships which
     are creditor relationships as defined in section 103 of the FA 1996 and in
     relation thereto:-

     (a) the accruals on which the Company is taxable are computed only by
         reference to interest;

     (b) if any such debt were to be repaid at its face value the Company would
         not suffer any charge to Tax in excess of Tax on interest accrued; and

     (c) there is no connection between the Company and the debtor as mentioned
         in section 87 of the FA 1996.

20.11

     (a) The Company obtains and has since the Accounts Date obtained tax relief
         on an authorised accruals basis of accounting in relation to all loan
         relationships which are debtor relationships as mentioned in section
         103 of the FA 1996 and in relation to each such relationship:-

         (i)   the deduction given in computing the taxable profits of the
               Company in consequence of that relationship is not less than the
               interest accruing for the period concerned;

         (ii)  the Company would suffer no adverse tax consequences were such
               debts to be repaid at face value except that the tax deduction
               for interest accrued would cease.

     (b) The Company has not since the Accounts Date held or been the debtor
         under any deep discount securities as defined in paragraph 1 of
         schedule 4 of the TA or any deep gain securities as defined in
         paragraph 1 of schedule 11 of the FA 1989 or any relevant discounted
         security as mentioned in schedule 13 of the FA 1996.

CAPITAL ASSETS

20.12 Capital Allowances

     (a) No balancing charge in respect of any capital allowances claimed or
         given would have arisen if all the assets of the Company had been
         realised on the Accounts Date for a consideration equal to the amount
         of the book value thereof as shown or included in the Accounts.

     (b) The Company has not since the Accounts Date become liable for any
         balancing charge.


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20.13 Finance Leases

     (a) The Company is not and has not been the lessee under any leases of
         plant or machinery except for the Leases.

     (b) No assets subject to the Leases have at any time been leased by the
         Company or its lessees to a person who is not resident in the UK and
         does not use the machinery or plant for the purposes of a trade carried
         on there.

     (c) Rivett, after making due and reasonable enquiry, is not aware of any
         revenue investigation, revenue enquiry or other circumstance which
         indicates that any person who is or was a lessor or owner of equipment
         subject to any of the Leases will or may be denied the first year
         allowances and/or writing down allowances by reference to which the
         initial rental under that Lease was calculated.

DISTRIBUTIONS

20.14 Repayments of Share Capital

     (a) The Company has not at any time after 6 April 1991 repaid or agreed to
         repay or redeemed or agreed to redeem or purchased or agreed to
         purchase (or made any contingent purchase contract within the meaning
         of section 165 of the Companies Act 1985) in respect of any of its
         issued share capital or any class thereof. Further the Company has not
         after 6 April 1991 capitalised or agreed to capitalise in the form of
         shares, debentures or other securities or in paying up amounts unpaid
         on any shares, debentures or other securities any profits or reserves
         of any class or description or passed or agreed to be passed any
         resolution to do so.

     (b) The Company has not made (and will not be deemed to have made) any
         distribution within the meaning of sections 209 and 210 (bonus issue
         following repayment of capital) of the TA since 5 April 1991 except
         dividends properly authorised and shown in its Accounts nor is the
         Company bound to make any such distribution.

CHARGEABLE GAINS

20.15 Sales at Book Value

     No chargeable gain or profit (disregarding the effects of any indexation
     relief available) would arise if any asset of the Company (other than
     trading stock) were to be realised for a consideration equal to the amount
     of the book value thereof as shown or included in the Accounts.

ANTI-AVOIDANCE PROVISIONS

20.16 Tax Schemes

     The Company has not entered into nor been a party to nor otherwise involved
     in any scheme or arrangement designed wholly or partly for the purpose of
     avoiding, reducing or deferring Tax which could be challenged by the Inland
     Revenue.


                                  PAGE 56 OF 74

<PAGE>

FOREIGN ELEMENT

20.17 Treasury Consents

     The Company has always been resident in the territory in which it was
     incorporated and has never been resident in any other territory or treated
     as so resident for the purposes of any double tax agreement.

20.18 Double Taxation

     The Company has received or is entitled to receive credit against its UK
     Tax liability for all Tax charged (whether by Tax being withheld or through
     direct assessment) on the Company's income from any foreign jurisdiction
     and the Company holds all deduction certificates or other documents
     necessary to claim all relief due to it under part XVIII of the TA.

20.19 Controlled Foreign Companies

     The Company does not have and never has had an interest in a controlled
     foreign company within the meaning of section 747 of the TA such that all
     or any of the chargeable profits of the controlled foreign company have
     been or will or may be apportioned to the Company.

20.20 Withholding of Tax and Agency for Non-Residents

     The Company is not and has not been assessable to Tax by virtue of section
     78 of the TMA or sections 42A or 43 of the TA, or section 126 of the FA
     1995.

CLOSE COMPANY

20.21 Close Companies - Transfers of Value

     At any time after 6 April 1991 the Company has made no transfer of value
     such as is specified in section 94(1) (or section 99(2)) of the ITA.

20.22 Close Companies - Loans to Participators

     the Company has not at any time after 6 April 1991 made any loan advance or
     payment or given any consideration falling within sections 419-420 or 422
     of the TA.

20.23 Close Companies - Distributions

     At any time after 6 April 1991 the Company has made no payments and
     conferred no benefits falling to be treated as distributions under section
     418 of the TA.

20.24 Close Companies - Transfers at Undervalue

     The Company has not at any time after 6 April 1991 made a transfer at an
     undervalue so that section 125 of the TCGA could apply.

20.25 Close Companies - Shortfall etc


                                  PAGE 57 OF 74

<PAGE>

     The Company is not and never has been a close investment-holding company as
     defined in section 13A of the TA.

GROUPS OF COMPANIES

20.26 Intra-Group Transfers

     The Company has at any time after 6 April 1991 acquired any asset other
     than trading stock from any other company other than another Group Company
     belonging at the time of acquisition to the same group of companies as the
     Company within the meaning of section 170 of the TCGA and no member (other
     than another Group Company) of any group of companies of which the Company
     is or has at any material time been the principal company (as defined in
     section 170(2)(b) of the TCGA) has so acquired any asset.

20.27 Group Relief and Advance Corporation Tax

     The Company is not part of and has never entered into any arrangements
     relating to relief under section 240 or sections 402 - 413 of the TA other
     than with another Group Company.

INHERITANCE TAX

20.28 Inheritance Tax

     (a) The Company is not, and will not become, liable to be assessed to
         inheritance tax as donor or donee of any gift or transferor or
         transferee of value (actual or deemed) nor as a result of any
         disposition, chargeable transfer or transfer of value (actual or
         deemed) made by or deemed to be made by any other person on or prior to
         Completion.

     (b) There is no unsatisfied liability to inheritance tax attached or
         attributable to the Shares or any asset of the Company and in
         consequence no person has the power to raise the amount of such tax by
         sale or mortgage of or by a terminable charge on any of the Shares or
         assets of the Company as mentioned in section 212 of the ITA and none
         of the Shares or assets of the Company are subject to an Inland Revenue
         charge within section 237 of the ITA.

VALUE ADDED TAX

20.29 Value Added Tax

     (a) The Company is a registered taxable person for the purpose of the VAT
         legislation and has not at any time been treated as a member of a group
         of companies for such purpose and has not made any application to be so
         treated and no circumstances exist whereby the Company would or might
         become liable for value added tax as an agent or otherwise by virtue of
         section 47 of the VATA.

     (b) The Company has complied in all material respects with the requirements
         and provisions of the VAT legislation and has made and maintained and
         will pending Completion make and maintain accurate and up to date
         records invoices accounts and other documents required by or necessary
         for the purposes of the VAT legislation and


                                  PAGE 58 OF 74

<PAGE>

          the Company has at all times punctually paid and made all payments and
          returns required thereunder.

     (d) The Company has not made any exempt supplies in consequence of which it
         is or will be unable to obtain credit for all input tax paid by it
         during any VAT quarter ending after the Accounts Date.

20.30 Capital Goods Scheme

     There are set out in the Disclosure Letter with express reference to this
     Warranty full details of each of the assets of the Company of a kind
     described in part XV of the Value Added Tax Regulations 1995 (SI No 2518)
     (adjustments to the deduction of input tax on capital items) in relation to
     which that part could operate to adjust the amount of input tax deducted,
     including in particular:-

     (a) a description (including, in the case of land, or a building or part of
         a building the nature of the tenure and the time that the tenure has to
         run), the date of acquisition (or, in the case of a lease, the date of
         grant) and the price paid and VAT upon the purchase or acquisition of
         the capital item in question;

     (b) the proportion of the VAT on the purchase price for which credit has
         been claimed, including any adjustments made under part XV of the Value
         Added Tax Regulations 1995.

STAMP DUTY

20.31 Stamp Duty

     All documents in the enforcement of which the Company is or may be
     interested have been duly stamped and since the Accounts Date the Company
     has not been a party to any transaction whereby the Company was or is or
     could become liable to stamp duty reserve tax.

21. ENVIRONMENTAL MATTERS

21.1 Consents

     The Company has obtained and complied with the terms and conditions of all
     Environmental Consents. All current Environmental Consents remain in full
     force and effect. The Company has not received any notice of and so far as
     Rivett is aware there are no circumstances that may lead to the revocation,
     modification or suspension of, or that may prejudice or require material
     expenditure for the renewal, extension, grant or transfer of, any current
     Environmental Consents.

21.2 Liability

     The Company complies and has at all times complied with and the Company's
     use of the Properties has at all times complied with all Environmental Laws
     and there are no facts or circumstances known to Rivett which interfere or
     prevent compliance with any Environmental Laws.


                                  PAGE 59 OF 74

<PAGE>

     There are no civil, criminal arbitration or administrative actions, claims,
     proceedings or suits pending or threatened against the Company arising from
     or relating to Environmental Consents or Environmental Law and so far as
     Rivett is aware there are no circumstances which may lead to such actions,
     claims, proceedings or suits.

21.3 Notices and Complaints

     The Company has not received any notice of enforcement, prohibition,
     improvement, remediation or other notice of equivalent nature, or any
     judgment, order, decree, award, demand or decision in respect of the
     Environment from any court, tribunal, arbitrator or governmental or
     regulatory authority and Rivett is not aware of any complaints,
     investigations, enquiries, requests for information or other formal or
     informal indications of any possible claims or legal actions in respect of
     the Environment from any person including any neighbour, governmental or
     regulatory authority, current or former employee or third party.

21.4 Contaminated Land

     So far as Rivett is aware, there has not been and there is not present on,
     at or under the Properties and there is and has been no release, migration,
     leakage, spill, discharge, entry, deposit or emission onto or from the
     Properties of any Hazardous Substance or Waste.

     So far as Rivett is aware, there has not been any disposal, storage,
     release, leakage, migration, spill, discharge, entry, deposit or emission
     of any Hazardous Substance or Waste into the Environment caused by the
     Activities.

21.5 Future Laws

     [deleted]

21.6 Documentation

     There are no environmental reports, surveys, assessments and investigations
     in respect of the Properties or Activities in the possession of the Vendors
     and the Company.

22. INFORMATION

22.1 General

     All information given by, or on behalf of, the Vendors or the Company to
     the Purchaser, its advisers or agents before or during the negotiations
     leading to this agreement is true, complete, accurate and not misleading in
     any material respects.

22.2 The Agreement and the Disclosure Letter

     The information set out in schedules 1, 2 and 5 of this agreement and in
     the Disclosure Letter is true, complete, accurate and not misleading in any
     material respects.

22.3 Material Information


                                  PAGE 60 OF 74

<PAGE>

     So far as Rivett is aware, all information about the Shares and the
     Company's business which might be material to a purchaser of the Shares has
     been disclosed to the Purchaser in writing.


                                  PAGE 61 OF 74

<PAGE>


                                   SCHEDULE 4
                                Form of Release
                         (to be signed by each Vendor)

                                                                [        ] 1997
To:     Olwen Direct Mail Ltd and
        each of its subsidiaries
        (together "the Group") and
        their respective officers and
        employees (together "Employees")



I confirm that I have no claims (actual or contingent) against the Company or
any other member of the Group or Employees in respect of any cause, matter or
thing whatsoever (including unpaid remuneration) but to the extent that any such
claim exists or may exist I hereby irrevocably waive such claim and release the
Company and each other member of the Group and Employees from any liability
whatsoever in respect thereof [save [Mr Ruddle only] in respect of the Company's
obligations to me under or pursuant to my service contract with it].

[3i Group only] [This release is also given on behalf of all subsidiaries of 3i
Group]




Executed as a Deed and Delivered
by [                                             ]
in the presence of:-



 ......................................................
(Witness)
Address
Occupation


                                  PAGE 62 OF 74

<PAGE>


                                   SCHEDULE 5
                                 The Properties

<TABLE>
<CAPTION>

Address             Date of Lease      Parties                     Term             Rent
- -------             -------------      -------                     ----             ----
<S>                 <C>                <C>                         <C>              <C>
Unit 1 Stafford     2.8.1989           (1) The Prudential          From             (pound)120,640
Cross Ind. Est                         Assurance Co. Ltd           25.12.88         p.a. subject
Croydon                                (2) Olwen Press Ltd         until            to review on
                                                                   24.12.2013       25.12.98 and
                                                                                    at 5 yearly
                                                                                    intervals


Unit 2 Stafford     2.8.1989           (1) The Prudential          From             (pound)120,640
Cross Ind. Est                         Assurance Co. Ltd           25.12.88         p.a. subject
Croydon                                (2) Olwen Press Ltd         until            to review on
                                                                   24.12.2013       25.12.98 and
                                                                                    at 5 yearly
                                                                                    intervals


Unit 8 Stafford     20.2.1989           (1) The Prudential         From             (pound)85,397
Cross Ind. Est                          Assurance Co. Ltd          25.12.88         subject
Croydon                                 (2) H.T. Electrical Ltd.   until            to review as
                                                                   24.12.2013       above


100 East Pratt St   30.12.1993          Landlord - 100 East        1 March 1994     US$29,888
Suite 1520                              Pratt Street Partnership   to 31            per annum
Baltimore                               Assigned from              December 1998
Maryland                                Production Group
21202                                   International Inc.
                                        15.12.1994

</TABLE>

                                  PAGE 63 OF 74

<PAGE>


                                   SCHEDULE 6
                               Deed of Indemnity

THIS DEED OF INDEMNITY is made on 18 September 1997

BETWEEN:-

(1)  PETER RIVETT of 15/37 Milson Road, Cremorne Point, NSW 2090, Australia (the
     "Covenantor"); and

(2)  BIG FLOWER LIMITED whose registered office is at Broadwalk House, 5 Appold
     Street, London EC2A 2HA (the "Purchaser" which expression shall include its
     successors and assigns).

RECITAL

This deed of indemnity is entered into pursuant to the provisions of an
agreement of today's date (the "Sale Agreement") pursuant to which the Purchaser
agreed to purchase the whole of the share capital of Olwen Direct Mail Limited.

THE PARTIES AGREE AS FOLLOWS:-

1.   INTERPRETATION

1.1  Subject to clause 1.2 and unless the context otherwise indicates, words,
     expressions and abbreviations defined in the Sale Agreement shall have the
     same meanings in this deed and any provisions of the Sale Agreement
     concerning matters of construction or interpretation shall mutatis mutandis
     apply to this deed.

1.2  The following words, expressions and abbreviations used in this deed shall,
     unless the context otherwise requires, have the following meanings:-

     "Claim for Tax" means any of the following:-

     (a) any liability to make a payment of Tax and any claim, assessment,
         demand, notice or other document issued or action taken by or on behalf
         of any person authority or body whatsoever and of whatever country
         which claims payment of Tax or any submission, return or correspondence
         from which it appears that there is or will be a liability to Tax or
         Claim for Tax within (b) below; or

     (b) any non-availability or loss of or reduction of any Relief (including
         in particular a right to repayment) to the extent that such Relief has
         been reflected in the net assets of the Company as shown by the
         Accounts.

     "Company" means each and all of the companies listed in Schedule 1 and 2 to
     the Sale Agreement;


     "Group Relief" means any of the following:-


                                  PAGE 64 OF 74

<PAGE>

     (a) relief surrendered or claimed pursuant to chapter IV part X of the TA;
         or

     (b) a Transferred Tax Refund;

     "income profits or gains" includes any other measure by reference to which
     Tax is computed;

     "Purchaser's Relief" means any Relief to the extent that the same either:-

     (a) has been reflected in the net assets of the Company as shown by the
         Accounts; or

     (b) arises in respect of periods after the Completion Date;

     "Relevant Event" means every event, act, omission, default, occurrence,
     circumstance, transaction, dealing or arrangement of any kind whatsoever
     done or omitted to be done by the Covenantor or the Company or which in any
     way concerns or affects the Company whether or not done or omitted to be
     done by the Company or the Covenantor;

     "Relief" means any allowance, credit, exemption, deduction or relief from,
     in computing, against or in respect of Tax or any right to the repayment of
     Tax;

     "Tax" means any tax, and any duty, impost, levy or charge in the nature of
     tax, whether domestic or foreign, and any fine, penalty or interest
     connected therewith, including (without prejudice to the foregoing)
     corporation tax, advance corporation tax, income tax (including, tax
     falling to be deducted at source), national insurance and social security
     contribution, capital gains tax, inheritance tax, petroleum revenue tax,
     value added tax, customs excise and import duties, stamp duty, stamp duty
     reserve tax, insurance premium tax, air passenger duty, and any other
     payment whatsoever which the Company is or may be or become bound to make
     to any person by reason of any taxation statutes but excludes, for the
     avoidance of doubt, any rates and water rates payable in respect of the
     Properties;

     "taxation statutes" means all statutes, decrees, orders and regulations,
     whether domestic or foreign providing for or imposing any Tax;

     "Transferred Tax Refund" means a tax refund relating to an accounting
     period as defined by section 102(3) of the FA 1989 in respect of which a
     notice has been given pursuant to section 102(2) of the FA 1989;

     "Utilisation of a Purchaser's Relief" means the utilisation or set off of a
     Purchaser's Relief available to the Company.

     1.2 References to income, profits or gains being earned, accrued or
     received before a particular date shall include deemed income, profits or
     gains treated as earned, accrued or received prior thereto.

2.   INDEMNITY

     2.1 Subject to clause 2.2, the Covenantor hereby covenants with the
     Purchaser to pay from time to time to the Purchaser:-


                                  PAGE 65 OF 74

<PAGE>

     (a) such sums as would if paid to the Company indemnify and keep
         indemnified the Company against each and every Claim for Tax where the
         Claim for Tax in question arises whether in whole or in part:-

         (i)   in connection with or as a consequence of one or more Relevant
               Events occurring or entered into on or before Completion; or

         (ii)  in respect of or by reference to any income profits or gains
               earned, accrued or received on or before Completion; or

         (iii) in consequence of the combined effect of two or more Relevant
               Events of which at least one shall have occurred on or before
               Completion but only in circumstances where such Claim for Tax
               would not have been suffered by the Company but for the failure
               of any person (other than a company falling within the definition
               of the Company for the purposes of this deed) to discharge or pay
               any liability for Tax;

         (iv)  in consequence of HM Customs & Excise treating postage costs
               recharged by Olwen Direct Mail Limited as a standard-rated supply
               for VAT purposes;

         (v)   in consequence of any transaction or transactions entered into by
               any of the Companies being treated by US Internal Revenue Service
               or the UK Inland Revenue as being transactions other than ones
               entered into on an arms length basis with the consideration (if
               any) charged or received or paid by any of the Companies on such
               transactions being equal to the consideration which might have
               been expected to be charged received or paid (as appropriate)
               between independent persons dealing at arms length.

     (b) such sums as will indemnify and keep indemnified the Purchaser and such
         further sums as would if paid to the Company and/or any subsidiary or
         holding company of the Purchaser (or any subsidiary of any such holding
         company) indemnify the same against all costs and expenses reasonably
         incurred or payable in connection with any Claim for Tax the subject of
         a claim under clause 2.1(a), including all legal proceedings relating
         thereto and the settlement of any Claim for Tax and/or rebuttal of any
         contention or in connection with any legal proceedings and reasonable
         steps taken to avoid any Claim for Tax or contention whether actual,
         threatened and/or anticipated;

2.2  If any Claim for Tax or liability which would have otherwise given rise to
     a Claim for Tax shall be reduced or avoided in consequence of any
     Utilisation of a Purchaser's Relief this deed shall apply as if such
     Purchaser's Relief had not been available so that the amounts paid by the
     Covenantors hereunder shall be the amounts which would have been payable in
     the absence of that or any other Purchaser's Relief.

2.3  The covenant contained in clause 2.1(a) shall not apply:-

     (a) to any Claim for Tax to the extent that any Tax giving rise to the same
         has been paid prior to the Accounts Date and payment is reflected in
         the Accounts or to the extent that provision or reserve for the
         liability to which the same relates has been made in


                                  PAGE 66 OF 74

<PAGE>

         the Accounts or that the Claim for Tax arises as a result of an
         increase in rates of Tax announced after the date of the Sale
         Agreement;

     (b) to any Claim for Tax to the extent that the same shall have arisen in
         consequence of any act or transaction which could reasonably have been
         avoided, and which was carried out without the agreement of the
         Covenantor by the Purchaser or the Company after Completion otherwise
         than in the ordinary course of business of the Company, and which the
         Purchaser was or should reasonably have been aware would give rise to
         the Claim for Tax in question provided that the exclusion contained in
         this clause shall not apply in relation to any Claim for Tax pursuant
         to Clause 2.1(a)(v) above; or

     (c) to any Claim for Tax to the extent that it arises in the ordinary
         course of business of the Company after the Accounts Date but on or
         before Completion and for this purpose, but without limitation, the
         following shall not be regarded as being in the ordinary course of
         business:-

         (i)   the declaration or payment of any dividend or the making of any
               other distribution; or

         (ii)  any transaction entered into by the Company in circumstances
               where the consideration (if any) received by or as the case may
               be, paid by the Company in respect thereof is less than or more
               than the consideration deemed to have been received or paid for
               Tax purposes but to the extent only of the Claim for Tax arising
               in respect of the amount by which the deemed consideration
               exceeds or is less than the actual consideration; or

         (iii) the Company ceasing or being deemed to cease, for Tax purposes,
               to be the member of any group or associated with any other
               company or person whether in consequence of the entering into of
               the Sale Agreement or anything done under it or otherwise; or

         (iv)  a Relevant Event which gives rise to a liability on the Company
               in respect of the income, profits or gains, whether actual or
               deemed, of any non resident person; or

         (v)   any other Relevant Event which gives rise to a liability to Tax
               on deemed (as opposed to actual) income, profits or gains.

     (d) to the extent that any amount subject to the covenant in Clause 2.1
         above has been received pursuant to a claim under the Warranties in the
         Sale Agreement.

2.4  In computing the amount to be paid by the Covenantors under this deed in
     respect of any Claim for Tax no account shall be taken of any Tax for which
     the Company would have been liable in respect of such amount had it in fact
     been paid to the Company.

2.5  All sums payable by the Covenantors under this deed shall be paid free and
     clear of all deductions or withholdings (including Tax) unless the
     deduction or withholding is required by law, in which event or in the event
     that the Purchaser shall incur any liability for Tax chargeable or
     assessable in respect of any payment pursuant to this deed, the Covenantors


                                  PAGE 67 OF 74

<PAGE>

     shall pay such additional amounts as shall be required to ensure that the
     net amount received and retained by the Purchaser (after Tax) will equal
     the full amount which would have been received and retained by it had no
     such deduction or withholding been made and/or no such liability to Tax
     been incurred and in applying this clause 2.5 no account shall be taken of
     the extent to which any liability for Tax may be mitigated or offset by any
     Relief available to the Purchaser so that where such Relief is available
     the additional amount payable hereunder shall be the amount which would
     have been payable in the absence of such availability.

3.   TIMING

3.1  Where the Covenantors become liable to make any payment pursuant to clause
     2, the due date for the making of that payment shall be:-

     (a) insofar as the claim arises pursuant to clause 2.1(a) seven days before
         the day on which a payment of Tax becomes due under or in consequence
         of the Claim for Tax in question or seven days before the day on which
         any repayment (or increased repayment) of Tax which but for such Claim
         for Tax would have been available, would have been due and for this
         purpose it shall be assumed that the repayment would have become due at
         the earliest possible date;

     (b) insofar as the claim arises pursuant to clause 2.1(b), seven days
         before the day on which the costs and expenses fall due for payment;

     (c) insofar as the claim arises pursuant to clause 2.2, the date on which
         payment would have become due under clause 3.1(a) had no Purchaser's
         Relief been available and for this purpose it shall be assumed that the
         Claim for Tax would have been made and all Tax would have become due at
         the earliest possible date (assuming no application for postponement).

3.2  Where but for the non-availability, loss or reduction of any Purchaser's
     Relief the Company could have surrendered the same to another company by
     way of Group Relief this deed and in particular clause 3.1(a) shall apply
     as the Company could have saved an equivalent amount of Tax by utilising
     such relief saved as the recipient of the Group Relief surrender would have
     saved as a consequence of such surrender and at the same time.

3.3  For the purposes hereof where Tax is due or a repayment due is lost or
     reduced or where, but for a Utilisation of a Purchaser's Relief Tax would
     be due or costs and expenses fall due for payment, on more than one
     occasion then paragraphs (a) to (c) of clause 3.1 shall apply separately on
     each such occasion.

3.4  If any sum due under clause 2 is not paid by the Covenantor by the later of
     the due date and the date seven days after the date of the demand made
     therefor the same shall carry interest (from such later date until the date
     of payment) at the rate of two per cent. over the base rate for the time
     being of National Westminster Bank PLC (or in the absence of such rate at
     such equivalent rate as the Purchaser shall select) save that interest
     shall not start to run in respect of any payments of Tax above until seven
     days before the day on which the Company makes the payment of Tax due.


                                  PAGE 68 OF 74

<PAGE>



4.   RIGHT TO REIMBURSEMENTS AND CREDITS

4.1  Subject to clause 4.3, in calculating amounts due from the Covenantor under
     this deed no account shall be taken of any entitlement of the Purchaser or
     the Company to make any recovery in respect of that amount or the
     circumstances giving rise to the same from some other person or of any
     Relief or other benefit which may become available to the Purchaser or the
     Company in consequence of the Claim for Tax in question or the
     circumstances giving rise to the same.

4.2  If the Purchaser or the Company is or becomes entitled to recover from some
     other person (not being the Company or any employee of the Company but
     including, inter alia, any Tax authority) any amount in respect of the
     Claim for Tax or liability within clause 2.1(b) resulting in a payment by
     the Covenantor to the Purchaser under this deed, then the Purchaser shall
     promptly notify the Covenantor of the said entitlement and, if so required
     by the Covenantor and if the Covenantor shall undertake to pay all costs
     and expenses incurred by the Purchaser and the Company and shall provide
     reasonable security for the same, shall take all reasonable steps to
     enforce or procure that the Company shall enforce that recovery (keeping
     the Covenantor fully informed of progress) and shall apply the same in
     accordance with clause 4.3.

4.3  If the Purchaser or the Company receives:-

     (a) a recovery as mentioned in clause 4.2; or

     (b) a benefit being either a reduction in Tax due and payable or any
         increased repayment of Tax in each case as a result either of credit
         being obtained for Tax giving rise to a claim by the Purchaser under
         the terms of this deed (including pursuant to clause 2.5) or as a
         result of the availability of any relief for which the payment in
         clause 2.1(b)(ii) was consideration (other than a reduction in a
         liability to Tax which would otherwise have itself given rise to a
         payment hereunder or been taken into account in a claim for damages
         under the Warranties)

     then the Purchaser shall promptly pay to the Covenantors an amount equal to
     so much of the benefit received or sum recovered (less any Tax paid by the
     recipient in respect thereof and less any costs and expenses reasonably
     incurred by the Purchaser and the Company) as does not exceed the amount
     which the Covenantor paid in respect of the Claim for Tax in question
     (together with so much of any interest or repayment supplement paid to the
     recipient of the recovery or benefit in respect thereof as corresponds to
     the proportion of the recovery or benefit accounted for under this clause
     4.3, less any Tax thereon).

4.4  Where any recovery or benefit is accounted for under clause 4.3:-

     (a) the amount of the payment originally made by the Covenantor under
         clause 2 shall be treated as reduced for all purposes of this deed
         (including any further application of this clause 4) and of the Sale
         Agreement; and

     (b) the same shall not prejudice the right of the Purchaser to make further
         recoveries under this deed whether in respect of matters to which the
         original claim related or otherwise.


                                  PAGE 69 OF 74

<PAGE>


5.   RESISTANCE OF CLAIMS

5.1  If the Purchaser or the Company becomes aware of any Claim for Tax (which
     expression shall for the avoidance of doubt include any claim which would
     give rise to a Claim for Tax but for a Utilisation of a Purchaser's Relief)
     which may result in the Purchaser having a claim against the Covenantor
     under this deed, the Purchaser shall give notice to the Covenantor in the
     manner provided by the Sale Agreement as soon as is reasonably practicable
     and the Covenantor shall except where an allegation of fraud or wilful
     default or neglect is made forthwith be entitled at its sole discretion
     (but after consultation with the Purchaser) to resist such Claim for Tax in
     the name of the Purchaser or the Company or any of them but at the expense
     of the Covenantor and to have the conduct of any appeal or incidental
     negotiations provided that:-

     (a) the Purchaser shall be kept fully informed of all matters pertaining to
         the dispute; and

     (b) no material communication, written or otherwise, pertaining to the
         dispute (and in particular no proposal for or consent to any settlement
         or compromise thereof) shall be transmitted to the Inland Revenue H.M.
         Customs & Excise or other taxation authority or governmental body or
         authority without the same having been submitted to, and approved by
         the Purchaser such approval not to be unreasonably withheld or delayed;
         and

     (c) no application shall be made for postponement of Tax unless the
         Purchaser and the Company shall be provided with such security as the
         Purchaser may reasonably require in respect of sums subsequently
         becoming payable under this deed; and

     (d) the Covenantor shall not be entitled to resist any such Claims for Tax
         before any court, tribunal or other appellate body unless it has been
         advised by leading tax counsel, after disclosure of all relevant
         information and documents, that it is reasonable to resist the Claim
         for Tax in the manner proposed by the Covenantor.

5.2  The Purchaser shall and shall procure that the Company shall give the
     Covenantor all reasonable co-operation, access and assistance, technical or
     otherwise, for the purpose of resisting such a Claim for Tax provided that
     each of the Purchaser and the Company is indemnified and secured to the
     reasonable satisfaction of the Purchaser by the Covenantor against all
     losses (including additional Claims for Tax, costs, damages and expenses)
     which may thereby be incurred.

5.3  If the Covenantor does not request the Purchaser or the Company to take any
     appropriate action or shall fail to indemnify and secure the Purchaser or
     the Company to its reasonable satisfaction within 21 days of the said
     notice to the Covenantor, the Purchaser and/or the Company shall be free to
     pay or settle the Claim for Tax on such terms as it may in its absolute
     discretion think fit.

6.   MISCELLANEOUS

6.1  Claims under this deed (whether being claims against the Covenantor under
     clause 2 or claims by the Covenantors pursuant to clause 4) shall be wholly
     barred and unenforceable


                                  PAGE 70 OF 74

<PAGE>

     unless full written particulars of the claim shall have been given by the
     claimant within six years of the end of the accounting period current at
     Completion.

6.2  In determining the amount of any Claim for Tax suffered by, or any recovery
     or benefit received by, any company for the purposes of this deed any party
     hereto may at its own expense request the auditors of that company to
     determine the same and to provide a certificate thereof; any certificate so
     provided shall be binding on the parties hereto in the absence of manifest
     error.

6.3  The provisions of clauses 13 (variations),14 (waiver), 16 (notices), 17
     (counterparts) and 18 (governing law) of the Sale Agreement shall apply to
     this deed as if the same were incorporated herein.

6.4  The provisions of Clause 4.9, 4.10, 4.13(b), 4.13(d), 4.13(e), 4.13(f),
     4.13(g), 4.13(h) and 4.13(i) shall apply to limit the Liability of the
     Covenantor under the covenant contained in Clause 2.1 as if the same were
     incorporated herein.

IN WITNESS whereof this deed has been executed on the date first above written.


Executed by                                       )
PETER RIVETT                                      )
in the presence of:-                              )


                                  PAGE 71 OF 74

<PAGE>





Signed by                                         )
PETER RIVETT                                      )
in the presence of:-                              )



Signed by                                         )
ANDREW RUDDLE                                     )
in the presence of:-                              )



Signed by                                         )
for and on behalf of 3i GROUP PLC                 )
in the presence of:-                              )




Signed by                                         )
for and on behalf of BIG FLOWER LTD in the        )
presence of:-                                     )








                                  PAGE 72 OF 74


                                                              EXHIBIT NO. 99.1




                         BIG FLOWER BEGINS INTERNATIONAL
                        EXPANSION WITH ACQUISITION OF UK
                                 DIRECT MARKETER
   Olwen Direct Mail Adds International Full-Service Direct Mail Capabilities

         New York City (Sept. 18, 1997) - Big Flower Press Holdings, Inc. (NYSE:
BGF), announced today that it has completed the acquisition of UK-based Olwen
Direct Mail Ltd, a privately-owned direct marketing company with 1996 sales of
approximately $30 million. Olwen, headquartered in South London, England
specializes in full-service direct mail preparation including prepress,
printing, personalization, finishing and mailing as well as database services
such as response analysis and target customer profiling. In addition to the UK
facility, Olwen operates a database management operation and international
direct mail group in Baltimore, Maryland. The terms of the acquisition were not
disclosed.

         "We are pleased to begin our international expansion with Olwen, which
is an innovative leader in the direct mail business. We believe there is a
growing market for global solutions to advertising and direct marketing
requirements among many of our multinational customers, and this first
acquisition outside the US is a strong initial step toward satisfying their
needs," said Edward T. Reilly, President and Chief Executive Officer of Big
Flower.

         Angus Fisher, Managing Director of Olwen Direct Mail said, "I am
delighted Olwen has become a member of the Big Flower group of companies where
our strong business performance, first-rate customer service abilities and
growth potential can be enhanced."

         Olwen was founded in 1982 as a printer for the UK's direct mail
industry. Since 1989, Olwen progressively expanded its range of specialist
services, including the development of its own software to process and manage
lists and other data supplied by


                                  PAGE 73 OF 74
<PAGE>


its clients. Today, Olwen provides a comprehensive, one-stop production service
to more than 150 blue-chip clients in financial services, advertising and
publishing.

         "We intend to coordinate Olwen's operations with those of Webcraft, our
US direct mail business, and we expect to capitalize on that relationship.
Olwen's worldwide mailing expertise, particularly in its US subsidiary, will
complement Webcraft's service capabilities. In addition, Olwen's highly-refined
short-run capabilities, which are necessary to satisfy Europe's differentiated
language and culture-specific markets, could be applicable in several market
segments in the US," Mr. Reilly added.

         Big Flower is a leading advertising and marketing services company
specializing in advertising insert programs, circulation-building newspaper
products, digital image and content management, customized direct mail products
and fragrance samplers. Its 1996 annualized revenues were approximately $1.4
billion.

                                    #   #   #

For more information, please contact:

        Nancy S. Murray     or    Angus Fisher
        Big Flower                or Andy Ruddle
        212.521.1606              Olwen Direct Mail
                                  0181.253.7000




                                  PAGE 74 OF 74


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