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EXHIBIT 2.1
DATED 20 NOVEMBER, 1996
SHARE SALE AND PURCHASE AND OPTION AGREEMENT
relating to the issued share capital of Global Accessories Limited
The persons herein named as VENDORS (1)
▇▇▇▇▇ P BARSHALL (2)
GLOBAL ACCESSORIES LIMITED (3)
VANS, INC. (4)
THE SHARES OF VANS, INC. COMMON STOCK OFFERED TO THE VENDORS HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), ANY
MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS SUCH
SHARES ARE REGISTERED UNDER THE ACT, OR ANY EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE.
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Table of Contents
PARTIES 1
INTRODUCTION 1
OPERATIVE PROVISIONS 2
1 Interpretation 2
2 Sale and purchase of the Shares and grant of Options 8
3 Consideration 10
4 Completion 16
5 Warranty 20
6 Non-disclosure of information 35
7 Management of the Company 35
8 Covenants against competition 41
9 Binding nature of Agreement 42
10 General Provisions 43
SCHEDULE 1 46
The Vendors 46
Part I 46
Shareholdings 46
Part II 47
Initial Consideration 47
Part III 48
Options Consideration - Option (Second) Shares 48
Part IV 49
Options Consideration - Option (Third) Shares 49
Part V 50
Options Consideration - Option (Fourth) Shares 50
Part VI 51
Options Consideration - Option (Fifth) Shares 51
Part VII 52
Options Consideration - Option (Sixth) Shares 52
SCHEDULE 2 53
Particulars of the Company 53
SCHEDULE 3 54
Warranty Statements 54
A Corporate and general 54
B Financial statements 55
C Business since the Accounts Date in 1996 55
E Assets 57
F Trade 57
G Insurance 58
H Intellectual property rights 59
I Employees 59
J Pensions 60
K Real property 60
L Tax returns and taxation 61
M Records 62
N Stamp duties 62
O Insolvency 62
ATTESTATIONS 63
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DATED 20 NOVEMBER, 1996
PARTIES
(1) The companies or persons whose names and addresses appear in column 1
of Schedule 1 ("the Vendors");
(2) ▇▇▇▇▇ ▇▇▇▇▇ BARSHALL of ▇▇▇▇ ▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
("Mr Barshall");
(3) GLOBAL ACCESSORIES LIMITED (No. 2589904) whose registered office is at
▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("the Company"); and
(4) VANS, INC. (a company incorporated in the state of Delaware, USA, with
registered number (737365024)) whose principal place of business is at
2095 Batavia, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America ("the
Purchaser").
INTRODUCTION
(A) The Company was incorporated in England and Wales on 8 March 1991
under the Companies ▇▇▇ ▇▇▇▇ and is registered under number 2589904 as
a private company limited by shares. Short particulars of the Company
are set out in Schedule 2. It has at the date of this Agreement an
authorised share capital of L.1,000 divided into 1,000 ordinary shares
of L.1 each all of which Shares have been issued and are fully paid or
credited as fully paid and the Vendors are the legal owners of the
Shares in the proportions shown in column 2 of Part I of Schedule 1
and have the right, power and authority to sell and transfer the
Shares free from any claims, charges, liens, encumbrances or equities.
(B) The business of the Company is that of the wholesaling of fashion
accessories.
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(C) The Vendors are willing to sell and the Purchaser is willing to
purchase the Sale (First) Shares and each of the Remaining Vendors and
the Purchaser are willing to grant each other the Options on the terms
and subject to the conditions of this Agreement.
OPERATIVE PROVISIONS
1 INTERPRETATION
1.1 In this Agreement (including the Introduction and Schedules), except
where a different interpretation is necessary in the context, the
following expressions shall have the following meanings:
the Accounts each of the audited balance
sheets of the Company and (if
relevant) the consolidated
audited balance sheets of the
Company and the Subsidiaries
as at the Accounts Date in
each of the years 1997 to
2001 (inclusive) and the
audited profit and loss
accounts of the Company and
(if relevant) the
consolidated audited profit
and loss accounts of the
Company and the Subsidiaries
for each of the years ended
on the Accounts Date in 1997
to 2001 (inclusive) together
with the directors' reports
and other documents required
by law to be annexed thereto
(and each of the periods
relating to the years in
which Accounts are to be
prepared shall be an
"Accounts Period")
the Accounts Date 30 September
Business Day a day other than a Saturday
or a Sunday on which the
clearing banks are open for
business in the City of
London, England
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Board(s) the board of directors for
the time being of any of the
Companies as specifically
referred to
Call Options Periods shall mean respectively in the
case of each of the Option
Shares, the period commencing
on the date following the
last date of the relevant Put
Options Period and ending 60
Business Days thereafter
the Company's Auditors at Completion, Blick
▇▇▇▇▇▇▇▇▇▇ of ▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
the Companies the Company and the
Subsidiaries and each of them
Completion completion of the sale and
acquisition of the Sale
(First) Shares in accordance
with the terms of clause 4
Completion Accounts the audited balance sheet of
the Company as at the 1996
Accounts Date and the audited
profit and loss accounts of
the Company for the eighteen
month period ended on the
Accounts Date in 1996
together with the directors'
report and other documents
required by law to be annexed
thereto
Completion Date the date of completion of the
Options (if exercised) in
respect of each of the Option
(Second) Shares, the Option
(Third) Shares, the Option
(Fourth) Shares, the Option
(Fifth) Shares and the Option
(Sixth) Shares pursuant to
clause 4.5, (each in the
context of the relevant
completion being a
"Completion Date")
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Consideration the aggregate of the Initial
Consideration and the Options
Consideration referred to in
clause 3
Consideration Shares shares of common stock par
value US$0.001 each of the
Purchaser
the Directors the persons specified as
directors of the Company in
Schedule 2 (the expression
"Director" meaning any of
them)
the Disclosure Letter a letter in the agreed form
bearing the same date as this
Agreement from the Vendors'
Solicitors to the Purchaser's
Solicitors together with the
documents annexed to such
letter
Distributor Agreement
Amendment the amendment to the
distributor agreement between
the Purchaser and the Company
(the "Distributor Agreement")
in the agreed form
Dr. Barshall ▇▇. ▇▇▇▇▇▇▇ ▇. Barshall
Initial Consideration the issue and allotment of
170,000 Consideration Shares
in respect of the sale and
acquisition of the Sale
(First) Shares pursuant to
clause 3.1
▇▇. ▇▇▇▇▇▇ Mr. ▇▇▇▇▇ A. D. Dubens
▇▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Net Profits the net profits of the
Companies, as defined in
clause 3.7 and calculated
pursuant to clauses 3.8 to
3.10 (inclusive)
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Options each of the Call Options
and/or the Put Options, as
defined in clause 2.2, as the
case may be
Options Consideration each of the considerations
payable in respect of the
acquisition of the Option
Shares by the Purchaser
pursuant to clause 3.2
Option Shares each of the Option (Second)
Shares, the Option (Third)
Shares, the Option (Fourth)
Shares, the Option (Fifth)
Shares and the Option (Sixth)
Shares, as the context
requires
Option (Second) Shares 90 of the Shares as set out
in Part III of Schedule 1
Option (Third) Shares 100 of the Shares as set out
in Part IV of Schedule 1
Option (Fourth) Shares 100 of the Shares as set out
in Part V of Schedule 1
Option (Fifth) Shares 100 of the Shares as set out
in Part VI of Schedule 1
Option (Sixth) Shares 100 of the Shares as set out
in Part VII of Schedule 1
Pailex Pailex Securities
International Inc.
Property ▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
the Purchaser's Directors the persons appointed as
directors of the Company by
the Purchaser from time to
time;
the Purchaser's Group the Purchaser and any holding
company of the Purchaser and
any of the subsidiaries from
time to
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time of the Purchaser or of
the Purchaser's holding
company from time to time
the Purchaser's Solicitors ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ of 527
Madison Avenue, 10th Floor,
New York, NY 10022 United
States of America
Put Options Periods shall mean respectively in the case of
each of the Option Shares, the period
commencing on the Determination Dates
(as defined in clause 3.10) of the
Option Consideration for each Accounts
Period and ending on the date that is
60 Business Days following each of
such Determination Dates
Regulation S Letter the representation letter of the
Vendors regarding Regulation S under
the Securities Act (as defined in
clause 5.17)
Remaining Vendors together, Dr. Barshall and
Pailex.
Sale (First) Shares 510 of the Shares as set out
in Part II of Schedule 1
SEC The Securities and Exchange
Commission
the Service Agreements the service agreements in the
agreed form to be entered
into on Completion between
the Company and each of Mr
Barshall, ▇▇ ▇▇▇▇▇ and ▇▇
▇▇▇▇▇▇
the Shares the 1,000 issued ordinary
shares of L.1 each in the
capital of the Company
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Subsidiaries all and any subsidiary or
subsidiaries of the Company
from time to time, and the
expression "Subsidiary" shall
mean any one of the
Subsidiaries
the Stock Exchange The NASDAQ National Market
System
the Vendors' Solicitors ▇ ▇ ▇▇▇▇▇▇ & Co of ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
the Warranty the warranty given in clause
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the Warranty Statements the statements set out in
Schedule 3 as construed in
accordance with clause 5
1.2 All references to statutory provisions or enactments shall include
references to any amendment, modification or re-enactment of any such
provision or enactment (whether before or after the date of this
Agreement) to any previous enactment which has been replaced or
amended and to any regulation or order made under such provision or
enactment but excluding any statutory modification not in force at the
date of this Agreement which operates to increase any liability of the
Vendors hereunder or any document referred to herein.
1.3 References to "the Companies Acts" are to the Companies Acts 1985 and
1989.
1.4 The term "holding company" shall have the meaning attributed to it in
section 736 and 736A of the Companies ▇▇▇ ▇▇▇▇ (as amended) and a
company or other entity shall be a "subsidiary" for the purposes of
this Agreement if it falls within any of the meanings attributed to a
"subsidiary" in such sections or the meaning attributed to the term
"subsidiary undertaking" in section 258 of such Act, and the terms
"subsidiaries" and "holding companies" are to be construed
accordingly.
1.5 References to those of the parties who are individuals include
references to their respective legal personal representative(s).
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1.6 References to documents "in the agreed form" are to documents in terms
agreed between the parties and signed (for the purpose of
identification only) by the Vendors' Solicitors and the Purchaser's
Solicitors.
1.7 References in this Agreement and the Schedules to the parties, the
Introduction, Schedules and clauses are references respectively to the
parties, the Introduction and Schedules to and clauses of this
Agreement.
1.8 Save where the context specifically requires otherwise, words
importing one gender shall be treated as importing any gender, words
importing individuals shall be treated as importing corporations and
vice versa, words importing the singular shall be treated as importing
the plural and vice versa, and words importing the whole shall be
treated as including a reference to any part thereof.
1.9 Clause and paragraph headings are inserted for ease of reference only
and shall not affect construction.
2 SALE AND PURCHASE OF THE SHARES AND GRANT OF OPTIONS
2.1 On and subject to the terms of this Agreement each of the Vendors
shall sell with full title guarantee the number of the Sale (First)
Shares set out opposite his name in column 2 of Part II of Schedule 1
and the Purchaser shall purchase all of the Sale (First) Shares with
any dividends, distributions and rights hereafter declared, paid,
created or arising and free from all claims, charges, liens,
encumbrances, options, rights of pre-emption or equities subject to
the terms of this Agreement.
2.2 The parties hereby grant to each other the following Options:
(a) the Purchaser hereby irrevocably and unconditionally grants to
each of the Remaining Vendors the right and option (each a
"Put Option" and collectively, the "Put Options") to put to,
and require the Purchaser to purchase, such Remaining Vendor's
Option Shares, with full title guarantee and any dividends,
distributions and rights declared, paid created or arising
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at the relevant Completion Date for each group of Option
Shares, free from all claims, charges, liens, encumbrances,
options, rights of pre-emption or equities, subject to the
terms of this Agreement, for a purchase price determined and
payable as provided in clause 3. Each Put Option may be
exercised by the Remaining Vendors as provided in clauses 2.3,
2.4 and 2.5; and
(b) subject to clause 2.6, each of the Remaining Vendors hereby
irrevocably and unconditionally grants to the Purchaser the
right and option (each a "Call Option" and collectively, the
"Call Options") to purchase from such Remaining Vendor, and
require such Remaining Vendor to sell, such Remaining Vendor's
Option Shares, with full title guarantee and any dividends,
distributions and rights declared, paid created or arising at
the relevant Completion Date for each group of Option Shares,
free from all claims, charges, liens, encumbrances, options,
rights of pre-emption or equities, subject to the terms of
this Agreement, for a purchase price determined and payable as
provided in clause 3. Each Call Option may be exercised by
the Purchaser as provided in clauses 2.3, 2.4 and 2.5.
2.3 The Call Options shall only be capable of exercise during the related
Call Option Periods (and in the event Purchaser complies with its
obligations under clause 5.17(e)) and the Put Options shall only be
capable of exercise during the related Put Option Periods and to the
extent that Options are not so exercised they shall lapse and be
incapable of further or subsequent exercise.
2.4 Each of the Options may be exercised collectively by the Remaining
Vendors or by the Purchaser (as relevant) in respect of all but not
part only of the Option Shares relating to the relevant Put Option or
Call Option.
2.5 The Options shall be exercised by notice in writing to the other
parties, served only during the relevant Put Option Periods or Call
Option Periods. A notice once given may not be withdrawn except with
the written consent of the recipient. The parties
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agree that a notice served by either of the Remaining Vendors on the
Purchaser shall be deemed to be a notice served on behalf of all of
the Remaining Vendors and shall bind all of the Remaining Vendors and
each of the Remaining Vendors hereby appoints the other Remaining
Vendors as its agent for serving such notice.
2.6 The Remaining Vendors' right to exercise the Put Options and the
Purchaser's right to exercise the Call Options pursuant to clause 2.2
shall be subject to, and conditional upon, the Purchaser complying
with its obligations under clause 5.17(e); provided that if, for any
reason, the Purchaser fails, on any Completion Date, to satisfy any
Options Consideration by the issue of Consideration Shares the
Purchaser agrees to satisfy such Options Consideration in cash (▇.
▇▇▇▇▇▇▇▇).
3 CONSIDERATION
3.1 In consideration of the sale of the Sale (First) Shares in accordance
with the terms of this Agreement, the Purchaser shall pay to the
Vendors the Initial Consideration which shall be satisfied at
Completion by the issue and allotment, of the Consideration Shares,
free of any lien, option, charge or other encumbrance whatsoever,
credited as fully paid and ranking pari passu in all respects with the
shares of common stock of par value US$0.001 each in the capital of
the Purchaser in issue at Completion to be divided between the Vendors
in the proportions set out in Part II of Schedule 1.
3.2 The Options Consideration shall be the greater of L.1 and in respect
of the:
(a) Option (Second) Shares the sum equal to 9 per cent. of the
product of the Net Profits derived from the 1997 Accounts
and 6.2;
(b) Option (Third) Shares the sum equal to 10 per cent. of the
product of the Net Profits derived from the 1998 Accounts
and 7.4;
(c) Option (Fourth) Shares the sum equal to 10 per cent. of the
product of the Net Profits derived from the 1999 Accounts
and 8.6;
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(d) Option (Fifth) Shares the sum equal to 10 per cent. of the
product of the Net Profits derived from the 2000 Accounts and
9.8; and
(e) Option (Sixth) Shares the sum equal to 10 per cent. of the
product of the Net Profits derived from the 2001 Accounts
and 11.
3.3 In the event that Options are exercised, the relevant Options
Consideration shall be satisfied by the allotment and issue of further
Consideration Shares and divided between the Remaining Vendors in the
proportions set out in Parts III to VII of Schedule 1 (as applicable
to each of the Option Shares).
3.4 In respect of any Options Consideration payable for the Option Shares,
such Options Consideration shall be satisfied by the issue of such
number of Consideration Shares on the relevant Completion Date (valued
at the average ask price (as reported by the Stock Exchange) at the
close of business on the twenty Business Days prior to the date of
issue) as shall be as close as possible equal to the relevant Options
Consideration without requiring the issue of fractions of
Consideration Shares either in aggregate or to any of the Vendors.
For the purposes of calculating the numbers of Consideration Shares to
be issue on each relevant Completion Date, the relevant Option
Considerations shall be converted into US dollars at the middle range
for spot Sterling US$ exchange rates at noon in London on the relevant
Determination Dates as certified by Midland Bank plc.
3.5 The Remaining Vendors agree that in the event that the aggregate
number of Consideration Shares to be issued in satisfaction of each
Options Consideration constitutes 1.5 per cent. or more of the total
issued common stock of the Purchaser as at the relevant Completion
Date ("the Consideration Shares Cap") then the Purchaser shall have
the right to pay that proportion of the Options Consideration payable
on the relevant Completion Date which would result in a greater number
of Consideration Shares being issued than the Consideration Share Cap,
to each of the Remaining Vendors in cash (▇. ▇▇▇▇▇▇▇▇).
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3.6 In the event that on or before the date of exercise of the Options in
respect of the Option Shares pursuant to clause 2.5:
(a) any sum has accrued due and payable by the Remaining Vendors
to the Purchaser in respect of any claim for breach of the
Warranty which has been settled (as herein defined) but
remains unpaid; and/or
(b) the Purchaser has notified the Remaining Vendors in accordance
with clause 5 of this Agreement of a claim in respect of a
breach of the Warranty;
the Purchaser shall be entitled, subject to the remaining provisions
of this clause, (in the case of (a) above) to treat such sum as an
adjustment in the calculation of the Options Consideration for the
Option Shares or (in the case of (b) above), to temporarily exclude
from the calculation of such consideration the amount believed by it
to be properly recoverable from the Remaining Vendors in respect of
such claim (to the extent not already paid) and the balance of such
consideration shall continue to be payable and satisfied in accordance
with the provisions of clause 3.2 as aforesaid. To the extent that
any such claim or claims shall not have been settled by the date of
payment of the Options Consideration for the relevant Option Shares
then, following settlement, the amount temporarily excluded as
aforesaid less the amount of the settlement (to the extent not already
paid or otherwise treated as an adjustment) and increased to include
interest thereon at the rate of two per cent. above base rate for the
time being of Barclays Bank plc, from such date to the date of actual
payment or satisfaction ("the Excess") shall be payable within 14
Business Days following such settlement, the Excess being treated as
an adjustment in the calculation of the Consideration and satisfied in
cash (▇. ▇▇▇▇▇▇▇▇) in a sum equal to such Excess. A claim shall be
regarded as settled for the purposes of this clause if either:
(a) the Remaining Vendors and the Purchaser (or their respective
solicitors) shall so agree in writing (such written agreement
not to be unreasonably withheld or delayed) following any oral
agreement between the parties; or
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(b) a court has awarded judgment in respect of the claim and no
right of appeal lies in respect of such judgment or the
parties are debarred whether by the passage of time or
otherwise from exercising any such right of appeal;
and references to "settlement" shall be construed accordingly. Any
amount in respect of which the Options Consideration payable for the
Option Shares is adjusted as aforesaid shall be treated as a reduction
in the calculation of the Consideration.
3.7 For the purposes of this clause and this Agreement the expression "Net
Profits" means the sum of the amounts disclosed as "profit on ordinary
activities relating to non-apparel turnover after taxation but before
payment of dividends" in the Accounts, provided that Net Profits shall
be determined after adding to "profit on ordinary activities relating
to non-apparel turnover after taxation but before payments of
dividends":
(a) interest which would have been earned by the Companies on the
Companies' own cash resources which have been advanced (with
the agreement of the Remaining Vendors) by way of loan to the
Purchaser's Group, such interest being calculated on a daily
basis using the rate that is equal to the actual or notional
cost of funds borrowed by the Companies;
(b) emoluments (including national insurance thereon) payable to
any director appointed by the Purchaser to the Boards;
(c) expenses payable to any director appointed by the Purchaser to
the Boards (provided that there shall be excluded the
reasonable expenses of up to a total of four visits in any
twelve month period to the United Kingdom by directors
nominated by the Purchaser for the purposes of Company
business).
(d) any professional fees charged to the profit and loss account
of the Companies and which have been incurred in connection
with any dispute or other matter arising in relation to this
Agreement (including any renegotiation thereof) in
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circumstances where the Remaining Vendors' position is
accepted or proved to have been materially correct;
(e) any management charges or similar fees payable by the
Companies to any member of the Purchaser's Group in so far as
they exceed a proper arm's length charge or fee for the goods
or services provided;
(f) where any sums are recovered by the Purchaser and/or any
member of the Purchaser's Group from the Remaining Vendors (or
deducted or set-off or treated as an adjustment from payments
to be made by the Purchaser to the Remaining Vendors) as a
result of any claim being made under the Warranty where:
(i) the event or circumstance giving rise to such claim
results in any reduction in the profits before tax or
increase in the borrowing costs of the Companies for
the period in question; and
(ii) (in consequence of (i)) the amount of the
Consideration would (but for the operation of this
clause) have been less than it would have been (but
for such event or circumstances);
the amount of such reduction in profits or increase in
borrowings cost or if less the amount recovered;
(g) payments made and liabilities incurred as a result of any
breach of the restrictions imposed by clause 7.3; and
(h) additional costs and expenses relating to conformity with SEC
regulations incurred by the Company in the preparation of the
Accounts.
3.8 The Accounts will be prepared (to the extent consistent with the
principles set out above) using accounting policies consistent with
those used in the preparation of the audited financial statements of
the Company for the period from 1 April 1995 to 30 September 1996.
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3.9 The Accounts shall be prepared by the Company's Auditors who shall
also determine the amount of the Net Profits for the relevant Accounts
Period. The parties shall procure (so far as they are so able) that
the Accounts together with the determination of the Net Profits for
the relevant Accounts Period shall be prepared within 30 Business Days
after the end of the relevant Accounts Date and that copies thereof
are sent forthwith together with the determination of the Net Profits
for the relevant Accounts Period to the Remaining Vendors who shall
have 12 Business Days within which to endeavour to agree in writing
such Accounts and determination of Net Profits. The Company shall
provide and render or cause the provision and rendering to the
Remaining Vendors and their accountants of such information or
assistance as they may require in order to assess such Accounts and
determination of Net Profits.
3.10 In the event of a dispute as to the Accounts or as to the
determination of the amount of the Net Profits for the relevant
Accounts Period or the determination of any excess or shortfall in
relation thereto, which is not resolved within the said 12 Business
Day period, such dispute shall thereafter be referred for final
settlement to an independent firm of chartered accountants whose
written decision shall be final and binding and who shall be nominated
jointly by the Remaining Vendors and the Purchaser or, in default of
agreement, by the President for the time being of the Institute of
Chartered Accountants in England and Wales on the application of
either the Remaining Vendors or the Purchaser. Any such independent
chartered accountants shall be deemed to be acting as experts and, in
each case, not as arbitrators. The date of each of the final
determinations of the Options Consideration ("Determination Dates")
shall, for each Accounts Period, be the date of receipt of the
Remaining Vendors' written agreement pursuant to clause 3.9 or, in the
event of disagreement, the date of decision of the independent
accountants appointed pursuant to this clause .
3.11 The costs, charges and expenses incurred in relation to the
preparation of and audit of the Accounts shall be borne by the
Company; the costs, charges and expenses incurred by the Company's
Auditors in determining the amount of the Net Profits
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shall be borne by the Company; the costs, charges and expenses of any
independent firm of chartered accountants appointed in accordance with
clause 3.10 shall be borne as to one half by the Remaining Vendors and
as to one half by the Purchaser.
3.12 The Purchaser shall procure that after Completion the Companies shall
give the Vendors and their agents all such assistance as is necessary
in submitting and agreeing all tax returns and making all claims and
elections relating to the Companies for all accounting periods ending
prior to Completion. Such assistance shall (without prejudice to the
foregoing generality) include where reasonable:
(a) the authorisation and making of statutory claims and elections
by officials of the Companies (including without prejudice to
the generality of the foregoing the surrender or acceptance of
the surrender of Advance Corporation Tax and trading losses
and the withdrawal of claims relating to the same); and
(b) affording such access to the books, accounts and records of
the Companies as the Vendors may require.
4 COMPLETION
4.1 Completion shall take place at the offices of the Vendors' Solicitors
(or any other location agreed upon by the Vendors and the Purchaser)
immediately following exchange of this Agreement.
4.2 On or before Completion the Vendors and Mr Barshall shall procure
that:
(a) all loans due to the Company from, and all loans due from the
Company to, each of the Vendors shall be repaid in full;
(b) all loans due to the Company, and all loans due from the
Company to, directors or employees of the Company shall be
repaid in full; and
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19
(c) all salaries, directors' fees, expenses and bonuses (if any)
of all directors and employees of the Company shall be paid up
to the last date for payment thereof prior to the date of
Completion.
4.3 At Completion:
(a) the Vendors shall deliver (where appropriate as agent for the
Company) to the Purchaser:
(i) transfers in respect of the Sale (First) Shares duly
executed by the registered holders thereof in favour
of the Purchaser;
(ii) certificates for the Sale (First) Shares;
(iii) the Disclosure Letter duly executed;
(iv) such other documents as necessary to enable the
Purchaser or its nominee to be registered as the
legal owner of the Sale (First) Shares (each of the
Vendors hereby irrevocably waiving all and any rights
of pre-emption to which they may be entitled under
any articles of association, agreement, law or
otherwise in respect of the transfer of the Sale
(First) Shares delivered under this Agreement) and to
be vested with full beneficial ownership of the Sale
(First) Shares;
(v) the counterpart of the Service Agreements duly
executed by Mr Barshall, ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇;
(vi) any power of attorney under which any document
required to be delivered under this clause 4.3 has
been executed;
(vii) a certified copy of a resolution of the Company in
the agreed form, inter alia, adopting new articles of
association in the agreed form;
(viii) a certified copy of board resolutions of the Company
in the agreed form approving the transactions
contained in this Agreement;
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20
(ix) a counterpart of the Distributor Agreement Amendment;
(x) a certified copy of the statutory books of the
Company; and
(xi) the Regulation S Letter;
(b) the Vendors shall cause a Board Meeting of the Company to be
duly convened and held at which:
(i) the said transfers of the Sale (First) Shares shall
be approved for registration (subject only to the
transfers being duly stamped at the cost of the
Purchaser);
(ii) an extraordinary general meeting of the Company shall
be duly convened at which new Articles of Association
in the agreed form shall be adopted by the Company in
substitution for the existing Articles of Association
of the Company; and
(iii) such persons as may be nominated by the Purchaser
shall be appointed directors of the Company; and
(c) the Purchaser shall;
(i) issue to the Vendors (as relevant) and deliver to the
Vendors' Solicitors (whose receipt therefor shall be
a sufficient discharge to the Purchaser) share
certificates in respect of the Consideration Shares
in the names of the Vendors in the proportions set
out opposite their respective names in Column 3 of
Part II of Schedule 1, which certificates shall bear
legends restricting their transfer in the form set
forth in clause 5.17 (d) (xi);
(ii) procure the delivery to the Vendors of the
counterpart of the Disclosure Letter; and
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21
(iii) procure the delivery to Mr Barshall, ▇▇ ▇▇▇▇▇ and ▇▇
▇▇▇▇▇▇ of the Service Agreements; and
(iv) procure the delivery to the Company of the
Distributor Agreement Amendment.
4.4 If for any reason the provisions of clause 4.3 are not fully complied
with, then (if the party so defaulting is a Vendor) the Purchaser (and
otherwise the Vendors) shall be entitled (in addition and without
prejudice to any other right or remedy available to them) to elect:
(a) to fix a new date for Completion; or
(b) to proceed to Completion so far as practicable, the defaulting
party then being obliged to use its best endeavours to perform
or procure the performance of any of the outstanding
provisions of clause 4.3.
4.5 The completions (if relevant) of the sale and acquisition of the
Option Shares shall take place at the offices of the Company (or any
other location agreed upon by the Remaining Vendors and the Purchaser)
on a date which is within three Business Days of service of an option
notice pursuant to clause 2.5.
4.6 On the relevant Completion Date:
(a) the Remaining Vendors shall deliver (where appropriate as
agent for the Company) to the Purchaser:
(i) transfers in respect of the relevant Option Shares
duly executed by the registered holders thereof in
favour of the Purchaser, or to any other member of
the Purchaser's Group nominated by the Purchaser;
(ii) certificates for the relevant Option Shares; and
(iii) such other documents as are necessary to enable the
Purchaser or its nominee to be registered as the
legal owner of the relevant Option
-19-
22
Shares (each of the Remaining Vendors hereby
irrevocably waiving all and any rights of pre-emption
to which they may be entitled under any articles of
association, agreement, law or otherwise in respect
of the transfer of the relevant Option Shares
delivered under this Agreement) and to be vested with
full beneficial ownership of the relevant Option
Shares; and
(b) the Purchaser shall:
(i) issue to the Remaining Vendors (as relevant) share
certificates in respect of the Consideration Shares
in the names of the Remaining Vendors in the
proportions determined pursuant to clause 3.3; and
(ii) in the event of the Purchaser's exercising their
rights pursuant to clause 3.5, or in the event of the
operation of clause 2.6, procure the delivery to the
Remaining Vendors of a banker's draft or telegraphic
transfer in favour of each of the Remaining Vendors
for the amount of the relevant Options Consideration
payable in cash as determined pursuant to clause 3.2.
4.7 If for any reason the provisions of clause 4.6 are not fully complied
with on any Completion Date, then (if the party so defaulting is a
Remaining Vendor) the Purchaser (and otherwise the Remaining Vendors)
shall be entitled (in addition and without prejudice to any other
right or remedy available to them) to elect:
(a) to fix a new Completion Date; or
(b) to proceed to completion so far as practicable, the defaulting
party then being obliged to use its best endeavours to perform
or procure the performance of any of the outstanding
provisions of clause 4.6.
5 WARRANTY
5.1 The Remaining Vendors hereby:
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23
(a) acknowledge that the Purchaser has been induced to enter into
this Agreement and to purchase the Shares and grant the right
to exercise the Options on the basis of the Warranty; and
(b) severally represent, warrant and undertake to the Purchaser
(for itself and as trustee for its successors in title) in the
terms of the Warranty Statements and agree that if any of the
Warranty Statements is found to be untrue or incorrect, then,
subject to the provisions of this Agreement, the Remaining
Vendors will, at the Purchaser's option either:
(i) pay to the Purchaser an amount equal to the amount by
which the amount of any liability (whether existing,
prospective or contingent) or the value of any asset
(whether existing, prospective or contingent) of the
Company is respectively greater or less than it would
have been if the Warranty Statement in question had
been true and correct, together with all costs and
expenses incurred or sustained by the Purchaser as a
result of such breach or in connection with the
matter or circumstance giving rise to that breach; or
(ii) pay to the Purchaser an amount equal to the amount by
which the value of the Shares owned by the Purchaser
or any member of the Purchaser's Group are less than
they would have been if such Warranty Statement had
been true and correct, together with all costs and
expenses incurred or sustained by the Purchaser as a
result of such breach.
5.2 The Warranty Statements are given subject to the matters disclosed in
the Disclosure Letter and in the documents annexed thereto, in each
case in sufficient detail to enable any reasonable Purchaser to
evaluate the same.
-21-
24
5.3 Each of the Warranty Statements set out in each paragraph and each
paragraph of Schedule 3 shall be separate and independent and shall
not be limited by reference to any other paragraph or anything in this
Agreement or the Schedules.
5.4 The Remaining Vendors agree with the Purchaser for itself and as
trustee for the Company and their respective officers and employees to
assign to the Purchaser all the rights, remedies or claims which they
have or may have in respect of any misrepresentations in or omissions
from any information or device supplied or given by the Company or its
respective officers, employees or agents and on which the Remaining
Vendors have relied in given the Warranty Statements, preparing the
Disclosure Letter and/or entering into this Agreement and/or the
documents referred to herein.
5.5 The total amount of the liability of the Vendors in respect of any
claim in respect of any breach or non-fulfilment of any of the
Warranty Statements and this Agreement shall be limited to and in no
event exceed the aggregate sum of all Options Consideration which
becomes due to the Remaining Vendors following the date of any claim
made by the Purchaser (for the avoidance of doubt, not including any
Consideration previously established, paid or satisfied by the
Purchaser prior to the date of such claim) in respect of this
Agreement; and the individual liability of each of the Remaining
Vendors shall be limited to that proportion of such claim which is
equal to his proportionate holding of Option Shares.
5.6 No proceedings shall be commenced in respect of any claim for breach
of this Agreement:
(a) unless notice giving reasonable details of the claim shall
have been delivered to the Vendors by the Purchaser not later
than the date which is three years after the date of this
Agreement, provided that in respect of the taxation Warranty
Statements (paragraph L of Schedule 3) notice giving
reasonable details of the claim need to have been delivered to
the Remaining Vendors not later than the fifth anniversary of
this Agreement;
-22-
25
(b) unless the amount of the claim when aggregated with all other
claims exceeds US$75,000; provided however the Vendors'
liability shall not be limited to the excess and the whole
amount shall be recoverable in full;
(c) unless notice of such claim is served on the Vendors in
writing specifying as fully as reasonably practicable details
of the nature of such claim and the amount claimed as soon as
reasonably practicable;
(d) unless notice of such claim is served on the Vendors in
accordance with this clause 5.6 and within six months
thereafter legal proceedings in respect of such claim shall
have been issued and served upon each of the Vendors;
(e) in respect of any material and written matter of which the
Purchaser's Group or any officer of the Purchaser's Group has
knowledge at Completion;
(f) where the amount so claimed in respect of such claim against
all the Vendors does not exceed US$1,500 in which case such
claim shall be disregarded for all purposes; or
(g) which arises from a breach which is capable of remedy unless
and until the Vendors are given notice of such breach and such
breach is not remedied within 30 days of the date that notice
is received (the Purchaser agreeing to in no way hinder the
Vendors' remedying of such breach).
5.7 The Purchaser shall and shall procure that each member of the
Companies shall promptly reimburse to the Vendors (or such of the
Vendors who have paid) all amounts (not exceeding the aggregate sum
paid by the Vendors (or such of the Vendors as aforesaid) in respect
of any claim under the Warranty) paid by the Vendors in respect of any
claim which is subsequently recovered by the Purchaser or the
Companies as the case may be from any insurance company or other third
party and the Purchaser hereby undertakes to use and to procure that
all relevant Companies use all reasonable endeavours to enforce any
rights to recover such sums from insurers or other third parties.
-23-
26
5.8 No claims for breach of the Warranty shall be made against any of the
Remaining Vendors:
(a) to the extent that the breach giving rise to a possible claim
occurs or is increased by reason of any event, act,
arrangement, occurrence or omission which occurs after the
date of this Agreement or by reason of any matter which would
not have arisen but for the coming into force of any
legislation not in force at the date of this Agreement or the
withdrawal of any relief, allowance or concession available at
the date of this Agreement (whether or not such legislation or
withdrawal purports to be effective retrospectively in whole
or in part) or as a result of any increase in any rate of
taxation or by reason of any change occurring after the date
of this Agreement in Inland Revenue practice;
(b) to the extent that any of the Companies receives indemnity
against any loss or damage suffered by any of the Companies
arising out of a breach giving rise to a claim, under the
terms of any insurance policy for the time being in force;
(c) to the extent of any over-provision or over-reserve made in
the Completion Accounts in respect of any liability where the
over-provision or over-reserve relates to that liability;
(d) to the extent that the breach giving rise to a possible claim
arises as a result of any change in the basis of accounting,
tax computation or trading of any of the Companies after the
date of this Agreement which is approved by the Purchaser's
Directors;
(e) based upon any liability in respect of corporation tax or any
other taxation arising in the ordinary course of trading of
the Company since the 1996 Accounts Date; or
-24-
27
(f) to the extent that the subject of such claim is to be
reflected in the calculation of the Options Consideration.
5.9 If any matter comes to the notice of the Purchaser or a member of the
Purchaser's Group or any of their respective officers in respect of
which a claim for breach of the Warranty may arise the Purchaser shall
and shall procure that each relevant member of the Purchaser's Group
shall:
(a) within thirty Business Days give written notice thereof to the
Remaining Vendors specifying the nature of the possible claim
in reasonable detail;
(b) not make any admission of liability, agreement or compromise
to or with any person in relation thereto without the prior
agreement in writing of the Remaining Vendors;
(c) give the Remaining Vendors and their professional advisers
reasonable access to the premises and personnel of the
Purchaser and the Companies and to any relevant chattels,
accounts, documents and records within the possession or
control of the Purchaser or the Purchaser's Group to enable
the Remaining Vendors and their professional advisers to
examine such chattels, accounts, documents and records and to
take copies and photographs thereof at their own expense;
(d) take such action at the Remaining Vendors' sole expense as the
Remaining Vendors may reasonably request to avoid, dispute,
resist, compromise or defend any such claim; and
(e) permit the Remaining Vendors at their sole expense and if they
shall so request in writing to the Purchaser to have the
conduct of all proceedings relating to the claim including the
appointment of solicitors or other professional advisers and
making any settlement or compromise thereof provided that if
the Purchaser shall in writing so require, the Remaining
-25-
28
Vendors shall procure that the Purchaser is promptly sent
copies of all written communications pertaining thereto.
5.10 If the Remaining Vendors make any payment pursuant to a claim for
breach of the Warranty and the Purchaser or a member of the
Purchaser's Group receive a benefit which was not taken into account
in calculating the liability of the Vendors and which would have
reduced such liability had the benefit been taken into account the
Purchaser shall repay to the Remaining Vendors (in proportion to the
amount they paid) a sum corresponding to such benefit.
5.11 Notwithstanding anything expressed or implied in this Agreement to the
contrary, any payment by the Remaining Vendors pursuant to a claim for
breach of the Warranty shall be treated for all purposes by the
parties as a reduction in the consideration payable for the Shares and
clause 3 shall be modified accordingly.
5.12 The Purchaser shall only be entitled to claim or recover once for the
loss suffered as a result of a single act or omission which
constitutes a breach of the Warranty and other term(s) of this
Agreement. For the purposes of this clause, the Purchaser shall not
be entitled to make a claim or effect a recovery from the Vendors if
the relevant act or omission has been or will be reflected in the
calculation of the Net Profits pursuant to clause 3.
5.13 The Purchaser shall procure that all reasonable steps are taken by it
and each member of the Purchaser's Group and all reasonable assistance
is given by it and each of the Companies to avoid or mitigate any loss
or liability (without prejudice to any similar obligation existing at
law generally or any other specific term of this Agreement) which
might give rise to a claim hereunder.
5.14 The Purchaser acknowledges that in entering this Agreement it is
relying on the Warranty and not upon any other warranties,
undertakings or representations of any description given by or on
behalf of any of the Vendors, the Vendors Solicitors or other agents
or advisers and the Purchaser hereby warrants, represents and
undertakes to
-26-
29
the Vendors that as at the date of this Agreement and Completion it
knows of no breach of the Warranty or any other matter that might give
rise to a claim in respect of this Agreement.
5.15 The Purchaser shall have no right to rescind or terminate this
Agreement or to delay performance of its obligations under this
Agreement or under the provisions of the ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
the Unfair ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ or for any other reason whatsoever
provided that this clause shall not apply in circumstances of fraud of
any of the Vendors.
5.16 The rights and remedies of the Purchaser in respect of any breach of
the Warranty shall not be affected by Completion.
5.17 The Purchaser represents, warrants, covenants and agrees that:
(a) all of the Consideration Shares issued to the Vendors pursuant
to this Agreement will be properly authorised and issued by
the Purchaser, deemed fully paid and non-assessable, and free
from all claims, charges, liens encumbrances rights of
pre-emption or equities;
(b) it will deliver to each of the Vendors, from the date of this
Agreement until either the Completion Date relating to the
Option (Sixth) Shares or the expiry of the relevant Call
Options Period (as relevant), copies of all public filings of
the Purchaser made with the SEC and all other information,
including press releases, which is required or permitted to be
published by the rules of the SEC or the Stock Exchange;
(c) it will, from the date of this Agreement until the Completion
Date relating to the Option (Sixth) Shares, remain a
"reporting" company under the Securities ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and
that its shares will remain listed on the Stock Exchange;
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30
(d) the Consideration Shares issued to the Vendors on Completion
shall be issued by the Purchaser pursuant to an offering by
the Purchaser under Regulation S ("Regulation S") promulgated
by the SEC under the Securities Act of 1933, as amended (the
"Securities Act"). In that connection, the Purchaser
represents, warrants and covenants to the Vendors as follows:
(i) the Purchaser is a "domestic issuer" and a "reporting
issuer", as such terms are defined in Rule 902 of
Regulation S. The Purchaser has registered its
common stock pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is in full compliance with all
reporting requirements of Section 13(a) of the
Exchange Act, and the Purchaser's common stock trades
on the Stock Exchange;
(ii) the Purchaser has furnished the Vendors with copies
of the Purchaser's most recent annual report on Form
10-K, most recent quarterly report on Form 10-Q, and
all reports on Form 8-K filed thereafter;
(iii) the Purchaser has not offered the Consideration
Shares to any person in the United States, any
identifiable group of U.S. citizens abroad, or to any
"U.S. Person" (as defined in Regulation S);
(iv) at the time the buy order was originated, the
Purchaser reasonably believed the Vendors were
outside the United States and were not U.S. Persons;
(v) the Purchaser believes that the sale of the
Consideration Shares has not been prearranged with a
buyer in the United States, and has no knowledge to
the contrary;
(vi) the Purchaser has not conducted any "directed selling
efforts" with respect to the Consideration Shares nor
has the Purchaser
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31
conducted any general solicitation (as that term is used in
Regulation D under the Securities Act) with respect to the
Consideration Shares;
(vii) the Purchaser is not aware of any authorisation,
approval or consent of any governmental body which is
legally required for the issuance and sale of the
Consideration Shares as contemplated by this
Agreement;
(viii) the Purchaser will comply with all applicable
securities laws with respect to the issuance of the
Consideration Shares, including but not limited to
the filing of all reports required to be filed in
connection therewith with the SEC or any stock
exchange or the Stock Exchange or any other
regulatory body;
(ix) to the actual knowledge of Purchaser (i) the
execution and delivery of this Agreement and the
issuance of the Consideration Shares does not violate
any law or regulation applicable to the Purchaser and
(ii) will not violate any rule or regulation of any
agency or exchange that has jurisdiction over the
Purchaser or its securities;
(x) the Purchaser has not received any oral or written
notification regarding its continued listing
eligibility on any securities exchange or securities
market;
(xi) the Purchaser will instruct its transfer agent to
issue the certificates evidencing the Consideration
Shares without a restrictive legend other than as
follows:
"These shares have been issued pursuant to
Regulation S as an exemption to the
registration provisions under the Securities
Act of 1933, as amended. These shares cannot
be transferred, offered or sold in the United
States or to U.S.
-29-
32
Persons (as defined in Regulation S) until
after 31 December 1996;
in addition, the Purchaser will instruct its transfer
agent (and, if required by such transfer agent, cause
an opinion of counsel to be delivered to such
transfer agent) as follows: (A) to place
stop-transfer instructions on such Consideration
Shares to the effect that such Consideration Shares
may not be transferred until 31 December 1996 without
a further opinion of counsel satisfactory to the
Purchaser; (B) that as of 31 December 1996, the 40
day restricted period under Regulation S will have
expired and the restrictions on transfer and resale
imposed on the Consideration Shares under Regulation
S shall lapse and will no longer be necessary; and
(C) certificates evidencing Consideration Shares
issued or reissued on and after that date may be
issued or reissued without further legend or
stop-transfer instructions;
(e) after the Completion, the Purchaser shall file with the SEC a
registration statement under the Securities Act, to effect the
registration, for the purposes of reofferings and resales, of
an estimate of the aggregate Consideration Shares issuable to
the Remaining Vendors (hereinafter referred to as the
"Registrable Securities"). The Purchaser shall thereafter use
its best efforts to cause the SEC to declare such registration
statement effective under the Securities Act prior to the
Completion Date with respect to the Option (Second) Shares.
If the number of Consideration Shares registered pursuant to
such initial registration statement should prove to be
insufficient to register all of the Consideration Shares to
-30-
33
be issued to the Remaining Vendors if the various Options
should be exercised, then the Purchaser shall promptly amend
or supplement such registration statement, or, if necessary,
promptly file and cause to become effective a new registration
statement, to cover all such additional Consideration Shares
to be issued to the Remaining Vendors and the term
"Registrable Securities" shall be deemed to include all such
additional Consideration Shares. The obligation of the
Purchaser to register the Registrable Securities shall be
satisfied only at such time as a registration statement or
registration statements, as the case may be, covering all
Registrable Securities shall be declared effective by the SEC.
The Purchaser shall pay all Registration Expenses (as defined
below) incurred in connection with the registration
statement(s) filed pursuant to this clause 5.17(e).
"Registration Expenses" shall mean all expenses incurred by
the Purchaser in complying with its registration obligations
including, without limitation, all registration,
qualifications and filing fees, "blue sky" fees and expenses,
printing expenses, fees and disbursements of counsel and
independent public accountants for the Purchaser, fees of the
National Association of Securities Dealers, Inc., transfer
taxes, escrow fees, fees of transfer agents and registrars,
costs of insurance, provided however, Vendors shall pay the
fees and expenses of counsel retained by them in connection
with the registration statement(s) filed pursuant to this
clause 5.17(e);
(f) in complying with the registration requirements set forth in
sub-clause (e) above, the Purchaser shall:
(i) prepare and file with the SEC registration
statement(s) (which shall be on Form S-3 or such
other form of general applicability satisfactory to
the Purchaser) with respect to the Registrable
Securities and use its best efforts to cause such
registration statement(s) to become and remain
effective for the period of the distribution
contemplated thereby (only the Registrable Securities
may be included in such registration statement(s));
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement(s) and the
prospectuses used in
-31-
34
connection therewith, including, without limitation,
all filings and reports required to be filed under
Section 13 of the Exchange Act, as may be required to
keep such registration statements(s) effective until
the earlier of (i) the date all Registrable
Securities shall have been sold by the Vendors or
(ii) the date the Registrable Securities become
eligible for sale pursuant to Rule 144 under the
Securities Act;
(iii) furnish to the Vendors such number of copies of the
registration statement(s) and the prospectuses
included therein (including each preliminary
prospectus) as the Vendors may reasonably request in
order to facilitate the sale or other disposition of
the Registrable Securities;
(iv) use its best efforts to register or qualify the
Registrable Securities covered by such registration
statement under the "blue sky" laws of the States
reasonably requested by the Vendors to the extent
legally required;
(v) use its best efforts to list or have approved for
trading the Registrable Securities on each securities
exchange upon which the Purchaser's other securities
are listed and/or each over the counter market in
which the Purchaser's other securities have been
approved for trading, not later than the time the
registration statement(s) is declared effective;
(vi) immediately notify the Vendors at any time when a
prospectus relating to the sale of the Registrable
Securities is required to be delivered under the
Securities Act of the happening of any event that
requires a supplement or amendment to the prospectus
included in the registration statement(s) so that, as
thereafter amended or supplemented, such prospectus
will not include an
-32-
35
untrue statement of a material fact or omit to state
any material fact required to be sated therein or
necessary to make the statements therein not
misleading in light of the circumstances then
existing; and
(vii) make available for inspection by the Vendors and any
attorney, accountant or other agent retained by the
Vendors all financial and other records, pertinent
corporate documents and properties of the Purchaser,
and cause the Purchaser's officers, directors,
employees and agents to supply all information
reasonably requested by the Vendors or any such
attorney, accountant or agent in connection with such
registration statement(s);
(g) the Purchaser shall indemnify and hold harmless the Vendors
against any losses, claims, damages or liabilities or actions
in respect thereof, joint or several, to which the Vendors may
become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions (i)
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any
registration statement under which the Registrable Securities
were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereof, (ii) arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or (iii) arise out
of or are based upon any violation by the Purchaser of any
rule or regulation promulgated under the Securities Act or the
Exchange Act and applicable to the Purchaser, and will
reimburse the Vendors for any legal or other expenses incurred
by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however,
that the Purchaser will not be liable in any such case if and
to the extent that any such loss, claim, damage, liability or
action arises out of or is
-33-
36
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made solely in reliance upon and
in conformity with information furnished to the Purchaser by
or on behalf of the Vendors in writing expressly for use in
such registration statement or prospectus ("Vendor
Information") and Vendors hereby indemnify and hold Purchaser
its officers, directors, stockholders, employees, agents,
attorneys and representatives harmless from and against any
and all loss, claims, damages, liabilities or actions which
any of them may have which are based upon such Vendor
Information as shall have been included in such registration
statement;
(h) the Purchaser has filed with the SEC all required filings on a
timely basis and has complied with all other SEC reporting
requirements, in conformity with applicable law and
regulation, and all such filings and reports and all press
releases and other public disclosure, were true, accurate, and
complete when made and were prepared in accordance with the
requirements of the Securities Act or the Securities Exchange
Act, as the case may be, and the rules and regulations
thereunder, and did not at the time they were filed or made
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements made therein, in
light of the circumstances in which they were made, not
misleading;
(i) no representation or warranty of the Purchaser in this
Agreement, nor in any statement or certificate furnished or to
be furnished to the Vendors pursuant to this Agreement, or in
connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading; and
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37
(j) the Purchaser shall continue to make all required filings with
the SEC on a timely basis and otherwise comply with all other
SEC reporting requirements, in conformity with applicable law
and regulation.
6 NON-DISCLOSURE OF INFORMATION
Each of the parties hereby agrees to keep secret and confidential and
not to use, disclose or divulge to any third party or enable or cause
any person to become aware of any confidential information relating
to any of the Companies including but not limited to intellectual
property (whether owned or licensed by any of the Companies),
inventions, know-how, lists of customers, reports, notes, memoranda
and all other documentary records pertaining to the Companies or
their business affairs, finances, suppliers, customers or contractual
or other arrangements provided always that the restrictions contained
in this clause 6 shall not apply to any confidential information
which:
(a) is required to be disclosed by an order of a court or tribunal
of competent jurisdiction or The Stock Exchange or the SEC or
the Takeover Panel (provided that the Vendors are given prior
written notice of such intended disclosure);
(b) comes into the public domain otherwise than as a result of its
wrongful disclosure by such party; or
(c) is disclosed by the Purchaser to any member of the Purchaser's
Group and such member is subject to a similar obligation to
keep such information confidential.
7 MANAGEMENT OF THE COMPANY
7.1 Save as hereafter or herein provided, from the date hereof up to the
date on which the Purchaser or any member of the Purchaser's Group is
the registered holder of the entire issued share capital of the
Company ("the Management Period"), the day to day
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38
management of the business of the Company shall be carried out by
Mr Barshall, provided that all matters relating to the business of the
Company that are not of a routine or day to day nature including, for
the avoidance of doubt, strategic management decisions, shall be
referred to the Board.
7.2 The Company and the Directors each undertake with the Purchaser that
during the Management Period they will:
(a) keep the Purchaser informed of material matters relating to
the progress of the business of the Company in such form and
detail as they may from time to time reasonably require;
(b) provide to the Purchaser monthly management accounts of the
Company including a consolidated profit and loss account, a
balance sheet and cashflow statement, such accounts to be
submitted within 30 days from the end of each month;
(c) not later 30 days prior to the beginning of each financial
year of the Company prepare and submit to the Purchaser
individual and consolidated revenue and capital budgets for
the Company for the forthcoming year showing proposed trading
and cashflow figures and all material proposed acquisitions,
disposals and other commitments; and
(d) procure that audited accounts of the Company are produced
complying with all necessary legal requirements and reported
on by the auditors of the Company within four months of the
end of the financial year in question and that copies thereof
shall be delivered to the Purchaser.
7.3 Each of the Purchaser, the Remaining Vendors and Mr Barshall severally
undertake to each other that during the Management Period he or it
will procure to the extent of
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39
his or its rights from time to time in relation to the Shares and (in
the case of Mr Barshall) as a director of the Company (subject always
to compliance with his legal duties and responsibilities as a
director) that, without the prior consent of the Purchaser and at
least one of either Pailex or Mr Barshall and save as provided for in
this Agreement or otherwise agreed between them:
(a) no person (other than the Directors and the Purchaser's
Directors) shall be appointed to the Board and the Directors
shall not be removed as directors of the Company, except that
a Director may be removed as a director of the Company if such
Director shall have:
(i) neglected, failed, refused or be unable to carry out
any of his duties as a director of the Company;
(ii) committed any material breach of any of his duties or
any of his express or implied obligations arising
from his position as a director of the Company;
(iii) been guilty of misconduct or permitted events tending
in the opinion of the Board to bring himself or the
Company into disrepute; or
(iv) committed any act of fraud or dishonesty or committed
any action which, in the opinion of the Board,
adversely affects his ability properly to carry out
his duties;
(b) the Companies will not create or issue or allow to come into
being any mortgage or charge upon any part of their property
or assets or uncalled capital or create or issue any debenture
stock or obtain any advance or credit in any form other than
normal trade credit;
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40
(c) the Companies will not allot or issue any shares or securities
or grant to any person any option or right to call for the
issue of any shares or securities;
(d) the Companies will not give any guarantee or indemnity other
than in the course of their business;
(e) the Companies will not make any payment or incur any
commitment other than in the normal course of their business
and on arm's length terms;
(f) a dividend of 60 per cent. of distributable profits shall be
declared and paid by the Companies(so far as permitted by law)
in respect of each of the years ending on the Accounts Date
where Accounts are to be delivered;
(g) no amendment shall be made to their Service Agreements or the
Distributor Agreement;
(h) no bonus scheme or arrangement will be introduced or operated
and no bonus payments or awards made or agreed to be made in
respect of the Directors and no bonus scheme or arrangement
will be introduced in respect of any other employee of the
Companies;
(i) the Companies will not subscribe for or otherwise acquire any
interest (whether on its own behalf or as nominee) in the
share capital or instruments convertible into share capital or
the undertaking of any other company or body corporate;
(j) the Companies will not make any loans or incur any borrowings
or finance obligations otherwise than for trade credit or
borrowings made under its existing borrowing and financing
arrangements;
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41
(k) no increase or reduction shall be made in the authorised or
issued share capital of the Companies;
(l) no amendment whatsoever will be made to the Companies'
Memorandum or Articles of Association;
(m) the Companies will not incur any capital commitment on any
individual project exceeding L.5,000;
(n) the Companies shall carry on the business of the Companies as
at Completion and shall not carry on any other business;
(o) no sale, transfer, lease, licence or other periodic agreement
or agreement for sale, transfer, lease, licence or other
disposition of the whole or a material part of the business or
undertaking of the Company or of any assets having a book or
market value in excess of L.10,000 shall be made or entered
into whether by a single transaction or by a series of
transactions;
(p) all transactions between the Purchaser's Group (other than the
Companies) on the one hand and the Companies on the other hand
shall be carried out at arms' length under normal commercial
terms;
(q) each of them shall not and shall procure that no member of
their groups shall directly or indirectly take any action
which is calculated or intended directly to materially harm
the Business, distort the Accounts, or materially or
artificially diminish or increase the amount of the Options
Consideration;
(r) none of the Companies shall acquire or establish any
subsidiary or subsidiary undertaking or acquire any part of
the undertaking of a company or other person or a substantial
part of the assets of a company or other person;
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42
(s) the accounting principles used in the Accounts shall not be
changed, other than to conform to law or generally accepted
accounting practices in the United Kingdom, nor shall the
accounting reference dates of the Companies be changed from
the Accounts Date;
(t) no steps shall be taken for the winding-up, receivership,
administrative receivership, administration or management of
assets of the Companies where they are solvent; and
(u) there shall be no material changes made to the account
structure of the Company; for example, there shall be no
decision to sell products to discount retailers or to
retailers who are perceived to be low-end retailers.
7.4 The Purchaser agrees to provide an open line of credit with 60 days
terms to the Company in a sum of up to US$500,000 and the Purchaser
agrees that, in its absolute discretion, it will provide such
additional reasonable financial resources to the Company as the
Purchaser reasonably decides appropriate in order to enable the
Company to maximise its trading profit on reasonable terms as to
repayment and at the Purchaser's own borrowing interest rate. The
Directors and the Company covenant with the Purchaser that all monies
subscribed or lent to the Company by the Purchaser or any member of
the Purchaser's Group shall be applied by the Company solely for the
purpose of continuing and furthering the business of the Company.
7.5 Each of the Remaining Vendors, the Purchaser and Mr Barshall severally
covenant and undertake with each other that during the Management
Period:
(a) he or it will use all reasonable endeavours to facilitate,
promote and carry forward the business of the Company by all
means at his or its disposal and will not unreasonably
withhold his or its consent to all reasonable proposals put
forward at Board meetings and will not act in any manner which
will or
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43
may prevent the Company from carrying on its business in a
reasonable and proper commercial manner;
(b) he or it will exercise his or its rights in relation to the
Shares at general meetings of the Company and exercise his or
its voting rights as a director of the Company (subject to his
or its fiduciary duty) to ensure the maintenance and
observance of the terms of this Agreement; and
(c) he or it will do or procure to be done all things that shall
be reasonably required to carry out this Agreement, including
where necessary the procuring of third parties under his or
its control to act appropriately.
8 COVENANTS AGAINST COMPETITION
8.1 In this clause the expression the "Requisite Period" shall mean the
period of one year after the date when a party ceases to be a director
of the Company .
8.2 Mr Barshall undertakes to the Purchaser and the Company that he will
not:
(a) during the Requisite Period, either on his own account or in
conjunction with or on behalf of any other person directly or
indirectly carry on or be engaged or concerned or interested
in the carrying on of the business of the wholesaling of
footwear, snowboard boots, apparel or fashion accessories
within the United Kingdom in competition with the business of
the Company as at the start of the Requisite Period;
(b) during the Requisite Period, either on his own account or in
conjunction with or on behalf of any other person directly or
indirectly solicit or entice away or endeavour to solicit or
entice away from the Company, any officer, manager or employee
or employ any such officer, manager or employee whether or not
such a person would commit a breach of his contract of
employment by reason of leaving service; or
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44
(c) either on his own account or in conjunction with or on behalf
of any other person directly or indirectly seek to procure
orders for or supplies of materials or goods in respect of
which the Company is in the custom of dealing at the
commencement of the Requisite Period from any person who as at
any time during the one year immediately proceeding the
commencement of the Requisite Period been a customer or
supplier (as the case may be) of the Company.
8.3 Each of the covenants contained in each of the paragraphs of clause
8.2 shall be and is a separate covenant and shall be enforceable
independently of the rights of the parties so enforcing the covenant
to enforce any one or more of the other covenants contained in that
clause.
8.4 The restrictions and obligations contained in clause 8.2 are
considered reasonable by Mr Barshall, but in the event that any
restriction or obligation shall be found to be void but would be valid
if some part thereof were deleted or the period or area of application
reduced, such restriction shall apply with such modification as may be
necessary to make it valid and effective.
9 BINDING NATURE OF AGREEMENT
9.1 If any Share is to be transferred in accordance with the Articles of
Association of the Company, the proposing transferor shall
nevertheless only transfer the same if the transferee shall agree in
writing with the other parties to this Agreement to assume all further
obligations of the transferor under this Agreement as if he were a
party hereto.
9.2 Upon a transferee so agreeing in writing the transferor shall be
released from any further obligations under this Agreement in relation
to the shares transferred but not
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otherwise and without prejudice to any liability of the transferor in
respect of any prior breach of this Agreement.
10 GENERAL PROVISIONS
10.1 Each of the Vendors shall be severally liable in the event of any
breach of the warranties, indemnities, covenants, agreements and
obligations of the Vendors under this Agreement provided that the
Purchaser may release or compromise the liability of any of the
Vendors hereunder or grant to any of the Vendors time or other
indulgence without affecting the liability of any other of the Vendors
hereunder.
10.2 The waiver by the parties of any right or breach, default or omission
by another party of any of the terms of this Agreement or any of the
agreements in the agreed form shall not take effect unless in writing
and shall not constitute a continuing waiver of the right waived or
apply to, or operate as a waiver of, any other breach, default or
omission and any forbearance in enforcing any right shall not
constitute a waiver.
10.3 None of the parties may assign this Agreement in whole or in part
without the consent of the other parties; provided that, nothing
herein shall be construed to prevent Purchaser from assigning this
Agreement pursuant to any acquisition of all or substantially all of
the voting securities of the Purchaser by a third party.
10.4 No party shall divulge to any third party (other than their respective
professional advisers or insurers) the fact that this Agreement or any
of the documents in the agreed form has been entered into or any
information regarding its terms or any matters contemplated by this
transaction or make any announcement relating to it without the prior
agreement (not to be unreasonably withheld or delayed) of the other
parties unless such announcement is required by the Inland Revenue
and/or a court of competent jurisdiction or by the Stock Exchange or
the SEC or the Takeover Panel in which event the other parties shall
be given prior written notice of such intended announcement.
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46
10.5 The Vendors and Mr Barshall shall ensure that the Purchaser, its
agents, advisers (including legal advisers or insurers) and
representatives are given promptly on request full access to all
accounting and other records of the Companies and any other facilities
and information regarding the business, assets, liabilities, contracts
and arrangements of the Companies which it may request and which are
within the possession or the control of the Vendors and Mr Barshall
and the Vendors hereby undertake to retain all such information in
their possession and control for a period of two years following the
Completion Date of the Option (Sixth) Shares or the expiry of the Call
Options Period in respect of the Option (Sixth) Shares (as relevant).
10.6 Each party shall pay its own legal, accountancy and other costs,
charges and expenses incurred in connection with this Agreement.
10.7 This Agreement, together with any document expressly referred to in
any of its terms, contains the entire agreement between the parties
relating to the subject-matter covered. No oral explanation or oral
information given by any party shall alter the interpretation of this
Agreement.
10.8 Any notice:
(a) must be in writing and must be given (subject to clause 10.9)
to any party at the address of that individual or company
given at the beginning of this Agreement; and
(b) will be effectively served:
` (i) on the day of receipt where any hand-delivered letter
or telefax message is received on a Business Day
before or during normal working hours; or
(ii) on the following Business Day, where any
hand-delivered letter or telefax message is received
either on a Business Day after normal working hours
or on any other day.
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47
10.9 Any demand notice or communication and any service of process relating
to any proceeding suit or action arising out of or in connection with
this Agreement will be validly given or made to the Purchaser,
attention: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇, Vice President and General Counsel.
10.10 This Agreement and all documents supplemental thereto are governed by
and are to be construed in accordance with English law.
10.11 The parties accept the non-exclusive jurisdiction of the appropriate
court of law in England in relation to all matters, claims and
disputes arising out of or in connection with this Agreement, any of
the documents in the agreed form or any document supplemental thereto.
10.12 Any provisions of this Agreement shall, so far as they are capable of
being performed or observed, continue in full force and effect
notwithstanding Completion except in respect of those matters already
performed.
10.13 This Agreement may be executed in several counterparts (whether
original or facsimile counterparts) and upon the execution of all such
counterparts by one or more parties, each counterpart shall be deemed
to be an original hereof.
10.14 Subject to any applicable law, in the event of any ambiguity or
conflict between this Agreement and the memorandum of association of
the Company and the articles of association of the Company, the terms
of this Agreement shall prevail as between the parties and in such
event the parties shall procure such modification to the memorandum of
association or the articles of association as shall be necessary.
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SCHEDULE 1
THE VENDORS
PART I
SHAREHOLDINGS
Column 1 Column 2
-------- --------
Name and Address Holdings of Shares
---------------- ------------------
Dr ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 360
Flat 3
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Dubens 70
as trustees of:
J Barshall's 1996 Settlement for ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Dubens and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ as 70
trustees of J Barshall's 1996 Settlement for ▇▇▇▇▇▇▇▇
▇▇▇▇▇:
▇▇▇▇ ▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Pailex Securities International Inc. 500
Palm ▇▇▇▇▇▇▇▇
No 4 Fishlock Road
Road Town
Tortola
British Virgin Islands
TOTAL 1,000
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PART II
INITIAL CONSIDERATION
Column 1 Column 2 Column 3
-------- -------- --------
Initial Consideration
Name Number of Sale (Consideration Shares)
---- -------------- ----------------------
(First) Shares
--------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 184 61,334
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and 70 23,333
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Dubens
as trustees
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Dubens and 70 23,333
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ as trustee
Pailex Securities International 186 62,000
Inc.
TOTAL 510 170,000
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PART III
OPTIONS CONSIDERATION - OPTION (SECOND) SHARES
Column 1 Column 2
-------- --------
Name Number of Option (Second) Shares
---- --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 32
Pailex Securities International Inc. 58
TOTAL 90
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PART IV
OPTIONS CONSIDERATION - OPTION (THIRD) SHARES
Column 1 Column 2
-------- --------
Name Number of Option (Third) Shares
---- -------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 36
Pailex Securities International Inc. 64
TOTAL 100
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PART V
OPTIONS CONSIDERATION - OPTION (FOURTH) SHARES
Column 1 Column 2
-------- --------
Name Number of Option (Fourth) Shares
---- --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 36
Pailex Securities International Inc. 64
TOTAL 100
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53
PART VI
OPTIONS CONSIDERATION - OPTION (FIFTH) SHARES
Column 1 Column 2
-------- --------
Name Number of Option (Fifth) Shares
---- -------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 36
Pailex Securities International Inc. 64
TOTAL 100
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PART VII
OPTIONS CONSIDERATION - OPTION (SIXTH) SHARES
Column 1 Column 2
-------- --------
Name Number of Option (Sixth) Shares
---- -------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Barshall 36
Pailex Securities International Inc. 64
TOTAL 100
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SCHEDULE 2
PARTICULARS OF THE COMPANY
Number: 2589904
Registered Office: ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Authorised share capital: L.1,000 divided into 1,000 ordinary shares of L.1
each
Issued share capital: L.1,000 divided into 1,000 ordinary shares of L.1
each
Directors: 1 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Flat 1
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
2 ▇▇▇▇▇ ▇▇▇▇▇ Barshall
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
3 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Dubens
Flat 1
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Secretary: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Auditors: Blick ▇▇▇▇▇▇▇▇▇▇
Charges: 1 Fixed and floating charge in favour of
Midland Bank plc dated 14 May 1996
2 Fixed charge on purchased debts in favour
of ▇▇▇▇▇▇▇ Factors Limited dated 9 May 1996
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SCHEDULE 3
WARRANTY STATEMENTS
A CORPORATE AND GENERAL
A.1 The information contained in the Recitals and Schedules 1 and 2 is
true and complete in all respects and the information contained in the
Disclosure Letter is materially accurate and so far as the Vendors are
aware there is no matter which renders any of such information untrue,
incomplete or misleading.
A.2 The Company is not the holder or beneficial owner of, and has not
agreed to acquire, any shares or securities of any other corporation
or other body.
A.3 The Company is not and has not agreed to become a member of any
partnership, joint venture, consortium or other incorporated or
unincorporated association, has not appointed any agent, attorney,
distributor, franchisee or other licensee, and has no place of
business or permanent establishment outside the United Kingdom.
A.4 No person has the right (actual or contingent) at any time to call for
the allotment, issue, sale or transfer of any share or loan capital of
the Company or to convert shares of the Company into a different class
or any security into share capital of the Company.
A.5 The Company has not purchased, redeemed, reduced or exercised any lien
or right or forfeiture over, any of its issued share capital nor has
it agreed to do any such thing.
A.6 The Company has not made any gift, loan or quasi-loan to any of the
Vendors or to any director or former director of the Company nor has
it sold any property to any such person, nor has it agreed to do any
such thing nor has the Company at any time owed any money to any such
person.
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B FINANCIAL STATEMENTS
The Completion Accounts:
(a) give a true and fair view of the financial position and state
of affairs of the Company at the Accounts Date in 1996 and of
its profit (or loss) for the period to which they relate;
(b) comply with the requirements of the Companies ▇▇▇ ▇▇▇▇ and of
all relevant SSAPs;
(c) have been prepared, unless otherwise expressly stated, on a
basis consistent with the basis applied in the corresponding
financial statements of the Company for the preceding three
financial years;
(d) contain full provisions for disclosure of all material
liabilities and capital commitments of the Company at the
Accounts Date in 1996, whether actual, contingent, quantified,
disputed or otherwise; and
(e) contain full provision for bad and doubtful debts,
depreciation, amortisation, obsolescence of assets and any
foreseeable losses.
C BUSINESS SINCE THE ACCOUNTS DATE IN 1996
C.1 Since the Accounts Date in 1996:
(a) the Company has carried on its business prudently and only in
its ordinary and usual course and without any material
interruption or alternation in the nature, scope or manner of
such business and (without limitation) there has been no
change in the manner or time of payment of creditors, or the
issue of invoices or collection of debts, or in the amount of
stock bought or agreed to
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58
be bought, or in the level of borrowing or working capital
requirements of the Company;
(b) no dividend or other distribution has been declared, made or
paid by the Company;
(c) no adverse material change in the financial position of the
Company has occurred;
(d) the Company has not borrowed any money which it has not repaid
nor has it lent any money which has not been repaid to it;
(e) the Company has not entered into any material capital
transaction or otherwise undertaken any commitment on its
capital account; and
(f) no substantial supplier to or customer of the Company has
ceased or significantly reduced its trade with the Company
nor, so far as the Vendors are aware, is any such person
likely to do so or to alter the terms of trade to the
Company's disadvantage.
C.2 The debts of the Company that are due at Completion will be good and
collectable in full within a period not exceeding 120 days following
Completion less an allowance of five per cent. of those debts due at
Completion.
C.3 The net worth of the Company has not materially diminished since the
1996 Accounts Date.
D COMPLIANCE AND LITIGATION
D.1 The Company has complied in all material respects with all statutes
and regulations applicable to it or to its property, including
(without limitation) the Companies ▇▇▇ ▇▇▇▇ and the Health & Safety at
Work etc. ▇▇▇ ▇▇▇▇.
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59
D.2 All licences and consents of any nature whether public or private
("permissions") necessary or desirable to enable the Company to carry
on its business in the ordinary course have been obtained; all such
permissions are valid and subsisting and, so far as the Vendors are
aware, there are no circumstances which can reasonably be foreseen as
likely to lead to any permission being suspended, cancelled or
revoked.
D.3 Neither the Company nor any person for whom it is vicariously liable
is engaged in any civil or criminal litigation or arbitration
proceedings, no injunction or order has been made which is binding on
the Company, the Company has given no undertaking to any court or
person arising out of any proceedings, nor are any such matters
pending or threatened nor are there any circumstances which can so far
as the Vendors are aware reasonably be foreseen to give rise to any
such matter.
D.4 The Company is not in breach to any material degree of any of its
contracts or obligations and, so far as the Vendors are aware, there
are not circumstances likely to give rise to such breach, nor is any
other party in breach of any such contract.
E ASSETS
E.1 All assets represented as belonging to or used by the Company are in
its actual possession and are its absolute property and none of such
assets is the subject of any encumbrance whatsoever nor is there any
agreement or commitment to give or create any encumbrance over any
assets of the Company.
E.2 The Company's stock is capable of being sold by the Company in the
ordinary course of business in accordance with its current price list
without rebate or allowance.
F TRADE
F.1 The Company is not party to any agreement or arrangement which
prohibits or will in any way be affected by any change in the
beneficial ownership of the Shares or
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under which any other party will be entitled to exercise any right
which would not have been exercisable but for such change.
F.2 The Vendors have disclosed in writing to the Purchaser full details of
discounts, overrides, rebates, allowances and other preferential terms
of any nature available to the Company from its suppliers or offered
by the Company to its customers.
F.3 The Vendors have disclosed in writing to the Purchaser all the
material terms and conditions of any contract or obligation which is
material to the carrying on of the business of the Company.
F.4 There are no outstanding guarantees, warranties or indemnities made or
issued by or on behalf of the Company and no outstanding agreements or
arrangements to give, make or issue any of the same.
F.5 The Company has not agreed to any restriction on it carrying on any
business in any part of the world.
F.6 Full details of all bank accounts of the Company have been disclosed
in writing to the Purchaser.
F.7 The Company is not a party to any agreement or arrangement which is
not on arm's length terms.
G INSURANCE
All insurance policies of the Company have been disclosed in the
Disclosure Letter and are in full force and effect. Nothing has been
done or omitted to be done which would make any policy of insurance
void or voidable. There is no insurance claim pending or outstanding.
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H INTELLECTUAL PROPERTY RIGHTS
H.1 So far as the Vendors are aware, after diligent inquiry, the carrying
on of the business of the Company does not infringe any trade ▇▇▇▇,
patent or other invention, design, copyright or rights in any
confidential information, know-how, trade secret or any other rights
of a third party.
H.2 All advertising and marketing materials used in connection with the
Company's business comply with all legal requirements in all countries
in which the materials are used or proposed to be used. So far as the
Vendors are aware such materials are not defamatory and there are no
grounds under which such materials could be challenged for any reason
whatsoever, including (without limitation) defamation, trade libel or
any similar law.
I EMPLOYEES
I.1 Full and accurate details have been supplied to the Purchaser in
writing concerning all the remuneration, benefits and perquisites of
any nature of each of the employees of the Company (the "Employees"),
together with copies of all service contracts or other written
contracts of the Employees (including, without limitation, any
employee handbook) and there is no commitment to vary any such matter.
I.2 There are no loans outstanding from the Company or the Vendors to any
Employee nor does any Employee owe any money to the Company or the
Vendors.
I.3 None of the Employees has given or received notice of termination of
his employment nor is any of the Employees the subject of any material
disciplinary action or involved in any grievance procedure of any
significance nor is the Company engaged in any dispute relating to the
provisions of the employment legislation. So far as the
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Vendors are aware, there is no matter which can reasonably be foreseen
as being likely to give rise to the same.
I.4 The Disclosure Letter lists all consultants or other independent
contractors engaged by the Company and the Inland Revenue has agreed
in writing that all such persons are not employees of the Company.
J PENSIONS
The Company has no obligations, moral or legal, to provide retirement,
death or disability benefits.
K REAL PROPERTY
K.1 The Company does not own and has no rights over any real property.
K.2.1 So far as the Vendors are aware, compliance has been made with all
applicable statutory and bye-law requirements with respect to the
Property.
K.2.2 So far as the Vendors are aware, there is no outstanding and
unobserved or unperformed obligation on the part of the Company with
respect to the Property necessary to comply with the requirements
(whether formal or informal) of any competent authority exercising
statutory or delegated powers.
K.2.3 So far as the Vendors are aware, there are not in force or required to
be in force any licences whether under the Licensing ▇▇▇ ▇▇▇▇ or
otherwise which apply to the Property.
K.2.4 So far as the Vendors are aware, there are no notices or orders
affecting the Property.
K.2.5 So far as the Vendors are aware, there are no disputes affecting the
Property.
K.3.1 The Company has paid all licence fees for its occupation of the
Property.
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K.3.2 So far as the Vendors are aware, the Property is held by Global Inc
Limited under a lease. The Company occupies the Property under a
licence without the benefit of any tenancy.
L TAX RETURNS AND TAXATION
L.1 All necessary taxation returns have been properly made on a correct
basis by the Company and there is no question or dispute with the
Inland Revenue or H.M. Customs and Excise and so far as the Vendors
are aware there are no matters which are likely to lead to any dispute
with either of them.
L.2 At the date hereof:
(a) all amounts due for payment by the Company to H.M. Customs and
Excise in respect of value added tax have been paid;
(b) all National Insurance and social security contributions (both
employers' and employees') payable by the Company have been
duly paid insofar as they ought to have been paid;
(c) all amounts in respect of taxation (including without
limitation PAYE) which are required to be deducted by the
Company in making any payment from which tax falls to be
deducted at source have been duly deducted and the Company has
so far as it ought to have been paid or accounted to the
Inland Revenue for all amounts due in respect of such taxation
and all payments of advance corporation tax relating to
franked payments due prior to the date hereof have been duly
made; and
(d) all amounts of Corporation Tax (if due) have been paid.
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M RECORDS
The Company has kept, and is in possession of, proper accurate and
up-to-date records, accounts, books and files relating to its business
or affairs. Such records, accounts, books and files, whether kept
manually or electronically, and access thereto are under the direct
control of the Company. The Company has kept its accounts records
accurately and there are at the date hereof no material inaccuracies
or discrepancies of any kind contained or reflected therein.
N STAMP DUTIES
All documents relating to the assets of the Company which are in the
possession or under the control of the Company and to which the
Company is a party and which attract stamp duty have been properly
stamped. The Company has not been a party to a scheme, contract or
arrangement in respect of which relief from duty has been obtained.
O INSOLVENCY
No order has been made or petition presented or resolution passed for
the winding-up of the Company and there are no grounds on which any
such order or petition could be made or presented.
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ATTESTATIONS
Signed by )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BARSHALL ) [SIG]
in the presence of: [SIG] )
Signed by [SIG] )
for and on behalf of )
PAILEX SECURITIES ) [SIG]
INTERNATIONAL INC. )
in the presence of: [SIG] )
Signed by )
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ) [SIG]
as trustee )
in the presence of: [SIG] )
Signed by )
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ DUBENS ) [SIG]
as trustee )
in the presence of: )
Signed by )
for and on behalf of ) [SIG]
VANS, INC. )
in the presence of: )
Signed by )
▇▇▇▇▇ Barshall )
for and on behalf of ) [SIG]
GLOBAL ACCESSORIES LIMITED )
in the presence of: [SIG] )
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