-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uex08eokVlxSLIRg/KDwXJJIVXxTSf4kb7KRtP/+NIIcBKWW2uLb3B51huBSNUHO dmXKku9IzflYi2JewLeXlg== 0000853102-01-500010.txt : 20010516 0000853102-01-500010.hdr.sgml : 20010516 ACCESSION NUMBER: 0000853102-01-500010 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010425 ITEM INFORMATION: FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAY RUNNER INC CENTRAL INDEX KEY: 0000853102 STANDARD INDUSTRIAL CLASSIFICATION: BLANKBOOKS, LOOSELEAF BINDERS & BOOKBINDING & RELATED WORK [2780] IRS NUMBER: 953624280 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19835 FILM NUMBER: 1639047 BUSINESS ADDRESS: STREET 1: 2750 W. MOORE AVENUE CITY: FULLERTON STATE: CA ZIP: 92833 BUSINESS PHONE: 7146803500 MAIL ADDRESS: STREET 1: 15295 ALTON PARKWAY CITY: IRVINE STATE: CA ZIP: 92718 8-K 1 f8k051501.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 25, 2001 DAY RUNNER, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation) 0-19835 95-3624280 (Commission File Number) (I.R.S. Employer Identification No.) 2750 W. Moore Avenue Fullerton, CA 92833 (Address of principal executive offices) Registrant's telephone number, including area code: 714/680-3500 Item 2. Acquisition or Disposition of Assets. On April 25, 2001, Day Runner, Inc. (the "Company") announced the sale of its Filofax operations for $30 million in debt reduction. The Filofax operations were sold to entities affiliated with the Company's lenders after the Company had pursued alternative sale possibilities for these operations. The sale of the Filofax operations was made in two transactions: one for the operations in the United States and the other for the international operations. The sale of the Filofax operations in the United States was accomplished through the sale of the outstanding shares of stock of Filofax, Inc., a wholly-owned subsidiary of the Company, to DRBG, LLC, a Delaware limited liability company (the "U.S. Buyer"). The consideration for the stock of Filofax, Inc. was $1,004,702 in the form of a release of debt owed to the U.S. Buyer by the Company Subsidiaries of the Company were released from their obligations as guarantors of this debt. The sale of the international Filofax operations was made pursuant to a share purchase agreement for all the outstanding shares of stock of Day Runner UK Plc ("DR UK") among the Company, certain of its subsidiaries and DRBG UK Limited, a company organized under the laws of England and Wales ("U.K. Buyer"). The Company and its subsidiaries party to the share purchase agreement collectively owned all of the outstanding shares of DR UK that in turn owns all of the outstanding shares of stock of Filofax Group Limited, the holding company for the Filofax operations worldwide. The consideration for the shares sold to the U.K. Buyer was $11,358,599 in reduction of debt owed by the Company to the U.K. Buyer and the release of all the Company's obligations with respect to (pound)12,420,210 ($17,636,699) in debt owed by DR UK to the Company's lenders. The Company's subsidiaries that sold their shares of DR UK to the U.K. Buyer were also released from all obligations as guarantors of this debt. The share purchase agreement further provides that in the event that the U.K. Buyer or Filofax Group Limited is sold to a third party on or before April 25, 2002 for an amount greater than the consideration provided in the share purchase agreement, the consideration paid for the shares of DR UK shall be increased by an amount equal to the additional consideration paid by the third party. Any such additional consideration would be in the form of additional reduction of debt of the Company and the release of guaranties by the Company's subsidiaries of such debt. Despite the sale of the Filofax operations, the parties have agreed that DR UK, Filofax, Inc., Filofax Group Limited, Filofax Limited and one of its subsidiaries are continuing to guaranty the Company's debt in the amount of $10,000,000. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Business Acquired Not applicable (b) Pro Forma Financial Information Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2000 Unaudited Pro Forma Condensed Consolidated Statements of Operations for the fiscal year ended June 30, 2000 and the six months ended December 31, 2000 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (c) Exhibits Item No. Exhibit Index 2.1 Share Purchase Agreement dated as of April 25, 2001 among DRBG UK Limited, DRI International Holdings, Inc., DR UK Holdings Limited and the Registrant 2.2 Stock Purchase Agreement dated as of April 25, 2001 between DRBG, LLC and the Registrant 99.1 Press Release issued April 26, 2001 by the Registrant Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements The unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as of March 31, 2001 reflects the financial position of the Company after giving effect to the disposition of the Filofax operations as discussed in Item 2 and assumes the disposition took place on March 31, 2001. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended June 30, 2000 and the nine months ended March 31, 2001 assume that the disposition occurred on the first date of the period presented, and are based on the operations of the Company for the year ended June 30, 2000 and the nine months ended March 31, 2001. The unaudited pro forma condensed consolidated financial statements presented herein are shown for illustrative purposes only and are not necessarily indicative of the future financial position or future results of operations of the Company, or of the financial position or results of operations of the Company that would have actually occurred had the transactions occurred as of the date or as of the first date of the periods presented. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements, and notes thereto of the Company for the year ended June 30, 2000 as filed on Form 10-K and for the nine months ended March 31, 2001 as filed on Form 10-Q.
Day Runner, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Balance Sheet March 31, 2001 (In thousands) Pro Forma Adjustments --------------------- Historical Filofax (a) Other Pro Forma ---------- ------- ----- --------- ASSETS: Cash and cash equivalents................................$ 13,231 $ 8,621 $ 4,610 Accounts receivable, net................................. 5,432 3,752 1,680 Inventories.............................................. 20,587 10,255 $ 21 (b) 10,353 Prepaid expenses and other current assets................ 3,668 2,158 1,510 Property and equipment, net.............................. 6,635 1,099 5,536 Intangibles and other assets............................. 6,141 2,583 (2,591)(c) 967 ---------- ---------- --------- --------- Total assets......................................... $ 55,694 $ 28,468 $ (2,570) $ 24,656 ========== ========== ========= ========= LIABILITIES: Lines of credit.......................................... $ 91,498 $ 17,637 $(12,363) (d) $ 61,498 Debt restructuring adjustment............................ 10,964 (f) 10,964 Accounts payable......................................... 5,438 3,047 2,391 Accrued expenses and other liabilities................... 15,689 12,115 7,431 (b) 11,005 Income taxes payable..................................... 2,230 2,755 (525) Long-term debt........................................... 43 43 --------- --------- --------- --------- Total liabilities.................................... 114,898 35,597 6,032 85,333 --------- --------- --------- --------- STOCKHOLDERS' DEFICIENCY: Preferred stock.......................................... Common stock............................................. 2 67,008 67,008 (b) 2 Additional paid-in capital............................... 18,089 18,089 Accumulated deficit...................................... (68,417) (75,630) (75,630)(e) (68,417) Accumulated other comprehensive income (loss)............ 803 1,493 20 (b) (670) Treasury stock........................................... (9,681) (9,681) --------- --------- --------- --------- Total stockholders' deficiency....................... (59,204) (7,129) (8,602) (60,677) --------- --------- --------- --------- Total liabilities & stockholders' deficiency......... $ 55,694 $ 28,468 $ (2,570) $ 24,656 ========== ========= ========= ========= See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Day Runner, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Fiscal Year Ended June 30, 2000 Pro Forma Adjustments Historical Filofax(a) Other Pro Forma ---------- ------- ----- --------- Net sales................................................... $ 171,487 $ 60,333 $ 111,154 Cost of goods sold.......................................... 103,274 29,724 73,550 ----------- --------- ---------- Gross profit................................................ 68,213 30,609 37,604 Operating expenses.......................................... 158,593 89,344 $ (143)(b) 69,106 ----------- --------- --------- ---------- Loss from operations........................................ (90,380) (58,735) (143) (31,502) Net interest expense........................................ 11,213 2,287 (2,910)(c) 6,016 ----------- --------- --------- ---------- Loss before provision for income taxes...................... (101,593) (61,022) (3,053) (37,518) Provision for income taxes.................................. 5,044 719 4,325 ----------- --------- --------- ---------- Loss from continuing operations............................. $ (106,637) $ (61,741) $ (3,053) $ (41,843) =========== ========= ========= ========== Loss per common share: Basic................................................ $ (44.79) $ (17.57) =========== ======== Diluted.............................................. $ (44.79) $ (17.57) =========== ======== Weighted-average number of common shares outstanding: Basic................................................ 2,381 2,381 ========= ========= Diluted.............................................. 2,381 2,381 ========= =========
Nine Months Ended March 31, 2001 Pro Forma Adjustments Historical Filofax(a) Other Pro Forma ---------- ------- ----- --------- Net sales................................................... $ 110,680 $ 35,431 $ 75,249 Cost of goods sold.......................................... 55,670 15,234 40,436 ---------- ---------- --------- Gross profit................................................ 55,010 20,197 34,813 Operating expenses.......................................... 66,098 31,217 $ (162)(b) 34,719 ---------- ---------- --------- --------- (Loss) income from operations............................... (11,088) (11,020) (162) 94 Net interest expense........................................ 10,014 1,833 (2,587)(c) 5,594 ---------- ---------- --------- --------- (Loss) income before provision for income taxes............. (21,102) (12,853) (2,749) (5,500) Provision for income taxes.................................. 1,756 1,698 58 ---------- ---------- --------- --------- (Loss) income from continuing operations.................... $ (22,858) $ (14,551) $ (2,749) $ (5,558) ========== ========== ========= ========= (Loss) income per common share: Basic................................................ $ (9.53) $ (2.32) ======== ======== Diluted.............................................. $ (9.53) $ (2.32) ======== ======== Weighted-average number of common shares outstanding: Basic................................................ 2,398 2,393 ========= ========= Diluted.............................................. 2,398 2,393 ========= ========= See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Day Runner, Inc. and Subsidiaries Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 1. General The foregoing unaudited pro forma condensed consolidated financial statements illustrate the effect of the sale by the Company of its Filofax operations pursuant to sale agreements among the Company, certain of its subsidiaries, DRBG, LLC and DRBG UK Limited. 2. Adjustments to Pro Forma Balance Sheet (a) Filofax - Represents the historical unaudited March 31, 2001 balances for the Filofax operations (U.S. and international) which are eliminated to reflect the sale of the Filofax operations. (b) Various - Consist of intercompany balances between the Registrant and its Filofax operations which are included in the historical balances and are eliminated via the sale of the Filofax operations. (c) Intangibles and other assets - Consists of goodwill included in the historical balances which is eliminated upon the sale of the Filofax operations. (d) Lines of credit - Upon the sale of the Filofax operations, there was a $30,000,000 reduction in term debt of which $17,637,000 is eliminated via the elimination of Filofax balances (see (a) above) and $12,363,000 is eliminated via the pro forma adjustments. (e) Accumulated deficit - Consist of the reversal of the elimination of the Filofax operations' accumulated deficit which is eliminated in the Filofax balances (see (a) above). (f) Debt restructuring adjustment: As the sale of the Filofax operations and the related debt reduction is accounted for as a troubled debt restructuring, this amount represents the amount of the debt reduction less the value of the assets transferred. Such amount is calculated as follows (in thousands): Carrying value of old debt $ 91,498 Less value of assets transferred 19,036 -------- Subtotal 72,462 Less remaining line of credit 61,498 -------- Debt restructuring adjustment $ 10,964 ======== 3. Adjustments to Pro Forma Statements of Operations for the Fiscal Year Ended June 30, 2000 and the Nine Months Ended March 31, 2001. (a) Filofax - Represents the historical audited June 30, 2000 balances and the unaudited March 31, 2001 balances for the Filofax operations which are eliminated to reflect the sale of the Filofax operations. (b) Operating expenses - Consist of the goodwill amortization included in the Historical balances that would have been eliminated due to the sale of the Filofax operations. There is also additional goodwill amortization which is eliminated from the pro formas via the elimination of the Filofax operations (see (a) above). (c) Net interest expense - Consist of interest on the $30,000,000 debt that would be eliminated due to the reduction in debt upon the sale of the Filofax operations. This amount does not include any adjustment made to amortize the debt restructuring adjustment amount as the underlying debt is being renegotiated. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DAY RUNNER, INC. By: /s/ John F. Ausura John F. Ausura Chief Executive Officer Dated: May 15, 2001 EX-2 2 ex21.txt Dated 25 April 2001 EXHIBIT 2.1 DAY RUNNER, INC (1) DRI INTERNATIONAL HOLDINGS, INC (2) DR UK HOLDINGS LIMITED (3) DRBG UK LIMITED (4) --------------------------------------- SHARE PURCHASE AGREEMENT -------------------------------------- relating to the sale and purchase of the whole of the issued share capital of Day Runner UK Plc GIBSON, DUNN & CRUTCHER A MULTINATIONAL PARTNERSHIP OF SOLICITORS AND REGISTERED FOREIGN LAWYERS Telephone House, 2-4 Temple Avenue, London EC4Y 0HB Telephone: +44 (0)20-7071-4000 Fax: +44 (0)20-7071-4244
CONTENTS Page - -------------- 2...............................................................................Agreement to Sell the Shares iv - ---------------------------- 3...............................................................................Consideration and Adjustment iv - ---------------------------- 4.................................................................................................Completion v - ---------- 5.................................................................................................Warranties v - ---------- 6...............................................................................Post Completion Relationship vi - ---------------------------- 7.....................................................................................Protection of Goodwill vi - ---------------------- 8...............................................................................Whole Agreement and Remedies viii - ---------------------------- 9...........................................................................................Other Provisions ix - ---------------- Schedule 1 Details of the Directors, the Company and the Subsidiaries.............................xvi - --------------------------------------------------------------------- Schedule 2 Completion Obligations................................................................xlii - --------------------------------- Schedule 3 Part I Warranties given by the Vendors under Clause 5..................................xlv - ---------------------------------------------------------------- Schedule 4 Limitation of Liability under Clause 5...............................................lviii - ------------------------------------------------- Schedule 5 Properties lxiii Schedule 6 Data Room lxiv
This Agreement is made on 25 April 2001 Between: (1) DAY RUNNER, INC whose principal place of business is 2750 West Moore Avenue, Fullerton, CA 92633 - 2565, USA; (2) DRI INTERNATIONAL HOLDINGS, INC whose principal place of business is, 15205 Alton Parkway, Irvine, California, USA; (3) DR UK HOLDINGS LIMITED (registered no: 3309870) whose registered office is 30-32 Gildredge Road, Eastbourne, East Sussex, BN21 4SH, UK; parties (1) - (3) collectively, (the "Vendors"); and (4) DRBG UK LIMITED (registered no: 4163587) whose registered office is at 2-4 Temple Avenue, London EC4Y 0HB, UK (the "Purchaser"). It is agreed as follows: 1 Interpretation In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply: 1.1 Definitions "Audited Accounts" means the audited accounts of the Company and of each of the Subsidiaries and the audited consolidated group accounts of the Group for the financial period ended on the Balance Sheet Date; "Balance Sheet Date" means 30 June 2000; "Company" means Day Runner UK Plc details of which are contained in Part 3 of Schedule 1; "Completion" means the completion of the sale and purchase of the Shares pursuant to Clause 4; "Completion Amount" means $11,358,599.33; "Consideration" means the consideration payable to the Vendors pursuant to Clause 3; "Data Room" means the data room currently at the offices of the Vendors' Solicitors, the contents of which are listed in Schedule 6, and which are fairly disclosed as exceptions to the Warranties; "Encumbrance" means any claim, charge, mortgage, security, lien, option, equity, power of sale, hypothecation or other third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind with the exception of liens arising by operation of law in the normal course of business of any Group Company; "Group" or "Group Companies" means the Company and the Subsidiaries and "Group Company" means any one of them; "Intellectual Property" means trade marks, service marks, trade names, logos, get-up, patents, inventions, registered and unregistered design rights, copyrights, database rights and all other similar proprietary rights which may subsist in any part of the world including, where such rights are obtained or enhanced by registration, any registration of such rights and applications and rights to apply for such registrations; "Loan Documentation" means the Second Amended and Restated Loan Agreement among Day Runner, Inc, Day Runner UK Plc and Filofax Limited as Borrowers, Wells Fargo Bank, National Association, Bank of Scotland, Credit Agricole Indosuez, Mellon Bank, NA, Oaktree Capital Management LLC and National Westminster Bank plc as Lenders and Wells Fargo Bank, National Association as Administrative Agent and related documentation; "Losses" means all losses, liabilities, costs (including, without limitation, legal costs), charges, expenses, actions, proceedings, claims and demands; "Properties" means the leasehold properties brief details of which are set out in Schedule 5 and includes each and every part of them and "Property" means any one of them; "Purchaser's Solicitors" means Gibson, Dunn & Crutcher of Telephone House, 2-4 Temple Avenue, London EC4Y 0HB; "Restricted Area" means the United Kingdom, Hong Kong, Europe and the Middle East; "Restricted Person" means any subsidiary of the Vendors and any holding company of the Vendors and any subsidiary of such holding company (the expressions "holding company" and "subsidiary " having the meaning detailed in section 736 of the Companies Act 1985); "Shares" means 3,924,669 Ordinary Shares of (pound)10 each being the whole of the issued share capital of the Company; "Subsidiaries" means the subsidiaries of the Company details of which are contained in Part 3 of Schedule 1; "Taxation" or "Tax" means all forms of taxation whether direct or indirect and whether levied by reference to income, profits, gains, net wealth, asset values, turnover, added value or other reference and statutory, governmental, state, provincial, local governmental or municipal impositions, duties, contributions, rates and levies (including without limitation social security contributions and any other payroll taxes), whenever and wherever imposed (whether imposed by way of a withholding or deduction for or on account of tax or otherwise) and in respect of any person and all penalties, charges, costs and interest relating thereto; "Taxation Benefits" means any Taxation benefit or advantage, including any loss, relief, allowance, exemption, set-off, deduction or credit available in the computation of any liability to Taxation; "Vendors' Group" means Day Runner, Inc and its subsidiary companies, other than the Group Companies plus Filofax, Inc and any of its subsidiaries; "Vendors' Solicitors" means Linklaters & Alliance of One Silk Street, London EC2Y 8HQ; "Warranties" means the warranties and representations set out in Schedule 3 and "Warranty" means any one of them. 1.2 Subordinate Legislation References to a statutory provision include any subordinate legislation made from time to time under that provision which is in force at the date of this Agreement; 1.3 Modification etc. of Statutes References to a statute or statutory provision include that statute or provision as from time to time modified, re-enacted or consolidated whether before or after the date of this Agreement so far as such modification, re-enactment or consolidation applies or is capable of applying to any transactions entered into in accordance with this Agreement prior to Completion and (so far as liability thereunder may exist or can arise) shall include also any past statute or statutory provision (as from time to time modified, re-enacted or consolidated) which such statute or provision has directly or indirectly replaced except to the extent that any statute or statutory provision made or enacted after the date of this Agreement would create or increase a liability of the Vendors under this Agreement; 1.4 Accounts Any reference to "accounts" shall include the directors' and auditors' reports, relevant balance sheets and profit and loss accounts and related notes together with all documents which are or would be required by law to be annexed to the accounts of the company concerned to be laid before that company in general meeting in respect of the accounting reference period in question; 1.5 Interpretation Act 1978 The Interpretation Act 1978 shall apply to this Agreement in the same way as it applies to an enactment; 1.6 Clauses, Schedules etc. References to this Agreement include any Schedules to it and references to Clauses and Schedules are to Clauses of and Schedules to this Agreement. References to paragraphs are to paragraphs of the Schedules; 1.7 Information Any reference to books, records or other information means books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm; and 1.8 Headings Headings shall be ignored in construing this Agreement. 2 Agreement to Sell the Shares The Vendors (each as to those of the Shares specified against its name in Part 1 of Schedule 1) agree to sell with full title guarantee and the Purchaser, relying on the Warranties, agrees to purchase the Shares free from all Encumbrances, subject to any pledges, charges and mortgages which may be in existence under the Loan Documentation on Completion, and together with all rights and advantages now and hereafter attaching thereto. 3 Consideration and Adjustment 3.1 Amount The Consideration for the purchase of the Shares and assignment of the intra-group indebtedness (pursuant to Clause 3.3) shall be $11,358,599.33, subject to any adjustment pursuant to Clauses 3.2 . 3.2 Consideration Uplift In the event that the Company or Filofax Group Limited is sold by the Purchaser to a third party within a period of twelve months from the date of Completion, the Consideration shall be increased by an amount ("the Consideration Uplift") equal to that which would result in the amount payable under this Agreement matching that payable on any such resale. Any Consideration Uplift shall be payable in the same manner as the Consideration. 3.3 Intra-Group Indebtedness 3.3.1 The Vendors and the Purchaser shall use best endevours to agree, in good faith, the precise inter-company loan position as at the date of Completion between the members of the Vendors' Group and each member of the Group plus Filofax, Inc (and its subsidiaries) (save only in respect of normal current account trading) within two weeks of Completion and produce a schedule of such ("the Inter-Company Schedule"). 3.3.2 The Vendors, on behalf of themselves and each and every member of the Vendors' Group, hereby transfer and assign to the Purchaser, with full title guarantee, the legal and beneficial title free of all Encumbrances, each and all of the inter-company loans identified on the Inter-Company Schedule in the aggregate amount outstanding between the Vendors' Group and the Group plus Filofax, Inc (and its subsidiaries) ("the Inter-Company Debt"). Each of the Vendors, on behalf of themselves and each member of the Vendors' Group, confirm and acknowledge that following assignment of the Inter-Company Debt pursuant to this Clause, the Vendors' Group shall have no further rights of claim against the Group plus Filofax, Inc (and its subsidiaries) in respect of the inter-company loans between the Vendors' Group and the Group plus Filofax, Inc and its subsidiaries. 4 Completion 4.1 Date and Place Completion shall take place at the offices of the Purchaser's Solicitors immediately on the signing of this Agreement or at such other place as may be agreed between the Vendors' Solicitors and the Purchaser's Solicitors on behalf of the Purchaser. Completion shall take place simultaneously with the sale of Filofax, Inc from Day Runner, Inc to DRBG LLC. 4.2 Obligations on Completion On Completion, the parties shall procure that the obligations specified in Schedule 2 are fulfilled and in so far as such obligations are not fulfilled by Completion, they shall be fulfilled within 2 weeks of Completion, except for paragraphs 1.1.1 to 1.1.5, 1.2.2 and 1.2.3 of Schedule 2 which must be satisfied on Completion, unless waived in writing by the Purchaser. 4.3 Payment of Price Against compliance with the foregoing provisions, the Purchaser shall pay the Completion Amount to the Vendors. DRI International Holdings, Inc and DR UK Holdings Limited hereby assert that they have each, at all material times, held their respective shares in the Company as a nominee on behalf of Day Runner, Inc and hereby direct the Purchaser to pay their respective portions of the Consideration to Day Runner, Inc, whose acknowledgment shall be sufficient discharge for the Purchaser's obligation under this Clause. 5 Warranties 5.1 Incorporation of Schedule 3 ......... 5.1.1 Each of the Vendors warrants and represents to the Purchaser in the terms set out in Part 1 of Schedule 3 subject only to: (i) any matter which is fairly disclosed in the documents made available in the Data Room and any matter referred to in the Audited Accounts or expressly provided for under the terms of this Agreement; and (ii) any matter or thing hereafter done or omitted to be done pursuant to this Agreement or otherwise at the request in writing or with the approval in writing of the Purchaser. 5.1.2 The Purchaser warrants and represents to the Vendors in the terms set out in Part 2 of Schedule 3. 5.2 Limitation of Liability The provisions of Schedule 4 shall apply. 5.3 Effect of Completion The Warranties and all other provisions of this Agreement insofar as the same shall not have been performed at Completion shall not be extinguished or affected by Completion, or by any other event or matter whatsoever, except by a specific and duly authorised written waiver or release by the Purchaser. 6 Post Completion Relationship 6.1 The Vendors and the Purchaser agree to work together in good faith following Completion to enter into any agreements or arrangements which are reasonably necessary to: 6.1.1 Transfer to the Vendors any interest or rights which relate exclusively to the "Day Runner" brand, which either the Vendor or the Purchaser considers should not be within the Group; 6.1.2 Continue the business of the Company and/or the subsidiaries around the world, and in particular, (without limitation), for a period of up to 12 months from the date of this Agreement, make available office space on reasonable terms to enable the Filofax operation in Hong Kong to continue in substantially the same manner as it does at the date of this Agreement; and 6.1.3 Obtain any consents of any third parties which may be necessary under any of the contracts of the Vendors (and their subsidiaries) and/or the Group which are necessary for the proper operation of the Company. 6.2 The Vendors and the Purchaser acknowledge that the Consideration has been determined after taking into account the provisions of Clause 6.1, and no further consideration shall be payable by the Purchaser to the Vendors (or to any other person) in respect of any of the transfers referred to in Clause 6.1.2 and no consideration shall be payable by the Vendors to the Purchaser (or any other person) in respect of the transfers referred to in clause 6.1.1. 7 Protection of Goodwill 7.1 The Vendors undertake to the Purchaser that without the written consent of the Purchaser (such consent to be at the sole and unfettered discretion of the Purchaser): 7.1.1 for a period of 18 months from Completion they will not and will procure that no Restricted Person will in any capacity whatsoever directly or indirectly carry on or assist in carrying on or be engaged, concerned or interested in any activity or undertaking which is the same as, or which competes directly with, the business of any member of the Group within the Restricted Area provided that none of the Vendors nor any Restricted Person will be prohibited by this Clause from carrying on or being engaged, concerned or interested in any activity or undertaking related to "Day Runner" branded products in the Restricted Area; and 7.1.2 for a period of 18 months from Completion they will not and will procure that no Restricted Person will directly, solicit or endeavour to entice away, offer employment to, engage or contract for the services of any employee who is an employee of the Purchaser or of any member of the Group at the time of any such approach or contact and who is a senior employee earning in excess of (pound)40,000 (or equivalent in another currency) per annum. The placing of an advertisement of a post available to a member of the public generally and the recruitment of a person through an employment agency shall not constitute a breach of this Clause provided that none of the Vendors advises such agency to approach any such employee; 7.1.3 other than in relation to any customer of "Day Runner" branded products at the date of this Agreement, for a period of 18 months from Completion they will not and will procure that no Restricted Person will at any time in the Restricted Area for the purpose of any business competing with the business of any member of the Group as at Completion, endeavour to entice away as a customer of the Purchaser or of any member of the Group any person who during the period of 12 months prior to the date of this Agreement has been a customer of any member of the Group who has not in that 12 month period bought, leased or distributed any "Day Runner" branded goods. The advertising or indirect marketing by the Vendors' Group of the Vendors' Group's products and services shall not constitute a breach of this Clause. 7.2 Nothing in sub-Clause 7.1 above shall prevent the Vendors or any Restricted Person (and there shall not be a breach of the above provisions if any such person shall do any of the same): 7.2.1 owning not more than three per cent of any class of the issued share capital of a company which is dealt in on a recognised investment exchange (as defined in the Financial Services Act 1986); or 7.2.2 soliciting, canvassing or otherwise dealing with customers or suppliers of any member of the Group otherwise than in connection with a business which competes with the business of that member of the Group. 7.3 Each of the undertakings contained in this Clause 7 is separate and severable and shall be construed on that basis. In the event that any such undertaking is found to be void but would be valid if some part of it were deleted or if the period or extent of it were reduced such undertaking shall apply with such modification as may be necessary to make it valid and effective. 7.4 The Vendors undertake to the Purchaser that neither one of the Vendors nor any Restricted Person shall at any time following the date of Completion in connection with any business use the names "Filofax" or Microfile" or "Yard-o-Led", or any names or words similar to or likely to be confused with any of them. 7.5 The Vendors by their execution hereof hereby agree that having regard, inter alia, to the price paid by the Purchaser for the Group, the undertakings contained in this Clause 7 are reasonable and necessary for the legitimate interests of the Purchaser and that having regard to those circumstances those covenants do not work harshly or oppressively on them. 7.6 The Purchaser undertakes to the Vendors that without the written consent of the Vendors it will not and will procure that no Group Company (including Filofax, Inc and its subsidiaries) will in any capacity whatsoever directly or indirectly carry on or assist in carrying on or be engaged, concerned or interested in the sale, leasing or distribution of any "Day Runner" branded products except to the extent that the Group Companies (including Filofax, Inc and its subsidiaries) shall be permitted: 7.6.1 to sell any "Day Runner" branded products owned or ordered by them at the date of this Agreement; and 7.6.2 to order any "Day Runner" branded replacement papers dated "2002" prior to December 31, 2001 and sell such replacement papers.. 8 Whole Agreement and Remedies 8.1 Whole Agreement This Agreement contains the whole agreement between the parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in this Agreement. 8.2 Acknowledgement The Purchaser acknowledges that it has not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated into it. 8.3 Remedies So far as permitted by law and except in the case of fraud, each party agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement to the exclusion of all other rights and remedies (including those in tort or arising under statute). 8.4 Reasonableness of this Agreement Each party to this Agreement confirms it has received independent legal advice relating to all the matters provided for in this Agreement, including the provisions of Clause 7, and agrees, having considered the terms of the Agreement as a whole, that its provisions are fair and reasonable. 9 Other Provisions 9.1 Announcements No announcement or circular in connection with the existence or the subject matter of this Agreement shall be made or issued by or on behalf of the Vendors or the Purchaser without the prior written approval of the Vendors and the Purchaser (such consent not to be unreasonably withheld or delayed). This shall not affect any announcement or circular required by law or any regulatory body or the rules of any recognised stock exchange but the party with an obligation to make an announcement or issue a circular shall consult with the other party insofar as is reasonably practicable before complying with such an obligation. 9.2 Confidentiality ......... ......... 9.2.1 Subject to Clause 9.2.3, the Vendors shall treat as confidential and not disclose or use any information received or obtained as a result of entering into this Agreement (or any agreement entered into pursuant to this Agreement) which relates to: (i) the provisions of this Agreement and any agreement entered into pursuant to this Agreement; or (ii) the negotiations relating to this Agreement (and such other agreements); or (iii) the Purchaser's business, financial or other affairs (including the business, financial or other affairs of the Group Companies and including, in each case, future plans and targets). 9.2.2 Subject to Clause 9.2.3, the Purchaser shall treat as confidential and not disclose or use any information received or obtained as a result of entering into this Agreement (or any agreement entered into pursuant to this Agreement) which relates to: (i) the provisions of this Agreement and any agreement entered into pursuant to this Agreement (save for any information disclosed to any permitted assignee pursuant to Clause 9.3); or (ii) the negotiations relating to this Agreement (and such other agreements); or (iii) any Vendor's business, financial or other affairs (including future plans and targets). 9.2.3 Clauses 9.2.1 and 9.2.2 shall not prohibit disclosure or use of any information if and to the extent: (i) the disclosure or use is required by law, any regulatory body or the rules and regulations of any recognised stock exchange; (ii) the disclosure or use is required to vest the full benefit of this Agreement in the Vendors or the Purchaser, as the case may be; (iii) the disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreement entered into under or pursuant to this Agreement or the disclosure is reasonably required to be made to a taxation authority in connection with the taxation affairs of the disclosing party; (iv) the disclosure is made to professional advisers of the Purchaser or the Vendors on terms that such professional advisers undertake to comply with the provisions of Clauses 9.2.1 and 9.2.2 in respect of such information as if they were a party to this Agreement; (v) the information becomes publicly available (other than by breach of the this Agreement); (vi) the other party has given prior written approval to the disclosure or use; or (vii) the information is independently developed after Completion, provided that prior to disclosure or use of any information pursuant to Clause 9.2.3(i), (ii), (iii) (except in the case of disclosure to a taxation authority) or (iv), the party concerned shall promptly notify the other party of such requirement with a view to providing the other party with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use. 9.2.4 On Completion, the Vendors shall assign to the Purchaser, or shall procure the assignment of, the benefit of any confidentiality agreements entered into by the Vendors in connection with its sale of the Shares to the extent permitted by the terms of the relevant agreements. 9.3 Successors and Assigns 9.3.1 This Agreement is personal to the parties to it. Accordingly, subject only to Clause 9.3.2, neither the Purchaser nor the Vendors may, without the prior written consent of the others assign, hold on trust or otherwise transfer the benefit of all or any of the other's obligations under this Agreement, or any benefit arising under or out of this Agreement nor shall the Purchaser be entitled to make any claim against the Vendors in respect of any loss which it does not suffer in its own capacity as beneficial owner of the Shares. 9.3.2 Notwithstanding Clause 9.3.1, the Purchaser may assign the full benefit and the full burden under this Agreement to one subsequent purchaser of: (i) the Company (or any of the Subsidiaries) or substantially all of their business; (ii) the Purchaser; or (iii) the Purchaser's parent company, providing that such assignment is made within 18 months of Completion. The Vendors hereby give their consent to any such assignment. 9.4 Third Party Rights A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement. 9.5 Variation No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the parties to this Agreement. 9.6 Time of the Essence Time shall be of the essence of this Agreement both as regards any dates and periods mentioned and as regards any dates and periods which may be substituted for them in accordance with this Agreement or by agreement in writing between the parties. 9.7 Further Assurance 9.7.1 At any time after the date of this Agreement the Vendors shall and shall use their best endeavours to procure that any necessary third party shall execute such documents and do such acts and things as the Purchaser may reasonably require for the purpose of giving to the Purchaser the full benefit of all the provisions of this Agreement. 9.7.2 The Vendors undertake to provide the Purchaser after Completion (at the Purchaser's cost) with all reasonable information which the Vendors or any member of the Vendors' Group have in their possession or under its control relating to the Company and/or the Subsidiaries and for this purpose the Vendors shall give the Purchaser and any persons authorised by the Purchaser reasonable access to all such information, during normal working hours and upon reasonable notice and the Purchaser may, at its own expense, copy any such documents. 9.7.3 The Vendors at the cost of the Purchaser shall at any time after Completion do or procure the doing of all such acts and things and/or execute or procure the execution of such documents in a form satisfactory to the Purchaser as the Purchaser reasonably considers necessary for the purpose of vesting the Shares in the Purchaser. 9.7.4 The Purchaser undertakes to provide and procure that the Group Companies provide the Vendors after Completion (at the Vendors' cost) with all reasonable information concerning the Group which the Vendors may require in order to enable them to comply with any law, rule, regulation or administrative practice of any government, governmental department, agency or regulatory body. 9.8 Costs 9.8.1 Subject to Clause 9.8.2, the Vendors shall bear all costs incurred by them and the Group in connection with the preparation, negotiation and entry into of this Agreement and the sale of the Shares. The Vendors shall indemnify the Purchaser against any professional fees incurred by the Company prior to the date of Completion and in connection with fulfillment of any of the Vendors' obligations under this Agreement in relation to the proposed sale of Filofax Group Limited. The Purchaser shall bear all such costs incurred by it. 9.8.2 Costs to be borne by the Vendors pursuant to Clause 9.8.1 shall not include any costs incurred by the Vendors or the Group in connection with any payment that falls due to Michael Ball and/or Christopher Brace as a consequence of the sale of the Shares. 9.9 Interest If the Vendors or the Purchaser default in the payment when due of any sum payable under this Agreement (howsoever determined) the liability of the Vendors or the Purchaser (as the case may be) shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgement) at a rate per annum of 1 per cent above LIBOR as quoted from time to time by The Royal Bank of Scotland PLC. Such interest shall accrue from day to day. 9.10 Notices 9.10.1 Any notice or other communication in connection with this Agreement shall be in writing in English (a "Notice") and shall be sufficiently given or served if delivered or sent: in the case of each of the Vendors to Day Runner, Inc at: Address: Day Runner, Inc 2750 West Moore Avenue Fullerton, CA 92633-2565 Attention: John Ausura; Catherine Ratcliffe Fax: 001 (714) 441 4848 Attention: Chief Executive Officer /Chairman With additional copies of Notices to: Address: Linklaters & Alliance One Silk Street London EC2Y 8HQ UK Fax: +44 20 7374 9318 Attention: Olivia McKendrick / Nicholas Pearey in the case of the Purchaser to DRBG UK Limited at: Address: c/o Filofax Group Limited, Waverley House, 7/12 Noel Street, London, W1F 8NE UK Fax: +44 1444 238183 Attention: The Company Secretary With additional copies of Notices to (such address not being the valid place for service): Gibson, Dunn & Crutcher, LLP Telephone House 2-4 Temple Avenue London EC4Y 0YB Fax : 44 (0) 20 7070 9224 Attention: Judith Shepherd or (in either case) to such other address or fax number in the United Kingdom as the relevant party may have notified to the other in accordance with this Clause. In particular, in relation to any court proceeding, the London office of the Vendors' solicitors can accept service of any proceedings. 9.10.2 Any notice may be delivered by hand or, sent by fax or prepaid first class post (first class in the case of service in the United Kingdom and airmail in the case of international service). Without prejudice to the foregoing, any Notice shall conclusively be deemed to have been received on the next working day in the place to which it is sent, if sent by fax, or 60 hours from the time of posting, if sent by post, or at the time of delivery, if delivered by hand. 9.11 Invalidity If any term in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any enactment or rule of law, such term or part shall to that extent be deemed not to form part of this Agreement but the legality, validity or enforceability of the remainder of this Agreement shall not be affected. 9.12 Counterparts This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this Agreement by executing any such counterpart. 9.13 Governing Law and Submission to Jurisdiction 9.13.1 This Agreement and the documents to be entered into pursuant to it, save as expressly referred to therein, shall be governed by and construed in accordance with English law. 9.13.2 All the parties irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and the documents to be entered into pursuant to it. [Intentionally left blank] In witness whereof this Agreement has been duly executed. SIGNED by ......... ) for and on behalf of....... ) DAY RUNNER, INC ......... ) SIGNED by ......... ) for and on behalf of....... ) DRI INTERNATIONAL ......... ) HOLDINGS, INC ......... ) SIGNED by ......... ) for and on behalf of....... ) DR UK HOLDINGS LIMITED..... ) SIGNED by ......... ) for and on behalf of....... ) DRBG UK LIMITED ......... ) Schedule 1 Part 1 Shares Sold by each Vendor Vendor Shares Sold Day Runner, Inc 3,919,668 DRI International Holdings, Inc 1 DR UK Holdings Limited 5,000 Part 2 Particulars of Directors of the Company Full Names Usual Address John Francis Ausura 63 Greencroft Drive, Champage, Illinois, 61821 USA David Anthony Werner 22502 Almaden Mission Viejo 92691 California USA Part 3 Particulars of the Company Registered Number: 3309833 Registered Office: 4th Floor Waverley House 7-12 Noel Street London WlF 8NE Date and place of incorporation: 24/01/97 - England & Wales Secretary: C. Ratcliffe VAT Number: Tax District and Reference Number: Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors Linklaters & Alliance Authorised Share Capital: 10,000,000 ordinary shares of (pound)10 each Issued and fully paid-up Share Capital: 3,924,669 ordinary shares of (pound)10 each Part 4 Particulars of the Subsidiaries Filofax Group Limited Registered Number: 00175064 Registered Office: Waverley House 7-12 Noel Street London WlF 8NE Date and place of incorporation: 06/06/1921 - England & Wales Secretary: Michael Ball Directors Michael Ball Christopher Brace John Ausura David A Werner VAT Number: 5970 52219 Tax District and Reference Number: 571 73430 10006 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)2,500,000 divided into 50,000,000 Ordinary Shares of 5p each Issued and fully paid-up Share Capital: 25,124,059 Ordinary Shares of 5p each Filofax Ltd Registered Number: 01891062 Registered Office: c/o Filofax Group Ltd Waverley House 7-12 Noel Street London, Wl F 8NE Date and place of incorporation: 01/03/1985 - England & Wales Directors: Michael Ball, Christopher Brace Secretary: Michael Ball VAT Number: 59705 2219 Tax District and Reference Number: 571 83430 04779 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)l00,000 divided into 100,000 Ordinary Shares of(pound)l each Issued and fully paid-up Share Capital: 100 Ordinary Shares of(pound) l each Shareholders No. of Shares Filofax Group Ltd 100 Drakes Office Systems Ltd Registered Number: 01239536 Registered Office: c/o Filofax Group Ltd Waverley House 7-12 Noel Street London, WlF 8NE Date and place of incorporation: 06/01/1976 - England & Wales Directors: Michael Ball, Christopher Brace Secretary: Michael Ball VAT Number: 597052219 Tax District and Reference Number: 571 82720 19475 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)50,000 divided into 50,000 Ordinary Shares of (pound)1 each Issued and fully paid-up Share 1,000 Ordinary Shares of Capital: (pound)1 each Shareholders No. of Shares Filofax Group Ltd 1,000 Filofax France Ltd Registered Number: 2741286 Registered Office: c/o Filofax Group Ltd Waverley House 7-12 Noel Street London, Wl F 8NE Date and place of incorporation: 14/08/1992 - England & Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 571 83430 04975 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)20 divided into 400 Ordinary Shares of 5p each Issued and fully paid-up Share Capital: 100 Ordinary Shares of 5p each Shareholders No. of Shares Filofax Ltd 100 Drakeplan Ltd Registered Number: 3226778 Registered Office: c/o Filofax Group Ltd Waverley House 7-12 Noel Street London, Wl F 8NE Date and place of incorporation: 18/07/1996 - England & Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 571 25612 16347 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)1,000 divided into 1,000 Ordinary Shares of (pound)1 each Issued and fully paid-up Share Capital: 2 Ordinary Shares of (pound)2 each Shareholders No. of Shares Filofax Limited 2 Filofax Pension Trustee Ltd Registered Number: 3751485 Registered Office: c/o Filofax Group Ltd Waverley House 7-12 Noel Street London, WlF 8NE Date and place of incorporation: 13/04/1999 - England and Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 571 1137 02827 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)1 divided into 1 Ordinary Shares of 1 each Issued and fully paid-up Share 1 Ordinary Shares of Capital:(pound)l each Shareholders No. of Shares Filofax Limited 1 Baybond Limited Registered Number: 2364396 Registered Office: Filofax Group Ltd Waverley House 7/12 Noel Street London WlF 8NE Date and place of incorporation: 22/03/1989 Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 680 11720 04934 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)10,000 divided into 10,000 Ordinary Shares of (pound)l each Issued and fully paid-up Share Capital: (pound)100 Ordinary Shares of(pound)l each Shareholders No. of Shares Topps of England Ltd 100 NOTE: NON-TRADING COMPANY Elijo Limited Registered Number: 2690189 Registered Office: c/o Filofax Group Ltd Waverley House 7/12 Noel Street London WlF 8NE Date and place of incorporation: 24/02/1992 - England and Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 27080 11577 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Authorised Share Capital: (pound)1,286,650 divided into 12,866,500 Ordinary Shares of 10p each Issued and fully paid-up Share Capital: 12,745,000 Ordinary Shares of 10p each Shareholders No. of Shares Filofax Group Limited 12,744,999 Filofax Group Limited and Robin Field 1 NOTE: NON-TRADING COMPANY Elijo (London) Limited (formerly known as Henry Ling and Son (London) Ltd) Registered Number: 502562 Registered Office: c/o Filofax Group Ltd Waverley House 7/12 Noel Street London WlF 8NE Date and place of incorporation: 20.12.1951 - England and Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 571 37080 12315 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)6,000 divided into 6,000 Ordinary Shares of (pound)1 each Issued and fully paid-up Share Capital: 6,000 Ordinary Shares of(pound)1 each Shareholders No. of Shares Elijo Ltd 6,000 Lefax Publishing Limited Registered Number: 2268439 Registered Office: c/o Filofax Group Ltd Waverley House 7/12 Noel Street London Wl F 8NE Date and place of incorporation: 16/06/1988 - England and Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 23470 22402 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)701,947.00 divided into 701,947 Ordinary Shares of(pound)1 each Issued and fully paid-up Share Capital: 701,947 Ordinary Shares of(pound) 1 each Shareholders No. of Shares Filofax Ltd 701,947 NOTE: NON-TRADING COMPANY Yard-O-Led Pencil Company Limited Registered Number: 284373 Registered Office: c/o Filofax Group Ltd Waverley House 7/12 Noel Street London Wl F 8NE Date and place of incorporation: 3/2/1934 - England & Wales Directors: Michael Ball, Christopher Brace and Timothy Tufnell Secretary: Michael Ball VAT Number: 59705 2219 Tax District and Reference Number: 23430 14702 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)100 divided into 100 Ordinary Shares of (pound)l each Issued and fully paid-up Share Capital: 100 Ordinary Shares of(pound) l each Shareholders No. of Shares Filofax Group Ltd 49 Tufnell Investments Ltd 51 100 NOTE: NON-TRADING COMPANY Topps of England Limited Registered Number: 596813 Registered Office: c/o Filofax Group Ltd Waverley House 7/12 Noel Street London WlF 8NE Date and place of incorporation: 9/l/1958 - England & Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: 680 41720 53430 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Linklaters & Alliance Authorised Share Capital: (pound)500,000 divided into 341,000 Ordinary Shares of (pound)1 each and 159,000 Deferred Shares of(pound)1 each Issued and fully paid-up Share Capital: 91,000 Ordinary Shares of (pound)l each and 159,000 Deferred Shares of (pound)1 each Shareholders No. of Shares Filofax Group Ltd 91,000 Ordinary Shares [SEARCH STATES THIS AS 159,000 Deferred Shares FILOFAX GROUP PLC] _____________________ 250,000 NOTE: NON-TRADING COMPANY Filofax Hong Kong Ltd Incorporation Number: 427034 29th floor Win On Centre Registered Office: 11 Connaught Road Central Hong Kong Date and place of incorporation: 10/06/1993 - Hong Kong Daniel K.K. Kwan, Rackson Principals: Company Limited and Christopher Brace Secretary: McCable Secretarial Services Limited VAT Number: N/A Tax District and Reference Number: N/A Accounting Reference Date: N/A Auditors: BDO McCabe Lo & Company Solicitors: N/A Authorised Share Capital: HK$10,000 divided into 10,000 Ordinary Shares of HK$1.00 each Issued and fully paid-up Share Capital: 2 Ordinary Shares of HK$1.00 each Shareholders No. of Shares Filofax Group Ltd 1 Filofax Limited 1 FilofaxAB Registered Number: 556471-1199 Registered Office: Box 1605, 5-70116, Orebro Date and place of incorporation: 29/07/1993 - Sweden Directors: Bjorn-Ingvar Olsson, Christopher Brace, Dennis Rundberg and Michael Ball (elected, but not registered by authority). Deputy Director - Kenneth Pettersson Secretary: None SE556471119901 (Sweden) VAT Number: FI10632183 (Finland) DK20801832 556 471-1199 (Sweden) Tax District and Reference Number: 688,043 (Finland) 244.914 (Denmark) Accounting Reference Date: 30 June Auditor: BDO Feinstein revision AB - Mats Bondeson Solicitors: Use different solicitors for different issues when necessary. Authorised Share Capital: SEK 100,000 dividend into 5,000 shares of 20 SEK each Issued and fully paid-up Share Capital: 5,000 shares of 20 SEK each Non-distributable Reserves SEK 22,450,000 Legal reserve Shareholders Beneficial Owners No. of Shares Filofax Group Ltd 5,000 Filofax A/S Registered Number: 213.926 Registered Office: Baldersbakvej 31, DK-2635 Ishoj Date and place of incorporation: 2/6/1993 - Copenhagen Directors: Bjorn-Ingvar Ollson, Christopher Brace and Torben Burkal Secretary: None VAT Number: 17095285 Tax District and Reference Number: 213.926 Accounting Reference Date: 31 March Auditors: BDO Binder Solicitors: Advokatfirmaet Kromann & Munter Authorised Share Capital: 500,000 TDKK divided into 5,000 A Shares of 100 DKK each Issued and fully paid-up Share Capital: 5,000 A Shares of DKK 100 each Shareholders No. of Shares Filofax Ltd 5,000 NOTE: NON-TRADING COMPANY Filofax GmbH Registered Number: HRB53342 Registered Office: Am Kronberger Hang 65824 Schwalbach Germany Date and place of incorporation: 29/07/1993 - Hamburg Directors: Volker Jungeblut and Christopher Brace Secretary: o VAT Number: DE 811 228 190 Tax District and Reference Number: 040 233 35 148 Accounting Reference Date: 30 June Auditors: Fritsen Consult Authorised Share Capital: DM400.000 Issued and fully paid-up Share Capital: DM400.000 Shareholders No. of Shares Filofax Ltd 400,000 Filofax Italia S.rl. Registered Number: 77458/1988 via del Rondinino 4/B Registered Office: 50132 Firenze (FI) Italy Date and place of incorporation: 01.12.98 - registered at Chamber of Commerce of FI no.501208 Directors: Christopher Brace, Jerome Canlorbe, Michael Ball Secretary: None VAT Number: IT 04928560483 Fiscal Code: 016069 Accounting Reference Date: 30 June Auditors/Solicitors: Dr Canessa, Via Fra Domenico, Buonvieini 5 50132 Firenze Authorised Share Capital: 20,000,000 Italian Lire Issued and fully paid-up Share Capital: 20,000,000 Italian Lire Shareholders No. of Shares Filofax Ltd 19,999,000 Jerome Canlorbe 1,000 20,000,000 Filofax France Sarl Registered Number: RCS: Paris B 388 517 195 89, Rue de Sevres Registered Office: 75006 Paris, France Date and place of incorporation: 15/09/1992 - Paris Gerant: Christopher Brace Secretary: None VAT Number: FR 82388517195 Tax District and Reference Number: FRP 75802001 3051 7500055 Accounting Reference Date: 30 June Patrick Aumerais Commissaire aux comptes: 7, rue Le Goff 75005 Paris Authorised Share Capital: FRF 50,000 divided into 500 Ordinary Shares of FRF 100 each Issued and fully Share paid-up Capital: 500 Ordinary Shares of FRF 100 each Loan Capital: None Shareholders No. of Shares Filofax France Ltd 500 Sturges Bladdon and Middleton Limited Registered Number: 752439 c/o Filofax Group Ltd Registered Office: Waverley House 7/12 Noel Street London W1F 8NE Date and place of incorporation: 06/03/1963 - England and Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 23430 12902 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Authorised Share Capital: (pound)100 divided into 100 Ordinary Shares of(pound)1 each Issued and fully paid-up Share Capital: 2 Ordinary Shares of(pound)1 each Shareholders No. of Shares Yard-O-Led Pencil Company Ltd 2 NOTE: NON-TRADING COMPANY Edward Baker & Son Limited Registered Number: 209240 Registered Office: 4th Floor, Waverley House, 7-12 Noel Street, London, W1F 8NE Date and place of incorporation: 26 October 1925 in England and Wales Directors: Michael David Ball and Christopher Simon Brace Secretary: Michael David Ball Accounting Reference Date: 30 June Auditors: None Solicitors: Linklaters & Alliance Authorised Share Capital: 4,2000 5 1/4% Cumulative Preference Shares of(pound)1 each 2,800 Ordinary Shares of (pound) 1 each Issued and fully paid-up Share Capital: 4,2000 5 1/4% Cumulative Preference Shares of(pound)1 each 1,601 Ordinary Shares of (pound)1 each Shareholders Beneficial Owners No. of Shares Filofax Group Limited 1 Ordinary Yard-o-led Pencil Co Limited 1,600 Ordinary 4,200 Preference NOTE: DORMANT COMPANY Tufnell Investments Limited Registered Number: 639693 c/o Filofax Group Ltd Registered Office: Waverley House 7/12 Noel Street London W1F 8NE Date and place of incorporation: 15/10/1959 - England and Wales Directors: Michael Ball and Christopher Brace Secretary: Michael Ball VAT Number: Not registered Tax District and Reference Number: 83430 13480 Accounting Reference Date: 30 June Auditors: Deloitte & Touche Solicitors: Authorised Share Capital: (pound)100 dividend into 100 Ordinary Shares of(pound)1 each Issued and fully paid-up Share Capital: 100 Ordinary Shares of(pound)1 each Shareholders No. of Shares Filofax Group Ltd 100 NOTE: NON-TRADING COMPANY Topps Far East Limited Registered Number: 487254 Registered Office: 19th floor Office C United Centre 95 Queensway Hong Kong Date and place of incorporation: 02/08/1994 - Hong Kong Principals: Michael Lionel Phillips, David John Edward Brown, Wing Cheong Bruce Lo, Lai Kuen Connie Lui, Wai Leung Yip Secretary: Consolidated Secretaries Ltd, 16-18 Kau U Fong, M/F, Central, Hong Kong VAT Number: Tax District and Reference Number: Accounting Reference Date: Auditors: M B Lee & Co United Centre 19th floor, Office C 95 Queensway, Hong Kong Solicitors: Authorised Share Capital: HK$10,000 divided into 10,000 Ordinary Shares of HK$1.00 each Issued and fully paid-up Share Capital: 10,000 Ordinary Shares of HK$1.00 each Shareholders No. of Shares Topps of England Ltd 9,999 Incorporated Nominees Ltd 1 ------------- 10,000 NOTE: NON-TRADING COMPANY Topps Hong Kong Ltd Incorporation Number: 71150 Registered Office: 19th floor Office C United Centre 95 Queensway Hong Kong Date and place of incorporation: 06/07/1979 - Hong Kong Principals: Wai Leung Yip, Michael Lionel Phillips, David John Brown Secretary: Consolidated Secretaries Ltd, 16-18 Kau U Fong, M/F, Central, Hong Kong VAT Number: Tax District and Reference Number: Accounting Reference Date: Auditors: M B Lee & Co United Centre 19th floor, Office C 95 Queensway, Hong Kong Solicitors: Authorised Share Capital: HK$10,000 divided into 10,000 Ordinary Shares of HK$1.00 each Issued and fully paid-up Share Capital: 10,000 Ordinary Shares of HK$1.00 each Shareholders No. of Shares Topps of England Ltd 9,998 Incorporated Nominees Ltd 2 ------------------- 10,000 NOTE: NON-TRADING COMPANY Schedule 2 Completion Obligations 1. Vendors' Obligations 1.1......General On Completion the Vendors shall, in accordance with Clause 4, deliver or make available to the Purchaser: 1.1.1 3 transfers relating to the Shares duly executed by each of the Vendors in favour of the Purchaser or as it may direct; 1.1.2 the written resignations of John Ausura, David Werner and Catherine Ratcliffe from office as a director or secretary from the Company and Filofax Group Limited to take effect on the date of Completion with acknowledgements signed by each of them in a form satisfactory to the Purchaser and executed as a deed to the effect that he or she has no claim against any Group Company or any other member of the Group for compensation for loss of office (whether contractual, statutory or otherwise), unfair dismissal, redundancy or otherwise except only for any accrued remuneration and reimbursable business expenses incurred down to the date of Completion; 1.1.3 certified copies of each of the Third Further Amending Agreements entered into between Filofax Group Limited and each of Michael Ball and Christopher Brace in relation to their respective service contracts together with certified copies of the minutes authorising such agreements; 1.1.4 an officers certificate from Filofax Group Limited, attaching a schedule of inter-company transfers from the Group plus Filofax, Inc (and its subsidiaries) to the Vendors' Group for the period of 30 days prior to Completion, stating that he or she believes such schedule to accurately reflect the inter-company transfer position between the Vendors' Group and the Group plus Filofax, Inc (and its subsidiaries) for such period; 1.1.5 certified copies of the board (and any necessary shareholder) resolutions of each of the Vendors approving the terms of this Agreement; 1.1.6 (if the Purchaser so requires) the written resignations of the auditors of each Group Company to take effect as of the date of Completion, with acknowledgements signed by each of them in a form satisfactory to the Purchaser to the effect that they have no claim against any Group Company and containing the statement referred to in Section 394 of the Companies Act 1985 to the effect that there are no circumstances connected with their resignation which they consider should be brought to the notice of the members or creditors of any Group Company; 1.1.7 (for the Purchaser itself and as agent for the Company) the certificates of incorporation, corporate seals (if any), cheque books, statutory and other books of each Group Company (duly written up-to-date), and the share certificates in respect of each of the Subsidiaries that are not charged or pledged pursuant to the Loan Documentation; 1.1.8 all the financial and accounts of each Group Company and (for the Purchaser itself and as agent for the Company) all title deeds and other documentation relating to the Properties; 1.1.9 the latest available bank statements of all bank accounts of all Group Companies; 1.1.10 copies of any third party consents required under the trading contracts of the Company or its Subsidiaries; and 1.1.11 letters of consent signed on behalf of the parties to the Loan Documentation releasing any charge or pledge over the Shares to theextent required to complete this Agreement. and to the extent that the Vendors are unable to deliver or make available the afore mentioned on Completion, they shall do so within a period of two weeks following Completion. 1.2 Board Resolutions of the Group Companies On Completion, the Vendors shall procure the passing of Board Resolutions of each Group Company inter alia: 1.2.1 (if so required by the Purchaser) revoking all existing authorities to bankers in respect of the operation of its bank accounts and giving authority in favour of such persons as the Purchaser may nominate to operate such accounts; 1.2.2 accepting the resignations referred to in paragraph 1.1.2 of this Schedule, appointing such persons (within the maximum number permitted by the Articles of Association) as the Purchaser may nominate as directors and secretary, and in relation to: (a) the Company, subject to Completion, re-registering as a limited company and adopting new Articles of Association (having procured the necessary shareholder approval); and (b) Filofax Group Limited, subject to Completion, adopting new Articles of Association (having procured the necessary shareholder approval); 1.2.3 in the case of the Company only, approving the registration of the share transfers referred to in paragraph 1.1.1 of this Schedule subject only to their being duly stamped; and 1.2.4 accepting the resignations referred to in paragraph 1.1.6 of this Schedule and appointing auditors of each Group Company as the Purchaser may direct; and shall hand to the Purchaser duly certified copies of such Resolutions and to the extent that the Vendors are unable to procure the passing of such Resolutions on Completion, other than in relation to paragraph 1.1.1, 1.1.2, 1.1.3, 1.1.4, 1.1.5, 1.2.2 and 1.2.3, they shall do so within a period of two weeks following Completion. 2. Purchaser's Obligations On Completion the Purchaser shall satisfy its obligations under Clause 4.3 and deliver copies of the following document, duly signed by all of the parties other than Filofax, Inc and those parties which are within the Vendors' Group or the Group: (a) the Debt Affirmation and Release Agreement to be entered into by some or all of the parties to the Loan Documentation; and (b) the Satisfaction Agreement to be entered into by some or all of the parties to the Loan Documentation. Schedule 3 Part 1 Warranties given by the Vendors under Clause 5 1 Authority and Capacity of the Vendor 1.1 Incorporation The Vendors and the Group Companies are companies duly incorporated and validly existing under their respective laws of incorporation. 1.2 Authority to enter into this Agreement etc. The Vendors have the legal right and full power and authority to enter into and perform this Agreement and any other documents to be executed by the Vendors pursuant to or in connection with this Agreement which when executed will constitute valid and binding obligations on the Vendors, in accordance with their respective terms. 1.3 No Breach The execution and delivery of, and the performance by the Vendors of their obligations under, this Agreement will not, so far as the Vendors are aware,: 1.3.1 result in a breach of any provision of the memorandum or articles of association of the Vendors or Group Company; or 1.3.2 result in a breach of or give any third party a right to terminate or modify, or result in the creation of any Encumbrance under, any agreement, licence or other instrument other than the Loan Documentation or result in a breach of any order, judgement or decree of any Court, governmental agency or regulatory body to which the Vendor or Group Companies is a party or by which the Vendor or any of its assets or Group Companies is bound. 1.4 The Shares The Vendors are entitled to sell and transfer to the Purchaser the full legal and beneficial ownership of the Shares on the terms of this Agreement without the consent of any third party. The Shares comprise the whole of the allotted and issued share capital of the Company, have been properly and validly allotted and issued and are each fully paid. 1.5 Pre-emption etc. No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the allotment, conversion, issue, sale or transfer of any share or loan capital in any Group Company under any option or other agreement (including conversion rights and rights of pre-emption) and there are no Encumbrances on the shares of any Group Company. 1.6 The Inter-Company Debt The Vendors are entitled to assign and transfer to the Purchaser the full legal and beneficial title to the Inter-Company Debt. The Inter-Company Debt is free of any Encumbrance. 2 Accuracy and Adequacy of Information Disclosed to the Purchaser All information contained in Schedules 1 and 5 of this Agreement is when taken as a whole and to the best of the knowledge, information and belief of the Vendors true and accurate in all material respects at the date hereof. 3 Accounts and Records 3.1 Accounts To the best of the knowledge, information and belief of the Vendors, the Audited Accounts have been prepared in accordance with the accounting policies and principles set out therein and properly present the net assets of the Group as at the Balance Sheet Date. 3.2 Accounting and other Records The statutory books and accounting records of each Group Company are to the Vendors' knowledge up-to-date and maintained in accordance with all applicable legal requirements on a proper basis and to the Vendors' knowledge contain complete and accurate records of all matters required by law to be dealt with in such books. 3.3 Changes since the Balance Sheet Date Since the Balance Sheet Date, so far as the Vendors are aware and save as expressly provided for in this Agreement: 3.3.1 there has been no material adverse change in the financial position or turnover of the Group as a whole, other than are resulting from changes in general economic conditions or from factors affecting companies carrying on similar businesses to a similar extent; 3.3.2 the business of the Group as a whole has been carried on in the ordinary course, without any interruption or alteration in its nature, scope or manner, and so as to maintain the same as a going concern; 3.3.3 no dividend or other distribution has been declared, made or paid by the Company to its members; 3.3.4 no share or loan capital has been allotted or issued by a Group Company; and 3.3.5 no Group Company has redeemed or purchased or agreed to redeem or purchase any of its share capital. 3.4 Taxation 3.4.1 Full provision or reserve has been made in the Audited Accounts for all taxation liable to be assessed on each Group Company or for which each is or may become accountable in respect of: (i) profits, gains or income (as computed for taxation purposes) arising or accruing or deemed to arise or accrue on or before the Balance Sheet Date; (ii) any transactions effected or deemed to be effected on or before the Balance Sheet Date or provided for in the Audited Accounts; (iii) distributions made or deemed to be made on or before the Balance Sheet Date or provided for in the Audited Accounts. 3.4.2 Proper provision or reserve for deferred taxation in accordance with accounting principles and standards generally accepted at the date of this Agreement in the United Kingdom has been made in the Audited Accounts. 3.4.3 Except as disclosed by the Audited Accounts and save in so far as full provision is made in them in a deferred taxation account for taxation in respect of any balancing charges which would arise or accrue in respect of any such machinery and plant on disposal thereof at the value at which the machinery and plant is included in the Audited Accounts, the machinery and plant is not included in the Audited Accounts at such value that if it were obtained on the disposal or deemed disposal of the machinery and plant as a whole a balancing charge would arise or accrue. 3.5 Debts None of the debts receivable or due to any Group Company which are included in the Audited Accounts or which have subsequently arisen has been outstanding for more than three months from its due date for payment or has been released on terms that the debtor has paid less than the full value of his debt and all such debts have realised or will realise in the normal course of collection their full value as included in the Audited Accounts or in the books of the relevant Group Company after taking into account the provision for bad and doubtful debts made in the Audited Accounts. For the avoidance of doubt, a debt shall not be regarded as realising its full value to the extent that it is paid, received or otherwise recovered in circumstances in which such payment, receipt or recovery is or may be void, voidable or otherwise liable to be reclaimed or set aside. 3.6 Borrowings 3.6.1 The amounts borrowed by each Group Company do not exceed any limitation on its borrowings contained in its Articles of Association (or other constitutional documents) or in any debenture or other deed or document binding upon it. 3.6.2 No Group Company has outstanding any loan capital, nor has it factored any of its debts, nor engaged in any financing of a type which would not be required to be shown or reflected in the Audited Accounts or borrowed any money which it has not repaid, save for borrowings disclosed in the Data Room. 4 Legal Matters 4.1 Compliance with Laws To the best of the knowledge, information and belief of the Vendors, each of the Group Companies has carried on and is carrying on its business and operations in all material respects so that there have been no breaches of applicable laws, regulations and bye-laws in each country in which it is carried on and there have not been and are not any breaches by any Group Company of its constitutional documents and there has not been any, and there is no, investigation or enquiry by, or order, decree, decision or judgement of, any court, tribunal, arbitrator, governmental agency or regulatory body outstanding or anticipated against any Group Company or any person for whose acts or defaults it may be vicariously liable which has had or may have a material adverse effect upon its assets or business, nor is there any notice or other communication (official or otherwise) from any court, tribunal, arbitrator, governmental agency or regulatory body with respect to an alleged actual or potential violation and/or failure to comply with any such applicable law, regulation, bye-law or constitutional document, or requiring it to take or omit any action which has had or may have a material adverse effect upon its assets or business. 4.2 Licences and Consents To the best of the knowledge, information and belief of the Vendors, all licences, consents, authorisations, orders, warrants, confirmations, permissions, certificates, approvals and authorities ("Licences") necessary or desirable for the carrying on of the businesses and operations of each of the Group Companies as now carried on, have been obtained, are in full force and effect and have been and are being complied with. To the best of the knowledge, information and belief of the Vendors, there is no investigation, enquiry or proceeding outstanding or anticipated which is likely to result in the suspension, cancellation, modification or revocation of any of such Licences. None of such Licences has been breached or is likely to be suspended, cancelled, refused, modified or revoked (whether as a result of the entry into or completion of this Agreement or otherwise). 4.3 Litigation 4.3.1 Since the Balance Sheet Date, no claim for damages or otherwise has been made against any Group Company. 4.3.2 No Group Company (or any person for whose acts or defaults a Group Company may be vicariously liable) is involved whether as plaintiff or defendant or other party in any claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration (other than as plaintiff in the collection of debts arising in the ordinary course of its business) and no such claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration of material importance is pending or threatened by or against any Group Company (or any person for whose acts or defaults a Group Company may be vicariously liable). 4.3.3 There are no investigations, disciplinary proceedings or other circumstances known to the Vendors likely to lead to any such claim or legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration. 4.4 Insolvency etc. 4.4.1 No order has been made, petition presented, resolution passed or meeting convened for the winding up (or other process whereby the business is terminated and the assets of the company concerned are distributed amongst the creditors and/or shareholders or other contributories) of any Group Company and there are no cases or proceedings under any applicable insolvency, reorganisation, or similar laws in any jurisdiction concerning any Group Company and no events have occurred which, under applicable laws, would justify any such cases or proceedings. 4.4.2 No petition has been presented or other proceedings have been commenced for an administration order to be made (or any other order to be made by which during the period it is in force, the affairs, business and assets of the company concerned are managed by a person appointed for the purpose by a court, governmental agency or similar body) in relation to any Group Company, nor has any such order been made. 4.4.3 No receiver (including an administrative receiver), liquidator, trustee, administrator, custodian or similar official has been appointed in any jurisdiction in respect of the whole or any part of the business or assets of any Group Company and no step has been taken for or with a view to the appointment of such a person. 5. Trading and Contractual Arrangements 5.1 Effect of Sale of the Shares To the best of the knowledge, information and belief of the Vendors neither entering into, nor compliance with, nor completion of this Agreement will, or is likely to, cause any Group Company to lose the benefit of any right or privilege it presently enjoys or any person who normally does business with or gives credit to any Group Company not to continue to do so on the same basis, or any officer or senior employee of any Group Company to leave his employment, and to the best of the knowledge, information and belief of the Vendors the attitude or action of customers, suppliers, employees and other persons with regard to any Group Company will not be prejudicially affected thereby. 5.2 Contracts 5.2.1 No Group Company is, or has been, party to any contract, commitment or arrangement which: (i) is outside the ordinary course of business; (ii) is not wholly on an arm's length basis; or (iii) is of a long-term nature (that is, unlikely to have been fully performed in accordance with its terms more than six months after the date it was entered into or undertaken or incapable of termination by the Vendors on six months' notice or less). 5.3 Compliance with Agreements All the contracts and all leases, tenancies, licences, concessions and agreements of whatsoever nature to which any of the Group Companies is a party are valid, binding and enforceable obligations of such Group Companies and the terms thereof have been complied with by the relevant Group Company and to the best of the knowledge, information and belief of the Vendors by all the other parties thereto and there are to the best of the knowledge, information and belief of the Vendors no grounds for rescission, avoidance or repudiation of any of the contracts or such leases, tenancies, licences, concessions or agreements and no notice of termination or of intention to terminate has been received in respect of any thereof. 5.4 Anti-Trust No Group Company is a party to any agreement, arrangement or concerted practice or is carrying on any practice which in whole or in part contravenes or is invalidated by any antitrust, fair trading, consumer protection or similar legislation in any jurisdiction where the Group Company has assets or carries on business or in respect of which any filing, registration or notification is required or is advisable pursuant to such legislation (whether or not the same has in fact been made). 5.5 Guarantees etc. Save as disclosed in the Audited Accounts, there is not outstanding any guarantee, indemnity, surety ship or comfort (whether or not legally binding) given by or for the benefit of any Group Company. 6 Employees etc. 6.1 Employees and Terms of Employment 6.1.1 There is not in existence any written contract of employment with any director or employee of any Group Company, nor any consultancy agreements with any Group Company, which cannot be terminated by 12 months' notice or less without giving rise to any claim for damages or compensation (other than a statutory redundancy payment or statutory compensation for unfair dismissal). 6.1.2 Other than in relation to Messrs. Christopher Brace and Michael Ball, there are no terms of employment for employees at any Group Company or consultancy agreements with any Group Company or terms of appointment for directors of any Group Company which provide that a change in control of any Group Company (however change in control may be defined in the said document, if at all) shall entitle the said employee, consultant or director to treat the change in control as amounting to a breach of the contract or entitling him to any payment or benefit whatsoever or entitling him to treat himself as redundant or dismissed or released from any obligation. 6.2 Trade Disputes No Group Company is involved in, and there are no circumstances likely to give rise to, any industrial or trade dispute or any dispute or negotiation regarding a claim of material importance with any trade unions, works council, staff association or other similar Organisation or other body representing any of the employees. 7 Taxation Matters References to any Taxation or other appropriate fiscal authority shall include any local, municipal, governmental, state, federal or other body or authority wherever in the world (and shall, for the avoidance of doubt, but without prejudice to the generality of the foregoing, include references to customs and/or excise authorities). 7.1 Returns, Information and Clearances 7.1.1 All registrations, returns, computations and notices which are or have been required to be made or given by each Group Company for any Taxation purpose in respect of the Group's business (i) have been made or given within the requisite periods and on a proper basis and are up-to-date and correct and (ii) none of them is, or is likely to be, the subject of any dispute with any Taxation authority. 7.1.2 Each Group Company is in possession of sufficient information or has reasonable access to such information to enable it to compute its liability to Taxation in so far as it depends on any Transaction occurring on or before Completion. 7.2 Taxation Claims, Liabilities and Reliefs 7.2.1 There are set out in the Data Room, details of any Taxation that may be outstanding in respect of any of the Group Companies. 7.2.2 There are set out in the Data Room, details of all matters relating to Taxation in respect of which each Group Company (either alone or jointly with any other person) has, or at Completion in relation to the relevant Group Company will have, an outstanding entitlement: (i) to make any claim including a supplementary claim for relief from Taxation under any statutory provision relating to Taxation; (ii) to make any election for one type of relief, or one basis, system or method of Taxation, as opposed to another; (iii) to make any appeal (including a further appeal) or objection against an assessment to Taxation; (iv) to make any application for the postponement of, or payment by installments of, Taxation; or (v) to disclaim any allowance or relief; such details being sufficient to enable the Purchaser to procure that any time limit to such entitlement expiring within six months after Completion in relation to the relevant Group Company can be met. 7.2.3 No relief (whether by way of deduction, reduction, set-off, exemption, repayment, allowance or otherwise) from, against or in respect of any Taxation has been claimed and/or given to any Group Company which could or might be effectively withdrawn, postponed, restricted or otherwise lost as a result of any act, omission, event or circumstance arising or occurring at or at any time after Completion in relation to the relevant Group Company. 7.3.Trading Company Status Each Group Company at the date of this Agreement carries on a business activity which is a trade for the purposes of Taxation and has not ceased and will not as a result of any contract, agreement or arrangement entered into before Completion in relation to the relevant Group Company cease to carry on such activity. 7.4 Company Residence There are set out in Schedule 1 full particulars of the residence for Taxation purposes of each Group Company. 7.5 Acquisitions from Members of the same Group The entry into or completion of this Agreement will not result in any profit or gain being deemed to accrue to any Group Company for Taxation purposes. 7.6 Base Values and Costs of Acquisition 7.6.1 If each of the assets (other than trading stock) of each Group Company was disposed of for a consideration equal to the book value of that asset in, or adopted for the purpose of, the Audited Accounts, no Taxation liability not fully provided for in the Audited Accounts would arise; and, for the purpose of determining such Taxation liability, there shall be disregarded any Taxation Benefit available to the Group Company concerned. 7.6.2 No Group Company has since the Balance Sheet Date acquired any asset (other than trading stock) from another Group Company. 7.7 Deductions from Payments Each Group Company has complied with all statutory provisions relating to Taxation which require the deduction of Taxation from any payment made by it, and has properly accounted for any such Taxation which ought to have been accounted for. 7.8 Depreciatory Transactions No asset owned by any Group Company has at any time since its acquisition by that or any other Group Company been subjected to a reduction in value such that any allowable loss arising on its disposal is likely to be reduced or eliminated or any chargeable gain arising on its disposal is likely to be increased. 7.9 Tax Equalisation Payments 7.9.1 No Group Company is liable to make a payment for the utilisation, surrender or other transfer of any Taxation Benefit, nor is any such payment received by any Group Company liable to be refunded; and 7.9.2 No Group Company is under any obligation to surrender or otherwise transfer any Taxation Benefit. 7.10 VAT/Sales Tax All proper records have been kept and all proper returns have been made as required by laws for the purpose of VAT or other applicable sales taxes in connection with the Group's business up to and including today's date. 7.11 Disputes The Vendors are not involved in any dispute with any Taxation or other appropriate fiscal authority concerning any matter likely to affect the Shares in any way. 8 Assets (other than the Properties and Intellectual Property) 8.1 Ownership of the Group Companies The Company, and/or (where specified) a Group Company, is the beneficial owner of all the issued or allotted shares of the Subsidiaries listed in Schedule 1 free from all Encumbrances and all such shares are fully paid or credited as fully paid. 8.2 Subsidiaries, Associates and Branches No Group Company: No Group Company: 8.2.1 is the holder or beneficial owner of, or has agreed to acquire, any share or loan capital of any other company (whether incorporated in the United Kingdom or elsewhere) other than the Subsidiaries set out in Schedule 1; 8.2.2 has any branch, division, establishment or operations outside the jurisdiction in which it is incorporated (other than to the extent disclosed in the Data Room in relation to Denmark & Sweden); or 8.2.3 has or has had any associate (that is to say, an entity which falls to be treated as such for the purposes of FRS 9). 8.3 Title to Assets All assets (other than the Properties and Intellectual Property) of each Group Company, including all debts due to each Group Company which are included in the Audited Accounts or at the Balance Sheet Date used or held for the purposes of its business, were at the Balance Sheet Date the absolute property of such Group Company and (save for those subsequently disposed of or realised in the ordinary course of trading) all such assets and all assets and debts which have subsequently been acquired or arisen are the absolute property of such Group Company and none is the subject of any assignment or Encumbrance (excepting only liens arising by operation of law in the normal course of trading) or the subject of any factoring arrangement, hire purchase, conditional sale or credit sale agreement excepting any retention of title clauses in contracts. 9 Intellectual Property 9.1 Ownership 9.1.1 To the best of the knowledge, information and belief of the Vendors, all material rights and interests held by the Group (whether as owner license or otherwise) inIntellectual Property (whether registered or not) and all pending applications therefore are (or where appropriate in the case of pending applications, will upon registration be) legally owned by, licensed to or used under the authority of the owner by the Group. 9.1.2 To the best of the knowledge, information and belief of the Vendor, all rights and interests held by the Group (whether as owner license or otherwise) in Intellectual Property which is owned by the Group (whether registered or not) and all pending applications therefore are (or where appropriate in the case of pending applications, will upon registration be): (i) not being infringed or attacked or opposed by any person; (ii) not licensed to a third party; and (iii) in force, and no claims have been made and no applications are pending, which if pursued or granted might be material to the truth and accuracy of any of the above. 10 Leasehold Property 10.1 The Properties comprise all of the premises and land owned, occupied or otherwise used in connection with the businesses of the Group Companies or in which the Group Companies have an interest. 10.2 No Group Company has any continuing liability in respect of any leasehold property other than the Properties. Part 2 Warranties given by the Purchaser under Clause 5 Authority and Capacity of the Purchaser 1.1 Incorporation The Purchaser is a company duly incorporated and validly existing under the laws of England and Wales. 1.2 Authority to enter into this Agreement The Purchaser has the legal right and full power and authority to enter into and perform this Agreement and any other documents to be executed by the Vendors pursuant to or in connection with this Agreement which when executed will constitute valid and binding obligations on the Vendors, in accordance with their respective terms. 1.3 No Breach The execution and delivery of, and the performance by the Purchaser of its obligations under this Agreement will not so far as the Purchaser is aware: 1.3.1 result in a breach of any provision of the memorandum or articles of association of the Purchaser; or 1.3.2 result in breach of any agreement, licence or other instrument, order, judgement or decree of any Court, governmental agency or regulatory body to which the Purchaser is a partly or by which the Purchaser is bound. 1.4 Corporate action All corporate action required by the Purchaser validly and duly to authorise the execution and delivery of, and to exercise its rights and perform its obligations under, this Agreement or any other agreement entered into pursuant to this Agreement has been duly taken. Schedule 4 Limitation of Liability under Clause 5 1 Limitation of Liability Notwithstanding the provisions of Clause 5.1.1 and with the exception of any claim under paragraph 1 of Schedule 3, Part 1, the Vendors shall not be liable under the Warranties : 1.1 Time Limits in respect of any claim unless notice of such claim is setting out details of the specific matter in respect of which the claim is made including an estimate of the amount of such claim, if practicable, within 18 months following Completion and any such claim shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be withdrawn six months after the relevant time limit set out above unless legal proceedings in respect of it have been commenced by being both issued and served and are being pursued with reasonable diligence; 1.2 Minimum Claims in respect of any claim arising from any single circumstance if the amount of the claim does not exceed 0.1 per cent. of the Consideration (save that claims relating to a series of connected matters shall be aggregated for this purpose) but the Vendors shall not be liable for a claim in excess of that amount unless the liability determined in respect of any such claim (excluding interest, costs and expenses) also exceeds that amount; 1.3 Aggregate Minimum Claims in respect of any claim unless the aggregate amount of all claims for which the Vendors would otherwise be liable under this Agreement exceeds 1 per cent. of the Consideration but the liability of the Vendors shall be limited to the amount of the excess there over; 1.4 Maximum Claims in respect of any claim to the extent that the aggregate amount of the liability of the Vendors for all claims made under this Agreement would exceed 50 per cent. of the Consideration; 1.5 Contingent Liabilities in respect of any liability which is contingent only unless and until such contingent liability becomes an actual liability and is due and payable; 1.6 Provisions in the Accounts in respect of any claim if and to the extent that: 1.6.1 proper provision or reserve is made for the matter giving rise to the claim in the Audited Accounts (and not subsequently released); or 1.6.2 any sum is received by any Group Company which has previously been written off as irrecoverable in the accounts of the Group Company; 1.7 Voluntary Acts, etc. in respect of any matter, act, omission or circumstance (or any combination thereof), to the extent that the same would not have occurred but for: 1.7.1 Voluntary Acts of Purchaser: any voluntary act of the Purchaser or any member of the Purchaser's Group or any of the Group Companies, or their respective directors, employees or agents or successors in title, after Completion; 1.7.2 Changes in Legislation: the passing of, or any change in, after the date of this Agreement, any law, rule, regulation or administrative practice of any government, governmental department, agency or regulatory body including (without prejudice to the generality of the foregoing) any increase in the rates of taxation or any imposition of taxation or any withdrawal of relief from taxation not actually (or prospectively) in effect at the date of this Agreement; 1.7.3 Accounting and taxation Changes: any voluntary change in accounting or taxation policy, bases or practice of the Purchaser or any of the Group Companies introduced or having effect after Completion (and other than changes to comply with UK GAAP, FRS's or to remedy any previous errors); 1.8 Insurance in respect of any claim to the extent that any Losses arising from such claim are (after taking account of taxation on the insurance proceeds but giving credit in calculating such taxation for any tax relief available in respect of Losses) actually covered under a policy of insurance or would have been if a claim had been submitted under such policy; 1.9 Net Benefit in respect of any claim for any Losses suffered by the Purchaser or any of the Group Companies to the extent of any corresponding savings by or net benefit to the Purchaser or any other member of the Purchaser's Group or any other Group Company arising directly therefrom; 1.10 Purchaser's Knowledge in respect of any claim to the extent that the relevant facts, matters or circumstances, giving rise to the claim were known by the Purchaser or by any of its directors or legal, financial or banking advisers prior to the execution of this Agreement. The Purchaser represents and warrants to the Vendors that none of such persons is aware of any such facts, matters or circumstances which are not disclosed in the Data Room and the Purchaser will represent and warrant at Completion that, save as disclosed in writing prior to Completion, none of such persons is at Completion aware of any event arising or occurring after the signing of this Agreement which results or may result in any of the Warranties being untrue, misleading or incorrect in any material respect at Completion. 1.11 Vendors' Knowledge In respect of any warranty determined by reference to the "knowledge, information and belief of the Vendors", the relevant knowledge, information and belief shall be that of the board of directors of the Vendors only, having made reasonable enquiries of Christopher Brace and Michael Ball. The Vendors confirm that they have no claim against either Christopher Brace or Michael Ball or any Group Company for any information supplied to it and should such a claim arise, the Vendors hereby waive any right to make any claim (other than in the case of fraud). 2 Mitigation of Loss The Purchaser shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses which in the absence of mitigation might give rise to a liability in respect of any claim under this Agreement. 3 Conduct of Claims 3.1 Notification If the Purchaser or any Group Company becomes aware of any matter that may give rise to a claim against the Vendors under this Agreement notice of that fact shall be given as soon as possible to the Vendors. 3.2 Investigation by the Vendors Without prejudice to the validity of the claim or alleged claim in question, the Purchaser shall allow, and shall procure that the relevant Group Companies allow, the Vendors and its accountants and professional advisers to investigate the matter or circumstance alleged to give rise to such claim and whether and to what extent any amount is payable in respect of such claim and for such purpose the Purchaser shall give, and shall procure that the relevant Group Companies give, subject to their being paid all reasonable costs and expenses, all such information and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Vendors or its accountants or professional advisers may reasonably request. The Vendors agree to keep all such information confidential and only to use it for the purpose of the claim in question. 3.3 Third party claim/liability If the claim in question is a result of or in connection with a claim by or liability to a third party (other the Inland Revenue or overseas equivalent whereupon the Vendors shall have the right to be kept informed of the progress of the matter by the Purchaser and the Purchaser shall have regard to the reasonable directions of the Vendors) then: 3.3.1 no admission of liability shall be made by or on behalf of the Purchaser or any Group Company; 3.3.2 the Vendors shall, subject to it first having indemnified and secured the Purchaser to the Purchaser's reasonable satisfaction, be entitled at its own expense in its absolute discretion to take such action as its shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim or liability (including, without limitation, making counterclaims or other claims against third parties) in the name of and on behalf of the Purchaser or the Group Company concerned and (subject to as aforesaid) to have the conduct of any related proceedings, negotiations or appeals; and/or 3.3.3 the Purchaser will give and procure that the relevant Group Company gives, subject to their being paid all reasonable costs and expenses, including professional costs of monitoring and reporting on the Vendors' obligations, all such information and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, for the purpose of avoiding, disputing, denying, defending, resisting, appealing, compromising or contesting any such claim or liability as the Vendors or its professional advisers reasonably request. The Vendors agree to keep and procure that its advisers keep all such information confidential and only to use it for the purpose of the Claim in question. 4 Prior Receipt If, before the Vendors pays an amount in discharge of any claim under this Agreement, the Purchaser or any Group Company recovers or is entitled to recover (whether by payment, discount, credit, relief or otherwise) from a third party a sum which is referable to the subject matter of the claim, the Purchaser shall procure that before steps are taken against the Vendors under this Agreement all reasonable steps are taken to enforce such recovery and any actual recovery (less any reasonable costs incurred in such recovery and less any taxation attributable to the recovery after taking account of any tax relief available in respect of any matter giving rise to the claim) shall pro tanto reduce or satisfy, as the case may be, such claim. 5 Subsequent Recovery If the Vendor pay an amount in discharge of any claim under this Agreement and the Purchaser or any Group Company subsequently recovers (whether by payment, discount, credit, relief or otherwise) from a third party a sum which is referable to the subject matter of the claim and which would not otherwise have been received by the Purchaser, the Purchaser shall pay, or shall procure that the relevant Group Company pays, to the Vendors an amount equal to (i) the sum recovered from the third party less any reasonable costs and expenses incurred in obtaining such recovery or (ii) if less, the amount previously paid by the Vendors to the Purchaser. 6 Double Claims The Purchaser shall not be entitled to recover from the Vendors under this Agreement more than once in respect of the same damage suffered. 7 Tax In calculating the liability of the Vendors for any breach of this Agreement, there shall be taken into account the amount (if any) by which any taxation for which the Purchaser or any Group Company would otherwise have been accountable or liable to be assessed is actually reduced or extinguished as a result of the matter giving rise to such liability or any repayment of taxation attributable to the matter giving rise to such liability. Schedule 5 Properties (follows this page) Schedule 6 Data Room Index (follows this page) 90017410_12.DOC EX-2 3 ex22.txt - -------------------------------------------------------------------------------- EXHIBIT 2.2 STOCK PURCHASE AGREEMENT - -------------------------------------------------------------------------------- Dated as of April 25, 2001 Between DRBG, LLC the Buyer, and Day Runner, Inc. the Seller.
TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and is not intended to define, limit or describe the scope or intent of any provision of this Agreement.) Page Parties; Recitals ..............................................................................1 ARTICLE ONE TERMS OF THE TRANSACTION...............................................................1 SECTION 1.1. Sale and Purchase.............................................................1 SECTION 1.2. Purchase Price and Adjustment.................................................1 SECTION 1.3. Certain Expenses..............................................................1 SECTION 1.4. The Closing...................................................................2 SECTION 1.5. Further Assurances............................................................2 ARTICLE TWO REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................................2 SECTION 2.1. Power and Capacity............................................................2 SECTION 2.2. The Shares....................................................................2 SECTION 2.3. Conflicting Instruments; Consents.............................................2 SECTION 2.4. Transfer of the Shares........................................................3 SECTION 2.5. Organization and Authority....................................................3 SECTION 2.6. Capitalization................................................................3 SECTION 2.7. Compliance with Law...........................................................4 ARTICLE THREE REPRESENTATIONS AND WARRANTIES OF THE BUYER..........................................4 SECTION 3.1. Power and Capacity............................................................4 SECTION 3.2. Conflicting Instruments; Consents.............................................4 ARTICLE FOUR COVENANTS OF SELLER AND THE COMPANY...................................................4 SECTION 4.1. Access........................................................................4 SECTION 4.2. Transfer of the Shares........................................................4 SECTION 4.3. Conduct of the Business of the Company........................................4 SECTION 4.4. Third Party Consents..........................................................6 SECTION 4.5. Notice of Default.............................................................6 ARTICLE FIVE INDEMNIFICATION.......................................................................7 SECTION 5.1. Indemnification Obligation....................................................7 SECTION 5.2. Claims........................................................................7 SECTION 5.3. Defense by the Indemnifying Party.............................................7 SECTION 5.4. Notice........................................................................8 ARTICLE SIX CONDITIONS TO THE BUYER'S OBLIGATIONS...................................................8 SECTION 6.1. Representations and Warranties................................................8 SECTION 6.2. Legal Matters.................................................................8 SECTION 6.3. Delivery of the Shares........................................................8 SECTION 6.4. Legal Proceedings.............................................................8 SECTION 6.5. Third Party Consents..........................................................9 ARTICLE SEVEN CONDITIONS TO THE SELLER'S OBLIGATIONS...............................................9 SECTION 7.1. Delivery of Satisfaction Agreement............................................9 SECTION 7.2. Representations and Warranties................................................9 ARTICLE EIGHT MISCELLANEOUS........................................................................9 SECTION 8.1. Survival of Representations, Warranties and Covenants.........................9 SECTION 8.2. Expenses......................................................................9 SECTION 8.3. Governing Law.................................................................9 SECTION 8.4. Notices......................................................................10 SECTION 8.5. Jurisdiction; Agent for Service..............................................10 SECTION 8.6. Entire Agreement.............................................................11 SECTION 8.7. Binding Effect...............................................................11 SECTION 8.8. Amendments; Waivers..........................................................11 SECTION 8.9. Counterparts.................................................................11 SECTION 8.10 Severability.................................................................11 SECTION 8.11. Specific Performance.........................................................11
SCHEDULES Schedule 2.3 Subsidiaries EXHIBITS EXHIBIT A Satisfaction Agreement DEFINED TERMS Term Defined in: - ---- ----------- Agreement Opening Paragraph Buyer Opening Paragraph Closing Section 1.4 Closing Date Section 1.4 Common Stock Recitals Company Recitals ERISA Section 3.3 GAAP Section 3.3 Indemnified Parties Section 4.1 Indemnifying Party Section 4.1 Loan Agreement Section 1.2 Purchase Price Section 1.2 Purchase Price Adjustment Section 1.2 Subsidiaries Section 2.3 Seller Opening Paragraph Shares Recitals STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of April 25, 2001 between DRBG, LLC, a Delaware limited liability company (the "Buyer") on the one hand and Day Runner Inc., a Delaware corporation (the "Seller") on the other hand. R E C I T A L S A. The Seller own directly, beneficially and of record, 100% of the issued and outstanding shares of capital stock (the "Shares") of Filofax, Inc., a Connecticut corporation (the "Company"). B. The Shares consist of 2,501 shares of the common stock, no par value per share, of the Company (the "Common Stock"). C. The Buyer desires to acquire the Shares from the Seller, and the Seller desires to sell the Shares to the Buyer, all upon the terms and subject to the conditions set forth in this Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained in this Agreement and for other valuable consideration the Buyer and the Seller agrees as follows: ARTICLE ONE TERMS OF THE TRANSACTION SECTION 1.1. Sale and Purchase. The Seller, on the Closing Date, agrees to sell the Shares to the Buyer by delivering certificates for the Shares to the Buyer in proper form for transfer by delivery or with duly executed stock powers attached thereto. SECTION 1.2. Purchase Price and Adjustment. Subject to reduction pursuant to Section 1.3(b) or increase pursuant to the last paragraph of this Section 1.2, the Buyer shall pay to the Seller on the Closing Date, as purchase price for the Shares, $401.72 per Share, for an aggregate amount of $1,004,702, (the "Purchase Price"). Such payment will be in the form of the release of certain debt owed to Buyer by Seller under that certain Second Amended and Restated Loan Agreement (the "Loan Agreement") dated as of November 1, 2000 by and among Seller, Day Runner UK plc, a company incorporated with limited liability under the laws of England and Wales and a wholly-owned indirect subsidiary of Day Runner, Filofax Limited, a company incorporated with limited liability under the laws of England and Wales and a wholly-owned indirect subsidiary of Day Runner UK plc, each lender whose name is set forth on the signature pages of Loan Agreement and each lender which may have become a party to Loan Agreement pursuant to Section 12.8 thereof, and Wells Fargo Bank, National Association, as Administrative Agent pursuant to a Satisfaction Agreement in the form attached hereto as Exhibit A. In the event that the Company is sold by the Buyer to a third party within a period of four months from the Closing Date for an amount greater than the Purchase Price, the Purchase Price shall be increased by an amount (the "Purchase Price Adjustment") equal to the sale price to such third party minus the Purchase Price. Any Purchase Price Adjustment shall be payable in the same manner as the Purchase Price. SECTION 1.3. Certain Expenses. (a) Neither the Buyer nor the Company shall pay or be liable for any of the following fees, expenses, taxes or liabilities incurred by the Seller or the Company, all of which shall be borne and paid by the Seller: (i) the fees and expenses, if any, of any person retained by the Seller or the Company for brokerage, financial advisory or investment banking services or services as a finder rendered to the Seller or the Company in connection with the proposed sale of the Shares including, without limitation, the transactions contemplated by this Agreement; (ii) any fees and expenses of legal counsel, auditors and accountants retained or employed by the Seller or the Company for services rendered to the Seller or the Company in connection with the proposed sale of the Shares including, without limitation, the transactions contemplated by this Agreement; (iii) any income, capital gains or other tax incurred by the Seller as a result of the consummation of the transactions contemplated hereby. (b) If the Company shall pay or be liable for any fee, expense, tax or liability described in Section 1.3(a), the sum of all such payments or liabilities shall be paid by the Seller to the Buyer upon demand or Buyer may reduce the Purchase Price accordingly. SECTION 1.4. The Closing. The closing of the purchase and sale of the Shares (the "Closing") shall be held at the offices of the Buyer or at such other place as the parties may agree upon, at 9:00 A.M., local time, on April 25, 2001 (the "Closing Date"), or on such other date as the parties may agree upon. SECTION 1.5. Further Assurances. The Seller, at its sole cost and expense and without expense to the Buyer, will do such further acts and execute and deliver such further documents regarding its obligations hereunder as may be required solely for the purpose of (i) accomplishing the purposes of this Agreement or (ii) assuring and confirming unto the Buyer the validity of any documents of conveyance to be delivered at Closing. ARTICLE TWO REPRESENTATIONS AND WARRANTIES OF THE SELLER The Seller represents and warrants to the Buyer, as of the date hereof and as of the Closing Date, as follows: SECTION 2.1. Power and Capacity. Seller has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by Seller, constitutes the valid and binding agreement of Seller and is enforceable against Seller in accordance with its terms. SECTION 2.2. The Shares. Seller is the beneficial and record owner of the Shares. The Shares are held by the Seller as record owner thereof, free and clear of all liens, charges, encumbrances, equities and claims whatsoever (other than encumbrances created by this Agreement or the Loan Agreement or other agreements entered into in connection therewith (collectively, the "Loan Documents")) and are not subject to any restriction with respect to their transferability (other than restrictions on transfer under applicable federal and state securities laws or under the Loan Documents). No third party, including any former owner of the Shares or any capital stock of the Company has the basis for any claims against the Shares, the Company, the Seller or the Buyer with respect to the transactions contemplated hereby other than claims under this Agreement or the Loan Documents. SECTION 2.3. Conflicting Instruments; Consents. (a) The execution and delivery by Seller of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the articles of incorporation or the by-laws (or the equivalent thereof) of the Company or any of the entities listed on Schedule 2.3 (the "Subsidiaries"), or, except with respect to the Loan Documents, result in the creation of any material lien, security interest, charge or encumbrance upon the Shares or any of the properties or assets of the Company or any of the Subsidiaries under, materially conflict with or result in a material breach of, create an event of default (or event that, with the giving of notice or lapse of time or both, would constitute an event of default) under, or give any third party the right to accelerate any obligation under, any material agreement, mortgage, license, lease, indenture, instrument, order, arbitration award, judgment or decree to which Seller, the Company or any of the Subsidiaries is a party or by which Seller, the Shares, the Company or any of the Subsidiaries, or any material assets or properties of the Company or any of the Subsidiaries, are bound or affected. (b) The execution and delivery by the Seller of this Agreement do not, and the consummation of the transactions contemplated hereby will not, result in a material violation of, or require any authorization, approval, consent or other action by, or registration, declaration or filing with or notice to, any court or administrative or governmental body pursuant to, any statute, law, rule, regulation or ordinance applicable to Seller, the Company or any of the Subsidiaries, where the failure to obtain such authorization, approval consent or action or make such registration, declaration, filing or notice would have a material adverse effect on the Company. There is no pending or, to the knowledge of Seller, threatened action, suit, proceeding or investigation before or by any court or governmental body or agency, to restrain or prevent the consummation of the transactions contemplated by this Agreement or that might materially affect the right of the Buyer to own and vote the Shares or the right of the Company to operate the business of the Company or any of the Subsidiaries. SECTION 2.4. Transfer of the Shares. Upon the delivery of the certificates for the Shares by the Seller and payment for the Shares as provided for in Sections 1.1 and 1.2, the Buyer will acquire good and marketable title to all of the outstanding shares of capital stock of the Company, free and clear of all liens, charges, encumbrances, equities and claims whatsoever, other than liens, charges, encumbrances, equities and claims created by Buyer or any affiliate of Buyer, under any Loan Documents or by law, rule or regulation. SECTION 2.5. Organization and Authority. (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Connecticut. The Company is duly qualified to do business as a foreign corporation and is in good standing in every jurisdiction in which the nature of the business conducted by it or the character or location of the properties owned or leased by it makes such qualification necessary, other than jurisdictions where the failure to so qualify or be in good standing would not have a material adverse effect on the Company. The Company has all requisite corporate power and authority to own or lease and operate its properties and assets and to carry on its business as now conducted. (b) The articles of incorporation and the by-laws and all amendments thereto, and the minute books, stock ledgers and stock transfer records of the Company furnished to the Buyer for review are accurate and complete in all material respects. Such minute books contain the minutes of all meetings of the shareholders and the board of directors, and all committees thereof, of the Company. All such meetings were duly called and held, and a quorum was present and acting throughout each such meeting. Such stock ledgers and stock transfer records reflect all issuances and registrations of transfer of all shares of capital stock of the Company and the certificates representing all canceled shares of capital stock have been returned to the stock ledger. SECTION 2.6. Capitalization. The Company has an authorized capital consisting of 20,000 shares of Common Stock, of which 2,501 shares of Common Stock are issued and outstanding. All outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and non-assessable and were issued by the Company in compliance with all applicable federal and state securities laws, rules and regulations. There is no outstanding or authorized option, subscription, warrant, call, right, commitment or other agreement of any character obligating the Company to sell or transfer any additional shares of its capital stock or any other securities convertible into or exercisable for or evidencing the right to subscribe for any shares of its capital stock. SECTION 2.7. Compliance with Law. The Seller, the Company and the Subsidiaries have complied in all material respects with all applicable statutes, regulations, orders and restrictions of the United States of America, all states and other subdivisions thereof, all applicable foreign jurisdictions, all agencies and instrumentalities of the foregoing and all national and international self-regulatory bodies and authorities in respect of the conduct of the Company's business and ownership of its properties. ARTICLE THREE REPRESENTATIONS AND WARRANTIES OF THE BUYER The Buyer represents and warrants to the Seller, as of the date hereof and as of the Closing Date, as follows: SECTION 3.1. Power and Capacity. Buyer has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by Buyer, constitutes the valid and binding agreement of Buyer and is enforceable against Buyer in accordance with its terms. SECTION 3.2. Conflicting Instruments; Consents. The execution and delivery by Buyer of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the limited liability agreement of the Buyer. SECTION 3.3. Organization and Authority. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. ARTICLE FOUR COVENANTS OF SELLER AND THE COMPANY SECTION 4.1. Access. (a) From the date hereof through the Closing Date, the Seller will cause the Company to give to the Buyer and its respective financial advisors, legal counsel, independent accountants and other representatives full access during normal business hours to all properties, documents, contracts, employees and records of the Company and will furnish the Buyer with copies of such documents (certified if so requested) and with such information with respect to the Company as the Buyer from time to time reasonably may request. (b) From the date hereof through the Closing Date, the Seller will cause the Company to permit representatives of the Buyer to be present at each facility of the Company and to observe the conduct of the business of the Company at any time during normal business hours. SECTION 4.2. Transfer of the Shares. From the date hereof through the Closing Date, Seller will not (i) sell or otherwise transfer or agree to sell or otherwise transfer, any of the Shares owned by Seller or (ii) incur or permit to exist any liens, charges, encumbrances, equities or claims on the Shares whatsoever, except for liens, charges, encumbrances, equities or claims under this Agreement or under the Loan Documents. SECTION 4.3. Conduct of the Business of the Company. (a) From the date hereof through the Closing Date, the Seller will cause the Company to use commercially reasonable efforts to preserve the business of the Company, keep available to the Company the services of all current officers and substantially all key employees and preserve for the Buyer the goodwill of the suppliers, customers, employees and others having business relations with the Company. (b) From the date hereof through the Closing Date, the Seller, except as otherwise permitted by this Agreement or consented to in writing by the Buyer, will cause the Company to continue the operation of the business of the Company in the ordinary course, and will maintain the assets, properties and rights of the Company in at least as good order and condition as exists on the date hereof, subject to ordinary wear and tear. Without limiting the generality of the foregoing, except as otherwise permitted by this Agreement or consented to in writing by the Buyer, the Seller will not permit the Company to: (i) incur, discharge or satisfy any obligation or liability or any liens, charges, encumbrances, equities or claims, except in the ordinary course of business or in connection with the performance of this Agreement; (ii) increase or establish any reserve for taxes or other liabilities on its books or otherwise provide therefor, except for taxes or other liabilities relating to the ordinary course operations of the Company since the Closing Date; write up or down the value of inventory or determine as collectible any notes or accounts receivable that were previously considered to be uncollectible, except for write-ups or write-downs in accordance with generally accepted accounting principles ("GAAP") in the ordinary course of business consistent with past practice; or voluntarily make any change in any of its methods of accounting or in any of its accounting principles or practices; (iii) purchase, lease, sell, assign or transfer any asset, property or business or waive or permit to lapse any right, except in the ordinary course of business; or make or authorize any capital expenditure for additions to plant and equipment in excess of $20,000 in the aggregate; (iv) make any loan to any shareholder or any relative or affiliate of any shareholder, or declare, set aside or pay to any shareholder any dividend or other distribution in respect of its capital stock, transfer any asset or pay any money to any shareholder or any relative or affiliate of any shareholder other than the payment of wages or salaries to shareholders who are also employees of the Company in the ordinary course of business; or enter into or agree to enter into any transaction with or for the benefit of any shareholder of the Company or any relative or affiliate of any shareholder other than the transactions contemplated pursuant to this Agreement; (v) reclassify or change in any manner the outstanding shares of capital stock of the Company or issue or agree to issue, sell, transfer, pledge, encumber or deliver any stock, bond, debenture or other security of the Company; (vi) grant any increase in the compensation payable to any officer, director, consultant, employee or agent of the Company, except for increases in the compensation payable in the ordinary course of business to employees (other than key employees) in amounts and at times consistent with past practice; enter into or amend any contract for the employment of any officer, employee or other person that is not terminable upon 30 days notice or less, except for accrued vacation pay for past services; enter into any contract or collective bargaining agreement with any labor union; enter into or agree to enter into any bonus, pension, profit-sharing, retirement, stock purchase, stock option, deferred compensation, incentive compensation, hospitalization, insurance or similar plan, contract or understanding providing for employee benefits; or make any payment or a contribution under any employee pension benefit plan as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA") and each employee welfare benefit plan or non-ERISA plan or incur any obligation to make any such payment or contribution that is not in accordance with the usual past practice of the Company; (vii) enter into any contract, except in the ordinary course of business, for the sale of goods or the performance of services for or by the Company that is not terminable upon 30 days notice or less; enter into any contract continuing for a period of more than three months from its date that is not terminable upon 30 days notice or less; enter into any agreement or instrument relating to the borrowing or lending of money or extension of credit; guarantee or indemnify any person or entity with respect to any obligation for borrowed money or otherwise, excluding endorsements made for collection; or make or permit to be made any amendment, modification, cancellation or termination of any material contract, agreement, lease, license, finance agreement or written evidence of indebtedness; (viii) extend credit in excess of $20,000 to any customer who was not a customer before the date of this Agreement or depart from the normal and customary trade, discount and credit policies of the Company; (ix) settle any administrative or judicial proceedings; (x) amend the certificate of incorporation or the by-laws of the Company. (c) From the date hereof through the Closing Date, the Seller shall cause the Company to comply in all material respects with all applicable statutes, regulations, orders and restrictions of the United States of America, all states and other subdivisions thereof, all applicable foreign jurisdictions, all agencies and instrumentalities of the foregoing and all national and international self-regulatory bodies and authorities. SECTION 4.4. Third Party Consents. The Seller will use its commercially reasonable efforts, and after Closing will cooperate with the Company and Buyer, to obtain or cause to be obtained all consents, waivers, approvals, amendments and authorizations that are necessary under applicable law, agreement, or otherwise to be obtained by the Company or the Seller in connection with the sale of the Shares to the Buyer and the consummation of the transactions contemplated hereunder, or to enable the Company to conduct its business after the Closing in all material respects in the same manner as such business is being conducted on the date hereof. SECTION 4.5. Notice of Default. (a) The Seller will use its commercially reasonable efforts, and after Closing will cooperate with the Company and Buyer, to give notice promptly to the Buyer of the occurrence of any event or the failure of any event to occur, which occurrence or failure to occur is known to the Company or the Seller, that results in a breach of any representation or warranty by the Seller or a failure by the Company or the Seller to comply with any covenant, condition or agreement contained herein. (b) The Seller will and will cause the Company to use commercially reasonable efforts to (i) take all actions necessary to render accurate as of the Closing Date its representations and warranties contained herein, (ii) refrain from taking any action that would render any such representation or warranty inaccurate as of such time and (iii) perform or cause to be satisfied each covenant or condition to be performed or satisfied as contemplated by this Agreement. ARTICLE FIVE INDEMNIFICATION SECTION 5.1. Indemnification Obligation. The Seller shall indemnify and hold harmless the Company, each of its Subsidiaries, the Buyer and their affiliates (collectively, the "Indemnified Parties") in respect of any and all claims, actions, causes of action, arbitrations, proceedings, losses, damages, liabilities and expenses (including, without limitation, settlement costs, attorneys' fees at such attorneys' customary hourly rates and any other expenses of investigating or defending any actions or threatened actions), whether or not due and payable, incurred by the Indemnified Parties in connection with each and all of the following: (a) Any breach (whether as of the Closing Date or as of some other date set forth in any such representation or warranty) of any representation or warranty contained herein of the Seller, or in any instrument delivered at the Closing by the Seller, the Company or any Subsidiary; (b) The breach of any covenant, agreement or obligation of the Seller, contained in this Agreement or any other instrument contemplated by this Agreement; and (c) any and all liabilities and obligations of every nature and description of any of the Seller, the Company or any Subsidiary, known or unknown, arising from or as a result of the Company's or any Subsidiary's operations prior to the Closing Date, or are based upon events, acts or omissions of Seller, the Company or any Subsidiary which occurred prior to such date. Notwithstanding anything else contained herein, the Seller shall have no liability under this Section 5, unless and until the aggregate of all Losses relating thereto exceeds $50,000 (the "Minimum Amount"), in which event the Seller shall be liable for all Losses in excess of the Minimum Amount up to an aggregate maximum amount for all claims made hereunder against Seller and all its affiliates, equal to the Purchase Price. SECTION 5.2. Claims. Whenever any claim shall arise for indemnification, the Indemnified Parties shall notify the party from whom it is seeking indemnification (the "Indemnifying Party") of the claim pursuant to Section 5.4 hereunder and, when known, the facts constituting the basis for such claim and the amount or estimate of the amount of the liability arising from such claim. SECTION 5.3. Defense by the Indemnifying Party. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a person other than the Indemnified Parties, the Indemnifying Party at its sole cost and expense, may, upon written notice to the Indemnified Parties received by the Indemnified Parties within 10 calendar days of the Indemnifying Party' receipt of such claim, assume the defense of any such claim or legal proceeding provided that the Indemnifying Party acknowledges their obligation to indemnify the Indemnified Parties in respect of the entire amount of all of the claims asserted therein. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, the Indemnifying Party shall select counsel reasonably acceptable to the Indemnified Parties to conduct the defense of such claims or legal proceedings at their sole cost and expense. The Indemnifying Party shall not consent to a settlement of, or the entry of any judgment arising from, any such claim or legal proceeding, without the prior written consent of the Indemnified Parties, provided that the Indemnifying Party may, without the Indemnified Party's prior written consent, settle or compromise any such action, claim or proceeding or consent to entry of any judgment with respect to any such action or claim that requires solely the payment of money damages by the Indemnifying Party and that includes as an unconditional term thereof the release by the claimant or the plaintiff of the Indemnified Party from all liability with respect to such action, claim or proceeding. The Indemnified Parties shall be entitled to participate in (but not control) the defense of any such action, with their own counsel and at their own expense and shall be entitled to any and all information or documentation relating thereto. If the Indemnifying Party does not assume (or continue to diligently and competently prosecute) the defense of any such claim or litigation resulting therefrom in accordance with the terms hereof, the Indemnified Parties may defend against such claim or litigation in such manner as they may deem appropriate, including, but not limited to, settling such claim or litigation, after giving notice of the same to the Indemnifying Party on such terms as the Indemnified Parties may deem appropriate. The Indemnifying Party shall be entitled to participate in the defense of any action by the Indemnified Parties, which participation shall be limited to contributing information to the defense and being advised of its status. SECTION 5.4. Notice. The Indemnified Parties agree that in the event of any occurrence which may give rise to a claim by the Indemnified Parties against the Indemnifying Party hereunder, the Indemnified Parties will give notice thereof to the Indemnifying Party; provided, however, that failure of the Indemnified Parties to timely give the notice provided in this Section shall relieve the Indemnifying Person of its obligations hereunder only to the extent, if at all, that it is prejudiced by reason of such delay or failure. ARTICLE SIX CONDITIONS TO THE BUYER'S OBLIGATIONS The obligations of the Buyer hereunder shall be subject to the satisfaction, as of the Closing Date, of the following conditions (any of wh ich may be waived, in whole or in part, by the Buyer): SECTION 6.1. Representations and Warranties. ------------------------------ The representations and warranties of the Seller contained in this Agreement (including the Schedules and Exhibits) or any certificate, instrument or other document delivered to the Buyer in connection herewith shall be true and correct in all material respects as of the Closing Date or as of such other date as is set forth in any such representation or warranty. The Seller shall have duly performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed by the Seller at or prior to the Closing Date. The Buyer shall have been furnished with certificates of the Seller, dated the Closing Date, certifying in such detail as the Buyer reasonably may request to the fulfillment of the foregoing conditions. SECTION 6.2. Legal Matters. All legal matters, and the form and substance of all documents to be delivered by the Seller or the Company to the Buyer at the Closing, shall be satisfactory to counsel for the Buyer. SECTION 6.3. Delivery of the Shares. The Seller shall have delivered to the Buyer certificates for all of the Shares in proper form for transfer by delivery or with duly executed stock powers attached thereto, together with evidence of the Company's possession of the shares of capital stock or other securities owned beneficially or of record, directly or indirectly, by the Company in each of the Subsidiaries. The Buyer is not obligated to close or purchase any Shares if less than all of the Shares are tendered at the Closing in accordance with the terms hereof. SECTION 6.4. Legal Proceedings. No action, suit, proceeding or investigation shall be pending or threatened before or by any court or governmental body or agency (i) challenging the transactions contemplated by this Agreement or otherwise seeking damages or (ii) seeking to restrain or prevent the carrying out of the transactions contemplated by this Agreement or to prohibit or limit the ability of the Buyer to exercise full rights of ownership of the Shares or to operate or control the assets, property and business of the Company and the Subsidiaries after the Closing Date. SECTION 6.5. Third Party Consents. The Seller shall have obtained and shall have caused the Company to obtain all consents, waivers, approvals, amendments and authorizations that are necessary under applicable law, agreement, or otherwise to be obtained by the Company or the Seller in connection with the sale of the Shares to the Buyer and the consummation of the transactions contemplated hereunder, or to enable the Company to conduct its business after the Closing in all material respects in the same manner as such business is being conducted on the date hereof. ARTICLE SEVEN CONDITIONS TO THE SELLER'S OBLIGATIONS The obligation of the Seller hereunder shall be subject to the satisfaction, as of the Closing Date, of the following conditions (any of which may be waived, in whole or in part, by the Seller): SECTION 7.1. Delivery of Satisfaction Agreement. ---------------------------------- Buyer shall have duly executed and delivered to the Seller the Satisfaction Agreement in the form attached hereto as Exhibit A SECTION 7.2. Representations and Warranties. The representations and warranties of the Buyer contained in this Agreement (including the Schedules and Exhibits) or any certificate, instrument or other document delivered to the Seller in connection herewith shall be true and correct in all material respects as of the Closing Date or as of such other date as is set forth in any such representation or warranty. The Buyer shall have duly performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed by the Buyer at or prior to the Closing Date. The Seller shall have been furnished with certificates of the Buyer, dated the Closing Date, certifying in such detail as the Seller reasonably may request to the fulfillment of the foregoing conditions. ARTICLE EIGHT MISCELLANEOUS SECTION 8.1. Survival of Representations, Warranties and Covenants. The covenants, agreements, representations and warranties entered into or made pursuant to this Agreement shall be continuing and survive the Closing Date for a period of eighteen months. SECTION 8.2. Expenses. -------- Except as otherwise provided in this Agreement, each party shall pay its own expenses in connection with the preparation and performance of this Agreement and the consummation of the transactions contemplated hereby, including without limitation all fees and expenses of investment bankers, financial advisors, legal counsel, independent accountants and actuaries. SECTION 8.3. Governing Law. -------------- This Agreement shall be governed by and construed and enforced in accordance with the internal, substantive laws of the State of California, without giving effect to the conflict of laws rules thereof. SECTION 8.4. Notices. ------- All notices, consents, requests, instructions, approvals and other communications provided for herein shall be deemed validly given, made or served if in writing and delivered personally or sent by certified mail, postage prepaid, or by overnight courier, or by telex, telecopier or telegraph, charges prepaid: (a) if to the Buyer, addressed to: DRBG, LLC Care of Wells Fargo Bank, National Association Loan Adjustment Group 333 South Grand Avenue, 9th Floor Los Angeles, CA 90071 Attention: Art Brokx Ernie Pinder Christine Kenmore, Esq. Fax: (213) 253-5913 Additional copies of Notices to: Gibson, Dunn & Crutcher LLP One Montgomery Street, 31st Floor Telesis Tower San Francisco, CA 94104 Attention: Kathryn A. Coleman, Esq. --------- Fax: (415) 986-5309 (b) if to the Seller, addressed to: Day Runner, Inc 2750 West Moore Ave Fullerton, CA 92633-2565 Attention: John Ausura Catherine Ratcliffe Fax: (714) 441-4848 or such other address as shall be furnished in writing by any party to the others. SECTION 8.5. Jurisdiction; Agent for Service. Legal proceedings commenced by the Seller or the Buyer arising out of any of the transactions or obligations contemplated by this Agreement shall be brought exclusively in the federal courts, or in the absence of federal jurisdiction in state courts, in either case in the State of California. The Buyer and the Seller irrevocably and unconditionally submit to the jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Buyer and the Seller irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Seller or the Buyer in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any indebtedness or liability of the Seller or the Buyer therein described, or by appropriate proceedings under any applicable treaty or otherwise. SECTION 8.6. Entire Agreement. This Agreement represents the entire agreement between the parties and supersedes and cancels any prior oral or written agreement, letter of intent or understanding related to the subject matter hereof. SECTION 8.7. Binding Effect. -------------- This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The Seller may not assign or transfer any right hereunder without the prior written consent of the Buyer. The Buyer may freely assign or transfer its rights hereunder. SECTION 8.8. Amendments; Waivers. ------------------- No provision of this Agreement may be terminated, amended, supplemented, waived or modified other than by an instrument in writing signed by the party against whom the enforcement of the termination, amendment, supplement, waiver or modification is sought. SECTION 8.9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties. SECTION 8.10 Severability. ------------ In the event any provision, or portion thereof, of this Agreement is held by a court having proper jurisdiction to be unenforceable in any jurisdiction, then such portion or provision shall be deemed to be severable as to such jurisdiction (but, to the extent permitted by law, not elsewhere) and shall not affect the remainder of this Agreement, which shall continue in full force and effect. If any provision of this Agreement is held to be so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is necessary for it to be enforceable. SECTION 8.11. Specific Performance. -------------------- The Seller acknowledges that the Company and its business are unique and that the Buyer will have no adequate remedy at law and may suffer irreparable damage if the Seller breaches any covenant contained herein or fail to perform any of its obligations under this Agreement. Accordingly, the Seller agrees that the Buyer shall have the right, in addition to any other rights which it may have, to specific performance and equitable injunctive relief if the Seller shall fail or threaten to fail to perform any of its obligations under this Agreement. (The remainder of this page has been left blank intentionally.) IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written. DRBG, LLC By: ------------------------------------- Name: Title: Day Runner, Inc. By: ------------------------------------- Name: Title: Exhibit A to the Stock Purchase Agreement Satisfaction Agreement Schedule 2.3 Subsidiaries Filofax Via Mail, Inc. Filofax Retail, Inc. EX-99 4 pressrelease042601.txt PRESS RELEASE FOR IMMEDIATE RELEASE CONTACT: Rubenstein Associates, Inc. Jackie Kaplan 212/843-8290 DAY RUNNER, INC. REPORTS SALE OF FILOFAX FULLERTON, CA. April 26, 2001. Day Runner, Inc. (OTCBB.DAYR) today announced the sale of its Filofax operations for $30 million which was used to reduce existing debt. The sale is a significant step in the Company's financial restructuring plan to improve profitability and its capital structure. The Filofax operations were sold to entities affiliated with the Company's lenders. All forward-looking statements made in this news release constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect the Company's current expectations and are subject to numerous risks and uncertainties that may cause actual results to differ materially from those described in the forward-looking statements. These include but are not limited to: (1) the Company's liquidity is dependent upon its ability to successfully renegotiate the terms of its bank loan agreement and/or obtain waivers of such agreement and there can be no assurance that the Company will succeed in renegotiating and/or obtaining waivers of such agreement; (2) the Company has reported substantial losses over the last two fiscal years and there can be no assurance that the Company's substantial restructuring plan will be successful in returning the Company to profitability; (3) the Company's efforts to control costs may not prove sufficient to prevent future increases in operating expenses in dollars or as a percentage of sales; (4) the Company may not be able to counteract the effects of large customers' supply chain management in any significant way which may result in lower than expected sales and/or higher than expected product returns; (5) the Company may not correctly anticipate the product mix of retailers' "just-in-time" inventory demands, resulting in the temporary unavailability of the products in demand by retailers and lower sales; and (6) there can be no assurance that the Company's new products will meet with market acceptance. Additional factors that may cause future results to differ materially from the Company's current expectations include, among others: timing and size of orders from large customers; timing and size of orders for new products; competition, especially for retail shelf space; consumer demand; general economic conditions; the health of the retail environment; foreign exchange rate fluctuations; supply constraints; and supplier performance. Among the effects of these factors may be: lower than anticipated sales; higher than anticipated product returns and/or excess inventory; negative effects on consumer purchases; lower than anticipated gross profit; higher than anticipated operating expenses; and lower than anticipated net income. For additional risks and more detailed explanations of factors that may cause the Company's results of operations to vary materially from current expectations, see the Company's Form 10-K for the year ended June 30, 2000 filed with the SEC. Day Runner, Inc. is a leading developer and marketer of loose-leaf paper-based organizers for the North American retail markets. The Company also develops and markets a number of related organizing products, including telephone/address books, business accessories, organizing tools for students, wallboards, laminated wall planners, and the Home Manager(TM) on-the-refrigerator organizer. #### (R)Day Runner is a registered trademark of Day Runner, Inc., and Home Manager is a trademark of Day Runner, Inc. -----END PRIVACY-ENHANCED MESSAGE-----