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EXHIBIT 99.2
CONFORMED COPY
DATED 12 MARCH 1998
AURA BOOKS PLC
- AND -
WINDGUARD LIMITED
TRADING AGREEMENT
▇▇▇▇▇▇▇ & CO
Solicitors
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This AGREEMENT is made on 12 March 1998
BETWEEN
(1) AURA BOOKS PLC of ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
("AURA"); and
(2) WINDGUARD LIMITED of ▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
("WINDGUARD").
WHEREAS-
(A) Aura and Windguard have today entered into an agreement ("the
Agreement") for the sale ("the Sale") by Aura to Windguard of the
business and assets of the retail division of Aura ("the Business").
(B) To facilitate the smooth separation of the Business from the business
of Aura the parties have agreed that certain assets and services will
be provided by Aura to Windguard.
IT IS AGREED as follows:-
1. INDEPENDENCE
1.1 The parties agree that Windguard shall use all reasonable efforts to
ensure that it is able to operate as an independent business as soon as
reasonably possible.
1.2 Windguard will procure that it has a fully independent accounting
system before 30 September 1998 and thereafter unless the parties
otherwise agree Windguard shall continue to have access to the hardware
and software
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facilities of Aura during the currency of this Agreement. Pending the
implementation of such a system Aura will on request purchase products
for use by Windguard. Stock will be invoiced to Windguard on despatch
to the stores and payment will be made within 30 days of the end of the
month following the month of invoice. Any stock not despatched within
60 days of receipt in the warehouse will automatically be invoiced to
Windguard and payment made by Windguard within 30 days.
1.3 For the avoidance of doubt Aura shall have no liability in respect of
such products and shall:
1.3.1 be entitled to invoice Windguard in full for all costs and
expenses associated therewith (including delivery to store
costs); and
1.3.2 shall not be required to accept any returns.
2. PROVISION OF SERVICES
2.1 Aura will make available those services set out in column 1 of Schedule
1 to Windguard (the "Services") until the earlier of (i) Windguard
becoming fully independent and no longer requiring the services as
contemplated in clause 1.1; and (ii) the exercise or expiry of the
option granted under the option deed of today's date between the
shareholders of Windguard and Advanced Marketing (Europe) Limited.
2.2 In consideration for the provision of the Services by Aura, Windguard
will pay to Aura the required amounts calculated by reference to column
2 of Schedule 1. For the avoidance of doubt any services or products
supplied by either of the parties to the other except for the Services
shall be provided on an arm's length basis.
2.3 The parties shall each procure the delivery to the other within 21 days
of a
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month end statements showing their respective sales and cost of sales
for such month. Aura will invoice Windguard on a monthly basis for the
amounts payable pursuant to clause 2.2 and Windguard will settle those
invoices within three days of receipt of the same. If for any reason
month end statements are not available within 21 days a payment on
account will be made by Windguard
2.4 The content of column 2 of schedule 1 will be reviewed by the parties
in good faith for reasonableness on a quarterly basis.
3. GENERAL
3.1 If Windguard no longer requires the Services or any of them to be
provided Windguard shall give to Aura not less than 4 weeks' written
notice that it wishes to terminate this Agreement or any part of it.
3.2 If at any time Windguard shall use the majority of any category of the
Services the parties shall in good faith agree the transfer of
employment of any relevant resource to Windguard which shall be
entitled to charge Aura for any continued use thereof.
4. WAREHOUSE EMPLOYEES
4.1 Windguard shall indemnify Aura and keep Aura indemnified against all
Employment Liabilities which relate to or arise out of all employment
relationships with the Warehouse Employees.
4.2 In this clause 4:-
4.2.1 "Employment Liabilities" means any and all Losses arising out
of or connection with employment or the employment
relationship, or
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termination of employment or of the employment relationship
(and, for the avoidance of doubt, shall exclude salaries and
other remuneration);
4.2.2 "Losses" means all losses, legal costs, actions, proceedings,
claims, demands and damages; and
4.2.3 "Warehouse Employees" means those employees listed in schedule 2.
5. NOTICES
5.1 Any notice or other communication given or made under or in connection
with the matters contemplated by this agreement shall be made in
writing.
5.2 Any such notice or other communication shall be addressed as provided
in sub-clause 5.3 and, if so addressed, shall be deemed to have been
duly given or made as follows:-
5.2.1 if sent by first class post, two business days after the date
of posting;
5.2.2 if sent by facsimile, when despatched to the correct facsimile
number confirmed by an activity report showing 'Transaction
O.K' or words to similar effect and followed by written
confirmation sent by first class post.
PROVIDED THAT if, in accordance with the above provisions, any such
notice or other communication would otherwise be deemed to be given or
made outside working hours, such notice or other communication shall be
deemed to be given or made at the start of working hours on the next
business day.
5.3 The relevant addressee, address and facsimile number of each party for
the
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purposes of this agreement, subject to sub-clause 5.4, are:-
Name of party Address Facsimile No.
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Windguard ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 0181 578 1905
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F.A.O ▇▇▇▇ ▇▇▇▇▇▇ D'Aeth
Aura ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 0181 578 1905
----
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▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
F.A.O. ▇▇▇▇ Pickup
5.4 A party may notify the other parties to this agreement of a change to
its name, relevant addressee, address or facsimile number for the
purposes of sub-clause 5.3 PROVIDED THAT such notification shall only
be effective on:-
5.4.1 the date specified in the notification as the date on which
the change is to take place; or
5.4.2 if no date is specified or the date specified is less than
five clear business days after the date on which notice is
given, the date falling five clear business days after notice
of any such change has been given.
6. CONFIDENTIALITY
6.1 Each of Aura and Windguard acknowledges and agrees that during the
course of this Agreement each of them may disclose to the other
information that can be considered proprietary and confidential which
relates to its business operations, services or technical knowledge
("Confidential
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Information"). Each party shall procure that when it is a receiving
party all Confidential Information communicated to it by the disclosing
party shall be received in confidence; used only for the purposes, and
within the duration, of this Agreement and shall be protected in the
same manner as the receiving party protects its own Confidential
Information, but in any event in not less than a reasonable manner,
except information which;
6.1.1 is or becomes generally available to the public other than as
a result of a breach of this clause; or
6.1.2 is acquired from a third party who owes no obligation of
confidence to the disclosing party in respect of the
Confidential Information; or
6.1.3 is independently developed by the receiving party without the
use of the disclosing party's Confidential Information; or
6.1.4 the receiving party is required by law to disclose, providing
always that the receiving party shall promptly notify the
disclosing party of such requirement prior to any such
disclosure; or
6.1.5 is already known by the receiving party at the time of its
receipt (as evidenced by its written records); or
6.1.6 is agreed by Aura and Windguard from time to time to be excluded.
6.2 Prior to the receiving party disclosing any Confidential Information
obtained from a disclosing party to any authorised agent or
sub-contractor engaged by a receiving party, the receiving party shall
obtain from the authorised agent or sub-contractor a signed
confidentiality undertaking on substantially the same terms as
contained in this clause 6.
6.3 Upon the expiration or termination of this Agreement all Confidential
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Information made available by one party to the other pursuant to this
Agreement, including any copies thereof, shall either be returned to
the disclosing party or destroyed pursuant to the request of such
disclosing party.
6.4 The obligations of each party in relation to Confidential Information
contained in this clause 6 shall survive the termination or expiry of
this agreement.
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SCHEDULE 1
PROVIDED ASSETS AND PRICE PAYABLE
PROVIDED ASSETS PRICE CALCULATED BY REFERENCE TO:
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SALES
Cost of Product Actual On a publisher
Retros in Cost of Sales % by publisher net
Retros Out N/A of any purchases
Settlement Discount N/A specifically
Labels Actual excluded from
the
Agreement
DISTRIBUTION
1. Warehouse Labour Actual
2. Customer Services Cost of Sales %
Recruitment Actual
3. Carriage Out Actual
Outside Storage Cost of Sales %
Fixture Carriage Actual
SELLING COSTS
Salaries Actual
Recruitment Actual
Agents N/A
Merchandising N/A
Concession Commission Actual
Car Expenses Actual
Travel Expenses Actual
Carrier Bags Shops Actual
Promotions Actual
Promotional Income N/A
Bad Debt Provision Actual
MANAGEMENT/ADMINISTRATION
4. Management Salaries Pre-Agreed Time Basis
Admin Salaries - Direct Actual Retail Manager
- Indirect Pre-Agreed Time Basis
5. Car Expenses - Direct Actual Retail Manager
- Indirect Pre-agreed time basis
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Travel & Subsistence
- Direct Actual Retail Manager
- Indirect + Actual From Expenses. Where
indistinguishable, on pre-agreed time
basis
6. Training & Recruitment Pre-Agreed Time Basis
Consultancy Actual
OPERATING COSTS
Maintenance - Direct Actual
- Indirect Cost of Sales %
Computer (to be discussed) Cost of Sales %
Light & Heat - Direct Actual
- Indirect Cost of Sales %
Telephones - Direct Actual
- Indirect Cost of Sales %
Stationery Cost of Sales % until such time as
monitored level agreed
Audit Fees Cost of Sales %
Changing to Actual
Profit Share Actual
Cleaning - Direct Actual
- Indirect Cost of Sales %
Postage - Direct Actual
- Indirect Monitor % to be agreed
Leasing - Direct Actual
- Indirect Cost of Sales %
Legal & Professional Actual
Sundry & Welfare - Direct Actual
- Indirect Cost of Sales %
SALES ACTUAL
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Shop Service Charge Actual
Insurance - Direct Actual
- Indirect Cost of Sales %
FIXED COSTS
Rent - Direct Actual
- Indirect Cost of Sales %
Rates - Direct Actual
- Indirect Cost of Sales %
Depreciation - Direct Actual
- Indirect Cost of Sales %
Interest Actual
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NOTES
1. Warehouse labour can be apportioned according to staff allocated to
each division. In reality, people will be swapped between wholesale and
retail on a regular basis, depending on requirements. This needs to be
treated on a 'wings and roundabouts' basis if warehouse management is
to do an effective job.
2. Customer Services to be apportioned by cost of sales until shops have
on-line ordering available as part of the new IT system, at which point
no Customer Service charge need be levied.
3. The vast majority of carriage for retail is on vehicles used
exclusively for retail deliveries. Small amounts going via Securicor
will need to be identified separately.
4. Directors salaries will be split as follows:-
▇▇▇▇▇▇ ▇▇▇▇▇▇ - 20% retail
▇▇▇▇▇ ▇▇▇▇▇ - 20% retail
▇▇▇▇ ▇▇▇▇▇▇-D'Aeth - 15% retail
▇▇▇▇ ▇▇▇▇▇▇▇ - Nil retail
This is not an exact science and would require review as the retail
division expands.
5. Administrative salaries to be apportioned on the following time basis:
Finance - 10%
Buying - 6%
Switchboard - 5%
Secretary - 10%
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6. For the avoidance of doubt any ancillary costs of employment (e.g.
overtime, bonuses, redundancy) shall form part of the expense to be
apportioned hereunder.
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SCHEDULE 2
WAREHOUSE EMPLOYEES
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IN WITNESS whereof this Agreement has been duly executed.
Signed for and on behalf of )
AURA BOOKS PLC )
in the presence of: ) M ▇▇▇▇▇▇
T Pickup
Signed for and on behalf of )
WINDGUARD LIMITED )
the presence of: ) P ▇▇▇▇▇▇ D'Aeth
▇ ▇ ▇▇▇▇▇
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