EXECUTION COPY
ROVENTA-HENEX S.A.
AND
FOSSIL (UK) HOLDINGS LIMITED
AND
FOSSIL, INC.
---------------------------------
AGREEMENT FOR THE SALE AND
PURCHASE OF THE AVIA WATCH COMPANY LIMITED
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CONTENTS
Clause Page
1. Interpretation.................................................... 3
2. Sale And Purchase................................................. 9
3. Completion........................................................ 9
4. Escrow Account.................................................... 9
5. Relevant Claims................................................... 10
6. Fossil Provisions................................................. 11
7. The Skagen Business............................................... 14
8. Warranties........................................................ 16
9. Limitations On The Seller's Liability............................. 17
10. Further Undertaking By The Seller................................. 17
11. Confidential Information.......................................... 17
12. Announcements..................................................... 18
13. Costs............................................................. 18
14. General........................................................... 18
15. Entire Agreement.................................................. 19
16. Assignment........................................................ 19
17. Notices........................................................... 20
18. Guarantee......................................................... 21
19. Governing Law And Jurisdiction.................................... 21
20. Counterparts...................................................... 21
Schedule 1 INFORMATION ABOUT THE COMPANY................................... 22
Schedule 2 CALCULATION OF FIRST QUARTER NET PROFIT......................... 23
Schedule 3 COMPLETION REQUIREMENTS......................................... 24
Schedule 4 WARRANTIES...................................................... 26
Schedule 5 REGISTERED INTELLECTUAL PROPERTY RIGHTS......................... 37
Schedule 6 LIMITATIONS OF THE SELLER'S LIABILITY........................... 41
Schedule 7 BUYER'S AND GUARANTOR'S WARRANTIES.............................. 45
Part A................................................................ 45
Part B................................................................ 45
Agreed Form Documents
1. Irrevocable power of attorney re: shares
2. Escrow account instruction letter
3. Letters of resignation of directors and secretary
4. Intellectual Property Assignment
5. Tax Deed
6. Accounts
7. Agreed Balance Sheet
8. Debt Collection Schedule
9. Disclosure Letter
10. Burberry Letter
11. Royalty Waiver Letter
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THIS AGREEMENT is made on 4 May 2001 BETWEEN:
(1) ROVENTA-HENEX S.A. a company incorporated in Switzerland, whose registered
office is at Xxx xx Xxxx 00, XX-0000 Xxxxxx, Xxxxxxxxxxx (the "Seller");
(2) FOSSIL (UK) HOLDINGS LIMITED, a company incorporated in England and Wales
(registered no. 4193340), whose registered office is at 00 Xxxxxx Xxxxx,
Xxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxx (the "Buyer"); and
(3) FOSSIL, INC., a company incorporated in the United States of America, whose
principal place of business is at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, XX
00000 XXX (the "Guarantor").
THE PARTIES AGREE as follows:
1. INTERPRETATION
1.1 In this Agreement: "Accounts" means the Company's individual accounts (as
that term is used in section 226 of the Act) for the financial year ended
on the Last Accounting Date, the auditors' report on those accounts, the
directors' report for that year and the notes to those accounts in the
agreed form;
"Accounts Relief" means a relief (other than a right to repayment of Tax)
which is taken into account in:
(i) computing (and so reducing) a provision for deferred tax in the
Accounts or in eliminating that provision; or
(ii) the Accounts as an asset;
"Act" means the Companies Xxx 0000;
"Agreed Balance Sheet" means the annotated balance sheet of the Company as
at 31 December 2000 in the agreed form;
"Aggregate Existing Avia Provisions" means (pound)303,189, being the
aggregate of the Avia Net Bad Debt Provision, the Avia Inventory Provision,
the Avia Returns Provision and the Avia Warranty Provision;
"Aggregate Fossil Provisions" means (pound)384,017, being the aggregate of
the Fossil Inventory Provision, the Fossil Redundancy Provision, the Fossil
Returns Provision and the Fossil Warranty Provision;
"Aggregate Fossil Provisions Test Amount" means a sum equal to the
aggregate of the Test Amounts (as defined in clause 6.5), each such Test
Amount as determined pursuant to clauses 6.8 or 6.11, as appropriate;
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"Assessment" means a claim, assessment, notice, demand or other document
issued or action taken by or on behalf of a Tax Authority by which the
Company is liable or is sought to be made liable to make a payment to the
Tax Authority or to another person (whether or not the payment is primarily
payable by the Company and whether or not the Company has or may have a
right of reimbursement against another person) or is denied or sought to be
denied a Relief;
"Avia Net Bad Debt Provision" means (pound)70,159, being the difference
between the bad debt provision of the Company of (pound)190,113 as
evidenced by the Agreed Balance Sheet, and the (pound)119,954 of debts
recovered by the Company during the period 1 January 2001 to 31 March 2001,
as evidenced by the Debt Collection Schedule in the agreed form;
"Avia Inventory Provision" means (pound)111,132, as evidenced by the Agreed
Balance Sheet;
"Avia Returns Provision" means (pound)27,500, as evidenced by the Agreed
Balance Sheet;
"Avia Warranty Provision" means (pound)94,398, as evidenced by the Agreed
Balance Sheet;
"Business Day" means a day other than a Saturday or Sunday or public
holiday in England and Wales;
"Buyer's Group" means the Buyer and any company which is, on or at any time
after the date of this Agreement, a subsidiary or holding company of the
Buyer or a subsidiary of a holding company of the Buyer;
"Company" means The Avia Watch Company Limited, a company incorporated in
England and Wales (registered number 03014656), whose registered office is
at 00/00 Xxxxxxx Xxx, Xxxxxxx, Xxxxxx, XX0 0XX;
"Company Intellectual Property Rights" means the Intellectual Property
owned or used by the Company and set out in Part A of schedule 5;
"Completion" means completion of this Agreement in accordance with clause
3;
"Completion Date" means the date of Completion;
"Confidential Information" means all information which is used in or
otherwise relates to the Company's business, customers or financial or
other affairs including, without limitation, information relating to:
(a) the marketing of goods or services including, without limitation,
customer names and lists and other details of customers, sales
targets, sales statistics, market share statistics, prices, market
research reports and surveys, and advertising or other promotional
materials; or
(b) future projects, business development or planning, commercial
relationships and negotiations;
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The term "Confidential Information" does not include information which (i)
is already in the possession of a Party, provided that such information is
not known by such Party to be subject to another confidentiality agreement
with or other obligations of secrecy to the other Party or a third party,
or (ii) is or becomes generally available to the public other than as a
result of a disclosure by a Party or its officers, directors and employees
in breach of an obligation of confidentiality or (iii) becomes available to
a Party on a non-confidential basis from a source other than the other
Party or its advisors, provided that such source is not known by such Party
to be bound by a confidentiality agreement or other obligation of secrecy
in respect of such information;
"Disclosure Letter" means the letter from the Seller to the Buyer in the
agreed form in relation to the Warranties having the same date as this
Agreement the receipt of which has been acknowledged by the Buyer;
"Dividend" means the dividend of (pound)490,000 declared by the Company on
16 February 2001 and paid by the Company to the Seller on 27 March 2001;
"Escrow Account" is defined in clause 3.2.2;
"Escrow Funds" means the money standing to the credit of the Escrow Account
from time to time (including accrued interest);
"Escrow Long Stop Date" means the date which falls 12 months after the
Completion Date or, if that is not a Business Day, the next Business Day
following such date;
"Encumbrance" means a mortgage, charge, pledge, lien, option, restriction,
right of first refusal, right of pre-emption, third-party right or
interest, other encumbrance or security interest of any kind, or another
type of preferential arrangement (including, without limitation, a title
transfer or retention arrangement) having similar effect;
"Event" means an event, act, transaction or omission;
First Quarter" means the period 1 January 2001 to 31 March 2001, inclusive;
"First Quarter Inventory Provision Utilisation Amount" means the amount
described as such in schedule 2 and taken into account in calculating the
First Quarter Net Profit, such amount corresponding to the amount of the
Avia Inventory Provision utilised in the First Quarter and charged in the
Management Accounts;
"First Quarter Net Profit" means the sum of (pound)55,500, representing the
net profit of the Company during the period 1 January 2001 to 31 March
2001, calculated in accordance with schedule 2;
"First Quarter Returns Provision Utilisation Amount" means the amount
described as such in schedule 2 and taken into account in calculating the
First Quarter Net Profit, such amount corresponding to the amount of the
Avia Returns Provision utilised in the First Quarter and charged in the
Management Accounts;
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"Xxxxx Xxxxxxx Xxxxxxxx Provision Utilisation Amount" means the amount
described as such in Schedule 2 and taken into account in calculating the
First Quarter Net Profit, such amount corresponding to the amount of the
Avia Warranty Provision utilised in the First Quarter and charged in the
Management Accounts;
"Fossil Inventory Provision" means (pound)106,000, as evidenced by the
Agreed Balance Sheet;
"Fossil Provisions" means the Fossil Inventory Provision, the Fossil
Redundancy Provision, the Fossil Returns Provision and the Fossil Warranty
Provision and "Fossil Provision" means any one of them;
"Fossil Redundancy Provision" means (pound)100,000, as evidenced by the
Agreed Balance Sheet;
"Fossil Returns Provision" means (pound)133,017, as evidenced by the Agreed
Balance Sheet;
"Fossil Warranty Provision" means (pound)45,000, as evidenced by the
Agreement Balance Sheet;
"Intellectual Property" means:
(a) patents, trade marks, service marks, registered designs, applications
and rights to apply for any of those rights, trade, business and
company names, unregistered trade marks and service marks, copyrights,
rights in designs and inventions; and
(b) rights under licences in relation to a right in paragraph (a);
"Intellectual Property Rights" means the Company Intellectual Property
Rights and the Seller Intellectual Property Rights;
"IP Assignment" means the assignment of certain Intellectual Property
Rights between the Seller and the Buyer in the agreed form;
"Last Accounting Date" means 31 December 2000;
"Lease" means the lease relating to the property located at 00/00 Xxxxxxx
Xxx, Xxxxxxx, Xxxxxx XX0 0XX dated 19 November 1996 between Xxxxxxx
Xxxxxxxx Esq. and the Company;
"Loan" means (pound)829,566, being the amount outstanding at the Completion
Date (comprising (pound)815,600 principal and (pound)13,966 accrued
interest) under the inter-company loan between the Seller and the Company;
"Management Accounts" means the management accounts of the Company for the
period to 31 March 2001;
"Original Escrow Amount" means (pound)384,017;
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"Party" means either of Seller or Buyer, and collectively, the "Parties";
"Property" means the real property demised by the Lease;
"Relevant Claim" means a claim by the Buyer involving or relating to a
breach of a Warranty or of another provision of this Agreement or a claim
by the Buyer under the Tax Deed;
"Relief" means any loss, relief, allowance, exemption, set-off, deduction,
right to repayment or credit or other relief of a similar nature granted by
or available in relation to Tax pursuant to any legislation or otherwise;
"Seller Intellectual Property Rights" means the Intellectual Property owned
by the Seller and used by the Company and set out in Part B of schedule 5;
"Seller's Group" means the Seller and any company (other than the Company)
which is, on or at any time after the date of this Agreement, a subsidiary
or holding company of the Seller or a subsidiary of a holding company of
the Seller;
"Seller's Solicitors" means Xxxxxxxx Chance Limited Liability Partnership
of 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX0X 0XX;
"Shares" means the 1,000,000 fully-paid ordinary shares of (pound)1.00 each
of the Company comprising the whole of the allotted and issued share
capital of the Company;
"Skagen Business" means the part of the business of the Company comprising
distribution and sale of products bearing the "Skagen" name ("Skagen
Products") pursuant to the terms and conditions of a distribution agreement
between the Company, Skagen Design AS and Skagen Design Limited (together
"Skagen") dated 25 March 2000 (the "Skagen Agreement");
"Tax" means has the meaning given in the Tax Deed;
"Tax Authority" has the meaning given in the Tax Deed;
"Tax Claim" means a claim under the Tax Deed or a claim for breach of any
of the Warranties set out in paragraph 6 of schedule 4;
"Tax Deed" means the tax deed in the agreed form between the Seller and the
Buyer;
"Taxes Act" means the Income and Corporation Taxes Xxx 0000;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"Test Date" means 31 December 2001;
"Test Period" means the period 1 January 2001 to 31 December 2001,
inclusive;
"VATA" means, in the United Kingdom, the Value Added Tax Xxx 0000 and, in a
jurisdiction outside the United Kingdom, any equivalent legislation; and
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"Warranty" means a statement contained in schedule 4 and "Warranties" means
all those statements.
1.2 In this Agreement, a reference to:
1.2.1 a "subsidiary undertaking" or "parent undertaking" is to be construed
in accordance with section 258 of the Act and to a "subsidiary" or
"holding company" is to be construed in accordance with section 736
of the Act;
1.2.2 liability under, pursuant to or arising out of (or any analogous
expression) any agreement, contract, deed or other instrument
includes a reference to contingent liability under, pursuant to or
arising out of (or any analogous expression) that agreement,
contract, deed or other instrument;
1.2.3 a document in the "agreed form" is a reference to a document in a
form approved and for the purposes of identification initialled by
or on behalf of each party;
1.2.4 a statutory provision includes a reference to the statutory provision
as modified or re-enacted or both from time to time before the date
this Agreement and any subordinate legislation made under the
statutory provision (as so modified or re-enacted) before the date of
this Agreement;
1.2.5 a "person" includes a reference to any individual, firm, company,
corporation or other body corporate, government, state or agency of a
state or any joint venture, association or partnership, works council
or employee representative body (whether or not having separate legal
personality);
1.2.6 an individual includes a reference to that individual's legal
personal representatives, successors and permitted assigns;
1.2.7 a clause, paragraph or schedule, unless the context otherwise
requires, is a reference to a clause or paragraph of, or schedule to,
this Agreement;
1.2.8 any English legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any
legal concept or thing shall in respect of any jurisdiction other
than England be deemed to include what most nearly approximates in
that jurisdiction to the English legal term and to any English
statute shall be construed so as to include equivalent or analogous
laws of any other jurisdiction; and
1.2.9 times of the day is to London time.
1.3 The headings in this Agreement do not affect its interpretation.
1.4 A reference in this Agreement to the Seller's knowledge, information or
belief is deemed to be a reference to the actual state of knowledge or
awareness at the date of this Agreement of each of Marc Xxxxx Xxxxxx
Xxxxxx, Xxxx-Xxxxxx Xxxxxx and Xxxxxx
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Xxxx Xxx (and, in the case of Xxxxxx Xxxx Xxx, he shall make reasonable
enquiry of each of Xxx Xxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxx), and
no other person.
2. SALE AND PURCHASE
2.1 The Seller agrees to sell with full title guarantee and the Buyer agrees to
buy the Shares and each right attaching to the Shares at or after the date
of this Agreement, free of any Encumbrance.
2.2 Subject to the release of the Escrow Funds pursuant to the provisions of
clause 4, the purchase price of the Shares is (pound)2,777,765 (the
"Consideration").
2.3 The Seller waives all rights of pre-emption and other restrictions on
transfer over the Shares conferred on it pursuant to the articles of
association of the Company or otherwise.
3. COMPLETION
3.1 Completion shall take place at the offices of the Seller's Solicitors
immediately following execution of this Agreement
3.2 At Completion:
3.2.1 the Seller and the Buyer shall sign the Escrow Account Instruction
Letter in the agreed form and the Buyer shall deliver the Escrow
Account Instruction Letter to the Seller's Solicitor (the "Escrow
Agent").
3.2.2 the Buyer shall deposit the Original Escrow Amount into a separately
designated interest-bearing account with HSBC Bank plc established by
the Escrow Agent and in the Escrow Agent's name (the "Escrow
Account");
3.2.3 the Seller and the Buyer shall do all those things respectively
required of them in schedule 3 and the Buyer shall pay the
Consideration less the Original Escrow Amount to the Seller or as the
Seller directs in writing by transfer of funds for same day value to
such account as shall have been notified to the Buyer by the Seller
on the Business Day before the Completion Date; and
3.2.4 the Buyer shall procure that the Company repays the Loan and pays the
First Quarter Net Profit, in each case to the Seller or as the Seller
directs in writing by transfer of funds for same day value to such
account as shall have been notified to the Buyer by the Seller on the
Business Day before the Completion Date.
3.3 Each party shall ensure that all rights to the Escrow Account remain free
from any Encumbrance, set-off or counterclaim except as referred to in
clause 4.
4. ESCROW ACCOUNT
4.1 The Escrow Funds are to be retained in the Escrow Account and shall only be
released:
4.1.1 in respect of a Relevant Claim in accordance with clause 5.1;
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4.1.2 in respect of a claim to settle an Excess Amount in accordance with
clause 6.1; or
4.1.3 in respect of a settlement of an Escrow Stock Amount in accordance
with clause 7.4.4.; or
4.1.4 in accordance with clause 4.6.
4.2 If the Seller or the Buyer are entitled to money from the Escrow Account in
accordance with this Agreement, the Seller and the Buyer shall within five
Business Days starting on the day after the date the entitlement arises
jointly instruct the Escrow Agent in writing to release the money to the
Seller or the Buyer, as the case may be. If either party fails to instruct
the Escrow Agent in accordance with this clause, the other party may
instruct the Escrow Agent alone.
4.3 Interest accruing from time to time on the balance of money standing to the
credit of the Escrow Account shall be added to the money standing to the
credit of the Escrow Account and shall form part of it for the purposes of
this Agreement.
4.4 The Seller and the Buyer shall each pay one half of the Escrow Agent's
costs in respect of any work done pursuant to this Agreement provided that
the Seller's portion of such costs shall be satisfied from the amount
standing to the credit of the Escrow Account before it is paid out to the
Buyer or the Seller.
4.5 The Buyer and the Seller acknowledge that the Escrow Agent may withdraw
from the Escrow Account an amount of tax on the interest earned in respect
of money held in the Escrow Account for which it is or may become liable.
4.6 Subject to clauses 5.1 and 6.1 the whole of the monies standing to the
credit of the Escrow Account (including interest which has accrued on such
monies but, for the avoidance of doubt, less any monies paid to the Buyer
pursuant to clauses 5.1 or 6.1) shall be paid to the Seller (by transfer of
funds for same day value to such account as shall have been notified to the
Escrow Agent by the Seller at lease three Business Days before the due date
for payment) on the Escrow Long Stop Date.
5. RELEVANT CLAIMS
5.1 Subject to clause 5.4, the Buyer shall be entitled to use the Escrow Funds
to settle a Relevant Claim, and to the extent it wishes to do so:
5.1.1 the Buyer shall notify the Seller of the Relevant Claim stating in
reasonable detail the nature of the Relevant Claim and the amount
claimed in respect of the Relevant Claim (the "Amount Claimed");
5.1.2 within 21 days starting on the day after receipt of notice of the
Relevant Claim the Seller shall notify the Buyer:
(a) whether or not it accepts liability for the Relevant Claim; and
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(b) whether or not it accepts the Amount Claimed and if it does not,
the part of the Amount Claimed it does accept;
5.1.3 if the Seller fails to notify the Buyer in accordance with clause
5.1.2, the money standing to the credit of the Escrow Account shall
be used to satisfy the Amount Claimed;
5.1.4 if the Seller accepts liability in respect of a Relevant Claim but
accepts part only of the Amount Claimed, that part of the Amount
Claimed which is accepted shall be paid to the Buyer out of the money
standing to the credit of the Escrow Account; and
5.1.5 if the Seller accepts the Amount Claimed or the Relevant Claim is
finally proved or determined by a Tax Authority or has been the
subject of a final judgement of the High Court of Justice in England
or other court of competent jurisdiction (including any appeals or,
as appropriate, no notice of appeal in respect thereof is lodged
within 21 days of the date of the judgement), in each such circum-
stances the Relevant Claim is deemed "substantiated", the amount so
accepted, proved or determined (in the latter case less any money
previously paid under clause 5.1.4 in respect of the Relevant Claim)
shall be paid to the Buyer.
5.2 To the extent that a payment to the Buyer out of the Escrow Account in
respect of a Relevant Claim is made in partial satisfaction of an Amount
Claimed, such payment is deemed to be a payment on account of the amount
finally agreed or determined to be payable in respect of the Amount
Claimed.
5.3 The Seller's liability in respect of Relevant Claims shall not be limited
by the amount of money standing to the credit of the Escrow Account from
time to time.
5.4 If any part of a Relevant Claim which is not accepted by the Seller in
accordance with clause 5.1.4 has not been substantiated (as defined in
clause 5.1.5) (an "Unsubstantiated Claim") on or before the Business Day
immediately prior to the Escrow Long Stop Date, the Buyer shall at such
time cease to be entitled to use the Escrow Funds to settle such
Unsubstantiated Claim and must pursue the Seller in respect of such claim
in accordance with applicable law.
6. FOSSIL PROVISIONS
6.1 The Buyer shall be entitled on the Escrow Long Stop Date, but immediately
prior to any payment to the Seller pursuant to clause 4.6 and to the Buyer
pursuant to clause 7.4.4 (the "Provisions Payment Time"), to remove from
the Escrow Account an amount (if any) equal to the amount by which the
Aggregate Fossil Provisions Test Amount exceeds the Aggregate Existing Avia
Provisions (the "Excess Amount"), together with interest which has accrued
on the Excess Amount in the Escrow Account since the Completion Date.
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6.2 For the avoidance of doubt, the Seller's maximum liability to make payments
to the Buyer in respect of the matters as a consequence of which payments
may be made out of the Escrow Account in accordance with this clause 6,
shall be limited to the Escrow Funds as at the Provisions Payment Time.
6.3 The Buyer shall procure that on or as soon as reasonably practicable
following, the Test Date (but in any event within 7 Business Days of the
Test Date), the Company shall test whether, in respect of the Test Period,
each of the Fossil Provisions was an appropriate provision to be made in
respect of the subject matter of such provision in respect of such period
(the "Test"). For the avoidance of doubt, the Buyer agrees with the Seller
that the Fossil Provisions are intended to be provisions for the relevant
subject matter in respect of the Test Period.
6.4 The Buyer shall procure that the Test is carried out in good faith by the
Company in accordance with clause 6.5.
6.5 The Test in respect of each of
the Fossil Provisions shall be carried out on the following basis:
6.5.1 in respect of the Fossil Inventory Provision, the Company shall
assess the actual items of inventory (if any) in existence at the
Last Accounting Date and which items were taken into account in
calculating the Fossil Inventory Provision (and including goods
returned to inventory from customers during the Test Period) which
remains unsaleable (taking into account a reasonable gross profit
margin) as at the Test Date ("Unsaleable Goods") (the value of such
inventory, less the First Quarter Inventory Provision Utilisation
Amount, the "Inventory Provision Test Amount");
6.5.2 in respect of the Fossil Redundancy Provision, the Company shall
assess the actual costs (if any) incurred by it in relation to
redundancies of employees of the Company during the Test Period (such
costs the "Redundancy Provision Test Amount");
6.5.3 in respect of the Fossil Returns Provision, the Company shall assess
the actual value of goods sold to customers prior to the Last
Accounting Date and returned from customers during the Test Period
(such value, less any reasonable value ascribed to such goods to the
extent they are returned to inventory as saleable goods, and less the
First Quarter Returns Provision Utilisation Amount, the "Returns
Provision Test Amount"); and
6.5.4 in respect of the Fossil Warranty Provision, the Company shall assess
the aggregate value of actual and (based on the historic rate of
claims being made under warranties issued by the Company) potential
claims under warranties issued by the Company prior to the Last
Accounting Date and which were valid and outstanding during the Test
Period, where such claims would (in the usual course of the Company's
treatment of any such claims) be treated for the Company's accounting
purposes as falling to be settled in the Test Period
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(such value, less the First Quarter Warranty Provision Utilisation
Amount, the "Warranty Provision Test Amount"),
the Inventory Provision Test Amount, the Redundancy Provision Test Amount,
the Returns Provision Test Amount and the Warranty Provision Test Amount,
together the "Test Amounts" and each a "Test Amount".
6.6 Within 30 days of the Test Date the Buyer shall provide the Seller with a
written report (the "Test Report") of the results of the Test setting out
each of the Test Amounts together with written notes (and supporting
documentation), setting out in reasonable detail the basis on which the
Test Amounts were calculated.
6.7 Within 21 days starting on the day after receipt of the Test Report, the
Seller shall notify the Buyer whether or not it agrees with the Test
Amounts set out therein and if the Seller disagrees with the Test Amounts,
shall provide the Buyer with written notes (and supporting documentation)
setting out in reasonable detail the basis for such disagreement. The Buyer
shall ensure the Seller has access to those documents and records within
its or the Company's possession or control which the Seller may reasonably
require to assess the Test Report.
6.8 If the Seller notifies its agreement with the Test Amounts within the 21
day period referred to in clause 6.7 or fails to give any notification
within that period the Test Amounts shall be final and binding on the
parties. If the Seller notifies the Buyer within the 21 day period referred
to in clause 6.7 that it disagrees with the Test Amounts or any of them
clause 6.9 applies.
6.9 If, within 21 days starting on the day after receipt of the notification
referred to in clause 6.8, the Seller and the Buyer have not agreed the
Test Amounts in dispute either party may refer the matters in dispute to a
partner of at least 10 years qualified experience at an independent firm of
chartered accountants agreed by the parties in writing or, failing
agreement on the identity of the firm of chartered accountants within 21
days starting on the day after receipt of the notification referred to in
clause 6.8, an independent firm of chartered accountants appointed on the
application of either party by the President for the time being of the
Institute of Chartered Accountants in England and Wales (the "Expert").
6.10 The Expert shall act on the following basis:
6.10.1 the Expert shall act as an expert and not as an arbitrator;
6.10.2 the Expert's terms of reference shall be to determine the matters in
dispute within 21 days of his appointment;
6.10.3 the parties shall each provide the Expert with all information
relating to the Company which the Expert reasonably requires and the
Expert shall be entitled (to the extent he considers appropriate) to
base his determination on such information and on the accounting and
other records of the Company;
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6.10.4 the decision of the Expert is, in the absence of fraud or manifest
error, final and binding on the parties; and
6.10.5 the Seller and the Buyer shall each pay one half of the Expert's
costs or as the Expert may determine.
6.11 The Test Amounts adjusted in accordance with the agreement, if any, between
the Seller and the Buyer pursuant to clause 6.9 or (as the case may be) the
decision of the Expert in accordance with clause 6.10 shall be final and
binding on the parties.
7. THE SKAGEN BUSINESS
7.1 The Buyer shall procure that the Company continues to operate the Skagen
Business following Completion in all material respects as it was operated
prior to Completion. If, on or before 30 September 2001 the Buyer decides
that it does not wish to continue operating the Skagen Business as part of
the business of the Company, it shall notify the Seller in writing to that
effect (such notice to be served on, or at any time before, 30 September
2001 (the "Skagen Notice").
7.2 Following receipt of the Skagen Notice the Seller shall be given until 31
December 2001 (the "End Date") to extract the Skagen Business from the
business of the Company such that the Company no longer has any liability
in respect of the Skagen Business (the "Extraction"). In order to effect
the Extraction, the Seller may, in accordance with clause 7.3:
7.2.1 negotiate with Skagen with a view to terminating the Skagen
Agreement; and/or
7.2.2 find a third party to whom the Skagen Business may be transferred or
sold.
7.3 During the period from receipt by the Seller of the Skagen Notice (the
"Notice Date") until the End Date (the "Extraction Period"):
7.3.1 the Buyer shall procure that the Company continues to operate the
Skagen Business in all material respects as it was operated prior to
Completion;
7.3.2 the Buyer shall ensure that the Seller has such access to the Company
(including, without limitation, to personnel, premises and
documentation), and that the Company provides such assistance, as the
Seller may reasonably require to effect the Extraction;
7.3.3 without prejudice to the generality of clauses 7.3.1 and 7.3.2, the
Buyer shall procure that the Company shall place a reasonable amount
of management time (including, without limitation, the time of Xxxxxx
Xxxx Xxx) of the Company at the disposal of the Seller, in order to
facilitate the Extraction;
7.3.4 the Seller shall (through such individual(s), including Xxxxxx Xxxx
Xxx, as it sees fit) retain the sole right (to the exclusion of the
Buyer's Group) to
14
contact, and/or conduct negotiations with, Skagen in order to effect
the Extraction; and
7.3.5 the Seller shall be responsible for all the reasonable out of pocket
costs and expenses incurred by the Company pursuant to compliance by
the Buyer with its obligations under clauses 7.3.2 to 7.3.4,
inclusive.
7.4 On the End Date, (or, if the End Date is not a Business Day, the next
Business Day following the End Date):
7.4.1 if the Extraction has not been completed by the Seller as envisaged
by clauses 7.2.1 or 7.2.2, the Seller shall, and the Buyer shall
procure that the Company shall, use all reasonable endeavours to
procure the effective assignment of the Skagen Agreement from the
Company to the Seller as soon as reasonably practicable following the
End Date;
7.4.2 the Buyer shall, subject to clause 7.4.3, procure that the Company
delivers to the Seller (the reasonable costs of such delivery to be
borne by the Seller):
(a) the Company's then entire inventory of Skagen Products; and
(b) as soon as reasonably practicable following 30 June 2002, any
Skagen Products returned to the Company by its customers after
the End Date and on or before 30 June 2002,
7.4.3 any such delivered inventory (Transferred Skagen Stock") the Seller
shall pay to the Buyer (or at the Buyer's request, to the Company) in
accordance with clauses 7.4.4 to 7.4.5, inclusive for any Transferred
Skagen Stock an amount in cash equal to the net book value of such
stock (as evidenced by the Company's accounting records) (the "NBV")
provided that:
(a) the Buyer shall procure that the Company determines the NBV using
the same accounting and valuation policies as were used by the
Company immediately prior to Completion in accounting for and
valuing Skagen Products inventory; and
(b) any Transferred Skagen Stock which was deemed Unsaleable Goods
(as defined in clause 6.5.1) and therefore taken into account in
calculating the Inventory Provision Test Amount (as defined in
clause 6.5.1) (as evidenced by the written notes and supporting
documentation referred to in clauses 6.6 and 6.7), shall be
deemed for the purposes of this clause 7.4.3 to have an NBV of
zero;
7.4.4 in respect of Escrow Stock, Transferred Skagen Stock delivered to the
Seller pursuant to clause 7.4.2(a) (the "Escrow Stock"), the Buyer
shall be entitled, on the Escrow Long Stop Date, but immediately
after any payment to the Buyer pursuant to clause 6.1 and immediately
before any payment to the Seller pursuant to clause 4.6 (the "Escrow
Stock Payment Time"), to remove
15
from the Escrow Account an amount (if any) equal to the aggregate NBV
(calculated in accordance with clause 7.4.3) of the Escrow Stock (the
"Escrow Stock Amount");
7.4.5 if the Escrow Funds as at the Escrow Stock Payment Time are
insufficient to settle the Escrow Stock Amount, any portion of the
Escrow Stock Amount not paid to the Buyer from the Escrow Funds in
accordance with clause 7.4.4 shall be paid by the Seller to the Buyer
(or at the Buyer's request, to the Company) in cash on the Escrow
Long Stop Date; and
7.4.6 in respect of Transferred Skagen Stock delivered to the Seller
pursuant to Clause 7.4.2(b), the Seller shall, within 5 Business Days
of the delivery to the Seller of such stock, pay to the Buyer (or at
the Buyer's request, to the Company) an amount in cash (if any) equal
to the aggregate NBV (calculated in accordance with clause 7.4.3) of
such Transferred Skagen Stock.
7.5 Provided that the Buyer complies with its obligations under clauses 7.1 to
7.4, inclusive, the Seller agrees to indemnify the Buyer against, and hold
the Buyer harmless from, all Indemnified Losses. For the purposes of this
clause 7.5 "Indemnified Losses" means all losses, liabilities, damages,
costs, charges and expenses:
7.5.1 which are incurred by the Buyer or the Company; and
7.5.2 which arise in respect of a third party claim against the Company
which claim:
(a) relates to an Event (including, without limitation, any act
carried out by Xxxxxx Xxxx Xxx pursuant to this clause 7) which
occurs after the Notice Date; and
(b) arises directly in relation to the Skagen Business (including,
without limitation, as a result of the non-compliance by the
Company after the Notice Date with the terms of the Skagen
Agreement).
For the avoidance of doubt, Indemnified Losses shall not include any loss
(whether economic or otherwise) of the Buyer arising from the loss of
income to the Company due to the Company having ceased to operate the
Skagen Business.
8. WARRANTIES
8.1 The Buyer warrants to the Seller that each of the warranties set out in
Part A of schedule 7 is true and accurate at the date of this Agreement.
The Guarantor warrants to the Seller that each of the warranties set out in
Part B of schedule 7 is true and accurate at the date of this Agreement.
8.2 Subject to clause 9 and the provisions of schedule 6, the Seller warrants
to the Buyer that each Warranty is true and accurate at the date of this
Agreement.
16
8.3 The Warranties are qualified by the facts and circumstances fairly
disclosed in the Disclosure Letter.
8.4 The Buyer acknowledges and agrees that at the time of entering into this
Agreement it is not aware of any matter, fact or circumstance which is
inconsistent with the Warranties or constitutes a breach of any of them.
8.5 The Buyer shall have no right to rescind this agreement by reason of breach
of Warranty or otherwise other than in circumstances of fraud on the part
of the Seller.
8.6 Each Warranty is to be construed independently and (except where this
Agreement provides otherwise) is not limited by a provision of this
Agreement or another Warranty.
9. LIMITATIONS ON THE SELLER'S LIABILITY
Schedule 6 operates to limit or exclude, as the case may be, the Seller's
liability for Relevant Claims.
10. FURTHER UNDERTAKING BY THE SELLER
10.1 On receiving the Buyer's reasonable request the Seller shall (subject to
clause 10.2, at the Buyer's cost) do and execute, or arrange to be done and
executed, each act, document and thing as may be reasonably required to be
done and executed, or arranged to be done and executed, by the Seller to
implement the sale of the Company pursuant to this Agreement.
10.2 The cost of effecting registration of the Seller Intellectual Property
Rights which are the subject of the IP Assignment in the name of Fossil,
Inc. in such of the jurisdictions in which such rights are currently
registered as may be determined by the Buyer shall be borne equally between
the Buyer and the Seller (the Seller's portion of such cost to be paid upon
presentation by the Buyer of reasonable evidence of such costs having been
incurred by the Buyer).
11. CONFIDENTIAL INFORMATION
11.1 The Seller undertakes to the Buyer, for itself and as agent and trustee for
the Company that after Completion the Seller shall not use or disclose to
any person Confidential Information it has or acquires.
11.2 The Buyer undertakes to the Seller that the Buyer shall not, and shall
procure that no member of the Buyer's Group shall, use or disclose to any
person any confidential information relating to the Seller or to the
business of the Seller ("Seller Confidential Information").
11.3 Clauses 11.1 and 11.2 do not apply to disclosure of Confidential
Information or Seller Confidential Information, as appropriate:
11.3.1 in the case of Confidential Information, to a director, officer or
employee of the Buyer or of the Company/a Group Company;
17
11.3.2 required to be disclosed by law, by a rule of a stock exchange or by
a governmental authority or other authority with relevant powers to
which the Seller or Buyer is subject or submits, whether or not the
requirement has the force of law provided that the disclosure shall
so far as is practicable be made after consultation with the other
party and after taking into account the other party's reasonable
requirements as to its timing, content and manner of making or
despatch;
11.3.3 to an adviser for the purpose of advising the Seller or the Buyer in
connection with the transactions contemplated by this Agreement
provided that such disclosure is essential for these purposes and is
on the basis that clause 10.1 applies to the disclosure by the
adviser; or
11.3.4 in the case of Confidential Information acquired by the Buyer as a
consequence of the acquisition of the shares pursuant to this
Agreement.
12. ANNOUNCEMENTS
12.1 Subject to clause 12.2, neither party may make or send a public
announcement, communication or circular concerning the transactions
referred to in this Agreement unless it has first obtained the other
party's written consent, which may not be unreasonably withheld or delayed.
12.2 Clause 12.1 does not apply to a public announcement, communication or
circular:
12.2.1 made or sent by the Buyer after Completion to a customer, client or
supplier of the Company informing it of the Buyer's purchase of the
Shares; or
12.2.2 required by law, by a rule of a stock exchange or by a governmental
authority or other authority with relevant powers to which either
party is subject or submits, whether or not the requirement has the
force of law, provided that the public announcement, communication
or circular shall so far as is practicable be made after consulta-
tion with the other party and after taking into account the reason-
able requirements of the other party as to its timing, content and
manner of making or despatch.
13. COSTS
Except where this Agreement provides otherwise, each party shall pay its
own costs relating to the negotiation, preparation, execution and
performance by it of this Agreement and of each document referred to in it
and, for the avoidance of doubt, the Buyer shall be responsible for any
stamp duty payable in respect of the transfer of the Shares to the Buyer.
14. GENERAL
14.1 A variation of this Agreement is valid only if it is in writing and signed
by or on behalf of each party.
18
14.2 The failure to exercise or delay in exercising a right or remedy provided
by this Agreement or by law does not impair or constitute a waiver of the
right or remedy or an impairment of or a waiver of other rights or
remedies. No single or partial exercise of a right or remedy provided by
this Agreement or by law prevents further exercise of the right or remedy
or the exercise of another right or remedy.
14.3 The parties' rights and remedies contained in this Agreement are cumulative
and not exclusive of rights or remedies provided by law.
14.4 Except to the extent that they have been performed and except where this
Agreement provides otherwise, the obligations contained in this Agreement
remain in force after Completion.
14.5 If a party fails to pay a sum due from it under this Agreement on the due
date of payment in accordance with the provisions of this Agreement, that
party shall pay interest on the overdue sum from the due date of payment
until the date on which its obligation to pay the sum is discharged at the
rate of 2 per cent. above the base rate from time to time of Barclays Bank
plc (whether before or after judgment). Interest accrues and is payable
from day to day.
14.6 A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of this
Agreement, but this does not affect any right or remedy of a third party
which exists or is available apart from that Act.
15. ENTIRE AGREEMENT
15.1 This Agreement and each document required to be entered into at or after
Completion in connection with this Agreement (the "Relevant Agreements")
constitute the entire agreement and supersede any previous agreements
between the parties relating to the subject matter of this Agreement.
15.2 The Buyer acknowledges that it has not relied on or been induced to enter
into this Agreement by a representation other than the Warranties or
otherwise as set out in the Relevant Agreements.
15.3 The Seller is not liable to the Buyer (in equity, contract or tort, under
the Xxxxxxxxxxxxxxxxx Xxx 0000 or in any other way) for a representation
that is not set out in the Relevant Agreements.
15.4 Nothing in this clause 15 shall have the effect of limiting or restricting
any liability of the Seller arising as a result of any fraud.
16. ASSIGNMENT
16.1 The Seller may assign and transfer its rights under this Agreement only
with the prior written consent of the Buyer save that the Seller's rights
may be assigned to another member of the Seller's Group provided the Seller
shall procure that if the assignee
19
ceases to be a member of the Seller's Group such rights shall automatically
be transferred back to the Seller.
16.2 The Buyer may assign and transfer its rights under this Agreement only with
the prior written consent of the Seller save that the Buyer's rights may be
assigned to another member of the Buyer's Group, provided the Buyer shall
procure that if the assignee ceases to be a member of the Buyer's Group
such rights shall automatically be transferred back to the Buyer.
17. NOTICES
17.1 A notice or other communication under or in connection with this Agreement
(a "Notice") shall be:
17.1.1 in writing;
17.1.2 in the English language; and
17.1.3 delivered personally or sent by first class post (and air mail if
overseas) or by fax to the party due to receive the Notice to the
address set out in clause 17.3 or to another address, person or fax
number specified by that party by not less than 7 days' written
notice to the other party received before the Notice was despatched.
17.2 Unless there is evidence that it was received earlier, a Notice is deemed
given if:
17.2.1 delivered personally, when left at the address referred to in clause
17.1.3;
17.2.2 sent by mail, except air mail, two Business Days after posting it;
17.2.3 sent by air mail, six Business Days after posting it; and
17.2.4 sent by fax, when confirmation of its transmission has been recorded
by the sender's fax machine.
17.3 The address referred to in clause 17.1.3 is:
Name of party Address Facsimile No. Marked for the attention of
The Seller Xxx xx Xxxx 00, XX-0000 Xxxxxx, Xxxxxxxxxxx 00 41 32 366 5354 Xxxx Xxxxxx
The Buyer 00 Xxxxxx Xxxxx, Xxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxx 01908 220411 Xxxxx Xxxxxx
Fossil, Inc. 0000 X. Xxxxxxxxxx Xxx. Xxxxxxxxxx, XX 00000 001 972 498 9639 X.X. Xxxxxxx
20
18. GUARANTEE
18.1 The Guarantor irrevocably and unconditionally guarantees to the Seller the
due and punctual performance of each obligation of the Buyer contained in
this Agreement and the Tax Deed. The Guarantor shall pay to the Seller from
time to time on demand any sum of money which the Buyer is at any time
liable to pay to the Buyer under or pursuant to this Agreement or the Tax
Deed and which has not been paid at the time the demand is made. The
Guarantor's obligations under this clause are primary obligations and not
those of a mere surety. If an obligation of the Buyer is void, voidable or
unenforceable for any reason or if the Guarantor's obligation of the Buyer
is void, voidable or unenforceable for any reason, the Guarantor's
obligations under this clause are unaffected and the Guarantor shall
perform the Buyer's obligations as if it were primarily liable for the
performance.
18.2 The Guarantor's obligations under clause 18.1 are continuing obligations
and are not satisfied, discharged or affected by an intermediate payment or
settlement of account by, or a change in the constitution or control of, or
the insolvency of, or bankruptcy, winding up or analogous proceedings
relating to, the Buyer.
19. GOVERNING LAW AND JURISDICTION
19.1 This Agreement is governed by English law.
19.2 Except as otherwise provided in this Agreement (including, for the
avoidance of doubt, clause 6.9), the courts of England have exclusive
jurisdiction to settle any dispute arising from or connected with this
Agreement (a "Dispute").
19.3 The parties agree that the courts of England are the most appropriate and
convenient courts to settle any Dispute and, accordingly, that they will
not argue to the contrary.
20. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
when executed and delivered is an original and all of which together
evidence the same agreement.
21
SCHEDULE 1
INFORMATION ABOUT THE COMPANY
PART A: THE COMPANY
1. Registered number: 03014656
2. Place of incorporation: England and Wales
3. Address of registered office: 00/00 Xxxxxxx Xxx
Xxxxxxx, Xxxxxx XX0 0XX
4. Type of company: Private Limited
5. Authorised share capital: (pound)1,000,000
6. Issued share capital: (pound)1,000,000
7. Directors: Xxxxxx Xxxx Xxx
Marc Xxxxx Xxxxxx Xxxxxx
Xxxx-Xxxxxx Xxxxxx
8. Secretary: Xxxxxx Xxxx Xxx
9. Accounting reference date: 31 December
10. Auditors: KPMG
22
SCHEDULE 2
CALCULATION OF FIRST QUARTER NET PROFIT
23
SCHEDULE 3
COMPLETION REQUIREMENTS
1. Seller's obligations
1.1 At Completion the Seller shall deliver to the Buyer:
1.1.1 duly executed transfer(s) in respect of the Shares to the Buyer or
its nominee(s) and the share certificate(s) for the Shares;
1.1.2 as evidence of the authority of each person executing a document
referred to in this schedule on the Seller's behalf:
(a) a copy of the minutes of a duly held meeting of the directors of
the Seller (or a duly constituted committee thereof) authorising
the execution by the Seller of the document and, where such
execution is authorised by a committee of the board of directors
of the Seller, a copy of the minutes of a duly held meeting of
the directors constituting such committee or the relevant extract
thereof; or
(b) a copy of the power of attorney conferring the authority in each
case certified to be true by a director or the secretary of the
Seller;
1.1.3 an irrevocable power of attorney duly executed by the Seller in
favour of the Buyer or its nominee(s) generally in respect of the
Shares in the agreed form;
1.1.4 the common seal (if any) of the Company and each register and minute
book made up to the Completion Date; and each certificate of
incorporation and certificate of incorporation on change of name for
the Company;
1.1.5 a copy of a letter to the Company from its auditors resigning their
office with effect from Completion and containing the statement
referred to in section 394 of the Act, the original of the letter
having been deposited at the registered office of the relevant
company;
1.1.6 resignations in the agreed form from each of Marc Xxxxx Xxxxxx Xxxxxx
and Xxxx-Xxxxxx Xxxxxx as directors and Xxxxxx Xxxx Xxx as secretary
of the Company expressed to take effect subject to Completion;
1.1.7 a signed letter from the Seller to the Company in the agreed form
relating to waiver of royalty payments;
1.1.8 a signed letter from Burberry Watch Company S.A. to the Company in
the agreed form;
1.1.9 a counterpart of the Tax Deed duly executed by the Seller;
24
1.1.10 a counterpart of the IP Assignment duly executed by the Seller; and
1.1.11 a counterpart of each of the deeds of termination relating to the
trademark licence agreements and royalty agreements between the
Seller and the Company duly executed by the Seller.
1.2 The Seller shall ensure that at Completion a meeting of the board of
directors of the Company is held at which the directors:
1.2.1 vote in favour of the registration of the Buyer or its nominee(s) as
member(s) of the Company in respect of the Shares (subject to the
production of properly stamped transfers);
1.2.2 appoint persons nominated by the Buyer as directors, secretary and
auditors of the Company with effect from the end of the meeting;
1.2.3 accept the resignations of each director [and secretary] resigning
pursuant to paragraph 1.1.6 so as to take effect from the end of the
meeting.
2. Buyer's obligations At Completion the Buyer shall deliver to the Seller:
2.1 as evidence of the authority of each person executing a document referred
to in this schedule on the Buyer's and on the Guarantor's behalf:
(a) a copy of the minutes of a duly held meeting of the directors of the
Buyer (or a duly constituted committee thereof) authorising the
execution by the Buyer of the document and, where such execution is
authorised by a committee of the board of directors of the Buyer, a
copy of the minutes of a duly held meeting of the directors
constituting such committee or the relevant extract thereof; or
(b) a copy of the power of attorney conferring the authority
in each case certified to be a true copy by a director or the secretary of
the Buyer;
2.2 a duly executed Commission letter in the agreed form;
2.3 a counterpart of the Tax Deed duly executed by the Buyer; and
2.4 counterparts of the IP Assignment duly executed by the Buyer.
25
SCHEDULE 4
WARRANTIES
Table of Contents
No. Subject Matter
1. Capacity and Authority
2. Information
3. Shares and Subsidiary Undertakings
4. Accounts
5. Changes since the Last Accounting Date
6. Tax
7. Assets
8. Intellectual Property
9. Insurance
10. Real Property
11. Material Contracts
12. Suppliers and Customers
13. Effect of Sale
14. Employees
15. Indebtedness
16. Insolvency, Winding up etc.
17. Litigation and Compliance with Law
18. Constitution, Registers and Returns
19. Brokerage or Commissions
20. Insider Agreements
26
1. CAPACITY AND AUTHORITY
1.1 Incorporation and existence
The Company is a private limited company incorporated under English law
with the right, power and authority to conduct its business as conducted at
the date of this Agreement.
1.2 Right, power, authority and action
The Seller has the right, power and authority, and has taken all action
necessary, to execute, deliver and exercise its rights, and perform its
obligations, under this Agreement and each document to be executed at or
before Completion.
1.3 Binding agreements
The Seller's obligations under this Agreement and each document to be
executed at or before Completion are, or when the relevant document is
executed will be, binding on the Seller in accordance with their terms.
2. INFORMATION
2.1 The information in Schedule 1 is true and accurate immediately prior to
Completion of this Agreement.
2.2 All information or documents concerning the Company supplied to the Buyer
by the Company or the Seller or their agents and included in the bundle
attached to the Disclosure Letter was provided in good faith and, to the
best of the Seller's knowledge, information and belief, does not contain
anything which is materially misleading (either in itself or by omission).
3. SHARES AND SUBSIDIARY UNDERTAKINGS
3.1 The Shares
3.1.1 The Seller is the sole legal and beneficial owner of the Shares.
3.1.2 The Shares comprise the whole of the Company's allotted and issued
share capital, have been properly allotted and issued and are fully
paid or credited as fully paid.
3.1.3 There is no Encumbrance, and there is no agreement, arrangement or
obligation to create or give an Encumbrance, in relation to any of
the Shares or unissued shares in the capital of the Company.
3.1.4 Other than this Agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, transfer,
redemption or repayment of, or the grant to a person of the right
(conditional or not) to require the allotment, issue, transfer,
redemption or repayment of, a share in the capital
27
of the Company (including, without limitation, an option or right of
pre-emption or conversion).
3.1.5 The Company has not in the last three years purchased or redeemed any
of, or reduced, its share capital.
3.2 Subsidiary Undertakings
3.2.1 The Company does not have a subsidiary undertaking.
3.2.2 The Company has no interest in, and has not agreed to acquire an
interest in, any person.
4. ACCOUNTS
4.1 General
4.1.1 The Accounts have been prepared and audited on a proper and
consistent basis in accordance with the law and applicable standards,
principles and practices generally accepted in the United Kingdom.
4.1.2 No change in accounting policies has been made in preparing the
accounts of the Company for each of the three financial years of the
Company ended on the Last Accounting Date, except as stated in the
audited balance sheets and profit and loss accounts for those years.
4.1.3 The Accounts show a true and fair view of the assets, liabilities and
state of affairs of the Company as at the Last Accounting Date and of
the profits and losses of the Company for the financial year ended on
the Last Accounting Date.
4.2 Accounting records
The Company's accounting records are up-to-date, in its possession or under
its control and are properly completed in all material respects in
accordance with the law and applicable standards, principles and practices
generally accepted in the United Kingdom.
5. CHANGES SINCE THE LAST ACCOUNTING DATE
5.1 General
Since the Last Accounting Date:
5.1.1 the Company's business has been operated in the usual way so as to
maintain it as a going concern; and
5.1.2 there has been no material adverse change in the financial or trading
position of the Company.
5.2 Specific
28
Since the Last Accounting Date:
5.2.1 the Company has not, other than in the usual course of its business:
(a) acquired or disposed of, or agreed to acquire or dispose of, a
material asset; or
(b) assumed or incurred, or agreed to assume or incur, a material
liability, obligation or expense (actual or contingent);
5.2.2 the Company's business has not been materially and adversely affected
by the termination of, or a change in the terms of, an agreement or
by the loss of a customer or supplier;
5.2.3 save in respect of the Dividend, the Company has not declared, paid
or made a dividend or distribution (including, without limitation, a
distribution within the meaning of the Taxes Act) except as provided
in the Accounts;
5.2.4 the Company has not changed its accounting reference period or
changed in any material respect its accounting methods or practices;
5.2.5 the Company has not created, allotted, issued, acquired, repaid or
redeemed share or loan capital or made an agreement or arrangement or
undertaken an obligation to do any of those things; and
5.2.6 the Company has not hired, or terminated the employment of, or
altered the terms of employment of, any employee of the Company
entitled to remuneration at an annual rate, or an average annual rate
over the last three financial years, of more than (pound)40,000 nor
paid a bonus to such person(s) to which they are not entitled under
the terms of their employment.
6. TAX
6.1 General
6.1.1 The Company is and has at all times been resident only in the United
Kingdom for all Tax purposes. The Company is not liable to pay and
has at no time incurred any liability to Tax chargeable under the
laws of any jurisdiction other than the United Kingdom.
6.1.2 The Company has paid all Tax which it has become liable to pay and is
not, and has not in the three years ending on the date of this
Agreement been, liable to pay a penalty, surcharge, fine or interest
in connection with Tax.
6.1.3 The Company has within applicable time limits made all returns,
provided all information and maintained in all material respects all
records in relation to Tax as it is required to make, provide or
maintain and has complied in all material respects on a timely basis
with all notices served on it and any other requirements lawfully
made of it by any Tax Authority. To the best of the Seller's
knowledge, information and belief, no return (and nothing in a
return)
29
is disputed or is yet to be determined by, or is subject to agreement
with, a Tax Authority.
6.1.4 The Company is not involved in a dispute in relation to Tax. No Tax
Authority has investigated or indicated that it intends to investi-
gate the Company's Tax affairs.
6.2 Value added tax The Company:
(a) is registered for the purposes of the VATA;
(b) has made, given, obtained and kept up-to-date, materially full and
accurate records, invoices and documents appropriate or required for
the purposes of the VATA;
(c) has complied in all material respects with all other applicable VAT
legislation and in particular has filed all returns and made all
payments of VAT on a timely basis; and
(d) has not been required by a Tax Authority to give security under the
VATA.
7. ASSETS
7.1 Title
7.1.1 Each asset (save, for the avoidance of doubt, assets which are the
subject of lease, hire or hire purchase arrangements or retention of
title arrangements pending payments of sums owed to suppliers)
included in the Accounts or acquired by the Company since the Last
Accounting Date (other than stock disposed of in the usual course of
business) and which is in the reputed ownership of the Company is:
(a) legally and beneficially owned solely by the Company free from
any Encumbrance; and
(b) where capable of possession, in the possession or under the
control of the Company.
7.1.2 The Company's asset registers comprise a materially complete and
materially accurate record of all the plant, machinery, equipment,
vehicles and other assets owned, possessed or used by it.
7.2 Hire purchase and leased assets
The Company is not a party to, nor is liable under, a lease or hire or hire
purchase agreement.
30
7.3 Debtors
Each debt shown in the Accounts as being owed to the Company arose from
valid sales during the ordinary course of business of the Company.
8. INTELLECTUAL PROPERTY
8.1 Each of the Intellectual Property Rights is legally and beneficially owned
by either the Seller or the Company, free from any licence (save for
licences between the Seller and the Company) or Encumbrance.
8.2 Neither the Seller nor the Company have received notice that any of the
Intellectual Property Rights:
8.2.1 are the subject of a claim or opposition from a person as to title,
validity, enforceability, entitlement or otherwise; or
8.2.2 infringe the Intellectual Property rights of any third party.
8.3 All renewal and maintenance fees and taxes due in respect of jurisdictions
in which the Company operates and payable prior to Completion in respect of
each of the Intellectual Property Rights have been paid in full.
8.4 The Company has the right to use all Intellectual Property which is
necessary for the effective operation of the business of the Company as
operated immediately prior to the date of this Agreement.
8.5 To the best of the Seller's knowledge, information and belief, there is not
any infringement or unauthorised use of any of the Intellectual Property
Rights.
9. INSURANCE
9.1 Policies
The Disclosure Letter contains a list of, and the principal terms of, each
current insurance and indemnity policy in respect of which the Company has
an interest (including any active historic policies which provide cover on
a losses occurring basis) (together the "Policies").
9.2 Status of the Policies
To the best of the Seller's knowledge, information and belief, each of the
Policies is valid and enforceable.
9.3 Premiums
All premiums which are due under the Policies have been paid.
31
10. REAL PROPERTY
10.1 Extent of property
The Property comprises all of the land and premises occupied or used by, or
in the possession of, the Company. The Company has no legal interest in any
land or premises other than pursuant to the Lease.
10.2 Lease
The copy of the Lease disclosed to the Purchaser is a true and correct copy
of the Lease. Neither the Company nor, to the best of the Seller's
knowledge, information and belief, the landlord, is in material breach of
the terms of the Lease.
10.3 Environmental
To the best of the Seller's knowledge, information and belief, there are no
underground storage tanks located on the Property in which any hazardous or
toxic substance, material or waste which is regulated by any relevant
governmental authority, is or was stored. To the best of the Seller's
knowledge, information and belief the Company is in compliance with any
material environmental regulation relating to the Company or the Property.
11. MATERIAL CONTRACTS
11.1 The Seller has disclosed to the Buyer copies of each agreement, arrangement
or obligation to which the Company is a party (a "Contract") and which is
material in the context of the Company's business as a whole (each a
"Material Contract") and copies of each Contract which has a significant
effect on the day to day operation of the Company's business.
11.2 Neither the Company nor, to the best of the Seller's knowledge, information
and belief, neither the Company nor any party with whom the Company has
entered into a Material Contract, is in material breach of the Material
Contract.
12. SUPPLIERS AND CUSTOMERS
12.1 During the period 1 January 2000 to the date of this Agreement no
substantial supplier or customer of the Company (being one which supplies
or purchases, as appropriate, greater than 10% of the Company's annual
purchases or sales, as appropriate), who is at the date of this Agreement
still a supplier or customer of the Company, has:
12.1.1 stopped, or indicated an intention to stop, trading with the
Company;
12.1.2 reduced, or indicated an intention to reduce, substantially its
trading with the Company; or
12.1.3 changed or indicated an intention to change, substantially the terms
on which it is prepared to trade with the Company.
32
12.2 To the best of the Seller's knowledge, information and belief, no
substantial supplier or customer of the Company (being one which supplies
or purchases, as appropriate, greater than 10% of the Company's annual
purchases or sales, as appropriate) is likely to, as a direct result of the
execution or performance of this Agreement:
12.2.1 stop trading with the Company;
12.2.2 reduce substantially its trading with the Company; or
12.2.3 change substantially the terms on which it is prepared to trade with
the Company.
13. EFFECT OF SALE
To the best of the Seller's information, knowledge and belief, neither the
execution nor the performance of this Agreement or any document to be
executed at or before Completion will:
13.1 materially conflict with;
13.2 result in a material breach of; or
13.3 give rise to an event of default under, any agreement or arrangement to
which the Company is a party or any legal or administrative requirement by
which the Company is bound.
14. EMPLOYEES
14.1 General The Disclosure Letter contains details of:
14.1.1 the total number of the Company's employees including those who are
on maternity leave or absent because of disability or other long-
term leave of absence and who have or may have a right to return to
work with the Company;
14.1.2 the name, date of start of employment, period of continuous
employment, salary and other benefits, grade and age of each
employee of the Company; and
14.1.3 the terms and conditions of each employee of the Company entitled to
remuneration at an annual rate, or an average annual rate over the
last three financial years, of more than (pound)20,000.
14.2 Records
The Company has maintained up-to-date and materially accurate records
regarding the employment of each of its employees and termination of
employment.
33
15. INDEBTEDNESS
Except as disclosed in the Accounts or in the Disclosure Letter and save
for the Loan and any bank overdraft incurred in the ordinary course of
business, the Company does not have outstanding and has not agreed to
create or incur loan capital, borrowings or indebtedness in the nature of
borrowings (including, without limitation, any such indebtedness to the
Seller).
16. INSOLVENCY, WINDING UP ETC.
16.1 Winding up and administration
No order has been made, petition presented or resolution passed for the
winding up of the Company or for the appointment of a provisional
liquidator to the Company and no administration order has been made in
respect of the Company.
16.2 Receivership
No receiver or receiver and manager has been appointed of the whole or part
of the Company's business or assets.
16.3 Voluntary arrangements
No voluntary arrangement has been proposed under section 1 of the
Insolvency Xxx 0000 in respect of the Company. No compromise or arrangement
has been proposed, agreed to or sanctioned under section 425 of the Act in
respect of the Company.
16.4 Insolvency
The Company is not insolvent or unable to pay its debts within the meaning
of section 123 of the Insolvency Xxx 0000.
16.5 Payment of debts
The Company has not stopped paying its debts as they fall due.
16.6 Distress etc.
No distress, execution or other process has been levied on an asset of the
Company.
16.7 Unsatisfied judgments
There is no unsatisfied judgment or court order outstanding against the
Company.
17. LITIGATION AND COMPLIANCE WITH LAW
17.1 Litigation
17.1.1 Save for the collection of debts in the ordinary course of its
business the Company is not involved in a civil, criminal,
arbitration, administrative or other proceeding. To the best of the
Seller's knowledge, information and
34
belief, no civil, criminal, arbitration, administrative or other
proceeding is pending or threatened by or against the Company.
17.1.2 There is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal, arbitrator or governmental agency
against the Company.
17.2 Compliance with law
To the best of the Seller's knowledge, information and belief the Company
has conducted its business and dealt with its assets in all material
respects in accordance with all applicable legal and administrative
requirements.
17.3 There is not and has not been any government or other investigation,
enquiry or disciplinary proceeding concerning the Company and to the best
of the Seller's knowledge, information and belief, none is pending or
threatened.
18. CONSTITUTION, REGISTERS AND RETURNS
18.1 Constitution
The Company is operating and has always operated its business in accordance
with its memorandum and articles of association at the relevant time (other
than instances of non-compliance with such documents as have had no effect
on the operation of the Company's business). The copy of the memorandum and
articles of association of the Company disclosed to the Buyer and in the
bundle attached to the Disclosure Letter is a true and correct copy of the
original.
18.2 Registers etc.
Each register which the Act requires the Company to keep has been properly
kept and contains a materially complete and materially accurate record of
the matters which it is required by the Act to record. No notice has been
received by, or allegation made to, the Company that a register is
incorrect or should be rectified.
18.3 Returns etc.
All returns, particulars, resolutions and other documents required to be
delivered by the Company to the Registrar of Companies have been prepared
and delivered.
18.4 Powers of attorney and authorities
The Company has not given a power of attorney or other authority by which a
person may enter into an agreement, arrangement or obligation on the
Company's behalf (other than an authority for a director, other officer or
employee to enter into an agreement in the usual course of that person's
duties).
19. BROKERAGE OR COMMISSIONS
No person is entitled to receive a finder's fee, brokerage or commission
from the Company in connection with this Agreement.
35
20. INSIDER AGREEMENTS
Save in respect of employment agreements, there is not, and during the two
years ending on the date of this Agreement there has not been, any
agreement or arrangement (legally enforceable or not) to which the Company
is or was a party and in which a director of the Company or a person
connected with him is or was interested in any way. For this purpose,
"connected" has the meaning given by section 839 of the Taxes Act, except
that in construing section 839 "control" has the meaning given by section
840 or section 416 of the Taxes Act so that there is control whenever
either section 840 or 416 requires.
36
SCHEDULE 5
REGISTERED INTELLECTUAL PROPERTY RIGHTS
Part A
Xxxx Country Number Class
Corvette UK 2163725 14
Elysium UK 2167482 14
Freestyle UK 2163726 14
Trekker UK 2112705 14
Watchout UK 2163712 14
Freestyle Ireland 115735 14
Part B
SCHEDULE
THE TRADE MARKS
1. Registrations
Xxxx Country Number Class
AVIA Switzerland 420 194 14
XXXX Xxxxxxxxxxxxx 000 000 00
XXXX Xxxxx 650 633 14
AVIA Austria 650 633 14
XXXX Xxxxx Xxxxx 000 000 00
XXXX Portugal 650 633 14
XXXX Xxxxxx 000 000 00
XXXX Xxxxxxx 650 633 14
AVIA Russian Fed. 650 633 14
AVIA Germany 650 633 14
XXXX Xxxxxxx 000 000 00
XXXX Xxxxxx Xxxxxxxx 650 633 14
37
Xxxx Country Number Class
XXXX Xxxxx 000 000 00
XXXX Xxxxxxxx 650 633 14
XXXX Xxxxxxx 000 000 00
XXXX Xxxxxxx 650 633 14
XXXX Xxxxxxxxxxxxx 000 000 00
XXXX Yugoslavia 650 633 14
AVIA Vietnam 650 633 14
XXXX Xxxxxx 000 000 00
XXXX Xxxxx 650 633 14
AVIA Xxxxx Xxxxxxxx 000 000 00
XXXX Xxxxxx 650 633 14
XXXX Xxxxxxxxx 000 000 00
XXXX Xxxxx 0000000 00
XXXX Xxxxxxxxx X/0000/00 00
XXXX Xxxxxxxx TM104841 00
XXXX Xxxxxx 00000 00
XXXX UK 1.118.439 00
XXXX Xxxxxx 000000 00
Xxxx (styl. Denmark VR 674 1952 14
liee)
Avia (styl. New Zealand 43626 14
liee)
Avia (styl. Norway 39946 14
liee)
Avia (styl. International R 299 118 14
minuscules)
Avia (styl. Benelux R 299 118 14
minuscules)
Avia (styl. Germany R 299 118 14
minuscules)
38
Xxxx Country Number Class
Avia (styl. Portugal R 299 118 14
minuscules)
Avia (styl. Austria R 299 118 14
minuscules)
Avia (styl. Italy R 299 118 14
minuscules)
Avia (styl. Spain R 299 118 14
minuscules)
Avia (styl. France R 299 118 14
minuscules)
AVIA (styl. South Africa 66/388 14
plate)
Avia (styl. Switzerland 300438 14
plate)
Avia (styl. International 2R 221 081 14
plate)
Avia (styl. Italy 2R 221 081 14
plate)
Avia (styl. Austria 2R 221 081 14
plate)
Avia (styl. Germany 2R 221 081 14
plate)
Avia (styl. Benelux 2R 221 081 14
plate)
Avia (styl. Cyprus 29105 14
plate)
Avia (styl. UK 649.846 14
plate)
Avia (styl. Guernsey 649.846 14
plate)
Avia (styl. Hong Kong 564 of 1967 14
plate)
Avia (styl. Jersey TM 2679 14
plate)
Avia (styl. Finland 51116 14
plate)
Avia (styl. Rep. of Ireland 71073 14
plate)
Avia (styl. Xxxxx 0000 00
xxxxx)
Xxxx Polar UK 1.509.276 00
Xxxx
Xxxx Xxxxx XX 1.509.273 14
Seas
Avia Swiss UK B1.001.354 14
Star
39
Xxxx Country Number Class
Avia Tec UK 1.507.920 00
XXXX Xxxxxxxxxxx 000000 14
AZIA International 2R 145 739 14
AZIA Italy 2R 145 739 14
AZIA Germany 2R 145 739 14
AZIA Benelux 2R 145 739 14
AZIA Spain 2R 145 739 14
AZIA Portugal 2R 145 739 14
AZIA Austria 2R 145 739 14
AZIA France 2R 145 739 14
2. Applications
Xxxx Country Application No. Class
AVIA TIME USA 75/450,251 14
AVIA TIME Canada 871.595 14
AVIA TIME United Kingdom 2179791 14
40
SCHEDULE 6
LIMITATIONS OF THE SELLER'S LIABILITY
1. LIMITATION ON QUANTUM
1.1 The Seller is not liable in respect of a Relevant Claim unless the amount
that would otherwise be recoverable from the Seller (but for paragraph 1.1)
in respect of that Relevant Claim exceeds (pound)2,000.
1.2 The Seller is not liable in respect of a Relevant Claim unless and until
the amount that would otherwise be recoverable from the Seller (but for
paragraph 1.2) in respect of that Relevant Claim, when aggregated with any
other amount or amounts recoverable in respect of other Relevant Claims
(excluding any amounts in respect of a Relevant Claim for which the Seller
has no liability because of paragraph 1.1), exceeds (pound)100,000 and in
the event that the aggregated amounts exceed (pound)100,000 the Seller
shall be liable for the whole amount and not just the excess.
1.3 The Seller's total liability in respect of all Relevant Claims is limited
to an amount equal to the Consideration.
2. TIME LIMITS FOR BRINGING CLAIMS
The Seller is not liable in respect of a Relevant Claim unless the Buyer
has given the Seller written notice of the Relevant Claim (stating in
reasonable detail the nature of the Relevant Claim and, if practicable, the
amount claimed):
2.1 on or before the seventh anniversary of Completion in respect of a Relevant
Claim under the Tax Deed or for breach of a Warranty contained in paragraph
6 of schedule 4; and 2.2 on or before 28 February 2003 in respect of
another Relevant Claim.
3. NOTICE OF CLAIMS
A Relevant Claim notified in accordance with paragraph 2 and not satisfied,
settled or withdrawn is unenforceable against the Seller on the expiry of
the period of 6 months starting on the day of notification of the Relevant
Claim, unless proceedings in respect of the Relevant Claim have been issued
and served on the Seller.
4. SPECIFIC LIMITATIONS
The Seller is not liable in respect of a Relevant Claim:
4.1 to the extent that the matter giving rise to the Relevant Claim would not
have arisen but for:
4.1.1 a voluntary Event after Completion by a member of the Buyer's Group;
4.1.2 the passing of, or a change in, after the date of this Agreement a
law, rule, regulation, interpretation of the law or administrative
practice of a
41
government, governmental department, agency or regulatory body or an
increase in the Tax rates or an imposition of Tax, in each case not
actually or prospectively in force at the date of this Agreement;
4.1.3 in respect of Relevant Claims arising under the Tax Deed, to the
extent the matter giving rise to the Relevant Claim arises in
consequence of an Event occurring since the Last Accounting Date in
the Company's ordinary course of business; or
4.1.4 to the extent the matter giving rise to the Relevant Claim is a
liability for Tax to which the Corporation Tax (Instalment Payments)
Regulations 1998 apply which would not have arisen by for the receipt
or accrual of income, profits or gains after Completion.
4.2 to the extent that the matter giving rise to the Relevant Claim arises from
an Event before or after Completion at the request or direction of, or with
the written consent of, a member of the Buyer's Group (which includes the
Company only after Completion) or an authorised agent or adviser of a
member of the Buyer's Group;
4.3 to the extent that the matter giving rise to the Relevant Claim is an
amount for which the Company has a right of recovery against, or an
indemnity from, a person other than a member of the Seller's Group, whether
under a provision of applicable law, insurance policy or otherwise
howsoever, and the amount is recovered or received by the Company, provided
that the Buyer shall procure that the Company shall use its reasonable
endeavours to enforce its rights to recover or receive any such amounts;
4.4 to the extent that the matter giving rise to the Relevant Claim was taken
into account in computing the amount of an allowance, provision or reserve
in the Accounts; or
4.5 to the extent of the amount by which a liability (including a provision
against liabilities) included in the Accounts is overstated;
4.6 to the extent that the matter giving rise to the Relevant Claim arose
solely as a result of:
4.6.1 a claim, election, surrender or disclaimer made, or notice or consent
given, after Completion under, or in connection with, a provision of
an enactment or regulation relating to Tax by a member of the Buyer's
Group; or
4.6.2 the Company's failure or omission to make a claim, election,
surrender or disclaimer, or give a notice, or consent or do another
thing, under, or in connection with, a provision of an enactment or
regulation relating to Tax after Completion, the anticipated making,
giving or doing of which was taken into account in computing the
provision for Tax in the Accounts;
4.7 to the extent that the matter giving rise to the Relevant Claim is a Tax
liability against which a Relief arising on or before Completion (other
than an Accounts Relief) is
42
available for set off or would have been available but for the Company's
failure after Completion to make an election under section 102 of the
Finance Xxx 0000;
4.8 to the extent that the Company or the Buyer obtains the benefit of a Relief
(other than an Accounts Relief) in an accounting period ending after the
Last Accounting Date for an expenditure, reserve or provision which was
recognised in the Accounts but was not, in preparing the Accounts, treated
as deductible or allowable for Tax purposes; or
4.9 to the extent that the matter giving rise to the Relevant Claim is a
liability for Tax which has been paid or discharged on or before
Completion.
5. RECOVERY ONLY ONCE
The Buyer is not entitled to recover more than once in respect of any one
matter giving rise to a Relevant Claim.
6. CLAIMS UNDER BOTH THE WARRANTIES AND THE TAX DEED
If in respect of any one matter a Relevant Claim may be made under the
Warranties and under the Tax Deed, then to the extent that the Relevant
Claim is satisfied under the Warranties, an amount payable under the Tax
Deed in respect of the same matter is reduced accordingly and vice versa.
7. CONDUCT OF RELEVANT CLAIMS
7.1 If a Buyer's Group Undertaking becomes aware of a matter which might give
rise to a Relevant Claim (including, in the case of a Tax Claim, any
Assessment):
7.1.1 the Buyer shall immediately give written notice to the Seller of the
matter and/or the Assessment and shall consult with the Seller with
respect to the matter;
7.1.2 the Buyer shall, and shall ensure that each member of the Buyer's
Group will, provide to the Seller and its advisers reasonable access
to premises and personnel and to relevant assets, documents and
records within each member of the Buyer's Group power or control for
the purposes of investigating the matter and/or the Assessment on
reasonable notice during normal business hours;
7.1.3 the Seller (at its cost) may take copies the documents or records,
and photograph the premises or assets, referred to in paragraph
7.1.2;
7.1.4 the Buyer shall not, and shall ensure that no member of the Buyer's
Group will, admit liability in respect of, or compromise or settle,
the matter without the prior written consent of the Seller (not to be
unreasonably withheld or delayed).
7.2 In assessing any damages or other amounts recoverable for a Relevant Claim
there shall be taken into account any corresponding savings by, or net
benefit to, a member of the Buyer's Group which is directly related to the
claim.
43
8. RECOVERY FROM ANOTHER PERSON
8.1 If the Seller pays to the Buyer an amount in respect of a Relevant Claim
and the Buyer or the Company subsequently recovers or is or becomes
entitled to recover from another person an amount which is referable to the
matter giving rise to the Relevant Claim, the Buyer shall immediately
notify the Seller and, if relevant, shall (at the cost of the Seller)
procure that the Company shall take such action as the Seller may
reasonably require to enforce the recovery against the person in question;
and
8.1.1 if the Seller has already paid an amount in satisfaction of a
Relevant Claim and the amount paid by the Seller in respect of the
Relevant Claim is more than the Sum Recovered, the Buyer shall immed-
iately pay to the Seller the Sum Recovered;
8.1.2 if the Seller has already paid an amount in satisfaction of a
Relevant Claim and the amount paid by the Seller in respect of the
Relevant Claim is less than or equal to the Sum Recovered, the Buyer
shall immediately pay to the Seller an amount equal to the amount
paid by the Seller; and
8.1.3 if the Seller has not already paid an amount in satisfaction of a
Relevant Claim, the amount of the Relevant Claim for which the Seller
would have been liable shall be reduced by and to the extent of the
Sum Recovered.
8.2 For the purposes of paragraph 8.1, "Sum Recovered" means an amount equal to
the total of the amount recovered from the other person less any Tax
computed by reference to the amount recovered from the person payable by a
member of the Buyer's Group and less all reasonable costs incurred by a
Buyer's Group Undertaking in recovering the amount from the person.
9. MITIGATION
Nothing in schedule 7 restricts or limits the Buyer's general obligation at
law to mitigate any loss or damage which it may incur in consequence of a
matter giving rise to a Relevant Claim.
10. PRESERVATION OF INFORMATION
The Buyer shall, and shall ensure that the Company will, preserve all
documents, records, correspondence, accounts and other information
whatsoever relevant to a matter which may give rise to a Relevant Claim for
a period of seven years after Completion.
11. GENERAL
Nothing in this schedule 7 shall have the effect of limiting or restricting
any liability of the Seller in respect of a Relevant Claim arising as a
result of any fraud.
44
SCHEDULE 7
BUYER'S AND GUARANTOR'S WARRANTIES
Part A
1. INCORPORATION AND EXISTENCE
The Buyer is a limited company incorporated under English law.
2. RIGHT, POWER, AUTHORITY AND ACTION
The Buyer has the right, power and authority, and has taken all action
necessary, to execute, deliver and exercise its rights, and perform its
obligations, under this Agreement and each document to be executed at or
before Completion.
3. BINDING AGREEMENTS
The Buyer's obligations under this Agreement and each document to be
executed at or before Completion are, or when the relevant document is
executed will be, enforceable in accordance with their terms.
Part B
1. RIGHT, POWER, AUTHORITY AND ACTION
The Guarantor has the right, power and authority, and has taken all action
necessary, to execute, deliver and exercise its rights, and perform its
obligations, under this Agreement.
2. BINDING AGREEMENTS
The Guarantor's obligations under this Agreement are enforceable in
accordance with their terms.
45
EXECUTED by the parties:
Signed on behalf of )
ROVENTA-HENEX S.A. by: )
---------------------------- ------------------------------
Name Name
---------------------------- ------------------------------
Position Position
Signed on behalf of )
FOSSIL (UK) HOLDINGS )
LIMITED by: )
----------------------------
Name
----------------------------
Position
Signed on behalf of )
FOSSIL, INC. by: )
----------------------------
Name
----------------------------
Position
