Sample Business Contracts


Framework Agreement - Benetton Group SpA and Prince Sports Inc.

Asset Purchase Forms

FRAMEWORK AGREEMENT

  1. This Framework Agreement is entered into on this day 27 of the month of March, 2003, by and between
  2. 1. BENETTON GROUP S.p.A., an Italian company, with registered office in Ponzano Veneto (TV), Villa Minelli, 1, represented by its pro-tempore legal representative Mr. Luigi de Puppi de Puppi (hereinafter referred to as "Benetton");
  3. 2. PRINCE SPORTS, INC., a Delaware company (USA), with registered office in Wilmington, Delaware, represented by its pro-tempore legal representative Mr. Michael Lyons (hereinafter referred to as the "Purchaser").

WHEREAS:

  1. Benetton controls indirectly Benetton Sportsystem U.S.A. Inc. (BSS) a company based in the U.S.A. which, among other things, owns and manages a going concern ("Business) that researches, develops, designs, markets and distributes tennis, squash and badminton racquets, shoes, apparel and accessories which bear the trademarks "Prince" and "Ektelon" or any related trademarks.
  2. Having received manifestations of the interest to purchase the Business from several subjects, Benetton granted to the merchant bank Merrill Lynch International, Milan Branch ("Merrill Lynch") mandate to study the feasibility of divesting of such Business, including the trademarks.
  3. From 13 May 2002, Merrill Lynch asked the several potentially interested parties to confirm their intention to buy and to make a non-binding offer, so as to make a first evaluation.
  4. On the basis of the non-binding offers received, Benetton - with the assistance of Merrill Lynch - selected several interested subjects, among which the Purchaser, and allowed them to carry out documentary due diligence activity and to meet some of the managers who have management responsibility in relation to the Business.
  5. After the above activities were carried out and the contractual documents reviewed, Merrill Lynch asked the selected subjects to make an offer for the purchase of the trademarks and related Business.
  6. On the basis of such offer, the Parties have negotiated and finally signed this Framework Agreement, which - along with its Schedules - contains and represents all the agreements between the Parties regarding the sale and purchase of the Business including the above mentioned trademarks.

THEREFORE, acknowledging that the recitals above constitute an integral and substantial part of the agreement, the Parties hereby agree as follows:

  1. DEFINITIONS
  2. In this Framework Agreement, the terms defined below, when capitalised, shall have the meaning attributed to them in this Article 1.

    Escrow Bank means Citibank or any other primary bank as agreed by the Parties to manage the Escrow Account.

    Assets means the movable assets used only by the Business in the exercise of its activity, and listed, with an indication of the place where they are located, in Schedule 1.

    Intangible Assets means the Patents, the Trademarks, the Contracts, the goodwill and all the other intangible assets currently used exclusively in connection with the Business, including, without limitation, all and any trade secrets, inventions, designs, copyrights, non registered trademarks and other intellectual property, know-how, manufacturing methods and processes, domain names and websites, if any.

    Patents means the patents, utility models, design patents and ornamental designs registered by or issued to the Sellers or their relevant assignors in reference to the Products, as listed in Schedule 2, and patents application already filed by the Sellers or by their relevant assignors or in the process of filing by the Sellers or by their relevant assignors with regards to the Products, including the applications filed after the date of the signature of this Framework Agreement and up to the Closing Date.

    Closing means the performance of the transactions necessary to transfer the Business in each Jurisdiction.

    Fixed Component means the amount of Euro 36.500.000,00, which refers to the Intangible Assets and constitutes the fixed, and not subject to adjustments, portion of the Price for the Business.

    Variable Component means the algebraic sum of the value, ascertained on Closing Date pursuant Article 4 of this Framework Agreement, of Assets, Inventory, Receivables and, where expressly agreed upon by the Parties, Liabilities.

    Escrow Account means the bank account which shall be opened prior to the Closing Date, with the Escrow Bank in the name of the Purchaser and put on escrow in favour of Benetton pursuant to the Irrevocable Instructions, on which Purchaser shall credit the Deferred Price on the Closing Date.

    Contracts means the contracts and agreements entered into for the activity of the Business, save for the Excluded Agreements, as per the list under Schedule 3. In the event, subsequent to the execution of this Framework Agreement, certain further agreements not included in said Schedule 3 were identified, the Parties shall agree on the possible inclusion of the same in the Business without any further cost for any of the Parties.

    Excluded Agreements means those agreements which, although executed in connection with the activities of the Business, the Parties have agreed will not be transferred, and are only those indicated in the list attached under 4.

    Closing Agreements means those agreements by means of which the transfer of the Business will be completed on the Closing Date in each Jurisdiction, and which will be executed in accordance with Art. 2 below, between the Seller(s) concerned and the Transferee(s) concerned in the form provided by local laws.

    Lease Agreement means the agreement attached to this Framework Agreement sub 5 and which constitutes an element essential to the transaction contemplated hereunder and will be executed by and between BSS and the Purchaser or its designee on the Closing Date, pursuant to which the Purchaser or its designee, will rent a portion of the Real Property in accordance with what provided in the Article 8

    Receivables means the commercial receivables of the Sellers (other than Benetton Sportsystem Schweiz AG) related to the supply of the Products existing on the Closing Date.

    Closing Date means 30 April 2003 or, should at such date the conditions that, pursuant to Article 6.1 hereafter, shall be fulfilled prior the Closing Date, not be fulfilled, the fifth business day after the fulfilment of such conditions, subject always to a different written agreement between Parties.

    Employees means the 91 employees working for the Business, who render services in the USA, in Hong Kong and Switzerland who will be hired by the Purchaser, pursuant to art. 9.1. here below, or who the Purchaser will procure to be hired by the Transferees and which are numerically listed in Schedule 6.

    Due Diligence Documents means the documents and the information related to the Business made available to the Purchaser during the due diligence activity or subsequently until the date this Framework Agreement is signed, listed in Schedule 7.

    Jurisdiction means each country in which any element of the Business is located.

    Irrevocable Instructions means the irrevocable instructions pursuant to which the Purchaser and Benetton (or any of the Sellers designed by Benetton), jointly, shall give mandate to the Escrow Bank to manage the Escrow Account substantially in compliance with the terms set forth under Schedule 8 (safe for any further amendment, non detrimental vis-à-vis the Purchaser, which shall be negotiated between Benetton and the Escrow Bank).

    Inventory means the entire inventory held by the Seller (in stock, in transit and related to orders already sent to suppliers) of Products, semi-finished products, raw materials, and other materials existing on the Closing Date, the quantity of which will be ascertained in accordance with the provisions Article 4 of this Framework Agreement.

    Trademarks means the trademarks "Prince" and "Ektelon", as well as all other trademarks, related to said trademarks, registered by the Sellers or by their relevant assignors, as listed in Schedule 9 and the trademark registration applications filed by the Sellers or by their relevant assignors with regards to the Products until the Closing Date, with explicit exclusion of the trademark "Benetton" and of all the connected trademarks and intellectual properties.

    Put Option means the option to sell that will be granted by the Purchaser to BSS on the Closing Date pursuant to the Lease Agreement, on the basis of which BSS shall have the right to sell, and in the event of the exercise of such option the Purchaser, or its designee, shall be under an obligation to buy - the Real Property.

    Liabilities means all the liabilities of the Business which the Parties will agree to transfer as part of the Business, the entity of which will be ascertained in accordance with Article 4 of this Framework Agreement. All other liabilities, whether connected or not with the Business up to the Closing Date, including, for example, but without limiting the generality of the foregoing, liabilities deriving from the Excluded Agreements or from agreements other than the Contracts, as well as tax, environmental, pension, employment liabilities or those deriving from litigation or infringements of the law, shall be expressly excluded.

    Losses means all costs, expenses, liabilities and losses suffered by the Transferees or the Sellers as a direct and exclusive result of breaches of the representations and warranties set out in Articles 10.1 and 10.2 hereafter with explicit exclusion of indirect damages and of missed profits.

    Interim Period means the period from the date this Framework Agreement is signed up to the Closing Date.

    Permits means all permits, licenses, authorisations and all other similar documents issued by any administrative authorities situated in any Jurisdiction, obtained by the Sellers in connection with the Business, which the Parties shall agree, insofar as allowed by the applicable laws, to transfer without consideration as part of the Business on the Closing Date.

    Price means the total resulting from the sum of the Fixed Component and Variable Component.

    Deferred Price means the portion of the Fixed Component, for an amount of Euro 26.500.000,00.

    Accounting Principles means the accounting principles applied by BSS, as the case may be, in the drawing up of its accounts as at December 31, 2002, as specified in and/or derogating from the accounting principles described in Schedule 10, the valuation criteria having been applied consistently (except where expressly otherwise provided).

    Products means all the products which display the Trademarks manufactured and sold in the context of the activity of the Business.

    Real Property means the land and buildings located in Bordentown, (USA), property of Sellers, as identified in the Schedule 11.

    Business means the totality of the going concern being transferred pursuant to this Framework Agreement, including the Assets, the Contracts, the Receivables, the Employees, the Intangible Assets, the Inventory, and the Liabilities, if any.

    Auditing Company means KPMG, of Milan, or Pricewaterhouse Coopers of Milan if the former fails to accept or has a conflict of interest or, if the latter company does not wish or cannot accept the mandate to audit, the leading Italian auditing company, independent from the Parties, as will be appointed within fifteen days from Pricewaterhouse's refusal, jointly by the Parties, or if no agreement is reached by the Parties, by the President of the Court of Milan.

    Transferees means the Purchaser, and any of its subsidiaries or affiliates, whether existing or to be incorporated before the Closing Date, which shall be designated by the Purchaser to purchase part of the Business .

    Sellers means BSS, Benetton Sportsystem Schweiz AG, Benetton Sportsystem Taiwan Ltd and Benetton Far East Ltd.

    The expression "as far as Benetton knows" shall be referred to the actual knowledge of the Managing Director or of the management of Benetton, of such circumstances referred to by such expression, as shall be proved by the existence of written communications or confirmed by the involved parties; such circumstances as the Managing Director or the management ought to have known using due care shall also be considered to be known by Benetton, but those circumstances (provided that the same are not immaterial) which have not come to the knowledge of the Managing Director or of the management of Benetton as a result of negligence on the part of the American management of the Business shall be expressly excluded.

  3. OBJECT OF THE AGREEMENT
    1. At the terms and conditions described in this Framework Agreement, Benetton undertakes to procure, pursuant to the provisions of Article 1381 of the Italian Civil Code, that BSS and the other Sellers will sell the various elements comprising the Business to the Purchaser and to the Transferees and the Purchaser undertakes to purchase and to procure that, pursuant to the provisions of Article 1381 of the Italian Civil Code, the Transferees purchase the Business.
    2. The transfer of the Business will be perfected on the Closing Date in each Jurisdiction, with the Seller(s) and the relevant Transferee(s) execution of the Closing Agreements.
    3. The Closing Agreements have the sole function of allowing perfection of the transfer in the manner allowed under the applicable laws. The terms and conditions of this Framework Agreement shall apply, even if not replicated in the Closing Agreements, to any transfer carried out in any Jurisdiction and shall prevail on covenants possibly inconsistent contemplated in the Closing Agreements, even if they are entered into earlier.
    4. Thus, any covenant of the Closing Agreements which is inconsistent with any of the provisions of this Framework Agreement shall not constitute an amendment of this Framework Agreement, unless it is so expressly provided in a written addendum signed by Benetton and the Purchaser. Therefore, in absence of such addendum, Benetton and the Purchaser, in the context of their relationship, agree not to apply - and to the extent possible to procure that the Sellers and the Transferees not apply - such inconsistent covenants (even if the same are mandatory pursuant to the relevant law), and agree in their relationship to apply - and procure that the Sellers and the Transferees involved apply in their stead - the covenants of this Framework Agreement. In the event the non-application of the inconsistent covenants between the Sellers and the Transferees is not allowed in some Jurisdictions, Benetton and the Purchaser shall make the necessary adjustments to reach the condition that would have existed if such inconsistent covenants had not been applied and the covenants of this Framework Agreement had been applied instead.

  4. PAYMENT OF THE FIXED COMPONENT OF THE PRICE
  5. 3.1 The Fixed Component shall be paid by the Purchaser to Benetton, also on behalf of the other Sellers, as part of the Closing transactions, as follows:

      1. For an amount Euro 10.000.000,00 on the Closing Date by wire transfer confirmed, with net value date, on the bank account that will be indicated by Benetton at least five days before the Closing Date;
      2. for the Deferred Price on 31 January 2004, by payment in favour of Benetton of the balance amount of the Escrow Account.

    1. In order to ensure the full and timely payment of the Deferred Price the Purchaser, on the Closing Date, shall credit in the Escrow Account an amount equal to the Deferred Price to be managed pursuant to the Irrevocable Instructions.

  6. CALCULATION AND PAYMENT OF THE VARIABLE COMPONENT
  7. 4.1 On the Closing Date Benetton and BSS will prepare a physical check of the Inventory and a list of Receivables and Liabilities, if any.

    4.2 In the following 15 working days Parties will meet to the end to proceed on mutual agreement to the ascertainment of the Inventory, the Receivables and the Liabilities, if any, keeping valid the evaluations (inclusive of the funds and reserves, if any, relating to the same) made in the respective financial statements on 31 December 2002 of BSS for the elements already existing on that date and the valuations thereof, applying the Accounting Principles to the elements of the Inventory, Receivables and Liabilities, if any, which came into existence after 1 January 2003.

    4.3 In the event Parties will not reach an agreement within the above deadline, the disputed issues only will be submitted to the Auditing Company on request of the more diligent party. The Auditing Company shall solve the dispute complying with what is contemplated in the Article 4.2 above, within the following thirty days and shall deliver copies of its findings to Benetton and the Purchaser. Except for material errors, the decision of the Auditing Company shall be final and not subject to appeal. The cost of services rendered by the Auditing Company shall be borne by the Party which will loses the dispute; for such purposes the losing Party shall be deemed to be the Party whose last offer prior to submission to the Auditing Company is further from the final decision on the matter of the relevant Auditing Company .

    4.4 Benetton at any time during the procedure of calculation of the Variable Component and for fifteen days following the completion of the same shall have the right to re-acquire from the Purchaser such items part of the Inventory or included in the list of such Receivables, which came into existence after 1 January 2003 being depreciated by the Auditing Company pursuant to Art. 4.3 here above in respect of the book value of the Sellers on Closing Date, for a price equal to that calculated pursuant the above paragraphs of this Article 4, to be paid to the Purchaser at the same time of re-acquisition in cash or, as the case may be, by cancellation of the corresponding payment obligation of the Purchaser. In such case the Purchaser shall have the right to impede the re-acquisition by Benetton by accepting to pay the book value of the relevant item or Receivable, without any reduction in value.

    4.5 The Parties agreed as a consideration for the Assets the lump sum of USD 2,200,000.00. The consideration for the Assets as above determined, shall be paid by the Purchaser to Benetton, on behalf of the Sellers in 36 months instalments of even amount, the first of which shall be paid on the Closing Date and the subsequent ones simultaneously with the payment of the rental due on the basis of the Lease Agreement; however, in the event BSS, pursuant to art. 8.5 here below, sells the Real Property to a third party before the consideration for the Assets has been fully paid, the Purchaser shall fully pay all instalments still outstanding within 10 working days as of the date of the sale of the Real Property.

    4.6 The value of the Inventory, ascertained pursuant to the paragraphs above of this Article 4 shall be paid by the Purchaser to Benetton as follows:

    4.6.1 As to 50% thereof on 31 December 2003;

    4.6.2 As to the balance on 30 June 2004.

    The above payments shall be made in US Dollars.

    4.7 The value of Receivables, ascertained pursuant to the paragraphs above of this Article 4, shall be paid by the Purchaser to Benetton in the following terms:

    4.7.1 within the fifteenth day from the end of each calendar month since the Closing Date the Purchaser shall pay to Benetton an amount equal to the value given, pursuant to this Article 4, to the Receivables collected during the previous month;

    4.7.2 the unpaid balance of the value of the Receivables shall be paid with no exception by the Purchaser to Benetton within and no later than 31 December 2003, regardless to the effective collection of the relevant Receivable;

    4.7.3 the Purchaser shall carry out all payments due to Benetton pursuant to this art. 4.7 in the same currency in which the relevant Receivable is denominated.

    4.8 Benetton shall have the right to check in any period of the year, but not more than two times per year, directly or through his appointed persons, the exact execution by the Purchaser of its obligations pursuant the Article 4.7 above. To this scope Benetton shall have the right to access to all the accounting documents of the Purchaser and to all the further documentation reasonably useful to the end to efficaciously complete the checks and the Purchaser undertakes to cause that the Business's personnel gives to Benetton and to its appointed persons all the necessary co-operation for an efficient execution of such verifications. It's understood that in the event that from such verification will result a difference of less than 1% the Purchaser shall pay to Benetton the amount mistakenly not paid and Benetton shall keep at its own charge the costs borne to carry out the verification, while in the event that from such verification it resulted a difference of more than 1%, the Purchaser shall be obliged, in addition to the immediate refund of the mistakenly paid amount, to reimburse to Benetton all the costs sustained in the performing of the verifications. In the event that the verification should show that the Purchaser has mistakenly paid to Benetton an amount higher than that actually due, Benetton shall refund to the Purchaser the excess amount paid and shall bear all costs incurred by the same in respect of such verification.

    4.9 Benetton and the Purchaser shall agree, complying with civil and fiscal laws, the allocation of the Price to the single elements which comprise the Business (and without any relevance for the purpose of this Framework Agreement).

    4.10 Benetton and the Purchaser, each to the extent of its responsibilities, shall divide the Price respectively collected and paid pursuant to this Framework Agreement, among the Sellers and the Transferees respectively, as appropriate.

    4.11 After a period of 120 days from the Closing Date, the Parties shall procure to make all necessary payments in order to settle the following situations, to the extent to which they are not taken into account in the calculation of the Price and they refer to the Business:

    4.11.1Payments effected by the Sellers before the Closing Date, to the extent such payments were consideration for services received or goods purchased after the Closing Date.

    4.11.2 Payments effected by the Transferees after the Closing Date, to the extent such payments were consideration for services received or goods purchased prior to the Closing Date.

    4.11.3 Payments received by the Sellers before the Closing Date, to the extent such payments were consideration for services rendered or goods sold after the Closing Date.

    4.11.4 Payments received by the Transferees after the Closing Date, to the extent such payments were consideration for services rendered or goods sold prior to the Closing Date.

    It's understood that, in the event the expense incurred and/or the collection made should refer to an activity spanning a period of time (e.g. advertising expenses, sponsorship agreements, sales agents' fees, etc.) straddling the Closing Date, the relevant prepaid expenses and accrued incomes shall be paid on a pro-rata temporis basis (e.g. where an expense is made with reference to the entire fiscal year 2003 and the Closing Date is 30 April 2003, the expense shall be divided for 4/12 to Benetton and for 8/12 for the Purchaser). In the event the Parties are in disagreement regarding the above adjustments, the adjustments shall be determined by the Auditing Company, upon request of the more diligent Party.

    4.12 Furthermore, within the context of the payments as per art. 4.11 above and within the same timing as therein specified, the Purchaser shall reimburse Benetton the payments carried out or to be carried out by the same or by the Sellers as commissions in favour of the agents pursuant to the agency agreements for Products delivered after the Closing Date for which the Purchaser records the sale and the subsequent receivable, but not included in the Receivable.

    4.13 All payments that the Purchaser shall make to Benetton pursuant this Article 4 shall be done, except where otherwise agreed between Parties, by bank transfer confirmed, with net value date on the date of expiration of the obligation, on the current account indicated by Benetton pursuant the Article 3.1.1 above, or on such different current account that should be indicated by Benetton to such purpose at least five days before the date planned for the payment.

    4.14 In case of delay in the execution of any payment due by one of the Parties pursuant this Article 4, without prejudice for any other remedy provided by this Framework Agreement or by the law, on the amounts due interest will accrue automatically and with no necessity of a warning notice at rate of the six months Euribor plus two hundred basis points.

    4.15 It is expressly agreed that both Benetton and the Purchaser shall be entitled to offset, up to the balance, the payment obligations pursuant to this Framework Agreement or to the Closing Agreements or to the Lease Agreement, to be borne by any of the Seller and/or of the Transferee, with the further right to receive or make payments from or to any Seller and/or any Transferee pursuant to these agreements, subject to the fact that such payments obligations are certain, liquid and enforceable. It is agreed, notwithstanding the above, that the Purchaser shall not offset any amount against the Deferred Price.

    4.16 In respect of the payments under articles 4.5, 4.6 and 4.7 here above, Benetton shall instruct the Purchaser to proceed with the payment directly in favour of the Sellers concerned to the extent this may be necessary to make such payment subject to the appropriate tax treatment. Equally the Purchaser shall procure that such payments are made in favour of the Transferees concerned.

  8. INTERIM PERIOD
    1. On the signature of this Framework Agreement, Benetton shall communicate in writing to the management in charge of the carrying out the Business, the sale and purchase obligations undertaken pursuant to this Framework Agreement and shall instruct the management to carry out the Business during the Interim Period in the ordinary course and consistently with the practices adopted up to the date on which this Framework Agreement is signed.
    2. In particular, without prejudice to the generality of the above, Benetton shall instruct the management in charge of the Business not to take any of the following actions outside the ordinary course of business and consistently with the past practises, without the prior written consent of Benetton and the Purchaser,.
      1. Material change of the terms of payment or material modification of the terms and conditions applied to clients and suppliers.

      5.2.2 Introduction of any new Products onto the market.

      5.2.3 Execution of new licenses, agency or distribution agreements.

      5.2.4 Alteration of the ordinary cycles for purchasing of raw materials and semi-finished goods or selling of Products that may anticipate to prior the Closing Date or postpone to after the Closing Date, such purchases or sales materially not in accordance with the past practise.

      5.2.5 Modification of investments or of promotional and advertising campaigns or pricing polices not justified by changes in circumstances or by the offer of new Products or services.

      5.2.6 Purchase or sale of Assets or Intangible Assets or creation of pledges, mortgages or other rights in rem on the above, save the ordinary replacement of the Assets or the Intangible Assets in accordance with past practice

      5.2.7 Modification of substantial terms of the Contracts (including the insurance policies), termination of the Contracts or waiver of any rights or claims pursuant thereto.

      5.2.8 Modification of past practice in connection with the maintenance of the Assets or with the custody of the Inventory.

      5.2.9 Taking of actions that may breach laws or contractual obligations.

      5.2.10 Modification of the salaries paid to the Employees or the terms of the agreements in force with them.

      It is furthermore hereby agreed that, in the event that any of the initiatives indicated in this Art. 5.2 should be undertaken by Benetton directly, Benetton shall not undertake them without the prior consent in writing of the Purchaser. Furthermore, the Italian directors on the Board of Directors of BSS shall exercise their voting rights so as to comply with the provisions of Artt. 5.1 and 5.2.

    3. Notwithstanding the above, Benetton may undertake or authorise the management to undertake actions outside the ordinary course of business, which are instrumental to the performance of the obligations contained in this Framework Agreement (such as, without limiting the generality of the foregoing, any transfers within the group).
    4. It is expressly agreed that in connection with the agreements reached between the Purchaser and the management concerning the continuation by the executives of their services to the Purchaser after the Closing Date, Benetton and Sellers will not be liable towards the Purchaser and the Transferees in connection with any liabilities or Losses arising out possible breaches by the management of the instructions of Benetton pursuant to Articles 5.1 and 5.2 here above, provided however that if such breaches cause any alterations of the values of Inventory, Receivables or Liabilities, if any, as compared to the values they would have had without such breaches, the Parties shall cause that, within the context of the procedures for determining such values pursuant to Article 4 above, the values are rectified as necessary in order to eliminate such alterations.

    5.5 During the Interim Period, the Purchaser undertakes to constitute, in each Jurisdiction where it considers necessary, a subsidiary or a branch to be used as a Transferee for the elements of the Business located in such Jurisdiction, with timing and methods ensuring that such Transferee will have the capability, pursuant to the laws of such Jurisdiction, to receive the elements of the Business on the Closing Date.

    5.7 Schedule 13 indicates, as far as Benetton knows, a complete list of all the Contracts and/or of any elements of the Business, for the transfer of which it will be necessary, pursuant to laws or contractual terms, to obtain the consent of the other party or of third parties. Benetton shall endeavour during the Interim Period to obtain any such consent or authorisations. However, it is hereby agreed that the Sellers and the Transferees will proceed with the Closing even if such consent or authorisation is not obtained by the Closing Date, and the elements of the Business which require such third party consent or authorisation to be transferred will be transferred subject to such consent or authorisation being granted, without the Sellers incurring any liability for the failure to transfer and without any reduction of the Price in the event the consent will be then denied. In such last event the Sellers shall give to the Purchaser and to the Transferees, even after the Closing Date, all reasonably possible co-operation in order to obtain such consent, or in so far as reasonably possible, procure that the Purchaser and the Transferees obtain the benefit deriving from such Contracts or elements of the Business.

  9. CONDITIONS TO THE CLOSING
    1. The Parties' obligations to proceed with the Closing are conditional upon the issuance by the USA Federal Trade Commission of the authorisations pursuant to the anti-trust law (Hart Scott Rodino Anti-Trust Improvements Act of 1976). If the procedure for the issuance of such authorisations has not yet started on the date of the signature of this Framework Agreement, the Parties, each one as far as it concerns undertake to cause the immediate starting of the procedure and in any case not later than seven working days following the date of the signature of this Framework Agreement and furthermore undertake to do all that may be necessary so that such procedure may have a positive conclusion in the shortest time possible, keeping the other party duly informed on the progress of the procedure. All costs and the expenses concerning the preparation of the notice, filing and the completion of the procedure shall be borne by each party, as far as it concerns, save for the filing fee which shall be born by the Purchaser.
    2. Furthermore, the transfer of the elements which comprise the Business in each Jurisdiction other than the USA, shall be conditional on the satisfaction of any further conditions precedent which may be provided under the laws of each Jurisdiction (expressly including any anti-trust no-objection notices or authorizations which may be necessary in any other Jurisdiction) in accordance with the further provisions of this Article 6 set out below.
    3. The Parties mutually undertake to use their best efforts, and to procure that the other Sellers and the other Transferees use their best efforts, so that the conditions precedent to the Closing in each Jurisdiction are satisfied during the Interim Period, and to such purpose the Parties also undertake to co-operate, and to procure that the other Sellers and the other Transferees co-operate, so as to immediately implement, and procure that the other Sellers and the other Transferees immediately implement, all necessary activities for which they are responsible and which are prerequisites to obtain the necessary authorisations and to satisfy any requirement under the law.
    4. If any of the conditions precedent required by the law (other than those provided by article 6.1) does not occur in a Jurisdiction, then Benetton and the Purchaser shall in good faith negotiate possible alternative solutions with the aim of achieving the perfection of the transfer of the elements of the Business located in such Jurisdiction pursuant the applicable laws. Any additional burden arising from any such alternative solution shall be borne by the Party to which the failure of the occurrence of the condition precedent can, objectively or subjectively (that is, due to the nature of one of the Parties or its inherent characteristics), be attributed, unless the failure of the occurrence of the condition precedent cannot be imputed to any Party, in which case such burden will be shared by the Parties.
    5. It is expressly agreed that the Closing will take place pursuant to Article 7 only after satisfaction of the condition precedent referred to in article 6.1. In the event on the Closing Date the condition(s) precedent required by the law of any Jurisdiction other than U.S.A. have not yet occurred, the Closing in such Jurisdiction or Jurisdictions concerned will be delayed until the date the condition(s) precedent required by law occur(s), without prejudice to Benetton's right to receive and collect on the Closing Date the entire outstanding amount of the Price, including the part allocated to the Business subject to such delayed transfer, in compliance with the provisions of Articles 3 and 4 above. After the Closing Date and up to the date on which the Closing actually becomes possible, in the Jurisdiction or Jurisdictions involved such part of the Business will be managed, in compliance with Article 5 above, and the results from such management shall go to the benefit of, and shall be borne by the Purchaser and the involved Transferees.

  10. CLOSING
    1. On the Closing Date, or during the days immediately following, the Sellers and the Transferees shall transfer, subject to the provisions of Article 6 above, the Business by executing and performing the Closing Agreements, carrying out and complying with all formalities, and carrying out any other activity necessary in each Jurisdiction to give full effectiveness to the transfer of the Business and each of its components, to give the Purchaser and the other Transferees full title, free of any pledge, mortgage or any other charge (except where otherwise expressly provided), and availability of the same, and to give the Purchaser and the other Transferees physical and actual possession of all the assets comprising the Business in each Jurisdiction.
    2. In particular, and without prejudice to the generality of the above, on the Closing Date will be performed, at the same time, the following activities:
      1. Parties shall enter into the Closing Agreements and will execute the other formalities pursuant the Article 7.1 above;
      2. the Purchaser shall make the payment contemplated in the Article 3.1.1;
      3. the Purchaser shall credit on the Escrow Account an amount equal to the Deferred Price;
      4. the Purchaser, Benetton (or any of the Seller designed by Benetton) and Escrow Bank shall sign the Irrevocable Instructions;
      5. BSS and the Purchaser shall enter into the Lease Agreement;
      6. Parties shall exchange certificates, signed by their respective authorised representatives, which confirm that, at the Closing Date, the relevant representations and warranties contemplated in the Articles 10.1 and 10.2 here below are true, within the limits and subject to the exceptions specified in the present Framework Agreement;
      7. Parties shall exchange documents certifying the signatures of the authorised representatives of both the Sellers and the Transferees relevant for the purposes of the Closing;
      8. The Parties shall exchange legal opinions from the respective legal counsels as to the capacity of the Sellers and of the Transferees to execute the Closing Agreements and as to the validity and enforceability of the same, in a form and with a substance reciprocally and reasonably acceptable.

      Except where otherwise expressly provided by this Framework Agreement, each Party shall have the right not to execute the Closing in the event the other Party does not perform even only one of the activities contemplated in this Article 7.2.

    3. All costs , burdens, and fiscal charges related to the Closing shall be borne by the Purchaser and/or the involved Transferees. Each of the Parties shall bear any fee and/or commission due to any consultants or advisors retained by it in relation to the transactions contemplated by this Framework Agreement, holding the other Party fully harmless and indemnified in relation to the same; in particular, without prejudice to the generality of the forgoing, Benetton shall bear the cost of the fees due to Merrill Lynch in relation to the services rendered thereby with reference to the subject matter of this Agreement, and shall indemnify the Purchaser in respect of any liability connected therewith.
    4. The Parties hereby agree that the Closing transactions shall begin on the Closing Date in all Jurisdictions in which it is possible to do so, even if in one or more Jurisdictions it is not possible to carry out the Closing, because of a reason set out in Article 6. or any other reason. The provisions of Article 6 above shall apply to the latter Jurisdictions.

  11. AGREEMENTS RELATED TO THE REAL PROPERTY
    1. Pursuant to the Lease Agreement the Purchaser or one of the Transferees or its designee (in such event with joint and several liability of the Purchaser in relation to the obligations assumed by the same) will rent on the Closing Date the portion of the Real Property highlighted in the map attached to this Framework Agreement and comprising an office building of 3.605 sqm (usually known as Building no. 1) and approximately half of the warehouse (around 6.450 sqm). The duration of the agreement will be of three years from the Closing Date and the annual rent will be equal to US$ 615,000.00 plus the pro-rata portion of the expenses of maintenance, security and utilities. It is agreed that, in the event of any conflict between the terms of this Article 8.1 and the terms and conditions of the Lease Agreement, the latter shall prevail.
    2. BSS shall have the right to rent the remaining portion of the Real Property to one or more third parties subject to obtaining the prior consent of the Purchaser, which shall not be unreasonably denied, it being understood that such consent shall not be necessary in the event the terms and conditions of the Lease Agreement provide for the exercise of a withdrawal right of the landlord, at such time as the Real Property may be purchased by the Purchaser pursuant to the following terms of this Article 8, with at most six months notice and without payment of any penalty by the Purchaser. Notwithstanding the above, BSS shall in no case rent the remaining portion of the Real Property to a direct competitor of the Business. It is agreed that neither the Purchaser nor the possible third parties shall utilize the portion of the Real Property rented by them in such manner as to impede or hinder the other parties in the exercise of their rights on the portions of the Real Property rented by them.
    3. For all the duration of the Lease Agreement, BSS will continue to pay the property tax on the Real Property and to capitalize the costs of extraordinary maintenance, if any, improvements or additions in compliance with the past practices.
    4. Pursuant to the Put Option, within six months from the date of expiration the Lease Agreement, BSS shall have the right to sell to the Purchaser, which in the event of such exercise shall purchase, the Real Property, at a price equal to the net book value of the Real Property (as shown by the accounting documents of BSS) on the Closing Date less the amount of the rent instalments actually collected by Benetton pursuant to the Lease Agreement and adding the capitalisations described in the Article 8.3 above. Subject always, to the exercise of the withdrawal right, the Purchaser shall be obliged to respect the lease agreement, if any, entered into between Benetton and third parties pursuant the article 8.2 above.
    5. It remains expressly understood that BSS shall have the right to sell the Real Property to third parties for all the duration of the Lease Agreement. In this event, the third party purchaser of the Real Property shall have the right to withdraw from the Lease Agreement with a six months notice.
    6. In the event the third party purchaser of the Real Property, contemplated in the Article 8.5 above, should be introduced to Benetton by the Purchaser, Benetton will pay to the Purchaser an amount equal to 50% of any gain realized by Benetton in the sale, over and above the net book value of the Real Property on 31 December 2003 plus any cost that should be capitalized, pursuant the Article 8.3 above, before the sale to third party.
    7. Furthermore, in the event BSS sells all or part of the assets and fittings contained at the Closing Date in the portion of the Real Property which is not subject to the Lease Agreement and not included among the Assets, Benetton shall procure that BSS pay to the Purchaser an amount equal to 50% of the revenues deriving from such sale, regardless whether the purchaser of the same has been introduced by the Purchaser or not.

  12. EMPLOYEES
    1. The Purchaser undertakes to hire the 86 Employees on the Closing Date and after termination of the employment relationship between such employees and the Sellers. Furthermore other 5 Employees (to be chosen by the Purchaser among the other employees of BSS) shall be hired by the Purchaser on the date when Benetton shall communicate to the Purchaser to have completed the sale of the "Rollerblade" business. It is understood that, in the event the purchaser of such business does not require the performance of the interim services as per the agreement mentioned in art. 12.3 below, the Purchaser shall not be obliged to proceed with the hiring of such additional 5 Employees. The Purchaser undertakes to grant to the Employees economic conditions and job positions taken as a whole equivalent to those granted to each of them on the Date of Closing by BSS and by the others Sellers on the basis of employments having a nature substantially similar to that of the presently existing employments, unless different arrangements between the Purchaser and the Employees have been reached. Nevertheless the Parties hereby mutually acknowledge that the undertaking contained in this article 9.1 is assumed by the Purchaser as towards Benetton and Sellers and does not constitute an agreement in favour of third parties, and that Purchaser makes no undertaking in relation to the actual duration and the stability of the employment relationships which will be created in performance of the above provisions.
    2. Benetton and the Purchaser mutually acknowledge to be aware of the fact that part of the Employees, up to now, have rendered services for both the Business and other going concerns of the Benetton Group.
    3. It's understood that, following the hiring, the Purchaser shall bear the payment obligation of any possible severance payment , which should be paid to the Employees following the Closing Date on the basis of the employment with the Purchaser. On the other hand, any obligations towards the Employees other than severance payments , such as sick pay holidays, etc. shall be divided between sellers and the Transferees, irrespective of the date on which they are due, proportionally on a time competence basis.

  13. REPRESENTATIONS AND WARRANTIES
    1. In relation to the circumstances existing on the date of this Framework Agreement and to the circumstances which will exist on the Closing Date (save as otherwise provided under Art. 5.4. above), Benetton represents and warrants to the Purchaser the following. Benetton's representations and warranties are limited by the exceptions and qualifications set out in Schedule 14, and by the information made available to the Purchaser as part of the Due Diligence Documents (provided that the information contained in such Documents shall be reasonably capable of allowing, by the exercise of due diligence, an evaluation of the existence of the potential risk of Loss).
      1. Benetton, BSS and the other Sellers are corporations duly incorporated, validly existing and in good standing under the laws of each of the relevant jurisdictions of incorporation; neither Benetton, nor BSS nor the other Sellers are insolvent or subject to any pre-bankruptcy proceeding whatsoever;
      2. The Sellers have full title to the Assets and have full authority to transfer the same on the terms and conditions set forth in this Framework Agreement. Benetton has taken all necessary resolutions to the end of authorizing the subscription of this Framework Agreement and the Sellers shall take all necessary resolutions to the end of authorising the subscription and the execution of the Closing Agreements. This Framework Agreement has been duly signed and the obligations contemplated in it are in valid and binding for Benetton.
      3. Neither the signature of this Framework Agreement, nor the performance by Benetton, BSS or the other Sellers, of the obligations assumed hereunder or under the Closing Agreements, will constitute a breach of the relevant by-laws provisions, contractual obligations or laws to which Benetton, BSS or the other Sellers are subject.
      4. With the exception of the authorisations and formalities which, pursuant to Art. 6 above, constitute conditions precedent to the Closing (as a whole, or in any one or more Jurisdictions), Benetton, BSS and the other Sellers are not obliged to obtain any other authorisations or consents whatsoever for the performance of its obligations pursuant to this Framework Agreement.
      5. The Assets, the Inventory, the Receivables, the Trademarks, and the Patents are free from any mortgage, pledge, right of option, and other third-party right. The Sellers enjoy the full possession of the Assets.
      6. The draft profit and loss account "Prince" as at 31 December 2002 delivered to the Purchaser prior to the date of signature of this Framework Agreement and attached hereto under Schedule 15, has been drafted in good faith having extracted the relevant items, on the basis of assumptions considered reasonable by Benetton, from the financial statement of Benetton prepared in compliance with accounting principles commonly applied in Italy.
      7. During the period from January 1, 2003 and until the date of signature of this Agreement, the Business has been carried out in the ordinary course consistent with past practice and, as far as Benetton knows, no events which have determined a substantial adverse effect on the Business taken as a whole , have occurred.
      8. As so far as Benetton knows, the Receivables have arisen out of the ordinary management of the Business, conducted in accordance with past practices.
      9. As far as Benetton knows, the Contracts are valid and binding on the parties thereto, pursuant to their terms and conditions, and upon the assignment thereof to the Purchaser or to the other Transferees pursuant to this Framework Agreement, the Purchaser or the other interested Transferees will assume the rights and obligations of the Sellers pursuant to the terms thereof; as far as Benetton knows, the Sellers have not committed any substantial breach of the Contracts.
      10. Schedule 16 contains a list of the names and the relevant addresses of the twenty (20) principal customers (on the basis of the sales during the year 2002) and suppliers (on the basis of purchases during the year 2002) of the Business. As far as Benetton knows, the Sellers have receive no written notice from customers or suppliers as listed in the above mentioned schedule, by which any creditors or suppliers have communicated their will to interrupt or to dramatically reduce the extent of their commercial relationships with the Business or to refuse to have any further commercial relationship with the Purchaser.
      11. As far as Benetton knows, the accounting books, corporate books and records and any other document to be transferred pursuant to the Framework Agreement have been duly updated and prepared consistently with the procedures already adopted in the past by Benetton and the other Sellers.
      12. As far Benetton knows the Sellers have substantially complied with all applicable provisions of law and agreements covering the employment in their relationships with the Employees and have regularly paid all mandatory social security contributions due.
      13. As far as Benetton knows, while managing the Business, the Sellers have substantially complied with all applicable provisions of law on the environment, and on safety in the workplace, and the Sellers have not received any notification of any orders issued by any competent authority or of proceedings brought claiming violations of applicable laws or regulations.
      14. The Sellers have correctly complied with the fiscal and tax obligations to which the Business is subject, submitting the required statements and returns and making all payments required pursuant to the same. The Business has no fiscal or tax obligation other than those the Parties may agree to include in the Liabilities.
      15. The Trademarks and the Patents have been registered by or issued to the Sellers or their relevant assignors, the registration taxes, annuities and maintenance fees due prior to the Closing Date have been paid and the relevant formalities related the registration procedures have been duly executed; as far as Benetton knows there are no opposition, cancellation, invalidity, interference, re-examination proceedings or other proceedings pending having a similar purpose, neither written objections or challenges have been made by any third party regarding the validity or effectiveness of such Trademarks or Patents, nor Benetton is aware of infringements by third parties of rights pertaining to the Trademarks and Patents. As far as Benetton knows none of the Trademarks or Patents having substantial importance violate rights of third parties in countries having substantial importance (for the purposes hereof "substantial importance" shall mean a Trademark or Patent the loss of which in the country in question would gravely prejudice the activities of the Business considered as a whole).The Business does not use any registered trademarks or patents other than the Trademarks and the Patents. Without prejudice to what has been guaranteed above, however, the Purchaser expressly acknowledges and accepts that is not given any warranty regarding the validity and effectiveness of the Trademarks and of the Patents or regarding the absence of violation of third parties' rights consequent to the use of such Trademarks and Patents.
      16. As far as Benetton knows, the Business is not a party to, or object of, any judicial, fiscal, arbitral, or administrative disputes, whether pending or threatened in writing, nor is it subject to any ruling, order or decree which may have a substantial adverse effect on the Business, intended as a whole.

    2. In relation to the circumstances existing on the date of this Framework Agreement and to the circumstances which will exist on the Closing Date, the Purchaser represents and warrants to Benetton the following.
      1. The Purchaser and the other Transferees are corporations duly incorporated, validly existing and in good standing under the laws of each of the relevant jurisdictions of incorporation; neither the Purchaser nor the other Transferees are insolvent or subject to any pre-bankruptcy proceeding whatsoever.
      2. Neither the signature of this Framework Agreement, nor the execution by the Purchaser and the other Transferees of the obligations assumed herein or in the Closing Agreements will constitute a breach of applicable by-laws provisions, contractual obligations or laws to which the Purchaser or the other Transferees are subject.
      3. With the exception of the authorisations and formalities which, pursuant to Art. 6 above, constitute conditions precedent to the Closing (as a whole or in any or more Jurisdictions), neither the Purchaser nor the other Transferees shall be obliged to obtain any other authorisation or consent whatsoever for the performance of their obligations pursuant to this Framework Agreement or to the Closing Agreements.
      4. The Purchaser has taken all necessary resolutions to the end of authorize the signature of this Framework Agreement and the Transferees have taken all necessary resolutions to the end of authorising the signature and the execution of the Closing Agreements This Framework Agreement has been duly signed and the obligations contemplated in it are valid and binding on the Purchaser.
      5. The Purchaser does not hold participations in companies or undertakings which carry out activities in the field of the production, distribution and sale of equipment for tennis, squash or badminton or of clothing for the same sports, and no conditions or circumstances in relation to the Purchaser and the other Transferees exist which may reasonably give rise to the rejection of the antitrust authorisation, as mentioned under Art. 6.1. above.

    3. The Purchaser acknowledges and agrees that the warranties and representations under Article 10.1 above are the only warranties made by Benetton and the Sellers. No other warranty of any other kind is made by the Sellers in relation to the Business, except for any additional warranty mandatory under the law, to which the limitations and conditions set out in Article 11 below will apply. Moreover, the above representations and warranties and the additional warranties mandatory under the law replace any other right or remedy the Purchaser has under the law, and thus the Purchaser recognises that it is not entitled to bring forth any claim other than a request for indemnification pursuant to the terms and conditions set out in Article 11 below.

  14. INDEMNIFICATION OBLIGATION
    1. Benetton undertakes to hold harmless and indemnify the Transferees against and for any Loss the Transferees may incur as a direct consequence of the breach of the warranties and representations set out in Article 10.1 or of the breach of any of the additional warranties mandatory under the law, at the terms and conditions set out in this Article 11.
    2. Benetton will not have an obligation to indemnify and hold harmless in relation to:
      1. Breaches of representations and warranties notified by the Purchaser after the end of the second anniversary of the Closing Date, except for representations and warranties relating to fiscal or social security contribution matters and to the ownership of the Assets, any breach of which may be notified within thirty days following the expiration of the relevant statute or term of limitation;
      2. Losses arising from circumstances which were known to the Purchaser and the other Transferees on the Closing Date, including those arising from the facts or circumstances set out in Schedule 14 or in the Due Diligence Documents (subject always to the provisions of article 10.1).

    3. The indemnification due by Benetton to the Transferees pursuant to Article 11 shall be equal to the Loss incurred by the Transferees, net of:
      1. any indemnification or reimbursement paid by insurance companies or any third party in relation to the Loss;
      2. any unexpected increase of value recorded by the Business related to the Inventory or to the Receivables in respect of the value attributed to the same under art. 4 here above.

      In the event that the Loss should concern the inexistence or dispossession of the elements of the Inventory, Assets or Receivables, the amount of the Loss, before the deductions referred to in this article 11.3, shall in any event not exceed the value attributed to such elements within the context of this purchase and sale pursuant to article 4 above.

    4. Benetton shall not have the obligation to indemnify if:
      1. The indemnification due in relation to each Loss is less than Euro 15,000.00 per Loss.
      2. The total indemnification due (not taking into account the amounts which are less than the threshold amount set out above at Article 11.4.1) is less than Euro 750,000.00, amount which shall be considered a fixed deductible, insofar as if the total indemnification due exceeds such deductible, Benetton shall indemnify only the amount in excess of such deductible.
      3. The total indemnification due exceeds an amount equal to 20% of the Fixed Component, which shall be considered the maximum ceiling, in excess of which Benetton and the other Sellers shall not have an obligation to indemnify.

11.5 In addition to the indemnifications due to Benetton pursuant the Article 11.1, in the event after the Closing Date the Purchaser should receive claims and/or warranty returns regarding Products delivered before the Closing Date, Benetton, to the extent and conditionally to the conditions contemplated in the Articles 11.3 and 11.4 and in the paragraphs below, will bear the cost of the reparation and/or substitution of the relevant products, with the exclusion of every and any further obligation with regard such claims or returns.

    1. The Purchaser shall notify to Benetton - within 20 days from the date on which the Purchaser acquires such knowledge (and for this purpose knowledge by any Transferee shall be deemed to be knowledge by the Purchaser) any circumstance which constitutes a breach of the representation and warranties set out in Article 10.1 above, or of any additional warranty mandatory under the law, and that might lead to any Loss to be indemnified. The notice shall include a clear description of the breach being notified and the potential consequences of such breach, and shall be submitted along with any document suitable to allow Benetton to fully understand such report.
    2. Upon receiving the Purchaser' s notice and at any other subsequent time, Benetton will have the right to take over management of the notified matter, taking any necessary action, including judicial action, to dispute or limit the breach and/or the Loss, without prejudice to the fact that in such case the Purchaser, having as a consequence the expiration of Benetton's obligation to indemnify in relation to such breach, shall fully co-operate with Benetton to such effect, signing all necessary deeds and powers of attorney that Benetton may request, and allowing Benetton full access to all documents and information which may be necessary to Benetton for such purpose.
    3. If Benetton decides not to exercise the faculty contemplated in the Article 11.7 above,, the Purchaser shall have the obligation to do all necessary, with the due diligence, to dispute such violation and/or mitigate the Loss, without prejudice to the fact that the Purchaser or the Transferees shall not have the right to waive any claim or objection, settle any judicial controversy, agree to any third party request, or admit its responsibilities without Benetton's prior written consent. .
    4. Any indemnification due by Benetton shall be paid when the Loss is actually borne by the Purchaser or the Transferees on the basis of a valid executive order, even if provisional, provided however that, if, following a payment made on the grounds of a provisional order, the Purchaser or the other Transferees become entitled, due to any appeal or amendment rulings, to the reimbursement in whole or in part of the amounts due, such right should be assigned to Benetton or, where such assignments were not possible, the right shall be exercised by the Purchaser or by the Transferee concerned on behalf of Benetton and at Benetton's own costs.
    5. Benetton undertakes to hold Purchaser and the other Transferees harmless and indemnified in respect of any loss, cost, direct damage or liability howsoever deriving from liabilities other than the Liabilities, provided however that this obligation will not be subject to the limitations and conditions set forth under this Article 11.
    6. The Purchaser undertakes to hold harmless and indemnify Benetton against and for any Loss borne by Benetton or the Sellers as a consequence of the breach of the Purchaser's representation and warranties set out in Article 10.2 above, and against and for all third party claims in relation to the Liabilities to the extent they are taken into account for the calculation of the Variable Component or any other liabilities pertaining to the Business which arose after the Closing.

  1. OTHER UNDERTAKINGS OH THE PARTIES

    1. The Parties hereby reciprocally acknowledge that a certain number of Trademarks and Patents were not duly endorsed in favour of the Sellers following the relevant purchase or acquisition by, or transfer or assignment to the same. Benetton hereby undertakes to procure that the Sellers give to the Purchaser all assistance reasonably necessary to the end of finalising said endorsements in favour of the Transferees even, where necessary, by appointing an attorney-in-fact duly empowered to carry out all the actions necessary for such purpose. The Purchaser hereby expressly accepts to bear, having nothing to claim via-à-vis Benetton or the other Sellers, all costs and taxes connected with the endorsements of said Trademarks and Patents (expressly including the costs and taxes for the endorsements prior to the endorsements in favour of the Purchaser which may be necessary to complete the latter).
    2. Benetton undertakes to procure that the Sellers perform the obligations connected with the Business up to the Closing Date which were not properly included by the Parties among the Liabilities in order to avoid that a breach thereof, if any, may prejudice the activities of the Business.
    3. With no prejudice to the obligation of the Purchaser to duly and timely perform all the obligations of the Contracts subject to transfer together with the Business and to keep Benetton indemnified and guaranteed with regard to any third party's claim connected to any breach of such Contracts made by the Purchaser or the Transferee after the Closing Date, as provided by the Article 11.11 above, the Purchaser expressly acknowledges to bear the obligations pursuant to the transition service agreement which will be executed prior to the Closing Date by Benetton and the acquirers of the "Rollerblade" business on the basis of the term sheet attached hereto under Schedule 17 and which shall be transferred as part of the Contracts together with the Business and undertakes to perform such services with the maximum care and diligence It is however agreed that in the event the Lease Agreement is terminated in advance as a result of the exercise of the right of termination by a third party, if any, being the purchaser of the Real property under art. 8.5, the Purchaser shall be released from its obligations relative to the Rollerblade interim services effective from the effective date of termination of this agreement. In such event Benetton shall hold the Purchaser harmless and indemnified against any liabilities vis-à-vis the purchaser of the Rollerblade business deriving from the discontinuance of such services; such release and the subsequent indemnification by Benetton, however, shall not be effective in respect of obligations that might been undertaken by the Purchaser as a result of the amendments to the relevant agreement as agreed with the purchaser of the Rollerblade business after the Closing Date.
    4. Benetton hereby undertakes, directly or indirectly, not to solicit, enter into negotiations or provide any information with respect to the Business, with the purpose to transfer or assign all or any portion of the Business during the period as from the date hereof and the Closing Date.

  1. NOTICES
    1. Any notice or communication to be effected in relation to this Framework Agreement shall be made in writing, and sent by registered mail with return receipt requested or by international courier; it may be transmitted by telegram or facsimile in advance, but it will be effective at the time of receipt of the registered mail with return receipt requested or of the international courier.
    2. Any notice or communication shall be sent to the following addresses:
    3. if to the Purchaser:

      Prince Sports, Inc.

      c/o Lincolnshire Management, Inc.

      780 Third Avenue, 40th Floor

      New York, NY 10017 USA

      Facsimile No. 212-755-5457

      Attention of Mr. Michael Lyons

      with copy to:

      Golenbock, Eiseman, Assor, Bell & Peskoe

      437 Madison Avenue, 40th Floor

      New York, NY 10022-7302 USA

      Facsimile No.: (212) 754-0330

      Attention of: Lawrence R. Haut, Esq.

      if to Benetton:

      Benetton Group S.p.A.

      Via Villa Minelli,

      Ponzano Veneto (TV), Italia

      Attention of legal affairs office

      Facsimile No.: +39.0422.519586

      with copy to: Grimaldi e Associati

      Facsimile No.: +39.02.30355200

      Attention of: Avv. Roberto Capelli

    4. It is expressly agreed that any communication addressed to the address above shall be deemed received by the addressee at the time it is actually received at such address. Any amendment to the above addresses shall be not enforceable unless the interested Party so notifies in writing.

  2. CONFIDENTIALITY
    1. Benetton and the Purchaser acknowledge that the contents of this Framework Agreement are highly confidential, and mutually undertake not to disclose such contents to any third party without the prior written consent of the other Party. However the Purchaser may, to the extent of what is reasonably necessary and subject to the assumption of opportune confidentiality undertakings by the addressee, disclose the contents of this Framework Agreement to its legal or fiscal advisors and to financing entities.
    2. Except for any notice, mandatory under the law, or any regulation issued by any government, supervisory, or stock exchange authority which governs the Transferees or the Sellers, no other advertisement, press release or any other announcement shall be made regarding the execution of Framework Agreement, the provisions contained herein, or the transactions provided for hereunder, without the prior written consent of both Parties.

  3. COMPETITION
    1. Benetton and the Sellers undertake for a period of 24 months after the Closing Date -, whether directly or indirectly (including without limitation, activities carried out through companies, associations, joint ventures, or similar vehicle associations)not to:

        1. carry out any activity which may be considered in competition with the activity carried out by the Purchaser in the sole sector of the manufacturing and marketing of tennis, squash, and badminton racquets, shoes, apparel and accessories together with related accessories, and expressly excluding from such obligation the right to manufacture and market under the "Killer Loop" and/or "Playlife" trademarks of the goods hereabove;
        2. become advisor, client, agent, owner, sponsor, co-operator, partner, member or in any other manner whatsoever, provide services to or on behalf of any person that the Purchaser may reasonably deem to be or to be able to become a competitor in respect of the activities listed above; or
        3. contact Employees with the purpose offering to the same an employment, within Benetton or third parties, in the field of business of the Business.

    1. Given that the Purchaser and the other Sellers would suffer damages in the event of a possible breach of the dispositions set forth under Article 15, notwithstanding the provisions set forth under Art. 17 here below, the Purchaser shall be entitled to apply for the issue by the competent court of an injunction aimed to prevent the effects of any violation or attempt to violate the provisions of Article 15 or to obtain a ruling which guarantees the enforcement thereof. It is however provided that the judgement on the merits in respect of these forms of relief will be however be subject to the arbitration provisions set forth under Art. 17.

  1. MISCELLANEOUS PROVISIONS
    1. Any amendment to this Framework Agreement shall be made in writing, signed by all the Parties thereto.
    2. This Framework Agreement is binding and shall inure to the benefit of the Parties and their respective successors in interest and assignees for any reason, which shall consequently be bound by all provisions contained in this Framework Agreement.
    3. If one or more clauses of this Framework Agreement are deemed invalid, it shall not affect the validity of the other clauses, or that of this Framework Agreement as a whole.
    4. This Framework Agreement and the Schedules hereto constitute the totality of the agreements and covenants between the Parties and supersede any other prior written or oral agreement, covenant, or accord.
    5. Tolerance, including repeated, by any Party of any default or delayed performance by the other Party shall never be interpreted as a tacit abrogation of the corresponding covenant, or as a waiver by the non-defaulting Party of the right to enforce its rights.
    6. The headings in this Framework Agreement are solely for ease of reference and shall not affect its interpretation.
    7. This Framework Agreement may not be assigned in whole or in part by any of the Parties without the prior written consent given by the other Party. However the Purchaser and the Transferees may, by means of written notice to Benetton, assign to their institutional sponsors which have financed in whole or in part the Bank Guarantee and/or the payment by the Purchaser of the Price, all of their rights deriving from the Framework Agreement at any time following the Closing Date, provided however that i) the Purchaser and the Transferees will remain jointly and severally liable for the fulfilment of any obligations deriving from this Framework Agreement; and ii) the assignee will be subject to the terms and conditions of this Framework Agreement.

  2. GOVERNING LAW AND JURISDICTION
    1. This Framework Agreement and all its related and ancillary contracts and agreements are governed by Italian law, except for the implementing contracts, which are governed by the applicable law in the respective Jurisdictions, except as expressly provided in Articles 2.3 and 2.4 above.
    2. Save as set forth under Article 15.2 above, any dispute included those regarding the validity, interpretation, performance and termination of this Framework Agreement shall be referred to an arbitral tribunal consisting of 3 arbitrators, one being the President, according to the International Arbitration Rules of the Chamber of National Arbitration of Milan, which the Parties declare that they know and accept in their entity.
    3. The arbitrators shall decide according to law.
    4. The language of the Arbitration will be the Italian language. The Arbitrators will however know the English language so that they may hear witnesses and examine documentation also in the English language.
    5. Parties undertake to procure that all the contracts which will be entered into by the Sellers and the Transferees in performance of this Framework Agreement shall include an arbitration clause similar to this Article 17. For the purposes of arbitration, the Sellers shall be deemed to all constitute one party, and the Transferees shall be deemed to all constitute the other party.

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