DATED 18 DECEMBER 2001
MULLION INTERNATIONAL LIMITED
and
ROYAL HOLDINGS, INC.
--------------------------------------------------
AGREEMENT RELATING TO
THE SALE AND PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL OF LMK LIMITED
AND SHARES IN THE CAPITAL OF PENHALIGON'S
& JEAVONS INVESTMENT CO LIMITED, MULMKION BV
AND PENHALIGON'S PACIFIC LIMITED
-----------------------------------------------------
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
One Canada Square
Xxxxxx Xxxxx
Xxxxxx
X00 0XX
CONTENTS
1. INTERPRETATION................................................................................1
2. SALE AND PURCHASE.............................................................................1
3. CONSIDERATION.................................................................................1
4. CONDITIONS TO COMPLETION......................................................................3
5. SELLER'S COVENANTS AND CONDUCT OF THE ACQUIRED BUSINESS BEFORE COMPLETION.....................5
6. COMPLETION....................................................................................9
7. SELLER'S WARRANTIES..........................................................................10
8. PURCHASER'S WARRANTIES.......................................................................11
9. PURCHASER'S UNDERTAKINGS AND ACKNOWLEDGEMENT.................................................12
10. INTRA-GROUP GUARANTEES.....................................................................12
11. EFFECT OF COMPLETION.......................................................................13
12. PROTECTION OF GOODWILL.....................................................................13
13. ACCESS.....................................................................................14
14. REMEDIES AND WAIVERS.......................................................................15
15. ASSIGNMENT.................................................................................15
16. FURTHER ASSURANCE..........................................................................15
17. ENTIRE AGREEMENT...........................................................................15
18. NOTICES....................................................................................16
19. ANNOUNCEMENTS..............................................................................18
20. CONFIDENTIALITY............................................................................18
21. COSTS AND EXPENSES.........................................................................19
22. COUNTERPARTS...............................................................................19
23. TIME OF ESSENCE............................................................................20
24. INVALIDITY.................................................................................20
25. GOVERNING LAW..............................................................................20
26. JURISDICTION...............................................................................20
27. SELLER'S AGENT FOR SERVICE.................................................................20
28. PURCHASER'S AGENT FOR SERVICE..............................................................21
29. SPECIFIC PERFORMANCE.......................................................................22
SCHEDULE 1..........................................................................................23
Interpretation......................................................................................23
SCHEDULE 2..........................................................................................30
Completion arrangements.............................................................................30
SCHEDULE 3..........................................................................................34
The Warranties......................................................................................34
1. OWNERSHIP OF THE SHARES.......................................................................34
2. CAPACITY OF THE SELLER........................................................................34
3. ARRANGEMENTS BETWEEN THE GROUP AND THE SELLER'S GROUP.........................................34
4. GROUP STRUCTURE, ETC..........................................................................35
5. OWNERSHIP, CONDITION AND SUFFICIENCY OF ASSETS................................................36
6. STOCK.........................................................................................36
7. ACCURACY OF INFORMATION.......................................................................36
8. ACCOUNTS AND MANAGEMENT ACCOUNTS..............................................................37
9. EVENTS SINCE THE ACCOUNTS DATE................................................................37
10. CONTRACTS AND COMMITMENTS..................................................................38
11. BANK ACCOUNTS AND BORROWINGS...............................................................38
12. POWERS OF ATTORNEY.........................................................................39
13. GRANTS AND ALLOWANCES......................................................................39
14. COMPLIANCE WITH LAWS.......................................................................39
15. LICENCES...................................................................................39
16. LITIGATION.................................................................................39
17. DELINQUENT AND WRONGFUL ACTS...............................................................39
18. OWNERSHIP OF LAND..........................................................................40
19. INTELLECTUAL PROPERTY......................................................................40
20. INSURANCES.................................................................................40
21. EMPLOYMENT.................................................................................40
22. PENSIONS...................................................................................41
23. TAX........................................................................................41
24. TAX RETURNS, DISPUTES, RECORDS AND CLAIMS ETC..............................................42
25. STAMP DUTY.................................................................................42
26. VALUE ADDED TAX............................................................................42
27. DEDUCTIONS AND WITHHOLDINGS................................................................42
28. RESIDENCE..................................................................................42
29. BROKER'S FEES..............................................................................42
30. ENVIRONMENTAL..............................................................................43
31. UNDISCLOSED LIABILITIES....................................................................43
32. DATA ROOM..................................................................................43
SCHEDULE 4..........................................................................................44
(Limitations on liability)..........................................................................44
1. LIMITATION ON QUANTUM AND GENERAL.............................................................44
2. TIME LIMITS FOR BRINGING CLAIMS...............................................................44
3. CONDUCT OF LITIGATION.........................................................................44
4. NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED FOR.............................................45
5. RECOVERY FROM INSURERS AND OTHER THIRD PARTIES................................................46
6. ACTS OF PURCHASER.............................................................................46
7. THE ACCOUNTS..................................................................................47
8. RETROSPECTIVE LEGISLATION.....................................................................48
9. PURCHASER'S KNOWLEDGE.........................................................................48
10. INFORMATION MEMORANDUM, DATA ROOM AND INDEPENDENT ADVICE OF PURCHASER.........................48
11. DISCLOSURE....................................................................................49
12. CLAIM TO BE REDUCTION OF PURCHASE PRICE.......................................................49
13. TAXATION......................................................................................49
PART I PENHALIGON'S LIMITED........................................................................50
SCHEDULE 5..........................................................................................51
PART II PENHALIGON'S PACIFIC LIMITED................................................................51
SCHEDULE 6..........................................................................................52
PART I PENHALIGON'S AND JEAVONS INVESTMENT CO LIMITED..............................................52
SCHEDULE 6..........................................................................................53
SCHEDULE 6 PART II MULMKION B.V.....................................................................53
SCHEDULE 6..........................................................................................54
PART III LMK LIMITED................................................................................54
SCHEDULE 7..........................................................................................56
The Properties......................................................................................56
SCHEDULE 8..........................................................................................58
Pro Forma Net Working Capital Statement.............................................................58
ii
SCHEDULE 9..........................................................................................59
Registered Intellectual Property....................................................................59
iii
THIS AGREEMENT is made the 18th day of December, 2001
BETWEEN:
1. Mullion International Limited whose registered office is at PO Box 3186,
Roadtown, Tortola, British Virgin Islands (the "Seller");
AND
2. Royal Holdings, Inc., a Delaware corporation, whose business address is c/o
Fox Xxxxx & Co LLC, 000 Xxxxx Xxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxxxxxxxxx 00000
(the "Purchaser").
WHEREAS:
The Seller has agreed to sell and the Purchaser has agreed to purchase and pay
for the Shares (as defined in this Agreement) on the terms and subject to the
conditions of this Agreement.
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
(A) Certain words and expressions used in this Agreement are defined in
Schedule 1.
(B) The Schedules form part of this Agreement and shall have the same force
and effect as if set out in the body of this Agreement and any
reference to this Agreement shall include the Schedules.
2. SALE AND PURCHASE
(A) On the terms and subject to the conditions set out in this Agreement,
the Seller shall with full title guarantee sell and the Purchaser shall
purchase the Shares as at and with effect from Completion free from all
claims, liens, charges and Encumbrances together with all rights
attached or accruing to them at Completion.
(B) The Purchaser shall from Completion be entitled to exercise all rights
attached or accruing to the Shares including, without limitation, the
right to receive all dividends paid or made on or after the Completion
Date.
3. CONSIDERATION
(A) The total consideration for the sale of the Shares shall be the payment
by the Purchaser of the Purchase Price subject to adjustment in
accordance with sub-clauses 3(C) to 3(F) inclusive below. The Purchase
Price is payable in accordance with Clause 6 (Completion) and any
adjustment to the Purchase Price shall be payable in accordance with
sub-clauses 3(B) to 3(G).
(B) If the Net Working Capital Amount of the Group as agreed or determined
pursuant to clauses 3(C) to 3(F) inclusive is:-
(i) greater than 'L'1,500,000 then the Purchaser shall within
5 Business Days of such agreement or determination pay to the
Seller such sum by which the Net Working Capital Amount so
agreed or determined exceeds 'L'1,500,000; or
(ii) less than 'L'1,500,000 then the Seller shall within 5
Business Days of such agreement or determination pay to the
Purchaser such sum by which the Net Working Capital Amount so
agreed or determined is less than 'L'1,500,000.
(C) The Purchaser shall, following Completion, give to the Seller or the
Seller's accounting advisors access to all books or records (including
materials in relation to inventories) in its or the Group's possession
relating to the Group and the Seller shall prepare and supply to the
Purchaser within 10 Business Days after Completion a draft Net Working
Capital Statement for the purpose of calculating the Net Working
Capital Amount. The draft Net Working Capital Statement shall be
prepared in accordance with UK GAAP and using the accounting policies,
principles, practices, evaluations, rules and procedures, methods and
basis adopted by and applied in the same way as in the preparation of
the Accounts. If the Seller and the Purchaser agree as to the amount of
the Net Working Capital Amount set forth in the draft Net Working
Capital Statement, the amount to be paid shall be determined and paid
in accordance with clauses 3(B) and 3(G). If the Seller and the
Purchaser do not agree as to the Net Working Capital Amount within 20
days of delivery of the draft Net Working Capital Statement, the
determination of the Net Working Capital Amount may be referred at the
election of the Seller or the Purchaser to an expert agreed between the
parties within 10 Business Days after the end of such 20 days or,
failing such agreement, appointed by the President of the Institute of
Chartered Accountants of England and Wales (the "Expert").
(D) Each party shall give to the other party's accounting advisors and the
Expert access to all books or records in its or the Group's possession
relating to the Group and shall instruct its accountants to make
available to the other party's accounting advisers and the Expert such
accounts or records or audit notes held by their accounting advisers
relating to the Group as the other party's accounting advisers or the
Expert may reasonably require, and generally shall provide the other
party's accounting advisers and the Experts with such other information
and assistance as the other party's accounting advisers or the Expert
may reasonably require. The Expert shall then calculate the Net Working
Capital Amount in accordance with UK GAAP and using the accounting
policies, principles, practices, evaluations, rules and procedures,
methods and basis adopted by and applied in the same way as in the
preparation of the Accounts as promptly as practicable.
(E) The Expert shall be entitled (but not obliged) to disclose to one
party, and invite its comments on, any information or material supplied
to them by or on behalf of the other party.
(F) In making the determination of the value of the Net Working Capital
Amount, the Expert shall act as an expert and not as an arbitrator and
its determination shall, in the absence of manifest error, be final and
binding on the parties, and
2
its fees and costs shall be borne and paid for as the Expert may
determine or, failing such determination, by the Seller and the
Purchaser equally.
(G) Any amounts payable under clauses 3(B) through 3(F) shall be converted
into US dollars based on the applicable conversion rate as published in
the Wall Street Journal, New York Edition on the Completion Date and
shall bear interest at a rate of 1% above the base lending rate from
time to time in force at Lloyds TSB Bank plc. In no event shall the
amount payable by the Purchaser or Seller under clauses 3(B) to 3(G)
(exclusive of interest described in the immediately preceding sentence)
exceed US$1 million. In the event that the Purchaser is entitled to a
payment under Section 3(B) to Section 3(G) it may elect to receive such
payment from the funds within the Escrow Account (and, if it makes such
election, the Seller shall take all steps to assist the Purchaser in
recovering such amount from the Escrow Agent under the Escrow
Agreement).
4. CONDITIONS TO COMPLETION
(A) The respective obligations of each party to effect the transaction
contemplated by this Agreement shall be subject to the satisfaction of
the following Conditions:
(i) the obtaining by the Seller of the necessary consents of the
Seller's Group's lenders for the transaction under the Senior
Secured Super-Priority Debtor in Possession Revolving Credit
Agreement dated 11 June 2001 and under the Agreement,
Modification, Restatement and General Provisions Agreement
dated as of 6 October 2000;
(ii) execution and delivery by Warner's (United Kingdom) Limited of
the Warner's Deed of Release in the Agreed Form;
(iii) the release by each of the Seller's Group's lenders and all
other persons of all Encumbrances they hold over the Shares of
each member of the Group and such Group member's assets
including those in Schedule 5(B) of the Disclosure Letter and
all Encumbrances held by City & West End Security Centre,
National Westminster Bank plc, and the assumption by Warner's
(United Kingdom) Limited of the Bank Indebtedness in the
Agreed Form;
(iv) the termination of the deed of option dated 27 March 1997
between PenHal Investments, Inc., Streamchase Limited and
Mullion Limited and other relating to the shares in the
capital of Streamchase Limited and an intellectual property
holding company;
(v) the termination of the deed of option with respect to shares
of Mulmkion B.V. among PenHal Investments Inc., Mulmkion B.V.
and Mullion International Limited and Penhaligon's & Jeavons
Investment Co. Limited dated April 6, 1998 and all exercise
agreements, shareholders' agreements and articles of
association;
3
(vi) the release of all Indebtedness owing by each member of the
Group and all Encumbrances on the Shares and the Acquired
Business (and the assets and properties of each member of the
Group) and the release and the termination of all intercompany
accounts, liabilities, claims and Indebtedness (and all
related Encumbrances) and guarantees owed to or owed in
respect of the Seller, any member of the Group, Affiliates and
Connected Persons of the Seller by any member of the Group;
(vii) the Seller and each member of the Group shall have complied
fully with their respective obligations and covenants required
by this Agreement and the Completion Documents which are to be
performed or complied with prior to Completion;
(viii) the Seller and its Affiliates shall have released the Group
from all claims and liabilities pursuant to the Release in the
Agreed Form;
(ix) no Governmental Entity, including any supra-national or state
agency or regulatory body or any other person or organisation,
having:
(a) instituted or threatened any action, suit or
investigation to restrain, prohibit or otherwise
challenge the acquisition of the Group or its assets,
or the Shares by the Purchaser; or
(b) threatened to take any action as a result of or in
anticipation of the implementation of such
acquisition; or
(c) proposed or enacted any statute or regulation which
would prohibit, materially restrict or materially
delay implementation of the acquisition of the Shares
or of the Group or its assets, or of the operation of
the Company after Completion;
(x) no order or judgment of any Governmental Entity, including any
court or governmental, statutory or regulatory body in the
United Kingdom or elsewhere, having been issued or made prior
to Completion which has the effect of making the acquisition
by the Purchaser of the Shares or the Group or any member of
the Group unlawful or otherwise prohibiting the Purchaser from
acquiring the Shares or the Group or its assets, or any member
of the Group on the Completion Date;
(xi) the Warranties being true, correct, complete and accurate in
all material respects and not materially misleading as and
when they are repeated at the time of Completion;
(xii) no fact or circumstance having occurred before the time of
Completion which might reasonably materially adversely affect
the Group, or its financial position, as a whole;
(xiii) all governmental consents required to transfer the Shares and
the Acquired Business to the Purchaser having been obtained;
4
(xiv) each of the arrangements, deliveries and actions required to
be made at Completion, including each of the arrangements set
forth in Schedule 2 (Completion Arrangements) shall have been
duly and fully made;
(xv) the Seller shall use its reasonable efforts to procure that
Xxxxxxxx Xxxxxxx'x employment agreement shall be assigned to
Penhaligon's Limited; and
(xvi) the promissory notes by Streamchase Limited owning to PenHal
Investments Inc. shall have been cancelled.
(B) The Purchaser may waive in whole or in part any of the Conditions (save
for condition (A)(i).
(C) This Agreement may be terminated at any time prior to Completion:
(i) by the written agreement of the Seller and the Purchaser;
(ii) by either the Purchaser or the Seller if a material breach of
this Agreement has been committed by the other party and such
breach has not been waived or cured within 20 Business Days;
and
(iii) by either the Purchaser or the Seller by giving written notice
of such termination to the other in circumstances where the
Conditions have not been fulfilled (or waived by the
Purchaser) by March 31, 2002 (unless the failure to satisfy
such Condition results primarily from a breach by the Party
(or its Affiliates) seeking to terminate).
(D) If this Agreement is terminated in accordance with sub-clause (C)
written notice thereof shall be given as promptly as practicable to the
other party to this Agreement and this Agreement shall terminate and
the transaction contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein, there shall be no liability or obligation on the part
of the Seller, the Purchaser or their respective officers, directors
and Affiliates, and all obligations of the Parties shall terminate and
this Agreement (save for clauses 1, 15, 18, 19, 20, 21, 22, 23, 24,
25, 26, 27 and 28) shall cease to have affect but without prejudice to
any rights accrued for breaches of this Agreement prior to termination;
provided, however, that a party that has committed fraud or wilfully
breached its representations, Warranties or covenants set forth in this
Agreement shall be liable for damages occasioned thereby, including,
without limitation, any expenses, including the reasonable fees and
expenses of attorneys, accountants and other agents incurred by the
other party in connection with this Agreement and the transaction
contemplated hereby.
5. SELLER'S COVENANTS AND CONDUCT OF THE ACQUIRED BUSINESS BEFORE
COMPLETION
(A) The Seller shall procure that, between the date of this Agreement and
Completion (or such earlier date as set forth below), each member of
the Group will operate the Acquired Business and otherwise carry on its
business
5
only in the normal course consistent with past practice and, in
particular, the Seller will procure that the Group (and each member of
the Group) does not, except as expressly provided in this Agreement or
with the prior written consent of the Purchaser:
(i) declare, make or pay any distribution of its profits or assets
by way of declaration or payment of dividend or otherwise;
(ii) lend any money outside the ordinary course of business;
(iii) transfer or otherwise dispose of or agree to transfer or
dispose of the Group, the Acquired Business or any part of it;
(iv) make a material change in the nature of, or cease carrying on,
the Acquired Business or any part of it;
(v) sell or otherwise dispose of any asset or property of the
Acquired Business or Group outside the ordinary course of
business;
(vi) enter into any material, unusual or abnormal agreement or
commitment, or any other agreement or commitment outside the
ordinary course of business, and in particular not enter into
any commitment for capital expenditure in excess of
'L'10,000 in any single case or 'L'100,000 in
aggregate;
(vii) borrow money, or draw on any credit lines, other than under
existing credit facilities which will be retired and fully
discharged, satisfied and released at Completion;
(viii) create, grant or issue or agree to create, grant or issue, any
mortgages, charges (other than liens arising by operation of
law), debentures or other securities;
(ix) create, allot or issue or agree to create, allot or issue any
shares or other securities convertible into shares or form any
subsidiary;
(x) fail to renew any of its insurances in force;
(xi) alter the provisions of its Memorandum or Articles of
Association (or like constitutional document of the Seller or
any member of the Group);
(xii) in relation to the Properties, agree to a new rent or fee
payable under a lease, tenancy or licence;
(xiii) commence (or determine to settle or cease defending any)
litigation or arbitration proceedings;
(xiv) make a payment out of a bank account except where the payment
is in the usual course of its business;
6
(xv) enter into any new agreement or amend the terms of any
existing employment, severance, or engagement of a director,
other officer or employee, or increase any bonus, salary or
other compensation payable to any director, officer or
employee;
(xvi) adopt, increase the payments or benefits under, any profit
sharing, bonus, defeised compensation, savings, insurance,
pension, retirement or other employee benefit plan for the
benefit of the employees of the Group; or
(xvii) agree, whether oral or written, to do any of the foregoing.
PROVIDED THAT it is acknowledged by the Purchaser that nothing in this
clause 5 shall prevent any member of the Group from distributing its
cash to any member of the Seller's Group prior to Completion except to
the extent that such distribution would knowingly cause the Net Working
Capital Amount to be less than 'L'1.5 million.
(B) Best Endeavours. The Seller and each member of the Group shall use
their respective best endeavours to (i) obtain all material third party
consents and consents of any Governmental Entity required to transfer
the Shares and the Acquired Business to the Purchaser; (ii) consummate
each of the transactions contemplated by this Agreement and the
Completion Documents, including the satisfaction of all obligations set
forth in clause 4 (Conditions to Completion) and the fulfillment of all
arrangements, deliveries and actions set forth in Schedule 2
(Completion Arrangements); and (iii) keep all of the Warranties made in
Schedule 3 (Warranties) true, correct and complete in all material
respects. In consideration of the Seller and each member of the Group
exercising their aforementioned best endeavours in obtaining any
material third party consents, the costs associated with obtaining such
consents (including without limitation reasonable legal fees) shall be
shared by the Seller and the Purchaser equally; provided that the
Seller shall bear all of the costs in fulfilling the condition set
forth in clause 4(A)(i) and the matters described in clause 5(F).
(C) Taiwan and Singapore Stores. In so far as the retail stores at Metro
Walk (Taiwan) and One Raffles Link (Singapore) are concerned, the
Seller shall procure that the Metro Walk (Taiwan) is closed prior to
Completion and shall procure that the One Raffles Link (Singapore)
property is closed within 90 days of Completion but prior to that date
the Purchaser shall procure that One Raffles Link (Singapore) continues
to operate at the Seller's expense. The Seller shall transfer the
Stock, moveable furniture and assets and fixtures at (x) the Metro Walk
(Taiwan) store within 15 days after Completion, and (y) the One Raffles
Link (Singapore) store within 15 days after such store is closed, to
the Purchaser who shall bear all costs associated with freight thereof.
(D) Supplemental Disclosure. Each of the Seller and each member of the
Group shall have the continuing obligation until Completion to promptly
notify the Purchaser in writing with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in
this Agreement, the Disclosure Letter,
7
the Schedules or the other Completion Documents; provided, however,
that, for the purpose of the rights and obligations of the parties
hereunder, any such supplemental or amended disclosure shall not be
deemed to have been disclosed as of the date of this Agreement unless
so agreed in writing by the Purchaser.
(E) No solicitation. From and after the date hereof until the Completion
Date, the Seller shall not, and shall cause each member of the Group,
each of its and their Affiliates, and each of its and their respective
directors, corporate officers or agents, as the case may be, not to
directly or indirectly, encourage, solicit, initiate or enter into any
discussions or negotiations concerning, any disposition of any or all
of the members of the Group (either through a sale of assets or a sale
of stock of the Seller, or any member of the Group or otherwise), the
Acquired Business or any portion thereof (other than pursuant to this
Agreement), or any proposal therefor, or furnish or cause to be
furnished any information concerning the Shares, the Group or the
Acquired Business to any party in connection with any transaction
involving the acquisition of the Shares or the Acquired Business by any
person (other than Purchaser). The Seller will promptly inform
Purchaser of any inquiry (including the terms thereof and the person
making such inquiry) which they may receive or learn of in respect of
any such proposal.
(F) US Assets. The Seller undertakes within 60 days of the Completion Date
to procure the requisite Bankruptcy Court approval for the assumption
by the lessee and the assignment to the Purchaser (or its designee) of
the lease of 000 Xxxxxxx Xxxxxx (and to pay all the costs associated
therewith), and the transfer to the Purchaser of inventory, fixtures
and fittings situated therein, assets of the Group or assets of the
Penhaligon's division of Warnaco or the Group or Warnaco or its
Affiliates used in or relating to the business transacted under the
name "Penhaligon's", in each case situated in the US (including the
assets of Penhaligon's by Request Inc. and the assets used at Saks
Fifth Avenue) at no additional cost to the Purchaser. Upon receipt of
the Bankruptcy Court approval, such lease will be assumed by the lessee
and assigned to the Purchaser (or its designee) and such assets will be
transferred to the Purchaser (or an Affiliate designated by the
Purchaser) at no additional cost. If such approval of the Bankruptcy
Court is obtained, the lessee under the lease shall assume the rights
and liabilities associated with the lease of 000 Xxxxxxx Xxxxxx and
assign the same to the Purchaser or its designee and the aforementioned
assets of the Penhaligon's Division of Warnaco and the Group (including
the assets of Penhaligon's by Request Inc., the assets at the store at
000 Xxxxxxx Xxxxxx and the assets held at Saks 5th Avenue) or Warnaco
or its Affiliates used in or relating to business transacted under the
name "Penhaligon's" situated in the U.S. at no additional cost. If the
Seller does not obtain the approval of the Bankruptcy Court within 60
days of the Completion Date, the Purchaser shall be entitled to
withdraw monies from the Escrow Account in an amount equal to the net
book value of the inventory and other assets (excluding leasehold
improvements) of the Penhaligon's Division of Warnaco and the Group
(including the assets of Penhaligon's by Request Inc., the assets at
the store at 000 Xxxxxxx Xxxxxx and the assets held at Saks 5th
8
Avenue) or Warnaco or its Affiliates used in or relating to business
transacted under the name "Penhaligon's" in the US as at the Completion
Date.
(G) If the Seller does not obtain the approval of the Bankruptcy Court
contemplated above within 60 days with respect to the
assignment/assumption of the lease of 000 Xxxxxxx Xxxxxx, the Purchaser
and Seller shall use their best endeavours to effect the transfer of
the benefits and the obligations to the Purchaser or an entity
designated thereby pursuant to the lease by way of assignment,
sub-lease, operating agreement or otherwise. In the event the Purchaser
and Seller are unable to effect such transfer within 90 days after the
Completion Date, the Purchaser and Seller shall negotiate in good faith
to address any contingent liability of the Purchaser with respect to
the guarantee of Penhaligon's Limited under the guarantee thereby of
such lease and to the extent Penhaligon's Limited shall incur any
liability or costs under such guarantee it shall be entitled to
withdraw an amount equal to any such liability or costs from the Escrow
Agreement; provided that, the Purchaser shall not be entitled to more
than $400,000 for such liabilities or costs relating to such guarantee
under the Escrow Agreement (and the Escrow Agreement shall, solely with
respect to $400,000 in the aggregate to reimburse liabilities or costs
incurred under such guarantee, extended until the earlier of (x)
$400,000 has been withdrawn by the Purchaser therefrom in respect of
such guaranty, (y) the expiration of such lease, and (z) the assumption
of the lease by the lessee and assignment thereof to the Purchaser (or
its designee)).
6. COMPLETION
(A) Completion of the sale and purchase of the Shares shall take place on
the third Business Day following satisfaction and/or waiver of all the
Conditions set forth in clause 4 unless another date is agreed in
writing by the parties hereto.
(B) At Completion the Seller and the Purchaser shall do those things
respectively listed in respect of them in Schedule 2.
(C) The Purchase Price (less the amount to be paid to the Escrow Agent as
contemplated below) shall be payable by or on behalf of the Purchaser
in immediately available funds in US dollars at Completion as referred
to Schedule 2 provided however that US$1,700,000 of the Purchase Price
shall be paid into the Escrow Account to be held pursuant to the Escrow
Agreement in the Agreed Form.
(D) Receipt of funds in accordance with sub-clause (C) shall constitute
good discharge of the Purchaser in respect of payment made and shall
discharge the obligations of the Purchaser under clause 2 (Sale and
Purchase) and the Purchaser shall not have any obligation with respect
to distribution of funds paid.
(E) The Purchaser is not obliged to complete this Agreement unless:
(i) the Seller complies with all its obligations under clause 4
and Schedule 2; and
9
(ii) the purchase of all the Shares is completed simultaneously.
7. SELLER'S WARRANTIES
(A) Subject as provided in this Agreement, the Seller warrants to the
Purchaser in the terms set out in Schedule 3.
(B) The only Warranties given:
(i) in respect of Property are those contained in paragraphs 18
and 30 of Schedule 3 and each of the other Warranties shall be
deemed not to be given in relation to Property;
(ii) in respect of Intellectual Property are those contained in
paragraphs 19 of Schedule 3 and each of the other Warranties
shall be deemed not to be given in relation to Intellectual
Property; and
(iii) in respect of Tax are those contained in paragraphs 23 to 28
of Schedule 3 and each of the other Warranties shall be deemed
not to be given in relation to Tax.
(C) Between the execution of this Agreement and Completion the Seller shall
(i) ensure each member of the Group complies with clause 5 and (ii)
notify the Purchaser immediately if it becomes aware of any fact or
matter or circumstance which constitutes a breach of clause 5 or clause
4 (A) (ix) or has caused a Warranty to become untrue or misleading at
any time before Completion.
(D) The Seller is under no obligation to disclose to the Purchaser anything
which is or may constitute a breach of or be inconsistent with any of
the Warranties given in this Agreement if they were to be repeated at
any time after the Completion Date; or to disclose to the Purchaser
anything which is or may constitute a breach of or be inconsistent with
any of the Warranties of which it may become aware after the Completion
Date.
(E) The Seller accepts that the Purchaser is entering into this Agreement
in reliance upon the Warranties.
(F) The Seller undertakes (if any claim is made against it in connection
with the Warranties) to waive and not to make any claim against any
member of the Group or any director, employee or adviser of any member
of the Group on whom it may have relied before agreeing to any terms of
this Agreement or the Tax Covenant or authorising any statement in the
Disclosure Letter.
(G) Save as stated in sub-clause (B), each of the Warranties shall be
construed as a separate and independent Warranty and shall not be
limited or restricted by reference to any other Warranty.
(H) The liability of the Seller under or in relation to the Warranties
shall be limited as set out in Schedule 4.
10
8. PURCHASER'S WARRANTIES
(A) The Purchaser warrants to the Seller that:
(i) the Purchaser has the requisite power and authority to enter
into and perform this Agreement and the other documents which
are to be executed by the Purchaser at Completion (the
"Completion Documents");
(ii) this Agreement constitutes and the Completion Documents to
which the Purchaser is a party will, when executed by the
Purchaser, constitute binding obligations of the Purchaser in
accordance with their respective terms;
(iii) the execution and delivery of, and the performance by the
Purchaser of its obligations under, this Agreement and the
Completion Documents will not:
(a) result in a breach of any provision of the memorandum
or articles of association or by-laws of the
Purchaser;
(b) result in a breach of, or constitute a default under,
any instrument to which the Purchaser is a party or
by which the Purchaser is bound and which is material
in the context of the transactions contemplated by
this Agreement;
(c) result in a breach of any order, judgment or decree
of any court or Governmental Entity to which the
Purchaser is a party or by which the Purchaser is
bound and which is material in the context of the
transactions contemplated by this Agreement; or
(d) require the Purchaser to obtain any Consent or
approval of, or give any notice to or make any
registration with, any Governmental Entity or other
authority which has not been obtained or made at the
date hereof both on an unconditional basis and on a
basis which cannot be revoked (save pursuant to any
legal or regulatory entitlement to revoke the same
other than by reason of any misrepresentation or
misstatement);
(iv) the Purchaser has or on the Completion Date will have
available sufficient cash or other sources of immediately
available funds or irrevocable cash commitments to meet its
obligations under this Agreement and the Completion Documents
(assuming that the Seller is not in breach of any of its
obligations thereunder); and
(v) the Purchaser is not aware at the date of this Agreement of
any fact matter or circumstance which would, or is reasonably
likely to, give rise to a claim under this Agreement or under
the Tax Covenant and for the purpose of this clause the
Purchaser shall be deemed to be aware of anything Xxxxx
Xxxxxxx and Xxxx Xxxxxxx has actual knowledge.
11
9. PURCHASER'S UNDERTAKINGS AND ACKNOWLEDGEMENT
(A) The Purchaser agrees and undertakes that (in the absence of fraud) it
has no rights against and shall not make any claim against any
employee, director, agent, officer or adviser of any member of the
Seller's Group on whom it may have relied before agreeing to any term
of this Agreement or any other agreement or document referred to herein
or entering into this Agreement or any other agreement or document
referred to herein including, without prejudice, those persons named in
the definition of "so far as the Seller is aware" in Schedule 1.
(B) The Purchaser acknowledges that the Group intends to utilize a
proportion of its trading losses carried forward to date to set against
the Group's trading profits for the year ending 31 December 2001 to a
maximum of the sum of (x)'L'600,000 and (y) the amount of
additional trading loss carried forwards generated during the period
from January 1, 2002 through the Completion Date (solely if the
Completion Date occurs after January 1, 2002) (the "Usable NOL
amount"). No member of the Group shall realize or have any income or
earnings or revenues which are taxable ("Discharge Income") arising due
to the satisfaction, discharge or release of any of its Indebtedness,
liabilities, claims or obligations (including any Indebtedness,
liabilities, claims or obligations owing to or on behalf of members of
the Seller's Group) contemplated by the Agreement (including that
contemplated by the Condition and Schedule 2). To the extent that more
than the Usual NOL Amount is utilized by the members of the Group prior
to the Completion Date to set against the Group's trading profits
accrued through the Completion Date (the "Excess NOLs") and/or the
members of the Group should incur Discharge Income, the Purchaser shall
be entitled to withdraw an amount from the Escrow Agreement equal to
the product of (x) 35 and (y) the sum of (i) the Discharge Income and
(ii) the Excess NOLs.
10. INTRA-GROUP GUARANTEES
The Purchaser, for itself and its successors and assigns, covenants that, at any
time and from time to time on or after Completion, it will execute and deliver
all such instruments of assumption and acknowledgments or take such other action
as the Seller may reasonably request in order to effect the release and
discharge in full of any Assurance given by any member of the Seller's Group to
any person (including any member of the Group) in respect of any obligation or
liability of any member of the Group and the Purchaser's assumption of, and the
substitution of the Purchaser as the primary obligor in respect of, each such
Assurance in each case on a non recourse basis to the Seller's Group; provided,
that, the Purchaser shall not be required to take any action with respect to the
lease relating to 000 Xxxxxxx Xxxxxx (except as contemplated specifically by
Clause 6(G)) if the Seller does not obtain the approval of the Bankruptcy Court
contemplated by Clause 6(F) on effect the transfer of such lease contemplated by
Clause 6(G). Pending such release and discharge, the Purchaser hereby agrees
with the Seller (on behalf of itself and each member of the Seller's Group) that
it will assume and pay and discharge when due, and indemnify each member of the
Seller's Group against, all such Assurances.
12
11. EFFECT OF COMPLETION
Save as otherwise provided herein, any provision of this Agreement or of any
other document referred to herein which is capable of being performed after but
which has not been performed at or before Completion shall remain in full force
and effect notwithstanding Completion.
12. PROTECTION OF GOODWILL
(A) As further consideration for the Purchaser agreeing to purchase the
Shares on the terms contained in this Agreement and with the intent of
assuring to the Purchaser the full benefit and value of the goodwill
and connections of the Group, the Seller shall not (and shall procure
that no Connected Person or agent or representative thereof shall):
(i) for a period of two years following the Completion Date carry
on or be engaged or economically interested in any business
carrying on in competition with the business of the Acquired
Business anywhere in the world, save that nothing shall
prevent the Seller or any member of the Seller's Group (i)
from conducting its business to the extent currently conducted
by any member of the Seller's Group which may compete or be
similar to the business of the Acquired Group (other than
operating Penhaligon's stores or operations) (ii) being the
holder of shares (conferring not more than 10 per cent of the
votes which would normally be cast at a general meeting of
that company) which is engaged in a business similar to the
Acquired Business or (iii) from acquiring the whole or a part
of a business, the carrying on of which would otherwise amount
to a breach of the undertaking contained in this sub-clause
(i) as part of a larger acquisition or related acquisitions if
the acquisition is not made with the sole or main purpose of
acquiring such business or (iv) from trading with its existing
customers or any future customers provided it does not do so
in direct competition with any member of the Group;
(ii) directly or indirectly, during the period of two years from
the Completion Date, solicit, entice away or hire, or
endeavour to solicit, entice away or hire from any member of
the Group any person who was at the Completion Date, an
employee of any member of the Group whether or not such person
would commit a breach of his employment contract by reason of
leaving service, save that this clause shall not apply to (a)
any employee employed by any member of the Group earning less
than 'L'20,000 (or its equivalent) or (b) responses to job
advertisements in newspapers or journals or (c) unsolicited
approaches by any such employee to any employment agency
retained by any member of the Seller's Group;
(iii) for two years following Completion, intentionally interfere or
seek to interfere or take such steps as may interfere with
supplies to the Group from any suppliers who shall have been
supplying goods or services to the Group for use in connection
with the Acquired Business at any time during the period of
two years prior to the date of Completion in
13
each case which would have an adverse effect on the Group's
supply arrangements;
(iv) willfully disparage the Purchaser or any member of the Group.
(B) Each of the restrictions in this clause 12 shall be enforceable
independently of each of the others and its validity shall not be
affected if any of the others is invalid.
(C) Whilst the undertakings in this clause 12 are considered by the parties
to be reasonable in all the circumstances, if any of the restrictions
in this clause 12 is void but would be valid if some part of the
restriction was deleted the restriction in question shall apply with
such modification as may be necessary to make it valid.
(D) The Seller acknowledges that the above provisions of this clause 12 are
no more extensive than is reasonable to protect the Purchaser in
respect of its purchase of the Shares and the other matters
contemplated by this Agreement.
(E) The Seller acknowledges that following Completion neither it nor any
member of the Seller's Group shall have the right to use the name
"Penhaligon's" nor the right to use of the Group's Intellectual
Property provided that the Purchaser agrees that the Seller and each
member of the Seller's Group and their respective employees shall have
a reasonable time following Completion to change the name of any member
of the Seller's Group prefixed with the name "Penhaligon's" or destroy
or amend business cards and office stationery bearing the name
"Penhaligon's".
(F) The Seller and the Purchaser agree that the restriction contained in
sub-clause 12(A)(i) above shall terminate and cease to be enforceable
against the Seller or any member of the Seller's Group immediately upon
the Seller or any member of the Seller's Group (or their respective
assets) being acquired by a purchaser which competes with the Purchaser
or the Group and/or is otherwise involved in the same or similar
business as the Acquired Business.
13. ACCESS
(A) Prior to Completion, the Seller shall permit or cause each member of
the Group to permit the Purchaser and its representatives to have
reasonable access, during Working Hours and upon reasonable advance
notice, to all employees of the Group, books, records, offices and
warehouses and other facilities related to the Acquired Business
subject to reasonable rules and regulations of the Seller and the
relevant member of the Group and the Seller shall furnish or cause to
be furnished to the Purchaser any financial or operating data and other
information that is available with respect to the Acquired Business as
the Purchaser shall from time to time reasonably request. In connection
with such access, the Purchaser and its representatives shall
co-operate with representatives of the Seller and members of the Group
and shall use their best efforts to minimize any disruption to the
Acquired Business;
14
(B) Following Completion, the Purchaser shall permit or cause any member of
the Seller's Group and its representatives and professional advisers to
have reasonable access during Working Hours and upon reasonable advance
notice for a period ending on the sixth anniversary of Completion to
the Group books and accounting, tax and other records of the Group for
tax and accounting purposes relating only to periods prior to the
Completion; provided, that the Seller Group shall keep all information
of the Group confidential.
14. REMEDIES AND WAIVERS
(A) No delay or omission on the part of either party to this Agreement in
exercising any right, power or remedy provided by law or under this
Agreement or any other documents referred to in it shall impair such
right, power or remedy or operate as a waiver thereof.
(B) The single or partial exercise of any right, power or remedy provided
by law or under this Agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
(C) The rights, powers and remedies provided in this Agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by law unless other stated herein.
15. ASSIGNMENT
(A) The benefits and obligations of the Seller under this Agreement shall
not be assignable. The Purchaser is permitted to assign all (or part)
of the benefit of, and any of its rights under, this Agreement
(including under the Warranties) to its successor in title, to any of
its Affiliates or to any purchaser or transferee from it or any of its
Affiliates (as the case may be) provided that no such assignment shall
relieve the Purchaser of its obligations under this Agreement.
(B) This Agreement shall be binding upon and enure for the benefit of the
personal representatives and permitted assigns and successors in title
of each of the parties and references to the parties shall be construed
accordingly.
16. FURTHER ASSURANCE
Each of the parties shall from time to time, on being required to do so by the
other party to this Agreement and at the cost of such requesting party now or at
any time in the future, so far as each is reasonably able do or procure the
doing of all such acts and/or execute or procure the execution of all such
documents in a form reasonably satisfactory to the party concerned as they may
reasonably consider necessary to transfer the Shares to the Purchaser. If
following Completion there shall be discovered assets of the Acquired Business
not part of the Group, the Seller shall use all best efforts to transfer such
assets to the Purchaser or its designee.
17. ENTIRE AGREEMENT
(A) This Agreement and the Completion Documents constitute the whole and
only agreement between the parties relating to the sale and purchase of
the Shares
15
and the Acquired Business and, save if and only to the extent expressly
repeated in this Agreement, supersedes and extinguishes any prior
drafts, agreements, undertakings, representations, warranties and
arrangements of any nature whatsoever, whether or not in writing,
relating thereto. The parties hereto endeavour to act in good faith to
complete the Services Agreement, the Escrow Agreement and the other
Completion Documents in a mutually satisfactory manner and in a manner
consistent with this Agreement.
(B) The Purchaser acknowledges and agrees with the Seller (on behalf of
itself and each other member of the Seller's Group) that:
(i) it does not rely on and has not been induced to enter into
this Agreement or any other agreement or document referred to
herein on the basis of any Assurance made or given by or on
behalf of any member of the Seller's Group or any of their
respective agents, officers, employees or advisers other than
those expressly set out in this Agreement or, to the extent
that it has been, it has (in the absence of fraud) no rights
or remedies in relation thereto; and
(ii) no member of the Seller's Group, or any of their respective
agents, officers, employees or advisers, has given or made any
Assurance other than those expressly set out in this Agreement
or, to the extent that they have, the Purchaser hereby
unconditionally and irrevocably waives (in the absence of
fraud) any claim which it might otherwise have had in relation
thereto.
(C) This Agreement may only be varied by a document signed by both of the
parties and expressed to be a variation to this Agreement.
18. NOTICES
(A) Any notice or other communication given or made under or in connection
with the matters contemplated by this Agreement shall be in writing.
(B) Any such notice or other communication shall be addressed as provided
in sub-clause (C) and, if so addressed, shall be deemed to have been
duly given or made as follows:
(i) if sent by personal delivery, upon delivery at the address of
the relevant party;
(ii) if sent by facsimile, when received and confirmed by telephone
call that such notice was received in full;
PROVIDED THAT if, in accordance with the above provisions, any such
notice or other communication would otherwise be deemed to be given or
made outside Working Hours, such notice or other communication shall be
deemed to be given or made at the start of Working Hours on the next
Business Day.
(C) The relevant addressee, address and facsimile number of each party for
the purposes of this Agreement, subject to sub-clause (D), are:
16
Name of party Address Facsimile No.
------------- ------- -------------
The Seller PO Box 3186 -
Roadtown
Tortola
British Virgin Islands
For the attn. of: The Company Secretary
with a copies to:
Warnaco Inc. 00 Xxxx Xxxxxx 001 212 503 0000
00xx Xxxxx
Xxx Xxxx
XX 00000
For the attn. of: The General Counsel
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP 001 212 735 0000
Xxxx Xxxxx Xxxxxx
Xxx Xxxx
XX 00000
For the attn. of: Xxxx Xxxxx
Sidley, Austin, Xxxxx & Xxxx 001 212 906 2021
000 Xxxxx Xxxxxx
Xxx Xxxx
XX 00000
For the attn. of: Xxxxx Xxxxxxx
The Purchaser Fox Xxxxx & Co LLC 001 212 836 8000
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxx Xxxx, XX
00000
For the attn. of: Xxxxx Xxxxxxx
with a copy to:
Xxxx Xxxxxxx XXX 000 Xxxx Xxxxxx 001 212 836 8000
Xxx Xxxx
XX 00000
For the attn. of: Xxxx Xxxxxxxxx
(D) A party may notify the other parties to this Agreement of a change to
its name, relevant addressee, address or facsimile number for the
purposes of sub-clause (C) PROVIDED THAT such notification shall only
be effective on:-
17
(i) the date specified in the notification as the date on which
the change is to take place; or
(ii) if no date is specified or the date specified is less than
five clear Business Days after the date on which notice is
given, the date falling five clear Business Days after notice
of any such change has been given.
(E) For the avoidance of doubt, the parties agree that the provisions of
this Clause shall not apply in relation to the service of any writ,
summons, order, judgment or other document relating to or in connection
with any Proceedings.
19. ANNOUNCEMENTS
(A) Subject to sub-clause (B), no announcement concerning the sale or
purchase of the Shares or any ancillary matter shall be made by any
party without the prior written approval of the others, such approval
not to be unreasonably withheld or delayed.
(B) Either party may make an announcement concerning the sale of the Shares
or any ancillary matter if required by:-
(i) the law of any relevant jurisdiction;
(ii) any securities exchange or regulatory or Governmental Entity
to which either party is subject or submits, wherever
situated, whether or not the requirement has the force of law,
in which case the party concerned shall take all such steps as
may be reasonable and practicable in the circumstances to
agree the contents of such announcement with the other party
before making such announcement and PROVIDED THAT any such
announcement shall be made only after notice to the other
party.
(C) The restrictions contained in this Clause shall continue to apply after
the termination of this Agreement without limit in time.
20. CONFIDENTIALITY
(A) Subject to sub-clause (B) and Clause 19, each party shall treat as
strictly confidential all information received or obtained as a result
of entering into or performing this Agreement which relates to:-
(i) the provisions or the subject matter of this Agreement or any
document referred to herein;
(ii) the negotiations relating to this Agreement or any document
referred to herein;
(iii) the other party (or in the case of the Purchaser, members of
the Seller's Group).
18
(B) Following Completion, the Seller shall keep confidential and shall
cause its subsidiaries, Affiliates, Connected Persons, employees,
officers, directors, agents, advisors and personal representatives to
keep confidential all information relating to the Acquired Business,
the Group and the Companies.
(C) Either party may disclose information which would otherwise be
confidential if and to the extent:-
(i) required by the law of any relevant jurisdiction;
(ii) required by any securities exchange or regulatory or
governmental body to which either party is subject or submits,
wherever situated, whether or not the requirement for
information has the force of law;
(iii) disclosed on a strictly confidential basis to the professional
advisers, auditors and bankers of that party provided such
professional advisers, auditors and bankers agree to abide by
the confidentiality undertaking set out in sub-clause 20(A)
above;
(iv) the information has come into the public domain through no
fault of that party; or
(v) the other party has given prior written approval to the
disclosure, such approval not to be unreasonably withheld or
delayed; or
(vi) required to enable that party to enforce its rights under this
Agreement,
PROVIDED THAT any such information disclosed pursuant to paragraphs (i)
or (ii) shall be disclosed only after notice to the other party.
The restrictions contained in this Clause shall continue to apply after
the termination of the sale and purchase of the Shares under this
Agreement without limit in time and are without prejudice to the
provisions of the confidentiality undertaking entered into between The
Warnaco Group, Inc. (as agent for the Seller) and Fox Xxxxx & Co LLC
and dated 30 October 2001.
21. COSTS AND EXPENSES
(A) Save as otherwise stated in any other provision of this Agreement, each
party shall pay its own costs and expenses in relation to the
negotiations leading up to the sale of the Shares and to the
preparation, execution and carrying into effect of this Agreement and
all other documents referred to in it.
(B) Without prejudice to sub-clause (A), all stamp, transfer, registration
and other similar taxes, duties and charges payable in connection with
the sale or purchase of the Shares under this Agreement, shall be paid
by the Purchaser.
22. COUNTERPARTS
(A) This Agreement may be executed in any number of counterparts, and by
the parties on separate counterparts, but shall not be effective until
each party has executed at least one counterpart.
19
(B) Each counterpart shall constitute an original of this Agreement, but
all the counterparts shall together constitute but one and the same
instrument.
23. TIME OF ESSENCE
Save as otherwise expressly provided, time is of the essence of this Agreement.
24. INVALIDITY
If at any time any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, that shall not
affect or impair: -
(i) the legality, validity or enforceability in that jurisdiction
of any other provision of this Agreement; or
(ii) the legality, validity or enforceability under the law of any
other jurisdiction of that or any other provision of this
Agreement.
25. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with English
law.
26. JURISDICTION
(A) The parties to this Agreement irrevocably agree for the exclusive
benefit of the Parties hereto that the courts of the State of New York
or if it has or can obtain jurisdiction in the United States District
Court for the Southern District of New York (and the appropriate
appellate courts) are to have jurisdiction to settle any disputes which
may arise out of or in connection with this Agreement and that
accordingly any Proceedings may be brought in such courts.
(B) Each party irrevocably waives (and irrevocably agrees not to raise) any
objection which it may have now or hereafter to the laying of the venue
of any Proceedings in any such court as is referred to in sub-clause
(A) and any claim that any such Proceedings have been brought in an
inconvenient forum and further irrevocably agrees that a judgment in
any Proceedings brought in any court referred to in this clause shall
(provided that there is no appeal pending or open) be conclusive and
binding upon such party and may be enforced in the courts of any other
jurisdiction.
27. SELLER'S AGENT FOR SERVICE
(A) The Seller irrevocably agrees that any Service Document may be
sufficiently and effectively served on them in connection with
Proceedings in New York by service on their agent Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, if no replacement agent has been appointed and
notified to the Purchaser pursuant to sub-clause (D) below, or on the
replacement agent if one has been appointed and notified to the
Purchaser.
20
(B) Any Service Document served pursuant to this clause shall be marked for
the attention of:
(i) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP at 0 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000 6522 or such other address in New York as
may be notified to the Purchaser by the Seller; or
(ii) such other person as is appointed as agent for service
pursuant to sub-clause (D) below at the address notified
pursuant to sub-clause (D).
(C) Any document addressed in accordance with sub-clause (B) above shall be
deemed to have been duly served if:
(i) left at the specified address, when it is left; or
(ii) sent by first class post, two Business Days after the date of
posting.
(D) If the agent referred to in sub-clause (A) above (or any replacement
agent appointed pursuant to this sub-clause) at any time ceases for any
reason to act as such, the Seller shall appoint a replacement agent to
accept service having an address for service in New York and shall
notify the Purchaser of the name and address of the replacement agent;
failing such appointment and notification, the Purchaser shall be
entitled by notice to the Seller to appoint such a replacement agent to
act on the Seller's behalf.
(E) A copy of any Service Document served on an agent pursuant to this
clause shall be sent by post to the Purchaser at its address for the
time being for the service of notices and other communications under
clause 18 (Notices), but no failure or delay in doing so shall
prejudice the effectiveness of service of the Service Document in
accordance with the provisions of sub-clause (A) above.
(F) "Service Document" means a document relating to or in connection with
any Proceedings.
28. PURCHASER'S AGENT FOR SERVICE
(A) The Purchaser irrevocably agrees that any Service Document may be
sufficiently and effectively served on it in connection with
Proceedings in New York by service on its agent Xxxx Xxxxxxx, if no
replacement agent has been appointed and notified to the Seller
pursuant to sub-clause (D) below, or on the replacement agent if one
has been appointed and notified to the Seller.
(B) Any Service Document served pursuant to this clause shall be marked for
the attention of Xxxx Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 for the attention of Xxxx Xxxxxxxxx:
(i) or such other address in New York as may be notified to the
Seller by the Purchaser; or
(ii) such other person as is appointed as agent for service
pursuant to sub-clause (D) below at the address notified
pursuant to sub-clause (D).
21
(C) Any document addressed in accordance with sub-clause (B) above shall be
deemed to have been duly served if:
(i) left at the specified address, when it is left; or
(ii) sent by first class post, two Business Days after the date of
posting.
(D) If the agent referred to in sub-clause (A) above (or any replacement
agent appointed pursuant to this sub-clause) at any time ceases for any
reason to act as such, the Purchaser shall appoint a replacement agent
to accept service having an address for service in New York and shall
notify the Seller of the name and address of the replacement agent;
failing such appointment and notification, the Seller shall be entitled
by notice to the Purchaser to appoint such a replacement agent to act
on the Purchaser's behalf.
(E) A copy of any Service Document served on an agent pursuant to this
clause shall be sent by post to the Purchaser at its address for the
time being for the service of notices and other communications under
clause 18 (Notices), but no failure or delay in doing so shall
prejudice the effectiveness of service of the Service Document in
accordance with the provisions of sub-clause (A) above.
(F) "Service Document" means a document relating to or in connection with
any Proceedings.
29. SPECIFIC PERFORMANCE
In addition to its right to damages and any other rights it may have, if the
Seller, or any member of the Group breaches any covenant, undertaking or
agreement contained in this Agreement or the Completion Documents, the Purchaser
shall be entitled to obtain injunctive or other equitable relief to restrain any
breach or threatened breach or otherwise to specifically enforce such covenant,
undertaking or agreement, it being agreed that money damages alone would be
inadequate to compensate the Purchaser and its Affiliates and would be an
inadequate remedy for such breach.
IN WITNESS whereof the parties have entered into this Agreement the day and year
first before written
22
SCHEDULE 1
Interpretation
(A) In this Agreement and the Schedules to it:-
"Accounts" means the audited financial statements of Penhaligon's &
Jeavons Investment Co Limited, Penhaligon's Limited and
Penhaligon's Pacific Limited for the two accounting
reference periods ended on the Accounts Date (a copy of each
of which is at Attachment I);
"Accounts Date" means 30 December 2000;
"Acquired Business" means the business of the Companies as carried on at the
date of this Agreement consistent with past practices;
"Affiliate" has the meaning set forth in Rule 12b-2 of the U.S.
Securities Exchange Act of 1934, as amended;
"Agreed Form" in relation to any document means such document in the
form initialed for the purposes of identification only by
the Purchaser's Solicitors and the Seller's Solicitors;
"Assurance" means any warranty, representation, statement, assurance,
covenant, agreement, undertaking, indemnity or commitment of
any nature whatsoever;
"Bank Deeds of
Release" means the deeds in the Agreed Form to be delivered to the
Buyer at Completion following assumption of the Bank
Indebtedness by Warner's (United Kingdom) Limited whereunder
Societe Generale releases each Encumbrance it holds over any
member of the Group or their respective assets and releases
each member of the Group from any and all obligations
relating to the Bank Indebtedness;
"Bank Indebtedness" all amounts owing by Penhaligon's Limited to Societe
Generale or its syndicates at the Completion Date
(including, without limitation, amount of principal debt,
accrued interest, accrued fees and charges);
23
"Business Day" means a day (other than a Saturday or a Sunday) on which
banks are open for business in New York City and the City of
London;
"Companies" means, together, Penhaligon's Limited (basic information
concerning which is set out in Part I of Schedule 5) and
Penhaligon's Pacific Limited (basic information concerning
which is set out in Part II of Schedule 5);
"Companies Acts" means the Companies Xxx 0000, the Companies Consolidation
(Consequential Provisions) Xxx 0000, the Companies Xxx 0000
and Part V of the Criminal Justice Xxx 0000;
"Completion" means completion of the sale and purchase of the Shares
under this Agreement;
"Completion Date" means the date of Completion;
"Completion
Documents" means all agreements, instruments, contracts or other
documents contemplated by this Agreement;
"Conditions" means the conditions to Completion set forth in clause 4;
"Connected Person" means a Person connected (within the meaning of
Section 839 Income and Corporation Taxes Act 1988) with the
Seller or any of the directors (or any former director) of
the Group
"Consent" includes any licence, approval, authorisation, permission,
waiver, order or exemption;
"Data Room" means those documents referred to in the list in the Agreed
Form entitled "Data Room List" and forming Attachment III;
"Disclosure Letter" means the letter dated with the same date as this agreement
written by the Seller to the Purchaser for the purposes of
paragraph 11 of Schedule 4;
"Encumbrances" means any interest or equity of any person (including any
right to acquire, option or right of pre-emption or
conversion) or any mortgage, charge, pledge, lien,
assignment, hypothecation, security interest, title
retention or any other security agreement or arrangement, or
any agreement to create any of the above;
24
"Environmental
Laws" all applicable statutes and subordinate legislation and
other supranational, national, federal, state and local
laws, civil code or common law, industry agreements,
guidance notes or codes of conduct insofar as they relate to
or apply to Environmental Matters which have the force of
law at the date of this Agreement;
"Environmental
Matters" all matters related to pollution, contamination, human
health and/or the environment, including but not limited to
those matters relating to radiation, health and safety,
waste, nuisance, discharges, emissions, deposits, disposals
and releases to land, air and water, and the sale, import,
export, manufacture, use, treatment, storage, handling,
deposit, transport or disposal of chemicals, wastes,
radioactive substances or any other polluting, dangerous,
hazardous or toxic substances or materials or forms of
energy;
"Escrow Account" shall mean the account maintained by the Escrow Agent under
the Escrow Agreement;
"Escrow Agent" shall mean the escrow agent (as shall be agreed by the
parties) under the Escrow Agreement;
"Governmental
Entity" means any federal, state, city, provincial, local, county or
municipal government, governmental, judicial, regulatory or
administrative agency, commission, board, tribunal, bureau
or other authority or instrumentality, domestic or foreign;
"Group" means, together, the Companies and Penhaligon's & Jeavons
Investment Co Limited, Mulmkion BV and LMK Limited, (basic
information concerning which is set out in Parts I, II and
III of Schedule 6) and where the context so requires,
includes any one or more of such companies;
"ICTA 1988" means the Income and Corporation Taxes Xxx 0000;
"Indebtedness" of any person shall mean all obligations of such Person
(whether for principal, interest, premiums, prepayment fees,
penalties or otherwise) (i) for or in respect of borrowed
money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for or in respect of the deferred
purchase price of goods
25
or services (other than trade payables or accruals incurred
in the ordinary course of business), (iv) under or arising
from leases which are required to be capitalized in
accordance with UK GAAP or letters of credit or (v) in the
nature of guarantees of any of the obligations described in
clauses (i) through (iv) above of any other Person;
"Information
Memorandum" means the information memorandum relating to the Acquired
Business prepared by The Warnaco Group Inc. on behalf of the
Seller and dated September 2001;
"Intellectual
Property" means patents, trade marks and service marks, rights in
designs, trade or business names or signs, copyrights
(including rights in computer software) and topography
rights (whether or not any of these is registered and
including applications for registration of any such thing)
and rights under licences and consents in relation to any
such thing and all rights or forms of protection of a
similar nature or having equivalent or similar effect to any
of these which may subsist anywhere in the world;
"Management
Accounts" the unaudited management accounts of each member of the
Group for the ten month period ended 31 October 2001;
"Material Contract" means any arrangement, understanding, commitment, agreement
or contract calling for payments by any party thereto in
excess of 'L'100,000 in any one year;
"Net Working
Capital Amount" means the consolidated current assets and debtors of the
Group less the amount of the Group's creditors and
provisions for liabilities as at the close of business on
the Completion Date determined in accordance with clauses
3(C) to 3(F) and Schedule 8;
"Net Working Capital
Statement" means a statement of the Net Working Capital Amount to be
prepared in accordance with clauses 3(C) to 3(F) in the
format set out in Schedule 8;
"Proceedings" means any proceeding, suit or action arising out of or in
connection with this Agreement;
26
"Properties" means leasehold properties specified in Schedule 7;
"Purchase Price" means US$11 million (eleven million US dollars);
"Purchaser's Group" means the Purchaser, its subsidiaries (including each member
of the Group), any holding company of the Purchaser and all
other subsidiaries of any such holding company from time to
time;
"Purchaser's
Solicitors" means Xxxx Xxxxxxx LLP of 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 and 00xx Xxxxx, 00 Xxxx Xxxxxx, Xxxxxx XX0X 0XX;
"Seller's Group" means the Seller and any of its subsidiary (other than
members of the Group) and subsidiary undertakings, any
affiliate and any holding company of the Seller and all
other subsidiaries and affiliates of any such holding
company from time to time;
"Seller's
Solicitors" means Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP; Xxx Xxxxxx
Xxxxxx, Xxxxxx Xxxxx, Xxxxxx X00 0XX;
"Senior Employee" means any one of the Employees who is entitled to emoluments
at a rate (or in the case of fluctuating amounts) an average
annual rate over the last three financial years, in excess
of 'L'30,000 per annum and every director who is also an
employee;
"Shares" means, together, all the issued shares in the capital of LMK
Limited, 41 ordinary shares in the capital of Penhaligon's &
Jeavons Investment Co. Limited (being 51 per cent. of its
issued share capital), 20,400 ordinary shares in the capital
of Mulmkion BV (being 51 per cent. of its issued share
capital) and 50 ordinary shares in the capital of
Penhaligon's Pacific Limited (being 50 per cent. of its
issued share capital);
"so far as the
Seller is aware" means so far as is within the actual knowledge (having made
reasonable enquiry) of the persons whose names are set out
below in this definition at the time of the execution of the
Disclosure Letter by the Seller:
27
Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxx Xxxxx
and all other phrases in this Agreement relating to the
knowledge, information and belief or awareness of the Seller
shall be construed as a reference to "so far as the Seller
is aware" as so defined;
"Stock" raw materials, consumables, finished goods and goods for
resale held by the Companies on the date hereof;
"Tax" or "Taxation" means any form of tax or any levy, impost, duty,
contribution or withholding in the nature of tax (whether of
the United Kingdom or elsewhere) imposed, collected or
assessed by, or payable to, a Tax authority and all
penalties and interest included in or relating to any of the
above and any objections under any agreement or arrangements
with respect of any Tax;
"Tax Authority" means any domestic or foreign revenue, customs or fiscal
governmental, federal, state, community, municipal or city
or local regional authority, body or person competent to
impose or collect Tax;
"Tax Covenant" means the tax deed of covenant in the Agreed Form set out in
Attachment IV;
"Tax Liability" has the meaning in the Tax Covenant;
"Tax Warranties" means the Warranties which mention or relate to Tax;
"TCGA 1992" means the Taxation of Chargeable Gains Xxx 0000;
"VATA 1994" means the Value Added Tax Xxx 0000;
"Warner's Deed of
Release" means the deed in the Agreed Form to be entered into at
Completion by Warner's (United Kingdom) Limited and
Penhaligon's Limited releasing Penhaligon's from all
obligations and liabilities to repay the Warner's
Indebtedness;
"Warner's
Indebtedness" means the debt owed by Penhaligon's Limited to Warner's
(United Kingdom) Limited and any interest related thereto
and any guarantee related thereto;
28
"Warranties" means the warranties set out in Schedule 3 and "Warranty"
shall be construed accordingly; and
"Working Hours" means 9.30 a.m. to 5.30 p.m. on a Business Day.
(A) In this agreement, unless otherwise specified:-
(i) references to Clauses, Schedules and Attachments are to
Clauses, Schedules and Attachments to this Agreement;
(ii) a reference to a sub-clause is to a sub-clause of the Clause
in which such reference appears, to a paragraph is to a
paragraph of the sub-clause in which such reference appears
and to a sub-paragraph is to a sub-paragraph of the paragraph
in which such reference appears;
(iii) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or
may from time to time be, amended, modified or re-enacted
except to the extent that any amendment or modification made
after the date of this Agreement would increase or alter the
liability of the Seller under this Agreement;
(iv) references to a "company" shall be construed so as to include
any company, corporation or other body corporate, wherever and
however incorporated or established;
(v) references to a "person" shall be construed so as to include
any individual, firm, company, Government Entity, state or
agency of a state or any joint venture, association or
partnership (whether or not having separate legal
personality);
(vi) the expressions "holding company", "subsidiary" and
"wholly-owned subsidiary" shall have the meaning given in the
Companies Xxx 0000;
(vii) a person shall be deemed to be connected with another if that
person is connected with another within the meaning of section
839 ICTA 1988;
(viii) references to writing shall include any modes of reproducing
words in a legible and non-transitory form;
(ix) references to times of the day are to London time;
(x) headings are for convenience only and do not affect the
interpretation of this Agreement; and
(xi) references to 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.
29
SCHEDULE 2
Completion arrangements
At Completion:
(i) the Seller shall deliver to the Purchaser or the Purchaser's
Solicitors such duly executed transfers in respect of the
Shares in favour of the Purchaser or such nominee of the
Purchaser as the Purchaser may nominate and share certificates
for the Shares in the name of the relevant transferors and any
power of attorney under which any transfer is executed on
behalf of the Seller;
(ii) the Seller shall duly execute and deliver the Tax Covenant to
the Purchaser and the Purchaser shall duly execute and deliver
a counterpart of it to the Seller;
(iii) the Seller shall deliver to the Purchaser an original Warner's
Deed of Release duly executed on behalf of Warner's (United
Kingdom) Limited and Penhaligon's Limited;
(iv) the Seller shall deliver to the Purchaser a Services Agreement
executed by Warnaco Inc. and Warner's (United Kingdom) Limited
in the Agreed Form and the Purchaser shall deliver a
counterpart of it to the Seller under which the relevant
member of the Seller's Group will provide certain services,
including those pursuant to which the Purchaser shall manage
the catalogue operations and operation at 000 Xxxxxxx Xxxxxx
of the Acquired Business (for its own profit and loss), and
office space to the Purchaser at the current cost charged to
the relevant members of the Group by the relevant members of
the Seller's Group for a period of one year terminable by
either party on 90 days notice;
(v) the Seller shall deliver to the Purchaser a duly executed
sub-lease or licence in the Agreed Form in respect of office
space with respect to (i) 000 Xxxxxxx Xxxxxx, Xxx Xxxx; (ii)
Xxxx 0-0 Xxxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxx X0; and (iii)
the Shop, 0 Xxxxxxx Xxxxxxxx, Xxxx Xxxx from Warnaco (HK)
Limited; and Seller cause its Affiliates not to take any
action which could adversely effect the rights of the
Purchaser to use the premises described in clauses (ii) and
(iii);
(vi) the Seller shall deliver to the Purchaser originals of the
Bank Deed of Release duly executed by or on behalf of the
relevant lenders of the Group;
(vii) the Seller shall deliver to the Purchaser or the Purchaser's
Solicitors such of the following as the Purchaser may require:
(a) the statutory books (which shall be written up to but
not including the Completion Date), the certificate
of incorporation
30
(and any certificate of incorporation on change of
name) and common seal (if any) of each member of the
Group;
(b) title deeds relating to Properties so far as they are
in the possession of the Seller; and
(c) a copy of the minutes of a duly held meetings of the
directors of the Seller authorising the execution by
the Seller of this Agreement and the Tax Covenant and
any other documents (such copy minutes being
certified as correct by the secretary of the Seller).
(viii) the Seller shall deliver to the Purchaser certificates in
respect of all issued shares in the capital of each of the
members of the Group and subsidiaries of any member of the
Group and duly executed transfers of all shares in any member
of the Group and any subsidiary held by any person other than
the Seller in favour of such persons as the Purchaser shall
direct;
(ix) the Seller shall deliver to the Purchaser such waivers,
consents or other documents (including any power of attorney
under which any document required to be delivered under this
Schedule has been executed) in the Agreed Form as are required
to enable the Purchaser and its nominee(s) to be registered as
the holders of the Shares and to acquire all of the assets of
the Acquired Business (including all Contracts and Permits)
without creating a default under any contract, agreement,
lease or other instrument to which any member of the Group as
a party or to which its assets are subject;
(x) the Seller shall deliver to the Purchaser all charges,
mortgages, debentures and guarantees to which any member of
the Group or any of their subsidiaries is a party together
with duly sealed discharges and (where applicable) deeds of
release (in the Agreed Form) and forms No. 403a duly sworn and
completed in respect of them and any covenants in connection
with them;
(xi) the Seller shall deliver to the Purchaser certificates from
each of the banks at which the members of the Group and each
of their subsidiaries maintains an account of the amount
standing to the credit or debit of all such accounts as at the
close of business on the last Business Day before the
Completion meeting;
(xii) the Seller shall deliver to the Purchaser the cash book
balances of the Group and each of the subsidiaries as at
Completion with statements reconciling such cash book balances
and the relevant cheque books with the balances on the bank
accounts of the members of the Group and each of their
subsidiaries as shown by the certificates referred to in
paragraph (xi) above;
(xiii) the Seller shall deliver to the Purchaser the cheque books
relating to all the bank accounts of the members of the Group
and each of their
31
subsidiaries, together with confirmation that no cheques have
been written by any member of the Group or any of their
subsidiaries since preparation of the statements referred to
in paragraph (xii);
(xiv) the Seller shall deliver to the Purchaser evidence in the
Agreed Form that (a) all debts and accounts between any member
of the Group or any Affiliate of any member of the Group (of
the one part) and the Seller or any Connected Person or any
Affiliate of the Seller, excluding any member of the Group (of
the other part), have been fully paid, settled and all
liability with respect thereto had been released and (b) all
guarantees or other undertakings with respect to any
obligations, covenants, liabilities or Indebtedness of the
Seller or any connected Person or any Affiliate of the Seller
by any member of the Group have been fully released and
terminated at or prior to the Completion Date;
(xv) each of the parties to the Escrow Agreement shall have
executed and delivered the Escrow Agreement which will provide
for payment for breaches of the Agreement and payment of
certain amounts contemplated by the Agreement;
(xvi) the Seller shall have delivered the release of all claims and
rights against the members of the Group in the Agreed Form;
(xvii) the Seller shall procure Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx and
Xxxxxxxx Xxxx to resign their offices as directors and
secretary of the relevant members of the Group, such
resignations to be tendered at the board meetings referred to
in paragraph (xxiv) below;
(xviii) (if required by the Purchaser) the Seller shall procure the
present auditors of each member of the Group to resign their
office as such, and to deposit at the registered office of the
relevant member of the Group a letter notifying their
resignation;
(xix) the Seller shall use its reasonable efforts to eliminate
Warnaco Inc. as a party to the Distribution Agreement among
Penhaligon's Limited, Warnaco Inc. and Xxxxxx Profumi - Div.
Henkel SPA and the Agreement with Pacific Direct Limited,
Warnaco Inc. and Penhaligon's Limited;
(xx) the deed of option, dated March 27, 1997, between PenHal
Investments, Inc., Streamchase Limited and Mullion
International Limited and other relating to the shares in
capital of Streamchase Limited and an intellectual property
holding company shall have been released;
(xxi) the deed of option with respect to shares of Mulmkion B.V.
among PenHal Investments Inc., Mulmkion B.V. and Mullion
International Limited and Penhaligon's & Jeavons Investment
Co. Limited dated
32
April 6, 1998 and all exercise agreements, shareholders'
agreements and articles of association shall be terminated.
(xxii) the Seller shall procure board meetings of each member of the
Group to be held at which:-
(a) it shall be resolved that each of the transfers
relating to the Shares shall be approved for
registration and ((if appropriate) subject only to
the transfer being duly stamped) each transferee
registered as the holder of the Shares concerned in
the register of members;
(b) each of the persons nominated by the Purchaser shall
be appointed directors and/or secretary, as the
Purchaser shall direct;
(c) the resignations of the directors and secretary
referred to in paragraph (v) shall be tendered and
accepted so as to take effect at Completion;
(d) the situation of the registered office of the members
of the Group shall be changed to such address as the
Purchaser may nominate;
(e) such other business as the Purchaser may reasonably
require shall be conducted; and
that minutes of each duly held board meeting, certified as
correct by the secretary of the relevant company and the
resignations and acknowledgements, referred to are delivered
to the Purchaser's Solicitors; and
(xxiii) the Purchaser shall:-
(a) pay the Purchase Price (less the amount to be paid to
the Escrow Agent as contemplated below) to the
Seller's bank account (as it shall notify the
Purchaser prior to Completion) by way of telegraphic
transfer and pay US$1,700,000 to the Escrow Agent to
be held pursuant to the Escrow Agreement;
(b) deliver to the Seller a copy (certified by the
secretary of the Purchaser to be a true copy of a
resolution in force at Completion) of the resolution
of the directors of the Purchaser which authorised
the execution and delivery of this Agreement and all
other relevant agreements and documents referred to
herein.
33
SCHEDULE 3
The Warranties
1. Ownership of the Shares
(A) The Seller is the sole legal and beneficial owner of the Shares.
(B) There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or Encumbrance or equity on, over or affecting
the Shares or the shares of Penhaligon's Limited (or any of them) and
there is no agreement or commitment to give or create any.
2. Capacity of the Seller
(A) The Seller has the requisite power and authority to enter into and
perform this Agreement.
(B) This Agreement constitutes, and the other documents to be executed by
the Seller at Completion will when executed constitute, binding
obligations of the Seller in accordance with its respective terms.
(C) The execution and delivery of, and the performance by the Seller of its
obligations under, this Agreement will not:-
(i) result in a breach of any provision of the memorandum or
articles of association of the Seller or any member of the
Group;
(ii) result in a breach of, or constitute a default under, any
instrument to which the Seller or any member of the Group is a
party or by which the Seller or any member of the Group is
bound and which is material in the context of the transactions
contemplated by this Agreement; or
(iii) result in a breach of any order, judgment or decree of any
court or governmental agency to which the Seller or any member
of the Group is a party or by which the Seller is bound and
which is material in the context of the transactions
contemplated by this Agreement.
3. Arrangements between the Group and the Seller's Group
(A) No material contract or arrangement other than on arm's length terms is
outstanding between any member of the Group and any member of the
Seller's Group or any person who is a director of or connected with any
such member of the Seller's Group.
(B) As at the Completion Date, there will be no Indebtedness, claims,
liabilities, rights, guarantees or other entitlements outstanding
against any member of the Group.
34
4. Group structure, etc.
(A) The Shares comprise the whole of the issued and allotted share capital
of LMK Limited, 51 per cent. of the issued and allotted share capitals
of Penhaligon's & Jeavons Investment Co Limited and Mulmkion BV and 50
per cent. of the issued and allotted share capital of Penhaligon's
Pacific Limited, and all of them are fully paid up.
(B) LMK Limited is the sole legal and beneficial owner of the issued and
allotted share capital of Penhaligon's & Jeavons Investment Co Limited,
Mulmkion BV and Penhaligon's Pacific Limited not comprising the Shares.
(C) Penhaligon's Limited is a wholly-owned subsidiary of Penhaligon's &
Jeavons Co. Limited.
(D) There is no agreement or commitment outstanding entered into by any
member of the Seller's Group which calls for the allotment, issue or
transfer of, or accords to any person the right to call for the
allotment or issue of, any shares (including the Shares) or debentures
in or securities of any member of the Group.
(E) The information given in Schedules 5 and 6 is true and accurate in all
material respects.
(F) No member of the Group has any interest in the share capital of any
company which is not a member of the Group.
(G) No member of the Group acts or carries on business in partnership with
any other person or is a member (otherwise than through the holding of
share capital) of any corporate or unincorporated body, undertaking or
association (other than a trade association) or holds or is liable on
any share or security which is not fully paid up or which carries any
liability.
(H) Save as disclosed, no member of the Group has any branch, agency, place
of business or permanent establishment outside the United Kingdom.
(I) No member of the Group trades under a name other than its corporate
name (excluding trademarks registered in a name other than its
corporate name).
(J) There is no Encumbrance on, over or affecting any of the Shares or any
issued shares (which are all held by Seller or another member of the
Group) or any unissued shares, debentures or other securities of any
member of the Group and no person has the right (exercisable now or in
the future and whether contingent or not) to call for the issue of any
share or loan capital of any member of the Group. There is no agreement
or commitment outstanding entered into by any member of the Group or
any other person which calls for the allotment, issue or transfer of,
or accords to any person the right to call for the allotment or issue
of, any shares (including the Shares) or debentures in or securities of
any member of the Group. There are no shareholders agreement, voting
rights, tag-along, drag-along, put, call or other similar agreements
affecting the securities of any member of the Group.
35
(K) The shares in the subsidiaries of any member of the Group or any member
of the Group which are not Shares are in each case held by a member of
the Group free from all Encumbrances and with all rights attaching to
them, no member of the Group owns or has agreed to acquire any shares,
loan capital or other securities (legally or beneficially) in any other
company.
5. Ownership, Condition and Sufficiency of Assets
(A) Each of the material assets included in the Accounts or acquired by
relevant member of the Group since the Accounts Date (other than
current assets sold, realised or applied in the normal course of
trading) is owned both legally and beneficially by relevant member of
the Group and each of those assets capable of possession is in the
possession of the relevant member of the Group. The assets held by the
Group constitute all of the assets necessary to conduct the Business of
the Group in a manner consistent with past practices and will be all of
the assets necessary for the Purchaser to conduct the business,
consistent with past practices, following Completion.
(B) Upon Completion, no option, right to acquire, mortgage, charge, pledge,
lien (other than a lien arising by operation of law in the ordinary
course of trading) or other form of security or Encumbrance or equity
on, over or affecting the whole or any part of the assets of any member
of the Group will be outstanding (other than any asset acquired in the
ordinary course of business on terms that the property does not pass
until payment is made) and there will be no agreement or commitment
entered into by any member of the Group to give or create any and no
claim has been made against any member of the Group by any person to be
entitled to any.
(C) Save as disclosed, the Group owns, possesses or has rights to use all
tangible and intangible assets, Intellectual Property, know-how and
Properties:
(i) for it to operate its business as it has been operated in the
past; and
(ii) (following Completion) to enable the Purchaser to conduct the
Acquired Business in the same manner as the Group conducted
the Acquired Business prior to Completion.
6. Stock
Save for a de minimus amount, the stock is undamaged and (to the extent it is
finished goods for resale) it is in merchantable condition.
7. Accuracy of information
(A) The statutory books (including all registers and minute books) of each
member of the Group have in all material respects been properly kept
and contain a record of the matters which should be dealt with in those
books and no notice in writing that any of them is materially incorrect
or should be rectified has been received by any member of the Group.
36
(B) The copies of the memorandum and articles of association or other like
constitutional documents of each member of the Group contained in the
Data Room are complete and accurate copies in all material respects.
8. Accounts and Management Accounts
(A) So far as the Seller is aware, the Accounts when taken as a whole:-
(i) were prepared in accordance with accountancy practices
generally accepted in the relevant jurisdiction of the
relevant member of the Group at the time they were audited;
and
(ii) (insofar as the accounts for the year ended 31 December 2000
are concerned) show a true and fair view of the assets and
liabilities of the relevant member of the Group as at the
Accounts Date and of their profits or losses for the financial
period ended on that date, provided that the foregoing shall
not constitute an Assurance as to any particular item in the
Accounts.
(B) So far as the Seller is aware, the Management Accounts have been
prepared using the same accounting policies and principles as the
Accounts of the relevant member of the Group to which they refer and
reasonably accurately state the level of turnover and expenditure for
the relevant period and reasonably accurately reflect the state of
affairs and financial position of the Group for the ten months ended 31
October 2001.
9. Events since the Accounts Date
Since the Accounts Date:-
(i) so far as the Seller is aware, there has been no material
adverse change in the financial position of the Companies;
(ii) so far as the Seller is aware, the Acquired Business has in
all material respects been carried on in the ordinary course;
(iii) no asset of a value in excess of 'L'10,000 of the
Companies has been acquired or disposed of on capital account
or has been agreed to be acquired or disposed of;
(iv) no resolution of any member of the Group in general meeting
has been passed other than resolutions relating to the routine
business of annual general meetings;
(v) no member of the Group has declared, authorised, made or paid
to its members any dividend or other similar distribution;
(vi) no member of the Group has allotted or issued or agreed to
issue or granted an option or other right to acquire any share
capital;
(vii) no member of the Group has redeemed or purchased or offered or
agreed to redeem or purchase any of its share capital; and
37
(viii) LMK Limited, Mulmkion BV and Penhaligon's & Jeavons Investment
Co Limited have not carried on any trading activity.
10. Contracts and commitments
(A) The Data Room contains or refers to each outstanding contract or
arrangement entered into by any member of the Group which:
(i) is a Material Contract;
(ii) restricts it from carrying on the business of that member of
the Group in any part of the world;
(iii) is a joint venture agreement or arrangement under which it is
to participate with any other person in any business;
(iv) is an agency or distributorship contract or arrangement; or
(v) is made with any member of the Seller's Group.
(B) The Disclosure Letter has attached to it a copy of each Material
Contract.
(C) No member of the Group is a party to any contract or arrangement which
is not contained or referred to in the Data Room and which:
(i) is a contract or arrangement which has an unexpired term of
three or more years and which is material in relation to the
Acquired Business;
(ii) can be terminated by any other party thereto in the event of a
change of control of that member of the Group and which is
material in relation to the Acquired Business; or
(iii) makes it liable to make any investment in securities or make
any loan (other than trade credit) to any person.
(D) So far as the Seller is aware, no member of the Group is in material
breach of any contract or arrangement which is material in the context
of the Acquired Business and, so far as the Seller is aware, no other
party to any such contract or arrangement is in material breach of any
such contract or arrangement.
11. Bank accounts and borrowings
(A) Details of all bank accounts maintained by any member of the Group
(comprising, in each case, the name and address of the bank with whom
the account is kept and the number and nature of the account) are set
out in or attached to the Disclosure Letter.
(B) The Data Room contains the terms of each overdraft, loan and other
similar financial facility available to each member of the Group other
than from a member of the Seller's Group.
38
(C) The total amount borrowed by each member of the Group does not exceed
any limitation in its financial facilities or articles of association.
12. Powers of attorney
No member of the Group has given any power of attorney, proxy or similar
authority (other than such given to an officer of a member of the Group in the
ordinary course of the business of that member of the Group) which is still
outstanding.
13. Grants and allowances
No member of the Group has received any grant, allowance, aid or subsidy from
any supranational, national or local authority or government agency during the
last three years which is currently repayable as a result of any act or failure
to act by the member of the Group concerned or which would be repayable as a
result of the sale of the Shares to the Purchaser.
14. Compliance with laws
Since 1 January 1999, neither the Seller nor any members of the Group has
received any notice of a failure to comply with any applicable laws material to
the Acquired Business as currently conducted and, so far as the Seller is aware,
no material contravention or allegation of a material contravention of any
applicable law is known to any member of the Group or the Seller.
15. Licences
So far as the Seller is aware, all governmental licences, consents, permissions
and approvals which are material and necessary to the on going operations of any
member of the Group are held by the relevant member of the Group.
16. Litigation
(A) No member of the Group is engaged in any litigation or arbitration,
administrative or criminal proceedings, whether as plaintiff, defendant
or otherwise which is material in the context of the Acquired Business
as a whole.
(B) So far as the Seller is aware, no such litigation or arbitration,
administrative or criminal proceedings as are referred to in paragraph
(A) above are pending or threatened.
17. Delinquent and wrongful acts
(A) So far as the Seller is aware, no member of the Group has committed any
criminal or illegal act which would have a material adverse effect on
the Acquired Business as a whole.
(B) So far as the Seller is aware, no member of the Group has received
notification that any investigation or inquiry is being or has been
conducted by any supranational, national or local authority or
governmental agency in respect of the business or affairs of any member
of the Group.
39
18. Ownership of land
(A) The legal estate in the Properties is vested in the relevant member of
the Group specified in column 3 of the relevant section of Schedule 7.
(B) The Properties are the only immovable property used by the Group in
conducting the Acquired Business.
(C) So far as the Seller's aware, each of the Properties is in a reasonable
state of repair and condition fair wear and tear excepted.
19. Intellectual Property
(A) Details of all registered Intellectual Property owned by any member of
the Group are set out in Schedule 9.
(B) All renewal fees and steps required for the maintenance or protection
of the rights disclosed pursuant to paragraph (A) above have been paid
or taken and none of such rights are subject to any challenge or attack
by a third party or competent authority of which the Seller has been
notified.
(C) No member of the Group nor any other party is, so far as the Seller is
aware, in breach of any licence.
(D) So far as the Seller is aware, the processes and methods employed, the
services provided, the businesses conducted and the products
manufactured, used or dealt in by each member of the Group do not
infringe the rights of any other person in any Intellectual Property.
(E) So far as the Seller is aware, there is no unauthorised use or
infringement by any person of any Intellectual Property owned or
otherwise required for the business of any member of the Group.
20. Insurances
Copies of the insurance policies in respect of which any member of the Group has
an interest are set out in the Disclosure Letter and, so far as the Seller is
aware, no claims are outstanding thereunder.
21. Employment
(A) A list of the names, jobs and terms of employment (including the
emoluments and material benefits) of each Senior Employee are set out
in the Disclosure Letter.
(B) Save as disclosed and set out in the Disclosure Letter, any contract of
employment with any Employee to which any member of the Group is a
party can be terminated by the employing company without damages or
compensation (other than that payable under the Employment Rights Act
1996) by giving at any time only the minimum statutory notice under the
Employment Rights Xxx 0000.
40
(C) No Senior Employee has given notice terminating his contract of
employment or is under notice of dismissal and no amount due to or in
respect of any such Senior Employee director or employee or former
Senior Employee is in arrears and unpaid other than his salary for the
month current at the date of this Agreement.
(D) Since the Accounts Date, no material change has been made in the
emoluments or other terms of employment of any Senior Employee save for
increases in emoluments made in accordance with the normal practice of
the Seller's Group.
(E) So far as the Seller is aware there is no material dispute between any
member of the Group and any trade union or other organisation formed
for a similar purpose existing, pending or threatened in writing to any
member of the Group and there is no collective bargaining agreement
(whether binding or not) to which any member of the Group is a party.
(F) So far as the Seller is aware no member of the Group has outstanding
any material undischarged liability to pay to any governmental or
regulatory authority in any jurisdiction any contribution, Taxation or
other impost arising in connection with the employment or engagement in
that jurisdiction of personnel by any member of the Group.
22. Pensions
(A) Copies of the explanatory booklet issued to employees who are members
of the personal pension schemes comprising the general personal pension
scheme ("GPP") have been disclosed to the Purchaser.
(B) Details of the rates of employer and member contributions currently
payable in respect of the personal pension schemes comprising the GPP
have been disclosed to the Purchaser and all such contributions which
have fallen due have been paid.
(C) The personal pension schemes comprising the GPP are approved under
Chapter IV of Part XIV of the Income and Corporation taxes Xxx 0000.
23. Tax
(A) All tax for which a member of the Group is liable or for which a member
of the Group is liable to account has been duly paid (insofar as it
ought to have been paid including (without limitation) payments under
the Corporation Tax (Installment Payments) Regulations 1998).
(B) The corporation tax return for the year ended 31 January 1999 for
Penhaligon's Limited showed a trading loss carry forward of 'L'12.6
million which was settled with the Inland Revenue. The corporation tax
return for the eleven months ended 31 December 1999 for Penhaligon's
Limited showed a trading loss carry forward of 'L'3 million which
has been filed with, but not been settled by, the Inland Revenue. The
corporation tax return for the year ended 31 December 2000 for
Penhaligon's Limited shows a trading loss carry
41
forward of 'L'12,595,716 which has not yet been filed with the Inland
Revenue. So far as the Seller is aware, the figures for trading loss
carry forward which have not been approved by the Inland Revenue
represent the trading loss carry forward position at the relevant year
end.
24. Tax returns, disputes, records and claims etc.
(A) Each member of the Group has made or caused to be made all proper
returns required to be made, and has supplied or caused to be supplied
all information required to be supplied, to any Tax Authority. All such
submitted items are true and accurate in all material respects.
(B) No member of the Group is involved in any current material dispute with
any Tax Authority nor has any member of the Group since 1 January 1999
been the subject of any non-routine investigation, audit or visit by
any Tax Authority and so far as the Seller is aware, there are no facts
which might cause such an investigation, audit or visit to be
instituted.
25. Stamp duty
All material documents which are required to be stamped and which are in the
possession of any member of the Group have been duly stamped.
26. Value added tax
Penhaligon's Limited has made, given, obtained and kept all material records,
invoices and other documents appropriate or required for the purposes of VATA
1994 and is not in arrears with any payments or returns due and has not been
required by the Commissioners of Customs & Exercise to give security under
paragraph 4 of Schedule 11 to VATA 1994.
27. Deductions and withholdings
Each member of the Group has made all deductions in respect, or on account, of
any tax from any payments made by it which it is obliged to make and has
accounted in full to the appropriate Tax Authority for all amounts so deducted.
28. Residence
The country which is given in Schedule 5 or Schedule 6 as the tax residence of
each member of the Group is the only country whose Tax Authorities seek to
charge tax on the worldwide profits or gains of that member of the Group and no
member of the Group has ever paid tax on income profits or gains to any tax
authority in any other country except that mentioned in Schedule 5 or Schedule 6
in respect of it.
29. Broker's fees
There is no investment banker, broker, finder or other intermediary that has
been retained by or is authorised to act on behalf of the Seller that might be
entitled to any fee or commission from the Seller or any member of the Group in
connection with the transactions contemplated by this Agreement.
42
30. Environmental
So far as the Seller is aware, neither the Group nor any of the Properties is
subject to any order or notice issued under any Environmental Law and each
member of the Group and each of the Properties comply in all material respects
with Environmental Laws.
31. Undisclosed Liabilities
So far as the Seller is aware, save for liabilities provided for the Accounts or
in the relevant Management Accounts, no member of the Group has an individual
liability (or series of related liabilities) which would have a material adverse
effect on the Group as a whole.
32. Data Room
The documents and information comprising the Data Room as augmented from time to
time following the requests of the Purchaser as made available to the Purchaser
are accurate and complete in all material respects and are not misleading and
constitute all the documents and the information material for inclusion in the
Data Room as is reasonable and customary to include.
43
SCHEDULE 4
(Limitations on liability)
1. Limitation on quantum and general
(A) The Purchaser shall not be entitled in any event to damages or other
payment in respect of any claim or claims under any of the Warranties
or the Tax Covenant in respect of any individual claim (or series of
related claims with respect to related facts or circumstances):
(i) for less than US$25,000; or
(ii) unless and until the aggregate amount of all such claims
(taking no account of those referred to in paragraph (i)
above) exceeds US$200,000.
(B) The total aggregate liability of the Seller under the Warranties and
the Tax Covenant shall not in any event exceed an amount equal to
US$1,700,000.
(C) The Purchaser shall not be entitled to claim for any indirect or
consequential loss (including loss of profit).
(D) Each provision of this Schedule shall be read and construed without
prejudice to each of the other provisions of this schedule.
2. Time limits for bringing claims
No claim shall be brought against the Seller in respect of any of the
Warranties or under the Tax Covenant unless the Purchaser shall have
given to the Seller written notice of such claim specifying (in
reasonable detail) the matter which gives rise to the claim, the nature
of the claim and the amount claimed in respect thereof (detailing the
Purchaser's calculation of the loss thereby alleged to have been
suffered by it) on or before the date falling on the first anniversary
of the Completion Date or on the objection deadline date with respect
to a hearing on the disclosure statement associated with the plan of
reorganization of the Warnaco Group proposed by or filed with the
concurrence of debtors (whichever is the earlier) PROVIDED that the
liability of the Seller in respect of such claim shall absolutely
determine (if such claim has not been previously satisfied, settled or
withdrawn) if legal proceedings in respect of such claim shall not have
been commenced within 6 months of the service of such notice and for
this purpose proceedings shall not be deemed to have been commenced
unless they shall have been properly issued and validly served upon the
Seller.
3. Conduct of litigation
(A) Upon the Purchaser or any member of the Purchaser's Group becoming
aware of any claim, action or demand against it or any other matter
likely to give rise to any claim in respect of any of the Warranties
(other than the Tax
44
Warranties, to which Clause 8 of the Tax Covenant shall apply), the
Purchaser shall:-
(i) as soon as practicable notify the Seller by written notice as
soon as it appears to the Purchaser that any assessment or
claim of a third party received by or coming to the notice of
the Purchaser or any member of the Purchaser's Group may
result in a claim under the Warranties;
(ii) subject to the Seller indemnifying the Purchaser in a form
reasonably satisfactory to the Purchaser against any
liability, cost, damage or expense which may be incurred
thereby, take such action and give such information and access
to personnel, premises, chattels, documents and records to the
Seller and its professional advisers as they may reasonably
request and the Seller shall be entitled to require any
relevant company to take such reasonable action and give such
reasonable information and assistance in order to avoid,
dispute, resist, mitigate, settle, compromise, defend or
appeal any claim in respect thereof or adjudication with
respect thereto;
(iii) at the request of the Seller, allow the Seller to take the
sole conduct of such actions as the Seller may deem
appropriate in connection with any such assessment or claim in
the name of the Purchaser or any relevant company and in that
connection the Purchaser shall give or cause to be given to
the Seller all such assistance as the Seller may require in
avoiding, disputing, resisting, settling, compromising,
defending or appealing any such claim and shall instruct such
solicitors or other professional advisors as the Seller may
nominate to act on behalf of the Purchaser or any relevant
company, as appropriate, but to act in accordance with the
Seller's sole instructions;
(iv) make no admission of liability, agreement, settlement or
compromise with any third party in relation to any such claim
or adjudication without the prior written consent of the
Seller; and
(v) take all reasonable action to mitigate any loss suffered by it
or any member of the Purchaser's Group in respect of which a
claim could be made under the Warranties.
(B) The Seller shall be entitled at any stage and at its sole discretion to
settle any such third party assessment or claim.
4. No liability if loss is otherwise compensated for
(A) The Purchaser shall not be entitled to recover damages or otherwise
obtain reimbursement or restitution more than once in respect of any
individual breach of the Warranties.
(B) No liability shall attach to the Seller by reason of any breach of any
term of the Warranties to the extent that the same loss has been
recovered by the Purchaser under any other terms of this Agreement or
any other document referred to herein.
45
(C) The Seller shall not be liable for breach of any of the Warranties to
the extent that the subject of the claim has been or is made good or is
otherwise compensated for without cost to the Purchaser or any other
member of the Purchaser's Group.
5. Recovery From Insurers and other Third Parties
(A) If, in respect of any matter which would give rise to a claim under the
Warranties, any member of the Purchaser's Group is entitled (or would
have been so entitled had any of them maintained in force the policies
of insurance maintained by or on behalf of the relevant member of the
Group immediately prior to Completion or policies providing equivalent
cover thereto) to claim under any policy of insurance, then no such
matter shall be the subject of a claim under the Warranties unless and
until the appropriate member of the Purchaser's Group shall have made a
claim against its insurers and used all reasonable endeavours to pursue
such claim and any such insurance claim (or any claim which could have
been made had such policies or their equivalents been maintained as
aforesaid) shall then reduce by the amount recovered or extinguish any
such claims under the Warranties.
(B) Where the Purchaser or any member of the Purchaser's Group is at any
time entitled to recover from some other person any sum in respect of
any matter giving rise to a claim under the Warranties (other than the
Tax Warranties, to which the provisions of Clause 5 of the Tax Covenant
shall apply) the Purchaser shall, and shall procure that the member of
the Purchaser's Group concerned shall, take all reasonable steps to
enforce such recovery prior to taking action against the Seller (other
than to notify the Seller of the claim against the Seller) and, in the
event that the Purchaser or any member of the Purchaser's Group shall
recover any amount from such other person, the amount of the claim
against the Seller shall be reduced by the amount recovered.
(C) If the Seller pays at any time to the Purchaser or any member of the
Purchaser's Group an amount pursuant to a claim in respect of the
Warranties (other than the Tax Warranties, to which the provisions of
Clause 5 of the Tax Covenant shall apply) or under any provision of
this Agreement and the Purchaser or member of the Purchaser's Group
subsequently recover from some other person any sum in respect of any
matter giving rise to such claim, the Purchaser shall, and shall
procure that the other member of the Purchaser's Group repay to the
Seller the lesser of (i) the amount paid by the Seller to the Purchaser
or other member of the Purchaser's Group and (ii) the sum (including
interest (if any)) recovered from such other person.
6. Acts of Purchaser
(A) Subject to paragraph 6(C), no claim shall lie against the Seller under
or in relation to the Warranties to the extent that such claim is
attributable to:
(i) any voluntary act, omission, transaction, or arrangement
carried out at the request of or with the consent of the
Purchaser or by a member of
46
the Purchaser's Group before Completion or under the terms of
this Agreement or any other agreement contemplated by it;
(ii) any voluntary act, omission, transaction, or arrangement
carried out by the Purchaser or by a member of the Purchaser's
Group on or after Completion; or
(iii) any admission of liability made in breach of the provisions of
this schedule after the date hereof by the Purchaser or on its
behalf or by persons deriving title from the Purchaser or by a
member of the Purchaser's Group on or after Completion.
(B) Subject to paragraph 6(C), the Seller shall not be liable for any
breach of any Warranty which would not have arisen but for any
reorganisation or change in ownership of any member of the Purchaser's
Group after Completion or any accounting basis on which any member of
the Purchaser's Group values its assets or any accounting policy or
practice of any member of the Purchaser's Group which is different from
that adopted or used in the preparation of the Accounts.
(C) Paragraphs (A) and (B) shall not apply to the Tax Warranties (which
instead shall be governed by the provisions of the Tax Covenant).
7. The Accounts
(A) No matter shall be the subject of a claim under the Warranties (other
than the Tax Warranties, to which the provisions of Clause 3 of the Tax
Covenant shall apply) to the extent that allowance, provision or
reserve in respect of such matter shall have been made in the debtors
in the Accounts or shall have been otherwise taken account of or
reflected in the Accounts.
(B) Notwithstanding sub-paragraph (A), if at any time after Completion the
amount of any allowance, provision or reserve made in the Accounts or
otherwise taken account of or reflected therein is found to be in
excess of the matter for which such allowance, provision or reserve was
made, the amount of such excess (the "Excess Amount") shall be applied
in the following manner:-
(i) if the Seller shall, prior to the date on which the Excess
Amount is ascertained, have made any payment or payments in
respect of the Warranties then the Purchaser shall forthwith
repay to the Seller a sum equal to such part of the Excess
Amount as does not exceed the aggregate of such prior payments
by the Seller as shall not have been previously refunded
pursuant to this sub-clause; and
(ii) where sub-paragraph (B) (i) above does not apply or where such
sub- paragraph does apply but there remains a balance of the
Excess Amount after the application of that sub-paragraph,
then the Excess Amount or the balance remaining, as the case
may be, shall be applied in reducing any liability of the
Seller that may subsequently arise under the Warranties.
47
(C) If any assets of any member of the Group which are represented in the
Accounts and are therein ascribed a valuation are disposed of for a
consideration which exceeds the said ascribed value in the Accounts,
then the amount by which such consideration exceeds the said ascribed
valuation shall forthwith be applied towards repaying to the Seller any
amounts which the Seller shall have previously paid in respect of any
claims under the Warranties and, if any balance remains thereafter, in
reducing any liability of the Seller that may subsequently arise under
the Warranties.
(D) If any liabilities of any member of the Group which are represented in
the Accounts and are therein ascribed a valuation are settled or
satisfied for a consideration which is below the amount of the said
valuation ascribed to them in the Accounts, then the amount by which
such valuation exceeds the consideration given for the satisfaction of
the said liabilities shall forthwith be applied towards repaying to the
Seller any amounts which the Seller shall have previously paid in
respect of any claims under the Warranties and, if any balance remains
thereafter, in reducing any liability of the Seller that may
subsequently arise under the Warranties.
8. Retrospective legislation
No liability shall arise in respect of any breach of any of the Warranties to
the extent that liability for such breach occurs or is increased directly or
indirectly as a result of any legislation not in force on or prior to the date
of this Agreement or as a result of the withdrawal of any extra-statutory
concession or other agreement or arrangement currently granted by or made with
any governmental authority or as a result of any change after the date of this
Agreement of any generally accepted interpretation or application of any
legislation. This paragraph shall not apply to the Tax Warranties.
9. Purchaser's knowledge
Without prejudice to paragraph 12, the Seller shall not be liable under the
Warranties in relation to any matter forming the basis of the claim of which the
Purchaser was aware on or before the date of this Agreement. For this purpose,
the Purchaser shall be deemed to have knowledge of those matters which could
fairly be deduced from the contents of any of the Data Room, the Disclosure
Letter, any due diligence report (in draft or final form) prepared by or for the
Purchaser which in any such case have been delivered to the Purchaser on or
prior to the date of this Agreement and of those matters which could have been
deduced had further reasonable enquiry been made in relation to the matters set
out in any of such documents.
10. Information Memorandum, Data Room and independent advice of Purchaser
Without prejudice to the Assurances expressly set out in this Agreement, the
Purchaser acknowledges and agrees with the Seller (on behalf of itself and each
other member of the Seller's Group and on behalf of their respective officers,
employees and advisers) that:
(A) the discussions with them regarding the purchase of the Shares and the
provision of information relating to the Group (including, without
prejudice to the generality of the foregoing, the Information
Memorandum and the
48
information in the Data Room) was made by the Seller and accepted by
the Purchaser and this Agreement is entered into, on the basis and
condition that no member of the Seller's Group or any of their
respective officers, employees and advisers has made or makes any
representation or warranty as to the accuracy or completeness of such
information, or accepts any duty of care in relation to the Purchaser
or any member of the Purchaser's Group or any provider of finance to
any such person in respect of the provision of any such information and
that none of such persons shall be under any liability to any such
person in the event that, for whatever reason, any such information is
or becomes inaccurate, incomplete or misleading in any particular and
that, in the absence of fraud, the Purchaser agrees and undertakes that
it shall have no rights or remedies in relation to any of the foregoing
save as otherwise expressly set out in this Agreement; and
(B) the Purchaser has had independent legal, financial and technical advice
relating to the purchase of the Shares and to the terms of this
Agreement and the documents to be executed pursuant to it.
11. Disclosure
The Purchaser shall not be entitled to claim that any fact, matter or
circumstance causes any of the Warranties to be breached if fairly disclosed in
the Disclosure Letter or in the Data Room or in any document referred to in the
Disclosure Letter or delivered or deemed to be delivered with it.
12. Claim to be Reduction of Purchase Price
Any payment made by the Seller or any other person in respect of any claim under
the Warranties shall be deemed to be a reduction of the Purchase Price.
13. Taxation
In calculating the liability of the Seller for any breach of the Warranties
there shall be taken into account the amount by which any Taxation for which the
Purchaser, any member of the Purchaser's Group and the Group is now or in the
future accountable or liable to be assessed is actually reduced or extinguished
as a result of the matter giving rise to the liability.
49
SCHEDULE 5
Part I
Penhaligon's Limited
1. Registered number : 2110619
2. Date of incorporation : 13 March 1987
3. Place of incorporation : England
4. Address of registered office : 00 Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
5. Authorised share capital : 'L'17,000,000 dividend into
17,000,000 shares of'L'1 each
6. Issued share capital : 'L'16,377,485
7. Directors:
Full Name Usual residential address Nationality
--------- ------------------------- -----------
Xxxxxxxx Xxxxxxxxx Xxxxxxx [Home Address] British
Xxxxxxx Xxxxx Xxxxxxxx [Home Address] British
Xxxxxxxx Xxxx [Home Address] British
Xxxxxxx Xxxxxx Xxxxxxxxxxx [Home Address] American
8. Secretary:
Full Name Usual residential address
--------- ------------------------
Xxxxxxxx Xxxx [Home Address]
9. Accounting reference date : 1st January
10. Auditors : Deloitte & Touche
11. Tax residence : United Kingdom
50
SCHEDULE 5
Part II
Penhaligon's Pacific Limited
1. Registered number : 618748
2. Date of incorporation : 30 July 1997
3. Place of incorporation : Hong Kong
4. Address of registered office : 10th Floor, One Harbour Front
18 Xxx Xxxx Street
Hunghom, Kowloon
5. Authorised share capital : HK$10,000 divided into 10,000
shares of HK$1.00 each
6. Issued share capital : HK$100.00
7. Directors: :
Full Name Usual residential address Nationality
--------- ------------------------- -----------
Xxxxxxx Xxxxxx Xxxxxxxxxxx [Home Address] American
Xxxxxx Xxxx [Home Address] Chinese
8. Secretary:
Full Name Usual residential address
--------- -------------------------
Snap Services (H.K.) [Home Address]
Limited
9. Accounting reference date : 1st January
10. Auditors : Deloitte Touche Tohmatsu
11. Tax residence : Hong Kong
51
SCHEDULE 6
Part I
Penhaligon's and Jeavons Investment Co Limited
1. Registered number : 3333043
2. Date of incorporation : 13 March 1997
3. Place of incorporation : England
4. Address of registered office : Crusador Estate, 000 Xxxxxxxxx
Xxxx Xxxxxx X0 0XX
5. Authorised share capital : 'L'100 divided into 100 shares of'L'1
each
6. Issued share capital : 'L'100
7. Directors: :
Full Name Usual residential address Nationality
--------- ------------------------- -----------
Xxxxxxx Xxxxx Xxxxxxxx [Home Address] British
Xxxxxxxx Xxxxxxxxx Xxxxxxx [Home Address] British
8. Secretary:
Full Name Usual residential address
--------- -------------------------
Xxxxxxxx Xxxx [Home Address]
9. Accounting reference date : 31st March
10. Auditors : Deloitte & Touche
11. Tax residence : United Kingdom
52
SCHEDULE 6
Part II
Mulmkion B.V.
1. Registered number : 33.29.52.58 (Register of the Chamber of Commerce of Amsterdam)
2. Date of incorporation : 16 April 1985
3. Place of incorporation : Amsterdam
4. Address of registered office : J. Xxxxxxxxxx 000
X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
5. Authorised share capital : 200,000 DGL of 1 Dutch Guilder each
6. Issued share capital : 40,000 DGL
7. Directors: :
Full Name Usual residential address Nationality
--------- ------------------------- -----------
Xxxxxxx Xxxxxx Xxxxxxxxxxx [Home Address] American
Xxxxxxxx Xxxx [Home Address] British
Xxxxx Xxx Xxxxxxx [Home Address] American
8. Secretary:
None - institute unknown in The Netherlands
9. Accounting reference date : 31 December
10. Auditors : Arenthals Xxxxx Xxxxxxxx
11. Tax residence : Amsterdam
53
SCHEDULE 6
Part III
LMK Limited
1. Registered number : 67962
2. Date of incorporation : 26 March 1997
3. Place of incorporation : Jersey
4. Address of registered office : Xxx Xxxxxx Xxxxxxx Xxxxx
00/00 Xxxxxxxxx
St. Helier, Jersey JE1 4HH
Channel Islands
5. Authorised share capital : 'L'10,000 divided into 10,000
shares of 'L'1 each
6. Issued share capital : 'L'100
7. Directors:
Full Name Usual residential address Nationality
--------- ------------------------- -----------
Xxxxx Xxxxxx Xxxxxxxxx [Home Address] British
Xxxxxxx Xxxxxx [Home Address] British
Xxxxx Xxxxxx
Xxxxxx Xxxxx Xxxx [Home Address] British
Ian Xxxxxxxxxxx Xxxxxx [Home Address] South Africa
Xxxxxxxx Xxxxxx Xxxx [Home Address] British
54
8. Secretary:
Full Name Usual residential address
--------- -------------------------
Clarendon Secretaries Limited [Home Address]
9. Accounting reference date : 31st March
10. Auditors : Le Sueur, Xxxxxx & Co
11. Tax residence : Jersey
55
SCHEDULE 7
The Properties
(1) (2) (3) (4)
Property Tenure Tenant Landlord
Shop G9 Leasehold Warnaco (HK) Limited HKL (Prince's Building)
Princes Building Limited
Hong Kong
Basement and ground floor Leasehold Penhaligon's Limited Xxxxxxx Acquisitions
00 Xxxxxxxxxx Xxxxxx Xxxxxxx
Xxxxxx
000X Xxx Xxxx Xxxxxx (20A Leasehold Penhaligon's Limited Maruito UK Limited
Brook Street)
London W1
Units 16/17 Burlington Leasehold Penhaligon's Limited The Prudential Assurance
Arcade Company Limited
Xxxxxx X0
Unit 8 Leasehold Penhaligon's Limited Rolls-Royce Pension
The Royal Exchange Trust Limited
00 Xxxxxxxx Xxx Xxxxx Leasehold Penhaligon's Limited The Scottish Provident
Chester Institution
00 Xxxxxxx Xxxxxx Leasehold Penhaligon's Limited Clerical Medical
Glasgow Investment Group Limited
and Britel Fund Trustees
Limited
56
(1) (2) (3) (4)
Property Tenure Tenant Landlord
Xxxx 00 Xxxxxxxxx Xxxxxxxxxx'x Limited Clerical Medical
Princes Square Investment Group Limited
Glasgow and Britel Fund Trustees
Limited
00 Xxxxxx Xxxxxx Xxxxxxxxx Xxxxxxxxxx'x Limited Xxxxxxx Xxxxxx
Edinburgh Sivewright and Xxx
Xxxxxxx Xxxxx Xxxxxxxxxx
Unit 6B Leasehold Penhaligon's Limited Bicester Nominees
Bicester Village Bicester Limited and Bicester II
Nominees Limited
Ground Floor Shop Leasehold Penhaligon's Limited Xxxxxxxx Xxx Nafissi
00 Xxxxxxxxx Xxxxx
Xxxxxx XX0
Unit 61 Leasehold Penhaligon's Limited AXA Equity & Law Life
Windsor Royal Station Assurance Society Plc
Windsor
Xxxx 00 Xxxxxxxxx Xxxxxxxxxx'x Limited Second Industrial
Crusader Industrial Estate Partnership
Hermitage Road
London N4
00 Xxxxxxxxxxxxxx Xxxxx Xxxxxxxxx Xxxxxxxxxx'x Limited Courts Nominees Limited
Bath
000 Xxxxxxx Xxxxxx Leasehold Warnaco Inc. Xxxxxxxx Xxxxxxxxx and
New York Xxxxxx Xxxxxxxxx
57
SCHEDULE 8
Pro Forma Net Working Capital Statement
'L''000
Current Assets
Raw materials and consumables [ ]
Finished goods and goods for resale [ ]
less: stock provision [ ]
Debtors
Trade debtors [ ]
Amounts owed by parent and subsidiary undertakings [ ]
Other debtors [ ]
Prepayments and accrued income [ ]
Less: creditors (amounts falling due within one year)
Trade creditors [ ]
Taxes and social security costs [ ]
Other creditors [ ]
Accruals and deferred income [ ]
Less: provisions for liabilities and charges
Balance at completion [ ]
Working Capital
58
SCHEDULE 9
Registered Intellectual Property
59
IN WITNESS whereof the parties have entered into this Agreement the day and year
first before written.
Signed by )
for and on behalf of ) /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------
Mullion International )
Limited )
Signed by )
for and on behalf of ) /s/ Xxxxx Xxxxxxx
-----------------
Royal Holdings, Inc. )
60
