Document/Exhibit Description Pages Size
1: 10-K Annual Report 73 419K
2: EX-3.1 Amended and Restated Certificate of Incorporation 25 103K
3: EX-10.13 Amended and Restated Agreement 21 54K
4: EX-10.14 Revised Facility Agreement 231 790K
5: EX-10.15 Senior Subordinated Loan Agreement 63 141K
6: EX-10.16 Material Contract 6 30K
7: EX-10.17 Management Stock Purchase Agreement 11 46K
8: EX-10.18 Agreement 177 640K
9: EX-10.19 Form of Agreement Evidencing A Grant of Stock 7 31K
Option
10: EX-10.20 Amended & Restated Shareholders Agreement 34 130K
11: EX-10.21 Securities Purchase Agreement 5 15K
12: EX-21.1 Subsidiaries 2 11K
13: EX-27 Financial Data Schedule 2 7K
EXHIBIT 10.18
Agreement
between
Diamond Back International Company Limited
Western States Import Company Inc.
Bejka Trading A.B.
as Vendors
and
The Derby Cycle Corporation
and
Derby Sweden A.B.
as Purchasers
relating to
the sale and purchase of certain of the business assets and rights, and the
assumption of certain liabilities, involved in the bicycle, parts and
accessories and fitness equipment distribution business carried on under the
principal trade name "Diamondback".
SIMMONS & SIMMONS
21 Wilson Street Londson EC2M 2TX
Tel: 0171-628 2020/528 9292 Fax: 0171-628 2070 DX Box No 12
CONTENTS
[Download Table]
1. Interpretation...................................................... 1
2. Sale of Business Assets............................................. 10
3. Consideration....................................................... 12
4. Conditions to Completion............................................ 14
5. Completion.......................................................... 16
6. Treatment of Contracts.............................................. 20
7. Management of the Business prior to Completion...................... 23
8. Provisions relating to Tax and VAT.................................. 25
9. Provision of Information............................................ 26
10. Exclusivity......................................................... 28
11. Restrictions of Vendors' Group...................................... 29
12. Warranties.......................................................... 30
13. Indemnity........................................................... 32
14. Change of name...................................................... 33
15. Public Announcements................................................ 33
16. Employees of the Business........................................... 34
17. Provisions relating to this Agreement............................... 35
18. Dispute Resolution.................................................. 39
19. Law and Jurisdiction................................................ 40
20. Invalidity.......................................................... 41
i
[Download Table]
SCHEDULE 1:................................................................ 42
SCHEDULE 2: THE SALE COMPANIES............................................. 43
SCHEDULE 3: WARRANTIES AND REPRESENTATIONS................................. 44
PART 1: Warranties and Representations in Relation to the Business Assets.. 44
1. Interpretation........................................................ 44
2. Warranties and representations........................................ 45
3. The Vendor and the Vendor's Group..................................... 45
4. Licences, litigation and the law...................................... 46
5. Environmental......................................................... 49
6. The Vendor's solvency................................................. 51
7. Accounts, records and Tax............................................. 52
8. The Conduct of the Business and the effect of the sale................ 55
9. The Business and its assets........................................... 56
10. Contracts and contractual arrangements................................ 61
11. Employees............................................................. 64
12. Miscellaneous......................................................... 67
SCHEDULE 3: WARRANTIES AND REPRESENTATIONS................................. 68
PART 2: Specific Warranties................................................ 68
1. Interpretation........................................................ 68
2. US Warranties and Representations..................................... 68
3. Swedish Warranties and Representations................................ 70
SCHEDULE 4: ADJUSTMENT OF CONSIDERATION.................................... 71
ii
[Download Table]
1. Interpretation...................................................... 71
2. Completion Accounts................................................. 71
3. Stock valuation..................................................... 73
4. Procedure........................................................... 74
5. Adjustment of Consideration......................................... 75
SCHEDULE 5: ASSETS....................................................... 76
PART 1: Current Assets................................................... 76
PART 2: Properties....................................................... 77
PART 3: Fixed Assets..................................................... 78
PART 4: Distribution Agreements.......................................... 101
SCHEDULE 6: LIST OF EMPLOYEES............................................ 104
SCHEDULE 7: LIST OF ASSUMED LIABILITIES.................................. 128
SCHEDULE 8: VENDOR/WARRANTOR PROTECTION.................................. 133
1. (Intentionally Blank)............................................... 133
2. Relevant Claims..................................................... 133
3. Financial Limits.................................................... 133
4. Time Limits......................................................... 134
5. No duplication of recovery.......................................... 135
6. Relevance of limitations in circumstances of fraud etc.............. 135
7. Third party claims.................................................. 135
8. Events after Completion............................................. 136
iii
[Download Table]
EXHIBIT 1:............................................................... 137
1. Interpretation...................................................... 138
2. Indemnity........................................................... 138
3. Gross-up............................................................ 139
4. Deductions and withholdings......................................... 139
5. Payments under this Deed............................................ 140
6. Incorporation of provisions from the Agreement...................... 140
EXHIBIT 2:............................................................... 142
EXHIBIT 3:............................................................... 145
PART 1: Form of Assignment of Intellectual Property Rights............... 145
EXHIBIT 3:............................................................... 148
PART 2: Form of Assignment of Trade Marks................................ 148
EXHIBIT 3:............................................................... 150
PART 3: Form of Assignment of Patents/Designs............................ 150
EXHIBIT 4:............................................................... 152
PART 1: Form of Assignment of the Contracts.............................. 152
1. Definitions and Interpretation...................................... 152
2. Assignment of Contracts............................................. 152
3. Assignment of Third Party Rights.................................... 153
4. Further Assurance................................................... 153
5. Law and Jurisdiction................................................ 153
PART 2: Form of Novation of the Contracts................................ 154
iv
[Download Table]
1. Interpretation.................................................... 154
2. Novation.......................................................... 154
3. Warranties........................................................ 155
4. Confirmation of terms............................................. 156
5. Limitation Periods................................................ 156
6. Governing Law..................................................... 156
PART 3: Form of Assignment of U.S. Property............................ 158
v
THIS AGREEMENT is dated December 1998 and made
--------------
BETWEEN:
--------
(1) DIAMOND BACK INTERNATIONAL COMPANY LIMITED ("International") a company
------------------------------------------
incorporated in The British Virgin Islands whose principal/registered
office is at International Trust Building, Wickhams Cay, Road Town,
Tortola, The British Virgin Islands;
(2) WESTERN STATES IMPORT COMPANY, INC. ("Western States") a company
-----------------------------------
incorporated in California, USA whose principal/registered office is at
4030 Via Pescador, Camarillo, CA 93612-5008;
(3) BEJKA TRADING A.B. ("Bejka") a company incorporated in Sweden under number
------------------
556115-4609 whose principal office is at Gothenburg;
(each of parties (1) to (3) a "Vendor" and so that references to a "Vendor"
shall be to such one or more of the Vendors as the context requires, and
together the "Vendors")
(4) THE DERBY CYCLE CORPORATION ("Derby Cycle") a company incorporated in the
---------------------------
state of Delaware, USA whose principal/registered office is at 22710 72nd
Avenue South, Kent, Washington, WA 98032, United States of America; and
(5) DERBY SWEDEN A.B. ("Derby Sweden") a company incorporated in Sweden whose
-----------------
principal/registered office is at Gothenburg.
(each of parties (4) and (5) a "Purchaser" and so that references to a
"Purchaser" shall be to such one or more of the Purchasers as the context
requires, and together the "Purchasers").
WHEREAS:
--------
The Purchasers wish to acquire from the Vendors (as defined herein) certain
Business Assets (as defined herein) from the Vendors on the terms of this
Agreement
NOW IT IS HEREBY AGREED as follows:
-----------------------
1. Interpretation
-----------------
1.1 Definitions
In this Agreement where the context admits:
1
"Affiliate" means, in relation to a body corporate, any subsidiary or
-----------
holding company of such body corporate, and any subsidiary of any such
holding company for the time being.
"Agreed Form" means, in relation to any document, a document in the terms
-------------
signed or initialled by or on behalf of one or more of the Vendors or their
solicitors and one or more of the Purchasers or their solicitors for
identification.
"Amendment Agreement" means an Agreement made between Derby Cycle and
---------------------
certain of its subsidiaries, Chase Manhattan plc as Arranger, Chase
Manhattan International Limited as Security Agent and Facility Agent and
the Financial Institutions named therein as Banks (the "Purchasers' Banks")
-----------------
pursuant to which, and in accordance with the terms and conditions stated
therein, the parties thereto agree to amend the DM225,000,000 Revolving
Credit Facility (the "Facility Agreement") dated 12 May 1998 in order to
------------------
permit Completion on terms satisfactory to the Purchasers' Banks.
"Assumed Liabilities" means in respect of each Vendor those liabilities of
---------------------
that Vendor in relation to the Business at Completion specified in the list
of Assumed Liabilities set out in Schedule 7 to the extent that the same
are provided for or otherwise taken into account in the Completion Accounts
and no other liabilities whatsoever.
"Audited Accounts" means the respective audited financial statements of
------------------
each of the Sale Companies comprising in each case an audited balance sheet
made up as at the respective Balance Sheet Date and the audited profit and
loss account and cash flow (if any) statement of each of the Sale Companies
in respect of the financial year ended on the respective Balance Sheet Date
including, in each case, the notes thereto and the directors' report and
auditors' report and audited, in each case, by the accounting firm set out
opposite each Sale Company's name in Schedule 2 or, at the cost of the
Purchasers, such other accounting firm as may be approved by the
Purchasers.
"Balance Sheet Date" means in relation to Western States, 31 October 1997
--------------------
and in relation to Bejka, 31 December 1997.
"Book Debts" means all debts and other amounts owing to the Sale Companies
------------
as at Completion (whether due for payment then or later) in respect of
goods and services supplied by or on behalf of the Business as shown in the
Completion Accounts other than:
(A) any Prepayments;
(B) any debts owing to any of the Sale Companies on any closed account of a
customer and any debts owing by a customer with whom any of the Sale
2
Companies is at the Completion Date no longer prepared to transact
business; and
(C) any debts in respect of which any of the Sale Companies has prior to
the date of this Agreement instructed solicitors to commence
proceedings for recovery of such debts to the extent that such debts
are not fully covered by reserves or provisions in the Completion
Accounts.
"Business" means the business of sourcing, manufacturing, assembling,
----------
marketing and/or distributing bicycles, bicycle components and accessories,
principally (but not exclusively) under the "Diamondback" trade mark and
fitness equipment hitherto carried on by the Sale Companies and/or using
the Business Assets except in The People's Republic of China and in respect
of each Vendor means that part of the Business at present carried on by it.
"Business Assets" means in respect of each Vendor the assets of the
-----------------
Business to be sold by it and purchased as specified in Sub-clause 2.1.
"Business Day" means a day (other than a Saturday or Sunday) on which banks
--------------
are open for ordinary banking business in New York.
"Closing Purchase Price" means that part of the consideration payable at
------------------------
Completion Date by the Purchasers for the Business Assets as referred to in
Sub-clause 3.2.
"Completion" means completion of the sale and purchase of the Business
------------
Assets in accordance with Clause 5.
"Completion Accounts" has the meaning given in paragraph 1 of Schedule 4.
---------------------
"Completion Date" means the date of Completion.
-----------------
"Conditions" means the conditions set out in Sub-clause 4.1.
------------
"Consideration" means the consideration payable by the Purchasers for the
---------------
Business Assets as referred to in Sub-clause 3.1.
"Contracts" means all contracts, contractual arrangements, engagements and
-----------
orders in any way relating to any aspect of the Business and subsisting at
Completion, a full list of which has been attached to the Disclosure
Letter, other than purchase orders where details have been summarised, and
to which any of the Sale Companies are a party and which shall include
(without limitation) the Intellectual Property Agreements, the Distribution
Agreements, and the Leased Asset Contracts, and the contracts of employment
(subject to the provisions of any local law or jurisdiction in relation to
the transfer of employment contracts on a sale and purchase of business
assets) of the Employees.
3
"Creditors" means all debts and other amounts (except the Excluded
-----------
Liabilities) owing by either of the Sale Companies to the trade creditors
of the Sale Companies in the ordinary course of the Business as at
Completion (whether due for payment then or later) to the extent that
provision or reserve (but not note only) is made in the Completion Accounts
in respect of such liabilities.
"Current Assets" means the assets of the kinds described in Schedule 5 Part
----------------
1 which in any way are employed in, or arise from, the carrying on of the
Business as at Completion.
"Diamondback Deutschland" means Diamond Back Deutschland GmbH, a company
-------------------------
incorporated in Germany whose principal/registered office is at Fahrrad
GroBhandel, Derchinger Str. 155, 86165 Angsburg, Germany;
"Diamondback Europe" means Diamond Back Europe S.A., a company incorporated
--------------------
in France whose principal/registered office is at BP.26-Z.I. Route de
Pernay, 37230 Luynes;
"Diamondback France" means Diamond Back France S.A., a company incorporated
--------------------
in France whose principal/registered office is at 4, Rue de L'Abreuvoir,
92415 Courbevoie, Cedex, France;
"Disclosure Letter" means the letter dated the date hereof written and
-------------------
delivered by or on behalf of the Vendors to the Purchasers in the Agreed
Form.
"Distribution Agreements" means in relation to a Vendor those agreements to
-------------------------
which that Vendor is a party in relation to distribution carried on in the
course of the Business and which are listed in Schedule 5 Part 4.
"Employees" means in relation to a Vendor each of the employees of that
-----------
Vendor as at the date hereof, details of whom are contained in Schedule 6
but subject to any cessation of the employment of any of such employees
which occurs in the period between the date of this Agreement and
Completion by reason of resignation, death or the termination of such
employment by the relevant Vendor and no other employees.
"Encumbrance" includes any interest or equity of any person (including, but
-------------
without limitation, any right to acquire, option or right of pre-emption);
any mortgage, charge, pledge, lien, assignment, hypothecation, security
interest (including any created by law), title retention or other security
agreement or arrangement; and any rental, hire purchase, credit sale or
other agreement for payment on deferred terms.
"Excluded Assets" means the Intercompany Receivables, all deferred Tax and
-----------------
the benefit of the claims brought by Bejka against (i) Fritidsartikler A/S
for SEK 789,000
4
and (ii) Peter Junge for SEK 207,000 and provisions for customer losses of
Bejka which as at 31 October 1998 were SEK 219,619.
"Excluded Liabilities" means all liabilities of any of the Vendors to pay
----------------------
Tax in respect of all periods ending on or prior to Completion and all
liabilities which are not Assumed Liabilities and the Intercompany
Payables.
"Fixed Assets" means all fixtures and fittings and other fixed plant,
--------------
machinery and equipment physically attached to the Properties at the date
of this Agreement (excluding landlord's fixtures and fittings at the
Leasehold Properties) and all the plant and machinery, tools and equipment,
vehicles and office furniture and other tangible assets now used by the
Vendors in or in connection with the Business (other than the Properties
and the Leased Assets) and at the date hereof includes (without limitation)
the items set out in part 3 of Schedule 5.
"Goodwill" means all the goodwill, interest and connection of each of the
----------
Vendors in and concerning the Business together with the right to represent
the Purchasers as carrying on the Business as a going concern in succession
to the Vendor.
"Hong Kong" means the Hong Kong Special Administrative Region of the
-----------
People's Republic of China.
"Intellectual Property" means all patents, trade marks, service marks,
-----------------------
rights (registered or unregistered) in any designs; applications for any of
the foregoing; trade or business names; copyright (including rights in
computer software) and topography rights; know-how; secret formulae and
processes; lists of suppliers and customers and other confidential and
proprietary knowledge and information; rights protecting goodwill and
reputation; database rights and all rights and forms of protection of a
similar nature to any of the foregoing or having equivalent effect anywhere
in the world and all rights under licences and consents in respect of any
of the rights and forms of protection mentioned in this definition.
"Intellectual Property Agreements" means all agreements or arrangements
----------------------------------
relating in any way, whether wholly or partly, to the Intellectual Property
Rights.
"Intellectual Property Rights" means all Intellectual Property owned by any
------------------------------
or all of the Vendors in relation to the Business in any part of the world
(except for (1) the registration of "Diamondback" trade mark in The
People's Republic of China to the extent that the same is for use on goods
made, furnished and sold therein but which does not of itself confer any
right to use that mark outside The People's Republic of China and (2) the
applications for or registrations of the "MARZOCCHI" and "RITCHEY" trade
marks in Sweden in the name of Bejka) including but not limited to the
Listed Intellectual Property Rights.
5
"Intercompany Payables" means all amounts owing by any of the Vendors to
-----------------------
any member of the Vendors' Group including any of the other Vendors.
"Intercompany Receivables" means all amounts owed by any member of the
--------------------------
Vendors' Group including any of the Vendors to any of the other Vendors.
"Leased Assets" means assets supplied to or held by either of the Sale
---------------
Companies pursuant to any Leased Asset Contract.
"Leased Asset Contracts" includes (subject to the exceptions stated in this
------------------------
definition) leases (whether operating or finance), conditional sale, credit
sale, hire purchase and other similar contracts subsisting at the date of
this Agreement and entered into by or on behalf of any of the Sale
Companies pursuant to which tangible assets used by such Vendors in or in
connection with the Business at that date have been supplied to or are held
by such Vendors on hire or other rental, lease, licence, hire purchase or
otherwise on terms such that title thereto does not pass or will not at
the Completion Date have passed to such Vendors, and the Leased Asset
Contracts include (without limitation) those listed in the Disclosure
Letter.
"Listed Intellectual Property Rights" means the Intellectual Property
-------------------------------------
Rights identified as such in the Disclosure Letter.
"Management Accounts" means the management accounts of each of the Sale
---------------------
Companies for the period from the Balance Sheet Date to 31 August 1998 true
copies of which are attached to the Disclosure Letter.
"Outstanding Purchase Orders" means all orders for Stock made by any of the
-----------------------------
Sale Companies which have not as of the date of this Agreement been shipped
from their port of origination.
"Prepayments" means the prepayments made and other amounts paid by any of
-------------
the Sale Companies in respect of the outgoings of the Business to the
extent that they are wholly attributable to the Business Assets or the
Employees and relate to the period after the Completion Date, as shown in
the Completion Accounts.
"Private Label Product" means any product sold under any trade mark, brand
-----------------------
or trade name not owned or controlled by the Vendors or any member of the
Vendors' Group prior to the date of this Agreement.
"Properties" means the land and premises, particulars of which are set out
------------
in Schedule 5 Part 2.
"Purchasers' Group" means each of the Purchasers and each of their
-------------------
Affiliates.
6
"Purchasers' Solicitors" means Simmons & Simmons of 21 Wilson Street,
------------------------
London EC2M 2TX.
"Records" means all the books, files, records and other documents and
---------
written material of each of the Vendors relating wholly or mainly to the
Business or any of the Business Assets in whatever medium held, including
without limitation the following:
(A) all books of account, ledgers, payroll records, income records,
information relating to clients, customers and suppliers and other
books, documents and computer records which relate to or are relevant
to the Business;
(B) all promotional material, sales publications, catalogues, price lists,
advertising materials, surveys, reports and other technical materials
and sales matter relating to the Business;
(C) the VAT Records; and
(D) all records and documents of title relating to the Intellectual
Property Rights.
"Reference Accounts" means the management accounts of each of the Sale
--------------------
Companies as at, and for the period ending on, 31 October 1998.
"Sale Companies" means Bejka and Western States.
----------------
"Stock" means those of the Current Assets specified in paragraphs (A), (B),
-------
and (C) of Schedule 5 Part 1.
"Tax" means all forms of taxation, duties, levies, imposts of whatever
-----
jurisdiction including (without limitation) corporation tax, income tax,
sales tax, value added tax, use tax, capital value tax, property tax,
franchise tax, excise customs and other import duties, all employment taxes
and all penalties, charges, costs and interest relating to the foregoing or
resulting from failure to comply with the provisions of any enactment
relating to tax.
"Tax Deed" means the deed of indemnity in the form attached at Exhibit A in
----------
relation to taxation to be executed and delivered to the Purchasers at
Completion.
"Third Party Rights" means in respect of a Vendor all rights of that Vendor
--------------------
against third parties arising out of or in connection with the Business
Assets or the conduct of the Business prior to Completion (including, but
not limited to):-
(A) all rights under or in respect of manufacturer's or supplier's
warranties, guarantees and other contractual obligations and
assurances (express or implied);
7
(B) all rights against any person in respect of any defect in the title,
construction or condition of the Properties or in respect of any work
or treatment carried out on the Properties; and
(C) all rights against sub-contractors and others;
but excluding any claim by or right of the Vendor in respect of any of the
following:
(1) Tax; and
(2) insurance, save to the extent set out in clause 2.3.
"US$" or "$" means dollars being lawful currency of the United States of
------------
America.
"VAT" means Value Added Tax and/or sales and other similar taxes.
-----
"VAT Records" means such records relating to the Business of the Sale
-------------
Companies as are required to be preserved following Completion for the
purposes of applicable legislation relating to VAT.
"Vendors' Group" means each of the Vendors and each of their Affiliates,
----------------
other than the Sale Companies.
"Vendors' Solicitors" means Richards Butler of 20th Floor, Alexandra House,
---------------------
16-20 Chater Road, Central, Hong Kong.
"Warranties" means the warranties and representations set out in Schedule
------------
3.
1.2 Construction of certain references
In this Agreement, where the context admits:
(A) words and phrases the definitions of which are contained or referred
to in Part XXVI Companies Act 1985 shall be construed as having the
meanings thereby attributed to them;
(B) references to, or to any provision of, any treaty, directive, statute,
regulation, decision, order, instrument, by-law, or any other law of,
or having effect in, any jurisdiction ("Laws") shall be construed also
--------
as references to all other Laws made under the Law referred to, and to
all such Laws as amended, re-enacted, consolidated or replaced or as
their application is modified by other Laws from time to time, and
whether before or after the date of this Agreement;
8
(C) where any statement to the effect that the Vendors are not aware of a
matter or circumstance, or is a statement qualified by the expression
"so far as the Vendors are aware" or "to the best of the Vendors'
knowledge and belief" or any similar expression, that statement shall
be deemed to include an additional statement that it has been made
after due and careful enquiry;
(D) references to Clauses, Sub-clauses and Schedules are references to
clauses and sub-clauses of and schedules to this Agreement, references
to Paragraphs and Sub-Paragraphs are unless otherwise stated,
references to paragraphs and sub-paragraphs of the Schedule in which
the reference appears, references to Exhibits are to documents in
Agreed Form, identified as such, and references to this Agreement
include the Schedules and Exhibits;
(E) references to the singular shall include the plural and vice versa and
words importing the neuter or gender shall include both genders and
the neuter;
(F) "person" includes any individual, partnership, company, body
--------
corporate, corporation sole or aggregate, state or agency of a state,
any joint stock company, any trust, any joint venture and any
unincorporated association or organisation, in each case whether or
not having separate legal personality, and shall include any trade
union; and
(G) "company" includes any body corporate.
---------
1.3 Joint and several liabilities
All warranties, representations, indemnities, undertakings, covenants,
agreements and obligations given or entered into by more than one person in
this Agreement are given or entered into jointly and severally as between
the persons giving or entering into such warranties, representations,
indemnities, undertakings, covenants, agreements and obligations, and where
warranties, representations, indemnities, undertakings, covenants,
agreements and obligations are given by only one Purchaser or Vendor (as
the case may be) the other Purchasers or Vendors shall be jointly and
severally liable with the Purchaser or Vendor in question in the case of
any warranty, representation or indemnity, and shall be jointly and
severally liable to procure performance by the relevant Purchaser or Vendor
in each other case.
1.4 Headings
The headings and sub-headings are inserted for convenience only and shall
not affect the construction of this Agreement.
9
1.5 Schedules
Each of the schedules shall have effect as if set out herein.
2. Sale of Business Assets
---------------------------
2.1 Sale and purchase of Business Assets
Subject to the exclusions in clause 2.2,
(A) Western States shall sell with full title guarantee to Derby Cycle and
Derby Cycle (with a view to carrying on the Business as a going
concern in succession to Western States) shall purchase free from all
Encumbrances and with effect from Completion:
(1) the Current Assets;
(2) the Properties;
(3) the Fixed Assets;
(4) the Intellectual Property Rights;
(5) the Goodwill;
(6) the Records;
(7) the benefit of the Contracts together with any title, right or
interest of Western States to or in the Leased Assets; and
(8) all other property, assets and rights of Western States used in
or for the purposes of the Business or in connection with the
Business Assets or any of them
in each case in relation to Western States.
(B) Bejka shall sell with full title guarantee to Derby Sweden and Derby
Sweden (with a view to carrying on the Business as a going concern in
succession to Bejka) shall purchase free from all Encumbrances and
with effect from Completion:
(1) the Current Assets;
(2) the Properties;
10
(3) the Fixed Assets;
(4) the Intellectual Property Rights;
(5) the Goodwill;
(6) the Records;
(7) the benefit of the Contracts together with any title, right or
interest of Bejka to or in the Leased Assets; and
(8) all other property, assets and rights of Bejka used in or for the
purposes of the Business or in connection with the Business
Assets or any of them
in each case in relation to Bejka.
(C) International shall at Completion sell with full title guarantee and
Derby Cycle shall purchase, free from all Encumbrances (except that
Derby Cycle acknowledges that the "Sabotage" trade mark in Germany has
not been fully registered following its assignment to International)
the Intellectual Property Rights in so far as they are owned by
International; and
(D) International shall at Completion sell with full title guarantee and
Derby Cycle shall purchase free from all Encumbrances the benefit
(subject to the burden) of the Contracts in so far as International is
a party to such Contracts and such Contracts relate to distribution
carried on in the course of the Business.
2.2 Exclusions
(A) The sale and purchase pursuant to this Agreement shall not include the
Excluded Assets.
(B) The Vendors acknowledge and agree that the Purchasers shall not assume
any liability or obligation in respect of the Business which is not
expressly and specifically assumed by it under this Agreement and,
without limitation, the Purchasers shall have no liability or
obligation in respect of the Excluded Liabilities. Accordingly, each
of the Vendors hereby agrees to indemnify the Purchasers and hold each
of them harmless against all liabilities and obligations of the
Vendors in respect of the Business not expressly and specifically
assumed by the Purchasers under this Agreement.
11
2.3 Risk and insurance
(A) Risk in respect of the Business Assets shall pass to the Purchaser at
Completion.
(B) The Vendor shall maintain or procure to be maintained in force by the
relevant member of the Vendor's Group all the insurance policies
referred to in the Disclosure Letter up to the time that risk passes
under clause 23. If any of the Fixed Assets or the Properties shall
be lost, destroyed or damaged prior to the time that risk passes and
if the Purchaser shall not in that event exercise any right it may
have to rescind this Agreement the Purchaser may at its option by
notice to the Vendor either:
(1) require the consideration payable hereunder to be abated or
adjusted as a result or
(2) require that the insurance monies (if any) recoverable in respect
thereof shall be paid to the Purchaser in which case the Vendor
shall direct the insurance company accordingly and any such
insurance monies received by the Vendor shall be held by it on
trust for the Purchaser absolutely.
(C) Stock shall be sold in the condition in which it is at Completion,
which shall be reflected in the consideration payable therefor, as
determined in accordance with the provisions of Schedule 4.
2.4 Simultaneous completion
No party shall be obliged to complete the sale and purchase of any of the
Business Assets unless the sale and purchase of all of the Business Assets
is completed simultaneously.
3. Consideration
-----------------
3.1 Amount
The Consideration shall consist of (1) the payment of the Closing Purchase
Price, and (2) the assumption by the Purchasers of the Assumed Liabilities
and the Purchasers agree and acknowledge that they exclusively shall be
liable for the Assumed Liabilities following Completion and that (for all
purposes hereof) the Assumed Liabilities are expressly and specifically
assumed by the Purchasers.
12
3.2 Closing Purchase Price
The Closing Purchase Price shall be the cash sum payable in accordance with
Sub-clause 5.3. of US$22,750,000 apportioned between the Business Assets as
follows:
(A) for the Business Assets of Western States the cash sum of
US$14,500,000;
(B) for the Business Assets of Bejka the cash sum of US$3,000,000;
(C) for the Intellectual Property Rights the cash sum of US$4,750,000; and
(D) for the Contracts transferred, assigned or novated by International
the cash sum of US$500,000;
and the Assumed Liabilities shall be apportioned as between the Business
Assets to which they relate.
3.3 Indemnity
(A) The Purchasers shall, upon receiving the Relevant Correspondence and
subject to sub-clauses 3.3(B),(C) and (D) below, indemnify and keep
indemnified Western States in respect of legal costs and expenses
reasonably and properly incurred by Western States for the exclusive
purpose of contesting any claim by or on behalf of the United States
Internal Revenue Service ("IRS") to reallocate in any way the Purchase
-----
Price as set out in Clause 3.2 amongst the various assets or to deem
that the same be reallocated so far as Western States is concerned for
the purposes of United States Tax (a "Reallocation Claim"). For the
--------------------
avoidance of doubt this indemnity is only intended to cover the legal
costs of Western States for this purpose and shall not extend to the
payment of any Tax or any other payment arising as a result of any
reallocation or any deemed reallocation of the Purchase Price by the
IRS.
(B) Western States shall, upon receiving from the IRS notice of, or a
purported, Reallocation Claim, forthwith notify the Purchasers of such
notice or purported Reallocation Claim and propose counsel ("Tax
----
Counsel") to be appointed for the purpose of contesting such
--------
Reallocation Claim, and upon, but not prior to, receiving the approval
of the appointment of Tax Counsel in writing by the Purchasers (such
approval not to be unreasonably withheld or delayed and such approval
shall be deemed to be given if the Tax Counsel to be appointed is the
firm of Neal, Gerber & Eisnberg of Chicago, Illinois), shall appoint
Tax Counsel.
(C) Western States shall keep the Purchasers informed of all material
developments in relation to negotiations with the IRS relating to any
Reallocation Claim by providing written monthly reports or reports
written
13
more often if necessary to keep the Purchasers aware of timely
information containing such information as the Purchaser shall
reasonably require together with the Relevant Correspondence.
(D) In the event that Tax Counsel advises Western States to enter into a
settlement with the IRS in connection with a Reallocation Claim
Western States shall promptly inform the Purchasers of such
recommendation and the Purchasers shall only continue to be liable to
Western States under Sub-clause 3.4(A) above to the extent that
Western States follows the advice of Tax Counsel and that any fees or
expenses incurred thereafter are reasonably and properly incurred in
the finalisation of the arrangements for such settlement.
(E) For the purposes of this Clause 3.4 only, "Relevant Correspondence"
-------------------------
means all correspondence between any of the IRS, Western States and
Tax Counsel as the case may be and in each case in relation to a
Reallocation Claim.
4. Conditions to Completion
----------------------------
4.1 Conditions
Completion is conditional upon:
(A) written evidence having been produced to the satisfaction of the
Vendors that satisfactory financing and banking facilities are
available as at the Completion Date to fund the proposed acquisition
at Completion;
(B) receipt of evidence that, if required, all filings have been made and
all the waiting periods have expired or been terminated in relation to
the sale and purchase of the Business Assets under this Agreement
pursuant to (1) the Hart-Scott-Rodino Anti-Trust Improvement Act of
1976 (as amended) of the United States of America and (2) the Swedish
Competition Act;
(C) receipt by the Purchasers of all consents and authorisations necessary
for the purposes of the transfer of the Business Assets to the
Purchasers with effect from Completion and in particular all consents
and authorisations necessary for the purposes of the assignment of the
Contracts pursuant to Sub-clause 2.1(D) and all consents and
authorisations necessary for the purposes of the transfer of the
Intellectual Property Rights pursuant to Sub-clause 2.1(C) and all
consents and authorisations necessary for the purposes of the transfer
or assignment of the Properties.
(D) receipt by the Purchasers of legal opinions in or substantially in the
form attached to this Agreement in Exhibit 2 from the advisers of the
Vendors as to the power and authority of each Vendor to enter into,
and perform their respective obligations under, this Agreement.
14
(E) the fixed and floating charge held by Foothills Bank over all the
assets for the time being of Western States being released and
discharged in full;
(F) the floating charge held by ForeningsSparbanken AB over all the assets
for the time being of Bejka being released and discharged in full;
(G) no winding up petitions, insolvency or liquidation proceedings being
instituted against any of the Vendors which are not discharged in full
before Completion and no arrangements with creditors of the type
referred to in Clause 1 of the Insolvency Act 1986 or anything
analogous thereto being made by any of the Vendors; and
(H) the Amendment Agreement having been duly executed by each of the
parties thereto and the Facility Agent (as defined therein) having
confirmed to Derby Cycle that the Amendment Agreement is unconditional
in all respects.
4.2 Satisfaction
The Purchasers shall use their reasonable endeavours to procure the
satisfaction of the Conditions set out in Sub-clauses 4.1(A), (B), (E),
(F), (G) and (H) and acknowledge that this may in some cases require
payments to be made by the Purchasers (and in the case of any Hart-Scott-
Rodino filing to be made by Western States in the United States (the
"Vendors' Hart-Scott-Rodino Filing"), by Western States) and that if any
such payment (apart from a payment pursuant to the Vendors' Hart-Scott-
Rodino Filing) is made such payment shall be for the account of the
Purchasers and they shall not thereby acquire any rights against the
Vendors or any of their assets (except to the extent such assets are
Business Assets and subject to Completion occurring). The Vendors shall
promptly and diligently provide all reasonable assistance and information
and shall otherwise provide their full co-operation to the Purchasers upon
request to enable Conditions 4.1(A),(B), (E), (F), (G) and (H) to be
fulfilled. The Vendors shall use all reasonable endeavours to satisfy or
procure satisfaction of the Conditions set out in Sub-clauses 4.1(C) and
(D). The Purchasers shall promptly and diligently provide all reasonable
assistance and information and shall otherwise provide their full co-
operation to the Vendors upon request to enable Condition 4.1(C) to be
fulfilled.
4.3 Lapse
Unless the Conditions are not satisfied or waived within 45 days of the
date of this Agreement (as the case may be) this Agreement (subject to
Clause 179) shall at 11.59pm Hong Kong time on that 45th day lapse and the
parties shall thereafter have no further right or cause of action against
the other hereunder or in respect of such termination (save for any prior
breach hereof).
15
5. Completion
--------------
5.1 Date and place of Completion
Completion shall take place on the seventh Business Day following
satisfaction (or waiver) of the Conditions unless such satisfaction (or
waiver) shall be notified to the Vendors within seven Business Days before
the date falling 45 days after the date of this Agreement in which case
Completion shall take place on the date falling 45 days after the date of
this Agreement, and in any event (subject to Sub-clauses 5.4(A) or 17.2)
Completion shall take place no later than the date falling 45 days after
the date of this Agreement at the offices of the Purchasers' Solicitors in
Hong Kong.
5.2 Vendors' obligations
On Completion:
(A) The Sale Companies shall deliver or cause to be delivered to the
Purchaser, in each case where applicable:
(1) the Current Assets and all documents of title relating thereto;
(2) subject to the necessary consents having been delivered to the
Purchaser pursuant to Sub-clause 4.1(C) or to the provisions of
Clause 5.4 duly executed assignments or transfers of the
Properties (and in the case of the Properties of Western States,
assignments in or substantially in the form of assignment
attached hereto at Exhibit 4 Part 3) and the immovable Fixed
Assets situated thereon in Agreed Form together with all title
deeds and documents relating thereto in accordance with the
schedules of title deeds in Agreed Form (including, without
limit, all consents to the assignment/transfer thereof in favour
of the Purchaser);
(3) the movable Fixed Assets, the Leased Assets and all documents of
title relating thereto;
(4) subject to the necessary consents having been delivered to the
Purchaser pursuant to Sub-clause 4.1(C), or to the provisions of
Clause 5.4, assignments from each of the Sale Companies of the
Intellectual Property Rights owned by those Companies in the
appropriate Agreed Form;
(5) subject to the necessary consents having been delivered to the
Purchaser pursuant to Sub-clause 4.1(C), or to the provisions of
Clause 5.4, assignments of the Contracts and the Third Party
Rights, each in such form as the Purchaser shall reasonably
require;
16
(6) the Records;
(7) in relation to the assets of Western States and Bejka a deed or
deeds, each in a form approved by the Purchaser (such approval
not to be unreasonably withheld), duly executed by the relevant
chargees, unconditionally releasing the Business Assets from the
security of all relevant chargees (including those charges
details of which are set out in the Disclosure Letter).
(B) the Vendors shall deliver to Derby Cycle on behalf of both of the
Purchasers the Tax Deed duly executed by the Vendors;
(C) International shall deliver or procure to be delivered to Derby Cycle
the assignments of the Intellectual Property Rights which are owned by
International in the appropriate Agreed Form;
(D) Subject to the necessary consents and authorisations having been
delivered to the Purchasers pursuant to Sub-clause 4.1(C) or to the
provisions of Sub-clause 5.4, the Vendors shall deliver or procure to
be delivered to the relevant Purchaser the assignments/novations of
the Contracts in the Agreed Form in accordance with Clause 6.1;
(E) The Vendors shall use all reasonable endeavours to take all necessary
steps to record the name of the relevant Purchaser as the registered
proprietor of any trade name, business name or Internet name which
contains any trade mark within the Intellectual Property Rights which
is the subject of a registration in any territory.
(F) The Vendors shall deliver to Derby Cycle on behalf of all the
Purchasers a list of Outstanding Purchase Orders.
(G) Western States shall deliver to Derby Cycle an Affidavit of Non-
Foreign Status in the Agreed Form.
5.3 Purchasers' obligations
(A) On Completion the Purchasers shall pay the Closing Purchase Price
specified in Clause 3.2 to be paid by telegraphic transfer to the
Vendors' Solicitors (or such other person as the Vendors may in
writing direct no later than three Business Days prior to the date of
Completion) for value on the Completion Date, receipt of which shall
be deemed to be an absolute discharge for all purposes of the
Purchasers' obligations under this Sub-clause 5.3;
17
(B) Following Completion the Purchasers shall pay or discharge the Assumed
Liabilities (including any liabilities represented by Outstanding
Purchase Orders) as they fall due;
(C) The Purchasers shall at their own expense procure that there is in
effect from and after Completion for a period of 10 years from
Completion, an insurance policy with Derby's insurer covering the
Purchasers, the Vendors, the Sale Companies and Western States Import
Co., Inc. 401k Savings Plan, Diamondback Holding B.V., Diamondback
International N.V., Hannan Investments of Hong Kong, Via Pescador
Development Company (as respects ownership of Building in Camarillo)
and AST Multisport, Inc. against all losses, costs, claims and
expenses (except for those exclusions customarily made in this type of
insurance) incurred but not reported and related to allegations of
Product Liability (as defined in paragraph 4.6(A) of Part 1 of
Schedule 3, in relation to the Business or any assets sold in the
course of the Business and covering all periods since 1st November
1985. The Purchasers shall procure that the interests of the Vendors
and the Sale Companies are noted on the policy of insurance and shall
on demand deliver a copy of it to the Vendors and shall use their best
endeavours to do nothing (or omit nothing) the doing (or omission) of
which might allow the insurance company to avoid or otherwise restrict
its liabilities thereunder. This obligation is in addition to and
without prejudice to the obligation of the Purchasers hereunder to
indemnify the Vendors and assume fully the Assumed Liabilities.
(D) The Purchasers shall, on Completion and upon delivery to them by John
Barker of a Waiver of Future Claims letter in the Agreed Form and by
Burton Schatz of a General Release of Corporation (Civil Code Section
1542) and a Waiver of Future claims letter in the Agreed Form, pay to:
(1) John Barker the amount of US$234,000 (which amount is equal to one
year's salary) plus a payment of US$1,300 per month for a period
of twelve months following Completion (or equivalent, as agreed
between the Purchasers and John Barker prior to Completion); and
(2) Burton Schatz the amount of US$163,200 (which amount is equal to
one year's salary) plus a payment of US$736 per month for a period
of twelve months following Completion (or equivalent, as agreed
between the Purchasers and Burton Schatz prior to Completion)
and the Purchasers shall procure that each of John Barker and Burton
Schatz and each of their wives is covered for a period of one year
from Completion by medical insurance equivalent to that made available
to the employees of Derby Cycle and the payments referred to in this
sub-clause 5.3(E) shall in each case be by way of severance and the
contracts of employment of each of
18
John Barker and Burton Schatz with Western States shall be terminated
for all purposes as from the date of Completion.
5.4 Failure to complete
If in any respect the preceding provisions of this Clause are not complied
with on the date for Completion set by Sub-clause (A) the party not in
default may:
(A) defer Completion to a date not more than 14 days after the date set by
Sub-clause 5.1 (and so that the provisions of this Sub-clause 5.4,
apart from this Item (A), shall apply to Completion as so deferred);
or
(B) proceed to Completion so far as practicable (without prejudice to its
rights hereunder); or
(C) rescind this Agreement.
5.5 Action deemed to be simultaneous
All actions to be taken at Completion shall be deemed to have occurred
simultaneously and every such action shall be conditional upon:
(A) the occurrence at Completion of every other such action; and
(B) the prior occurrence of every action to be taken or event to have
occurred hereunder before Completion.
5.6 Post Completion obligations
(A) All monies or other items belonging to the Purchasers which are
received by any of the Vendors on or after Completion in connection
with the Business or any of the Business Assets shall immediately be
paid or passed by the Vendors to the Purchaser.
(B) The Purchaser shall after Completion, on demand, indemnify the Vendors
in respect of:
(1) the Assumed Liabilities; and
(2) all costs, claims, expenses or liabilities reasonably and
properly incurred by the Vendors in consequence of any failure or
delay of the Purchaser to comply with Sub-clause 5.6(B)(1)
provided that if there are any amounts due and outstanding from the
Vendors to the Purchasers under Clause 5.6(A) then the Purchasers
shall be entitled to
19
set such amounts against any amounts due and outstanding from the
Purchasers to the Vendors under this Clause 5.6(B) and to treat all
such amounts (except to the extent the amounts owed by the Purchasers
exceed those owed by the Vendors, in each case under this Clause 5.6)
as paid and discharged pro tanto.
(C) The Vendor shall promptly pass to the Purchaser all correspondence,
telephone enquiries and other communications ("Communications") which
----------------
the Vendor receives after Completion which in any way relate to the
Business or the Business Assets (excepting anything relating to the
Excluded Assets) and the Purchaser shall promptly pass to the Vendor
all Communications which the Purchaser receives after Completion
relating to the Excluded Assets.
(D) Provided the Purchasers have received notice and have consented (such
consent not to be unreasonably withheld or delayed), the Purchasers
shall at all reasonable times and only during business hours give the
Vendors and their representatives full access to the books and records
of the Business and the Business Assets and Assumed Liabilities (and
allow the Vendors at the cost of the Vendors to take copies thereof)
and to the staff and employees involved in the Business for the
purposes of the preparation of tax and all other statutory and
administrative returns and filings to the extent requested by the
Vendors.
6. Treatment of Contracts
-------------------------
6.1 Assignment
The Vendors shall:
(A) on or with effect from the Completion Date assign to Derby Cycle (in
the case of the Contracts of Western States) and Derby Sweden (in the
case of the Contracts of Bejka), or procure the assignment to such
Purchaser of, all the Contracts by assignments in the forms set out at
Exhibit 3 save, without prejudice to any rights the Purchasers may
have under Sub-clause 5.4, those which are incapable of assignment
without the consent of the other parties thereto and in respect of
which such consent has not been obtained; and
(B) in the case of those of the Contracts, if any, not assigned pursuant
to Sub-clause 6.1(A), and provided the Purchasers agree to proceed to
Completion pursuant to Sub-clause 5.4(B), as soon as practicable
following Completion, if the Purchasers shall so request, use all
reasonable endeavours to obtain all necessary consents for the
assignment of the same and upon receiving such consents then assign
the same to the Purchasers or arrange the novation thereof.
20
6.2 Performance: Vendors' obligations
Unless and until such consents are obtained or novation is effected
pursuant to Sub-clause 6.1 the Vendors shall following Completion in
relation to the Contracts in question:
(A) subject to Sub-clause 6.2(C), sub-contract the obligations of the
relevant Vendor thereunder to the Purchasers, or procure that the same
is sub-contracted to the Purchasers, on the same terms (mutatis
mutandis) and for the same remuneration as apply to the Contracts in
question; or
(B) (where the relevant Vendor thereunder is contractually prevented from
so contracting) the Purchasers shall act as the Vendors' agent in
connection therewith; or
(C) (if and to the extent that the relevant Vendor is contractually
prevented from sub-contracting and it is not permissible in respect of
such Contract pursuant to Sub-clause 6.2(B) for the Purchasers to act
as the Vendors' agents in connection therewith) the Vendors shall
continue to perform their obligations and liabilities arising under
the Contracts;
(D) without prejudice to the generality of the foregoing the Purchasers
shall (save as set out in paragraph (C) above) perform the obligations
and liabilities of the relevant Vendors arising under the Contracts in
question so far as any obligation or liability arises or falls to be
performed on or after the Completion Date (other than by reason of any
breach of any Contracts occurring before Completion) and the
Purchasers shall indemnify and keep indemnified the relevant Vendors
in respect of any costs, claims, demands, expenses or liabilities of
any kind reasonably and properly incurred by such Vendors as a result,
directly or indirectly, of complying with the provisions of (C) above
in respect of the Contracts (other than by reason of any breach of
such Contracts (except for any breach or alleged breach arising out of
Product Liability claims which are covered by insurance) occurring
before Completion) to the extent that such costs, claims, demands,
expenses or liabilities are incurred in relation to an obligation or
liability thereunder which arises or falls to be performed on or after
the Completion Date, and the full benefit of all contractual rights,
benefits, claims under the Contracts whether arising before or after
Completion shall from Completion vest in and be held in trust by the
relevant Vendors for the Purchasers absolutely and the Purchasers
shall, on demand, indemnify and keep indemnified the Vendors in
respect of any costs, claims, demands, expenses or liabilities of any
kind reasonably and properly incurred by the Vendors, as a result,
directly or indirectly, of the failure by the Purchasers following
Completion to comply with any of the terms of the Contracts or with
the terms of any replacement of the Contracts;
21
(E) give all reasonable assistance to the Purchasers to enable them to
enforce the rights of the relevant Vendors under the Contracts and
shall (subject to being fully and effectively indemnified by the
Purchasers in respect of the same including all legal and other
professional costs and expenses reasonably incurred by or on behalf of
the Vendors in taking any steps in or with a view to commencing
proceedings to enforce any Contracts provided that the Vendors in so
incurring such costs and expenses act in accordance with all requests
of the Purchasers) at all times and with regard to the Contracts act
in accordance with the Purchasers' reasonable instructions from time
to time (without incurring expense save in relation to reasonable
labour costs of the Vendors' employees) and for this purpose the
Vendors shall be entitled to rely on the instructions of any one or
more of the Purchasers as being on behalf of all of the Purchasers;
and
(F) not take any action in respect of the Contracts without the prior
written approval of the Purchasers (such consent not to be
unreasonably withheld or delayed).
6.3 Vendors holding on trust
The relevant Vendors shall from Completion hold any monies, goods or other
benefits or notifications received under the Contracts after Completion
(except to the extent that they do not fall within "Book Debts") as agent
of and trustee for the Purchasers and shall forthwith upon receipt of the
same account for and pay or deliver to the Purchasers without any deduction
or withholding whatsoever all such monies, goods and other benefits or
notifications.
6.4 Vendors' Undertaking
The Vendors shall, on demand, indemnify and keep indemnified the Purchasers
in respect of any costs, claims, demands, expenses or liabilities of any
kind reasonably and properly incurred by the Purchasers as a result,
directly or indirectly, of the failure by the Vendors prior to Completion
to comply with any of the terms of the Contracts.
6.5 Purchasers' Undertaking
To the extent that any of the Purchasers receive payment in respect of book
debts of any of the Vendors not transferred pursuant to this Agreement or
any documents or notifications relating to the Excluded Liabilities then
such Purchaser shall forthwith upon receipt of the same account for and pay
or deliver to the relevant Vendors without any deduction or withholding
whatsoever the amount of such payment except to the extent that any amounts
shall be due and outstanding from the Vendors under Clause 6.4 in which
case the Purchasers shall be entitled to set such amounts against any
amounts due and outstanding from the Purchasers to the Vendors under
22
this Clause 6.5 and to treat all such amounts (except to the extent the
amounts owed by the Purchasers under Clause 6.5 exceed those owed by the
Vendors under Clause 6.4) as paid and discharged pro tanto and shall
deliver to the relevant Vendor such documents or notifications.
7. Management of the Business prior to Completion
--------------------------------------------------
7.1 The Sale Companies shall during the period from the date hereof to
Completion procure that (save with the prior written consent of the
Purchasers):
(A) the Business will continue to be carried on in the ordinary and usual
course of trading so as to maintain the same as a going concern and in
relation to the Business or the Business Assets none of the Sale
Companies shall enter into any transaction other than on arms' length
terms or;
(B) neither of the Sale Companies shall declare or pay any dividend or
make any distribution or deemed distribution to its shareholders;
(C) neither of the Sale Companies shall purchase or agree to purchase any
shares or securities from any of its shareholders or any other person;
(D) neither of the Sale Companies acquires or disposes of or agrees to
acquire or dispose of any material assets or incurs in relation to the
Business or the Business Assets any material liabilities or capital
commitments otherwise than in the ordinary course of trading and for
this purpose a material asset, liability or commitment shall be deemed
to be one having a value or being in an amount of US$50,000 or more
for either one of the Sale Companies;
(E) neither of the Sale Companies disposes of, agrees to dispose of,
grants a lease over, or agrees to grant a lease over, or otherwise
permits any Encumbrance to subsist over any of the Business Assets or,
additionally in respect of the Intellectual Property Rights and unless
it cannot lawfully prevent it from happening, allows any such right to
lapse, be cancelled, any application to be withdrawn or fails to renew
any registration falling due;
(F) neither of the Sale Companies takes any loans, incurs any borrowings
or other form of indebtedness, funding or financial facility or
assistance (or agrees to do so) (whether debt or otherwise) without
the prior consent of the Purchasers, except in the case of short-term
debt for purchase of inventory and financing of accounts receivable
which is in the nature of working capital and in the ordinary course
of business or, with respect to Western States, for the purposes of
building out the warehouse facility at Camarillo, California;
(G) neither of the Sale Companies enters into or agrees to enter into
(whether or not in the ordinary course of trading) any contract of
more than three months'
23
duration involving a commitment of more than US$50,000 and in relation
to any such contract which is proposed to be entered into and which is
considered by the Purchasers to be in the ordinary course of business,
the Purchasers' written consent shall not be unreasonably withheld and
if the Purchaser does not respond within 2 Business Days of written
notice being received then the Purchaser's consent shall be deemed to
be given;
(H) neither of the Sale Companies shall enter into or agree to enter into
any joint venture, partnership or agreement or arrangement for the
sharing of any profits or assets in relation to the Business or any
of the Business Assets (except where commissions are in the ordinary
course of business paid to sales agents of any of the Sale Companies);
(I) neither of the Sale Companies cancels or causes a breach of or varies
any manufacturing agreement (or agrees to do so) in connection with
the Business or any Distribution Agreement;
(J) neither of the Sale Companies shall appoint any new director, officer
or senior employee or consultant or enter into any new employment
agreement or any death, retirement, profit sharing, bonus, share
option, share incentive or other scheme for the benefit of any of the
Employees with any person or persons or materially alter the terms of
employment or engagement (or agree to do so) of any senior employee or
consultant;
(K) neither of the Sale Companies shall make or permit any change to be
made to the accounting methods of the Sale Companies used in
connection with the Business including (but without limitation)
pricing or inventory valuations;
(L) neither of the Sale Companies shall repay any intercompany
indebtedness owed to the Vendors and/or their Affiliates (other than
the other Sale Companies) unless such payment shall be made upon
delivery to such Sale Company (as shall be making the payment) of the
goods comprised in any Outstanding Purchase Order notified by the
Vendors to the Purchaser on the date of this Agreement;
(M) neither of the Sale Companies commences, compromises or discontinues
(or agrees to do so) any legal or arbitration proceedings relating to
the Business or the Business Assets (other than routine debt
collection);
(N) neither of the Sale Companies makes or permits any amendment,
variation, deletion, addition, renewal or extension to or of, or
terminates or gives any notice or intimation of termination of any of
the Contracts or breaches, repudiates, or fails to comply in any
material respect with the terms of any of the Contracts; or
24
(O) neither of the Sale Companies shall take any other action which by
reference only to the facts actually known by the Vendors at the time
of such action is likely to result in a material adverse change in the
Business and does so within the relevant time limit set by paragraph 4
of Schedule 8.
7.2 Provided the Vendors have received prior notice and given their consent
(such consent not to be unreasonably withheld or delayed), each of the Sale
Companies during the period from the date hereof to Completion shall permit
representatives of the Purchasers during normal office hours to:-
(A) consult with the management, executives and auditors of each of the
Sale Companies about the conduct of the Business during the financial
year ended 31 October 1997 and the period from 1 November 1997 to the
date hereof;
(B) have access to the Properties, the Employees and the Records of each
of the Sale Companies for the purpose of discussing any aspects of the
Business and to take copies of and extracts from the Records at its
own expense; and
(C) review the business performance and forecasts of each of the Sale
Companies for the year ending 31 December 1998.
7.3 Notwithstanding the provisions of Sub-clause 7.2 the sole responsibility
for the management, control and operation of the Business until the
Completion Date shall remain with the Vendors and each of the Sale
Companies subject only to the provisions of this Agreement.
8. Provisions relating to Tax and VAT
--------------------------------------
8.1 Each of the Vendors and the Purchasers undertake to co-operate and provide
the others of them with all such information and assistance as is
reasonably necessary to enable the other party to respond to any enquiry in
connection with Tax raised by any tax authority or other governmental
authority in respect of either the Business or any of the Business Assets.
Each party will bear its own costs of providing all such information and
assistance.
8.2 Each of the Vendors and the Purchasers undertake to co-operate and provide
the others of them with all such information and assistance as is
reasonably necessary to enable the other party to make any return to the
relevant tax authority or other governmental authority which is due after
Completion and which relates, either in whole or in part, to a period
before Completion. Each party will bear its own costs of providing all
such information and assistance.
8.3 The Vendors and the Purchasers will co-operate to obtain any tax clearances
and to comply with any bulk sale notification procedures or similar
procedures which are required by any relevant tax authority, governmental
authority, state, county or
25
municipality. The Vendors agree to provide the Purchasers, at the Vendors'
own cost and expense, with all such information and assistance as the
Purchasers reasonably require to obtain any such tax clearance or to comply
with any such notification procedures. The Purchasers may deduct and
withhold from the Closing Purchase Price any amount that they are required
by law to pay to any relevant tax authority, governmental authority, state,
county or municipality to enable them to obtain any necessary tax clearance
or to comply with any necessary notification procedure.
8.4 The Vendors agree that they will co-operate with the Purchasers and will,
at the Vendors' own cost and expense, provide the Purchasers with all such
information and assistance as the Purchasers may reasonably require in
respect of the transfer of any unemployment tax experience ratings or fund
balances.
8.5 Transfer as a going concern
The Vendors and the Purchasers intend that, and shall use all reasonable
endeavours to secure that, in so far as is applicable to the transfer of
the Business of any one or more of the Sale Companies, the sale and
transfer of the Business Assets of the Sale Companies shall be treated as
neither a supply of goods nor a supply of services for the purpose of VAT.
9. Provision of Information
----------------------------
9.1 Confidentiality
The Purchasers hereby acknowledge and undertake that:
(A) any information they have received or will receive regarding the
purchase of Sale Companies will be received by the Purchasers under a
duty of confidentiality to the Vendors and for the exclusive purpose
of the present transaction;
(B) the Purchasers will hold such information in confidence and will not
disclose or make, or permit to be made, available to any other person
any of such information and will not use any of such information for
any purpose other than that stated in Sub-clause 9.1 (A) above;
(C) the Purchasers may make copies of such information solely for their
internal use for such purpose and may make such information available
to those of their directors, shareholders, senior employees,
professional advisers and lenders who are directly concerned in this
transaction;
(D) the Purchasers will ensure that such directors, shareholders,
employees, advisers and lenders are fully aware of the obligations of
the Purchasers under this section and will use their best efforts to
ensure that such persons act in
26
accordance with the Purchasers' obligations;
(E) any other use of such information must have the prior written approval
of the Vendors; and
(F) the Purchasers shall only be released from their obligations in this
Sub-clause 9.1 upon Completion taking place and (without prejudice to
the generality of the foregoing) execution of this Agreement is
without prejudice to any claims the Vendors have or have alleged
against the Purchasers and their Affiliates in connection with breach
of confidence and interference with business (which claims the
Purchasers have not admitted).
9.2 No Completion
If this Agreement does not for any reason proceed to Completion:
(A) the Purchasers will forthwith upon request return all such information
to the Vendors and destroy all copies thereof, whether or not in the
possession of the Purchasers, and certify to the Vendors that all such
copies have been destroyed; and
(B) the Purchasers will not use, or permit the use of, any such
information for any commercial purpose whatsoever without the prior
written consent of the Vendors.
9.3 No disclosure
Except as specifically provided below or with the prior written consent of
the Purchasers, neither the Vendors nor any person controlled by the
Vendors nor any of the directors, officers, employees or agents of either
of them, shall disclose to any person or use for its or his own account or
business at any time before or after Completion any confidential
information, observations, data, written materials, records or documents
(including any offer letters, proposals or projections) which the
Purchasers may disclose or deliver to the Vendors in the course of the
negotiations for this Agreement or the actions taken pursuant to this
Agreement.
9.4 Public knowledge
The obligations of confidentiality of the parties hereto shall not apply in
the event and to the extent that such information, observations, data,
written materials, records or documents (or such offer letters, proposals
or projections) become generally known to or available for use by third
parties, other than by an act or omission of either party hereto or their
respective representatives in violation of mutual undertakings herein
contained.
27
10. Exclusivity
----------------
10. In consideration of the Purchasers entering into this Agreement the Vendors
hereby represent, undertake and agree that:
(A) they will not:
(1) solicit any alternative offer for the Sale Companies or the
Business Assets (save in the ordinary course of business); or
(2) enter into discussions or negotiations with, or provide any
information concerning the Sale Companies or the Business Assets
to any third party in contemplation of any alternative offer;
(B) subject to such obligations of secrecy as may be imposed on them by
any relevant party, they will notify the Purchasers forthwith of the
terms of any alternative offers received from a third party for the
purchase of the Sale Companies or the Business Assets (save for offers
received in the ordinary course of business) or any of them.
10.2 Obligations Cease
The obligations contained in this Clause 10 shall cease to apply upon:
(A) the Completion Date; or
(B) the prior termination or lapse of this Agreement between the
Purchasers and the Vendors,
without prejudice to any antecedent breaches of the terms of this
Agreement.
10.3 Definitions
In this Clause 10:
"third party" means any person other than the Purchasers; and
-------------
"alternative offer" means any offer by any third party for any part of the
-------------------
issued share capital of the Sale Companies or for any of the Business
Assets.
28
11. Restrictions of Vendors' Group
-----------------------------------
11.1 Restricted Business
In this Clause 11, "Restricted Business" means the business of designing,
manufacturing, marketing and/or distributing bicycles or bicycle spares
and accessories or fitness equipment which directly or indirectly competes
with the Business as carried on at the date of this Agreement.
11.2 Undertakings
The Vendors undertake with the Purchasers that they will not and that none
of their Affiliates will for the period of three years after Completion,
either on their own account or in conjunction with or on behalf of any
person, firm or company, carry on, or be engaged, concerned or interested
in carrying on, directly or indirectly, the Restricted Business (other than
as a holder of less than 5 per cent. of any class of shares or debentures
listed on any stock exchange anywhere in the world).
11.3 Exceptions
The restrictions set out in Sub-clause 11.2 shall not apply to (1) the
ownership by either of the Vendors or their Affiliates of minority
shareholding interests in Shenzhen China Bicycle Company (Holdings) Limited
or the manufacture and/or sale by that company of bicycles and bicycle
spares and equipment within The People's Republic of China but without any
use of the Intellectual Property Rights, (2) ownership of any shareholding
interest in The Apollo bicycle distribution business in Australia, (3) the
sales by Shenzhen China Bicycle Company (Holdings) Limited of Private Label
Products to retailers who are not Independent Bicycle Dealers provided that
no use is made of the "Diamondback" trade mark or trade name in connection
with any product sold or to the knowledge of the relevant Vendor or its
Affiliate destined to be sold outside The People's Republic of China and
(4) the activities of Diamondback France and Diamondback Deutschland to the
extent they are permitted by the distribution agreements granted to those
companies by the Purchasers.
11.4 Vendors to procure compliance
The Vendors undertake to take all such steps as shall from time to time be
necessary or as may be reasonably required by the Purchasers to ensure that
no breach of Sub-clause 11.2 arises as a result of any action by any of the
Vendors' Affiliates, or any employee or agent of the Vendors or any such
Affiliate (for so long only as the relevant person remains such an employee
or agent).
29
11.5 Reasonableness
The Vendors agree that the restrictions and undertakings contained in Sub-
clause 11.2 are reasonable and necessary for the protection of the
Purchasers' legitimate interests in the goodwill of the Business, but if
any such restriction or undertaking shall be found to be void or voidable
but would be valid and enforceable if some part or parts of the restriction
or undertaking were deleted, such restriction or undertaking shall apply
with such modification as may be necessary to make it valid and
enforceable.
11.6 Void or unenforceable restrictions
Without prejudice to Sub-clause 11.5, if any restriction or undertaking is
found by any court or other competent authority to be void or unenforceable
the parties shall negotiate in good faith to replace such void or
unenforceable restriction or undertaking with a valid provision which, as
far as possible, has the same legal and commercial effect as that which it
replaces.
12. Warranties
---------------
12.1 General
(A) The Vendors hereby warrant and represent to and for the benefit of the
Purchasers in the terms of the Warranties and acknowledge and accept
that the Purchasers are entering into this Agreement in reliance upon
each of the Warranties each of which is given on the basis that,
unless otherwise disclosed, it will remain true and accurate up to and
including Completion.
(B) Schedule 3 Part 1 contains Warranties in relation to the Business
Assets sold and purchased pursuant to this Agreement, the Sale
Companies and the Vendors and Schedule 3 Part 2 contains Warranties in
relation to Swedish and US jurisdictions.
(C) Where the Warranties make reference to matters of English law such
Warranties shall be deemed to be referring to the nearest equivalent
provision or provisions of the law to which each Sale Company and
Vendor, as the case may be, is subject in the jurisdiction in which
they are resident.
12.2 Purchasers' knowledge
The Warranties are given subject to matters fairly disclosed in this
Agreement or in the Disclosure Letter, but no other information relating to
the Sale Companies or their Affiliates of which the Purchasers have
knowledge (actual or constructive) shall prejudice any claim made by the
Purchasers under the Warranties or operate to reduce any amount
recoverable. The provisions of s.6(2) of the Law of Property
30
(Miscellaneous Provisions) Act 1994 are hereby excluded.
12.3 Warranties to be independent
Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to any other Warranty
or anything in this Agreement.
12.4 No acts or omissions contrary to Warranties
The Vendors shall procure that (save only as may be necessary to give
effect to this Agreement) neither the Vendors nor any member of the
Vendors' Group shall do, allow or procure any act or omission before
Completion which would constitute a breach of any of the Warranties in any
material respect if they were given at any and all times from the date
hereof down to Completion or which would make any of the Warranties
inaccurate or misleading in any material respect if they were so given.
12.5 Further disclosure by Vendors
The Vendors shall forthwith disclose in writing to the Purchasers any
matter or thing which may arise or become known to the Vendors after the
date hereof and before Completion which is inconsistent in any material
respect with any of the Warranties or which can reasonably be expected to
make any of them inaccurate or misleading in any material respect if they
were given at any and all times from the date hereof down to Completion or
which is a breach of Sub-clause 12.4 or Clause 7.
12.6 Rescission
(A) In the event of it becoming apparent on or before Completion that the
Vendors are in material breach of any of the Warranties or any other
term of this Agreement or any act, omission, matter or thing has
occurred which would be a material breach of the Warranties if they
were given on the basis set out in Sub-clause 12.4, the Purchasers may
at their option either:
(1) rescind this Agreement by notice in writing to the Vendors; or
(2) proceed to Completion but without prejudice to its right to claim
for breach of this Agreement or such Warranties,
(B) In the event of it becoming apparent on or before Completion that the
Vendors are in breach (other than a material breach) of any of the
Warranties or any other term of this Agreement or any act, omission,
matter or thing has occurred which would be a breach (other than a
material breach) of the Warranties if they were given on the basis set
out in Sub-clause 12.4, subject to paragraph 3.2(A) of Schedule 8 the
Purchasers may include the amount of
31
any claim (including all reasonable costs expenses, damages, and
liabilities which may be incurred by reason of any such claim)
resulting from such breach in the calculation of the aggregate
liability of the Vendors for the purposes of paragraph 3.2(B) of
Schedule 8.
(C) For the purposes of this Clause 12.6 (but not of any other Clause of
this Agreement) a material breach shall be a breach which, (including
all costs, expenses and liabilities which may be reasonably and
properly incurred by reason of any such claim), results in or could
reasonably be expected to result in loss to the Purchasers of $500,000
or more.
12.7 Waiver of claims
The Vendors undertake to and for the benefit of the Purchasers that they
will not make or pursue any claim or action howsoever arising against any
of the Employees in respect of any loss or liability the Vendors may incur
pursuant to this Agreement (or any other document referred to herein) or
otherwise in connection with the sale of the Business Assets to the
Purchasers or the preparation of the Disclosure Letter provided that the
Vendors shall not be precluded from bringing any such claim against an
Employee insofar as the Employee is not entitled to any right of indemnity
or other right of recovery from or against either of the Sale Companies in
relation to any such claim.
13. Indemnity
--------------
13.1 Vendor's undertaking
Save as otherwise herein expressly provided the Vendors undertake to the
Purchaser that in relation to the Business Assets they will pay, satisfy,
discharge and fulfil all costs, claims, expenses, liabilities, obligations
and undertakings whatsoever relating to the Business arising in respect of
or by reference to any period up to Completion and shall indemnify and hold
harmless the Purchaser in respect of the same and from and against all
costs, claims, liabilities and reasonable expenses which the Purchaser may
reasonably suffer or incur in consequence of any failure or delay by the
Vendors to comply with this clause 131.
13.2 The Vendors undertake fully and effectively to indemnify and to keep so
indemnified the Purchasers against or in respect of any costs, claims,
demands, expenses, taxes and liabilities of any kind incurred by either of
the Sale Companies, whether arising before or after Completion, in
relation, directly or indirectly, to, or which would not otherwise have
been incurred but for:
(A) the discontinued operations of Western States concerning a facility
for producing cycle helmets in Montreal, Canada;
32
(B) the contingent liabilities of Bejka in respect of claims by third
parties in relation to underlying purchases by Bejka from Shenzhen
China Bicycle Company (Holdings) Limited.
14. Change of name
-------------------
14.1 Vendors' Obligations
The Vendors (apart from Bejka) shall each procure that at Completion (or
within three Business Days thereafter) they and Diamondback France,
Diamondback Europe and Diamondback Deutschland shall pass a resolution
changing their respective names to a name which does not include the name
"Diamond" or "Diamondback" or any colourable imitation thereof in English
or any other language or any name which includes a word or words the same
as or similar to any trade mark within the Intellectual Property Rights, in
English or any other language.
14.2 Restriction
The Vendors agree that they will not, and will procure that none of their
Affiliates will, use the name and or trade marks "Diamond" or "Diamondback"
or any colourable imitation thereof in English or any other language or any
name which includes a word or words the same as or similar to any trade
mark within the Intellectual Property Rights, in English or any other
language as part of their corporate or business or trading name anywhere in
the world (except in The People's Republic of China) or (save for the
"Diamondback" trade mark as registered in The People's Republic of China)
as a trade mark or product name provided that the "Diamondback" trade mark
may only be used on goods sold in and not for export from The People's
Republic of China.
14.3 Exception
The restrictions in Clause 14.2 shall not apply to the use of the
"Diamondback" trade mark by Diamondback France or Diamondback Deutschland
to the extent only that the same is permitted by the distribution
agreements granted to those companies by the Purchasers.
15. Public Announcements
-------------------------
15.1 Prior to Completion
None of the parties hereto shall make any public announcement relating to
the transactions contemplated by this Agreement in any circumstances prior
to Completion without the prior consent of the other parties which consent
shall not be unreasonably withheld.
33
15.2 Following Completion
The text of any public announcement which any party proposes to make with
respect to the transactions contemplated by this Agreement following
Completion shall be submitted to the other parties five (5) Business Days
before the date on which the announcement is to be made, and the parties
shall consult prior to the time of such public announcement to settle the
final agreed text of such announcement. The foregoing shall not apply to
any announcement that may be required by law and the party required to make
such announcement shall give the other parties notice thereof at least
twenty-four (24) hours prior to such announcement.
15.3 Announcements to Employees
In relation to any announcement to employees of the Sale Companies of the
transactions contemplated by this Agreement, the parties hereto shall
consult and shall agree the text of such announcement on the date of this
Agreement.
16. Employees of the Business
------------------------------
16.1 Contracts of employment
The Purchasers acknowledge and agree that the respective written contracts
of employment of the Employees shall have effect from and after Completion
as if originally made between each of the Employees and the relevant
Purchaser and that to the extent that any of the Employees have not entered
into written employment contracts, the Purchasers acknowledge and agree
that the employment of such Employees shall continue with the relevant
Purchaser after Completion on terms no less favourable than those on which
equivalent employees of the relevant Purchaser are employed by such
Purchaser and in the case of those Employees who have entered into written
contracts of employment the relevant Purchaser shall procure at its expense
that the relevant Employee is offered a new contract of employment on terms
which release, or effectively release the Vendor from all liability
(accrued or not) in respect of that Employee.
16.2 Informing Employees
As soon as practicable after satisfaction of the Conditions at Clause
4.1(H) of this Agreement the Vendors shall send to each Employee a letter
in Agreed Form outlining the consequences of the transfer.
16.3 Vendor indemnity
The Vendors shall indemnify the Purchasers and hold the Purchasers harmless
against all and any costs (including reasonably and properly incurred legal
costs on a full indemnity basis), expenses, liabilities, damages and
losses reasonably and properly
34
incurred and arising out of any claim, action or proceeding which:
(A) is made or brought by an Employee and relates to facts or events
occurring prior to Completion in relation to or arising out of his or
her employment; or
(B) is made or brought by any person who is not an Employee but who was,
or is alleged to have been, employed in the Business at any time
prior to Completion and relates to facts or events occurring at any
time before Completion, in relation to or arising out of his or her
employment or alleged employment (including without limitation, any
dismissal or alleged dismissal of any such person by the Purchaser).
16.4 Purchaser indemnity
The Purchasers shall indemnify the Vendors and hold the Vendors harmless
against all and any costs (including reasonably and properly incurred legal
costs on a full indemnity basis), expenses, liabilities, damages and
losses reasonably and properly incurred and arising out of any claim,
action or proceeding which is made or brought by an Employee and relates to
facts or events occurring after Completion in relation to or arising out of
his or her employment.
16.5 Employment records
As soon as practicable after Completion, the Vendors shall deliver to the
Purchasers originals of all payroll and social security records and of any
other documents or records (including, without limitation, personnel
records and files) which are relevant to the Employees provided that the
Vendors shall be entitled to retain a copy of any such record or document
where the original is delivered to the Purchasers.
17. Provisions relating to this Agreement
------------------------------------------
17.1 This Agreement shall be binding upon and enure for the benefit of the
successors of the parties but shall not be assignable, except in the
following circumstances:
(A) the Purchasers may assign the benefit of the Warranties to any
transferee of the Business Assets provided such transferee is one of
the Purchasers' Affiliates which as a condition precedent to such
assignment agrees with the Vendors that such assignment shall ipso
facto lapse on the transferee ceasing to be one of the Purchasers'
Affiliates; and
(B) the benefit of the Agreement and any assignments or novations made to
or in connection with the Agreement shall be assignable to Chase
Manhattan International Limited as Security Agent for itself, the
Purchasers' Banks and Chase Manhattan International Limited as the
Facility Agent under the Facility Agreement.
35
17.2 Whole agreement and variations
(A) This Agreement, together with any documents referred to in it,
constitutes the whole agreement between the parties relating to its
subject matter and supersedes and extinguishes any prior drafts,
agreements (and in particular the Letter of Intent dated 18 July 1998
and entered into among the Vendors and Derby Cycle), representations,
warranties and undertakings, whether in writing or oral, relating to
such subject matter, except to the extent that the same are repeated
in this Agreement and the Purchasers acknowledge and agree that except
in the case of fraud they shall have no remedy for any
misrepresentation not contained in this Agreement or for breach of any
warranty not contained in this Agreement and the Purchasers waive any
and all rights in respect thereof.
(B) No variation of this Agreement shall be effective unless made in
writing and signed by each of the parties.
17.3 Agreement survives completion
The Warranties and all other provisions of this Agreement, in so far as the
same shall not have been performed at Completion, shall remain in full
force and effect notwithstanding Completion.
17.4 Rights etc cumulative and other matters
(A) The rights, powers, privileges and remedies provided in this Agreement
are cumulative and are not exclusive of any rights, powers, privileges
or remedies provided by law or otherwise.
(B) No failure to exercise nor any delay in exercising any right, power,
privilege or remedy under this Agreement shall in any way impair or
affect the exercise thereof or operate as a waiver thereof in whole or
in part.
(C) No single or partial exercise of any right, power, privilege or remedy
under this Agreement shall prevent any further or other exercise
thereof or the exercise of any other right, power, privilege or
remedy.
17.5 Release
The Purchasers may release or compromise the liability of any of the
Vendors hereunder and the Purchasers may release or compromise the
liability of any of the Purchasers hereunder without affecting the
liability of the other Vendors or Purchasers (as the case may be).
36
17.6 Further assurance
At any time after the Completion the Vendors shall, at the request and cost
of the Purchasers, execute or procure the execution of such documents and
do or procure the doing of such acts and things as the Purchasers may
reasonably require for the purpose of vesting the Business Assets in the
Purchasers or their nominees and giving to the Purchasers the full benefit
of all the provisions of this Agreement.
17.7 Payment to the Vendors and the Purchasers
Any payment falling to be made to the Vendors or to the Purchasers under
any provision of this Agreement may be made to the Vendors' Solicitors or
the Purchasers' Solicitors respectively (as the case may be) whose receipt
shall be an absolute discharge for all of them.
17.8 Counterparts
This Agreement may be executed in any number of counterparts, which shall
together constitute one Agreement. Any party may enter into this Agreement
by signing any such counterpart.
17.9 Costs
Subject to Sub-clause 17.6, each party shall bear its own costs arising out
of or in connection with the preparation, negotiation and implementation of
this Agreement.
17.10 Investment Banking Fees
(A) The Vendors shall, on demand, indemnify and hold harmless the
Purchasers against any claims by any banker, broker, investment banker
or agent for any fees or expenses claimed to be due to such party in
connection with or in respect of the transactions provided for in this
Agreement as a result of any agreement with or commitment by or on
behalf of any of the Vendors or either of the Sale Companies.
(B) The Purchasers shall, on demand, indemnify and hold harmless the
Vendors against any claims by any banker, broker, investment banker or
agent for any fees or expenses claimed to be due to such party in
connection with or in respect of the transactions provided for in this
Agreement as a result of any agreement with or commitment by or on
behalf of either of the Purchasers.
37
17.11 Notices
(A) Any notice or other communication required to be given under this
Agreement or in connection with the matters contemplated by it shall,
except where otherwise specifically provided, be in writing in the
English language and shall be addressed as provided in Sub-clause
17.11(B) and may be:
(1) personally delivered, in which case it shall be deemed to have
been given upon delivery at the relevant address; or
(2) sent by pre-paid registered priority airmail, in which case it
shall be deemed to have been given seven (7) Business Days after
the date of posting; or
(3) sent by fax, in which case it shall be deemed to have been given
when despatched, subject to confirmation of uninterrupted
transmission by a transmission report provided that any notice
despatched by fax after 17.00 hours (at the place where such fax
is to be received) on any day shall be deemed to have been
received at 09.00 on the next Business Day at the place where
such fax is to be received.
(B) The addresses and other details of the parties referred to in Sub-
clause 17.11(A) are, subject to Sub-clause 17.11(C):
Name: Diamond Back International Company Limited,
Western States Import Company Inc. or Bejka
Trading A.B.
For the attention of: Jerome Sze
Address: 37th Floor, Tower 2, Metroplaza,
223 Hing Fong Road,
Kwai Chung,
New Territories
Hong Kong
Fax number: 852 2610 1530
Name: The Derby Cycle Corporation or Derby Sweden AB
For the attention of: Robert E Michalik
Address: 1455 Pennsylvania Avenue NW
Suite 350
38
Washington DC, 20004
USA
Fax number: 1 202 371 0391
(C) Any party to this Agreement may notify the other parties of any change
to its address or other details specified in Sub-clause 16.11(B),
provided that such notification shall only be effective on the date
specified in such notice or five (5) Business Days after the notice is
given, whichever is later.
18. Dispute Resolution
-----------------------
18.1 Disputes to be referred to arbitration
Any dispute arising out of or in connection with this Agreement, including
any question regarding the existence, scope, validity, or termination of
this Agreement or this Clause, shall be referred to and finally resolved
under the Rules of the London Court of International Arbitration, which
Rules are deemed to be incorporated by reference into this Clause.
18.2 Number of arbitrators
The number of arbitrators shall be 1.
18.3 Place of arbitration
The place of arbitration shall be London, England.
18.4 Language of arbitration
The arbitration proceedings shall be conducted in the English language and
the Award shall be in English.
18.5 Governing law
The proceedings of the arbitration shall be governed by the laws of
England.
18.6 Confidentiality
The parties agree that information concerning any arbitration, including,
without limitation, information concerning any arbitration award, shall be
treated as confidential and not disclosed to any third party without the
consent in writing of all of the parties unless:
(A) the information has come into the public domain other than through the
fault
39
of the party disclosing it;
(B) such disclosure is required by law or by any securities exchange or
regulatory or governmental body having jurisdiction over the party
disclosing the information, whether or not the requirement has the
force of law;
(C) such disclosure is necessary in order to establish or protect any
legal right of the party disclosing the information; or
(D) the disclosure is limited to the directors and officers, professional
advisers, auditors, bankers or insurers of the person disclosing the
information, acting as such, or to a person intended to be called as a
witness in the arbitration by the person disclosing the information,
for the purpose of preparing his testimony, but provided that in any
such case a written confidentiality undertaking in a form equivalent
to this Clause has first been obtained from such person.
19. Law and Jurisdiction
-------------------------
19.1 English Law
This Agreement shall be governed by, and construed in accordance with,
English law.
19.2 Jurisdiction
In relation to any legal action or proceedings to enforce this Agreement or
arising out of or in connection with this Agreement ("Proceedings") each of
-----------
the parties irrevocably submits to the jurisdiction of the English courts
and waives any objection to Proceedings in such courts on the grounds of
venue or on the grounds that the Proceedings have been brought in an
inconvenient forum.
19.3 Process Agent
(A) The Vendors appoint Richards Butler of 15 St. Botolph Street, London
EC3 as their process agent to receive on their behalf service of
process in any proceedings in England. Service upon the process agent
shall be good service upon the Vendors whether or not it is forwarded
to and received by the Vendors. If for any reason the process agent
ceases to be able to act as process agent, or no longer has an address
in England, the Vendors irrevocably agree to appoint a substitute
process agent with an address in England acceptable to the Purchasers
and to deliver to the Purchasers a copy of the substitute process
agent's acceptance of that appointment within twenty (20) Business
Days. In the event that the Vendors fail to appoint a substitute
process agent, it shall be effective service for the Purchasers to
serve the process upon the last known address in England of the last
known process agent for the Vendors
40
notified to the Purchasers, notwithstanding that such process agent is
no longer found at such address or has ceased to act.
(B) The Purchasers appoint Simon Goddard of Raleigh Industries Limited,
Triumph Road, Nottingham NG7 2DD, United Kingdom as their process
agent to receive on their behalf service of process in any proceedings
in England. Service upon the process agent shall be good service upon
the Purchasers whether or not it is forwarded to and received by the
Purchasers. If for any reason the process agent ceases to be able to
act as process agent, or no longer has an address in England, the
Purchasers irrevocably agree to appoint a substitute process agent
with an address in England acceptable to the Vendors and to deliver to
the Vendors a copy of the substitute process agent's acceptance of
that appointment within twenty (20) Business Days. In the event that
the Purchasers fail to appoint a substitute process agent, it shall be
effective service for the Vendors to serve the process upon the last
known address in England of the last known process agent for the
Purchasers notified to the Vendors, notwithstanding that such process
agent is no longer found at such address or has ceased to act.
20. Invalidity
---------------
If any provision of this Agreement shall be held to be illegal, void, invalid or
unenforceable under the laws of any jurisdiction, the legality, validity and
enforceability of the remainder of this Agreement in that jurisdiction shall not
be affected, and the legality, validity and enforceability of the whole of this
Agreement in any other jurisdiction shall not be affected.
AS WITNESS the hands of the duly authorised representatives of the parties on
----------
the date first before written.
41
SCHEDULE 2 : THE SALE COMPANIES
Sale Company Firm of Accountants
Western States Import Company Inc. Ernst & Young
Bejka Trading A.B. Ernst & Young
43
SCHEDULE 3: WARRANTIES AND REPRESENTATIONS
PART 1: Warranties and Representations in Relation to the Business Assets
1. Interpretation
------------------
1.1 Definitions
In this Schedule, where the context admits:
"Company" means all, any or each of the Sale Companies.
---------
"Computer Systems" means the Hardware, Software and Data.
------------------
"Data" means any data or information used by or for the benefit of the
------
Company at any time and stored electronically at any time.
"EC" means European Community.
----
"ECU" means the ECU as defined in Council Regulation (EC) No. 3320/94 of 22
-----
December 1994.
"GAAP" means generally accepted accounting principles in the country of
------
incorporation of the Company at the applicable time.
"Hardware" means any computer equipment used by or for the benefit of the
----------
Company at any time including, without limitation, personal computers,
mainframes, screens, terminals, keyboards, disks, printers, cabling,
associated and peripheral electronic equipment but excluding all Software.
"Material Contract" means any Contract falling within paragraph 10.1(D) or
-------------------
10.2.
"Member States" means the Member States of the European Union from time to
---------------
time.
"Software" means any set of instructions for execution by microprocessor
----------
used by or for the benefit of the Company at any time irrespective of
application, language or medium.
1.2 Construction
In this Schedule where the context admits:
(A) any question whether a person is connected with another shall be
determined
44
in accordance with s.839 Income and Corporation Taxes Act 1988,
(subject to the deletion of the words from "Except" to "arrangements"
in sub-section (4) thereof) which shall apply in relation to this
Schedule as it applies in relation to that Act;
(B) reference to any Act, statutory instrument, regulation, bye-law or
other requirement of English law and 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 that which
most nearly approximates in that jurisdiction to the English legal
term; and
(C) where, in this Schedule 3, a term is defined in and for the purposes
of a particular Paragraph or Sub-Paragraph, the relevant definition
shall apply, where the context admits, for all other purposes of this
Schedule.
2. Warranties and representations
----------------------------------
The Vendors hereby warrant and represent to and for the benefit of the
Purchasers in the terms set out in the following paragraphs of this schedule.
3. The Vendor and the Vendor's Group
-------------------------------------
3.1 Capacity
Each of the Vendors has full power and authority to enter into and perform
this Agreement and has full power and authority to carry on the Business as
it is now being carried on and to sell the Business and the Business Assets
(and each of them) to the Purchaser on the terms of this Agreement and may
execute and deliver this Agreement and perform their obligations under this
Agreement without in any such case requiring or obtaining the consent of
their shareholders or any other person, authority or body and this
Agreement constitutes valid and binding obligations on the Vendors in
accordance with its terms.
3.2 Competing interests
Neither the Vendors nor any Affiliate of the Vendors nor any person
connected with any of them (and a connected person shall be defined in
accordance with Section 346 of the Companies Act 1985) has any interest,
direct or indirect, in any company or business (other than the Business)
which is or is likely to be or become competitive with the Business as the
same is presently carried on.
45
3.3 Associations
None of the Vendors is, nor have any of them agreed to become, in relation
to the Business, a member of any partnership, joint venture, consortium or
other unincorporated association, body or undertaking in which any of them
is to participate with any other in any business or investment.
4. Licences, litigation and the law
-------------------------------------
4.1 Compliance with laws
The Business has been conducted in all material respects in accordance with
all applicable laws and regulations and there is no order, decree or
judgment of any court or any governmental or other competent authority or
agency outstanding which can reasonably be expected to have a material
adverse effect upon the Business or the Business Assets.
4.2 Licences etc.
(A) All licences, consents, permits, approvals and authorisations (public
and private) necessary for utilising any of the Business Assets in the
Business or carrying on effectively any aspect of the Business or any
business now being carried on at any of the Properties have been
obtained by the Vendor, are in full force and effect and are not
limited in duration or subject to conditions which are uncommon or
unusual in that type of licence.
(B) All reports, returns and information required by law or as a condition
of any licence, consent, permission, approval or other authorisation
to be made or given to any person or authority in connection with the
Business have been made or given to the appropriate person or
authority.
(C) The utilisation of any of the Business Assets or the carrying on of
any aspect of the Business or any business now being carried on at any
of the Properties is not in breach of any of the terms and conditions
of any of such licences, consents, permits, approvals and
authorisations and so far as the Vendor is aware there is no
circumstance which indicates that any such licence, consent, permit,
approval or authorisation is likely to be suspended, cancelled or
revoked or that any of them will expire within a period of one year
from the date of this Agreement.
4.3 Breach of statutory provisions
Neither the Vendor, nor any of its officers, agents or employees have, in
relation to the Business, committed, or omitted to do, any act or thing the
commission or omission of which is in contravention of any Act, Order,
Regulation, or the like
46
which is punishable by fine or other penalty and no notice or communication
has been received with respect to any alleged, actual or potential
violation of, or failure to comply with, any of the same.
4.4 Litigation
(A) Neither the Vendor nor any of its officers or agents nor any of the
employees of the Business is engaged in or the subject of any
litigation or arbitration, administrative or criminal proceedings,
whether as plaintiff, defendant or otherwise, which adversely affects
or is likely to have an adverse effect on the Business or any of the
Business Assets or the ability of the Vendor or any purchaser to carry
on the Business in the same manner and to the same extent as
previously carried on.
(B) No such litigation or arbitration, administrative or criminal
proceedings are pending, threatened or expected by or against the
Vendor or any such officers, agents or employees, and so far as the
Vendor is aware, there are no facts or circumstances likely to give
rise to any such litigation or arbitration or administrative or
criminal proceedings.
(C) Neither the Vendor nor any Affiliate of the Vendor (nor so far as the
Vendor is aware officer or employee of any of them) nor so far as the
Vendor is aware any predecessor (if any) of the Vendor has or have
been a party to any undertaking or assurance given to any court or
governmental agency or the subject of any injunction relating to the
Business or any of the Business Assets which is still in force.
4.5 Fair trading
(A) No agreement practice or arrangement carried on in connection with or
in relation to the Business or to which the Vendor is a party
(including, but not limited to, any Contract):
(1) infringes Article 85 of the Treaty of Rome establishing the
European Economic Community or constitutes an abuse of a dominant
position contrary to Article 86 of that Treaty or infringes any
regulation or other enactment made under Article 87 and/or
Article 235 of that Treaty or is or has been the subject of any
enquiry, complaint, investigation or proceeding in respect
thereof; or
(2) has so far as the Vendor is aware been notified to the
Directorate General for Competition of the European Commission
and/or to the EFTA Surveillance Authority; or
(3) infringes any other competition, restrictive trade practice,
anti-trust,
47
fair trading or consumer protection law or legislation applicable
in any jurisdiction in which the Business is carried on or in
which the activities of the Business may have an effect.
(B) In relation to the Business, there has not been given by or on behalf
of the Vendor and there has been no default or contravention of any
assurance or undertaking (written or oral) by or on behalf of the
Vendor to the European Commission, the EFTA Surveillance Authority or
the Courts of Justice of the European Communities, or to any other
court, person or body and the Vendor in respect of the Business is not
subject to or in default or contravention of any Article, Act,
decision, regulation, order or other instrument or undertaking
relating to any matter referred to in this paragraph 45.
4.6 Product liability
(A) There is no claim in respect of Product Liability (as hereinafter
defined) outstanding or threatened against or expected by the Vendor
or any other party in relation to the Business and so far as the
Vendor is aware there are no circumstances which are likely to give
rise to any such claim. For this purpose "Product Liability" means a
-------------------
liability arising out of death, personal injury or damage to property
caused by a defective product or defective services sold, supplied or
provided in the course of the Business on or prior to the date hereof.
(B) During the course of the Business there has not been manufactured,
sold or supplied any product or service which:
(1) is or was in any material respect faulty or defective; or
(2) does not comply in any material respect with any warranty or
representation expressly or impliedly made by or on behalf of the
Vendor in respect of it or with all applicable regulations,
standards and requirements in respect thereof; or
(3) was sold on terms that the Vendor accepts an obligation to
service or repair or replace such products after delivery save
any obligation imposed by law.
(C) There has not been received a prohibition notice, a notice to warn or
a suspension notice under the Consumer Protection Act 1987 in relation
to any product or service of the Business.
48
4.7 Inducements
So far as the Vendor is aware no officer, agent or employee of the Vendor
in relation to the Business has paid any bribe (monetary or otherwise) or
used any of the Business Assets unlawfully to obtain an advantage for any
person.
5. Environmental
-----------------
5.1 Definitions
For the purpose of this paragraph 5, the following terms shall have the
following meanings:
"Environment" means all or any of the media of air, water and land
-------------
(wherever occurring) and in relation to the media of air and water includes
without limitation the air and water within buildings and the air and water
within other natural or man-made structures above or below ground.
"Environmental Law" means all or any applicable EC, national or local law
-------------------
or regulation arising through statute, subordinate legislation, judicial or
administrative under or common law or any relevant code of practice,
guidance, note, standard or other advisory material issued by any competent
authority relating to Environmental Matters and in relation to paragraph 52
includes Part IIA Environmental Protection Act 1990 whether or not in
force.
"Environmental Liability" means any cost, expense, liability, claim,
-------------------------
damages, penalty or fine arising from any of the following:
(A) any legal requirement, direction, notice, order or obligation served
or imposed by any competent authority or court of competent
jurisdiction under Environmental Law.
(B) the carrying out of any investigatory, monitoring, precautionary,
remedial or engineering works (whether on the Premises or elsewhere)
which are necessary to avoid the issue, service or imposition of any
notice, requirement or obligation by any competent authority or court
of competent jurisdiction under Environmental Law;
(C) the carrying out of any investigatory, monitoring, precautionary,
remedial or engineering works (whether on the Premises or elsewhere)
which are necessary to ensure the continued operation of the Business
or the protection of the goodwill of the Business or otherwise in the
interests of the Business; and
(D) the repair, replacement or rebuilding of any part of the Premises or
any disruption of the Business necessitated or caused by the carrying
out of any
49
investigatory, monitory, precautionary, remedial or engineering works
(whether on the Premises or elsewhere) in connection with any
Environmental Matters;
including in each case all reasonable legal, consulting, monitoring,
laboratory and other professional fees and other reasonable costs and
expenses associated therewith.
"Environmental Matters" means the pollution of the Environment, the
-----------------------
protection of the Environment and human health, health and safety of
employees in the work place, the protection of natural amenity, production,
the disposal, release, use, storage, spillage, deposit, escape, discharge,
leak, emission, recovery, transport of, or radiation from any Hazardous
Material or Waste.
"Environmental Permits" means the permits, licences, consents or
-----------------------
authorisations required under Environmental Law in relation to the carrying
on of the Business or the occupation or use of the Premises.
"Hazardous Material" means any pollutant, or any hazardous, toxic,
--------------------
radioactive, noxious, corrosive or caustic substance whether in solid,
liquid or gaseous form.
"Waste" includes any unwanted or surplus substance irrespective of whether
-------
it is capable of being recycled or recovered.
5.2 Environmental Matters
(A) The Business and the Business Assets have at all times complied with
Environmental Law.
(B) All Environmental Permits have been lawfully obtained and are in full
force and effect and all conditions and limitations in all
Environmental Permits have at all times been complied with.
(C) The Vendor is not aware of any circumstances which would make it
impossible or difficult for the Purchaser to cause the Business to
comply with the conditions or limitations in any Environmental Permits
in the future and no communication has been received revoking,
suspending, modifying or varying any of the Environmental Permits and
the Vendor is not aware of any circumstances which might give rise to
any such communication being received.
(D) No litigation, arbitration, administrative or criminal proceedings or
negotiations are in progress with any person or body relating to any
actual or potential Environmental Liability affecting the Business or
the Business Assets and none are pending, threatened or envisaged.
50
(E) There has not been received at any time in relation to the Business or
the Business Assets any communication
(1) regarding any actual or alleged violation of Environmental Law or
any liability or potential liability thereunder; or
(2) failure to comply with which would constitute a breach of
Environmental Law, or compliance with which could be secured by
further proceedings under Environmental Law, or which relates in
any way to any actual or potential Environmental Liability and
the Vendor is not aware of any circumstances, which might give
rise to any such communication being received.
6. The Vendor's solvency
--------------------------
6.1 Winding up
No order has been made, petition presented or resolution passed for the
winding up of the Vendor and no meeting has been convened for the purpose
of winding up the Vendor.
6.2 Administration and receivership
No steps have been taken for the appointment of an administrator or
receiver (including an administrative receiver) in respect of the Vendor or
of all or any part of the Business Assets.
6.3 Compositions
The Vendor has not made or proposed any arrangement or composition with its
creditors or any class of its creditors.
6.4 Insolvency
None of the Vendors is insolvent.
6.5 Unsatisfied judgments
No distress, execution or other process has been levied against the Vendor
or action taken to repossess any of the Business Assets which has not been
satisfied in full. No unsatisfied judgment is outstanding against the
Vendor.
51
6.6 Floating charges
No floating charge created by the Vendor has crystallised and, so far as
the Vendor is aware, there are no circumstances likely to cause such a
floating charge to crystallise.
6.7 Analogous events
No event analogous to any of the foregoing has occurred.
7. Accounts, records and Tax
-----------------------------
7.1 Accounts
(A) Accounts - The Audited Accounts:-
(1) were prepared in accordance with the requirements of all relevant
statutes and applicable accounting practices generally accepted
at the time they were audited save to the extent the accounting
bases and policies stated in the Audited Accounts differ
therefrom;
(2) present fairly the assets and liabilities of the relevant Vendor
and that part of the Business carried on by it as at, and the
profits of the relevant Vendor and that part of the Business
carried on by it for the accounting reference period ended on,
the Balance Sheet Date; and
(3) are not affected by any unusual or non-recurring items save as
specified therein; and
(B) Provisions for liabilities - Full provision has been made in the Audited
Accounts for all actual liabilities of the relevant Vendor in relation to
the Business outstanding at the Balance Sheet Date and proper provision
(or note) in accordance with accounting practices generally accepted in
each relevant country at the time they were audited has been made in the
Audited Accounts for all other liabilities of the relevant Vendor then
outstanding in relation to the Business whether contingent, quantified,
disputed or not, including the cost of any work or material for which
payment has been received or credit taken, any future loss which was at
the Balance Sheet Date anticipated in connection with uncompleted
contracts and any claims against such Vendor in respect of completed
contracts.
52
(C) Valuation of Stock and work in progress -
(1) For the purposes of the Audited Accounts all Stock was valued at the
lower of cost and net realisable value and all work in progress was
valued on a basis excluding profit, including proper provision for
losses which are or could reasonably be anticipated.
(2) The respective amounts of raw materials, work in progress, finished
goods, packaging and promotional material held or on order by the
Business are appropriate and normal for its present level of
business.
(D) Management Accounts - The Management Accounts have been carefully prepared
in accordance with accounting policies consistent with those used in
preparing the Audited Accounts and on a basis consistent with the
management accounts prepared in the preceding year. The cumulative
profits, assets and liabilities of the Business stated in the Management
Accounts have not been materially mis-stated and are not materially
inaccurate and the Vendor does not consider the Management Accounts
misleading.
7.2 Books and records
(A) All the books and other material comprised in the Records which are to
be delivered or otherwise made available to the Purchaser in
accordance with the terms of this Agreement:
(1) have been fully, properly and accurately maintained in all
material respects on a consistent basis and are and will at
Completion be up to date and contain true, complete and accurate
records of all aspects of the Business and/or the Business Assets
to which they relate and of all matters required by law to be
entered therein;
(2) do not contain or reflect any material inaccuracies or
discrepancies;
(3) are within the possession and control of the Vendor; and
(4) give a true and fair view of the contractual and trading position
of the Business and of its fixed and current assets, liabilities
(actual and contingent), debtors and creditors (as appropriate)
and all other matters which ought or would normally be expected
to appear therein
and no notice or allegation that any of the same is incorrect or
should be rectified has been received;
(B) Without prejudice to the generality of the foregoing, the Records will
fully reflect and provide full and sufficient details of:
53
(1) all entitlements of customers of the Business to any special terms,
discounts, rebates, allowances and the like in respect of or by
reference to the terms on which goods or services have been supplied
by the Vendor to such customers prior to Completion;
(2) the names and addresses of all customers and suppliers of the
Business, all dealings between the relevant Vendor and such customers
and suppliers during the last three years together with full details
of all known or likely defaulters;
(3) all items of Current Assets and Fixed Assets held at the
Completion Date together with proof of ownership thereof; and
(4) the location of all tangible Business Assets which are not
physically located on the Properties at the Completion Date and
the terms and conditions upon which they are being held.
7.3 Tax
(A) The Vendors have maintained all records for Tax (including, without
limit, VAT, payroll, federal, foreign, state, county, municipal and
local income, excise, customs, capital, franchise, sales, use,
transfer, business and property taxes) and other purposes required to
be kept by them in relation to the Business and the Business Assets or
necessary to support the preparation of any tax return and all proper
payments and returns (including all extensions to returns) which are
due or claimed to be due have been made to the relevant taxation
authority or other governmental authority within the required period
or at the required time.
(B) All tax returns made by the Vendors or any of them to the relevant tax
authority were accurate and correct, properly reflected the tax due
for the periods in respect of which they were made and none of the
same is subject to or are likely to be the subject of any dispute.
(C) None of the Vendors has waived any law or regulation which fixes, or
consents to the extension of, any period of time for the assessment of
any Tax and which is in effect at the date of this Agreement.
(D) None of the Vendors has made or entered into any election, consent or
agreement with a relevant tax authority other than any such election,
consent or agreement as appears on a tax form or return filed with the
relevant tax authority.
(E) None of the Business Assets is a capital item for the purposes of
Part XV Value Added Tax Regulations 1995 or the equivalent
provisions in relevant
54
jurisdictions.
8. The Conduct of the Business and the effect of the sale
----------------------------------------------------------
8.1 Business since the Balance Sheet Date
Since the Balance Sheet Date:
(A) the Business has been carried on in the ordinary and usual course so
as to maintain it as a going concern and without any interruption or
alteration in the nature, scope or manner of the Business;
(B) there has been no significant event or occurrence (including, but not
limited to the loss of any significant customer or supplier) which has
had or can reasonably be expected following Completion to have a
material adverse affect on the Business or its value, profitability or
prospects or on the value of any of the Business Assets;
(C) there has been no unusual change in the stock in trade or work in
progress of the Business; and
(D) no substantial customer or supplier representing more than 5 per cent.
of sales or supplies of any product or service of the Company for the
purpose of the Business has:
(1) ceased or reduced the level of its trade with or supplies to the
Business or indicated an intention to do any of the foregoing; or
(2) changed or indicated an intention to change the terms on which it
is prepared to trade with or supply the Business.
8.2 Consequence of acquisition of the Business by the Purchaser
(A) The acquisition of the Business and the Business Assets by the
Purchaser in compliance with the terms of this Agreement:
(1) will not cause the Purchaser to lose the benefit of any right or
privilege in relation to the Business presently enjoyed by the
Vendor or relieve any person of any obligation(whether
contractual or otherwise) to the Vendor of which the Purchaser is
to acquire the benefit, or enable any person to determine any
such obligation or any contractual right or benefit now enjoyed
by the Vendor in relation to the Business or to exercise any
right whether under an agreement or otherwise in respect of the
Business;
55
(2) will not give rise to or cause to become exercisable any right of
pre-emption relating to the Business or any of the Business
Assets; and
(3) will not result in a breach of, or constitute a default under
(a) any agreement, understanding, arrangement or instrument
(including, but not limited to, any of the Contracts) or
(b) any order, judgment or decree of any court or governmental
agency to which the Vendor is party or by which the Vendor
or the Business or any of the Business Assets is bound or
subject;
and so far as the Vendor is aware the goodwill of the Business
and its relationship with clients, customers, suppliers and
employees will not be adversely affected thereby.
(B) The exchange and/or performance of this Agreement will not relieve
any party to any of the Contracts other than the Vendor from any
obligation thereunder or enable any of them to determine any of the
Contracts.
(C) The Vendor has not been explicitly informed that any person who now
has business dealings with the Business would or might cease to do so
after Completion which cessation can reasonably be expected to have a
material adverse effect on the Business.
9. The Business and its assets
-------------------------------
9.1 Business Assets
(A) The Vendor is the owner both legally and beneficially and has good and
marketable title to (or is otherwise able to procure the sale
hereunder to the Purchaser by the legal and beneficial owner who has
good and marketable title to) all the Business Assets free from any
Encumbrance or any third party claim and all such assets are within
the control or possession of the Vendor.
(B) No Encumbrance is outstanding nor is there any agreement or commitment
to give or create or allow any Encumbrance over or in respect of the
whole or any part of the Business Assets and no claim has been made by
any person that he is entitled to any such Encumbrance.
(C) No asset used in the Business is shared by the Vendor with any other
person. The Business does not require or depend for its continuation
or for the continuation of the method or manner or scope of operation
of its business in the same way or manner or on the same basis as
heretofore upon any assets,
56
premises, facilities or services (other than those included in the
Business Assets)
(D) Save for the Excluded Assets the Business Assets comprise all of the
assets, rights and privileges (other than cash, stock in trade or
stocks of materials and work in progress which has been sold or used
in the ordinary course of the Business) which are currently or have
since the Balance Sheet Date been used or required by the Vendor to
carry on the Business.
9.2 Book Debts
The Book Debts are good and collectable in the ordinary course of business
and will realise their full face value for Western States of US$14,062,515
and for Bejka of SEK 4,003,056 as stated in the Reference Accounts less any
amounts for which full provision has been made in the Reference Accounts
within one year after Completion. The rights of the Vendor in respect of
the Book Debts are valid and enforceable
9.3 Condition and use of Fixed Assets
Each of the Fixed Assets:
(A) is in good repair and condition (taking into account its age and level
of use), is in satisfactory working order and has been regularly and
properly serviced and maintained and none is in need of renewal or
replacement and each is capable of being properly used over its
estimated useful life for the current requirements of the Business for
the same purposes and to no lesser extent than heretofore;
(B) is not unsafe, dangerous or in such a physical condition as to
contravene any health and safety legislation, statute, regulation or
order having the force of law, or the terms of any contract (express
or implied) between the Vendor and any of its employees, customers or
any other person, and does not contravene or infringe any law
applicable to the Vendor or any obligation to which it is subject or
breach any duty of care which it owes.
9.4 Levels, value and quality of Stock
(A) The Stock (other than stock which is featured in the sales catalogues
for the Business for the year 1999) is all capable of being sold in
the ordinary course of the Business for an aggregate amount not less
than, or is otherwise (on the basis of the lower of cost and net
realisable value) worth in aggregate not less than, for Western States
US$15,924,252 and for Bejka SEK16,642,497 as stated in the Reference
Accounts. The Stock which is featured in the sales catalogues for the
Business for the year 1999 is all capable of being sold in the
ordinary
57
course of the Business for an aggregate amount not less than for
Western States US$4,765,605 and for Bejka SEK 0.
(B) All finished goods included in the Stock are in good condition and
meet all relevant statutory, regulatory and industry-accepted
standards.
(C) The levels of stocks of materials and partly and fully finished goods
included in the Stock are sufficient for the normal requirements of
the Business and are adequate (but not excessive) in relation to the
current trading requirements of the Business as a whole.
9.5 Intellectual Property Rights
(A) The Vendor is the sole legal and beneficial owner free from
Encumbrances of the Intellectual Property Rights and (save for
copyrights and unregistered design rights not included in the Listed
Intellectual Property Rights) owns no other Intellectual Property
material to the Business.
(B) Save as may appear from the Intellectual Property Agreements no person
has been authorised to make any use whatsoever of any Intellectual
Property Rights.
(C) Save as may appear from the Intellectual Property Agreements all the
Intellectual Property Rights are owned by the Vendor and the Vendor
does not use any Intellectual Property Rights in respect of which any
third party has any right, title or interest.
(D) All the Intellectual Property Rights are valid and enforceable and
nothing has been done, omitted or permitted whereby any of them has
ceased or can reasonably be expected to cease to be valid and
enforceable.
(E) So far as the Vendor is aware none of the processes or products of the
Vendor and/or used in the Business infringes any Intellectual Property
or any right of any other person relating to Intellectual Property or
involves the unlicensed use of confidential information disclosed to
the Vendor in relation to the Business by any person in circumstances
which might entitle that person to make a claim against the Vendors.
(F) None of the Intellectual Property Rights is being used, claimed,
applied for, opposed or attacked by any person.
(G) The Vendor is not aware of any infringement of the Intellectual
Property Rights or of any rights relating to them by any person.
(H) There are no outstanding claims against the Vendor for infringement of
any
58
Intellectual Property or of any rights relating to it used (or
which has been used) in the Business and during the last three years
no such claims have been settled by the giving of any undertakings
which remain in force. The Vendor has not received any actual or
threatened claim that any of the Intellectual Property Rights is
invalid nor is the Vendor aware of any reason why any patents included
in the Intellectual Property Rights should be amended.
(I) Confidential information and know-how used in the Business is kept
strictly confidential and the Vendor operates and fully complies with
procedures which maintain such confidentiality. The Vendor is not
aware of any such confidentiality having been breached. The Vendor has
not disclosed (except in the ordinary course of its business or to the
Purchaser or its Affiliates) any of its know-how, trade secrets or
list of customers to any other person.
(J) All application and renewal fees, costs, charges and taxes required
for the maintenance or protection of the Intellectual Property Rights
have been duly paid on time and all other steps so required have been
taken and so far as the Vendor is aware none of such rights is subject
to any existing challenge or attack by a third party or competent
authority and a list of all pending applications and in each case the
status of such application is attached to the Disclosure Letter.
(K) So far as the Vendor is aware each of the Intellectual Property
Agreements is valid and binding and the Vendor is not in breach of any
such agreement and Completion will not result in a breach of any of
the Listed Intellectual Property Agreements.
(L) All current advertising, marketing and sales promotions by the
Business comply with all applicable codes of practice and self-
regulatory schemes. The Vendor has not been disciplined under any
scheme or code in respect of any such advertising, marketing or sales
promotion and no complaint has been made against it in respect thereof
and there are no outstanding complaints or disciplinary proceedings
against the Vendor in respect thereof.
(M) All persons retained or employed by the Vendor who in the course of
their work in the Business will or might reasonably be expected to
bring into existence Intellectual Property or things protected by
Intellectual Property are, so far as is reasonably practicable,
individually bound by agreements with the Vendor whereby all
Intellectual Property which such persons may bring into existence
during their work in the Business vests in the Vendor and all such
agreements contain terms which, so far as is reasonably practicable,
prevent such persons disclosing any confidential information about the
Vendor and the Business.
(N) None of the Intellectual Property Rights is subject to compulsory
licensing or
59
the granting of any licences of right nor, so far as the Vendor is
aware, will it become so by operation of law.
(O) The Business does not use on its letterhead, brochures, sales
literature or vehicles, nor does it otherwise carry on its business
under, any name other than the name(s) set out in the Disclosure
Letter.
9.6 Computer Systems
(A) The Hardware has been satisfactorily maintained and supported and the
systems contracts include an appropriate maintenance and support
agreement.
(B) The Hardware and Software have adequate capability and capacity for
the current requirements of the Business for the processing and other
functions required to be performed for the purposes of the Business.
(C) Disaster recovery plans are in effect and are adequate to ensure that
the Hardware, Software and Data can be replaced or substituted without
material disruption to the Business.
(D) In the event that any person providing maintenance or support services
for the Hardware, Software and Data ceases or is unable to do so, the
systems contracts provide all necessary rights and information to
procure the carrying out of such services by employees or by a third
party without undue expense or delay.
(E) The Business has sufficient technically competent and trained
employees to ensure proper handling, operation, monitoring and use of
its computer systems.
(F) The Business has adequate procedures to ensure internal and external
security of the Hardware, Software and Data, including (without
limitation) procedures for preventing unauthorised access, preventing
the introduction of a virus, taking and storing on-site and off-site
back-up copies of Software and Data.
(G) Where any of the records of the Business are stored electronically,
the systems contracts confer upon the Vendor all hardware and software
licences necessary to enable it to keep, copy, maintain and use such
records in the course of the Business and the Business does not share
any hardware or software relating to the records with any person
(including the Vendor).
(H) The systems contracts confer upon the Vendor all the rights necessary
(including rights over the source code) to obtain, without undue
expense or delay, modified versions of the Software which are required
at any time to
60
improve in any regard the operation and/or efficiency of the Software.
(I) The Vendor owns, and is in possession and control of, original copies
of all the manuals, guides, instruction books and technical documents
(including any corrections and updates) required to operate
effectively the Hardware and the Software which are included in the
Business Assets.
(J) The Hardware and Software have never unduly interrupted or hindered
the running or operation of the Business, and have no defects in
operation which so affect the Business.
(K) The Hardware is the absolute property of the Vendor free from
encumbrances and is included in the Fixed Assets.
9.7 Title retention
The Vendor has not acquired or agreed to acquire any of the Business Assets
on terms that property therein or title thereto does not pass until full
payment is made or (if it has) the property therein and title thereto has
now fully passed to the Vendor and no supplier or other third party has any
rights or claims against or in respect of such Business Assets accordingly.
9.8 Insurances
(A) Full copies of all the insurance policies in which the Vendor has an
interest in relation to the Business (the "Insurances") are annexed to
------------
the Disclosure Letter. The Insurances afford to the Business cover
against fire and such other risks as persons carrying on a similar
business as the Business commonly cover by insurance.
(B) All the Insurances are in full force and effect and will be maintained
in full force without alteration in accordance with clause 23 and all
premiums have been paid on time. There are no circumstances which can
reasonably be expected to lead to any liability under any of the
Insurances being avoided by the insurers. The Vendor is unaware of
any circumstances likely to give rise to a claim under any of the
Insurances.
10. Contracts and contractual arrangements
-------------------------------------------
10.1 The Contracts
(A) Each of the Contracts is valid and binding on the parties thereto and
is capable of being assigned by the Vendor to the Purchaser without
the consent of any other party thereto (save to the extent otherwise
expressly stated in the Disclosure Letter) and no notice of
termination of any such Contract has been
61
received or served by the Vendor.
(B) Save for the Contracts, there are not now any agreements,
undertakings, understandings, arrangements or other engagements,
whether written or oral, in relation to the Business or any of the
Business Assets to which the Vendor or any Affiliate of the Vendor is
a party or of which it has the benefit or to which it is otherwise
subject, the benefit of which would be required to be assigned to or
otherwise vested in a purchaser of the Business and the Business
Assets to enable it to carry on the Business and/or to enjoy all the
rights and privileges attaching thereto and/or to any of the Business
Assets in the same manner and scope and to the same extent and on the
same basis as the Vendor has so carried it on or enjoyed prior to the
date hereof, or the burden of which has passed or will pass or will be
alleged to pass to the Purchaser.
(C) Apart from those of the Contracts of which complete and accurate
copies have been disclosed to the Purchaser in the Disclosure Letter
the Vendor is not now in relation to the Business a party to or
subject to any agreement, transaction, obligation, commitment,
understanding, arrangement or liability which:
(1) is of six months or greater duration or is incapable of complete
performance in accordance with its terms within six months after
the date on which it was entered into or undertaken or is
otherwise of a length that is greater than is customary in
businesses of a similar nature to the Business; or
(2) is known by the Vendor to be likely to result in a loss to the
Vendor or to the Business on completion of performance; or
(3) cannot readily be fulfilled or performed by the Vendor on time
and without undue or unusual expenditure of money or effort; or
(4) involves or is likely to involve obligations, restrictions,
expenditure or receipts of any unusual onerous or exceptional
nature; or
(5) is a contract for services (other than contracts for the supply
of electricity or other utility or other normal office services)
or in the nature of an agency, distribution, franchise or
management agreement; or
(6) requires the Vendor to pay any commission, finders fee, royalty
or the like; or
(7) involves liabilities which may fluctuate in accordance with an
index or rate of currency exchange or interest or movements in
the price of any securities or commodities; or
62
(8) is (save for the Leased Asset Contracts) a contract for the
supply of assets to the Vendor on hire, lease, hire purchase,
conditional sale, credit or deferred payment terms; or
(9) is dependent on the guarantee or covenant of or security provided
by any other person; or
(10) is in any way otherwise than in the ordinary course of business.
(D) There is no agreement or arrangement relating to the Business or any
part thereof to which the Vendor or any Affiliate of the Vendor is a
party (including, but not limited to the Contracts) which in any way
restricts the freedom of the Vendor to carry on the Business in whole
or in part or to use or exploit any of the Business Assets in any part
of the world as it thinks fit.
10. Substantial or significant contracts
Apart from those of the Contracts of which full and complete copies have
been disclosed to the Purchaser and which are listed in the Disclosure
Letter no contract, agreement, transaction, obligation, commitment,
understanding, arrangement or liability entered into by the Vendor in
connection with the Business and now outstanding or unperformed involves
any of the following:
(A) obligations on the part of the Vendor which will cause or are likely
to cause the Vendor to incur expenditure or an obligation to pay money
in excess of US$50,000;
(B) obligations on the part of the Vendor to purchase any specified
minimum quantity or any specified minimum percentage of its total
requirement for bicycles, bicycle parts and accessories or fitness
equipment or other stock in trade from any one supplier;
(C) the supply by the Vendor of bicycles, bicycle parts and accessories or
fitness equipment or other products or services whether by way of
lease or outright sale or otherwise to any one customer such that the
value of such supplies exceeds or is likely to exceed (if the Vendor
were to carry on the Business after Completion) five per cent. of the
total turnover of the Vendor in relation to the Business in the
current financial year or in any subsequent year.
10.3 Defaults
(A) Neither the Vendor nor any other party to any agreement with the
Vendor in relation to the Business is in default thereunder, and the
Vendor is not aware of any invalidity or grounds for termination,
avoidance, rescission or repudiation of any such agreement which in
any such case would be material
63
in the context of the financial or trading position of the Business or
in the context of the Business Assets nor (so far as the Vendor is
aware) are there any circumstances likely to give rise to any such
event.
(B) Full details of any customers or any party to any of the Distribution
Agreements (or any persons to whom the Vendor in the course of
Business has supplied goods or services in the 12 months ended on the
date hereof) who have defaulted in the payment when due of any monies
to the Vendor or the Business are specified in the Disclosure Letter.
10.4 Powers of Attorney
There is not in force any power of attorney or other authority (express,
implied or ostensible) given by or on behalf of the Vendor in connection
with the Business or the conduct thereof or any of the Business Assets
which is still outstanding or effective to any person to enter into any
contract, commitment or obligation on behalf of or which might affect the
Business or the conduct thereof or any of the Business Assets (save to
competent and responsible Employees to enter into routine contracts in the
ordinary course of business in the normal course of their duties).
10.5 Non-arm's length contracts
The Vendor has not in relation to the Business been a party to, nor have
the profits or financial position of the Business during the last three
years been affected by, any agreement or arrangement which is not entirely
of an arm's length nature.
10.6 Documents
All title deeds and agreements relating to the Business and the Business
Assets to which the Vendor is party (including, without limitation, the
Contracts) and other documents relating to the Business and the Business
Assets owned by or which ought to be in the possession or control of the
Vendor are in the possession or control of the Vendor, are properly stamped
where relevant, are free from any Encumbrance and will be delivered or made
available to the Purchaser on Completion.
11. Employees
--------------
11.1 Employment matters generally
(A) The Employees are all employed by the Vendor in the Business at the
date of this Agreement. There are no other individuals employed at
the date of this Agreement in the Business.
(B) The contract of service of each of the Employees is terminable on not
more than three months notice without compensation.
64
(C) To the fullest extent permitted by relevant law the Disclosure Letter
contains true, accurate and complete details of the names, ages and
lengths of continuous service of all of the Employees and the
remuneration payable and other benefits provided by the Vendor or any
Affiliate of the Vendor or which the Vendor is bound to provide
(whether now or in the future) to each category of the Employees at
the Completion Date or any person connected with any such Employee and
(without limiting the generality of the foregoing) contains
particulars of all profit sharing, incentive, bonus, commission and
other similar arrangements and any other benefit to which any such
category of the Employees is entitled or which is regularly provided
or made available to them (including details of their notice period
and their entitlement to holiday) in any case whether legally binding
on the Vendor or not.
(D) There are no subsisting contracts for the provision by any person of
any consultancy services to the Business.
(E) None of the Employees has given notice terminating his contract of
employment.
(F) Save as disclosed in the Disclosure Letter none of the Employees is
under notice of dismissal or has any outstanding dispute with the
Vendor or any Affiliate of the Vendor in connection with or arising
from his employment. There is no liability outstanding to any such
person except for remuneration or other benefits accruing due and no
such remuneration or other benefit which has fallen due for payment
has not been paid.
(G) During the period of six months ended on the date of this Agreement
neither the Vendor nor any Affiliate of the Vendor nor any other
person carrying on the Business has directly or indirectly terminated
the employment of any person employed in or by the Business where the
reason or principal reason for such termination was the transfer of
the Business.
(H) None of the Employees belongs or has belonged at any material time to
an independent trade union recognised by the Vendor or any Affiliate
of the Vendor in relation to the Business.
(I) There are no employee representatives representing all or any of the
Employees.
(J) The Vendor has complied with all of its statutory obligations to
inform and consult appropriate representatives as required by law.
(K) There is no plan, scheme, commitment, policy, custom or practice
(whether legally binding or not) relating to redundancy affecting any
of the Employees more generous than the statutory redundancy
requirements.
65
(L) All schemes and plans whereby benefits are provided to Employees
comply in all respects with all relevant statutes, regulations and
other laws and all necessary consents in relation to such schemes and
plans have been obtained and all governmental filings in relation to
such schemes and plans have been made.
(M) There are no loans owed by any of the Employees to the Vendor or any
Affiliate of the Vendor.
(N) Since the Balance Sheet Date no change has been made or agreed to be
made in (i) the rate of remuneration, or the emoluments or pension
benefits or other contractual benefits, of any of the Employees or
(ii) the terms of engagement of any of the Employees.
(O) There is no outstanding undischarged liability to pay any governmental
or regulatory authority in any jurisdiction any contribution, taxation
or other duty arising in connection with the employment or engagement
of any of the Employees.
(P) None of the Employees will become entitled by virtue of their contract
of service to any payment or enhancement in or improvement to their
remuneration, benefits or terms and conditions of service only by
reason of the execution of this Agreement or the completion of the
sale and purchase under or pursuant to this Agreement.
11.2 Pensions
The Vendor is not under any present or future liability to pay to any of
the Employees or to any other person who has been in any manner connected
with the Business any pension, superannuation allowance, death benefit,
retirement gratuity or like benefit or to contribute to any life assurance
scheme or medical insurance scheme and the Vendor has not made any such
payments or contributions on a voluntary basis nor is it proposing to do
so.
11.3 Disputes with Employees
There is no:
(A) outstanding claim by any person who is now or has been an employee of
the Vendor or any Affiliate of the Vendor in relation to the Business
or any dispute outstanding with any of the said persons or with any
union or any other body representing all or any of them in relation to
their employment in the Business and there are no circumstances likely
to give rise to any such claim or dispute;
66
(B) industrial action involving any employee, whether official or
unofficial, currently occurring or threatened; or
(C) industrial relations matter which has been referred to any
governmental agency for advice, conciliation or arbitration.
12. Miscellaneous
------------------
12.1 Off-Balance Sheet Financing
The Vendor has not in relation to the Business engaged in any borrowing or
financing which is not reflected in the Audited Accounts other than in
relation to the Leased Assets.
12.2 All material matters disclosed
All information relating to the Business or the Vendor contained or
referred to in this Agreement and all documents in Agreed Form and in the
Disclosure Letter or any annexure thereto is true and accurate in all
material respects and the Vendor is not aware of any other fact or matter
which renders any such information misleading because of any omission or
ambiguity or for any other reason.
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SCHEDULE 3 : WARRANTIES AND REPRESENTATIONS
PART 2 : Specific Warranties
1. Interpretation
------------------
1.1 Definitions
In this Part 2 of Schedule 3 where the context admits:
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code (S)4980B;
"Code" means the United States Internal Revenue Code of 1986, as amended;
"Company" means any of the Sale Companies (including the US Company);
"ERISA" means the United States Employee Retirement Income Security Act of
1974, as amended;
"IRS" means the Internal Revenue Service of the United States.
"Swedish Company" means Bejka Trading A.B.
"US Company" means Western States Import Co., Inc.
2. US Warranties and Representations
-------------------------------------
The Vendors hereby warrant and represent to and for the benefit of the
Purchasers in the following terms:
2.1 Employee plans
(A) The Disclosure Letter lists each of the following plans which
currently is sponsored, maintained or contributed to by (or required
to be contributed to by) the US Company, or with respect to which the
US Company has any liability or potential liability: (i) any "employee
benefit plan", as such term is defined in Section 3(3) of ERISA,
whether or not subject to the provisions of ERISA; and (ii) any other
stock incentive, bonus, deferred compensation, retirement, severance,
vacation or any other employee benefit plan, policy or arrangement
(each such plan, policy and arrangement being herein referred to as an
"Employee Plan").
(B) With respect to each Employee Plan, the US Company has provided the
Purchasers with true and complete copies of each current plan
document, policy statement, summary plan description and other written
material
68
governing or describing the Employee Plan (including, without
limitation, any related trust agreement, insurance company contract,
most recent IRS determination letter, and the prior year's IRS Form
5500) or, if there are no such written materials, a summary
description of the Employee Plan.
(C) Each Employee Plan and any related trust, insurance contract or fund
has been maintained, funded and administered in compliance with its
respective terms and in compliance with ERISA and the Code. Each
Employee Plan that is intended to be qualified under Section 401(a) of
the Code has received a determination from the IRS that such Employee
Plan is so qualified, and nothing has occurred since the date of such
determination that could adversely affect the qualified status of such
Employee Plan. With respect to each Employee Plan which is an
"employee benefit plan" within the meaning of Section 3(3) of ERISA or
which is a "plan" within the meaning of Section 4975(e) of the Code,
there has occurred no transaction which is prohibited by Section 406
of ERISA or which constitutes a "prohibited transaction" under Section
4975(c) of the Code and with respect to which a prohibited transaction
exception has not been granted and is not currently in effect.
(D) The US Company has never maintained, sponsored, or contributed to, and
has no liability or potential liability with respect to, any employee
benefit plan (as defined in Section 3(3) of ERISA) that is a defined
benefit plan (as defined in Section 3(35) of ERISA or Section 414(j)
of the Code) or any multiemployer plan (as defined in Section 3(37) of
ERISA), including any liability on account of a "partial withdrawal"
or a "complete withdrawal" (within the meaning of Sections 4205 and
4203, respectively, of ERISA). No asset of any Company is subject to
any lien under Title IV of ERISA or the Code.
(E) The consummation of the transactions contemplated by this Agreement
will not entitle any employee or other person to receive severance or
other compensation which would not otherwise be payable absent the
consummation of the transaction contemplated by this Agreement or
cause the acceleration of the time of payment or vesting of any award
or entitlement under any Employee Plan.
(F) Save as set out in the Disclosure Letter, (i) the US Company has
complied with the health care continuation requirements of COBRA; and
(ii) no Company has any obligation under any Employee Plan or
otherwise to provide health or life insurance benefits to former
employees of any Company or any other person, except as specifically
required by COBRA.
(G) No Company has any liability with respect to any "employee benefit
plan" (as defined in Section 3(3) of ERISA) solely by reason of being
treated as a single employer under Section 414 of the Code with any
trade, business or entity other than the US Company.
69
(H) The US Company does not contribute to, maintain or sponsor nor does it
have any liability with respect to any Employee Plan or other employee
benefit plan, agreement or arrangement applicable to employees located
outside the United States.
(I) All contributions (including all employer contributions and employee
salary reduction contributions), premiums or other payments which are
due have been paid to each Employee Plan and all contributions,
premiums or other payments for any period ending on or before the date
of this Agreement which are not yet due have been paid to each
Employee Plan or properly accrued.
2.2 Environmental
(A) The Vendor has not either expressly or by operation of law, assumed or
undertaken any liability, including without limitation any obligation
for corrective or remedial action, of any other person relating to
Environmental Law.
(B) The Vendor has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any
Hazardous Material, or owned or operated any property or facility (and
no such property or facility is contaminated any such Hazardous
Material) in a manner that has given or could give rise to liabilities
of the Vendor pursuant to Environmental Law.
3. Swedish Warranties and Representations
------------------------------------------
The Vendors hereby warrant and represent to and for the benefit of the
Purchasers in the following terms:
3.1 All obligations to consult and negotiate with the employees of Bejka under
the Codetermination Act (1976:580) have been fully complied with.
3.2 Bejka is not bound by any collective agreement.
3.3 No former employee of the Vendors or Bejka will have a right of re-
employment with the Purchasers or Bejka.
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SCHEDULE 4 : ADJUSTMENT OF CONSIDERATION
1. Interpretation
------------------
In this schedule, where the context admits:
"Completion Accounts" means the accounts prepared in accordance with paragraph 2
---------------------
and agreed or determined in accordance with paragraph 4.
"Net Tangible Assets" means the sum of the values of:
---------------------
(1) the Fixed Assets; and
(2) the Current Assets.
(together referred to as the "Tangible Assets"),
-----------------
less
(1) the Creditors; and
(2) the Assumed Liabilities; and
(3) any other provisions specifically required under this Schedule 4
(all as shown in or derived from the Completion Accounts).
"Purchaser's Accountants" means Arthur Andersen.
-------------------------
"Vendor's Accountants" means in each case the firm of Accountants set out
---------------------
opposite the name of each of the Vendors in Schedule 2 to this Agreement.
2. Completion Accounts
-----------------------
2.1 Preparation
The Purchaser shall, as soon as practicable, and in any event within 90
Business Days after Completion, procure that accounts for the Business
shall be prepared in accordance with this schedule and the parties shall
use their best endeavours to secure compliance with this schedule by their
respective accountants. The Vendor shall promptly supply all such
information and provide access to all such records and personnel as the
Purchaser and any independent firm of accountants appointed under paragraph
4.3 shall reasonably require, including all working papers of the Vendor
relating to the preparation of the Audited Accounts and the Management
Accounts.
71
The Vendor, if so required by the Purchaser or such independent firm shall
use all reasonable endeavours to obtain for the Purchaser or such
independent firm, access to the working papers of the Auditors, prepared in
relation to the audit of the Audited Accounts.
2.2 Description
The Completion Accounts shall consist of a balance sheet of the Business
drawn up as at the Completion Date.
2.3 General requirements
Subject to the specific requirements of paragraph 2.4 which shall take
priority over the general requirements of this paragraph 2.3, the
Completion Accounts shall apply and adopt the same policies, bases,
methods, practices and procedures of accounting as applied or adopted for
the purposes of the Audited Accounts.
2.4 Specific requirements
In preparing the Completion Accounts:-
(A) Stock shall be determined in accordance with paragraph 3 and valued
applying and adopting the same policies, bases, methods, practices and
procedures of accounting as applied or adopted for the purposes of the
Audited Accounts;
(B) no value shall be attributed to any Business Asset except to the
extent the Purchaser shall have the full benefit of it after
Completion;
(C) the Goodwill, the Intellectual Property Rights, the Listed
Intellectual Property Rights, the Third Party Rights, the Contracts,
the Leased Assets and the Records shall be excluded;
(D) Prepayments shall be included as an asset in the Completion the
Accounts and there shall be included therein as a liability the amount
of all outgoings relating to the Business which will fall to be
discharged by the Purchaser to the extent that they are attributable
to any period prior to Completion and the amounts of such prepayments
and outgoings shall be determined in accordance with the same
policies, bases, methods, practices and procedures of accounting as
applied or adopted for the purposes of the Audited Accounts but:-
(1) where a discount or excess charge will be incurred in relation to
any accrued liability the whole amount of such discount or excess
shall be excluded from the Completion Accounts if it would not
have been obtained or incurred had not usage, volume or purchases
after
72
Completion exceeded those prior to Completion, but otherwise
shall be deemed to accrue evenly over the period to which such
discount or excess charge relates and;
(2) there shall be included as a liability in the Completion Accounts
an amount equal to the holiday pay accrued or which would accrue
to each Employee at the Completion Date on the basis of the
holidays taken by each Employee up to Completion (calculated on
the assumption that entitlement to holidays accrues evenly over
the calendar year).
(E) where any of the Fixed Assets or the Properties has been destroyed or
damaged prior to Completion, the Completion Accounts shall:-
(1) if the Purchaser has selected the first alternative in clause
2.3(B), be adjusted in such manner as is necessary to reflect the
revised Consideration or the manner in which it is to be abated or
adjusted; or
(2) if the Purchaser has selected the second alternative in clause
2.3(B), not be adjusted to reflect the damage or destruction, on
the basis that the Purchaser will receive the insurance proceeds
in lieu of such adjustment.
3. Stock valuation
-------------------
For the purposes of the preparation of the Completion Accounts, the value of the
Stock shall be ascertained in accordance with the following provisions of this
paragraph 3:-
(A) the Vendor and the Purchaser shall cause a stocktaking to be made on
the Completion Date of all the Stock;
(B) unless otherwise agreed by the parties such stocktaking shall consist
of a physical check of the amount, quality and condition of the Stock
situated on the Properties at the Completion Date and an inspection of
the books and records and contractual documentation for all Stock not
so situated together with confirmation from the person or persons
having physical possession of such Stock of the extent of any interest
in or Encumbrance claimed over such Stock (if any); and
(C) when such stocktaking has been completed the Stock shall be valued by
the Purchaser in accordance with the same policies, bases, methods,
practices and procedures of accounting as applied or adopted for the
purposes of the Audited Accounts, and included in the Completion
Accounts.
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4. Procedure
-------------
4.1 Submission of draft
(A) As soon as the Completion Accounts shall have been prepared the
Purchaser shall send a copy to the Vendor together with such working
papers used in connection with the preparation of the same as it
considers necessary or appropriate to understand and agree the
Completion Accounts and shall in addition, and at the same time, send
to the Vendor its calculation of the Net Tangible Assets.
(B) Unless the Vendor shall within one calendar month after receipt of the
Completion Accounts (and associated papers and calculation as provided
in paragraph 4.1(A)) serve a notice in writing on the Purchaser that
it objects to the Completion Accounts (identifying the reason for any
objection and the amount(s) or item(s) in the Completion Accounts
and/or calculation which is/are in dispute) (such notification being,
for the purposes of this paragraph 4, an "Objection Notice") the
------------------
Vendor shall be deemed to have agreed to the Completion Accounts and
the Purchaser's calculation of the Net Tangible Assets for all
purposes of this Agreement.
4.2 Agreement of draft
If, within the period referred to in paragraph 4.1(B), the Vendor shall
give the Purchaser an Objection Notice then the Purchaser and the Vendor
shall use their best endeavours to reach agreement upon adjustments to the
draft and the value of Net Tangible Assets.
4.3 Independent accountant
In the event that the Vendor and the Purchaser are unable to reach
agreement within 20 days Business Days following service of the Objection
Notice, either the Vendor or the Purchaser shall be entitled to refer the
matter or matters in dispute to an independent firm of accountants agreed
upon between them and in any event such firm of accountants must be one of
the "Big Five" firms of accountants except Arthur Anderson and Ernst &
Young. Such independent firm of accountants shall act as experts not as
arbitrators and shall determine the matter or matters in dispute and their
decision shall be binding. The costs of the independent firm of
accountants shall be borne equally by the Vendor and the Purchaser.
4.4 Report
If the Vendor accepts, or is deemed to accept, that the said draft complies
with paragraph 2 the Purchasers Accountants shall sign a report to the
effect that the Completion Accounts comply with paragraph 2 and any
Completion Accounts so
74
reported on, or (if paragraph 4.3 shall apply) the final draft of the
Completion Accounts as adjusted so as to be in accordance with the
determination of the independent firm of accountants, shall be the
Completion Accounts for the purposes of this Agreement and shall be final
and binding on the parties.
4.5 Information and explanations
The Purchaser and the Purchaser's Accountants shall provide such
information and explanations relating to the draft Completion Accounts and
their preparation as the Vendor's Accountants, or any independent firm of
accountants appointed pursuant to paragraph 4.3, shall reasonably require.
5. Adjustment of Consideration
-------------------------------
5.1 Repayment of Consideration
When the Completion Accounts have become binding, the Vendors shall
forthwith repay to the Purchasers the amount (if any) by which the Net
Tangible Assets are less than for Western States US$10,038,550 and for
Bejka SEK18,980,000 as adjusted upwards or downwards by the amount of any
ordinary operating income or loss (as the case may be) made by the Business
between the date of the Reference Accounts and Completion.
5.2 Currency Translation
Where currency translation is required the rate to be applied shall be the
rate for buying each relevant currency with US Dollars on the Completion
Date as quoted by the Foreign Exchange Rates column of the Wall Street
Journal at the close of business on that day.
75
SCHEDULE 5 : ASSETS
PART 1 : Current Assets
(A) All stocks of raw materials, components and consumables including, without
limitation, fuel, office supplies, packaging and labelling, spares and
spare parts;
(B) All stocks of partly finished goods and all work-in-progress;
(C) All stocks of unsold finished goods;
(D) the Prepayments;
(E) the Book Debts;
(F) Cash at bank relating to the Business;
(G) Employee advances (as referred to in doc W63.17 of Exhibit A to the
Disclosure Letter).
76
PART 2 : Properties
[Download Table]
Facility Size Expiration Monthly
Date Payment
-----------------------------------------------------------------------
Gothenburg, Sweden: 2,895 sq ml (of Sept 2001 $ 10,000
Office and Warehouse which 450 sq
mt. is used for
office)
-----------------------------------------------------------------------
US:
Camarillo, CA 90,000 sq ft March 1999 $ 64,856
headquarters and
warehouse
Camarillo R&D facility 5,000 sq ft Monthly $ 4,095
Bolingbrook, IL warehouse 66,452 sq ft Lease $ 17,222
Jan 2004
Dayton, NJ warehouse 73,800 sq ft Dec 2000 $ 20,295
Camarillo, Ventura construction 31 October, $56,312.50
County, CA (new appears to have 2008
headquarters will replace been delayed-
facility described as was supposed
"headquarters and to commence
warehouse" above 01 November,
1998
-----------------------------------------------------------------------
77
PART 3: Fixed Assets
LIST OF ASSETS
Western States
78
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
Purch Depr Depr Exp Accum Depr
Description Fp Yr Cost Meth Life 1998 10-98
-------------------------------------------- --- --- --------------- -------- ------ -------------- --------------
SUMMARY
LOCATION 1
---------------------------------
13/1400-1 TOTAL MACHINERY & EQUIP 221,789.22 15,141.02 206,735.25
13/1405-1 TOTAL TOOLING - DB 137,434.27 11,030.63 38,744.24
13/1410-1 TOTAL OFFICE EQUIP & FURN 714,967.59 40,534.81 672,546.10
13/1420-1 TOTAL COMPUTER EQUIP 739,486.72 69,215.38 562,779.84
13/1430-1 TOTAL LEASEHOLD IMPROVEMENTS 89,972.36 8,251.73 61,909.22
13/1440-1 TOTAL VEHICLES 119,568.82 24,778.95 91,507.39
--------------- ------------------------------
TOTAL ASSETS - LOCATION 1 2,023,218.98 168,952.52 1,634,222.04
--------------- ------------------------------
LOCATION 2
---------------------------------
13/1405-2 TOTAL TOOLING - FITNESS 723,374.48 130,002.88 425,565.51
--------------- ------------------------------
TOTAL ASSETS - LOCATION 2 723,374.48 130,002.88 425,565.51
--------------- ------------------------------
LOCATION 3
---------------------------------
13/1400-3 TOTAL MACHINERY & EQUIP 149,221.36 14,717.92 140,356.33
13/1410-3 TOTAL OFFICE EQUIP & FURNITURE 21,931.56 0.00 21,931.56
13/1420-3 TOTAL COMPUTER EQUIPMENT 19,890.56 1,256.22 19,024.46
13/1430-3 TOTAL LEASEHOLD IMPROVEMENTS 14,371.50 1,437.15 7,006.11
--------------- ------------------------------
TOTAL ASSETS - LOCATION 3 205,414.98 17,411.29 188,318.46
--------------- ------------------------------
LOCATION 4
---------------------------------
13/1400-4 TOTAL MACHINERY & EQUIPMENT 252,665.80 33,624.03 239,195.53
13/1410-4 TOTAL OFFICE EQUIP & FURNITURE 24,737.19 0.00 24,737.19
13/1420-4 TOTAL COMPUTER EQUIPMENT 10,239.77 915.14 9,515.11
13/1430-4 TOTAL LEASEHOLD IMPROVEMENTS 5,653.00 565.30 2,449.03
--------------- ------------------------------
TOTAL ASSETS - LOCATION 4 293,295.76 35,104.47 275,896.86
--------------- ------------------------------
TOTAL COMPANY 3,245,304.20 351,471.16 2,524,002.87
=============== ==============================
79
[Enlarge/Download Table]
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD #11
Purch Depr Depr Exp Accum Depr
Description FP YR Cost Meth Life 1998 10-98
------------------------------------------- -- -- -------- ---- ---- -------- ----------
MACHINERY & EQUIPMENT - 1300 & 1400-1
---------------------------------
CLARK POWER FORK LIFT TRUCK 6 81 9,540.00 SL 7 0.00 9,540.00
FORK LIFT - DATSUN NISSAN 10 84 9,232.30 SL 7 0.00 9,232.30
FORKLIFT - NISSAN 86 19,145.72 SL 7 0.00 19,145.72
Power Machinery: Order Selector 86 19,492.34 SL 7 0.00 19,492.34
American Whse Equip: Beams 1 89 11,912.40 SL 7 0.00 11,912.40
Power Machinery: Conveyor 4 89 1,608.27 SL 7 0.00 1,608.27
American Whse Equip: Beams 5 89 3,344.10 SL 7 0.00 3,344.10
Power Machinery: Pallet Jacks 6 89 909.48 SL 7 0.00 909.48
Clarklift: Forklift 7 89 11,978.00 SL 7 0.00 11,978.00
Mike Barbey: Wheel Trees 8 89 800.00 SL 7 0.00 800.00
American Whse Equip: Beams 8 89 5,353.28 SL 7 0.00 5,353.28
American Whse Equip: Beams 9 89 1,500.00 SL 7 0.00 1,500.00
Paper & Plastics: Tape Dispenser 10 89 731.40 SL 7 0.00 731.40
Power Machinery: Conveyor 10 89 611.62 SL 7 0.00 611.62
Paper & Plastics: Tape Dispenser 10 89 690.00 SL 7 0.00 690.00
Kent Landsberg: Ladder 11 89 810.90 SL 7 0.00 810.90
Photo-scan: Cameras 12 89 4,793.41 SL 7 0.00 4,793.41
Probar: Inspector II 1 90 1,588.51 SL 7 0.00 1,588.51
Grainger: 20 Gal ASME Comp 6 90 527.24 SL 7 0.00 527.24
Quinn: Forklift 9 90 27,468.81 SL 7 0.00 27,468.81
Big Joe: Pallet Jack 12 90 1,241.19 SL 7 0.00 1,241.19
Power Machinery: Wheel Baskets 4 91 3,048.56 SL 5 0.00 3,048.56
McMaster/Carr: Lockers 6 91 936.76 SL 7 93.68 936.76
Caterpillar: Forklift 8 91 13,694.36 SL 7 1,369.44 13,694.36
Clarklift: Racks - Uprights & Beams 3 92 4,055.88 SL 7 579.41 3,708.23
M.C. Woodworks: 6 92 325.00 SL 7 46.43 297.14
Certified Weigh Systems: Counting Scale 3 93 2,734.88 SL 5 502.11 2,734.88
R.L. Spear: Pallets 4 93 10,550.66 SL 5 1,937.03 10,550.66
Photo-scan: Surveylance System 10 93 1,213.09 SL 5 222.72 1,213.09
Fleet Industrial: Flex Conveyor 3 95 3,714.31 SL 5 74?.?8 2,816.69
Lodi Metal: Bike Picking Racks 4 95 41,128.75 SL 5 8,225.75 30,503.82
Embly Ranch: 2 Lift Trucks 10 95 1,500.00 SL 5 300.00 962.50
B of A: PD Tools 1 96 1,542.87 SL 5 308.57 912.86
JV 01-52: PD Tools out of Inventory 1 96 653.16 SL 5 130.63 386.45
Morton Machinery: Lathe & Mill via Barter 6 96 762.90 SL 5 152.58 387.81
Anthony Martino 7 96 2,649.07 SL 5 529.81 1,302.46
---------- --------- ----------
TOTAL MACHINERY & EQUIP 221,789.22 15,141.02 206,735.25
---------- --------- ----------
80
[Enlarge/Download Table]
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR
PURCHASES THROUGH FISCAL PERIOD #11 PRINT DATE - 10/06/98
PURCH DEPR DEPR EXP ACCUM DEPR
??? DESCRIPTION FP YR COST METH LIFE 1998 10-98
--------- ----------------------- ----- -- ---------- ---- ---- -------- ----------
TOOLING - DB - 1305 & 1405-1
-----------------------
Ramiko/A-Plus: 6 96 29,397.89 SL 5 0.00 14,943.93
Ramiko/A-Plus: 9 96 14,575.00 SL 5 0.00 6,680.21
Hodaka: 9 96 5,000.00 SL 5 0.00 2,291.67
Hodaka: 9 96 2,395.55 SL 5 0.00 1,097.96
Dayton: 6 97 24,100.00 SL 5 4,820.00 7,430.83
Ramiko/A-Plus: 9 97 1,145.00 SL 5 229.00 295.79
Vigorousport 12 97 2,666.67 SL 5 533.33 555.56
Anodizing Inc.: 3 98 17,192.50 SL 5 2,722.15 2,722.15
19902 Anodizing Inc.: 6 98 1,500.00 SL 5 162.50 162.50
980505/NK Ramiko: 7 98 7,851.52 SL 5 719.72 719.72
97888 Dayton: 9 98 24,100.00 SL 5 1,405.83 1,405.83
980626/NK Ramiko/A-Plus: 9 98 7,510.14 SL 5 438.09 438.09
---------- --------- ---------
TOTAL TOOLING - DB 137,434.27 11,030.63 38,744.24
---------- --------- ---------
81
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE- 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
Purch Depr Depr Exp Accum Depr
Description Fp Yr Cost Meth Life 1998 10-98
----------------------------------------------------------- -- -- -------- ---- ---- -------- ----------
FURNITURE & FIXTURES - 1310 & 1410-1
------------------------------------------------------
BOOK CASES 2 9 81 776.08 SL 7 0.00 776.08
CABINETS, DESKS, CALCULATOR 9 81 2,566.95 SL 7 0.00 2,566.95
COPIER, MAILER, SCALE - PITNEY 6 82 16,187.90 SL 7 0.00 15,187.90
TYPEWRITER - REMINGTON 9 82 683.70 SL 7 0.00 683.70
TYPEWRITER - IBM 9 82 482.30 SL 7 O.00 482.30
CABINETS, DESKS, CALCULATOR 9 82 2,018.13 SL 7 0.00 2,018.13
COPIER TABLE - PITNEY BOWES 2 83 2,424.20 SL 7 0.00 2,424.20
DESK, CHAIRS - JULES SELTZER 5 83 2,967.09 SL 7 0.00 2,967.09
BLUEPRINT CABINET 11 84 619.90 SL 7 0.00 619.90
API: Phone System 88 90,330.50 SL 7 0.00 90,330.50
More Copy: Fax 1 89 4,128.70 SL 7 0.00 4,128.70
NFSA: Gym Equip 1 89 4,693.12 SL 7 0.00 4,693.12
Drapery Affair: Blinds 1 89 1,780.74 SL 7 0.00 1,780.74
Save More: Furniture 2 89 559.84 SL 7 0.00 559.84
Economy Office Equip: Cabinets 3 89 331.53 SL 7 0.00 331.53
API: Phone 3 89 4,296.12 SL 7 0.00 4,296.12
Hayworth: Modular Furniture & Partitions 3 89 101,769.62 SL 7 0.00 101,769.62
H.G. Daniels: Ref Table 3 89 861.91 SL 5 0.00 861.91
API: Phone System 4 89 24,226.66 SL 7 0.00 24,226.66
YES: Chairs 4 89 477.00 SL 7 0.00 477.00
Save More: File Cabinets 4 89 956.28 SL 7 0.00 956.28
Drapery Affair: Blinds 4 89 434.95 SL 7 0.00 434.95
More Copy: Shredder 5 89 3,199.70 SL 7 0.00 3,199.70
EOF: Files 5 89 1,293.66 SL 7 0.00 1,293.66
EOF: Files 5 89 300.91 SL 7 0.00 300.91
Save More: 5 89 954.83 SL 7 0.00 954.83
EOF: Files 5 89 354.81 SL 7 0.00 354.81
Bayless: Files 5 89 571.84 SL 7 0.00 571.84
Metropolitan: 5 89 2,141.00 SL 7 0.00 2,141.00
H.G. Daniels: Files 6 89 1,054.72 SL 7 0.00 996.83
Linecraft: Racks 6 89 996.93 SL 7 0.00 996.93
Jax International: 6 89 2,149.54 SL 7 0.00 2,149.54
Grainge Cabinet 8 89 617.44 SL 7 0.00 617.44
Model Display: Showroom 10 89 974.54 SL 7 0.00 974.54
Universal Exhibits: Show Material 11 89 760.41 SL 5 0.00 760.41
Croppers Fire Extinguishers 3 90 1,099.84 SL 7 0.00 1,099.84
David Thompson: Addrays 4 90 755.41 SL 7 0.00 755.41
Drapery Affair: 6 90 845.38 SL 7 0.00 845.38
Hayworth: Modular Furniture & Partitions 8 90 648.33 SL 7 0.00 648.33
Hayworth: Modular Furniture & Partitions 8 90 24,448.66 SL 7 0.00 24,448.66
Xerox: 5065 Copier 7 90 28,196.88 SL 7 0.00 28,196.88
Zenders: 3 Outside Tables 9 90 1,701.20 SL 7 (0.00) 1,701.20
Rapport: Exec. Conf. Room. Furn. 11 90 2,235.88 SL 7 0.00 2,235.88
Rapport: Exec. Conf. Room. Furn. 11 90 2,485.88 SL 7 0.00 2,485.88
Tri-Country: Chairs 11 90 2,234.65 SL 7 0.00 2,234.65
Hayworth: Modular Furniture & Partitions 9 90 440.89 SL 7 0.00 440.89
Office Club: Chairs & Keyboard Drawers 10 91 466.48 SL 7 46.65 466.48
Office Club: Chairs 9 91 343.16 SL 7 34.32 343.16
Hayworth: Modular Furniture & Partitions 10 91 994.53 SL 7 99.45 994.53
Hayworth: Modular Furniture & Partitions 10 91 740.88 SL 7 74.09 740.88
Hayworth: Modular Furniture & Partitions 10 91 740.88 SL 7 51.36 740.88
NEC Business: Phones 10 91 513.60 SL 7 51.31 513.60
Ikea: 12 91 513.11 SL 5 0.00 513.11
Skyline: Showroom 7 91 13,583.87 SL 5 0.00 13,583.87
Aderson's Woodcraft: Showbooth 9 91 575.00 SL 5 0.00 575.00
Procraft: Showbooth 9 91 54,310.00 SL 5 0.00 54,310.00
Procraft: Showbooth 9 91 38,411.75 SL 5 0.00 38,411.75
Procraft: Showbooth 9 91 40,732.50 SL 5 0.00 40,732.50
Procraft: Showbooth 11 91 1,729 .13 SL 5 0.00 1,729 .13
Display Whse: Showbooth 11 91 73.60 SL 5 0.00 73.60
82
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Purchases Through Fiscal Period # 11
Purch Depr Depr Exp Accum Depr
Description FP YR Cost Meth Life 1998 10-98
--------- ------------------------------------------ ---- -- ---------- ---- ---- ------------- --------------
Display Whse: Showbooth 11 91 404.93 SL 5 0.00 404.93
Bill Immerisk: Showbooth 11 91 375.37 SL 5 0.00 375.37
Steve Miller: Showbooth 11 91 1,804.49 SL 5 0.00 1,804.49
Hayworth: Modular Furniture & Partitions 2 92 401.84 SL 5 26.79 401.84
Steve Miller: Ikea-3 Bookcases 2 92 318.26 SL 5 21.22 318.26
NEC: A109925 2 92 2,915.38 SL 5 194.36 2,915.38
Office Depot: 4500 Fax 9 92 531.94 SL 5 35.46 531.94
Pacific Office Interiors: 12 92 1,033.47 SL 5 68.90 1,033.47
JLJ Construction: 4 Crates 5 92 1,650.00 SL 5 110.00 1,650.00
IMS Enterprise: Oak Bike Displays 10 92 1,294.50 SL 5 86.33 1,294.90
IMS Enterprise: Oak Bike Displays 10 92 75.00 SL 5 5.00 75.00
Procraft: Showbooth 11 92 5,850.36 SL 5 390.02 5,850.36
Procraft: Showbooth 11 92 5,986.16 SL 5 399.08 5,986.16
Central Copy: FAX UF-128M + ZMG MEM 93 3,720.67 SL 5 951.28 3,720.67
I-Med: Slide Projectors for Reps 6 93 21,505.90 SL 5 3,948.34 21,505.90
MODULAR FURNITURE 3 94 1,694.94 SL 5 338.99 1,624.32
NEAX 2400 SIM 5200 UPGRADE 6 94 45,908.00 SL 5 9,181.60 41,699.77
NEC - 2nd Console 9 94 3,151.45 SL 5 630.29 2,704.99
Hayworth modular furniture 9 94 32,447.01 SL 5 6,489.40 27,850.35
Com-Aid 20 new phones 10 94 2,740.12 SL 5 548.02 2,306.27
NEC - 28 post cards 11 94 4,151.30 SL 5 830.26 3,424.82
PJP - add art room data station 11 94 138.00 SL 5 27.60 113.85
PJP - 17 terminal & phone wiring 11 94 2,295.00 SL 5 459.00 1,893.38
PJP - 3 fax & 8 phone lines 11 94 430.98 SL 5 86.20 355.56
PJP - Prod Dev - Wiring 12 94 241.50 SL 5 48.30 195.21
GTE: 30 Headsets 1 95 4,265.12 SL 5 853.02 3,376.55
Office Mart: Training room furniture 2 95 2,098.57 SL 5 419.71 1,626.39
Reid Nansen: 3 movable offices in Art Dept. 3 95 8,800.00 SL 5 1,760.00 6,673.33
Hunt Commm: Cindi 10 hr Harddrive 4 95 2,250.00 SL 5 450.00 1,668.75
Morasi: Show Booth upgrades 11 95 5,343.17 SL 5 1,068.63 3,339.48
Continental: 2 Time Clocks 11 95 5,422.09 SL 5 1,084.42 3,388.81
Keith Willingham: Show Booth Logos 11 95 1,269.24 SL 5 253.85 793.28
Interior Office: Cubicle Shelving 12 95 1,660.17 SL 5 332.03 1,009.94
Vision Comm: PO Phone System 1 96 10,735.58 SL 5 2,147.12 6,351.88
Office World: PO 4 96 4,492.71 SL 5 898.54 2,433.55
Xiox: Call Accounting 6 96 3,619.86 SL 5 723.97 1,840.10
Stephanie Schmidt Nikon EZ digital camer 6 96 14,005.00 SL 5 2,801.00 7,119.21
Office Depot: Desk, Credenza & File Cab 7 96 879.40 SL 5 175.88 432.37
Office Mart: 8 96 3,071.91 SL 5 614.38 1,459.16
Office Mart: 8 96 650.10 SL 5 130.02 308.80
Office Mart: 8 96 3,421.10 SL 5 684.22 1,625.02
Office Mart: 1 97 1,548.88 SL 5 309.78 606.64
Bryan Seti: 35" Color TV 8 97 1,095.23 SL 5 219.05 301.19
Sharon Reisinger: 9 97 1,507.45 SL 5 301.49 389.42
---------- ------------- --------------
TOTAL OFFICE EQUIP & FURN 714,967.59 40,534.81 672,546.10
---------- ------------- --------------
83
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT - 1320 & 1420 - 1
--------------------------------------
Computers Unlimited: 2 ATs 1 89 1,969.00 SL 7 0.00 1,969.00
Tan-data: Manifest System 2 89 6,953.26 SL 7 0.00 6,953.26
Microamerica: 6 WYSE Terminals & Keybo 2 89 5,260.85 SL 7 0.00 5,260.85
Acme-Ware: AT 2 89 3,041.00 SL 7 0.00 3,041.00
IDS Inc Port Contender 2 89 693.23 SL 7 0.00 693.23
IDS Inc Port Contenders 2 89 1,343.32 SL 7 0.00 1,343.32
Acme Ware: B ATs 2 89 8,739.00 SL 7 0.00 ?,739.00
Data Vue: 24 Sparks Laptops 3 89 25,030.00 SL 7 0.00 25,030.00
Pactel Infosystems: Monitor 4 89 4,955.50 SL 5 0.00 4,955.50
SOS Computer: Mac RAM 5 89 2,604.99 SL 7 0.00 2,604.99
Micro Telesis: Computer 286 5 89 1,317.95 SL 7 0.00 1,317.95
Lewis & Lewis: Plotter, Printer & Tape Drive 5 89 7,022.50 SL 7 0.00 7,022.50
PC House: AT 386 5 89 2,545.01 SL 7 0.00 2,545.01
High Technology: 19 Citizen Printers 6 89 2,861.55 SL 7 0.00 2,861.55
P.C. & C.: 2 286s 7 89 2,347.90 SL 7 0.00 2,347.90
Datavue: 19 Sparks Laptops 7 89 19,285.00 SL 7 0.00 19,285.00
Personnel Computer: 2 286s & Printer 8 89 7,416.82 SL 7 0.00 7,416.82
Micro: Keyboards 10 89 595.40 SL 7 0.00 595.40
SOS Computer: Mac II 10 89 4,513.47 SL 7 0.00 4,513.47
Soft Whse: 2 286s 11 89 1,894.22 SL 7 0.00 1,894.22
P&C Research: AT 11 89 2,260.00 SL 7 0.00 2,260.00
Triathon: Computer - RT 135 11 89 21,800.00 SL 7 0.00 21,800.00
Triathon: Computer - RT 135 12 89 91,880.00 SL 7 0.00 91,880.00
Pickblue/Triathon: RT 135 1 90 1,360.00 SL 7 0.00 1,360.00
State Board: Sales Tax - RT 135 12 89 5,421.64 SL 7 0.00 5,421.64
P.C. & C. Research: Harddrive 40 mb 12 89 413.40 SL 7 0.00 413.40
Personnel Computer: 386 2 90 4,259.56 SL 7 0.00 4,259.56
WCS: 4 Turbo XTs 3 90 4,322.87 SL 7 0.00 4,322.87
Data Vue: 2 Sparks 3 90 3,389.00 SL 7 0.00 3,389.00
PCA: 4 mb Ram 4 90 808.75 SL 7 0.00 808.75
Wizard: 4 mb Ram 4 90 900.00 SL 7 0.00 900.00
Sun Computers: Toshiba Laptop 5 90 1,888.13 SL 7 0.00 1,888.13
Sun Computers: HP Laser Jet II 5 90 1,227.63 SL 7 0.00 1,227.63
Sun Computers: AST 286 5 90 1,371.06 SL 7 0.00 1,371.06
Sun Computers: AST 386 & Monitor 7 90 2,983.66 SL 7 0.00 2,983.66
Sun Computers: Math ????? & 4 mb Ram 7 90 1,040.81 SL 7 0.00 1,040.81
Hewlett Packard: New System Translations 11 90 1,062.50 SL 7 0.00 1,062.50
MST Dist: Phone System 11 90 1,507.75 SL 7 0.00 1,507.75
Datagram: 5 Portable Modems 11 90 1,250.94 SL 7 0.00 1,250.94
DA/COM Services: Install Phone System 12 90 2,919.00 SL 7 0.00 2,919.00
MST Dist: Phone System 11 90 16,219.00 SL 7 0.00 16,219.00
MST Dist: Phone System 11 90 1,507.75 SL 7 0.00 1,507.75
Dell: 33 mhz 386DX & Monitor 12 90 7,588.38 SL 7 0.00 7,588.38
MST Dist: Phone System 12 90 637.50 SL 7 0.00 637.50
Phil Bachman: Toshiba Power 1 91 400.00 SL 5 0.00 400.00
Shepard Info: 7 WYSE Terminals & Keyboa 4 91 2,975.12 SL 5 0.00 2,975.12
Shepard Info: 8 WYSE Terminals & Keyboa 9 91 3,337.36 SL 5 0.00 3,337.36
Tan-data: UPS Manifest Printer 10 91 1,867.31 SL 5 0.00 1,867.31
Dell: 33 mhz 386DX w/ Tape Drive & Monit 10 91 5,622.32 SL 5 0.00 5,622.32
Patrick Lowe: Mono Monitor 11 91 353.76 SL 5 0.00 353.76
Oxnard Computer Cntr (Bofa): 3 Citizen Pri 7 91 1,555.43 SL 5 0.00 1,555.43
Technic: Hi Speed Printer 11 91 18,133.70 SL 5 0.00 18,133.70
Contemporary City: 91 4,239.00 SL 5 0.00 4,239.00
Computer Village: Mac 1?fx w/ Scanner Las 11 92 18,151.00 SL 5 0.00 18,151.00
Computer Village: Max 2/4D. Monitor & Prin 2 92 2,899.68 SL 5 0.00 2,899.68
Teltron: Panasonic Printer 2 92 802.23 SL 5 0.00 802.23
Mac Whyse: Monitor 2 92 652.00 SL 5 0.00 652.00
LA Data: 7 Monitors 2 92 2,777.78 SL 5 0.00 2,777.78
JTI: Modem 7 92 486.92 SL 5 0.00 486.92
Computer Village Microage: Apple Classic 1 8 92 1,725.65 SL 5 0.00 1,725.65
84
PURCHASES THROUGH FISCAL PERIOD # 11
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PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
------------------------------------------------- ----- ----- --------- ----- ---- --------- -----------
Tan-data: #IN52811 12 92 2,410.00 SL 5 0.00 2,410.00
Computer Village: Quadra 950 & 20" Monito 1 93 12,161.00 SL 5 1,216.17 12,161.70
Computer Village: Quadra 950 & 20" Monito 1 93 12,834.37 SL 5 1,283.44 12,834.37
Computer Village: Apple Mac II SI 5/80 & M 1 93 2,719.07 SL 5 271.91 2,719.07
Computer Village: External Removable Hard 1 93 683.18 SL 5 68.32 683.18
Computer Village: Laserwriter II 1 93 3,547.29 SL 5 354.73 3,547.29
Computer Village: GCC 50S Ultra Drive Ext 1 93 461.41 SL 5 46.14 461.41
Computer Village: Suprafax Modem 1 93 356.31 SL 5 35.63 356.31
Computer Village: Umax 1200S Flatbed Sc 1 93 3,678.67 SL 5 367.87 3,678.67
Computer Village: Umax Transparency Ada 1 93 788.29 SL 5 78.83 788.29
Teltron: Various Depts 1 93 2,184.84 SL 5 121.70 2,184.84
PC Connection: Laptop Modems 5 93 600.00 SL 5 33.42 600.00
PC Connection: Laptop Modems 5 93 714.00 SL 5 39.77 714.00
Computer Village: PD 6 93 1,061.00 SL 5 59.10 1,061.00
Computer Village: Pwr Bk - J. Stevenson 8 93 2,859.29 SL 5 159.27 2,859.29
Apple: Monitor 12 93 186.62 SL 5 10.40 186.62
QUADRA 840AV 8/230 1 94 3,378.38 SL 5 675.68 3,350.22
13 8MB MEMORY UPGRADES 1 94 2,199.00 SL 5 439.80 2,180.68
1 DELL DIMENSION 486SX 2 94 1,464.57 SL 5 292.91 1,427.96
1 QUADRA 610 8/230 3 94 1,794.82 SL 5 358.96 1,720.04
1 APPLE MONITOR & KEYBOARD 3 94 353.93 SL 5 70.79 339.18
1 FUTURA II LX Video Card 3 94 822.95 SL 5 164.59 788.66
2 QUADRA 605s & 1 POWERBOOK 4 94 4,976.40 SL 5 995.28 4,686.11
10 MEG POWERBOOK MEMORY 4 94 1,314.50 SL 5 262.90 1,237.82
1 POWERBOOK 4 94 3,265.76 SL 5 653.15 3,075.26
1 HP LASERJET PRINTER 4 94 1,445.67 SL 5 289.13 1,361.34
1 PRO DAT TAPE BACKUP 5 94 1,202.95 SL 5 240.59 1,112.73
DELL DIMENSION PC 4SX33 6 94 1,555.08 SL 5 311.02 1,412.53
Compaq Presano PC w/ Monitor 9 94 1,797.51 SL 5 359.50 1,542.86
2 Compaq Presano PCs w/ 1 Monitor 9 94 2,989.07 SL 5 597.81 2,565.62
Pionix PC 4DX2/66 w/ Monitor 9 94 2,049.55 SL 5 409.91 1,759.20
Comp USA - 11 94 262.76 SL 5 52.55 216.78
Comp USA: Laptop & Printer-Ron B. 12 94 2,207.21 SL 5 441.44 1,784.16
Comp USA: Mac - Sales Admin Assist 12 94 1,885.46 SL 5 377.09 1,524.08
Comp USA: HP 4L Laserjet - Finance 12 94 574.60 SL 5 114.92 464.47
Comp USA: Compaq 486 SX266 - Liz 1 95 1,561.56 SL 5 312.31 1,236.24
Comp USA: PWR Mac 7100 - Dan Shirey 1 95 2,999.78 SL 5 599.96 2,374.83
Comp USA: 486 DX50 laptop - Brian 1 95 2,528.95 SL 5 505.79 2,002.09
Comp USA: Compaq 486DX266 - Victor 1 95 2,394.52 SL 5 478.90 1,895.66
Comp USA: Compaq 486 SX266 - Kim Binn 1 95 1,531.13 SL 5 306.23 1,212.14
Comp USA: HP 4Plus Laserjet - Finance 1 95 1,569.00 SL 5 313.80 1,242.13
Comp USA: Compuayne 486DX2/66 & HP 3 95 1,919.31 SL 5 383.86 1,455.48
Comp USA: 486DX266 - Wende 4 95 1,563.62 SL 5 312.72 1,159.68
Mac Whse: DRI 0658 8GB Mac network ba 4 95 1,202.00 SL 5 240.40 891.48
Comp USA: 486DX266 & HP 540 Printer - 4 95 1,862.85 SL 5 372.57 1,381.61
Teltron: 486 PC - Stephanie-T 6 95 1,201.20 SL 5 240.24 850.85
Comp USA: Monitor - Carolyn 7 95 235.95 SL 5 47.19 163.20
Comp USA: PC P75 8/850 - Carolyn 7 95 2,016.96 SL 5 403.39 1,395.06
Comp USA: Laptop & Printer - Jamison 8 95 2,445.97 SL 5 489.19 1,651.03
Mac Whse: Scanner - Art Dept. 10 95 2,728.00 SL 5 545.60 1,750.47
Comp USA: Laptop - Brent 10 95 3,569.28 SL 5 713.86 2,290.29
Comp USA: Laptop - Liz 10 95 3,043.76 SL 5 608.75 1,953.08
Comp USA: Laptop - Renee 10 95 2,851.78 SL 5 570.38 1,829.89
Comp USA: DEC STR915 P100 8/850 - Re 12 95 1,854.57 SL 5 370.91 1,128.20
Technic: Hi Speed Printer 12 95 3,081.40 SL 5 616.28 1,874.52
Comp USA: 2 Tosh T2135CS Kari & Eric 1 96 6,517.59 SL 5 1,303.52 3,856.24
Comp USA: PC Network 1 96 29,486.28 SL 5 5,897.26 17,446.05
Comp USA: Toshiba Laptop - Chris 1 96 3,053.42 SL 5 610.68 1,806.61
PJP Comm: Install Network Jacks 2 96 2,899.40 SL 5 579.88 1,667.16
Comp USA: Windows NT Server 2 96 736.81 SL 5 147.36 423.67
Comp USA: Toshiba Laptop - Ron Blocher 3 96 2,467.54 SL 5 493.51 1,377.71
85
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PURCHASES THROUGH FISCAL PERIOD # 11
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
----------------------------------------------------------------------------------------------------------------------
Comp USA: Laptop P75 - Hans 4 88 3,056.42 SL 5 611.28 1,655.56
Comp USA: Laptop P75 & Printer - Peter O. 4 96 3,467.02 SL 5 693.40 1,877.97
Teltron: PC P75 - Alex 4 95 2,239.38 SL 5 447.88 1,213.00
Teltron: PC P75 - Jamie 4 98 2,239.38 SL 5 447.88 1,213.00
JV 04-30A: Vanous Network Equipment 4 96 3,933.78 SL 5 786.76 2,130.80
Comp USA: Toshiba Port Replicator - Peter 5 95 358.85 SL 5 71.77 188.40
Cad/Cam Consult Autocad C3 & Designer 5 98 5,280.76 SL 5 1,056.15 2,772.40
Pick: Advanced Pick Software & Training 5 95 8,800.00 SL 5 1,760.00 4,620.00
Inmac Network Relay Rack 5 96 339.23 SL 5 67.85 178.10
Teltron: P75 & Monitor - Julie 5 98 1,781.42 SL 5 356.28 935.25
Teltron: P75 & Monitor - Call Acctg 5 98 1,781.42 SL 5 356.28 935.25
Teltron: Pro 200 - McWethy 5 88 8,472.75 SL 5 1,694.55 4,448.19
Teltron: P75 & Monitor - Louise 6 95 1,781.42 SL 5 358.28 905.56
Best Products: Fixed Asset Software 6 95 1,618.34 SL 5 323.67 822.88
Comp USA: UPS for RS6000 6 98 2,323.46 SL 5 464.69 1,181.09
Comp USA: Mirror harddrive - Network 6 98 1,173.37 SL 5 234.67 596.45
Pick 7 95 290.63 SL 5 58.13 142.89
Comp USA: 7 96 3,700.11 SL 5 740.02 1,819.22
Teltron: P75 & Monitor - Linda-E 7 96 1,542.79 SL 5 308.56 758.?4
Comp USA: Apple PM8500 - Mktg 7 96 4,422.99 SL 5 884.60 2,174.64
Teltron: 9 98 1,822.18 SL 5 364.44 835.17
Comp USA: 9 96 3,144.52 SL 5 628.90 1,441.24
Comp USA: 9 96 4,337.59 SL 5 867.52 1,988.06
HKL: Distribution Software 10 96 6,468.30 SL 5 1,293.66 2,856.83
Hardware ????: Terminals 11 96 738.00 SL 5 147.60 313.65
Teltron: 11 96 1,847.92 SL 5 369.58 785.37
Technic: 11 96 3,333.44 SL 5 666.69 1,416.71
AT Plus: 11 96 1,874.73 SL 5 374.95 796.76
Teltron: 12 96 1,386.74 SL 5 277.35 566.25
AT Plus: 12 96 583.07 SL 5 112.61 229.92
Comp USA: 12 96 2,815.32 SL 5 563.06 1,149.59
AT Plus: 12 98 2,357.36 SL 5 471.47 962.59
Comp USA: 12 95 2,678.47 SL 5 535.69 1,093.71
AT Plus: 12 96 232.73 SL 5 46.55 95.03
AT Plus: 1 97 1,178.68 SL 5 235.74 461.65
Comp USA: 1 97 2,827.11 SL 5 565.42 1,107.28
AT Plus: 2 97 1,178.68 SL 5 235.74 442.01
AT Plus: 2 97 1,639.85 SL 5 327.97 614.94
AT Plus: 2 97 1,167.95 SL 5 233.59 437.98
Comp USA: 3 97 2,968.24 SL 5 593.65 1,063.62
Comp USA: 3 97 3,339.32 SL 5 667.86 1,196.59
PC Connection: 3 97 1,234.85 SL 5 246.97 442.49
Comp USA: JV 08-30A.6: 3 97 2,932.14 SL 5 586.43 1,050.68
Comp USA: 5 97 2,286.57 SL 5 457.31 743.14
Ambertech: 5 97 3,202.49 SL 5 640.50 1,040.81
Renee Buckly: 7 97 2,693.67 SL 5 538.73 785.65
AT Plus: 8 97 1,016.73 SL 5 203.35 279.60
Comp USA: 9 97 2,917.17 SL 5 583.43 753.60
AT Plus: 9 97 1,016.73 SL 5 203.35 262.66
AT Plus: 9 97 1,016.73 SL 5 203.35 262.66
AT Plus: 9 97 1,423.21 SL 5 284.64 367.66
Comp USA: 9 97 1,224.49 SL 5 244.90 316.33
Unipress Software: 9 97 2,750.00 SL 5 550.00 710.42
AT Plus: 10 97 1,246.25 SL 5 249.25 301.18
18931.910 Intosh: 12 97 9,307.10 SL 5 1,861.42 1,938.98
18991 NEC: 12 97 24,194.48 SL 5 4,838.90 5,040.40
18986 Comp USA: 12 97 1,394.15 SL 5 278.83 291.27
18988 Comp USA: 12 97 1,740.74 SL 5 348.15 361.06
18990 Comp USA: 12 97 1,549.83 SL 5 309.97 322.88
Comp USA: JV 12-300.2: 12 97 2,269.90 SL 5 453.98 472.90
19203 Pinpoint Software: 1 98 1,301.09 SL 5 249.38 249.38
86
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DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
--------------------------------------------------- --- -- ----------------- ----- ------ --------- ---------------
19206 Comp USA: 1 98 4,929.67 SL 5 944.85 944.85
19208 Comp USA: 1 98 2,570.20 SL 5 492.62 492.62
18987 Comp USA: 1 98 1,329.87 SL 5 254.89 254.89
19065 Mac Warehouse: 1 98 8,210.75 SL 5 1,573.73 1,573.73
19068 Comp USA: 2 98 2,501.82 SL 5 437.82 437.82
19122 Cad/Cam Consult 2 98 1,067.14 SL 5 186.75 186.75
Dataworks: Infoflo software 4 98 192,867.68 SL 5 27,322.92 27,322.92
Dataworks: returned software 4 98 (122,800.48) SL 5 (17,396.73) (17,396.73)
Dataworks: refund received 4 98 (70,067.20) SL 5 (9,926.19) (9,926.19)
19307 Comp USA: 2 98 5,209.63 SL 5 911.69 911.69
19117 Comp USA: 2 98 1,144.88 SL 5 200.35 200.35
19375 Comp USA: 3 98 0.00 SL 5 0.00 0.00
19570 Insight: 4 98 1,049.94 SL 5 148.74 148.74
19546 Insight: 4 98 11,009.76 SL 5 1,559.72 1,559.72
19534 Insight: 4 98 2,014.26 SL 5 285.35 285.35
19539 Insight: 4 98 1,050.93 SL 5 148.88 148.88
19543 Insight: 4 98 5,779.44 SL 5 818.75 818.75
19542 Insight: 4 98 26,205.88 SL 5 3,712.50 3,712.50
19894 Insight: 4 98 1,061.90 SL 5 150.44 150.44
19893 Insight: 6 98 1,209.48 SL 5 131.03 131.03
19880 Insight: 6 98 6,194.86 SL 5 671.11 671.11
19893 Insight: 6 98 10,600.05 SL 5 1,148.34 1,148.34
19893 Insight: 6 98 651.98 SL 5 70.63 70.63
19880 Insight: 6 98 10,289.76 SL 5 1,114.72 1,114.72
19880 Insight: 6 98 14,474.70 SL 5 1,568.09 1,568.09
10181 Insight: 6 98 1,539.94 SL 5 166.83 166.83
3879774 Insight: 7 98 12,949.26 SL 5 1,187.02 1,187.02
3882815 Insight: 7 98 699.75 SL 5 64.14 64.14
3847871 Insight: 7 98 369.15 SL 5 33.84 33.84
9534 Insight: 3 notebooks purch in Feb. 7 98 6,042.82 SL 5 553.?3 553.?3
10270 Insight: 8 98 4,289.90 SL 5 321.74 321.74
Financing of 2/98 - 6/98 PCs above: 9 98 (117,483.76) SL 5 (13,855.80) (13,855.80)
10325 Insight: 8 98 2,389.92 SL 5 179.24 179.24
120997 Mac Warehouse: 9 98 489.00 SL 5 28.53 28.53
110485 Micro Warehouse: 9 98 3,276.30 SL 5 191.12 191.12
110533 Unipress 9 98 6,038.00 SL 5 352.22 352.22
Insight: 10 98 1,139.94 SL 5 47.50 47.50
Micro Warehouse: 10 98 1,470.15 SL 5 61.26 61.26
----------- ---------- ----------
TOTAL COMPUTER EQUIP 739,486.72 69,215.38 562,779.84
87
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PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
--------- -------------------------------- -- -- --------- ---- ---- -------- ----------
LEASEHOLD IMPROVEMENTS -1330 & 1430-1
--------------------------------
Arbon: Dockboards 2 89 18,593.00 SL 10 1,859.30 18,593.00
Mulcahey Plumbing: Air Systemm 2 89 3,350.00 SL 10 335.00 3,350.00
Power Machinery: Beam Install 3 89 2,785.00 SL 10 278.50 2,785.00
Coastel Telephone: Closed Circuit 3 89 518.50 SL 10 51.85 518.50
Dale Barnett: Electrical 3 89 750.00 SL 10 75.00 750.00
Dale Barnett: Electrical 3 89 1,898.95 SL 10 189.90 1,898.95
Arbon: Install Dock Doors 5 89 2,238.47 SL 10 223.85 2,238.47
Dale Barnett: Electrical 5 89 1,200.00 SL 10 120.00 1,200.00
Morris: Security 5 89 244.00 SL 10 24.40 244.00
Eric Meyer: Partition 9 89 872.00 SL 10 87.20 872.00
Computer Room Services: Floor 9 89 3,650.00 SL 10 365.00 3,650.00
Computer Room Services: Floor 9 89 1,866.50 SL 10 186.65 1,866.50
Dale Barnett: Mail Room 30 amp Circuit 6 90 825.00 SL 10 82.50 577.50
Dale Barnett: Added Circuits 8 90 1,827.00 SL 10 182.70 1,278.90
Dale Barnett: Outlets 10 90 1,804.50 SL 10 180.45 1,263.15
Dale Barnett: Outlets, Lights & Switches 10 90 1,897.57 SL 10 189.76 1,328.30
Power Machinery: 185 Anchors 11 91 804.38 SL 10 80.44 643.50
Challenge Fire: Sprinklers 2 92 8,800.00 SL 10 880.00 6,160.00
Variety Lighting: Exit Signs 3 92 1,880.00 SL 10 188.00 1,316.00
JLI Construction: Electrical 4 92 950.00 SL 10 95.00 665.00
Scotty Chitwood: 7 94 4,004.72 SL 10 400.47 1,785.44
Venco power to modulars 9 94 850.00 SL 10 85.00 389.58
Randall Fire sprinkler over electric room 10 94 390.00 SL 10 39.00 172.25
Lloyd Henry - 2 showroom offices 10 94 9,002.00 SL 10 900.20 3,975.88
Lloyd Henry - wnse slider & fencing 10 94 4,300.00 SL 10 430.00 1,899.17
Capps - Archive lighting 10 94 1,138.00 SL 10 113.80 502.62
Terry - Showroom Wall Slats 11 94 740.03 SL 10 74.00 314.51
Lloyd Henry: Showroom Office Work 12 94 607,00 SL 10 60.70 247.86
Signature Signs - Front DB sign 9 95 1,375.00 SL 10 137.50 767.71
Reid Nansen: 10 95 500.00 SL 10 50.00 270.83
ITC: 9 96 383.34 SL 10 38.33 137.36
Solargy: Energy Calcs 9 98 4,850.00 SL 10 141.46 141.46
Semco. Sweet & Meyer: Consulting 10 98 5,077.40 SL 10 105.78 105.78
---------- --------- ---------
TOTAL LEASEHOLD IMPROVEMENTS 89,972.36 8,251.73 61,909.22
88
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Purch Depr Depr Exp Accum Depr
Description FP YR Cost Meth Life 1998 10-98
--------- ---------------------------------------- --- --- ---------- ---- ---- ------------- --------------
VEHICLES - 1340 & 1440-1
----------------------------------------
1986 Chevy Astro Van - General 4 86 11,691.99 SL 4 1,169.20 11,691.99
Kemp Ford: Team Van 4 93 10,000.00 SL 5 1,621.06 10,000.00
Kemp Ford: Team Van 5 93 16,545,98 SL 5 2,682.20 16,545.98
Signs of Distinction: Logos and Paint 6 93 2,168.60 SL 5 351.54 2,168.60
William Woodul: Team Van Cabinets 7 93 2,042.00 SL 5 331.02 2,042.00
William Woodul: Team Van Cabinets 8 93 1,294.00 SL 5 209.75 1,294.00
Ed Green - Executive Auto: Lincoln - Todd 4 93 19,000.00 SL 5 2,755.00 19,000.00
Disposed - Executive Auto: Lincoln - Todd 5 98 (19,000.00) SL 5 0.00 (19,000.00)
Jeep Grand Cherokee - Burt 4 94 25,000.00 SL 5 5,000.00 22,041.67
Disposal - Jeep Grand Cherokee - Burt 10 98 (25,000.00) SL 5 (1,041.67) (1,041.67)
GMC Yukon - Fred 6 95 25,000.00 SL 5 5,000.00 17,708.33
Fillmore Central: Promo Trailer & spare tire 6 95 4,634.07 SL 5 926.81 3,282.47
19355 Performance Trailers: 5th wheel awning 5 98 10,381.17 SL 5 1,297.65 1,297.65
Rusnak BMW: John Barker 5 98 35,811.01 SL 5 4,476.38 4,476.38
----------- ---------- -----------
89
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD #11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
---------- -------------------------------------------- ---- ----- ------------- ------ ----- ------------ -------------
TOTAL VEHICLES 119,568.82 24,778.95 91,507.39
------------- ------------ -------------
TOOLING - FITNESS - 1305 & 1405-2
--------------------------------------------
JOHNSON METAL 91 147,607.00 SL 7 24,249.72 147,607.00
JOHNSON METAL 93 45,000.00 SL 5 19,2?5.71 45,000.00
U.S. CUSTOM SERVICE 8 94 7,818.32 SL 5 1,563.66 6,541.03
Johnson Metal 1 95 3,655.00 SL 5 731.00 2,893.54
Emotion Fitness: Dvlpmt of noise reduction 1 95 2,479.90 SL 5 495.98 1,963.25
JMI: HRT 1000 side case tooling 4 95 90,389.81 SL 5 18,077.95 67,039.11
Arex: HRT 1000 Console Tooling 7 95 26,720.00 SL 5 5,344.00 18,451.33
JMI: 1000 senes jig & fixture 8 95 31,120.31 SL 5 6,224.06 21,006.21
Arex: HRT 1000 Tooling 10 95 29,166.00 SL 5 5,837.20 16,727.68
JMI: 7 96 23,340.23 SL 5 4,668.05 11,475.61
JMI: 7 96 58,903.85 SL 5 11,780.77 28,961.06
JMI: 7 96 1,000.00 SL 5 200.00 491.67
JMI: 12 96 99,551.69 SL 5 19,910.34 40,650.27
JMI: sWSI-970110 3 97 17,642.00 SL 5 3,528.40 6,321.72
19651 Abler: 9 98 5,333.33 SL 5 311.11 311.11
19691 Abler: 9 98 10,666.67 SL 5 622.22 622.22
19685 Master Patern: 9 98 14,700.00 SL 5 857.50 857.50
19693 Pierson Designs: 9 98 1,480.00 SL 5 8?.33 8?.33
19697 Pierson Designs: 9 98 5,000.00 SL 5 291.67 291.67
19686 Vytron: 9 98 3,200.00 SL 5 186.67 186.67
JV 09-153 - 1200T treadmill tooling 9 98 98,580.37 SL 5 5,750.52 5,750.52
------------- ------------ -------------
90
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD #11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
---------- -------------------------------------------- ---- ----- ------------- ------ ----- ------------ -------------
TOTAL TOOLING - FITNESS 723,374.48 130,002.88 425,565.51
------------- ------------ -------------
MACHINERY & EQUIPMENT - 1300 & 1400-3
--------------------------------------------
BIG JOE STOCK SELECTOR 12 78 10,309.20 200DB 7 0.00 10,309.20
RACKS - W.W. CANNON 9 81 1,204.37 SL 7 0.00 1,204.37
LADDER, PLATFORM TRUCKS 10 81 514.61 SL 7 0.00 514.61
WHEEL CAGES - MARK LAWERANCE 12 82 2,343.00 SL 7 0.00 2,343.00
DIGITAL SCALE 12 82 808.89 SL 7 0.00 808.89
RIG-U-RACK BEAMS 12 82 516.05 SL 7 0.00 516.05
RIG-U-RAK BEAMS 8 83 462.99 SL 7 0.00 462.99
FRAMES & BEAMS - LYNCH 11 83 1,403.31 SL 7 0.00 1,403.31
POWER LIFT TRUCK 11 83 10,345.00 SL 7 0.00 10,345.00
CONVEYOR - ASTON EQUIP. 1 84 627.90 SL 7 0.00 627.90
PALLET JACK - R.L. SPEAR 1 84 285.77 SL 7 0.00 285.90
FRAMERS & BEAMS - LYNCH 2 84 1,388.87 SL 7 0.00 1,388.87
POWER LIFT TRUCK 11 84 10,468.03 SL 7 0.00 10,468.03
POWER LIFT BATTERY 11 84 1,884.00 SL 7 0.00 1,884.00
PRIME MOVER 12 87 12,691.35 SL 7 0.00 12,691.35
W.W. Transport Racks & Beams 1 89 12,000.00 SL 7 0.00 12,000.00
Thornell: 4 Workbenchs 2 89 573.52 SL 7 0.00 573.52
Thornell: Conveyer 2 89 4,053.16 SL 7 0.00 4,053.16
Illinois Storage 8 92 1,353.89 SL 5 0.00 1,353.89
Interstate Pallet 4 93 5,099.64 SL 5 540.36 5,099.64
REB: Rack System 1 94 28,595.74 SL 5 5,719.15 25,617.02
Amer. Ind.: Mitsubishi Forklift FGC15 4 94 9,406.87 SL 5 1,881.37 8,858.14
Assoc Mat: Raymond Ordernicker 7 94 21,051.82 SL 5 4,210.36 18,771.21
REB: 164 Pallet Rack Beams 4 95 3,513.50 SL 5 702.70 2,605.85
Assoc Mat: Raymond elect pallet jack 4 95 8,319.88 SL 5 1,663.98 6,170.58
------------- ------------ -------------
91
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR
PURCHASES THROUGH FISCAL PERIOD # 11 PRINT DATE - 10/05/98
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
--------- ----------------------------------------- -- -- ------------ ------- ------ ---------- ------------
TOTAL MACHINERY & EQUIP 149,221.36 14,717.92 1?0,358.33
------------ ---------- ------------
FURNITURE & FIXTURES - 1310 & 1410-3
-----------------------------------------
ADT: Security System 1 89 895.87 SL 7 0.00 895.87
TIE Systems: Phone System-Ultra com CX 4 89 5,176.61 SL 7 0.00 5,176.61
Aarons Office Furn: Desks & Chairs 5 89 7,969.43 SL 7 0.00 7,969.43
Office Mart 6 89 1,029.07 SL 7 0.00 1,029.07
Communitech: 7 89 603.20 SL 7 0.00 603.20
Panasonic Copier 90 6,257,38 SL 7 0.00 6,257.38
------------ ---------- ------------
92
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PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
-------- ---------------------------------------- -- -- ---------- -------- ------ ---------- ------------
TOTAL OFFICE EQUIP & FURNITURE 21,931.56 0.00 21,931.56
---------- ---------- ------------
COMPUTER EQUIPMENT - 1320 & 1420-3
----------------------------------------
Tan-data: Manifest System 1 89 8,866.88 SL 7 0.00 8,866.88
Burlington Computers: 5 WYSE Terminals 2 89 1,921.50 SL 7 0.00 1,921.50
Burlington Computers: Harddrive 4 89 608.48 SL 7 0.00 608.48
Pacific Mtn Computers: Printer 8 89 1,530.50 SL 7 0.00 1,530.50
Elec-tek: PC - L Coleman 2 93 1,967.40 SL 5 325.02 1,967.40
Elec-tek: PC - L Coleman 8 93 1,953.00 SL 5 322.64 1,953.00
Comp USA: Laptop & Printer-Wally 12 94 2,304.80 SL 5 460.96 1,863.05
Hardware Periphrials: Terminals 11 96 738.00 SL 5 147.60 313.65
-- ---------- ---------- ------------
93
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
---- ----------------------------------- -- -- ----------- ------ ------ --------- ------------
TOTAL COMPUTER EQUIPMENT 19,890.56 1,256.22 19,024.46
-- ----------- --------- ------------
LEASEHOLD IMPROVEMENTS - 1330 & 1430-3
-----------------------------------
LIGHTING 2 94 14,371.50 SL 10 1,437.15 7,006.11
----------- --------- ------------
94
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
---------- -------------------------------------------- -- -- ------------- ------ ----- ------------ -------------
TOTAL LEASEHOLD IMPROVEMENTS 14,371.50 1,437.15 7,006.11
------------- ------------ -------------
MACHINERY & EQUIPMENT - 1300 & 1400-4
--------------------------------------------
WHEEL BASKETS - R.L. SPEAR 10 83 1,725.30 SL 7 0.00 1,725.30
FORK LIFTS - JERSEY CO. 11 83 61,226.80 SL 7 0.00 61,226.80
JERSEY LIFT TRUCK CO. 12 83 1,677.98 SL 7 0.00 1,677.98
COMPRESSOR - JERSEY CO. 12 83 1,480.00 SL 7 0.00 1,480.00
LIFT DOCK PLATES - JERSEY CO. 12 83 702.36 SL 7 0.00 702.36
STEEL - JERSEY CO. 12 83 1,293.20 SL 7 0.00 1,293.20
CROSS BARS - STOR DYNAMICS 2 84 1,049.40 SL 7 0.00 1,049.40
SCALE - EASTERN 3 84 1,325.00 SL 7 0.00 1,325.00
BATTERY CHARGER 87 1,425.58 SL 7 0.00 1,425.58
FORKLIFT 87 12,433.88 SL 7 0.00 12,433.88
PALLET TRUCK 88 573.30 SL 7 0.00 573.30
C&C Lift Truck 91 1,872.50 SL 7 187.25 1,872.50
Barclay - Stack Picker 6 93 7,950.00 SL 5 1,391.25 7,950.00
Raymond: 31R40TT Forklift 8 93 19,564.42 SL 5 4,010.71 19,564.42
Raymond: 31R40TT Forklift 9 93 18,080.42 SL 5 3,977.69 18,080.42
Intertake: Rack System 2 94 105,438.06 SL 5 21,087.61 93,576.28
Raymond: 2 Walkie/Riders 7 94 14,847.60 SL 5 2,969.52 13,239.11
------------- ------------ -------------
95
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
--------- --------------------------------- -- -- ----------- ------- ------- ----------- --------------
TOTAL MACHINERY & EQUIPMENT 252,665.80 33,624.03 239,195.53
----------- ----------- --------------
FURNITURE & FIXTURES - 1310 & 1410-4
---------------------------------
PHONE SYSTEM 87 12,192.87 SL 7 0.00 12,192.87
FILE CABINETS 87 556.50 SL 7 0.00 556.50
Office Bus Sys: Fax 5 89 1,440.00 SL 7 0.00 1,440.00
Metro Bus: Copier 9 89 5,905.00 SL 7 0.00 5,905.00
Raritan Valley: Desk & Chair 9 89 820.50 SL 7 0.00 820.00
Raritan Valley: Desk & Credenza 10 89 1,166.00 SL 7 0.00 1,166.00
Tel Plus: 1648 10 89 581.83 SL 7 0.00 581.83
Allegheny Shredder 90 2,074.49 SL 7 0.00 2,074.49
----------- ----------- --------------
96
[Enlarge/Download Table]
DIAMONDBACK - BOOK DEPRECIATION AS OF 10/31/98 FOR PRINT DATE - 10/06/98
PURCHASES THROUGH FISCAL PERIOD # 11
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
-------- --------------------------------------- ----- -- --------- ---- ---- -------- ----------
TOTAL OFFICE EQUIP & FURNITURE 24,737,19 0.00 24,737,19
--------- -------- ----------
COMPUTER EQUIPMENT - 132D & 1420-4
---------------------------------------
UCR Bus Cntr: Star NX-2400 Printer 1 89 731.40 SL 7 0.00 731.40
Pacific Mtn: Datasouth matrix printer 4 90 1,529.06 SL 7 0.00 1,529.08
Daven/Tan Data 91 1,887.50 SL 7 188.75 1,887.50
Tan-Data: 11 92 2,410.00 SL 5 160.67 2,410.00
Tan-Data: UPS Equip 5 93 885.00 SL 5 6.36 885.00
Comp USA: Laptop & Printer Jim-Z 12 94 2,304.81 SL 5 460.96 1,863.05
Hardware Periphrals: Terminals 11 95 492.00 SL 5 98.40 209.10
---------- --------- ---------
97
PURCHASES THROUGH FISCAL PERIOD # 11
[Enlarge/Download Table]
PURCH DEPR DEPR EXP ACCUM DEPR
DESCRIPTION FP YR COST METH LIFE 1998 10-98
---- ---------------------------------- -- -- ----------- ------- ------ -------- ----------
TOTAL COMPUTER EQUIPMENT 10,239.77 915.14 9,515.11
----------- -------- ----------
LEASEHOLD IMPROVEMENTS - 1330 & 1430-4
-----------------------------
EMERGENCY EXIT LIGHTS 3 94 4,540.00 SL 10 454.00 2,175.42
AG Teleconsultants: Cable runs 7 95 1,113.00 SL 10 111.30 273.61
----------- -------- ----------
TOTAL LEASEHOLD IMPROVEMENTS 5,653.00 565.30 2,449.03
----------- -------- ----------
98
LIST OF ASSETS
Bejka
99
List of Movable Fixed Assets
[Download Table]
Asset Current Book Value
-------------------------------------------------------------
Electronic Equip. 9 884.75 kr
Camera 19 275.25 kr
Computer Hardware 7 620.00 kr
Computer Hardware 19 000.00 kr
Office Furniture 9 110.00 kr
Electronic Equip. 3 495.25 kr
Office Furniture 3 492.90 kr
Office Fixtures 2 000.00 kr
Computer System 205 781.00 kr
Computer Equip. 6 525.80 kr
Sale Deposit Box 5 241.80 kr
Diamondback Tent 4 178.00 kr
Cell Phone 1 293.60 kr
Snow Blower 2 688.00 kr
Telephone 5 385.00 kr
Camera Equip. 2 253.60 kr
Camera Equip. 2 671.00 kr
Laser Printer 2 792.00 kr
Table Tennis Equip. 320.00 kr
Cell Phone 892.80 kr
Typewriter 378.00 kr
Cleaning Equipment 438.80 kr
Carpeting 1 008.00 kr
Fax Machine 6 532.00 kr
Cell Phone 1 840.00 kr
Cell Phone 797.60 kr
Tarpolin 476.60 kr
Alarm System 10 400.00 kr
Office Furniture 911.20 kr
Computer Terminal 2 880.00 kr
Cell Phone 1 107.00 kr
Computer Hardware 2 008.00 kr
Fax Machine 799.20 kr
Diamondback sign 282.40 kr
Forklift 4 200.00 kr
Alarm/stereo sys. 3 337.00 kr
Sound Equip. 1 076.00 kr
Sound Equip. 1 480.00 kr
Iveco Delivery Vehicle 120 000.00 kr
Trailer 16 000.00 kr
Warehouse Fixtures
Shelving 330.00 kr
Shelving 570.00 kr
Shelving 600.00 kr
Shelving 672.00 kr
Pallet Racks 41 485.00 kr
100
PART 4 : Distribution Agreements
1. Distribution agreement between Western States and Cyclos De Mexico dated 1
January, 1990 - valid until 31 December, 1994;
2. Distribution agreement between Western States and Moore Large & Co Ltd
dated 29 December 1988 - valid for 5 years, and shall continue in force
thereafter until either party gives the other 6 months' notice of
termination;
3. Distribution agreement between Western States and Freewheeling di Liliana
Riamondi dated 11 August 1989 - valid for 5 years, and shall continue in
force thereafter until either party gives the other 6 months' notice of
termination;
4. Distribution agreement between Diamond Back (Hong Kong) Co Ltd and Roslyn
Bicycles - Ross Gilchrist dated 1 March 1993 - valid until 1 July 1998;
5. Distribution agreement between Diamond Back (Hong Kong) Co Ltd and OY
Brandt AB dated 1 October 1994 - valid until 30 September 1997;
6. Distribution agreement between Western States and Cape Cycle Systems dated
1 January 1990 - valid until 31 December 1994;
7. Distribution agreement between Diamond Back (Hong Kong) Co Ltd and
Transport-Peter Kunstl GesmbH + Co dated 1 March 1993 - valid until 31 July
1996;
8. Distribution agreement between Diamond Back International Company Limited
and Harfa Bike Sport dated 15 September 1998 - valid until 14 September
2001;
9. Distribution agreement between Diamond Back International Company Limited
and Veloplus Ou dated 15 September 1998 - valid until 14 September 2001;
10. Distribution agreement between Diamond Back International Company Limited
and Michael Agrotis Trading dated 15 September 1998 - valid until 14
September 2001;
11. Distribution agreement between Diamond Back International Company Limited
and Komersia AS dated 15 September 1998 - valid until 14 September 2001;
12. Distribution agreement between Diamond Back International Company Limited
and G.B.S. Hellas dated 13 July 1998 - valid until 31 August 2001;
13. Distribution agreement between Diamond Back (Hong Kong) Co Ltd and Adamo
Kereskedelmi es Szolgaltato KFT dated 1 March 1993 - commencing on 1
January 1993 and valid until 1 January 1996;
101
14. Distribution agreement between Diamond Back International Co Ltd and Repco
Cycle Company, Australia dated 1 June 1994 - valid until 1 June 1999;
15. Distribution agreement between Diamond Back (Hong Kong) Co Ltd and Repco
Cycle Company, Australia dated 1 October 1994 - valid until 30 September
1997 (not signed);
16. Distribution agreement between Western States Import Co Inc and Pacific
Dunlop Limited, trading as Repco Cycle Company dated 26 May 1989 - valid
for 5 years and shall continue in force thereafter until either party gives
the other 6 months' notice of termination;
17. Distribution agreement between Diamond Back International Company Limited
and Rosen & Meents dated 15 September 1998 - valid until 14 September 2001;
18. Distribution agreement between Western States Import Co Inc d.b.a.,
Diamondback and Asama Enterprises Corp dated 7 August 1998 - valid until 7
August 2001;
19. Distribution agreement between Diamond Back International Co Ltd and Roslyn
Cycles and Fitness dated 15 September 1998 - commencing on 15 September
1998 at 24:00 hours and terminating on 14 September 2003 at 24:00 hours;
20. Distribution agreement between Diamondback and Repco Cycles and Fitness
dated 15 September 1998 - commencing on 15 September 1998 at 24:00 hours
and terminating on 14 September 2003 at 24:00 hours;
21. Distribution agreement between Diamondback and Ferraris S.R.L. dated 15
September 1998 - valid until 14 September 2001;
22. Distribution agreement between Diamondback and Toedy Pte Ltd dated 15
September 1998 - valid until 14 September 2001;
23. Distribution agreement between Diamondback and Bike Sports dated 15
September 1998 - valid until 14 September 1999;
24. Distribution agreement between Diamondback and Promex dated 15 September
1998 - valid until 14 September 1999;
25. Distribution agreement between Diamondback and Asia International Co Ltd
dated 15 September 1998 - valid until 14 September 2001;
26. Distribution agreement between Diamondback and Xcesso Departive S.A. dated
15 September 1998 - valid until 14 September 2001;
27. Distribution agreement between Diamondback and Marathon Sports dated
102
15 September 1998 - valid until 14 September 2001;
28. Distribution agreement between Diamondback and Merlin Genuine Spare Parts
Ltd dated 15 September 1998 - valid until 14 September 1999;
29. Distribution agreement between Diamondback and Classic's Imports & Exports
USA dated 15 September 1998 - valid until 14 September 2001;
30. Distribution agreement between Diamondback International Company Limited
and Freewheeling s.r.l. dated 27 March 1996 - commencing on 28 March 1996
and terminating on 30 June 2002;
31. Distribution agreement between Diamondback International Company Limited
and Intercycle, Switzerland dated 27 March 1996 - commencing on 30 April
1996 and terminating on 30 June 2000;
32. Distribution agreement between Western States Import Co Inc and Repco
Cycles and Fitness - commencing at 24:00 on 1 June 1998 and terminating at
24:00 on 30 May 2000 (undated and unsigned);
33. Distribution agreement between Western States Import Co Inc and Asama
Enterprises Corp dated 7 August 1998 - valid until 7 August 2001;
34. Distribution agreement between Diamondback International Company Limited
and Cape Cycle Systems dated 15 September 1998 - valid until 14 September
2001;
35. Distribution agreement between Diamondback International Company Limited
and and Diamondback France S.A. subject to execution immediately prior to
Completion; and
36. Distribution agreement between Diamondback International Company Limited
and and Diamondback Deutschland GmbH subject to execution immediately prior
to Completion.
103
SCHEDULE 6: LIST OF EMPLOYEES
LIST OF EMPLOYEES
Western States
104
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other benefits
Name of Employee Employ Title 31.10.97 31.10.98 pension (e.g company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
Administration
--------------
------------------------------------------------------------------------------------------------------------------------------------
1. *Barker John General N/A 234,000.00 Y CAR
Manager
------------------------------------------------------------------------------------------------------------------------------------
2. Bobrick, Michael 07/31/92 Director N/A 15,000.00 15,000.13 Y N/A
------------------------------------------------------------------------------------------------------------------------------------
3. Briggs, Carolyn 02/26/90 Executive N/A
Assistant 45,000.00 45,000.00 Y N/A
------------------------------------------------------------------------------------------------------------------------------------
4. Gargiulo, Sossity 11/16/96 Administrative N/A
Assistant 28,000.13 28,000.13 Y N/A
------------------------------------------------------------------------------------------------------------------------------------
5. Mays, Tucker 04/15/96 Contract paid N/A
through
4/15/99 N/A N/A N N/A
(Terminated)
------------------------------------------------------------------------------------------------------------------------------------
6. Turnham, Todd 02/01/90 To be paid N/A
through
10/15/98 N/A N/A N N/A
(Terminated)
------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Severance("S") & Notice
Name Of Employee Retention("R") Period
----------------
bonuses (No. of
days)
-----------------------------------------------------------------------------------------------------------------------------------
Administration
--------------
-----------------------------------------------------------------------------------------------------------------------------------
1. *Barker John S-12 months' salary N/A
-----------------------------------------------------------------------------------------------------------------------------------
2. Bobrick, Michael N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
60
3. Briggs, Carolyn N/A
-----------------------------------------------------------------------------------------------------------------------------------
60
4. Gargiulo, Sossity N/A
-----------------------------------------------------------------------------------------------------------------------------------
N/A
5. Mays, Tucker N/A
-----------------------------------------------------------------------------------------------------------------------------------
N/A
6. Turnham, Todd N/A
-----------------------------------------------------------------------------------------------------------------------------------
* denotes employee has service agreement Y indicates employee has elected to be covered by Western States' medical plan (N - not
covered)
-----------------------------------------------------------------------------------------------------------------------------------
3
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other benefits(e.g.
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
---------------- (including (including etc. housing)
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
Finance
-------
------------------------------------------------------------------------------------------------------------------------------------
1. Aguilar, Tina 01/17/95 Accounts N/A 18,408.00 19,240.00 N N/A
Receivable
------------------------------------------------------------------------------------------------------------------------------------
2. Alton, Patricia 10/06/97 Accounts N/A 17,680.00 18,200.00 N N/A
Receivable
------------------------------------------------------------------------------------------------------------------------------------
3. Armstrong, John 02/16/93 Accounting N/A 48,800.00 50,508.02 Y N/A
Manager
------------------------------------------------------------------------------------------------------------------------------------
4. Crosby, Linda 12/20/85 Credit N/A 34,000.00 36,000.00 Y N/A
Specialist &
A/R - Fitness
------------------------------------------------------------------------------------------------------------------------------------
5. Freeman, Steve 08/28/92 Controller N/A 83,472.00 88,500.00 Y N/A
------------------------------------------------------------------------------------------------------------------------------------
6. Lobas, Cynthia 02/10/97 Credit N/A 30,000.00 31,200.00 Y N/A
Specialist
------------------------------------------------------------------------------------------------------------------------------------
7. Lacono, Linda 05/16/94 Accounts N/A 19,968.00 20,592.00 N N/A
Payable
Specialist
------------------------------------------------------------------------------------------------------------------------------------
8. Esposito, DeAnna 10/13/92 Credit N/A 48,848.00 52,000.00 Y N/A
Manager
------------------------------------------------------------------------------------------------------------------------------------
9. Leon-Guerrero, Theresa 06/23/97 Credit N/A 22,880.00 25,000.00 Y N/A
Specialist
------------------------------------------------------------------------------------------------------------------------------------
10. Mazza, Arlene 02/01/98 Credit N/A 24,000.00 25,000.00 Y N/A
Specialist
------------------------------------------------------------------------------------------------------------------------------------
11. Reza, Roxxanne 10/01/97 Credit N/A 18,720.00 21,000.00 Y N/A
Specialist
------------------------------------------------------------------------------------------------------------------------------------
12. Schatz, Burton 06/01/93 Vice- N/A 160,000.00 163,199.92 Y CAR
President
Finance
------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Severance ("S") & Notice
Name of Employee Retention ("R") Period
---------------- bonuses (No. of days)
----------------------------------------------------------------------------------------
Finance
-------
1. Aguilar, Tina N/A 60
----------------------------------------------------------------------------------------
2. Alton, Patricia N/A 60
----------------------------------------------------------------------------------------
3. Armstrong, John N/A 60
----------------------------------------------------------------------------------------
4. Crosby, Linda N/A 60
----------------------------------------------------------------------------------------
5. Freeman, Steve S-4 months' salary N/A
----------------------------------------------------------------------------------------
6. Lobas, Cynthia N/A 60
----------------------------------------------------------------------------------------
7. Lacono, Linda N/A 60
----------------------------------------------------------------------------------------
8. Esposito, DeAnna N/A 60
----------------------------------------------------------------------------------------
9. Leon-Guerrero, Theresa N/A 60
----------------------------------------------------------------------------------------
10. Mazza, Arlene N/A 60
----------------------------------------------------------------------------------------
11. Reza, Roxxanne N/A 60
----------------------------------------------------------------------------------------
12. Schatz, Burton S-12 months' salary N/A
R-3 months' salary
----------------------------------------------------------------------------------------
4
WESTERN STATES
--------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------------------
Name of Date of Position/ Age Salary as of Salary as at Insurance Other benefits Severance Notice
Employee Employ Title 31.10.97 31.10.98 Pension (e.g. company ("S") & Period
-------- (including (including etc. car, housing) Retention (No. of
bonus/commission) bonus/commission ("R") bonuses days)
(USD per annum) (USD per annum)
-----------------------------------------------------------------------------------------------------------------------------------
13. Kinnison, 05/16/98 Credit N/A N/A 15,600.00 Y N/A N/A 60
Christine Clerk
-----------------------------------------------------------------------------------------------------------------------------------
5
WESTERN STATES
--------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance Other Severance Notice
Name of Employee Employ Title 31.10.97 31.10.98 Pension benefits ("S") & Period
----------------
(including (including etc. (e.g Retention (No. of
bonus/commis- bonus/commis- company ("R) bonuses days)
sion) (USD) sion) (USD) car,
per annum) per annum) housing
-----------------------------------------------------------------------------------------------------------------------------------
Warehouse - West
----------------
-----------------------------------------------------------------------------------------------------------------------------------
1. Avila, Ruben 03/12/96 Warehouse N/A 14,560.00 15,600.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
2. ????, Randall 05/26/98 Distribution N/A N/A 45,000.07 Y N/A N/A 60
Manager
-----------------------------------------------------------------------------------------------------------------------------------
3. Cancino, Everardo 06/10/95 Receiving N/A 33,432.00 34,798.00 N N/A N/A 60
Supervisor
-----------------------------------------------------------------------------------------------------------------------------------
4. Dennis, Charles 12/21/92 Warehouse N/A 19,656.00 20,072.00 N N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
5. Estrade, Reynaldo 03/10/97 Warehouse N/A 14,560.00 15,600.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
6. Flores, Rutilio Warehouse N/A 18,720.00 19,760.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
7. Garcia, Daniel 03/20/95 Warehouse N/A 15,288.00 15,600.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
8. Meyer, Lynn 03/06/89 Warehouse N/A 33,600.00 36,000.00 Y N/A N/A 60
Manager
-----------------------------------------------------------------------------------------------------------------------------------
9. Munoz, Pascual 08/21/95 Warehouse N/A 15,600.00 16,640.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
10. Nuno, Oscar 03/25/96 Warehouse N/A 15,288.00 16,640.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
11. Rodriguez, Rogelio 02/19/91 Warehouse N/A 22,214.00 22,880.00 N N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
12. Ruiz, Ramon 02/21/95 Warehouse N/A 15,600.00 16,640.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
13. Salcedo, Eduardo 03/15/93 Warehouse N/A 21,424.00 21,840.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
14. Smith, Daryl 08/16/96 Warehouse N/A 17,784.00 18,720.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
15. Taylor, William 02/22/90 Warehouse N/A 17,784.00 17,368.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
16. Jimenez, Rosaura 06/01/98 Warehouse N/A N/A 13,520.00 Y N/A N/A 60
-----------------------------------------------------------------------------------------------------------------------------------
6
WESTERN STATES
--------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance Other Severance Notice
Name of Employee Employ Title 31.10.97 31.10.98 Pension benefits ("S") & Period
----------------
(including (including etc. (e.g Retention (No. of
bonus/commis- bonus/commis- company ("R) bonuses days)
sion) (USD sion) (USD car,
per annum) per annum) housing
-----------------------------------------------------------------------------------------------------------------------------------
Warehouse - Central
-------------------
-----------------------------------------------------------------------------------------------------------------------------------
1. Bellinghiere, Philip 06/01/93 Warehouse N/A 23,400.00 24,440.00 y N/A N/A 60
Person
-----------------------------------------------------------------------------------------------------------------------------------
2. Dorelti, Patrick 09/24/90 Warehouse N/A 24,960.00 26,000.00 N N/A N/A 60
Lead
-----------------------------------------------------------------------------------------------------------------------------------
3. Falk, Robert 11/14/88 Warehouse N/A 33,384.00 34,789.00 y N/A N/A 60
Manager
-----------------------------------------------------------------------------------------------------------------------------------
4. Hannan, William 07/31/95 Warehouse N/A 20,800.00 21,632.00 y N/A N/A 60
Person
-----------------------------------------------------------------------------------------------------------------------------------
5. Preikschat, Allan 07/07/97 Warehouse N/A 17,680.00 18,408.00 y N/A N/A 60
Person
-----------------------------------------------------------------------------------------------------------------------------------
6. Rivas, Ricardo 02/23/98 Warehouse N/A 16,640.00 17,680.00 y N/A N/A 60
Person
-----------------------------------------------------------------------------------------------------------------------------------
7. Shively, William 05/18/98 Warehouse N/A 19,760.00 20,800.00 y N/A N/A 60
Person
-----------------------------------------------------------------------------------------------------------------------------------
8. Stroud, Stewart 09/29/97 Warehouse N/A 17,680.00 18,408.00 y N/A N/A 60
Person
-----------------------------------------------------------------------------------------------------------------------------------
7
WESTERN STATES
--------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as of Salary as at Insurance
Name of Employee Employ Title 31.10.97 31.10.98 Pension
----------------
(including (including etc.
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
-----------------------------------------------------------------------------------------------------------------------
Warehouse- East
---------------
-----------------------------------------------------------------------------------------------------------------------
1. Barrientos, Edgar 04/04/94 Warehouse N/A 18,720.00 ??,968.00 Y
Person
------------------------------------------------------------------------------------------------------------------------
2. DeLeon, Luis 11/10/97 Warehouse N/A N/A ??,120.00 Y
Person
------------------------------------------------------------------------------------------------------------------------
3. Jones, Clark 03/17/97 Warehouse N/A 16,120.00 ??,952.00 Y
Person
------------------------------------------------------------------------------------------------------------------------
4. Marzigliano, Leonard 08/14/89 Warehouse N/A 30,900.00 ??,136.00 Y
Manager
------------------------------------------------------------------------------------------------------------------------
5. Moore, William 08/12/96 Warehouse N/A 16,536.00 ??,368.00 Y
Person
------------------------------------------------------------------------------------------------------------------------
6. Torres, Reno 04/04/94 Warehouse N/A 17,680.00 ??,720.00 Y
Person
------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Other benefits Severance Notice
Name of Employee (e.g. company ("S") & Period
----------------
car, housing) Retention (No. of
("R") bonuses days)
---------------------------------------------------------------------------------------------------------------------------
Warehouse- East
---------------
---------------------------------------------------------------------------------------------------------------------------
1. Barrientos, Edgar N/A N/A 60
---------------------------------------------------------------------------------------------------------------------------
2. DeLeon, Luis N/A N/A 60
---------------------------------------------------------------------------------------------------------------------------
3. Jones, Clark N/A N/A 60
---------------------------------------------------------------------------------------------------------------------------
4. Marzigliano, Leonard N/A N/A 60
---------------------------------------------------------------------------------------------------------------------------
5. Moore, William N/A N/A 60
---------------------------------------------------------------------------------------------------------------------------
6. Torres, Reno N/A N/A 60
---------------------------------------------------------------------------------------------------------------------------
8
WESTERN STATES
--------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------------------
Name of Date of Position/ Age Salary as of Salary as at Insurance Other benefits Severance Notice
Employee Employ Title 31.10.97 31.10.98 Pension (e.g. company ("S") & Period
--------
(including (including etc. car, housing) Retention (No. of
bonus/commission) bonus/commission) ("R") bonuses days)
(USD per annum) (USD per annum)
-----------------------------------------------------------------------------------------------------------------------------------
Office
------
Services
--------
-----------------------------------------------------------------------------------------------------------------------------------
1. Gana, 06/21/95 Office N/A 20,800.00 22,880.00 Y N/A N/A 60
Tammy Services
Lead
-----------------------------------------------------------------------------------------------------------------------------------
2. Jensen, 12/09/92 Office N/A 19,344.00 19,968.00 Y N/A N/A 60
Tracy Services
-----------------------------------------------------------------------------------------------------------------------------------
3. Petralba, 03/09/98 Office N/A N/A 14,560.00 Y N/A N/A 60
Juvelyn Services
-----------------------------------------------------------------------------------------------------------------------------------
4. Revelez, 11/01/97 Office N/A N/A 15,600.00 Y N/A N/A 60
Buffi Services
----------------------------------------------------------------------------------------------------------------------------------
6. Miana, 10/05/98 Recept. N/A N/A 19,760.00 N N/A N/A 60
Marci
----------------------------------------------------------------------------------------------------------------------------------
9
WESTERN STATES
--------------
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------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other Benefits
Name of Employee Employ Title 31.10.97 31.10.98 Pension (e.g company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
Warranty
--------
------------------------------------------------------------------------------------------------------------------------------------
1. Bosman, Joe 09/01/96 Warranty N/A 29,000.19 32,000.00 Y N/A
Tech
------------------------------------------------------------------------------------------------------------------------------------
2. Gentile Michael 10/16/96 Warranty N/A 26,200.10 31,000.00 Y N/A
Tech
------------------------------------------------------------------------------------------------------------------------------------
3. Rodrigues, Ignacio 08/15/92 Warranty N/A 28,995.00 29,580.00 Y N/A
Tech
------------------------------------------------------------------------------------------------------------------------------------
4. Davenport, Dwayne 10/12/92 Warranty N/A 28,995.00 29,500.02 N N/A
Tech -
Fitness
------------------------------------------------------------------------------------------------------------------------------------
5. Nakohiro, Shawn 04/23/98 Warranty N/A N/A 27,000.06 Y N/A
Tech -
Fitness
-----------------------------------------------------------------------------------------------------------------------------------
6. *Hernandes, Joseph Ware Tech N/A N/A 14,560.00 N N/A
-----------------------------------------------------------------------------------------------------------------------------------
7. Ober, Brandon 10/12/98 Ware Tech N/A N/A 25,000.00 Y N/A
-----------------------------------------------------------------------------------------------------------------------------------
8. *Peterson, Brian Ware Tech N/A N/A 16,640.00 Y N/A
-----------------------------------------------------------------------------------------------------------------------------------
9. *Tyminski, Jonathan Ware Tech N/A N/A 17,680.00 Y N/A
-----------------------------------------------------------------------------------------------------------------------------------
Transferred from Warehouse
-----------------------------------------------------------------
Severance("S") & Notice
Name of Employee Retention("R") Period
----------------
bonuses (No. of
days)
-----------------------------------------------------------------
Warranty
--------
-----------------------------------------------------------------
1. Bosman, Joe N/A 60
-----------------------------------------------------------------
2. Gentile Michael N/A 60
-----------------------------------------------------------------
3. Rodrigues, Ignacio N/A 60
-----------------------------------------------------------------
4. Davenport, Dwayne N/A 60
-----------------------------------------------------------------
5. Nakohiro, Shawn N/A 60
-----------------------------------------------------------------
6. *Hernandes, Joseph N/A 60
-----------------------------------------------------------------
7. Ober, Brandon N/A 60
-----------------------------------------------------------------
8. *Peterson, Brian N/A 60
-----------------------------------------------------------------
9. *Tyminski, Jonathan N/A 60
-----------------------------------------------------------------
Transferred from Warehouse
-----------------------------------------------------------------
10
WESTERN STATES
--------------
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-------------------------------------------------------------------------------------------------------------------------
Name of Date of Position/ Age Salary as of Salary as at Insurance, Other benefits Severance
Employee Employ Title 31.10.97 31.10.98 Pension (e.g. company ("S") &
--------
(Including (including etc. car, housing) Retention
bonus/commission) bonus/commission ("R") bonuses
(USD per annum) (USD per annum)
-------------------------------------------------------------------------------------------------------------------------
M.I.S.
------
-------------------------------------------------------------------------------------------------------------------------
. Henderson, 10/15/97 Systems N/A 22,880.00 22,880.00 Y N/A N/A
Jeff Technician
-------------------------------------------------------------------------------------------------------------------------
. Lee, 06/13/91 Manager, N/A 73,500.00 77,000.00 Y N/A N/A
Victor Programming
(Da-ming)
-------------------------------------------------------------------------------------------------------------------------
. Lowe, 02/01/97 Systems N/A 52,000.00 56,000.26 Y N/A N/A
Patrick Administrator
-------------------------------------------------------------------------------------------------------------------------
. Buckly, 04/02/84 H/R N/A 61,152.00 63,000.00 Y N/A S-4 months'
Rence Manager salary
& Treasury
-------------------------------------------------------------------------------------------------------------------------
--------------------------------
Name of Notice
Employee Period
-------- (No. of
days)
-------------------------------
M.I.S.
------
-------------------------------
. Henderson, 60
Jeff
-------------------------------
. Lee, 60
Victor
(Da-ming)
-------------------------------
. Lowe, 60
Patrick
-------------------------------
. Buckly, N/A
Rence
-------------------------------
11
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance Other benefits (e.g
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/commission bonus/commis-
(USD per annum) sion
(USD per
annum
------------------------------------------------------------------------------------------------------------------------------------
FITNESS
-------
------------------------------------------------------------------------------------------------------------------------------------
1. Abbott, Chris 08/22/95 Inside Sales N/A 39,947.00 34,578.00 Y N/A
------------------------------------------------------------------------------------------------------------------------------------
2. Leazor, John 03/15/95 Regional N/A 58,719.00 58,165.00 Y N/A
Manager-
East
------------------------------------------------------------------------------------------------------------------------------------
3. Turkel, Scott 07/01/97 Regional N/A 16,867.00 40,543.00 Y N/A
Manager
West
------------------------------------------------------------------------------------------------------------------------------------
4. Puerling, Donald 11/01/94 Marketing N/A 40,000.000 41,200.02 N N/A
Assistant
------------------------------------------------------------------------------------------------------------------------------------
5. Liu, Pei-ju Anita 06/09/97 Product N/A 38,001.00 39,520.00 Y N/A
Development
Assistant
------------------------------------------------------------------------------------------------------------------------------------
6. Murray, Brian 04/15/96 Senior Product N/A 80,080.00 85,000.00 Y N/A
Development
Manager
------------------------------------------------------------------------------------------------------------------------------------
7. Thompson-Wright, Steph 06/15/92 Administrative N/A 26,000.00 30,000.05 Y N/A
Assistant
------------------------------------------------------------------------------------------------------------------------------------
8. Rodriguez, Susan 09/01/97 Administrative N/A 32,000.00 32,000.18 Y N/A
Assistant
------------------------------------------------------------------------------------------------------------------------------------
9. Sparks, Stephen 10/16/96 P.D. Asst N/A N/A 36,000.00 Y N/A
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Severance ("S") & Notice
Name of Employee Retention("R") Period
----------------
bonuses (No. of
days)
---------------------------------------------------------------------
FITNESS
-------
---------------------------------------------------------------------
1. Abbott, Chris N/A 60
---------------------------------------------------------------------
2. Leazor, John N/A 60
---------------------------------------------------------------------
3. Turkel, Scott N/A 60
---------------------------------------------------------------------
4. Puerling, Donald N/A 60
---------------------------------------------------------------------
5. Liu, Pei-ju Anita N/A 60
---------------------------------------------------------------------
6. Murray, Brian N/A 60
---------------------------------------------------------------------
7. Thompson-Wright, Steph N/A 60
---------------------------------------------------------------------
8. Rodriguez, Susan N/A 60
---------------------------------------------------------------------
9. Sparks, Stephen N/A 60
---------------------------------------------------------------------
12
WESTERN STATES
--------------
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------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at
Name of Employee Employ Title 31.10.97
----------------
(including
bonus/commission
(USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
PURCHASING
----------
------------------------------------------------------------------------------------------------------------------------------------
1. Greenslitt, Liz 12/17/84 Director- N/A 83,928.00
Purchasing
(Bikes)
------------------------------------------------------------------------------------------------------------------------------------
2. Souza, Sandy 02/01/97 Administrative N/A 34,611.00
Assistant
------------------------------------------------------------------------------------------------------------------------------------
3. Clubb, Janet 06/18/81 Traffic N/A 27,539.00
Coordinator
------------------------------------------------------------------------------------------------------------------------------------
4. Ramirez, Maria 07/31/95 Traffic N/A 23,795.00
Coordinator
------------------------------------------------------------------------------------------------------------------------------------
5. Weiss, Patricia 04/14/97 Traffic N/A 42,500.00
Manager
------------------------------------------------------------------------------------------------------------------------------------
6. Gottesfeld, Eric 10/30/95 After Market N/A 61,200.00
Buyer
------------------------------------------------------------------------------------------------------------------------------------
7. Drenhouse, Fred 03/07/95 VP - Purchasing N/A 110,000.00
------------------------------------------------------------------------------------------------------------------------------------
8. Murphy, Keven 06/22/98 Parts Buyer N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
9. Cohn, Chandra 08/17/98 ADM Asst. N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
10. Willis, Sandee 08/03/98 Purch. EXp N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Salary as at Insurance Other benefits (e.g Severance ("S") & Notice
Name of Employee 31.10.98 Pension company car, Retention ("R") Period
----------------
(including etc. housing) bonuses (No. of
bonus/commission days)
(USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
PURCHASING
----------
------------------------------------------------------------------------------------------------------------------------------------
1. Greenslitt, Liz 89,999.94 Y N/A S-12 months' salary N/A
------------------------------------------------------------------------------------------------------------------------------------
2. Souza, Sandy 38,000.00 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
3. Clubb, Janet 28,100.80 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
4. Ramirez, Maria 24,502.00 N N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
5. Weiss, Patricia 44,200.42 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
6. Gottesfeld Eric 63,650.08 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
7. Drenhouse, Fred 120,016.00 Y CAR S-12 months' salary N/A
------------------------------------------------------------------------------------------------------------------------------------
8. Murphy, Keven 60,000.00 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
9. Cohn, Chandra 32,000.00 N N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
10. Willis, Sandee 22,880.00 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
13
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other Benefits (e.g.
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
Product Development/Q.C.
------------------------
------------------------------------------------------------------------------------------------------------------------------------
1. Edlauer, Ken 05/09/90 Bicycle N/A 50,000.00 60,000.00 Y N/A
Product
Manager
------------------------------------------------------------------------------------------------------------------------------------
2. Malone T.K. 09/01/97 Assistant N/A 32,000.00 38,000.00 Y N/A
Product
Manager
------------------------------------------------------------------------------------------------------------------------------------
3. McWethy, Robert 10/22/90 Design N/A 65,000.00 67,600.00 Y N/A
Eng/QC
Coordinator
------------------------------------------------------------------------------------------------------------------------------------
4. Sloan, Brandon 03/01/97 Asst. Product N/A 32,000.00 40,000.00 Y N/A
Manager
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------
Severance ("S") & Notice
Name of Employee Retention ("R") Period
----------------
bonuses (No. of days)
------------------------------------------------------------------------------
Product Development/Q.C.
------------------------
------------------------------------------------------------------------------
1. Edlauer, Ken S-1 year N/A
------------------------------------------------------------------------------
2. Malone T.K. N/A 60
------------------------------------------------------------------------------
3. McWelhy, Robert N/A 60
------------------------------------------------------------------------------
4. Sloan, Brandon N/A 60
------------------------------------------------------------------------------
14
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other benefits
Name of Employee Employ Title 31.10.97 31.10.98 Pension etc. (e.g company car,
----------------
(including (including housing)
bonus/commission bonus/commission
(USD) per annum (USD) per annum
------------------------------------------------------------------------------------------------------------------------------------
Marketing/I.D.
--------------
------------------------------------------------------------------------------------------------------------------------------------
1. Dlexroid, Adam 09/22/97 Promotions N/A 31,990.00 36,000.00 Y N/A
Coordinator
------------------------------------------------------------------------------------------------------------------------------------
2. Greczyk, Marcus 06/07/93 Creative N/A 43,742.00 50.000.08 N N/A
Services
Manager
------------------------------------------------------------------------------------------------------------------------------------
3. Jones, Ricki 10/16/95 Marketing N/A 20.000.00 25.000.00 N N/A
Coordinator
------------------------------------------------------------------------------------------------------------------------------------
4. Ketterer, Keith 11/16/93 Team N/A 42,198.00 43.886.13 Y N/A
Manager
------------------------------------------------------------------------------------------------------------------------------------
5. Koniocki, Lusha 05/26/98 Marketing N/A N/A 17,680.00 Y N/A
Assistant
------------------------------------------------------------------------------------------------------------------------------------
6. Schmidit, Stephanie 12/16/85 Marketing N/A 41,098.00 50,000.00 Y N/A
Manager
------------------------------------------------------------------------------------------------------------------------------------
7. Walt, Tiffany 01/26/98 Graphic N/A N/A 25,000.14 N N/A
Designer
------------------------------------------------------------------------------------------------------------------------------------
8. Duhborf, Corey 09/01/97 International N/A 36,006.40 35.006.40 Y N/A
Sales
Manager
------------------------------------------------------------------------------------------------------------------------------------
Severance ("S") & Notice Period
Name of Employee Retention ("R") bonuses (No. of days)
----------------
--------------------------------------------------------------------------------
Marketing/I.D.
--------------
--------------------------------------------------------------------------------
1. Dlexroid, Adam N/A 60
--------------------------------------------------------------------------------
2. Greczyk, Marcus N/A 60
--------------------------------------------------------------------------------
3. Jones, Ricki N/A 60
--------------------------------------------------------------------------------
4. Ketterer, Keith N/A 60
--------------------------------------------------------------------------------
5. Koniocki, Lusha N/A 60
--------------------------------------------------------------------------------
6. Schmidit, Stephanie N/A 60
--------------------------------------------------------------------------------
7. Walt, Tiffany N/A 60
--------------------------------------------------------------------------------
8. Duhborf, Corey N/A 60
--------------------------------------------------------------------------------
15
WESTERN STATES
--------------
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----------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other Benefits (e.g
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
----------------------------------------------------------------------------------------------------------------------------------
INSIDE SALES
------------
-----------------------------------------------------------------------------------------------------------------------------------
1. Johnson, Tracy 01/01/96 Customer N/A 22,880.00 26,000.00 Y N/A
Service Rep
-----------------------------------------------------------------------------------------------------------------------------------
2. Kami Griswold 08/10/98 Customer N/A N/A 22,880.00 Y N/A
Service Rep
-----------------------------------------------------------------------------------------------------------------------------------
3. Turner, Karen 07/26/93 Inside Sales N/A 28,042.00 40,000.06 Y N/A
Manager
-----------------------------------------------------------------------------------------------------------------------------------
4. Anderson, Jim 02/23/98 Inside Sales N/A N/A 24,048.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
5. Cliatt, Gene 02/23/98 Inside Sales N/A N/A 19,255.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
6. Dvoretzky, Aaron 01/15/90 Inside Sales N/A 34,502.00 33,075.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
7. Harms, John Ivan 11/18/96 Inside Sales N/A 23,380.00 32,500.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
8. Kirwin, Angela 08/08/94 Inside Sales N/A 23,831.00 23,998.00 N N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
9. LeHouillier, Daniel 11/01/97 Inside Sales N/A N/A 26,387.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
10. Moore, Marc 02/01/98 Inside Sales N/A N/A 23,224.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
11. Ramirez, Robert 08/30/90 Inside Sales N/A 36,492.00 34,030.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
12. Santy, Lisa 06/08/98 Inside Sales N/A N/A 11,368.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
13. Schofield, Bruce 07/30/96 Inside Sales N/A 25,607.00 32,237.00 Y N/A
Rep.
----------------------------------------------------------------------------------------------------------------------------------
Severance ("S") & Notice
Name of Employee Retention ("R") Period
----------------
bonuses (No. of Days)
----------------------------------------------------------------------
INSIDE SALES
------------
----------------------------------------------------------------------
1. Johnson, Tracy N/A 60
----------------------------------------------------------------------
2. Kami Griswold N/A 60
----------------------------------------------------------------------
3. Turner, Karen N/A 60
----------------------------------------------------------------------
4. Anderson, Jim N/A 60
----------------------------------------------------------------------
5. Cliatt, Gene N/A 60
----------------------------------------------------------------------
6. Dvoretzky, Aaron N/A 60
----------------------------------------------------------------------
7. Harms, John Ivan N/A 60
----------------------------------------------------------------------
8. Kirwin, Angela N/A 60
----------------------------------------------------------------------
9. LeHoullier, Daniel N/A 60
----------------------------------------------------------------------
10. Moore, Marc N/A 60
----------------------------------------------------------------------
11. Ramirez, Robert N/A 60
----------------------------------------------------------------------
12. Santy, Lisa N/A 60
----------------------------------------------------------------------
13. Schofield, Bruce N/A 60
----------------------------------------------------------------------
16
WESTERN STATES
--------------
[Enlarge/Download Table]
-------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as al Salary as at Insurance, Other benefits (e.g
Name of Employee Employ Title 31.01.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission
(USD per annum) (USD per annum)
-------------------------------------------------------------------------------------------------------------------------------
14. Wood, Steven 09/29/97 Inside Sales N/A 2,048.00 25,633.00 Y N/A
Rep.
-------------------------------------------------------------------------------------------------------------------------------
15. Shaw, Lisa 09/01/97 Administrative N/A 26,000.00 26,000.00 Y N/A
Assistant
-------------------------------------------------------------------------------------------------------------------------------
16. Cratzor, Michael 07/22/98 Inside Sales N/A N/A 7291 Y N/A
Rep.
-------------------------------------------------------------------------------------------------------------------------------
17. Omess, Jake 07/22/98 Inside Sales N/A N/A 7293 Y N/A
Rep.
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------
Severance ("S") & Notice
Name of Employee Retention ("R") Period
----------------
bonuses (No. of
days)
-------------------------------------------------------
14. Wood, Steven N/A 60
-------------------------------------------------------
15. Shaw, Lisa N/A 60
-------------------------------------------------------
16. Cratzor, Michael N/A 60
-------------------------------------------------------
17. Omess, Jake N/A 60
-------------------------------------------------------
17
WESTERN STATES
--------------
[Enlarge/Download Table]
Date of Position/ Age Salary as at Salary as at Insurance, Other benefits
Name of Employee Employ Title 31.10.97 31.10.98 Pension (e.g company
---------------- etc. car, housing)
(including including bonus/
bonus/commission) commission USD
(USD per annum) per annum)
------------------------------------------------------------------------------------------------------------------------------------
Sales
-----
------------------------------------------------------------------------------------------------------------------------------------
1. Gray, Wayne D 02/06/95 National Sales N/A 65,000.00 78,000.0? Y N/A
Manager
------------------------------------------------------------------------------------------------------------------------------------
2. Harris, Paul 07/27/94 Sales Manager, N/A N/V 60,000.1? Y N/A
West
------------------------------------------------------------------------------------------------------------------------------------
3. Hoopingarner, Marc 08/28/96 Sales N/A 54,999.00 54,999.9? Y N/A
Administrator
------------------------------------------------------------------------------------------------------------------------------------
4. Reisinger, Sharon 05/04/92 Administrative N/A 33,571.00 35,000.1? Y N/A
Assistant
------------------------------------------------------------------------------------------------------------------------------------
5. Wallace, Ronald 08/12/91 Vice President N/A 92,592.00 100,000? Y N/A
Sales
------------------------------------------------------------------------------------------------------------------------------------
6. Holcomb, Thomas 10/17/88 Sales Manager, N/A 65,000.00 75,000.00 Y N/A
East
------------------------------------------------------------------------------------------------------------------------------------
7. Blocher, Ron 11/01/87 Sales Manager, N/A 75,000.00 76,499.9? Y N/A
Central
------------------------------------------------------------------------------------------------------------------------------------
8. Bellefeuille, Steve 11/16/94 National N/A 50,000.00 52,000.00 Y N/A
Accounts
Manager
------------------------------------------------------------------------------------------------------------------------------------
Severance("S") & Notice
Name of Employee Retention("R") Period
----------------
bonuses (No. of days)
-----------------------------------------------------------------------------
Sales
-----
-----------------------------------------------------------------------------
1. Gray, Wayne D N/A 60
-----------------------------------------------------------------------------
2. Harris, Paul N/A 60
-----------------------------------------------------------------------------
3. Hoopingarner, Marc N/A 60
-----------------------------------------------------------------------------
4. Relsinger, Sharon N/A 60
-----------------------------------------------------------------------------
5. Wallace, Ronald 5-6 months' salary N/A
-----------------------------------------------------------------------------
6. Holcomb, Thomas N/A 60
-----------------------------------------------------------------------------
7. Blocher, Ron N/A 60
-----------------------------------------------------------------------------
8. Bellefeuille, Steve N/A 60
-----------------------------------------------------------------------------
18
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance Other benefits (e.g.
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission)
(USD per annum) (USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
Expense
-------
------------------------------------------------------------------------------------------------------------------------------------
1. Allen, Robert 12/01/87 Western N/A 58,554.87 54,946.42 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
2. Carpenter, Scott 02/01/98 Central N/A N/A 44,292.73 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
3. Coyne, Anthony 07/12/93 Western N/A 44,728.67 50,478.21 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
4. DeSouza, David 01/11/90 Western N/A 70,085.63 62,844.54 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
5. Heaton, Steve 08/08/94 Western N/A 23,380.21 50,000.00 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
6. Henry, Bill 08/01/89 Western N/A 54,785.09 61,540.62 N N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
7. Holliday, Dennis 07/22/98 Central N/A N/A 40,000.00 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
8. Letford, Gary 01/03/78 Western N/A 60,613.82 50,448.26 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
9. McElravey, Tobias 09/07/95 Western N/A 30,159.05 50,527.92 Y N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Severance ("S") & Notice
Name of Employee Retention ("R") Period
----------------
bonuses (No. of days)
------------------------------------------------------------------------------------
Expense
-------
------------------------------------------------------------------------------------
1. Allen, Robert N/A 60
------------------------------------------------------------------------------------
2. Carpenter, Scott N/A 60
------------------------------------------------------------------------------------
3. Coyne, Anthony N/A 60
------------------------------------------------------------------------------------
4. DeSouza, David N/A 60
------------------------------------------------------------------------------------
5. Heaton, Steve N/A 60
------------------------------------------------------------------------------------
6. Henry, Bill N/A 60
------------------------------------------------------------------------------------
7. Holliday, Dennis N/A 60
------------------------------------------------------------------------------------
8. Letford, Gary N/A 60
------------------------------------------------------------------------------------
9. McElravey, Tobias N/A 60
------------------------------------------------------------------------------------
19
Western States
--------------
[Enlarge/Download Table]
---------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance Other benefits e.g.
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/ bonus/
commission) commission)
USD per annum) USD per annum)
---------------------------------------------------------------------------------------------------------------------------
10. Middents, David 02/01/82 Western N/A 75,623.48 62,007.36 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
11. Niermeyer, Todd 09/29/97 Western N/A 4,200.79 37,635.86 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
12. Santiago, Gary 01/15/90 Western N/A 51,656.61 62,096.06 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
13. Wehmeyer, Phil 09/16/93 Western N/A 55,618.68 58,252.78 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
14. Ayers, Michael 05/03/93 Central N/A 40,995.66 47,566.23 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
15. Clark, Geoffrey 10/14/96 Central N/A 57,123.31 56,531.29 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
16. Dixon, John 10/14/96 Central N/A 37,875.14 32,569.60 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
17. James, Scott 07/10/95 Central N/A 59,651.99 50,680.50 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
18. Kroeger, Richard 04/07/97 Central N/A 28,995.61 40,172.95 Y N/A
Region
Sales Rep.
---------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------
Severance ("S") & Notice Period
Name of Employee Retention (R) (No. of days)
----------------
bonuses
-------------------------------------------------------------
10. Middents, David N/A 60
--------------------------------------------------------------
11. Niermeyer, Todd N/A 60
--------------------------------------------------------------
12. Santiago, Gary N/A 60
--------------------------------------------------------------
13. Wehineyer, Phil N/A 60
--------------------------------------------------------------
14. Ayers, Michael N/A 60
-------------------------------------------------------------
15. Clark, Geoffrey N/A 60
-------------------------------------------------------------
16. Dixon, John N/A 60
-------------------------------------------------------------
17. James, Scott N/A 60
-------------------------------------------------------------
18. Kroeger, Richard N/A 60
-----------------------------------------------------------
20
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at
Name of Employee Employ Title 31.10.97
----------------
(including
bonus/commission)
(USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
19. Price, Terry 01/10/94 Central N/A 70,676.92
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
20. Schall, Michael 01/16/89 Central N/A 46,837.27
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
21. Stephens, Jeff 07/??/98 Central N/A N/A
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
22. Abney, John Davic 05/15/95 East Region N/A 38,375.21
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
23. Frye, David 08/10/97 East Region N/A 8,978.68
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
24. Hagstrom Doug 04/01/94 East Region N/A 70,117.47
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
25. Harouff, Steve 07/22/98 East Region N/A N/A
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
26. Henderson, Randa 02/01/98 East Region N/A N/A
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
27. Hibberts, William 07/29/96 Central N/A 32,513.11
Region Sales
Rep.
------------------------------------------------------------------------------------------------------------------------------------
28. Moore, S.D. Roberts 05/15/97 East Region N/A 30,330.80
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
29. Peszek, David 09/08/97 East Region N/A 7,781.28
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
30. Sanossian, David 02/18/98 East Region N/A N/A
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Salary as at Insurance, Other Benefits (e.g Severance ("S") & Notice
Name of Employee 31.10.98 Pension company car, Retention ("R") period
----------------
(including etc. housing) bonuses (No. of
bonus/commission) days)
(USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
19. Price, Terry 53,645.04 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
20. Schall, Michael 62,911.74 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
21. Stephens, Jeff 14,356.38 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
22. Abney, John Davic 23,883.26 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
23. Frye, David 32,966.09 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
24. Hagstrom Doug 69,714.86 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
25. Harouff, Steve 40,000.00 N N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
26. Henderson, Randa 38,074.33 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
27. Hibberts, William 32,400.15 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
28. Moore, S.D. Roberts 70,120.99 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
29. Peszek, David 53,155.50 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
30. Sanossian, David 38,397.77 Y N/A N/A 60
------------------------------------------------------------------------------------------------------------------------------------
21
WESTERN STATES
--------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Date of Position/ Age Salary as at Salary as at Insurance, Other benefits (e.g
Name of Employee Employ Title 31.10.97 31.10.98 Pension company car,
----------------
(including (including etc. housing)
bonus/commision bonus/commision
(USD per annum) (USD per annum)
------------------------------------------------------------------------------------------------------------------------------------
31. Thornhill, Don 11/14/88 East Region N/A 45,304.13 31,526.58 Y N/A
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
32. Thomton, Gary 09/01/96 East Region N/A 29,645.59 48,456.12 Y N/A
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
33. Zimmenman, Greg 01/06/86 East Region N/A 55,375.34 46,254.84 Y N/A
Sales Rep.
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Severance ("S") & Notice Period
Name of Employee Retention ("R") bonuses (No. of days)
----------------
--------------------------------------------------------------------------------
31. Thornhill, Don N/A 60
--------------------------------------------------------------------------------
32. Thomton, Gary N/A 60
--------------------------------------------------------------------------------
33. Zimmenman, Greg N/A 60
--------------------------------------------------------------------------------
(???? denotes monthly expenses)
22
LIST OF EMPLOYEES
Bejka
125
BEJKA
-----
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Period of Position/ Age Salary as at Salary as at Insurance, Other benefits
Name of Employee Employment Title 31.10.97 31.10.98 Pension (e.g company car,
----------------
(including (including etc. housing)
bonus/commission) bonus/commission)
(SEK/per annum) (SEK/per annum)
------------------------------------------------------------------------------------------------------------------------------------
1. *Stefan Spang 5 years Man. Dir. 42 422,500.00 480,000.00 Pension, Company car
(SEK5,600/
mth) Life
Health
------------------------------------------------------------------------------------------------------------------------------------
2. Margaretha Jonholl 20 years Respons. 62 287,800.00 297,600.00 Pension,
Economics Health
(SEK3,056/
mth)
------------------------------------------------------------------------------------------------------------------------------------
3. James Krueger 2 years Economics 32 18,000.00 250,000.00 Pension
half-time employed Purchaser (for full-time) (for full-time) Health
during 1998,
full-time from June
1999
------------------------------------------------------------------------------------------------------------------------------------
4. Ninni Alvesten 7 years Economics 36 194,000.00 201,000.00 Pension
Invoicing Health
(SEK
1,194/mth)
------------------------------------------------------------------------------------------------------------------------------------
5. Stefan Zachrisson 7 years Purchaser 29 199,000.00 201,600.00 Pension,
Health
(SEK
1,164/mth)
-----------------------------------------------------------------------------------------------------------------------------------
6. Peter Olsson 7 years Salesman 25 214,000.00 261,900.00 Pension, Access to company
(plus 1% bonus) plus 1% bonus Health car
(SEK
1,123/mth)
-----------------------------------------------------------------------------------------------------------------------------------
7. Fredrik Andersson ? months Salesman 26 228,000.00 Pension, Access to company
employed half-time (for full-time) Health car
till September 1st.
Thereafter on
probation for six
months
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------
Severance("S") & Notice Period
NAME OF EMPLOYEE Retention("R")
----------------
bonuses
-----------------------------------------------------------------
1. *Stefan Spang N/A Acc. to
contract
-----------------------------------------------------------------
2. Margaretha Jonholl N/A Acc. to
Swedish law: 6
months
-----------------------------------------------------------------
3. James Krueger N/A Acc. to
half-time employed Swedish law: 3
during 1998, months
full-time from June
1999
-----------------------------------------------------------------
4. Ninni Alvesten N/A Acc. to
Swedish law: 5
months
-----------------------------------------------------------------
5. Stefan Zachrisson N/A Acc. to
Swedish law: 3
months
-----------------------------------------------------------------
6. Peter Olsson R Acc. to
Swedish law: 3
months
-----------------------------------------------------------------
7. Fredrik Andersson N/A
employed half-time
till September 1st.
Thereafter on
probation for six
months
-----------------------------------------------------------------
1
BEJKA
-----
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
Period of Position/ Age Salary as at Salary as at Insurance
Name of Employee Employment Title 31.10.97 31.10.98 Pension
----------------
(including (including etc.
Bonus/commission) bonus/commission)
(Sek/per annum) (Sek/per annum))
------------------------------------------------------------------------------------------------------------------------------------
8. Lima Rosenquist 11 years Order Stock 36 189,000.00 201,000.00 Pension, Health
(SEK 1,128/mth)
------------------------------------------------------------------------------------------------------------------------------------
9. Peter Wold 3 years Warehouse 24 175,600.00 182,700.00 AMF
------------------------------------------------------------------------------------------------------------------------------------
10. ?rgen Schmitt Warehouse 24 150,000.00 AMF
Employed on probation till
Dec. 1st 1998
------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Other benefits (e.g Severance("S") Notice Period
Name of Employee company car, &
----------------
housing) Retention("R")
bonuses
-----------------------------------------------------------------------------------------------------------------------------------
8. Lima Rosenquist N/A N/A Acc. to Swedish
law: 5 months
-----------------------------------------------------------------------------------------------------------------------------------
9. Peter Wold N/A N/A Acc. to Swedish
law: 1 month
-----------------------------------------------------------------------------------------------------------------------------------
10. ?rgen Schmitt N/A N/A Acc. to Swedish
Employed on probation till law: 1 month
Dec. 1st 1998
-----------------------------------------------------------------------------------------------------------------------------------
Notes: *denotes employee has service agreement
Under Swedish law, an employer is obliged to pay an "employer's fee" of 33.03% of the gross salary and bonuses paid to its
employees, and on other benefits, such as company cars.
In addition, tax is levied against the employer at the rate of 25.03% of all pension payments made by the employer. Under
Swedish law, employees are entitled to 5 weeks' paid leave per annum.
-----------------------------------------------------------------------------------------------------------------------------------
2
SCHEDULE 7 : LIST OF ASSUMED LIABILITIES
WESTERN STATES
Liabilities Amount US$
----------- ----------
Notes payable to bank 12,054,181.15
Accounts payable-trade 8,199,973.00
Payroll tax payable 0.00
Sales tax payable - West 1,084.00
Sales tax payable - Central 0.00
Sales tax payable - East 0.00
Deposit payable sales computers - West 0.00
Deposit payable sales computers - Central 0.00
Deposit payable sales computers - East 0.00
Accrued expenses - other 80,787.00
Accrued freight out bikes 20,000.00
Accrued freight out bikes 6,000.00
Accrued freight out bikes 10,000.00
Accrued freight out bikes 10,000.00
Accrued freight out parts 9,000.00
Accrued freight out parts 1,000.00
Accrued freight out parts 2,000.00
Accrued freight out parts 2,000.00
Accrued workers compensation 53,422.00
Accrued product liability 550,000.00
Accrued insurance - medical 119,456.00
Accrued interest with foreign vendor 9,356.00
Accrued payroll and tax - West 132,979.00
Accrued payroll and tax - Fitness 0.00
128
Liabilities Amount US$
----------- ----------
Accrued payroll and tax - Central 7,211.00
Accrued payroll and tax - East 6,529.00
Accrued payroll and tax - South 2,074.00
Accrued commission and tax - West 14,164.00
Accrued commission and tax - Fitness 7,832.00
Accrued commission and tax - Central 1,404.00
Accrued commission and tax - East 9,610.00
Accrued commission and tax - South 15,227.00
Accrued bonus and tax - West 77,159.00
Accrued bonus and tax - Fitness - 8,000.00
Accrued bonus and tax - Central 2,342.00
Accrued bonus and tax - East 24,745.00
Accrued bonus and tax - South 6,335.00
Accrued bonus and tax - Taiwan 18,239.00
Accrued vacation, sickness and tax - West 125,005.00
Accrued vacation, sickness and tax - Fitness 13,500.00
Accrued vacation, sickness and tax - Central 13,296.00
Accrued vacation, sickness and tax - East 5,198.00
Accrued vacation, sickness and tax - South 4,366.00
Accrued profit sharing 0.00
Accrued rebates - West 0.00
Accrued rebates - Central 0.00
Accrued rebates - East 0.00
Accrued rebates - South 0.00
Accrued discounts - West 100,000.00
Accrued discounts - Fitness 15,000.00
Accrued discounts - Central 40,000.00
129
Liabilities Amount US$
----------- ----------
Accrued discounts - East 50,000.00
Accrued discounts - South 0.00
Accrued development - paid Diamondback 0.00
Accrued development - paid - Fitness 0.00
Accrued development - Quality Control 0.00
Accrued development - Quality Control 0.00
Accrued trade show - West 0.00
Accrued trade show - Fitness 0.00
Accrued trade show - Central 0.00
Accrued trade show - East 0.00
Accrued trade show - South 0.00
Accrued dealer clinic - West 0.00
Accrued dealer clinic - Fitness 0.00
Accrued dealer clinic - Central 0.00
Accrued dealer clinic - East 0.00
Accrued dealer clinic - South 0.00
Accrued dealer focus - West 0.00
Accrued dealer focus - Fitness 0.00
Accrued dealer focus - Central 0.00
Accrued dealer focus - East 0.00
Accrued dealer focus - South 0.00
Accrued sales meeting - West 0.00
Accrued sales meeting - Fitness 0.00
Accrued sales meeting - Central 0.00
Accrued sales meeting - East 0.00
Accrued meetings - South 0.00
Accrued travel - sales - West 0.00
130
Liabilities Amount US$
----------- ----------
Accrued travel - Fitness 0.00
Accrued travel - sales - Central 0.00
Accrued travel - sales - East 0.00
Accrued travel - sales - South 0.00
Accrued travel - paid - Diamondback 0.00
Accrued travel - paid - Fitness 0.00
Accrued travel - Quality Control 0.00
Accrued travel ID 0.00
Accrued outside services - West 70,000.00
Accrued outside services - Fitness 0.00
Accrued outside services - Central 0.00
Accrued outside services - East 0.00
Accrued abandoned space - Central 91,399.00
Accrued abandoned space - East 29,917.00
==============
TOTAL 22,003,790.15
BEJKA
Liabilities Amount (SEK)
----------- ------------
Swedish payables 559,586.00
International payable 1,626,817.00
Short term debt 32,124.00
Prepaid Salary expenses (vac) 98 40,000.00
Prepaid Salary expenses (vac) 99 142,203.00
Prepaid Salary expenses 0.00
Prepaid Salary expenses 60,180.00
131
Liabilities Amount (SEK)
----------- ------------
Net VAT 304,771.00
Income tax for personnel 0.00
Letter of Credit debt 0.00
Long loan, Sparbank 1,250,000.00
Loan, ADB System 87,497.00
==============
TOTAL 4,103,178.00
132
SCHEDULE 8 : VENDOR/WARRANTOR PROTECTION
1. (Intentionally Blank)
------------------------
2. Relevant Claims
------------------
In this Schedule, "Relevant Claim" means any claim under this Agreement for
--------------
breach of the Warranties.
3. Financial Limits
-------------------
3.1 Aggregate limit
The aggregate liability of the Vendors under this Agreement in respect of
the Warranties shall be limited to the sum of US$22,750,000 plus the amount
of the Assumed Liabilities and for this purpose any sum which the Vendors
incur in respect of professional fees and expenses incurred in connection
with a Relevant Claim shall not be taken into account.
3.2 Thresholds
The Vendors shall not be liable in respect of a Relevant Claim unless:
(A) the liability of the Vendors in respect of that Relevant Claim (and
all other Relevant Claims arising out of or related to the same or
similar subject matter) exceeds US$25,000; and
(B) the aggregate liability of the Vendors in respect of all Relevant
Claims (excluding any for which liability is excluded by Sub-Paragraph
3.2(A)) exceeds US$500,000 in which case the Vendors shall be liable
for the whole amount and not merely the excess over US$500,000.
3.3 Excess provisions
If and to the extent that the amount of any provision made in the
Completion Accounts in relation to the Book Debts or the Stock is found by
or notified to the Purchasers to be in excess of the matter for which such
provision was made then the Purchasers shall notify the Vendors of such
finding as soon as reasonably practicable and the amount of any such excess
(the "Excess Amount") shall, only to the extent that it has resulted in any
repayment of monies by the Vendors by reason of the application of the
provisions of Paragraph 5 of Schedule 4, be credited against and applied in
relieving the Vendor from any liability it would otherwise incur in respect
of Relevant Claims (but only to the extent of the amount of such repayment
and not otherwise).
133
3.4 No applications
The limits set out in this Paragraph 3 shall be without effect in relation
to the Warranties contained in Paragraph 3.1 of Part 1 of Schedule 3.
3.5 Single Price
The Purchasers' rights to claim damages in respect of any specific matter
shall not be limited by reference to the apportionment of the Consideration
pursuant to Clause 3 of this Agreement.
4. Time limits
--------------
The Vendors shall have no liability in respect of any Relevant Claim unless the
Purchasers shall have given notice in writing to the Vendors 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 not later than:
(A) in the case of a Relevant Claim under or in connection with any of the
Warranties contained in Paragraph 3.1 of Part 1 of Schedule 3, six (6)
years after the date of this Agreement;
(B) in the case of a Relevant Claim under or in connection with or any of
the Warranties contained in Paragraph 7.3 of Part 1 of Schedule 3 the
latest time permitted under the law of the relevant jurisdiction in
which the Company is incorporated or otherwise subject to by which
proceedings must be commenced in respect of the Relevant Claim;
(C) in the case of a Relevant Claim under or in connection with any
regulatory, environmental or social security liabilities (including,
for the avoidance of doubt, ERISA and other employee benefits), 31 May
2001; or
(D) in any other case, 31 May 2000.
and any Relevant Claim which has been made against the Vendors and which
has not been previously satisfied, settled or withdrawn shall be deemed to
have been withdrawn and shall become fully barred and unenforceable unless
proceedings in respect of the claim shall have been issued and served on
the Vendors on or before the date falling 12 months after the date by which
notice of claims must have been given to the Vendors pursuant to the
foregoing provisions of this Clause.
134
5. No duplication of recovery
-----------------------------
5.1 No double recovery
The Purchasers shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of the same loss
(but, for the avoidance of doubt, this shall not apply to damages,
reimbursement or other restitution in respect of common circumstances which
give rise to different heads of loss).
5.2 Claims under Warranties
In the event that the Purchasers are entitled to claim under the Tax Deed
or under the Warranties contained in Schedule 3 in respect of the same
subject matter, the Purchasers may claim under either or both but payments
under the Tax Deed shall pro tanto satisfy and discharge any claim which is
--- -----
capable of being made under the Warranties contained in Schedule 3 in
respect of the same subject matter and vice versa.
----------
6. Relevance of limitations in circumstances of fraud etc
---------------------------------------------------------
Notwithstanding anything to the contrary contained herein, the provisions of
Paragraphs 3, 4 and 5 shall not apply in respect of a Relevant Claim to the
extent that the matter giving rise to the Relevant Claim or the delay in the
discovery of such matter would not have arisen but for any act involving the
fraud, wilful misconduct or wilful concealment by any of the Vendors or any
member of the Vendors' Group or any officer or employee or agent or former
officer or employee of the Vendors' or any member of the Vendors' Group.
7. Third party claims
---------------------
(A) If the Vendors pay to the Purchasers an amount in respect of a breach of
any of the Warranties and the Purchasers subsequently recover a sum which
is referable to that breach, the Purchasers shall forthwith repay to
International on behalf of the Vendors (and the receipt of International
shall be deemed to be an absolute discharge for all purposes of the
Purchasers' obligations hereunder) so much of the amount paid by them as
does not exceed the sum recovered from the third party less all reasonable
costs, charges and expenses incurred by the Purchasers, as the case may be,
in obtaining that payment and in recovering that sum from the party.
(B) By way of covenant but not (except in relation to Sub-paragraph 7(B)(4)
below compliance with which is a condition precedent to liability unless
security has not been provided under paragraph 7(B)(3) of this Schedule) by
way of condition precedent to any Relevant Claim, each of the Purchasers
undertakes that if it becomes aware of any matter which might give rise to
a claim under any of the Warranties, the Purchasers shall or shall procure
that the relevant Sale Company shall:-
135
(1) as soon as reasonably practicable give notice to the Vendors of the
matter and shall consult with the Vendors with respect to the matter;
(2) give the Vendors and the Vendors' professional advisers reasonable
access to premises and personnel and to any relevant assets, documents
and records within the power, possession or control of the relevant
Purchaser to enable the Vendors to examine and to take copies or
photocopies of any of such documents or records at the Vendors'
expense;
(3) take such action and institute such proceedings, and give such
information and assistance, as the Vendors may reasonably request to:-
(a) dispute, resist, appeal, compromise, defend, remedy or mitigate
the matter; or
(b) enforce against any person (other than the Vendors) the rights of
the relevant Sale Companies in relation to the matter;
provided that the Vendors shall provide to the Purchasers and the
Purchasers' shareholders such security as they may reasonably require
for all reasonable costs, expenses, damages, and liabilities which may
be incurred by reason of any such action and the amount of the
relevant claim under the Warranties;
(4) not admit liability in respect of or compromise or settle the matter
without the prior written consent of the Vendors, such consent not to
be unreasonably withheld or delayed.
8. Events after Completion
--------------------------
The Vendors shall have no liability whatsoever in respect of any Relevant Claim
to the extent that the matter giving rise to such claim would not have arisen
but for:
(A) any act after Completion by any of the Purchasers or any of their
respective Affiliates, or any director, officer or employee or agent
of any of them; or
(B) the passing of, or change in, after the date of this Agreement any
law, rule or regulation of any governmental department, agency or
regulatory body or the interpretation thereof.
136
EXHIBIT 1:
Form of Tax Deed
THIS DEED is dated [ ] and made
---------
BETWEEN:
--------
(1) DIAMOND BACK INTERNATIONAL COMPANY LIMITED ("International") a company
------------------------------------------
incorporated in The British Virgin Islands whose principal/registered
office is at International Trust Building, Wickhams Cay, Road Town,
Tortola, The British Virgin Islands;
(2) WESTERN STATES IMPORT COMPANY, INC. ("Western States") a company
-----------------------------------
incorporated in California, USA whose principal/registered office is at
4030 Via Pescador, Camarillo, CA 93612-5008;
(3) BEJKA TRADING A.B. ("Bejka") a company incorporated in Sweden under number
------------------
556115-4609 whose principal office is at Gothenburg;
(each of parties (1) to (3) a "Vendor" and together the "Vendors")
(4) THE DERBY CYCLE CORPORATION ("Derby Cycle") a company incorporated in the
---------------------------
state of Delaware, USA whose principal/registered office is at 22710 72nd
Avenue South, Kent, Washington, WA 98032, United States of America;
(5) DERBY SWEDEN ("Derby Sweden") a company incorporated in Sweden whose
------------
principal/registered office is at Gothenburg.
(each of parties (4) and (5) a "Purchaser" and together the "Purchasers").
BACKGROUND:
-----------
This Deed has been entered into pursuant to an agreement dated [ ] 1998 made
between the Vendors and the Purchasers (the "Agreement") under which the
Purchasers have agreed to purchase certain Business Assets from the Vendors,
with the intention that an amount calculated by reference, inter alia, to
certain tax liabilities of the Purchasers relating to the Business and the
Business Assets shall be paid by the Vendors to the Purchasers subject as
mentioned herein.
137
THE PARTIES AGREE THAT:
-----------------------
1. Interpretation
------------------
1.1 Definitions
In this Deed, unless the contrary intention appears or the context
otherwise requires:
(A) words and expressions defined in the Agreement have the same
respective meanings in this Deed and any provisions in the Agreement
concerning matters of construction or interpretation shall also apply
in this Deed.
(B) "Tax" means all forms of taxation, duties, levies, imposts of whatever
-----
jurisdiction including (without limitation) corporation tax, income
tax, sales tax, value added tax, use tax, capital value tax, property
tax, franchise tax, excise customs and other import duties, all
employment taxes and all penalties, charges, costs and interest
relating to the foregoing or resulting from failure to comply with the
provisions of any enactment relating to tax.
(C) "Relief" means any relief, allowance or credit in respect of Tax or
--------
any right to repayment of Tax or any deduction, exemption or set-off
relevant in computing income, profits or gains for the purposes of Tax
pursuant to any legislation in any jurisdiction or otherwise.
1.2 Joint and Several Liability
All covenants, indemnities, agreements and obligations given under this
Deed by more than one person are given jointly and severally.
2. Indemnity
------------
2.1 Covenant
The Vendors undertake to the Purchasers that in relation to the Business
and Business Assets they will pay, satisfy, discharge and fulfil any and
all liabilities to Tax relating to the Business arising in respect of or by
reference to any period up to Completion (unless specifically assumed by
the Purchasers and save for any such liability provision for which is made
in the Completion Accounts) and in any jurisdiction whatsoever and shall
indemnify and hold harmless the Purchasers in respect of the same and from
and against all costs, claims, interest (including default interest),
liabilities and reasonable expenses which the Purchasers or any of them may
reasonably and properly suffer or incur in consequence of any failure or
delay by the Vendors to comply with this clause 2.1.
138
2.2 Disclosure not relevant
The Vendors' obligation to make payments under Sub-Clause 2.1 shall not be
affected by the Purchasers' knowledge or the disclosure, in the Disclosure
Letter or otherwise, of the liability to Tax giving rise to the payment, or
of the circumstances giving rise to that liability.
3. Gross-up
-----------
If any amount paid or due to the Purchasers under this Deed is a taxable receipt
of the Purchasers then the amount so paid or due (the "Net Amount") shall be
------------
increased to an amount which, after subtraction of the amount of any Tax on such
increased amount which arises, or would but for the availability of any Relief
arise, shall equal the Net Amount provided that if any payment is initially made
on the basis that the amount due is not taxable in the hands of the Purchasers
and it is subsequently determined that it is, or vice versa, appropriate
adjustments shall be made between the Purchasers and the Vendors.
4. Deductions and withholdings
------------------------------
4.1 No deductions, etc.
Any amount payable pursuant to this Deed shall be paid free and clear of
all deductions, withholdings, counter-claims or set-off whatsoever, save
only as may be required by law.
4.2 Deduction, etc. required by law
(A) If any deductions or withholdings are required by law to be made from
any sums, the Vendors shall be obliged to pay the Purchasers such
amount as will, after the deduction or withholding has been made,
leave the Purchasers with the same amount as they would have been
entitled to receive in the absence of such requirement to make a
deduction or withholding.
(B) To the extent the Purchasers obtain a tax credit in relation to such
deduction or withholding the Purchasers shall repay such credit to the
Vendors by way of adjustment to the Consideration.
4.3 Accounting for deductions and withholdings
If the Vendors are required by law to make a deduction or withholding as is
referred to in Sub-Clause 4.2, the Vendors shall:
(A) make such deduction or withholding;
139
(B) account for the full amount deducted or withheld to the relevant
authority in accordance with applicable law; and
(C) provide to the Purchasers the original, or a certified copy, of a
receipt or other documentation evidencing the above.
5. Payments under this Deed
---------------------------
5.1 Date for payment
Where any amount is required to be paid to the Purchasers by the Vendors in
respect of a liability to Tax under Clause 2.1, the Vendors shall pay such
amount in cleared funds on or before the date 3 Business Days before the
date on which the Tax in question is due for payment to the relevant tax
authority or, if later, 10 Business Days following the date on which the
Vendors are deemed pursuant to Sub-Clause 17.11 of the Agreement to receive
notice of their liability to make such payment. Any dispute as to the
amount contained in such notice shall be determined by the Auditors acting
as experts and not arbitrators (at the Vendors' expense).
5.2 Payments due on days other than Business Days
Any payment which becomes due on a day which is not a Business Day shall be
paid on the previous Business Day, and any payment which is made after noon
on any day shall, for the purposes of calculating interest, be deemed to
have been paid on the next following Business Day.
5.3 Payment in cleared funds
The Vendors shall make all payments under this Deed in immediately
available funds before noon on the due date for payment without deduction
or withholding on any account (save as expressly provided in this Deed) and
if any amount is not paid when due the Vendors shall pay to the Purchasers
interest on such amount accruing from day to day (as well after judgment as
before) at the rate of 3 per cent. per annum above the base rate of
Barclays Bank plc from time to time from the due date until the date of
actual payment (or the next Business Day if such day of actual payment is
not a Business Day) compounded quarterly.
6. Incorporation of provisions from the Agreement
-------------------------------------------------
The provisions of the following sub-clauses of the Agreement shall have effect
as if incorporated into this Deed mutatis mutandis namely:-
Sub-clause 17.1 - Assignment
Sub-clause 17.11 - Notices
Clause 19 - Law and Jurisdiction.
140
IN WITNESS WHEREOF this Deed was executed by the parties on the day and date
first above written.
141
EXHIBIT 2:
Form of Opinion to be given by Vendors' Solicitors
The Derby Cycle Corporation and
Derby Sweden
[date]
Dear Sirs,
The Acquisition by The Derby Cycle Corporation and Derby Sweden of business
---------------------------------------------------------------------------
assets from, inter alia, [ ]
-------------------------------------------------------
1. We act as legal advisers in [Country] to [ ].
2. This opinion is confined to and given on the basis of the law of [Country]
as currently applied by the courts of [Country]. We have made no
independent investigation of the laws of England as a basis for this
opinion and do not express or imply any opinion thereon. We have assumed
that there is nothing in the law of any other place which affects this
opinion.
3. For the purposes of this opinion we have examined the documents listed in
Schedule One to this letter. Other words and expressions defined in the
Sale and Purchase Agreement shall bear the same meanings herein.
4. In giving this opinion we have assumed in relation to the documents listed
in the Schedule to this letter that:
(A) all such documents are within the capacity and powers of and have been
validly authorised, executed and delivered by and are binding on the
parties thereto other than [ ] and there has been
no breach of any of the terms thereof
(B) there is nothing under English law to prevent the Sale and Purchase
Agreement or the Tax Deed from being valid, binding and enforceable
(C) all such documents submitted to us as copy, draft or specimen
documents conform to the originals
5. Based upon and subject to the foregoing and subject to clause [6] below we
are of the opinion that:
(A) [ ] is a company duly incorporated and existing
in good standing
142
in [Country] under the [Companies Act .] [law of Country] and is
properly qualified and entitled to carry on the business as currently
carried on and to sell the Business Assets as defined in the Sale and
Purchase Agreement.
(B) [ ] has power to enter into and execute and to
perform all of its obligations under the Sale and Purchase Agreement
and the Tax Deed.
(C) [ ] has taken all necessary corporate action to
authorise the execution, delivery and performance of the Sale and
Purchase Agreement and the Tax Deed.
(D) the Sale and Purchase Agreement and the Tax Deed constitute direct,
unconditional, legal, valid, binding and enforceable obligations of [
].
(E) the submission by [ ], for the purposes of the
Sale and Purchase Agreement and the Tax Deed, to the jurisdiction of
the English courts, and the appointment of the person therein
mentioned as its agent for service in respect of any action arising
out of or relating to it, are valid and binding on [ ]
and the courts of [Country] would recognise as a valid judgment and
would register for enforcement any judgment for a sum of money
obtained in an English court against [ ] in an
action connected with the Sale and Purchase Agreement or the Tax Deed
and would give effect thereto.
6. This opinion is subject to the following:
(A) enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganisation, limitation and other laws of general application
relating to or affecting the rights of creditors;
7. This opinion is addressed to and is solely for the benefit of The Derby
Cycle Corporation and Derby Sweden AB and except with our express consent
is not to be transmitted to any other person nor is to be relied upon by
any other person or for any purpose other than in connection with the Sale
and Purchase Agreement and the Tax Deed.
Yours faithfully,
143
Schedule 1:
1. Sale and Purchase Agreement among Diamond Back International Company
Limited, Western States Import Company, Inc., Bejka Trading A.B., The Derby
Cycle Corporation and Derby Sweden dated [ ] (the "Sale and Purchase
Agreement").
2. Tax Deed among Diamond Back International Company Limited, Western States
Import Company, Inc., Bejka Trading A.B., The Derby Cycle Corporation and
Derby Sweden and dated [ ] (the "Tax Deed").
144
[LETTERHEAD OF STANARD, BLENDER & SCHWARTZ APPEARS HERE]
December 7, 1998
The Derby Cycle Corporation
Derby Sweden A.B.
(Address)
Re: The Acquisition by the Derby Cycle Corporation ("Derby Cycle")
(Purchaser of the assets of Western States Import Co., Inc.
("WSI"))
--------------------------------------------------------------
Gentlemen:
This opinion is furnished to you pursuant to Clause 2.1 of the Sale
and Purchase Agreement dated December 4, 1998 (the "Agreement") between
Diamond Back International Company Limited, Hejka Trading A.B., and WSI
("Sellers") and Derby Cycle and Derby Sweden A.B. Only Derby Cycle
purchases the assets of WSI; however, Derby Sweden A.B. is a party to the
Agreement and Derby Cycle and Derby Sweden are collectively defined as
"Purchaser." The firm has acted as general counsel to WSI in connection
with the transactions contemplated in the Agreement.
For the purposes of this letter, the capitalized terms used herein but
not otherwise defined shall have the same meanings as defined in the
Agreement.
In rendering this opinion, we have examined originals or copies of
such documents, records and other writings as we consider relevant for
purposes of this opinion. In our examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and the conformity of all original documents submitted
to us as certified or photostatic copies. As to questions of fact material
to this opinion, we have, when relevant facts were not independently
established by us, relied on appropriate representations and
certifications.
144A
The Derby Cycle Corporation
December 7, 1998
Page 2 of 5
Specifically, we have examined the following documents:
1. The Agreement;
2. Tax Deed (as defined in the Agreement);
3. Articles of Incorporation of WSI;
4. By-Laws of WSI; and
5. Corporate Minutes of WSI.
The opinions expressed herein are subject to and qualified in all respects
by the following:
a. We have made no physical inspection of the principal place of
business of WSI, and express no opinion with respect to any matter which may be
disclosed through a physical inspection; and
b. We have not participated in the day-to-day management and
operation of WSI, and, except as specifically set forth herein, express no
opinion with respect to the day-to-day operation of WSI.
Please be advised that the use of the phrase "to our knowledge" in the
opinions expressed below does not imply that we have done any independent
investigation of the facts referenced. We are qualified to practice in the State
of California and, for the purpose of this opinion, have made no review of and
express no opinion regarding the laws of any other state or jurisdiction, except
for the applicable laws of the United States of America.
In our capacity as such counsel, we have been furnished with and have
examined originals or copies, certified or otherwise identified to our
satisfaction as being true copies, of such records, agreements, instruments, and
documents as, in our judgment, are necessary or relevant as the basis for the
opinions expressed below.
We have obtained and relied upon such certificates and assurances from
public officials as we have deemed necessary. We have investigated such
questions of law and fact for the purpose of rendering this opinion as we have
deemed necessary.
144B
The Derby Cycle Corporation
December 7, 1998
Page 3 of 5
References to sections of the UCC are to sections of the Uniform Commercial
Code as in effect in California, and any and all terms used in this opinion
which are defined in the UCC shall be construed and defined in accordance with
the meaning and definition ascribed to such terms under the UCC as in effect in
California.
Certain of the opinions rendered herein are qualified by the discussion
following the numbered paragraphs.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that:
1. WSI is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California and has all requisite
corporate power and corporate authority to enter into and perform all of its
obligations under the Agreement and the Tax Deed, thereto, to own and operate
its properties and assets, and to carry on its business as it is currently being
conducted and as it is contemplated to be conducted.
2. WSI is duly qualified to own and operate its properties and assets and
to carry on its business as it is currently being conducted and as it is
contemplated to be conducted, and is in good standing in each jurisdiction where
the conduct of its business or the ownership or operation of its properties and
assets makes such qualification necessary.
3. The Agreement, the Tax Deed, and all other agreements, instruments,
and documents referred to therein or delivered in connection therewith or
ancillary thereto, to the extent WSI is a party thereto, have been duly
authorized by all necessary corporate action on the part of WSI under the laws
of its state or incorporation and have been duly executed and delivered by WSI.
4. The Agreement, the Tax Deed, and all other agreements, instruments,
and documents referred to therein or delivered in connection therewith or
ancillary thereto, to the extent WSI is a party thereto, constitute the legal,
valid, and binding obligations of WSI, enforceable against WSI in accordance
with their respective terms.
5. WSI has full corporate power and authority to execute and deliver, and
to perform and observe the provisions of, the Agreement, the Tax Deed and all
other agreements, instruments and documents referred to therein or delivered in
connection therewith or ancillary thereto, to the extent WSI is a party thereto.
144C
The Derby Cycle Corporation
December 7, 1998
Page 4 of 5
6. WSI has the power and authority to cause its appropriate officers,
directors or authorized agents acting for and on its behalf, to execute and
deliver the Agreement and the Tax Deed and all other agreements, instruments and
documents referred to therein or delivered in connection therewith or ancillary
thereto, to the extent WSI is a party thereto and to cause its appropriate
officers, employees and agents, acting for and on its behalf, to satisfy the
obligations of WSI and take any discretionary actions permitted to be taken by
WSI under the Agreement and/or the Tax Deed and all other agreements,
instruments and documents referred to therein or delivered in connection
therewith or ancillary thereto, to the extent WSI is a party thereto.
7. The execution, delivery, and performance of the Agreement and the Tax
Deed by WSI, the compliance with the terms and conditions thereof, and the
consummation of the transactions contemplated thereby, do not and will not: (a)
violate or conflict with, result in a breach of, or constitute a default under,
any of the terms, conditions, or provisions of: (i) any present statutes, rules,
or regulations applicable to WSI: (ii) the articles of incorporation or bylaws
of WSI: (iii) any order, judgment, or decree of any domestic court or other
agency of domestic government, known to us, after due inquiry, which is binding
on charge, security interest, or other encumbrance upon any of the properties or
assets of WSI.
8. To the best of our knowledge, there are no actions, suits, arbitration
proceedings or claims pending or threatened against or involving WSI or
maintained by WSI at law on in equity or before any foreign, federal, state,
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof or any court or arbitrator,
which, if adversely determined, would have a material adverse effect upon the
business, operations, property, reasonably foreseeable prospects, profits or
condition (financial or otherwise) (a "Material Adverse Effect") of WSI.
9. To our knowledge, WSI is not in default under any agreement to which it
is a party or by which it or any of its property is bound, the effect of which
default would have a Material Adverse Effect. To our knowledge, no
authorization, consent, approval or other action by, and no notice to or filing
with, any governmental body or any other person which has not already been
obtained, taken or filed, as applicable, is required for the due execution,
delivery or performance by WSI of any of the aforementioned agreements.
144D
The Derby Cycle Corporation
December 7, 1998
Page 5 of 5
All opinions herein contained with respect to the enforceability of
documents and instruments are qualified:
(a) to the extent that the availability to the remedy of specific
performance or specific enforcement is subject to the discretion of the court
before which any proceedings therefor may be brought; and
(b) to the extent that certain remedies provided in the Agreement, the Tax
Deed, or documents delivered pursuant thereto may be limited by applicable
bankruptcy, reorganization, arrangement, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally as at the time in
effect.
Our opinion is limited to the laws of the State of California and the
applicable laws of the United States of America, and we assume no responsibility
as to the applicability or the effect of the laws (including the blue sky and
insolvency laws) of any other jurisdiction.
This letter and the opinion rendered herein are effective only as of the
date hereof and provided solely for the purpose of partially fulfilling the
requirements imposed on WSI in order to consummate the transactions contemplated
by the Agreement and the Tax Deed. This opinion may not be relied on by any
person or party other than Purchaser or its counsel, unless otherwise expressly
authorized in writing, by this firm.
Very truly yours,
GARY N. SCHWARTZ
GNS: jgb
Enclosures
144E
[ ] 1998
The Derby Cycle Corporation
22710, 72/nd/ Avenue South,
Kent, Washington WA 98032
DERBY SWEDEN A.B.
c/o 1455 Pennsylvania Avenue N.W.,
Suite 350
Washington DC 2004,
U.S.A
Dear Sirs,
Re: Diamond Back International Company Limited (the "Company")
1. We are qualified, practising lawyers in the British Virgin Islands
("B.V.I") who have been asked to provide this legal opinion with
regard to B.V.I law in connection with a sale and purchase agreement
dated [ ] 1998 (the "Agreement") and a tax deed dated [ ] 1998
(the "Tax Deed"), both made between, inter alias, you and the Company.
2. For the purpose of this opinion we have examined originals or copies
certified or otherwise indentified to our satisfaction of the
following:
(a) the executed Agreement;
(b) the executed Tax Deed
((a) and (b) are together referred to herein as the "Documents");
(c) (i) the Company's Certificate of Incorporation;
(ii) the Company's current Memorandum and Articles of
Association; and
(iii) a registered Agent's Certificate issued by the Company's
B.V.I registered agent.
144F
THE DERBY CYCLE CORPORATION
DERBY SWEDEN A.B.
[ ] 1998
Page 3
(d) minutes of a meeting of the Company's board of directors held on
[ ] 1998 at which resolutions were passed approving the Company's
execution and delivery of the Documents;
(e) written resolutions dated [ ] 1998 of the Company's members
approving the execution and delivery of the Documents
((d) and (e) above are together referred to as the "Authorising
Resolutions"); and
(f) the Company's public records (the "Public Records") on file on
[ ] 1998 with, and available for inspection at, the B.V.I.
Registry of Companies (the "Registry").
We have also made such other enquiries and reviewed such matters of law,
and examined the originals or copies certified or otherwise identified to
our satisfaction of such other documents, records, agreements, and
certificates as we have considered relevant for the purpose of giving the
opinions expressed below.
3. For the purposes of giving this opinion we have assumed without further
enquiry:
(a) that all signatures and seals on documents submitted to us are
genuine; that all documents submitted to us as originals are authentic
and complete; and that all documents submitted to us as copies conform
to the originals (and we have found nothing to indicate such
assumptions are not justified);
(b) that the Documents constitute valid and binding obligations of the
Company under the laws of England, by which laws they are expressed to
be governed;
(c) that all factual statements made in such documents we have examined
are correct;
(d) that the Authorising Resolutions remain in full force and effect up to
and including the time of execution of the Documents and have not been
amended or rescinded; and
(e) that the Public Records which we have examined are accurate and that
the information disclosed by the company searches which we have
conducted is true and complete; that such information has not since
then been altered; and that such searches did not fail to disclose any
information which had been delivered for registration but did not
appear on the Registry's file at the date of our search.
This legal opinion is confirmed to and given on the basis of B.V.I. law as
currently applied by the B.V.I. courts. We have not investigated, and do
not express or imply any opinion on the laws of any other jurisdiction.
144G
THE DERBY CYCLE CORPORATION
DERBY SWEDEN A.B
[ ] 1998
PAGE 3
4. The opinions set out herein are subject to the following qualifications:
(a) Rights and obligations may be limited or affected by applicable
bankruptcy, insolvency, liquidation, or other similar laws of general
application in the B.V.I.
(b) Certain equitable remedies such as injunction or specific performance
will only be available under B.V.I. law at the court's discretion and
will not normally be available where damages are considered to be an
adequate remedy.
(c) Where obligations are to be performed in a jurisdiction outside the
B.V.I. they may not be enforceable under B.V.I. law to the extent that
such performance would be contrary to public policy under the laws of
that outside jurisdiction.
(d) Claims may become barred under the B.V.I. Limitation Act, pursuant to
which an action based upon a contract must be brought within six (6)
years of the date when the cause of action arises and an action based
upon a deed must be brought within twelve (12) years of such date. A
cause of action is generally understood to arise when there is in
existence a person who can sue and another who can be sued, and when
there are present all the facts which are material to be proved to
entitle the plaintiff to succeed. Regarding a cause of action to
enforce a foreign judgement, the limitation period will begin to run
when the cause of action arises, that is, from the date of such
foreign judgement.
(e) A B.V.I. court will determine in its discretion whether an illegal or
unenforceable provision may be severed.
(f) The B.V.I. courts may refuse to give effect to a provision in respect
of the cost of unsuccessful litigation brought before those courts or
where the courts have themselves made an order for costs.
5. Based upon and subject to the foregoing paragraphs of this letter, we are
of the opinion that:
(a) The Company is a company duly incorporated with limited liability and
validity existing in good standing under the B.V.I. law with full
statutory and corporate capacity, power, authority, and right to own
its property and assets and to carry on its business as envisaged in
the Documents. To the best of our knowledge after due enquiry, no
steps have been or are being taken to appoint a receiver, liquidator,
or similar officer of, or to wind up or dissolve, the Company. It
should be noted, however, that B.V.I. law does not require notice of a
receiver's appointment to be filed anywhere in the B.V.I.
(b) The Company has full statutory and corporate capacity, power,
authority, and right to enter into and perform its obligations under
the Documents, including the giving of security pursuant to the
Documents, and has taken and obtained all necessary corporate and
other action and consents to authorise the execution and delivery of,
and the performance of its obligations under, the Documents.
144H
THE DERBY CYCLE CORPORATION
DERBY SWEDEN A.B.
[ ] 1998
PAGE 4
(c) The Documents have been duly executed for and on behalf of the Company
and constitute valid and binding obligations of the Company.
(d) The execution and delivery of, and the performance of its obligations
and the exercise of any of its rights under, the Documents by the
Company will not violate, contravene, or conflict with any provisions
of its constitutional documents or any existing B.V.I. law or
regulation to which the Company is subject, or cause any limit on the
powers to give security of the Company or its directors to be
exceeded.
(e) It is not necessary to ensure the legality, validity, enforceability,
or admissibility in evidence in proceedings of the Documents that they
or either of them or any other document be notarised, filed,
registered, or recorded in the B.V.I. or that any tax, stamp duty, or
similar fee be paid in respect thereof.
(f) The Company's obligations under the Documents constitute primary,
direct, unconditional, and general obligations and rank at least pari
passu in point of priority and security with all the Company's other
direct or contingent unsecured liabilities.
(g) The Company is generally subject to civil and commercial law with
respect to its obligations under the Documents and neither it nor any
of its assets is entitled to any immunity or privilege (sovereign or
otherwise) from suit, proceedings, set-off, judgement, execution,
attachment, or other legal process in the B.V.I. The Company's
execution and performance of the Documents do and will constitute
private and commercial acts.
(h) The Documents are in acceptable and proper legal form for enforcement
in the B.V.I., and in any proceedings taken in the B.V.I. for such
enforcement the choice of English law as the governing and proper law
will be recognised and upheld and applied in the B.V.I. courts. The
Company's submission to the non-exclusive jurisdiction of the English
courts is valid and irrevocable and the Company's irrevocable
appointment of an agent in England to accept service of process in
respect of the jurisdiction of such courts is valid and binding on the
Company.
(i) Any final and conclusive monetary judgement for a definite sum
obtained against the Company in the High Court of England in respect
of either of the Documents may, subject as hereinafter provided, be
registered and enforced as a judgement of the B.V.I. court. In order
for a judgement to be so registered three conditions must be
fulfilled: First, application must be made for registration of the
said judgement within twelve months of the date thereof or such longer
period as the court may allow; second, the judgement debtor must not
be appealing or have the right and intention to appeal; and third, the
B.V.I. court must consider it just and convenient that the judgement
be so enforced. Alternatively, the judgement may be treated as a cause
of action in itself so that no retrial of the issue would be necessary
in which case of an appeal is irrelevant unless a stay of execution
has been granted. In either case, it will be necessary that in respect
to the court issuing the final judgement:
144I
The Derby Cycle Corporation
Derby Sweden A.B.
[ ]1998
Page 5
(i) the court had jurisdiction in the matter and the judgement
debtor either submitted to such jurisdiction or was resident or
carrying on business within such jurisdiction and was duly
served with process;
(ii) the judgement given by the court was not in respect of
penalties, taxes, fines or similar fiscal or revenue
obligations;
(iii) in obtaining judgement there was no fraud on the part of the
person in whose favour judgement was given or on the part of
the court;
(iv) recognition or enforcement of the judgement in the B.V.I. would
not be contrary to public policy; and
(v) the proceedings pursuant to which judgement was obtained were
not contrary to natural justice.
(j) An award in the B.V.I. courts in respect of a claim brought with
regard to the Documents in United States dollars would be expressed in
United States dollars.
(k) There is no applicable usury or interest limitation law in the B.V.I.
which may restrict the recovery of payments under the Documents.
(l) The Company is not required by B.V.I. law to deduct or withhold from
any payment (whether of principal, interest, commitment commission,
fees, or other amount) becoming due under either of the Documents any
amount in respect or on account of tax in the B.V.I.
(m) No authorisations, licences, consents, or approvals are required by
the Company from any government and other authorities in the B.V.I. in
connection with its performance of its obligations under the
Documents.
(n) You are not and will not be deemed to be resident, domiciled, or
carrying on or transacting business or subject to taxation in the
B.V.I. or in violation of any law thereof by reason only of the
negotiation or preparation of the Documents or the entering into of,
or the exercise of your rights or the performance of your obligations
under, the Documents.
(o) You are not required to be licensed, qualified, or otherwise entitled
to carry on business in the B.V.I. in order to enforce your rights
under, or as a consequence of the execution, delivery, and performance
of, the Documents.
This opinion is addressed to you and may be relied upon by you and your counsel.
It is limited to the
144J
THE DERBY CYCLE CORPORATION
DERBY SWEDEN A.H
[ ] 1998
Page 6
matters herein and is not to be read as an opinion with respect to any other
matter; nor is it to be transmitted to any other person without our prior
express written consent.
Yours faithfully,
HARNEY WESTWOOD & RIEGELS
/s/ Fred L.A. Phillips
144K
EXHIBIT 3:
PART 1 : Form of Assignment of Intellectual Property Rights
THIS ASSIGNMENT is dated [ ] and made
---------------
BETWEEN:
--------
(1) [ ] a company incorporated
---------------------------------------------------
in [ ][No. ] whose principal/registered office is
at [ ] (the "Assignor"); and
----------
(2) THE DERBY CYCLE CORPORATION a company incorporated in the state of
---------------------------
Delaware, USA [no. ] whose principal/registered office is at 22710
72nd Avenue south, Kent, Washington, WA 98032, United States of America
(the "Assignee").
----------
WHEREAS:
-------
(A) Pursuant to an agreement dated [ ] between (inter alia) the
Assignor and the Assignee (the "Sale and Purchase Agreement"), the Assignor
has agreed to enter assignments to assign to the Assignee the Intellectual
Property Rights (as defined in the Sale and Purchase Agreement);
(B) Accordingly, the parties hereto have agreed to enter into this Assignment
to assign to the Assignee all Intellectual Property Rights (as defined in
the Sale and Purchase Agreement) owned by the Assignor which are not the
subject of the Assignments listed in the Schedule hereto (such rights
being referred to herein as the "IP Rights").
NOW IT IS HEREBY AGREED as follows:
-----------------------
1. In consideration of the sum of US$ now paid by the
Assignee to the Assignor (the receipt of which the Assignor hereby
acknowledges) the Assignor HEREBY ASSIGNS with full title guarantee to the
Assignee absolutely free from all liens, charges, security interests and/or
encumbrances whatsoever all its right, title and interest in and to the IP
Rights including all statutory and common law rights attaching thereto and
the right to sue for past infringements and to retain any damages obtained
as a result of such action, to hold unto the Assignee absolutely.
2. It is agreed that the IP Rights hereby assigned to the Assignee include
(without limitation) such right title and interest as the Assignor has in
the Intellectual Property Rights in respect of which no trade mark
registrations or applications or patents or patent applications or
registered designs or applications for the same are included in the
Assignments listed in the Schedule hereto and, in particular, all goodwill
of the business in relation to which any trade marks within the IP Rights
have been used
145
and all statutory and common law rights attaching thereto and the right to
sue for past infringements and to retain any damages as a result of such
action.
3. The Assignor hereby agrees and undertakes to render to the Assignee (at its
request) all such assistance with any proceedings which may be brought by
or against the Assignee against or by a third party in relation to the IP
Rights and the Assignee shall indemnify the Assignor in respect of all
costs and expenses (including reasonable legal costs) actually incurred by
it in providing the Assignee with such assistance.
4. The Assignor hereby covenants that at the costs and request of the Assignee
at any time and from time to time it will execute such deeds or documents
and do such acts or things and provide such assistance as may in each case
be necessary or desirable to give effect to this Assignment including, in
particular executing confirmatory assignments in such forms as the Assignee
may reasonably require for the purpose of recording/registering the
assignment hereby effected with any registry.
5. This Assignment shall be governed by and construed in accordance with
English law and the parties hereby submit to the exclusive jurisdiction of
the English courts.
IN WITNESS whereof this Assignment has been executed the day and year first
above written.
THE SCHEDULE
------------
--------------------------------------------------------------------------------
Assignment Parties Date
--------------------------------------------------------------------------------
Trade Marks (1) [ ] of even date herewith
(2) THE DERBY CYCLE
CORPORATION
--------------------------------------------------------------------------------
Patents/Designs (1)[ ] of even date herewith
2) THE DERBY CYCLE
CORPORATION
--------------------------------------------------------------------------------
146
Signed by duly )
authorised for and on behalf of )
[ ] )
in the presence of: )
Signed by duly )
authorised for and on behalf of )
THE DERBY CYCLE CORPORATION )
in the presence of: )
147
EXHIBIT 3:
PART 2: Form of Assignment of Trade Marks
THIS ASSIGNMENT is dated [ ] and made
---------------
BETWEEN:
--------
(1) [ ] a company incorporated
----------------------------------------------------
in [ ] [no. ] whose principal/registered office is at [
] (the "Assignor"); and
----------
(2) THE DERBY CYCLE CORPORATION a company incorporated in the state of
---------------------------
Delaware, USA [no. ] whose principal/registered office is at
22710 72nd Avenue South, Kent, Washington, WA 98032, United States of
America (the "Assignee").
----------
W H E R E A S :
(A) The Assignor is the beneficial owner of and the registered proprietor of or
applicant for the trade marks listed in the Schedule hereto ("the Trade
Marks").
(B) The Assignor has agreed to assign all its right title and interest in and
to the Trade Marks to the Assignee for the consideration hereinafter
mentioned.
NOW THIS ASSIGNMENT WITNESSETH as follows :
------------------------------
1. In consideration of the sum of [ ] now paid by the
Assignee to the Assignor (the receipt of which sum the Assignor hereby
acknowledges) the Assignor HEREBY ASSIGNS with full title guarantee to the
Assignee absolutely free from all liens, charges, security interests and/or
encumbrances whatsoever all its right title and interest in and to the
Trade Marks including the benefit of the applications for registration with
the intention that when the applications are granted the registrations will
vest in the Assignee and including any common law rights and all the
goodwill attaching to the Trade Marks.
2. The Assignment hereby effected shall include the right for the Assignee to
bring proceedings against any third party in respect of the Trade Marks
(including proceedings against any third party for infringement of the
Trade Marks or for passing off or for otherwise infringing the rights of
the Assignor in the Trade Marks). The Assignor hereby agrees and
undertakes to render to the Assignee (at its request) all such assistance
with any proceedings which may be brought by or against the Assignee
against or by any third party in relation to the Trade Marks and the
Assignee shall indemnify the Assignor in respect of all costs and expenses
(including reasonable legal costs) actually incurred by it in providing the
Assignee with such assistance.
148
3. The Assignor hereby covenants that at the cost and request of the Assignee
at any time and from time to time it will execute such deeds or documents
and do such acts or things and provide such assistance as may, in each
case, be necessary or desirable to give effect to this Assignment
including, in particular, executing confirmatory assignments in such form
as the Assignee may reasonably require for the purpose of
recording/registering the assignment hereby effected at any registry.
4. This Assignment shall be governed by and construed in accordance with
English Law and the parties hereto submit to the exclusive jurisdiction of
the English courts.
IN WITNESS WHEREOF this Assignment has been executed the day and year first
------------------
above written
SCHEDULE
--------
[Provide following details as appropriate]
Trade Marks
-----------
--------------------------------------------------------------------------------
Country Mark No. Class Status
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Signed by duly )
authorised for and on behalf of )
[ ] )
in the presence of: )
Signed by duly )
authorised for and on behalf of )
THE DERBY CYCLE CORPORATION )
in the presence of: )
149
EXHIBIT 3:
PART 3: Form of Assignment of Patents/Designs
THIS ASSIGNMENT is dated [ ] and made
---------------
BETWEEN:
--------
(1) [ ] a company incorporated
----------------------------------------------------
in [ ] [no. ] whose principal/registered office is at [
] (the "Assignor"); and
----------
(2) THE DERBY CYCLE CORPORATION a company incorporated in the state of
---------------------------
Delaware, USA [no. ] whose principal/registered office is at
22710 72nd Avenue south, Kent, Washington, WA 98032, United States of
America (the "Assignee").
----------
W H E R E A S :
(A) The Assignor is the beneficial owner of and the registered proprietor of or
applicant for the patents and designs listed in the Schedule hereto
(collectively "the Patents").
(B) The Assignor has agreed to assign all its right title and interest in and
to the Patents to the Assignee for the consideration hereinafter mentioned.
NOW THIS ASSIGNMENT WITNESSETH as follows :
------------------------------
1. In consideration of the sum of [ ] now paid by the
Assignee to the Assignor (the receipt of which sum the Assignor hereby
acknowledges) the Assignor HEREBY ASSIGNS with full title guarantee to the
Assignee absolutely free from all liens, charges, security interests and/or
encumbrances whatsoever the all its right title and interest in and to the
Patents to the intent that the grant of any patents or registered designs
thereon shall be in the name of and vest in the Assignee together with all
rights and powers arising or accrued therefrom including the right to sue
for damages and other remedies in respect of any infringement of such
rights or other acts within the scope of the claims of any published
specification of any of the Patents or accompanying any application
therefore or accompanying any of the applications included in the Patents
prior to the date hereof.
2. The Assignor hereby agrees and undertakes to render to the Assignee (at its
request) all such assistance with any proceedings which may be brought by
or against the Assignee against or by any third party in relation to the
Patents and the Assignee shall indemnify the Assignor in respect of all
costs and expenses (including reasonable legal costs) actually incurred by
it in providing the Assignee with such assistance.
150
3. The Assignor hereby covenants that at the cost and request of the Assignee
at any time and from time to time it will execute such deeds or documents
and do such acts or things and provide such assistance as may in each case
be necessary or desirable to give effect to this Assignment including, in
particular, executing confirmatory assignments in such form as the Assignee
may reasonably require for the purpose of recording/registering the
assignment hereby effected at any registry.
4. This Assignment shall be governed by and construed in accordance with
English Law and the parties hereto submit to the exclusive jurisdiction of
the English courts.
IN WITNESS WHEREOF this Assignment has been executed the day and year first
------------------
above written
SCHEDULE
--------
[Provide following details as appropriate]
Patents
-------
--------------------------------------------------------------------------------
Country No. Description Filing Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Signed by duly )
authorised for and on behalf of )
[ ] )
in the presence of: )
Signed by duly )
authorised for and on behalf of )
THE DERBY CYCLE CORPORATION )
in the presence of: )
151
EXHIBIT 4:
PART 1: Form of Assignment of the Contracts
THIS DEED is made on day of [ ] 1998
---------
BETWEEN:
-------
(1) [ ] a company whose office is at [
] (the "Assignor"); and
(2) [ ] a company whose office is at [
] (the "Assignee")
WHEREAS pursuant to an agreement dated [ ] (the "Sale and
-------
Purchase Agreement") made between the [ ] (1) and the [ ]
(2) the Assignor has agreed to sell, or to procure the sale of, with full
title guarantee and the Assignee has agreed to purchase the [ ] and
its related assets and employees from the Assignor (as defined therein)
including the benefit and the burden of the Contracts (as defined therein) and
together with the Third Party Rights (as defined therein).
THIS DEED WITNESSES AND IT IS AGREED as follows:
------------------------------------
1. Definitions and Interpretation
---------------------------------
In this Deed, unless the context otherwise requires, words and expressions
defined, or for whose definition provision is made, in the Sale and Purchase
Agreement shall have the same meanings in this Deed and any provisions in the
Sale and Purchase Agreement concerning matters of construction or interpretation
shall also apply in this Deed.
2. Assignment of Contracts
--------------------------
In consideration of the payment from the Assignee to the Assignor of the sum of
(Pounds)[ ] (receipt of which the Assignor acknowledges) and upon and subject
to the terms and conditions of the Sale and Purchase Agreement, the Assignor
with full title guarantee hereby assigns to the Assignee with effect from the
midnight on the date hereof (the "Transfer Date") the full benefit of all of the
Assignor's right, title and interest under these Contracts (as defined in the
Sale and Purchase Agreement) subject to the burden of the Assignor's liabilities
and obligations arising under the Contracts in respect of or by reference to any
period commencing after but not before the Transfer Date.
152
3. Assignment of Third Party Rights
-----------------------------------
In consideration of the payment from the Assignee to the Assignor of the sum of
(Pounds)[ ] (receipt of which the Assignor acknowledges) and upon and subject
to the terms and conditions of the Sale and Purchase Agreement, the Assignor
with full title guarantee hereby assigns to the Assignee with effect from the
Transfer Date the full benefit of all of the Assignor's right title and interest
in the Third Party Rights.
4. Further Assurance
--------------------
At any time after the date hereof the Assignor shall, at the reasonable request
and cost of the Assignee, execute or procure the execution of such documents and
do or procure the doing of such acts and things as the Assignee may reasonably
require for the purpose of giving the Assignee the full benefit of all the
provisions of this Deed.
5. Law and Jurisdiction
-----------------------
This Deed shall be governed by and construed in accordance with English law and
the parties irrevocably submit to the exclusive jurisdiction of the English
courts for all purposes relating to this Deed.
IN WITNESS of which this Deed has been executed and delivered by the parties the
day and year first before written
EXECUTED as a Deed by )
[ ] )
acting by )
Director
Director/Secretary
EXECUTED as a Deed by )
[ ] )
acting by )
Director
Director/Secretary
153
PART 2: Form of Novation of the Contracts
THIS NOVATION AGREEMENT is dated . 1998 and made
-----------------------
BETWEEN:
--------
(1) [ ] the "Continuing Party"), [ ]
---------------- ------------------
and having its place of business at [ ];
(2) [ ] (the "Outgoing Party"), [ ]
--------------- ----------------
and having its place of business at [ ]; and
(3) [ ] (the "Incoming Party"), [ ]
------------- ----------------
and having its place of business at [ ].
BACKGROUND:
-----------
(A) This Agreement is supplemental to the Original Agreement.
(B) The parties hereto have agreed that with effect from . . 1998 the
Outgoing Party shall cease to be a party to the Original Agreement and
that the Incoming Party shall become a party thereto in place of the
Outgoing Party and accordingly the Outgoing Party shall be released and
discharged from the Original Agreement upon the terms [and to the extent]
set out in this Agreement.
THE PARTIES AGREE THAT:
-----------------------
1. Interpretation
-----------------
In this Agreement and the recitals hereof:
"Original Agreement" means the . dated . . 1998 made between the
------------------
Continuing Party and the Outgoing Party.
["Effective Date" means . . 1998.]
----------------
154
2. Novation
-----------
2.1 Substitution of parties
(A) The Incoming Party hereby undertakes to the Continuing Party to
perform the Original Agreement and be bound by the terms thereof in
every way as if the Incoming Party was [,with effect from the
Effective Date,] a party to the Original Agreement in place of the
Outgoing Party.
(B) The Continuing Party hereby releases and discharges the Outgoing
Party from all obligations and liabilities of the Outgoing Party
under the Original Agreement [becoming due to be performed or
satisfied on or after the Effective Date] and all claims and demands
whatsoever in respect thereof and accepts the performance thereof by
the Incoming Party in place of performance by the Outgoing Party and
hereby undertakes to the Incoming Party [,with effect from the
Effective Date,] to perform the Original Agreement and be bound by
the terms thereof in every way as if the Incoming Party was a party
to the Original Agreement in place of the Outgoing Party.
[2.2 Surviving obligations
Each of the Continuing Party and the Outgoing Party shall continue to be
liable to the other in respect of their respective obligations and
liabilities under the Original Agreement becoming due to be performed or
satisfied prior to the Effective Date and all claims and demands in
respect thereof in all respects as if this Agreement had not been made and
the Incoming Party shall have no liability or obligation in respect
thereof.]
3. Warranties
-------------
[3.1 Performance by the Outgoing Party
The Continuing Party hereby warrants to the Incoming Party that [, as at
the Effective Date,] the Outgoing Party is not in breach of and has duly
performed and observed all its obligations and liabilities to the
Continuing Party contained in the Original Agreement and that the
Continuing Party has no claims or demands of any nature whatsoever in
relation thereto and the Continuing Party hereby releases any such claims
and demands that it may have.]
[3.2 Performance by the Continuing Party
[The Continuing Party hereby warrants to the Incoming Party that [, as at
the Effective Date,] the Continuing Party is not in breach of and has duly
observed and performed all its obligations and liabilities to the Outgoing
Party contained in the
155
Original Agreement.]
4. Confirmation of terms
------------------------
[For the avoidance of any doubt the Continuing Party hereby confirms to the
Incoming Party that the entire current terms of the Original Agreement [subject
only to the amendments referred to in clause ] are those appearing in the
document[s] [a copy/copies] of which [is/are] annexed hereto and signed on
behalf of the Continuing Party and the Incoming Party for identification and
there has been no amendment thereof (whether written or oral and whether or not
legally binding) and no subsisting waiver of any of such terms has been given by
the Continuing Party or the Outgoing Party].
5. Limitation Periods
---------------------
Nothing in this Agreement shall have the effect of extending any limitation
period set out in, or applicable to, the Original Agreement and nothing in this
Agreement shall operate to enable any claims to be brought against the Incoming
Party whether in tort, contract or otherwise which, but for this Agreement,
would be statute barred if made against the Outgoing Party.
6. Governing Law
----------------
This Agreement shall be governed by and construed in accordance with the law of
England and the parties hereto hereby submit to the jurisdiction of the English
Courts.
IN WITNESS whereof this Novation Agreement has been executed as a deed by the
parties hereto the day and year first before written
EXECUTED AS A DEED by
acting by:
Director
Director/Secretary
EXECUTED AS A DEED by
acting by:
Director
Director/Secretary
156
EXECUTED AS A DEED by
acting by:
Director
Director/Secretary
157
PART 3: Form of Assignment of U.S. Property
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE made as of this ________ day
of ______________, 1998 between Western States Import Co., Inc., a Delaware
corporation d/b/a Diamondback having an address at 4030 Via Pescador, Camarillo,
CA 93012-5008 ("Assignor"), and The Derby Cycle Corporation, a Delaware
--------
corporation having an address at 22710 Seventy-Second Avenue South, Kent,
Washington 98032 ("Assignee");
--------
RECITALS
--------
Pursuant to that certain Agreement dated as of ____________ _____, 1998
between Assignor, as seller, and Assignee, as buyer, and various other entities
(the "Agreement"), Assignor is selling to Assignee all of its assets, including
---------
without limitation the lease which is more particularly described on Schedule 1
----------
attached hereto (the "Lease"). All capitalized terms not defined herein shall
have the respective meaning ascribed thereto in the Agreement.
NOW, THEREFORE, in consideration of FIVE DOLLARS ($5.00) to the Assignor in
hand well and truly paid by the Assignee at and before sealing and delivery
hereof, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
ASSIGNMENT AND ASSUMPTION
-------------------------
Subject to the terms and conditions set forth in the Agreement, Assignor
hereby assigns, transfers, sets-over, delivers and conveys unto Assignee all of
the rights, title, interest, benefits and privileges of Assignor, as tenant,
under the Lease.
Assignee assumes all rights, duties, obligations and liabilities first
arising or first accruing on or after the date hereof to be performed by
Assignor, as tenant, under the Lease, for the duration of the respective term
thereof.
Assignor retains all rights, duties, obligations and liabilities first
arising or first accruing prior to the date hereof to be performed by
Assignor, as tenant, under the Lease.
This Assignment shall be binding upon, enforceable by and shall inure to
the benefit of the successors and assigns of the parties.
This Assignment may be signed in multiple counterparts which, when taken
together and signed by all parties and delivered to any other party hereto,
shall constitute a binding Assignment between the parties.
158
IN WITNESS WHEREOF, Assignor and Assignee have duly executed this
instrument as of the date first set forth above.
WESTERN STATES IMPORT CO., INC., a Delaware
corporation
_______________________________________
Name:
Title:
THE DERBY CYCLE CORPORATION, a Delaware
corporation
_______________________________________
Name:
Title:
159
SCHEDULE 1
----------
DESCRIPTION OF LEASE
--------------------
Standard Industrial Commercial Lease, dated February 18, 1998 by and between
Centex Industrial Development Company, L.P., as Landlord and Western States
Import Co., Inc., d/b/a Diamondback for premises located in Ventura California.
160
SIGNED by SZE CHIN HUNG JEROME )
duly authorised for and )
on behalf of )
DIAMOND BACK INTERNATIONAL )
COMPANY LIMITED )
SIGNED by SZE CHIN HUNG JEROME )
duly authorised for and )
on behalf of )
WESTERN STATES IMPORT )
COMPANY, INC. )
SIGNED by SZE CHIN HUNG JEROME )
duly authorised for and )
on behalf of )
BEJKA TRADING A.B. )
SIGNED by FRED MALEK )
duly authorised for and )
on behalf of )
THE DERBY CYCLE CORPORATION )
SIGNED by ALAN FINDEN-CROFTS )
duly authorised for and )
on behalf of )
DERBY SWEDEN A.B. )
Dates Referenced Herein and Documents Incorporated by Reference
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