TRANSFER OF BRANCH OF BUSINESS

The present Transfer of Branch of Business Deed is stipulated in Ponzano Veneto on 31st January 2003 between

BENETTON GROUP S.P.A.,

with registered offices in Via Villa Minelli, No. 1, Ponzano Veneto (Tv), nominal capital Euro 236,026,454.30 (two hundred and thirty-six million twenty-six thousand four hundred and fifty-four euro and thirty cents), tax code and registration number in the Company Registry Office of Treviso 00193320264, registered under No. 84146 in the Trade Register of the Chamber of Commerce of Treviso, in the person of the Managing Director and legal representative Mr. LUIGI DE PUPPI DE PUPPI, manager, born in Udine (Ud) on 8th March 1942, resident for the office at the company mentioned herea bove, vested with the necessary power (Board of Directors resolution of 18/12/02);

NORDICA S.P.A.

with registered offices in Via Montebelluna 5/7, Trevignano (Tv), share capital Euro 5,000,000.00 (five million), tax code and registration number in the Company Registry Office of Treviso 03767740263, registered under number 296839 Trade Register of the Chamber of Commerce of Treviso, in the person of the Chairman of the Board of Directors and legal representative Mr. FRANCO VACCARI, businessman, born in Montebelluna (Tv) on 6th May 1939, resident for the office at this company, who acts in performance of the resolution of the Board of Directors made at the meeting on 24th January 2003.

WHEREAS

The Seller is owner of the "Nordica" trademark, as well as the Branch of Business having as its object the manufacture and marketing of ski boots and skis marked with such principal trademark and with trademarks connected thereto

The Seller intends to sell and the Transferee intends to purchase the aforesaid Branch of Business

CONSIDERING THIS, forming an integral and substantial part, together with the attachments indicated hereinafter, in respect of the agreements as set forth hereinafter, the Parties have agreed as follows:

  1. DEFINITIONS
  2. In the present Deed, recitals included, the terms defined here below, when used with a capital first letter, will have the meaning attributed to them respectively in the present art.1.

    1. Goods means the movables or chattels used in the activity of the Branch of Business and those assigned to the latter by the Parties, which are listed in the attachment 1.1.
    2. Patents means the patents, design patents, utility models and ornamental models registered by the Seller and the registration applications filed by the Seller with reference to the Products listed in the attachment 1.2.
    3. Deed stands for the present transfer of Branch of Business deed inclusive of the attachments.
    4. Contracts means all the contracts listed in the attachment 1.4 (where contracts are specified that are conditional on the obtainment of the consent of the transferor contracting party), stipulated for the activity of the Branch of Business and transferred with the same.
    5. Transfer Date means the date from which the present Contract takes effect and which the parties agree on being 1st February 2003.
    6. Employees means the 119 employees listed in the attachment 1.6 who until the Transfer Date have worked within the scope of the activity carried out by the Branch of Business or also by others at the same time and who shall be transferred together with the same.
    7. Working Days means all the days in which the banks on the Milan market are open.
    8. Warehouse means the entire Product Warehouse, including the relative semi-finished products, raw materials and consumable materials, as at 31st January 2003 as described in the attachment 1.8. The valorizations in this attachment are the result of the agreement between the parties and are not subject to revision, while the quantities are purely on a book-keeping basis and subject to quantitative verification on the basis of the physical inventory being prepared.
    9. Trademarks means the "Nordica" trademark, as well as the other trademarks connected with it that have been registered by the Seller and the registration applications filed by the Seller, which are listed in the attachment 1.9.
    10. Party/Parties means the Seller and/or the Transferee.
    11. Liability means the algebraic sum of (i) severance indemnities accrued at the Transfer Date in respect of the Employees; (ii) severance indemnities to which those agents are entitled whose contracts are transferred with the Branch of Business, calculated according to the collective trade agreements in force; (iii) payables of the Branch of Business as shown by the Estimated Statement of Assets and Liabilities and by the accounting records at the Transfer Date; these preceding items all identified in the attachment 1.11.; and (iv) the loans from Gesfin S.p.A. resulting from the Estimated Statement of Assets and Liabilities and the accounting records as at the Transfer Date and related to the Branch of Business.
    12. Losses mean the costs, expenses, losses and non-existent assets/liabilities suffered by the Transferee or by the Seller as a consequence of the breach of declarations and guarantees or of the breach of any other guarantees due by law.
    13. Final Purchase Price means the Temporary Purchase Price adjusted on the basis of the differences between the Estimated Statement of Assets and Liabilities and the Final Statement of Assets and Liabilities.
    14. Temporary Purchase Price means the total of Euro 5,330,008.39 (five million three hundred and thirty thousand and eight euro/39) determined by the Parties based on the Estimated Statement of Assets and Liabilities.
    15. Products means all the ski boots manufactured and/or marketed within the scope of the Branch of Business's activity and distinguished by the Trademarks and the skis (complete with bindings) included in the sample collection relative to the 2003-2004 season.
    16. Intellectual Property means the Trademarks, Patents, as well as the possible copyright, trademarks by fact, trade names and domain names used in the activity of the Branch of Business provided they are connected with the Trademarks and with explicit exclusion of the Benetton name and trademark in its various forms.
    17. Branch of Business means the Branch of Business subject-matter of transfer according to this Deed, consisting of the following elements: goodwill, Goods, Contracts, Employees, Intellectual property, Liabilities and Warehouse, excluding any other element and/or asset and/or legal position not expressly contemplated in the present Deed and/or connected with the Branch of Business as defined in the present Deed.
    18. Auditor means the audit firm PriceWaterhouseCoopers of Treviso, or should the latter not wish to accept or there is a conflict of interest, the audit firm KPMG of Padova, or, should also this company not be able to or not wish to accept the appointment, the major Italian audit firm, independent from the parties, which shall be appointed in agreement between the Parties within fifteen days from the refusal of the appointment by KPMG, or, in the event of disagreement, appointed by the Chief Justice of the Court of Milan.
    19. Final Statement of Assets and Liabilities means the final update of the Estimated Statement of Assets and Liabilities prepared in agreement between the parties or, failing agreement within sixty days from the Transfer Date, by the Auditor within thirty days from the date of the appointment at the request of the most diligent Party.
    20. Estimated Statement of Assets and Liabilities means the pro-forma statement of assets and liabilities of the Branch of Business as at 31st January 2003 as per the attachment 1.20.
    21. Transferee means Nordica S.p.A., with registered offices in via Montebelluna, 5/7, Trevignano (TV).
    22. Warehouse Value means the value of the Warehouse as at the determined Transfer Date, as agreed between the Parties or by the Auditor, applying to the physical inventory as per art. 1.8 the unit values as per attachment 1.8 or failing such, the criteria of evaluation indicated in the attachment 1.22.
    23. Estimated Warehouse Value means the total Euro 3,732,650.00 (three million seven hundred and thirty-two thousand six hundred and fifty/00) as it is valorized in the Estimated Statement of Assets and Liabilities.
    24. Seller means Benetton Group S.p.A., with registered offices in via Villa Minelli, 1 - Ponzano Veneto (TV).

  3. SUBJECT-MATTER OF THE DEED
    1. In the terms and on the conditions as set forth in the present Deed the Seller sells and transfers to the Transferee, which accepts and purchases, the Branch of Business.

  4. PURCHASE PRICE AND PAYMENT METHOD
    1. The Final Purchase Price of the Branch of Business shall be paid according to the following methods:
      1. at the same time as the execution of the present Deed, the Transferee shall pay the Seller the difference between the Temporary Purchase Price and the Estimated Warehouse Value equating to Euro 1,597,358.39 (one million five hundred and ninety-seven thousand three hundred and fifty-eight/39);
      2. by and no later than 31st July 2003 the Parties shall settle the difference between the Temporary Purchase Price and the Final Purchase Price with exclusion of every settlement with reference to the Warehouse Value, which shall be accomplished in accordance with art. 3.1.3 hereinafter;
      3. by and no later than 31st July 2003 the Transferee shall pay the Seller the Warehouse Value, in full and irrespective of the effective sale of the Products included therein and/or of the effective proceeds of such sale, deducted any Liabilities whose total was not known at the Transfer Date and were, agreed upon between the Parties, determined after the Transfer Date.

    2. The Parties acknowledge and agree that the Temporary Purchase Price has been assigned to the Branch of Business elements as shown in the Estimated Statement of Assets and Liabilities.
    3. All the payments due by the Transferee to the Seller according to the present Deed, unless otherwise agreed, shall be made through bank crediting of the due amount, at here and there currency, into the current bank account number 20027/L held by the Seller at the Banca Antoniana Popolare Veneta S.p.A.. Treviso Branch, piazza dei Signori, 8, (ABI Italian Bankers Association 5040, CAB Sorting Code 12080) or into another bank account which may be indicated by the Seller in writing to the Transferee.
    4. All the costs, fees and tax impositions connected with the performance of the present Deed shall be charged to the Transferee, except, however, for the costs regarding the juridical and economical sphere of the Seller such as the costs of its consultants and the direct taxes in relation to the transfer subject-matter of the present Deed.

  5. EMPLOYEES
    1. The Seller and the Transferee mutually acknowledge that they are aware that some of the Employees, up to the Transfer date, have given their services to the Branch of Business and other company branches of the Seller.
    2. Should some of the Employees start legal proceedings to dispute their transfer and, as the result of such proceedings, the Seller is obliged to reintegrate one or more Employees, the Transferee shall pay the Seller the amount of the reserve for severance indemnity relative to the reintegrated Employees, which shall be taken on by the Seller. The Transferee undertakes to make every effort to prevent that disputes by the Employees arise over transfer.

  6. DECLARATIONS AND GUARANTEES
    1. The Seller declares and guarantees to the Transferee as follows with reference to the existing circumstances as at the Transfer Date.
      1. The Seller has full ownership of the elements that are part of the Branch of Business and full capacity to use the same within the ways and terms described in the present Deed. The Seller has not infringed third party rights, and has not infringed or will not infringe third party rights with the execution and performance of the present Deed. The Seller has taken all necessary resolutions to authorize the execution of the present Deed and performance of the same within the terms provided for therein. The present Deed is duly executed and the obligations contemplated herein are valid and binding for the Seller.
      2. The Goods, Warehouse and Intellectual Property are free of lien, seizure, options and third party claims have not been formalized in respect of their ownership.
      3. The Branch of Business Employees are 119. The Seller has complied with all the applicable legal and collective, company and individual contract provisions in the relationship with the Employees, it has paid the due compulsory contributions, it has correctly kept the accounts of the reserve for severance indemnity due to the Employees and has correctly complied with the insurance and social security laws. The Branch of Business has in being no contracts of consultancy, association in participation, profit sharing et similia, neither of brokerage, dealership et similia.
      4. In the management of the Branch of Business the Seller has substantially complied with applicable current legal provisions on environment and safety in the workplace and, as far as the Seller is aware, it has not been served notice of injunctions by competent authorities or the start of proceedings for infringement of the law or applicable regulations, nor have the same been threatened.
      5. The Seller has correctly fulfilled the obligations of a fiscal and contributory nature that are the responsibility of the Branch of Business, presenting the necessary declarations and reports and making the due payments on the basis of the same. The Branch of Business does not have any obligations of a fiscal or contributory nature other than those for which an adequate reserve has been transferred as part of the Branch of Business.
      6. The Trademarks and Patents were registered by the Seller and the payment of registration taxes due before the Transfer Date have been made; as far as the Seller is aware, no exceptions or objections have been raised by third parties in respect of the validity or efficacy of the Trademarks or Patents nor in respect of the use of such Trademarks and Patents by the Seller. Excluding those indicated in the attachment 1.4, Trademark or Patent licenses have not been granted to a third party. It remains expressly understood, however, that the Seller does not guarantee the validity and efficacy of the Trademarks and Patents, nor the positive result of the filed registration applications.
      7. No legal, fiscal, arbitration or administrative disputes exist, having a value exceeding Euro 50,000.00 each, nor, as a whole, a value exceeding Euro 250,000.00 that are transferred with the Branch of Business or of which the Branch of Business is a necessary part.
      8. No letters of patronage et similia have been issued by the Branch of Business.
      9. No contracts exist that are in course to purchase raw materials, semi-finished products, accessories, supplies or equipment that are not currently used for the characteristic activity of the Branch of Business.
      10. The existing Contracts with agents and distributors as at the Transfer Date are all listed in the attachment 1.4.
      11. In 2000, 2001 and 2002 there were no epidemic defects in the Products that, based on the applicable laws, would have led to the obligation to notify and/or to put into being withdrawal campaigns of the Products, nor were there any withdrawal campaigns of Products.

    2. The Transferee declares and guarantees to the Seller as follows with reference to the existing circumstances as at the Transfer Date.
      1. The Transferee has taken all the necessary resolutions to authorize the execution of the present Deed and the performance thereof within the terms provided for therein. The present Deed is duly executed and the obligations that are contemplated therein are valid and binding for the Transferee.
      2. The Transferee is not aware of any circumstance that constitutes breach of the declarations and guarantees of the Seller as set forth in art. 5.1 hereinabove.

    3. The Transferee acknowledges and agrees that the declarations and guarantees as per art. 5.1 hereinabove are the only guarantees given by the Seller. No other guarantee of any kind whatsoever is given by the Seller in relation to the Branch of Business, except for any other compulsorily legal guarantees.

  7. RESPONSIBILITY FOR THE PRODUCTS PRIOR TO THE TRANSFER DATE
    1. The Seller undertakes to keep the Transferee unharmed from costs and Losses that the Transferee could be called upon to sustain in relation to claims of third parties in respect of Products manufactured by the Branch of Business prior to 31st December 2002 (excluding the fall/winter collection 2003). The Parties acknowledge that in relation to the Products as hereinbefore being part of the Warehouse, the costs and Loss consequent to the return may not exceed the valorization of the Product in question made in accordance with the present Deed (except third party liability). Regarding this the Transferee undertakes to notify the Seller immediately of any third party claim that is brought against the it, in order to allow the Seller to deal with the same without delay, taking the suitable initiatives.
    2. Notwithstanding anything to the contrary hereinbefore, for the return of Smartech ski boots only from clients by and no later than 30th August 2003 due to delays in delivery (where the same was accomplished prior to the Transfer Date) or for defects in workmanship, the Seller undertakes to pay the Transferee a reimbursement calculated in conformity with the criteria as set forth in the attachment 6.2, always providing that and to the extent that the return costs were incurred by the Transferee. For third party claims relative to Smartech ski boots other than those described in the present art. 6.2 the provisions as per art. 6.1 shall apply.

  8. COMMUNICATIONS
    1. Any communication or notice to be made in relation to the present Deed shall be in writing, through registered letter with return receipt, if necessary preceded by a telegram or telex or fax and shall take effect from the sending of the registered letter with return receipt.
    2. The communications or notices shall be made to the following addresses:
      1. if sent to the Transferee:
      2. Nordica S.p.A.

        via Montebelluna, 5/7

        31040 Trevignano (TV)

        Fax No. 0423-6731

        For the attention of Mr. Franco Vaccari

        For information to:

        Avv. Renzo Maria Morresi

        Fax n. 0422 571942

        e-mail: morlex.treviso@morresi.org

      3. if sent to the Seller:

      Benetton Group S.p.A.

      Via Villa Minelli, 1

      31050 Ponzano Veneto (TV)

      For the attention of the Managing Director

      Fax No. 0422 51 99 94

      For information to:

      Legal Business Manager

      Fax No. 0422 51 95 86

    3. It is expressly understood that the communications addressed to the Parties at the residence as elected hereinbefore are to be considered as arrived only when they have effectively arrived at such residence. Any amendments to such addresses may not be opposed unless they are communicated in writing by the Party in question.

  9. PRESS RELEASES
    1. Except for any communications compulsorily required by law or regulations issued by government, control or stock market authorities, having jurisdiction over the Transferee or the Seller, press releases or of other nature shall not be issued in respect of the execution of the present Deed, the provisions contained therein or the operations provided for therein, without the prior written consent by both Parties.

  10. COMPETITION
    1. Benetton undertakes for 36 (thirty-six) months from the Transfer Date, directly or indirectly (including without limitation, the activities carried out through companies, associations, joint ventures, or other similar associative means) not to carry out any activity whatsoever that may be considered in competition with the activity carried out by the Branch of Business in just the sector of the manufacture and marketing of ski boots, snowboard boots and skis, with explicit exclusion from such obligation of the possibility of manufacturing and marketing of snowboard boots and skis with the "Kästle" and "Killer Loop" trademarks.

  11. VARIOUS PROVISIONS
    1. Any amendment to the present Deed shall be by written document executed by the Parties.
    2. The present Deed is binding and is to the benefit of the Parties and to the respective successors by any title or cause, who shall consequently be bound to all that is contained in the present Deed.
    3. In the event that one or more of the clauses contained in the present Deed is considered void, such invalidity shall not determine the invalidity of the remaining clauses, neither in the present Deed nor as a whole.
    4. The present Deed with its attachments constitutes the whole of the agreements between the Parties and substitutes any previous understanding, arrangement or agreement, oral or written.
    5. No tolerance, even if repeated, of either of the Parties regarding the non-fulfillment or delayed fulfillment by the other Party may be interpreted as silent abrogation of the corresponding agreement or as waiver by the non-defaulting Party to enforce their rights.
    6. The headings and subheadings of the single clauses of the present Deed have been inserted merely for identification purposes and do not have any interpretive value of the same.

  12. JURISDICTION
    1. Any dispute regarding the validity, interpretation or performance of the present Deed shall be settled through ritual impartial arbitration in conformity with the rules of conciliation and arbitration of the Chamber of Commerce of Milan. The venue of the arbitration shall be Treviso.
    2. Any dispute that derives from the present Deed, which cannot be settled in arbitration, the Law Court of Treviso shall have exclusive jurisdiction.

Benetton Group SpA Nordica SpA

Luigi de Puppi de Puppi Franco Vaccari

Source: OneCLE Business Contracts.