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SHARE AND QUOTA PURCHASE AGREEMENT
Between
XXXXX PLASTICS CORPORATION
And
Xxxxxxxxx AGNOTTOLI
Xxxxxxxx XXXXXXXXX
Xxxxxxxxx XXXXXXXXX
Maddalena XXXXXXXXX
Xxxxx Xxxxxxx XXXXXX
Concerning
THE ACQUISITION OF 100%
of CAPSOL SPA and of OCIESSE SRL
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THIS AGREEMENT (hereinafter referred to as the < AGREEMENT >), made and
entered into, by and between
XXXXX PLASTICS CORPORATION, a joint stock corporation duly incorporated
and validly existing under the laws of Delaware (USA), having its
registered office and principal place of business located in 000 Xxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxx, X.X.X., represented by Xx. Xxxxxx X. Xxxxxx,
in his capacity as President and Chief Executive Officer (hereinafter
referred to as < BUYER >), on one side,
AND
MRS. XXXXXXXXX AGNOTTOLI, an Italian citizen born in Milan (Italy) on
July 27th, 1941, domiciled in Vimercate, Milan (Italy) at Via Xxx Xxxxxxx
23, Tax Code XXX XXX 00X00 X000X (hereinafter referred to as
< MRS. AGNOTTOLI >);
MR. XXXXXXXX XXXXXXXXX, an Italian citizen born in Soncino, Cremona
(Italy) on July 20th, 1937, domiciled in Vimercate, Milan (Italy) at Via
Xxx Xxxxxxx 23, Tax Code XXX XXX 00X00 X000X (hereinafter referred to as
< XX. X. XXXXXXXXX >);
XX. XXXXXXXXX XXXXXXXXX, an Italian citizen born in Soncino, Cremona
(Italy) on October 10th, 1945, domiciled in Bresso, Milan (Italy) at Via
Panzeri 12, Tax Code XXX XXX 00X00 X000X (hereinafter referred to as
< XX. X. XXXXXXXXX >);
XXX. XXXXXXXXX XXXXXXXXX, an Italian citizen born in Soncino, Cremona
(Italy) on January 29th, 1939, domiciled in Cornate d'Adda, Milano (Italy)
at Xxx Xxxxxxxx
0
00, Xxx Code XXX XXX 00X00 X000X (hereinafter referred to as
< XXX. X. XXXXXXXXX >);
XXX. XXXXX XXXXXXX XXXXXX, an Italian citizen born in Rovigo (Italy)
on October 27th, 1943, domiciled in Buccinasco, Milano (Italy) at Via
2 Giugno 3, Tax Code XXX XXX 00X00 X000X (hereinafter referred to as
< XXX. XXXXXX >);
(hereinafter collectively referred to as the < SELLERS >).
WITNESSETH THAT
(a) CAPSOL SpA is a joint stock corporation duly incorporated and validly
existing under the laws of Italy, having its registered office and
principal place of business located in Cornate d'Adda, Milano (Italy),
at Via X. Xxxxxxxxxx 44, Tax Code 01778690154, registered at the
Companies' House in Milan at no. 25253 and having a corporate capital of
ITL 1,000,000,000 (one billion Italian Lire) (hereinafter referred to as
< CAPSOL > or, jointly with OCIESSE, as the < Companies >); and,
(b) OCIESSE SRL is a limited liability company duly organized and validly
existing under the laws of Italy, having its registered office and
principal place of business located in Buccinasco, Milano (Italy), at
Xxx Xxxxxxxxxx 00, Tax Code 01793150150, registered at the Companies'
House in Milan at no. 161026 and having a corporate capital of ITL
40,000,000 (forty million Italian Lire) (hereinafter referred to as
< OCIESSE > or, jointly with CAPSOL, as the < Companies >); and,
(c) GAZA SRL is a limited liability company duly organized and validly
existing under the laws of Italy, having its registered office and
principal place of business located in Vimercate, Milano (Italy), at Via
Xxxx Cremagnani 15/7, Tax Code 01793150150, registered at the Companies'
House in Monza at no. 42527 and having a corporate capital of ITL
90.000.000 (ninety million Italian Lire) (hereinafter referred to as
< GAZA >); and,
(d) Sellers jointly own the entire corporate capital of CAPSOL and OCIESSE
apportioned as indicated in Schedule < A > and certain of the Sellers
own part of the corporate capital of Gaza apportioned as indicated n
Schedule < B >; and
(e) GAZA owns a real estate property located in Colnago, Milano (Italy) as
identified in Schedule < C > hereto (hereinafter referred to as the
< Colnago Real Estate >) where CAPSOL carries out its activity, and a
real estate property located in Buccinasco, Milano (Italy) as
identified in Schedule < D > hereto (hereinafter referred to as the
< Buccinasco Real Estate >) where OCIESSE carries out its activity; and
(f) Buyer is willing and capable to purchase from Sellers 100% (one hundred
per cent) of the corporate capital of both CAPSOL and OCIESSE, and
Sellers are willing to sell and transfer to Buyer the share
participation respectively owned in the corporate capital of CAPSOL and
OCIESSE; and
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NOW, THEREFORE, in consideration of the premises which constitute an integral
part of this Agreement and the agreements, covenants, representations and
warranties hereinafter expressed, Buyer and Sellers agree as follows:
ARTICLE 1
1.01 Sellers hereby agree to sell to Buyer and Buyer hereby agrees to buy
from Sellers, in exchange for the consideration set forth in Article 1.03
below, and at the terms and conditions hereof:
(a) the Sellers' participation in CAPSOL as precisely identified and
apportioned among the Sellers in Schedule < A > hereto
(hereinafter referred to as the < CAPSOL SHARES > or sometimes,
jointly with the OCIESSE QUOTA, collectively referred to as the
< SHARES >) consisting of 100.000 stocks having par value of ITL
10,000 (ten thousand Italian Lire) each and a nominal value equal
in the aggregate to ITL 1,000,000,000 (one billion Italian Lire);
and
(b) the Sellers' participation in OCIESSE as precisely identified
and apportioned among the Sellers in Schedule < B > hereto
(hereinafter referred to as the < OCIESSE QUOTA > or sometimes,
jointly with the CAPSOL SHARES, collectively referred to as the
< SHARES >) having a nominal value equal in the aggregate to ITL
40,000,000 (forty million Italian Lire).
In consideration (i) of the sale and transfer of the SHARES,
(ii) of the indemnity obligations assumed by the Sellers pursuant
to Articles 4 and 6 hereof, and (iii) of the undertaking not to
compete, assumed by the Sellers, pursuant to Article 7 below,
Buyer agrees to pay to Sellers the aggregate amount of ITL
24,389,838,825 (twenty four billion three hundred eighty nine
million eight hundred thirty eight thousand eight hundred twenty
five Italian Lire) (the < Purchase Price >) allocated among the
Sellers as indicated in Schedule 1.01 and further allocated
among the CAPSOL SHARES and the OCIESSE QUOTA as indicated in
Schedule 1.
1.02 The undertaking of Sellers under Paragraph 1.01 above preceding shall be
regarded as one and single obligation and shall not be divisible nor
otherwise severable from one another. Accordingly, Buyer shall not be
required to purchase less than all of the CAPSOL SHARES and of the
OCIESSE QUOTA.
(i) Buyer may designate one or more company(ies) to become a party to
this Agreement and to purchase and pay for all or part of the
CAPSOL SHARES and/or the OCIESSE QUOTA in accordance with the
terms hereof (the < Designated Buyer >) provided that such
designation is made in compliance with the following provisions:
(ii) anything in Art 1403 of the Italian Civil Code to the contrary
notwithstanding, each designation will be sufficiently made if
notified in writing to Sellers together with the written
acceptance of the Designated Buyer;
(iii) any designation pursuant hereto may be notified to Sellers (under
penalty of forfeiture) not later than 2 (two) business days prior
to the Closing. For
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the purpose of this Agreement "Business Day" shall mean any
day other than a Saturday, Sunday or other day on which commercial
banks in Italy are authorized or required to close.
(iv) the Designated Buyer shall be an entity controlling or controlled
by Buyer pursuant to Article 2395 of the Italian Civil Code;
(v) Buyer does hereby guarantees the punctual and exact performance by
the Designated Buyer of the duties and obligations arising under
or in connection with this Agreement.
1.03 The payment of the Purchase Price shall be made by Buyer to the Sellers
at Closing, as hereinafter defined, as follows :
(i) ITL 21,950,854,943 (twenty one billion nine hundred fifty million
eight hundred fifty four thousand nine hundred forty three Italian
Lire) shall be paid at Closing to the Sellers, in the proportions
set out in Schedule 1.01 by means of bank wire transfer in
immediately available funds; and
(ii) ITL 2,438,983,882 (two billion four hundred thirty eight million
nine hundred eighty three thousand eight hundred eighty two
Italian Lire) shall be paid at Closing to the Escrow Agent (as
hereinafter defined) pursuant to Article 6.04 below, by means of
bank wire transfer in immediately available funds.
ARTICLE 2
ACTIONS PRIOR TO THE CLOSING
Sellers and Buyer (hereinafter referred to as the "Parties") agree that the
following events to the extent that they have not occurred prior to the date
hereof shall take place before Closing and shall be considered as conditions to
Buyer's obligation to close. In the event that the said conditions have not
occurred by the Closing (as hereinafter defined) the obligations of the Parties
under this Agreement shall be automatically terminated.
2.01 The board of directors of Buyer shall approve the transaction
contemplated by this Agreement.
2.02 Sellers shall hold at Closing (i) an ordinary shareholders' meeting of
the Companies to resolve upon the replacement of the current members of
the board of directors and, as to CAPSOL, of the board of statutory
auditors; (ii) an extraordinary shareholders' meeting to amend the
by-laws of both Capsol and Ociesse.
2.03 The Buyer shall have obtained financing on terms and conditions
satisfactory to the Buyer in its sole discretion required to consummate
all of the transactions contemplated hereby.
2.04 Since January 1, 2000 there shall have been no material adverse change in
the business, operations, assets, condition (financial or otherwise),
operating results, liabilities, employee relations or business prospects
of either of the Companies.
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2.05 Sellers shall approve the 1999 final balance sheet of the Companies and
allocate any net profit resulting therefrom to increase the mandatory and
special reserves of the Companies consistently with the resolutions of
the shareholders' or, as the case may be, the quotaholders' meetings
which approved the 1997 and 1998 balance sheets.
2.06 From and after the date of this Agreement until the Closing (the
< Transition Period >), except as otherwise consented to in writing by
Buyer or provided by this Agreement, each of the Companies shall, and
Sellers shall cause each of the Companies to:
(a) conduct its operations according to the ordinary and usual course
of business consistent with past custom and practice (including
the collection of receivables, the payment of payables and the
maintenance of supplies) and use its best efforts to preserve
intact its business organization, keep available the services of
officers and employees, and maintain satisfactory relationships
with suppliers, customers and other persons having business
relationships with it;
(b) maintain its assets in customary repair, order and condition,
maintain insurance reasonably comparable to that in effect on the
date hereof, replace in accordance with past practice inoperable,
worn out or obsolete assets with modern assets of comparable
quality and, in the event of a casualty, loss or damage to any of
such assets or properties prior to the Closing for which the
relevant Company is insured or the condemnation of any assets or
properties, either repair or replace such assets or property or,
if Buyer so agrees, retain such insurance or condemnation
proceeds;
(c) promptly inform Buyer in writing of any material variances from
the representations and warranties contained in Article 4;
(d) permit representatives and lenders of Buyer to have full access to
the Companies' books, records, property, facilities, customers,
suppliers, sales representatives, consultants, key employees and
independent accountants in connection with any supplementary due
diligence review of the Companies which Buyer may reasonably deem
necessary or useful it being understood that such investigation
shall in no way affect or otherwise obviate or diminish any
representations or warranties of the Sellers, or conditions to the
obligations of the Buyer, in each case as set forth herein. As far
as customers, suppliers and sales representatives are concerned,
Buyer shall be entitled to contact them only upon obtaining
Sellers' prior approval;
(e) maintain its insurance policies in full force and effect, or renew
or replace the same prior to the expiration or termination of the
expiring policies from a reputable insurance carrier with a
< Best's Rating > equal to or better than that of the existing
carrier, containing insurance coverage in the same or greater
amount than the existing policies in substantially the same form
and substance as the existing policies;
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(f) ensure that no actions will be taken to significantly increase the
debt of the Companies (the sum of all amounts owed to Banks,
financial institutions and leasing companies less cash and
positive bank balances), and that the Companies shall not pay, any
cash out of the business to the Sellers (directly, by any means
whatsoever) other than the normal salary payments to which they
are entitled as employees or directors;
(g) ensure that there will be no material changes to the current
agency and distribution agreements.
During the Transition Period, without the prior written consent of Buyer and
except as expressly contemplated by this Agreement or any ancillary agreements
contemplated herein, each of the Companies shall not, and Sellers shall cause
each of the Companies not to:
(a) sell, lease, transfer or assign any of its assets, tangible or
intangible, other than inventory in the ordinary course of
business consistent with past custom and practice;
(b) delay or postpone the payment of accounts payable or other
obligations and liabilities or accelerate the collection of
accounts receivable, other than in the ordinary course of business
consistent with past custom and practice;
(c) enter into any contract other than in the ordinary course of
business;
(d) enter into any employment contract or collective bargaining
agreement, written or oral, or modify the terms of any existing
such contract of such kind;
(e) grant any increase in the base compensation of any of its officers
or employees other than in the ordinary course of business
consistent with past custom and practice;
(f) adopt, amend, modify or terminate any bonus, profit-sharing,
incentive, severance or other plan, contract or commitment for the
benefit of any of its officers or employees;
(g) other than as contemplated by this Agreement or any ancillary
agreements contemplated herein, enter into any transaction with
any of its officers, employees or Affiliates of such officers or
employees (or any directors, officers or employees of such
Affiliate), other than ordinary course employment arrangements
entered into in accordance with past custom or practice and
transactions between the Companies;
(h) in any manner take, or cause to be taken, any action which is
designed, intended or might reasonably be anticipated to have the
effect of discouraging its customers, employees, suppliers,
lessors and other associates from maintaining the same business
relationships with it after
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the date of this Agreement as were maintained with it prior to
the date of this Agreement;
(i) amend the Company's by-laws;
(j) make any change in its corporate capital, or issue any shares of
any class or issue or become a party to any subscriptions,
warrants, rights, options, convertible securities or other
agreements or commitments of any character relating to the
foregoing;
(k) incur or commit to incur any capital expenditures out of the
ordinary course of business;
(l) incur, assume or guarantee any long-term or short-term
indebtedness; and
(m) pay, declare, accrue or set aside any dividends or any other
distributions.
Furthermore, during the Transition Period, Sellers shall, and shall cause
the Companies and Gaza to, deal exclusively with Buyer regarding the
transactions contemplated herein or in any ancillary agreements
contemplated herein and, without the prior written consent of Buyer
neither Sellers, the Companies nor Gaza will, and Sellers will cause the
Companies and Gaza not to, directly or indirectly solicit, initiate or
engage in negotiations or discussions with any third party, other than
Buyer, relating to the transactions contemplated herein or in any
ancillary agreements contemplated herein.
Notwithstanding anything to the contrary provided by this Agreement, in
the event that any of the above conditions is not fulfilled and the
Closing does not occur, Buyer shall continue to be bound by the
confidentiality covenants undertaken pursuant to the letter of intent of
February 16th, 2000, as subsequently amended, and shall refrain from
employing any employee of the Companies as provided therein.
ARTICLE 3
CLOSING
3.01 The closing of this Agreement (hereinafter referred to as the
< Closing >) shall take place at the offices of Mazzeschi, Xxxxxxx &
Porcari, Xxx Xxxxxx 00, Xxxxx, on August 31st , 2000 (hereinafter
referred to as the "Closing") at 9:30 am, or on such other place, date
and time as the Parties shall mutually agree in writing.
3.02 At Closing, the following events shall take place concurrently:
(a) Sellers shall cause all members of the Board of Directors of
CAPSOL and of OCIESSE and all standing and alternate members of
the Board of Statutory Auditors of CAPSOL to resign their
positions with immediate effect, and shall deliver to Buyer
letters from each of them acknowledging that none of them has
outstanding any claim for compensation or otherwise against CAPSOL
and/or OCIESSE, as applicable, except for annual fees
7
(as indicated in Schedule 3.02(a)) accrued up to the Closing; and
(b) Sellers shall give their favorable vote to a resolution of the
ordinary shareholders' meeting of CAPSOL and OCIESSE upon the
appointment of the new members of the Board of Directors and, as
to Capsol of the Board of Statutory Auditors designated by Buyer;
and
(c) Sellers shall deliver to Buyer a statement in the form set forth
in Schedule 3.02(c) confirming the continuing validity, as of the
date of Closing, of the representations and warranties made
pursuant to Article 4 below; and
(d) Sellers and Buyer shall execute and deliver to each other a deed
of transfer of the OCIESSE QUOTA to Buyer duly certified by a
Notary Public pursuant to Section 2479 of the Italian Civil Code
in the form set forth in Schedule 3.2(d); and
(e) Sellers shall deliver to Buyer the share certificates representing
the CAPSOL SHARE duly endorsed before a Notary Public; and
(f) Buyer shall pay to Sellers by means of bank wire transfer in
immediately available funds the amount of ITL 21,950,854,943
(twenty one billion nine hundred fifty million eight hundred fifty
four thousand nine hundred forty three Italian Lire) allocated
among Sellers as set out in Schedule 1.01; and
(g) Buyer, Sellers and the Escrow Agent (as defined below) shall enter
into the Escrow Agreement (as defined below) substantially in the
form of the draft attached hereto as Schedule 3.2(g); and
(h) Buyer shall pay to the Escrow Agent in immediately available funds
the amount of ITL 2,438,983,882 (two billion four hundred thirty
eight million nine hundred eighty three thousand eight hundred
eighty two Italian LirE) pursuant to Article 6.04 below; and
(i) Sellers shall cause GAZA to enter into with CAPSOL a lease
agreement concerning the Buccinasco Real Estate substantially in
the form of the draft attached hereto as Schedule 3.2.(i); and
(j) Sellers shall cause GAZA to terminate the lease agreement
presently in force with Ociesse and to enter into with OCIESSE a
lease agreement concerning the Colnago Real Estate substantially
in the form of the draft attached hereto as Schedule 3.2.(j); and
(k) The personal guarantees released by Sellers in favor of CAPSOL and
OCIESSE in order to secure the Companies' obligations vis-a-vis
third parties (e.g. banks and utilities suppliers) as set forth in
Schedule 3.3(k) shall be terminated. The monies owed by the
Companies to the banks indicated in Schedule 3.02(k), as adjusted
at Closing, shall be entirely paid off by the Buyer or by the
Designated Party and the relevant credit agreements shall be
terminated. Schedule 3.02(k) shall be adjusted prior to the
Closing in order to reflect the changes occurred after the
execution of this Agreement. It is
8
understood between the parties that the debt (less cash) owed by
the Companies to the banks at Closing shall not exceed more
than LIT 538,000,000 the debt (less cash) indicated in Schedule
3.02(k). Any sum exceeding this amount shall be paid off directly
by the Sellers unless Sellers prove that the amount in excess is
due to expenses incurred in the ordinary course of business.
Buyer agrees and undertakes to hold the Sellers harmless from
any liability whatsoever they may incur after the Closing pursuant
to the aforesaid personal guarantees; and
(l) Xx. X. Xxxxxxxxx shall execute a consultancy agreement with CAPSOL
in the form attached as Schedule 3.2(l); and
(m) Sellers shall cause Xxxxxx Xxxxxxxxx to execute the Non
Competition Agreement in the form attached as Schedule 3.2(m); and
(n) CAPSOL shall have sold and transferred to GAZA the Buccinasco Real
Estate for a price equal to ITL 400,000,000; and
(o) CAPSOL shall have sold and transferred its 50% interest in Capsol
Certwood UK Limited, a limited liability company having its
registered office at 0 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx,
Xxxxxxx for a price equal to ITL 1,369,275,115;
(p) Sellers shall cause the terms of the labour relationships between
Xxxxxx Xxxxxxxxx and Capsol to be amended as set out in Schedule
3.2(p); and
(q) the Parties shall deliver the other documents, if any, required by
the provisions of this Agreement to be delivered at Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Sellers hereby make the following representations and warranties, each of which
is true and accurate on the date hereof, shall be true on the date of Closing
and shall survive the sale and transfer of the SHARES contemplated hereby.
4.01 EXISTENCE, QUALIFICATION AND AUTHORITY OF THE COMPANIES
CAPSOL is a joint stock corporation duly incorporated, validly existing
and in good standing under the laws of the Republic of Italy. OCIESSE
is a limited liability company duly organized, validly existing and in
good standing under the laws of the Republic of Italy. The Companies
have all necessary power and authority to own and use their properties
and to transact their business and possess all franchises, licenses and
permits necessary and required therefor, and their business is
conducted in compliance with all applicable governmental and other
regulations, in particular environmental and safety regulations.
4.02 CAPITALIZATION AND CAPITAL STOCK
The entire corporate capital of CAPSOL consists of ITL 1,000,000,000 (one
billion Italian lire) fully subscribed and paid in. All such capital is
divided in n. 100,000 shares having nominal value of ITL 10,000 (ten
thousand Italian Lire) each, all of which are duly authorized, validly
issued, fully paid and without
9
restriction on the right of transfer thereof.
The entire authorized nominal capital stock of OCIESSE as of the Closing
consists of ITL 40,000,000 (forty million Italian lire) fully subscribed
and paid in. All such capital is divided in quotas having nominal value
of multiples of ITL 1.000 each, all of which are duly authorized, validly
issued, fully paid and without restriction on the right of transfer
thereof.
There are no outstanding warrants, options, conversion privileges,
contracts, calls, or other rights or agreements of any kind with regard
to any authorized or issued capital stock or any other debt or equity
security of the Companies, nor has any commitment or authorization
therefor been given.
4.03 BALANCE SHEET
Attached hereto as Schedule 4.03 is the balance sheet and profit and loss
statement of each of the Companies for the fiscal year ended on December
31st, 1999, as well as an Interim Financial Statement as of May 31, 2000
(hereinafter collectively referred to as "Balance Sheets"). Such Balance
Sheets are true, complete and correct, have been prepared in conformity
with the books and records of the Companies and the accounting principles
expressed in the Italian Civil Code as well as the Accounting principles
enacted by the Xxxxxxxxx Nazionale degli Ordini dei Dottori
Commercialisti e dei Ragionieri (hereinafter < Accounting Principles >),
as consistently applied by the Companies, and fairly present the
financial position of the Companies and any appropriate reserve
requirements at the date indicated, and results and operations for the
period indicated, and do not omit to state or reflect any material fact
concerning the Companies, required to be stated or reflected therein, or
necessary to make the statements therein not misleading. As far as the
Interim Financial Statement as of May 31, 2000, Sellers represent (and
Buyer acknowledges) that: (i) it has not been audited; and(ii) it has
been prepared in accordance to past practice and using Sellers' Best
Knowledge on the basis of the accounting data and information available
to the Companies.
4.04 ABSENCE OF CHANGES
Since January 1st, 1999 there has not been, and until the Closing there
will not be, any change in the business, assets, financial conditions or
results or operation of the Companies, individually or in the aggregate,
that is reasonably likely to have a material adverse effect on the
Companies, including:
(a) any change in the financial condition, assets and liabilities,
earnings, business, employees or in the relationships with
suppliers, clients or third parties other than changes in the
ordinary course of business, consistent with past practice;
(b) sales or other disposals of assets or purchases other than in the
ordinary course of business, consistent with past practice;
(c) material damages, destruction or losses of any kind;
(d) bonuses or increases of salary to employees or managers other than
those
10
normally granted by the Companies consistently with past
practices.
4.05 ACCOUNTS RECEIVABLE
All accounts receivable of the Companies in existence on the Closing:
(i) shall arise from commercial transactions carried out in the ordinary
and usual course of business; and (ii) shall be valid and enforceable
obligations; (iii) subject to any reserve established in the Balance
Sheet are current and collectable and, to the best of the Sellers'
knowledge, will be regularly paid within their maturity day. For the
purpose of this Agreement "Best Knowledge" shall mean and include:
(i) actual knowledge; and (ii) that knowledge which a prudent business
person could have obtained in the management of his business affairs
after making due inquiry and exercising due diligence which a prudent
business person should have made or exercised, as applicable, with
respect thereto. In connection therewith, the knowledge (both actual and
constructive) of the Sellers shall be imputed to the knowledge of the
Companies.
4.06 UNDISCLOSED LIABILITIES
The Companies do not have any liabilities actual or contingent which, on
the basis of the Accounting Principles, should be reflected in the
Balance Sheets and there is no basis for any claim against the Companies
for any such liability except (a) as set forth on the Balance Sheets; or
(b) to the extent that such liabilities arose in the ordinary course of
business of the Companies after June 1st, 2000.
4.07 TAX RETURNS AND AUDIT
The Companies have filed within the statutory terms all the mandatory
tax, social security, duty and insurance returns which were due to be
filed, and such returns were true, complete and accurate. The Companies
have paid, or have made in the Balance Sheets the necessary provision for
the payment of, all taxes, duties, social security and insurance
contributions and administrative charges, including related interest and
penalties, if any, the payment of which was due.
The Companies have withheld, or (as the case may be) have made in the
Balance Sheets provisions for, all taxes required to be withheld and have
timely paid such taxes in accordance with applicable laws and
regulations.
No claims or judicial or administrative proceedings are pending or
threatened in respect of taxes, duties, social security and insurance
contributions or other similar charges or related interest and penalties,
with respect to the Companies. In addition, no act or fact occurring or
known prior to the Closing will exist which may give rise to any
liability of the Companies for taxes, duties, social security or
insurance contributions or other similar charges or related interest
and penalties.
4.08 REAL PROPERTY - OWNED
The Companies do not own (nor do they utilize, as lessee or otherwise,
with the exception of the Buccinasco Real Estate and the Colnago Real
Estate) any real property.
4.09 PERSONAL PROPERTY - OWNED
Except as set for in Schedule 4.09(a) hereto, the Companies have full and
unrestricted ownership of all moulds and other movable assets indicated
in the Balance Sheets or physically located at Buccinasco Real Estate or
the Colnago Real Estate. All moulds owned by the Companies are listed in
Schedule 4.9(b).
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All motor vehicles, equipment, software programs and other tangible/
movable property owned by the COMPANIES, to the maximum extent required
under the Accounting Principles, are reflected in the Balance Sheets and
are not subject to any mortgage, pledge, encumbrance or charge of any
nature or right for the benefit of third parties, are in good operating
condition and repair, normal wear and tear excepted, are usable for the
current operations carried on by the Companies and conform to all
applicable laws and regulations.
4.10 REAL AND PERSONAL PROPERTY LEASED
The Companies have valid and enforceable leases with respect to all
movable assets leased and have in all material respects performed all the
obligations required to be performed under respective leases. All such
assets are not subject to any liens, encumbrances or user restrictions
whatsoever.
4.11 INTELLECTUAL PROPERTIES Set forth on Schedule 4.11 hereto is a list of
all the patents, applications for patents, trademarks, and any other
intellectual property rights owned or granted by, or to the Companies,
which list comprises all of such items required for the operation of the
business of the Companies as presently conducted or planned. Except as
set forth on Schedule 4.11, all such items are valid and subsisting; good
and marketable title to such items, together with all legal or implied
rights to the subject matter thereof, is held by each of the Companies
free and clear of all options, adverse claims, defenses, liens, charges,
security interests, covenants, conditions, agreements, restrictions and
other encumbrances; and there exists no restriction on the use or
transfer of any such item. There are no interference, challenges,
proceedings, or infringement suits, pending or threatened with respect to
any such item, nor have the Companies granted any license to any other
party with respect to any such item. To the Best Knowledge of the
Sellers, the Companies are not infringing upon the right of any other
person under any patent, trademark or other right in the conduct of their
business. The names < Capsol > and respectively < Ociesse > have been
legitimately acquired by the Companies, and included in their corporate
names and no third party has any claim of any nature whatsoever with
respect to the use of such name by the Companies. The execution of this
Agreement and or the consummation of the transactions contemplated herein
shall in no way affect the rights of the Companies with respect to the
use of such names.
4.12 FOREIGN ASSETS
The Companies do not have any interest in any real property or tangible
or intangible personal property located outside of the Republic of Italy.
4.13 SUBSIDIARIES
The Companies have no controlled subsidiaries, nor own or have the right,
or obligation, to acquire any interest in any corporation, limited
liability company, partnership or joint venture.
4.14 CERTAIN PAYMENTS
All payments to agents, consultants and others by the Companies have been
in payment of bona fide fees. The Companies have never made or received
any payment which has not been duly reflected in their accounting books,
or any
12
other kind of unlawful, inappropriate or irregular payment. No government
agency or entity has initiated or threatened any investigation of any
payments made by the Companies and alleged to have been of the type
covered by this Article 4.14.
4.15 NECESSARY PROPERTY: TITLE TO ASSETS
The real and tangible property owned and/or leased by the Companies and
the intangible personal property, including patents, patent applications,
inventions, discoveries, processes, formulae, trade secrets, proprietary
technical information and know-how owned by, or licensed to, the
Companies, constitute all of such property now used in, and necessary for
the conduct of, the business of the Companies, in the manner and to the
extent presently conducted, or planned, by them. There exists no
restriction or reservation affecting the Companies' title to, or the
utility of, their assets, which would prevent or hinder the Companies
from occupying or utilizing its respective assets, or any part thereof,
to the same full extent that the Companies now do if the transactions
contemplated hereby did not take place.
4.16 USE AND CONDITION OF PROPERTY - RESPECT OF ENVIRONMENT
All property and assets currently used by the Companies are in good
operating condition and repair (except for ordinary wear and tear) as
required for their use in the business of the Companies, as presently
conducted or planned; conform to all applicable laws and regulations,
including zoning, anti-pollution, work safety and other regulations
concerning the use of industrial premises and/or warehouses and no notice
of any violation of any law, statute, ordinance, or regulation or
condemnation relating to any such property or assets has been received,
except such as have been complied with; and there are pending or
threatened no changes in any of the foregoing which would adversely
affect the business of the Companies.
The Companies operate their activity in full compliance with the
statutory rules and regulations relating to public health and safety and
the protection of nature. In particular, the Companies have obtained all
the authorizations required by the regulations applicable to the
Companies.
The operations of, and the facilities used by the Companies, in
particular the real estate used by the Companies are free of any
pollution of soil, air, or ground water or other environmental pollution
caused by, or in connection with the business of the Companies. The
Companies have all environmental permits, licenses and authorizations
necessary to conduct their business. In their operations, the Companies,
as well as those subcontractors whose activity may result in any
environmental liability for the Companies, have always complied with the
applicable environment protection, public safety and zoning laws and
regulations, as well as any orders or authorizations of any kind
concerning effluent, waste, discharge or the release of any substances.
The Companies know of no changes of such provisions or revocation or
withdrawal of any licenses being contemplated which would adversely
affect their business. On the basis of the present business the fresh
water supply and the disposal of waste, water and gases as well as solid
effluent and waste are fully
13
assured in accordance with presently applicable law. There are no
commitments, agreements or understandings with any administrative
agency, with respect to any effluents, waste, discharge or release of
other substances. There are no investigations, inquiries (R)or other
proceedings now pending or threatened by any governmental entity with
respect to the Companies' business, or their actual or alleged failure
to comply with any requirement of any law, regulation or ordinance
relating to air or water quality, waste management, hazardous or toxic
substances or the protection of health or the environment.
4.17 LICENSES AND PERMITS
The Companies have obtained all licenses, permits and authorizations
required to own or lease, operate and use their respective assets and to
conduct their respective business operations as currently conducted. All
such licenses, permits and authorizations are valid and in effect and in
any case have not been challenged.
The Companies have always acted and do act in material compliance with
all applicable laws and regulations.
To the best of Sellers' knowledge and after due inquiry any
investigations, neither of the Companies has received any written or
oral communication that alleges that one of them is currently not in
compliance with any applicable laws.Neither of the Companies is in
default under, or in violation of any applicable statute, law,
ordinance, decree, order, rule, regulation of any governmental body,
or the provisions of any contract, company by-laws or articles of
incorporation or of any franchise or license; and consummation of the
transactions contemplated hy will not result in any of the foregoing.
4.18 CONTRACTS AND COMMITMENTS
Except as set forth in Schedule 4.18 or in other Schedules hereto or
otherwise expressly provided by this Agreement the Companies do not have:
(a) any single contract providing for an expenditure in excess of ITL.
100,000,000 (one hundred million Italian Lire) or contracts with
the same affiliated parties in the aggregate providing for
expenditures in excess of ITL 100,000,000 (one hundred million
Italian Lire);
(b) any contract, bid or offer to sell products or to provide services
to third parties which (i) is at a price which would result in a
net loss on the sale of such products or the providing of such
services; (ii) which, pursuant to its terms or conditions, the
Companies cannot reasonably expect to satisfy or fulfil in their
entirety; or (iii) which involves more than ITL 100,000,000 (one
hundred million Italian Lire), or which, together with all other
contracts, bids, or offers to or with the same or any other
affiliated parties, involves more than ITL. 100,000,000 (one
hundred million Italian Lire);
(c) any lease of any real or personal property where either of the
Companies is the lessor;
(d) any revocable or irrevocable power of attorney to any person, firm
or corporation for any purpose whatsoever;
14
(e) any loan agreement, indenture, promissory note, conditional sales
agreement or other similar type of agreement;
(f) any arrangement or other agreement which involves a sharing of
profits or future payments to other persons, or any joint venture
contract or arrangement;
(g) any contract containing covenants limiting the freedom of either
of the Companies to compete in any line of business in which it is
involved;
(h) any contract calling for the payment or receipt of royalties;
(i) any contract of guarantee, indemnity or security;
(j) any contract or commitment not made in the ordinary course of
business which is material to the business, financial condition or
results of operations of either of the Companies;
(k) any agency or distribution contract to which either of the
Companies is a party;
(l) any pension plan in favor of employees or third parties;
(m) any other material contract or commitment, other than the
employment agreements, which can not be terminated by either of
the Companies with a thirty (30) days' notice or less, and which
is not specifically referred to in any other Schedule thereto;
(n) any commitment or obligation to pay any fees to any attorney,
consultant, broker or expert in connection with or related to the
negotiation and execution of this agreement and the consummation
of the transaction contemplated herein.
4.19 REASONABLENESS - VALIDITY OF CONTRACTS
No purchase commitment for materials, supplies, component parts or other
items of inventory to which either of the Companies is a party is in
excess of the normal, ordinary, usual and current requirements of its
businesses, or at a price in excess of the current reasonable market
price.
Each of the contracts and agreements to which either of the Companies is
a party is a valid and binding obligation of the parties thereto in
accordance with its terms and conditions. No party to any such contract
or agreement is in default with respect to any term or condition thereof,
nor has any event occurred which, through the passage of time or the
giving of notice, or both, would constitute a default thereunder of would
cause the acceleration of any obligation of any party thereto or the
creation of a lien or encumbrance upon any asset of either of the
Companies.
4.20 LITIGATION
There is no suit, claim, action or proceeding now pending or threatened
including
15
but not limited to labor issues, product liability, product warranty,
product safety, environment, tax, before any court, administrative or
regulatory body, arbitration panel, or any governmental agency, nor are
there any grounds therefore, to which either of the Companies is, or may
be, a party, or which may result in any judgement, order, decree,
liability or other determination which will, or could, have any material
adverse effect upon its businesses or condition, financial or otherwise.
4.21 EXECUTIVES, AGENTS, EMPLOYEES AND CONSULTANTS
(a) Other than the employees and agents listed in Schedule 4.21(a)
there are no other persons who have, or may claim to have, any
relationship with the Companies which qualifies such persons as
employees or agents of the Companies under applicable law or which
would otherwise entitle such persons, or any labor union or
government agency acting on behalf of such persons, to collect
from the Companies any wages, benefits, commissions, severance
indemnities or any other sums of any nature.
(b) All applicable laws and regulations concerning the employees and
agents of the Companies have been and are duly complied with in
all material respects. The salary, commissions and benefits for
each of the employees and agents of the Companies are specified in
Schedule 4.21(b) as well as the commissions payable to agents and
none of the employees or of the agents of the Companies is
entitled to any other salary, commissions or benefit.
The Companies have properly and accurately reflected on their
books and records all compensation paid to, or on behalf of, their
agents and employees. Such compensation has been properly and
accurately disclosed in the Balance Sheets, and other public or
private reports, records or filings to the extent required by law.
All current and past employees of the Companies have been duly
recorded as such in the books and records of the Companies.
(c) There is, and during the past two years there has been, no labor
strike, dispute, work stoppage or lockout pending or threatened
against the Companies.
There is no unfair labor practice charge or complaint against
the Companies, pending or threatened. There are no pending or
threatened union grievances, demands or proceedings against
the Companies.
4.22 INDEBTEDNESS TO AND FROM SHAREHOLDERS, EXECUTIVES AND OTHERS
Neither of the Companies is indebted or is bound by any contractual
obligations of any nature whatsoever to any shareholder, partner,
executive, employee or agent of such Company except for amounts due as
normal salaries, wages, bonuses, accrual for severance payments
(including "TFR") and in reimbursement of ordinary expenses on a current
basis, and no shareholder, executive, employee or agent of either of the
Companies is indebted to either of the Companies except for advances for
ordinary business expenses in a normal amount.
16
4.23 OUTSTANDING FINANCIAL INTERESTS
Except as indicated in Schedule 4.23., no shareholder, director,
executive or, to the Best Knowledge of Sellers, no 1st level employee of
either of the Companies has any direct or indirect financial interest in
any supplier or customer of the Companies.
4.24 LABOR AGREEMENTS, EMPLOYEE BENEFITS PLANS, AND EMPLOYMENT AGREEMENTS
Except as provided for in Schedule 4.21(b), in the National Collective
Bargaining Labor Agreement applicable to the Plastic Industry (< CCNL
Gomma e Plastica >; hereinafter referred to as the < CCNL >), or in the
Companies' shop agreements (< Contratti Aziendali >) attached as Schedule
4.24 hereto, the Companies are not a party, or otherwise bound, to any
other agreement or commitment, of any nature or kind whatsoever, both in
writing or oral, according to which any compensation, benefit or alike
would be payable to the Company's employees and agents.
4.25. OVERTIME, SEVERANCE PAY, BACK WAGES, VACATION, MINIMUM WAGES AND OTHER
BENEFITS
Except (i) as provided for in the CCNL and in the Contratti Aziendali;
and (ii) as indicated and properly accrued on the Balance Sheets; and
(iii) for obligation arising from the employment contracts incurred in
the ordinary course of business, no present or former employee of the
Companies has any claim (whether under any law, employment agreement or
otherwise) on account of, or for, (a) severance or overtime pay, other
than overtime pay for the current payroll period; (b) wages or salary
(excluding bonuses and amounts accruing under any pension and
profit-sharing plans listed in Schedule 4.24 for any period other than
the current payroll period; (c) vacation, time off, or pay in lieu of
vacation or time off, other than that earned in respect of the current
fiscal year to which no provisions has been made in the Balance Sheets;
(d) any violation of any statute, ordinance or regulation relating to
minimum wages or maximum hours of work; (e) severance indemnity; or (f)
any other fringe benefits whatsoever.
4.26 INSURANCE POLICIES
Schedule 4.26 sets forth a true and correct list of the policies of fire,
casualty, civil liability and other forms or insurance. All such
insurance policies are in full force and effect in accordance with the
terms thereof, all premiums thereunder have been punctually paid as due,
and such policies will expire on the dates specified in Schedule 4.26.
4.27 GUARANTEE
Neither of the Companies released any kind of guarantee, indemnity or
security or are otherwise liable for any indebtedness of any other
person, firm or corporation except as endorser of checks received and
deposited in the ordinary course of business.
4.28 BROKER'S FEES
Sellers have not incurred any liability for any brokerage, finder's or
similar fees or commissions in connection with the transactions
contemplated hereby, the payment of which could be validly claimed from
the Companies or the Buyer.
17
4.29 BOOKS AND RECORDS
The books of account, stock record books and minute books and other
corporate records of the Companies are appropriately kept and all the
matters contained therein are accurately reflected, to the extent
appropriate, on the Balance Sheets. Copies of the current valid version
of the Articles of Association and of all notaries deeds concerning any
increase of capital of the Companies, as well as the Shareholders' Ledger
and the Shareholders' and Board of Directors' meetings' minutes books of
the Companies shall be made available to Buyer before Closing [BOOKS TO
BE DISCLOSED TO BUYER] and are correct and complete to the date hereof.
4.30 BANK ACCOUNTS AND SAFE DEPOSIT BOXES
Set forth on Schedule 4.30 hereto is a list of (a) all bank accounts
maintained by the Companies, together with the names of authorized
signatories on each such account, and (b) the location of all safe
deposit boxes maintained by the Companies, together with the names
of the persons authorized with access thereto.
4.31 SUBCONTRACTORS
Attached hereto as Schedule 4.31 is a list of all subcontractors and
suppliers to the Companies providing goods or services of a value of at
least ITL. 100,000,000 (one hundred million Italian Lire), or more during
the 1999 fiscal year, as well as those expected to supply goods or
services of a value of at least ITL 100,000,000 (one hundred million
Italian Lire), or more, in 2000 fiscal year. None of the agreements
listed in the said Schedule 4.31 could be intended or construed as hidden
employment agreements, nor infringes any mandatory provision of law,
including, by way of example, Laws no. 1369 of October 23, 1960 or no.
877 of December 18, 1973, as amended.
4.32 OWNERSHIP
Sellers are, jointly, the sole record and beneficial holders and owner
of the SHARES, which represents 100% (one hundred per cent) of all the
authorized, issued and outstanding stock of CAPSOL and of OCIESSE.
4.33 TITLE
Sellers have good and marketable title to the SHARES, free and clear
of all adverse claims, options, liens, security interests, restrictions
and other encumbrances.
4.34 CONSENTS
(a) The Sellers have full and absolute legal right, capacity, power
and authority to enter into this Agreement and any ancillary
agreements to which they are a party and this Agreement and said
ancillary agreements are the valid and binding obligation of such
Sellers, enforceable against such Sellers in accordance with their
terms.
(b) The Sellers have full legal right and power to transfer and
deliver the SHARES to Buyer, in the manner provided in this
Agreement, and upon transfer and delivery of the SHARES, pursuant
to the terms of this Agreement, Buyer is receiving good and
marketable title to 100% (one
18
hundred per cent) of the total corporate capital of CAPSOL and
of OCIESSE, free and clear of all adverse claims, options, liens,
security interests, restrictions and other encumbrances.
(c) Neither the execution, delivery and performance of this Agreement
by Sellers or any ancillary agreements to which they are a party
nor the consummation of the transactions contemplated hereby or
thereby nor compliance by Sellers with any of the provisions
hereof or thereof will (i) conflict with, or result in any
violations of, or cause a default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligations
contained in or the loss of any material benefit under, any term,
condition or provision of any contract to which Sellers are a
party, or by which such Sellers or any of their properties may be
bound or (ii) violate any law applicable to Sellers or any of
their properties, which conflict or violation would prevent the
consummation of the transactions contemplated by this Agreement or
result in an encumbrance applicable to the Companies' or Sellers'
assets or give rise to any claim against the Companies, any
Sellers, the Buyer, or any affiliate of the Buyer or have a =
material adverse effect on the Companies, any Sellers the Buyer or
any affiliate of the Buyer.
(d) Except as contemplated by this Agreement, no permit,
authorization, consent or approval of or by, or any notification
of or filing with, any person or governmental entity is required
in connection with the execution, delivery and performance by such
Sellers of this Agreement or any ancillary agreement to which
their are a party or the consummation by such Sellers of the
transactions contemplated hereby and thereby
4.35 PRINCIPAL CUSTOMERS
The relationships of the Companies with their principal customers are
normal and amicable and neither the Sellers nor either of the Companies
have received any indication that any such customer is or may be
unwilling to do business with Buyer in the future, with respect to the
Companies.
4.36 SUBSIDIES AND GRANTS
The Companies have been granted with the grants and subsidies listed in
Schedule 4.36 hereto.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as set forth below:
(a) Each of the warranties and representations contained in this Article 5
is true, correct and not misleading on the date hereof and shall be true,
correct, and not misleading on the Closing.
(b) Buyer undertakes to promptly inform in writing Sellers of any fact, act
or circumstance (whether occurred or become known after the date hereof)
which
19
may render any of the representation and warranties of this Article 5
untrue, incorrect or misleading.
(c) Buyer shall indemnify Sellers in respect of damages or costs suffered by
them in the event that the warranties and representations contained in
this Article 5 prove to be incorrect or untrue in any material respect.
(d) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is
qualified to conduct its business in the manner in which it is now being
conducted.
(e) No consents by any third party, including public authorities, are needed
to authorize the execution and performance of this Agreement by Buyer,
other than those obtained prior to the Closing. All corporate and other
proceedings required to be taken by Buyer to authorize the execution,
delivery and performance of this Agreement have been duly and properly
taken, and this Agreement has been duly executed by Buyer and constitutes
the legal, valid and binding obligation of Buyer in accordance with its
terms.
(f) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, will not conflict with, or result
in a breach of, or constitute a default under or give rise to a right
of termination, cancellation or acceleration of, the articles of
incorporation or the by-laws of Buyer or violate any agreement,
judgement, order, injunction, award, decree, law or regulation applicable
to Buyer.
ARTICLE 6
INDEMNITY, SECURITY
6.01 GENERAL PROVISIONS
[A] Sellers shall indemnify and hold harmless Buyer or, at the request
of Buyer (but subject to Article 6.02), the Companies and their
respective successors and assigns, affiliates, officers, directors
and employees (hereinafter referred to as the < Indemnified
Party >), to the extent set forth below, from and against all
liability, loss, cost or expense, including performance or
contributions in kind and reasonable attorneys' and other
professionals' fees and (without prejudice to the provisions of
art. 6.02 below) taxes incurred in connection with the receipt of
indemnification payments (hereinafter referred to as the
< Losses >), which may be sustained by an Indemnified Party, by
reason of the breach (intentional or unintentional) of any
covenant, representation or warranty contained in this Agreement
or any document or certificate delivered pursuant hereto. The
foregoing shall in no way be deemed to waive or restrict other
legal remedies available to Buyer under the applicable law;
provided that Buyer shall not be entitled to terminate this
Agreement except in case of a material breach of Sellers.
[B] Any obligation hereunder, including without limitation, indemnification
obligations pursuant to Article 6 is undertaken by Sellers jointly and
severally, except for the indemnification obligations deriving from the
breach of Articles
20
4.32, 4.33 and 4.34 in which cases the Sellers' liability toward
Buyer shall be individual.
[C] If subsequent to any indemnification payment by Sellers, the Companies,
or the Buyer, receive payment or reimbursement of such indemnification
amount, then the amount of such payment or reimbursement, less any costs
incurred by the Companies to recover that amount, shall be immediately
paid to Sellers.
6.02 EXTENT OF THE INDEMNITY OBLIGATION OF THE SELLERS
Notwithstanding anything to the contrary provided in Article 6.01, Buyer
undertakes not to avail itself of the right to require Sellers to pay any
indemnity hereunder to the Companies (and not to the Buyer) unless
failure by Buyer to avail itself of such right would negatively affect
Buyer's tax affairs. Appropriate consideration for the assumption by
Sellers of such indemnity obligation has been included in the Purchase
Price payable to Sellers pursuant to Article 1.1 above.
6.03 EXCLUSIONS AND LIMITATIONS
Anything herein or in any applicable law to the contrary notwithstanding:
(a) Sellers shall not be liable to Buyer under Article 6.01 until the
aggregate amounts of all such Losses that would be due pursuant to
such Article 6.01 exceeds ITL 500,000,000 (five hundred million
Italian Lire) in the aggregate, and then only to the extent of the
excess of said threshold. However, the mentioned threshold of ITL
500,000,000 (five hundred million Italian Lire) will not apply to
the indemnification of Losses arising from (i) the violation of
Articles 4.02, 4.22 (but only with reference to any indebtness of
the Companies against shareholders and not to the other cases
mentioned therein), 4.28, 4.32, 4.33, or 4.34; and (ii) any claims
which the Companies may receive from the following employees:
Xxxxxxxxx Xxxxxxxxx, Stefania Xxxxxxxxx, Xxxxxxxxx Agnottoli,
Xxxxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx; provided that, if such limit
is exceeded, Sellers' liability shall be limited to the excess;
(b) As far as Losses arising from the violation of Article 4.07 (Tax
returns and audit) are concerned, Sellers shall not be liable to
Buyer under Article 6.01 until the aggregate amount of such Losses
exceeds 300 Million ITL and then only to the extent of the excess
of said treshold;
(c) Sellers' maximum aggregate liability under Article 6.01 shall be
limited to the Purchase Price;
(d) The amount of all indemnities payable by Sellers pursuant to
Section 6.01 shall be reduced in accordance with the following
provisions:
(i) In the event and to the extent that (1) any liability,
cost, loss, damage, or expense to be indemnified by Sellers
under Section 6.01 is deductible by the Companies for
income tax purposes in any given fiscal year and that (2)
Sellers' indemnity payment thereunder does not constitute
taxable income for Buyer as recipient of such payment,
then, in such event and to such extent, the amount of any
liability, cost, loss, damage or expense to be indemnified
by Sellers under such Section 6.01 will be reduced by a
percentage equal to the percentage of the actual aggregate
rate of income tax applicable to
21
the Companies for the fiscal year in which the income tax
deduction may first be taken.
(ii) In the event that (1) any liability, cost, loss, damage or
expense to be indemnified by Sellers under Section 6.01 is
deductible by the Companies for income tax purposes in any
given fiscal year and that (2) Sellers' indemnity payment
thereunder constitutes taxable income for Buyer as
recipient of such payment but is taxed at an aggregate
current income tax rate lower than the aggregate current
income tax rate applicable to the Companies, then, in such
event, the amount to be paid by Sellers as indemnity under
Section 6.01 shall be reduced pursuant to paragraph (i)
above, but the amount so resulting shall be grossed up in
order to reflect taxation due by Buyer thereon;
(e) Without prejudice to the provisions of Paragraph (c) preceding,
the amount of all indemnities payable by Sellers to Buyer pursuant
to Section 6.01 shall be further reduced by:
(i) any reserve amount recorded on the Balance Sheet relating
to the event giving rise to indemnification;
(ii) the amount of any insurance or similar payment that the
Companies have received or are entitled to receive in
connection with the event giving rise to indemnification;
(iii) the amount of any indemnification that the Companies or
Buyer have received from any third party;
(f) In the event that, at any time between the Closing and the date
upon which the liability of Sellers for Tax or social security
matters shall expire pursuant to Paragraph (h) below, any law,
regulation, order or decree should be enacted in Italy having as
an effect the right to settle, in whole or in part, tax or social
security obligations of the Companies covered by Sellers'
indemnity obligation hereunder (any such law, regulation, order
or decree is hereinafter referred to as an < Amnesty >), the
following provisions shall apply:
(i) Sellers shall have the right to request the Buyer that the
Companies avail themselves of the Amnesty;
(ii) Buyer shall have the right to determine, in its sole
discretion (irrespective of any request of Sellers under
Paragraph (i) preceding), whether or not the Companies
should avail themselves of the Amnesty and shall promptly
notify to Sellers its intention to avail itself of the
Amnesty. Failure by Sellers to reply to Buyer's notice
within 30 days from receipt of the same shall be considered
as a consent by Sellers to Buyer's request;
(iii) if Buyer elects to proceed with an Amnesty in agreement
with Sellers or pursuant to the Sellers' request, all costs
and expenses of such Amnesty shall be borne by Sellers;
(iv) if Buyer elects not to proceed with an Amnesty
notwithstanding Sellers' request pursuant to Paragraph (i)
preceding, it shall be free to do so, but Sellers'
liability in respect of the matter constituting the subject
of such Amnesty shall be limited to the amount that would
have been paid by Sellers pursuant to Paragraph (iii)
preceding had
22
Buyer elected to proceed with the Amnesty in accordance
with Sellers' request;
(v) if Buyer elects to proceed with an Amnesty against Sellers
opinion, all costs and expenses of such Amnesty shall be
borne by Buyer; In the event that a tax audit or an
assessment ("accertamento") is subsequently carried out by
the authority and irregularities arise that would give way
to penalties of any kind, Sellers shall indemnify Buyer for
the amount of any expenses incurred by the Buyer for filing
and obtaining the Amnesty .
(g) Sellers will not be required to indemnify Buyer under Article 6.01
in respect of any Losses, unless and until such Losses have become
actual and has been paid for by the Companies or has become the
subject matter of a final and uncontestable obligation to pay of
the relevant party.
(h) In no event will Sellers be responsible to Buyer under Section
6.01 in respect of:
(i) any actual or alleged inaccuracy or breach of the
representations and warranties referred to therein (other
than representations and warranties referred to at point
(ii) below) which is notified to Sellers later than
twenty-four (24) months following the Closing; or
(ii) any actual or alleged inaccuracy or breach of the
representations and warranties referred to in Articles
4.02, 4.07, 4.22, (but only with reference to any
indebtness of the Companies against shareholders and not to
the other cases mentioned therein) 4.28, 4.32, 4.33, or
4.34 or any claims which the Companies may receive from the
following employees: Xxxxxxxxx Xxxxxxxxx, Stefania
Xxxxxxxxx, Xxxxxxxxx Agnottoli, Xxxxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx; which is notified to Sellers later than thirty
(30) Business Days after the expiration of (i) the date of
the final tax assessment against the Companies where
applicable, or (ii) the expiration of the mandatory statute
of limitations whichever occurs last;
provided, however, that Sellers' obligations arising under Section
6.01 or otherwise shall survive the expiration of the time limits
provided under (i) and (ii) above in respect of any actual or
alleged breach of the representations or warranties of Sellers
referred to therein which, as of the date of such expiration,
constitutes the subject matter of a notice of claim under this
Article 6.
6.04. ESCROW
As security for (i) the indemnification obligations of the Sellers
pursuant to Articles 6.1. and 6.2. hereof; and (ii) the obligations of
the Sellers pursuant to Article 7.1. below, at Closing the Sellers
shall deposit the amount of ITL 2,438,983,882 (two billion four hundred
thirty eight million nine hundred eighty three thousand eight hundred
eighty two Italian Lire) with the Escrow Agent. Said amount shall be
retained in the escrow, on the terms set out in an escrow agreement, as
set forth on Schedule 3.02.(g) hereto (hereinafter referred to as
23
the "Escrow Agreement"), which shall be executed at Closing. The amount
so deposited shall be released, or otherwise disposed of, under the
terms of the said Escrow Agreement.
6.05 CLAIMS HANDLING
In the event the Buyer shall have a claim against the Sellers, pursuant
to this Agreement, it shall promptly send written notice thereof to the
Sellers, indicating the nature of the claim and the amount thereof.
The Buyer shall have the right to assert claims from time to time and
the assertion and/or disposition of any claims shall not exhaust the
rights of the Buyer with respect to further claims.
The Sellers shall have a period of thirty (30) days from receipt of
notice of a claim of the Buyer either to allow or contest said claim.
Prior to the expiration of said twenty (30) Business Days period the
Sellers shall send notice to the Buyer of their determination to either
allow or contest said claim; failure to give such notice to the Buyer,
within the stated deadline, by the Sellers shall be deemed as allowance
of the claim by the Sellers.
If the claim is allowed, the Escrow Agent shall pay to the Buyer the
amount requested, within a period of five days from the allowance, or
deemed allowance, of the Sellers.
In the event the claim of the Buyer is contested by the Sellers, then
the Parties shall endeavor to settle and compromise the dispute
amicably; in the event no agreement is reached within 30 (thirty) days
from the challenge of the claim, or 60 (sixty) days from Sellers'
receipt of Buyer's notice, whichever occurs first, then the issue shall
be determined by arbitration, in accordance with the provision of
Article 8.15 below.
The Escrow Agent shall pay to the Buyer any amount which will be due in
accordance with the arbitration award, as soon as possible upon service
of a certified copy of such arbitration, regardless of any further
appeal which might be raised against the said award.
6.06 THIRD PARTY CLAIMS
The Buyer shall promptly give written notice to the Sellers according
to art. 6.5 above of any claim of a third party which might result in a
claim, suit, action or proceeding of the Buyer against the Sellers, in
accordance with this Agreement. (hereinafter referred to as "Third
Party Claim")
Sellers shall have the right to participate, and, to the maximum extent
permitted by law, join, at their cost, by counsel or counsels of their
choice, in the defense of any claim, action, suit or proceeding
asserted or initiated against the Companies and/or the Buyer
constituting the subject matter of a notice of a Third Party Claim.
Buyer shall properly and diligently defend, and shall cause the
Companies to properly and diligently defend, any Third Party Claim and
shall refrain, and shall
24
cause the Companies to refrain, from taking any action which could
prejudice the defense of Sellers' interest hereunder.
Buyer shall not make or accept any settlement of any Third Party Claims
nor shall make acquiescence thereto or, as the case may be, to any
demand, assessment, judgement or order constituting the subject matter
of a notice to Sellers of a Third Party Claims or, as the case may be,
having resulted from any such claim, action, suit or proceeding, nor
shall permit the Companies to do so, without the prior written consent
of Sellers, which consent shall not be withheld without reasonable
justification.
If a firm offer is made to the Companies or to Buyer to settle any
matter giving rise to the Sellers' liability under this Article 6 which
Sellers but not Buyer, are willing to accept, Buyer and/or the
Companies (as the case may be) shall be free not to enter into such
settlement and to commence or continue litigation, at its/their own
expense, but Sellers' liability under Article 6.01 or otherwise shall
be limited to the amount of the proposed settlement, including monetary
amounts and performance or contributions in kind.
ARTICLE 7
ADDITIONAL UNDERTAKINGS
7.01 NON-COMPETE CLAUSE
For a period of 5 years after the date of this Agreement, each of the
Sellers hereby covenants and agrees to comply with and perform each of
the terms and provisions described in the following subparagraphs:
(a) each of the Sellers shall not, without the prior written consent
of the Buyer, either directly or indirectly, throughout the world,
either on his own behalf or in the service or on behalf of others,
engage in or be employed by any business that competes directly or
indirectly with the current business of either of the Companies,
or does business in any manner (any such other business being
herein referred to as a < Competing Business >) as a partner,
officer, executive employee, guarantor, director, shareholder
(other than as owner of less than five percent of the issued and
outstanding stock of a publicly owned corporation whose securities
are traded on a nationally recognized stock exchange), consultant,
salesperson, joint venturer, investor, or any other manner or
capacity whatsoever;
(b) each of the Sellers shall not, without the prior written consent
of the Buyer, either directly or indirectly, either on his own
behalf or in the service or on behalf of others, or in any manner
or capacity whatsoever, solicit or service for, or divert or
appropriate to any Competing Business, or attempt to solicit,
divert or appropriate any Competing Business, any person or entity
which is, or was at any time during the two year period preceding
this Agreement, a customer of either of the Companies (a
"Customer");
(c) each of the Sellers shall not, either directly or indirectly,
either on his behalf or on the behalf of others, or in any manner
or capacity whatsoever, solicit, divert or hire away, or attempt
to solicit, divert or hire away, to any Competing Business, any
person employed by Company or by any
25
affiliated entity of either of the Companies, whether or not
such employee is a full-time or temporary employee, and whether
or not such employment was pursuant to written agreement and
whether or not such employment was for a determined period or
was at will.
In each case of a violation of the above undertaking the defaulting
Seller shall be liable to Buyer for damages, which shall be liquidated by
taking into account the amount of the goodwill paid by the Buyer
hereunder, i.e. the difference between the net book value of the
Companies and the purchase price, without prejudice to other relief and
remedies. Nothing contained in this provision shall be deemed to prohibit
the Sellers from investing in equity securities of a publicly held
company engaged in competing business provided the securities of such
business are traded on a national or regional securities exchange or on
an over the counter market, and provided further the holdings of Sellers
do not amount to more than five percent (5%) of the fair market value of
all the issued and outstanding equity securities of such company in the
aggregate.
7.02 CONFIDENTIALITY
Sellers shall keep strictly confidential all business and trade secrets
for the present and envisaged production, distribution or development of
the products of the Companies, in particular recipes and formulae, and
shall not disclose such secrets to third parties, either directly or
indirectly, nor cause, support or cover such disclosure by third parties.
Sellers shall not retain any copies of the documentation with regard to
business and trade secrets as supplied to Buyer. This includes all
recipes and formulae and copies thereof.
7.03 RELEASE OF DIRECTORS
Without prejudice to the indemnification obligations undertaken by
Sellers hereunder, Buyer hereby undertakes to:
(i) refrain from starting any action or proceedings pursuant to
Section 2395 of the Italian Civil Code against the directors of
the Companies who shall resign at Closing and those who ceased
from office during a period of five years prior to Closing;
(ii) refrain from voting the CAPSOL SHARES or the OCIESSE QUOTA in a
manner which would allow Capsol or, as the case may be, Ociesse to
start against the aforesaid directors any action or proceedings
pursuant to Section 2393 of the Italian Civil Code.
ARTICLE 8
MISCELLANEOUS
8.01 ENTIRE AGREEMENT AND MODIFICATION
This Agreement and the Schedules hereto and other documents referenced
herein replace and supersede all other agreements and understandings
between and among the parties hereto, oral and written, and constitute
the entire agreement between and among the parties. No changes or
modifications of, or additions to, this Agreement shall be valid unless
the same shall be in writing and signed by all parties hereto affected by
such modifications or additions.
8.02 COUNTERPARTS
26
This Agreement has been executed in two identical counterparts (one for
the Buyer and one collectively for the Sellers) in English language, each
of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
8.03 HEADINGS
Any article, section and paragraph headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.04 GOVERNING LAW
This Agreement shall be construed and interpreted according to the laws
of the Republic of Italy.
8.05 PAYMENT OF FEES AND EXPENSES
Each party shall pay all fees and expenses of such party's respective
counsel, accountants and other agents and experts, and all other expenses
incurred by such party incident to the negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby.
Notary fees and registration costs incidental with this Agreement and the
stamp duties due on the transfer of the SHARES shall be borne by the
Buyer. Any expenses incurred by the Companies prior to Closing in
connection with or relating to this transaction shall be paid directly by
Sellers.
8.06 NOTICES
All notices, requests, demands and other communications hereunder shall
be in writing and shall be effective upon the receipt thereof by
registered or certified mail, postage prepaid, and addressed as set forth
below:
(a) If to Buyer:
Capsol Xxxxx Plastics Srl
Xxx Xxxxxx, 00
00000 Xxxxx
Attn. Xxxxx Xxxxxxx
Fax 00.00000000
with copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000, XXX
Attn. Xxxxxxx X. X'Xxxxx, Esq.
Fax 000.000.000.0000
and to :
Mazzeschi Xxxxxxx & Xxxxxxx
00, Xxx Xxxxxx
00000 Xxxxxx, Xxxxx
27
Attn. Marco Mazzeschi, Esq.
Fax 00.00000000
(b) If to Sellers, one copy only addressed to :
Xxxxxxxx Xxxxxxxxx
Xxx Xxx Xxxxxxx, 00
00000 Xxxxxxxxx - Milan
Fax 00.000000000
and to:
Vita Samory, Xxxxxxxx e Associati
Xxxxx Xxxxxxxxx 00
00000 Xxxxxx, Xxxxx
Attn. Xxxx Xxxxxxxx, Esq.
Fax 00.00000000
All notices between the parties shall be sent also by telefax, with a
copy to Xxxxx Plastics Corporation at 000.000.000.0000
Any party may change the address to which notices are to be addressed by
giving the other party written notice in the manner herein set forth.
8.07 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made by the parties in this Agreement
or in any instrument, certificate or other document delivered pursuant to
this Agreement shall survive the consummation of the transactions
contemplated hereby notwithstanding any investigation by any party. All
such representations and warranties shall be deemed material and relied
upon by the party to whom made, notwithstanding that such representations
and warranties are made or given on the basis of documentation prepared
by, or information obtained from, representatives and/or agents of the
Parties.
8.08 BINDING AGREEMENT; ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective permitted successors and
assigns. Neither this Agreement nor any of Buyer's or Sellers' rights,
interests or obligations hereunder may be assigned, nor any duties
delegated, without the prior written consent of the other party to this
Agreement unless otherwise provided herein.
Anything contained in this Agreement to the contrary notwithstanding, the
Buyer may, without the prior written consent of any other Party, assign
any of all of its rights and interests hereunder to any lender or lenders
providing financing to the Buyer as collateral security for such
financing, to the extent that any such assignment does not diminish or
otherwise impair the validity and enforceability of the obligations
undertaken by Buyer hereunder.
8.09 SEVERABILITY
Should any provision, or provisions, of this Agreement for any reason be,
or
28
become, invalid or not capable of performance, in whole or in part, then
the validity of the remaining provisions of this Agreement shall not be
affected thereby. In lieu of the invalid or inoperable provision, this
Agreement shall be applied in a reasonable manner, which, so far as
legally permissible, comes as close as possible to the application of
what the parties intended, according to the spirit and purpose of this
Agreement. In case of a provision being invalid, because of the extent
of performance or period of time (term and date) called for by such
provision, including but not limited to, the provisions of Article 7.1
of this Agreement, then the agreed upon extent of performance or period
of time (term or date) shall be replaced by such performance or period
of time (term or date) as is legally permissible, and which comes closest
to the invalid provisions.
8.10 INSTRUMENT OF FURTHER ASSURANCE
Sellers shall at any time and from time to time, upon the reasonable
request by Buyer, cause the execution and delivery to Buyer of such
further memoranda, instruments or agreements, and take such other action
as Buyer may reasonably request, in order to more sufficiently convey,
assign, transfer, deliver and/or perfect and record Buyer's title to the
SHARES or to document this transaction with respect to any jurisdiction.
8.11 REMEDIES
Nothing contained herein is intended to or shall be construed so as to
limit the remedies which any party may have against the other party due
to the breach of any representation warranty and undertakings under this
Agreement and made under or pursuant to this Agreement, it being intended
that any remedies shall be cumulative and not exclusive.
8.12 PUBLICITY
Prior to Closing no press release, public announcement, confirmation or
other information regarding this Agreement or the transactions provided
for hereunder shall be made by any party without the express prior
written approval of the other Party. Prior to Closing the Parties will
consult with each other with respect to the timing and content of
disclosure to suppliers, customers and personnel of the Companies.
8.13 SCHEDULES, ETC.
All Schedules provided for herein and the documents and instruments
delivered hereunder are expressly made a part hereof as fully as though
set forth completely herein, and all references to this Agreement shall
be deemed to refer to and include all such Schedules and instruments. Any
material and intentional breach or a default under any provision of any
such document or instrument shall for all purposes constitute a breach of
or a default under this Agreement.
8.14 WAIVER
Compliance with any provision hereof may be waived only in writing signed
by the party against which such waiver is sought to be enforced. No
exercise of, or failure to exercise, any right hereunder, and no partial
or single exercise of any such right, shall operate as a waiver or
otherwise affect such exercise or any such exercise, of that, or any
other, right it being understood, except as otherwise specifically
provided herein, that all such rights and all remedies
29
thereof are intended to be cumulative and not exclusive.
8.15 CONTROVERSIES
All disputes arising in connection with this agreement shall be
exclusively and finally settled pursuant to the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by a panel of three
arbitrators appointed in accordance with said Rules. One arbitrator shall
be appointed de by Buyer, the second arbitrator jointly by the Sellers
and the Chairman directly by the ICC. The place of arbitration shall be
Milan and the language of the proceedings shall be in English
IN WITNESS WHEREOF, this deed, including the above mentioned and following
schedules and all other documents affixed thereto has been signed by each of the
parties as of the date below written.
XXXXX PLASTICS CORPORATION
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Date: , 2000
-----------------
Signature
---------------------
Mrs. Xxxxxxxxx AGNOTTOLI
Date: , 2000
-----------------
Signature
---------------------
Mr. Xxxxxxxx XXXXXXXXX
Date: , 2000
-----------------
Signature
---------------------
Xx. Xxxxxxxxx XXXXXXXXX
Date: , 2000
-----------------
Signature
---------------------
Xxx. Xxxxxxxxx XXXXXXXXX
Date: , 2000
-----------------
Signature
---------------------
Xxx. Xxxxx Xxxxxxx XXXXXX
Date: , 2000
-----------------
Signature
---------------------
30
LIST OF SCHEDULES
- Schedule "A" Allocation of SELLERS' interests in CAPSOL and OCIESSE
- Schedule "B" Allocation of SELLERS' interests in GAZA
- Schedule "C" Description of the Colnago Real Estate
- Schedule "D" Description of the Buccinasco Real Estate
- Schedule 1.01 Allocation of the Purchase Price
- Schedule 3.02(a) Directors and Auditors' fee
- Schedule 3.02(c) form of statement confirming validity of representations
- Schedule 3.02(d) draft deed of transfer of the OCIESSE SHARE
- Schedule 3.02(g) Form of Escrow agreement
- Schedule 3.02(i) draft lease agreement concerning the Buccinasco Real Estate
- Schedule 3.02(j) draft lease agreement concerning the Colnago Real Estate
- Schedule 3.02(k) List of personal guarantees with banks and of money owed by the Companies to the banks
- Schedule 3.02(l) draft consultancy agreement with Xx. X. Xxxxxxxxx
- Schedule 3.02(m) draft non competition agreement with Xxxxxx Xxxxxxxxx
- Schedule 3.02(p) Terms of labor relationship with X. Xxxxxxxxx
- Schedule 4.03 CAPSOL and OCIESSE's balance sheet of profit and loss statement for the fiscal year
ended December 31st, 1999. CAPSOL and OCIESSE's interim financial statements as of
May 31, 2000
- Schedule 4.09(a) restrictions on moulds
- Schedule 4.09(b) list of moulds owned
- Schedule 4.11 list of patents and trademarks
- Schedule 4.18 list of contracts and commitments
- Schedule 4.21(a) list of executives, employees, agents
- Schedule 4.21(b) salary, commissions, benefits to employees and agents
- Schedule 4.23 outstanding financial interests
- Schedule 4.24 list of Labor Agreements, employee benefits plans and Employment Agreements.
- Schedule 4.26 list of all insurance policies
- Schedule 4.30 bank accounts and safe deposit boxes
- Schedule 4.31 list of all subcontractors and suppliers to the Companies
- Schedule 4.36 list of subsidies and grants
31
