EXHIBIT 2.1
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PURCHASE AGREEMENT
AMONG
COMPEX ITALIA S.R.L
(THE PURCHASER)
AND
XXXXXXXX XXXXXX
AND
XXXXXXXX XXXXXXXXXXX
(COLLECTIVELY THE SELLERS AND EACH A SELLER)
DATED AS OF JULY 3, 2003
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................................................5
ARTICLE II - PURCHASE AND SALE OF SHARES......................................................................8
Section 2.01 Purchase and Sale.................................................................8
Section 2.02 Cash Payment; Escrow; Transfer of Quotas..........................................8
(a) Cash Payment at Closing...........................................................8
(b) Escrow............................................................................8
(c) Transfer of Quotas................................................................8
Section 2.03 Verification of the assumptions of the Cash Payment...............................9
Section 2.04 Adjustment Procedure.............................................................10
ARTICLE III - CLOSING .................................................................................11
Section 3.01 Place and Date...................................................................11
Section 3.02 Closing Documents and Deliveries.................................................11
(a) Documents to be Delivered by the Sellers.........................................11
(b) Documents to be delivered by the Purchaser.......................................11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES..................................................................12
Section 4.01 Representations and Warranties of the Purchaser..................................12
(a) Organization of the Purchaser....................................................12
(b) Authority........................................................................12
(c) No Violations....................................................................12
Section 4.02 Representations and Warranties of the Sellers....................................12
(a) Ownership of the Quotas..........................................................13
(b) Organization of the Company/ No Subsidiaries.....................................13
(c) Authority, No Conflict...........................................................13
(d) Capitalization...................................................................13
(e) Capital Paid-up..................................................................14
(f) No Rights of Third Party Over Quotas.............................................14
(g) Financial Statements.............................................................14
(h) No Undisclosed Liabilities.......................................................14
(i) Accounts Receivable; Trade Accounts Payable and Other Accounts Payable...........14
(j) Capital Improvements.............................................................15
(k) Inventory........................................................................15
(l) Absence of Change................................................................15
(m) Insolvency.......................................................................16
(n) Taxes............................................................................16
(o) Environment......................................................................17
(p) Real Property....................................................................18
(q) Condition of Personal Property and Assets........................................18
(r) Intellectual Property Rights.....................................................19
(s) Contracts........................................................................19
(t) Customers........................................................................20
(u) Suppliers........................................................................20
(v) Litigation.......................................................................21
(w) Compliance with Laws.............................................................21
(x) Insurance........................................................................21
(y) Employees........................................................................22
(z) Professional and Social Welfare..................................................22
(aa) No Collective Bargaining.........................................................23
(bb) Agents and Consultants...........................................................23
(cc) Accuracy of Information..........................................................23
(dd) Termination of Agreements between the Company and the Sellers....................24
(ee) Absence of Questionable Payments.................................................24
(ff) Brokerage........................................................................24
ARTICLE V - COVENANTS........................................................................................25
Section 5.01 Covenant Not to Compete and Not to Solicit.......................................25
Section 5.02 Waivers; Payment of Indebtedness.................................................26
ARTICLE VI - INDEMNIFICATIONS................................................................................26
Section 6.01 Indemnification by the Sellers...................................................26
Section 6.02 Indemnification by the Purchaser.................................................27
Section 6.03 Deductions from Payments.........................................................27
Section 6.04 Limitation in Time...............................................................28
Section 6.05 Limitations on Amount............................................................28
(a) Sellers..........................................................................28
(b) Purchaser........................................................................29
(c) Third Party Claims...............................................................29
Section 6.06 Adjustment of Indemnity Payment -- Accounts Receivable...........................30
Section 6.07 Effect of Knowledge on Representations and Warranties............................30
Section 6.08 Exclusive Remedy.................................................................30
ARTICLE VII - MISCELLANEOUS..................................................................................30
Section 7.01 Sellers' Joint and Several Liability and Rights..................................30
Section 7.02 Notices..........................................................................31
(a) if to the Sellers, to:...........................................................31
(b) if to the Purchaser, to:.........................................................31
Section 7.03 Entire Agreement.................................................................32
Section 7.04 Severability of Provisions.......................................................32
Section 7.05 Binding Effect, Benefit..........................................................32
Section 7.06 Assignability....................................................................32
Section 7.07 Amendment and Modification; Waiver...............................................33
Section 7.08 Announcements....................................................................33
(a) Employees........................................................................33
(b) Press Release and Public Announcements...........................................33
Section 7.09 Confidentiality..................................................................34
Section 7.10 Adviser's Fees; Expenses.........................................................34
Section 7.11 Applicable Law...................................................................34
Section 7.12 Arbitration......................................................................34
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of July 3, 2003 (the Agreement), is among
Compex Italia S.r.l, Xxx Xxxxxxxxx 00, 00000 Xxxxxx, Xxxxx, (the Purchaser), and
Xxxxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxxxxx (collectively the "Sellers" and each a
Seller).
WITNESSETH
WHEREAS Xxxxxxxx Xxxxxx owns 30'420 Quotas of EUR 1.-- each in Filsport
Assistance Srl;
WHEREAS Xxxxxxxx Xxxxxxxxxxx owns 3'380 Quotas of EUR 1.-- each in Filsport
Assistance Srl;
WHEREAS Xxxxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxxxxx jointly own 100% of the
outstanding and fully paid capital of Filsport Assistance Srl, which amounts to
EUR 33'800.--.
NOW THEREFORE, the Parties hereto agree as follows:
ARTICLE I - DEFINITIONS
"Accounts" shall mean the audited financial statements (consisting of the income
statement, the balance sheet and notes to the financial statements) and the
annual report of the Company for the business years 2000, 2001 and 2002.
"Accounts Receivable" shall mean any and all accounts receivable, trade
receivables, notes receivable and other receivables arising in connection with
the Business.
"Agreement" shall have the meaning set forth in the Preamble.
"Arbitral Tribunal" shall have the meaning set forth in Section 7.12.
"Audited December 2002 Balance Sheet" shall mean the audited balance sheet of
the Company as of December 31, 2002.
"Best Knowledge" shall mean that level and extent of knowledge which, reasonably
is, or should be, held after having made due and careful inquiries.
"Business" shall mean the business carried on by the Company as of the date of
this Agreement, i.e. the activity of development, marketing, sale, distribution,
service, repair and rental distribution of electro-stimulation and ultrasound
products.
"Business Day" shall mean any day other than Saturday or Sunday on which banks
are open for business in Milan, Italy and Geneva, Switzerland.
"Cash Payment" shall be Euros 3'885'000.--(three million eight hundred eighty
five thousand Euros).
"Closing" shall have the meaning set forth in Section 3.01.
"Closing Date" shall have the meaning set forth in Section 3.01.
"Company" shall mean Filsport Assistance Srl.
"Damages" shall have the meaning set forth in Section 6.01
"Earn-Out Amount" shall mean EUR 950'000.--
"EBIT Threshold" shall mean EUR 1'900'000.--.
"Environmental Law" shall mean any and all applicable laws or regulations
regarding the protection of the environment (land, air, water or any combination
thereof) and of nature or human health and safety.
"Escrow Account" shall mean a special account of Me Xxxx xx Xxxxxx,
BCCC-Bianchi, Xxxxxxx, Xxxxxxxx & xx Xxxxxx, Attorneys-at-law, 00, Xxx xx
Xxxxxxxx, 0000 Xxxxxx 17.
"Escrow Agreement" shall mean the agreement of even date herewith, pursuant to
which the Escrow Amount shall be deposited in the Escrow Account.
"Escrow Amount" shall mean an amount of Euros 385'000.--(three hundred eighty
five thousand Euros) held in the Escrow Account until the determination of the
Stockholders' Equity in accordance with Section 2.03 hereof.
"Escrow Payment" shall mean the Escrow Amount paid to the Seller.
"Expert" shall mean the accounting firm of Deloitte and Touche.
"Final EBIT" shall mean the EBIT calculated for the period from the Closing Date
until the first anniversary of Closing.
"Financial Reports" shall mean the unaudited management accounts of the Company,
as of May 31, 2003, including the income statement, balance sheet and cash flow
prepared by the management of the Company for internal purposes only.
"Historical EBIT" shall mean the historical calculation of the EBIT for the year
ended December 31, 2002 as set forth in Exhibit 2.04.
"Historical Stockholder's Equity" shall mean the historical calculation of the
Stockholder's Equity for the year ended December 31, 2002, as set forth in
Exhibit 2.03.
"Indebtedness for Borrowed Money" shall mean all obligations for borrowed money
which should, in accordance with Italian GAAP, be classified upon the Company's
balance sheet as liabilities.
"Indemnification Notice" shall have the meaning set forth in Section 6.05 (c).
"Indemnification Party" shall have the meaning set forth in Section 6.05 (c).
"Indemnification Period" shall have the meaning set forth in Section 6.04(i).
"Indemnifying Party" shall have the meaning set forth in Section 6.05 (c).
"Intellectual Property Rights" shall mean all patents and patent applications,
all trademarks and trademark applications (including but not limited to the
Registered Trademark as defined in Section 4.02(r)), all copyrights, all
registrations and applications and renewals for any of the foregoing, all trade
names, trade secrets, confidential information, ideas, formulae, compositions,
know-how, technical and computer data, documentation and software, financial,
business and marketing plans, agents' list, customer and supplier lists and
related information, marketing and promotional materials and all other
information and intellectual property rights and all tangible embodiments
thereof.
"Italian GAAP" shall have the meaning set forth in Section 4.02(g).
"Leased Real Property" shall have the meaning set forth in Section 4.02(p).
"Material Adverse Effect" shall mean any change or effect that, individually or
when taken together with all other such changes or effects that have occurred
prior to the date of the determination of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of the Company,
taken as a whole.
"Other Accounts Payable" shall mean all the accounts payable other than the
Trade Accounts Payable.
"Parties" shall mean each of the Sellers and the Purchaser.
"Proposed Final EBIT" shall mean the EBIT submitted by Purchaser to Sellers as
set forth in Section 2.04 of this Agreement.
"Purchase Price" shall mean the amount of Euros 4'270'000.- (four million two
hundred seventy thousand Euros), plus the Earn-Out Amount, if any. The Purchase
Price consists of the following: (i) the Cash Payment, (ii) the Escrow Payment
made under the Escrow Agreement, if any, and (iii) the Earn-Out Amount, if any.
Such Purchase Price has been agreed on the assumption that at the Closing Date
Stockholders' Equity is not less than Euros 970'000.-(nine hundred seventy
thousand Euros).
"Purchaser" shall have the meaning set forth in the Preamble.
"Quotas" shall mean the contributions to the entire capital of the Company made
by the Sellers.
"Xxxxxxxx Xxxxxxxxxxx Consultant Agreement" shall mean the agreement entered
into by Xxxxxxx Xxxxxxxxxxx and the Company as set forth in Exhibit 3.02 (iii).
"Sellers" shall have the meaning set forth in the Preamble.
"Sellers' Objection" shall mean the notification by Sellers to Purchaser of
their objections relating to the correctness of the Proposed Final EBIT.
"Significant Agreements" shall have the meaning set forth in Section 4.02(s).
"Social Security Contributions" shall mean the mandatory contributions to the
old-age pension insurance scheme, pension fund scheme, invalidity insurance,
loss of salary insurance and unemployment insurance, or any equivalent or
similar contributions and any other social security contributions (including
accident and health insurance contributions as the case may be) applicable in
the jurisdictions in which the Company does business, together with any interest
or any penalty imposed by any social security authority with respect thereto.
"Stockholders' Equity" shall mean the sum of the capital (quotas), the legal
reserves and the accrued and retained earnings in accordance with Italian GAAP
consistently applied.
"Taxes" shall mean all income, profits, capital gains, capital, stamp,
anticipatory, gross receipts, sales, value added, use, real property transfer
taxes and other taxes (whether payable directly or by withholding), assessed by
Italian or foreign authorities, together with any penalties, additions to tax or
additional amounts imposed by any taxing authority with respect thereto.
"Threshold" shall have the meaning set forth in Section 6.05.
"Trade Accounts Payable" shall mean any and all trade accounts payable arising
in connection with the Business.
ARTICLE II - PURCHASE AND SALE OF SHARES
SECTION 2.01 PURCHASE AND SALE
Subject to all the terms and conditions of this Agreement, the Sellers
shall sell to the Purchaser and the Purchaser shall purchase from the Sellers
good and valid title to the Quotas free from encumbrances, mortgages, charges,
liens, security interests and other rights of any third party, for the Purchase
Price payable pursuant to this Agreement.
SECTION 2.02 CASH PAYMENT; ESCROW; TRANSFER OF QUOTAS
(a) CASH PAYMENT AT CLOSING
At Closing, the Purchaser shall pay by wire transfer of immediately
available funds to the bank accounts previously communicated by Sellers to
Purchaser, an amount equal to the Cash Payment to be splitted as was determined
and agreed upon by Sellers.
(b) ESCROW
At Closing, the Purchaser shall pay in accordance with the provisions of
the Escrow Agreement the Escrow Amount into the Escrow Account.
(c) TRANSFER OF QUOTAS
At Closing, each Seller shall transfer to the Purchaser all Quotas entered
into the register of Quotas owned by such Seller, being understood that if all
the Quotas representing 100% of the capital of the Company are not
transferred/assigned to the Purchaser at Closing, the Purchaser shall have no
obligation to pay or transfer any part of the Cash Payment.
SECTION 2.03 VERIFICATION OF THE ASSUMPTIONS OF THE PURCHASE PRICE
Promptly following Closing but not later than 90 (ninety) Business Days
thereafter, Purchaser shall verify that the assumption of the Purchase Price
provided for in Article I -- Definitions (i.e. that at the Closing Date the
Stockholders' Equity is no less than Euros 970'000 (nine hundred seventy
thousand Euros) is true and correct.
For the sake of clarity, Exhibit 2.03 sets forth the Historical
Stockholders' Equity. The Parties shall use the same form to calculate the
Stockholders' Equity for purposes of verifying the assumption of the Purchase
Price provided for above.
In the event Purchaser finds that the above assumption is incorrect, it
shall notify it in writing to Sellers (including his estimate of the
Stockholder's Equity, the "Estimate") and, if in the 15 (fifteen) Business Days
following such Purchaser notice, Sellers and Purchaser do not find an agreement
on the correctness of such assumption, the matter may be submitted by either
Party to the Expert.
The Expert shall determine the Stockholders' Equity in accordance with
Italian GAAP, consistently applied and will include a provision for
uncollectible receivables amounting to Euros 130'000 (one hundred thirty
thousand Euros). The Expert shall have to render its determination on the
correctness of the assumption of the Cash Payment within 15 (fifteen) Business
Days of receipt of the notice of its appointment or such other period as the
Expert reasonably determines. The determinations of the Expert shall be final
and binding for the Parties.
The Party who submits the matter to the Expert shall advance the Expert's
fees, if necessary. If the Expert determines that the Stockholders' Equity:
(i) is equal or inferior to the Estimate, the Expert's fees shall be borne
by Sellers.
(ii) is equal to or higher than Euros 970'000, the Expert's fees shall be
borne by Purchaser.
(iii) is between the amount the Purchaser valued the Estimate and Euros
970'000, the Expert's fee shall be borne by both Parties pro rata.
Should the assumption prove to be incorrect (after agreement of the Parties
or after determination of the Expert) the Euro for Euro amount equal to the
deficiency shall be released from the Escrow Account in favour of the Purchaser,
and the remainder, if any, to the Sellers in accordance with the terms of the
Escrow Agreement. If the amount of the deficiency is greater than the Escrow
Amount, then the Sellers shall pay the difference between the Escrow Amount and
the total amount of the deficiency to the Purchaser within 10 (ten) Business
Days.
SECTION 2.04 EARN-OUT AMOUNT
Purchaser shall pay the Earn-Out Amount within 10 (ten) Business Days
following the final determination of the EBIT Threshold by wire transfer of
immediately available funds pursuant to the procedure set forth in Section 2.05;
provided that the Final EBIT for the period from the Closing Date until the
first anniversary of Closing exceeds the EBIT Threshold.
For the sake of clarity, Exhibit 2.04 sets forth the Historical EBIT. The
Parties shall use the same form to calculate the Final EBIT for purposes of
determination of whether the Earn-Out Amount shall be due.
For the purposes of the Final EBIT, and therefore for a period from the
Closing Date until the first anniversary of Closing, Purchaser or any affiliated
company undertake: (i) not to increase the pricing of the products sold by
Purchaser or any affiliated company to the Company, and (ii) not to assign any
holding costs or similar corporate costs. If for business reasons, Purchaser or
any affiliated company determine to increase the pricing of the products to be
sold to the Company and/or to assign any such holding costs, Purchaser will
consult with Sellers and will carefully document those changes in order to duly
take into account the effects on the Final EBIT as the case may be. It is
further agreed that new products lines sold by the Company, which were not
previously sold by the Company and are not Compex products shall be excluded for
the purpose of calculation of the Final EBIT.
SECTION 2.05 ADJUSTMENT PROCEDURE
Promptly following the first anniversary of the Closing Date, but in no
event later than 90 (ninety) Business Days following such anniversary, Purchaser
shall (a) calculate the Proposed Final EBIT in accordance with Italian GAAP, on
the basis of Exhibit 2.04, consistently applied with the practices used in the
preparation Historical EBIT, (b) submit to Sellers, the Proposed Final EBIT and
(c) allow access to such documents, records and back-up materials pertaining or
relating to the Proposed Final EBIT, including, without limitation, the
financial statements and the management accounts of the Company as well as the
respective audit reports as Sellers shall reasonably request.
In the event Sellers dispute the correctness of the Proposed Final EBIT,
Sellers shall notify Purchaser of their objections within 20 (twenty) Business
Days after receipt of Purchaser's calculation of the Proposed Final EBIT and
shall set forth in writing and in reasonable detail, the reasons for Sellers'
Objection. If Sellers fail to deliver such notice of Sellers' Objection within
such time, Sellers shall be deemed to have accepted the Proposed Final EBIT,
which shall then be binding for the Parties and shall constitute the final and
binding Final EBIT for purpose of determining whether the Earn Out Amount shall
be due.
Sellers and Purchaser shall endeavor in good faith to resolve Sellers'
Objection within 15 (fifteen) Business Days after Purchaser's receipt of
Sellers' notice of Sellers' Objection. If they are unable to do so, each of the
Parties shall be entitled to retain the Expert as expert arbitrator to
independently determine the Final EBIT, in accordance with this Section and
Exhibit 2.04 by notifying the other Party of such retention and by providing to
the Expert such documents, records and back-up materials pertaining or relating
to the Proposed Final EBIT.
The Expert shall within 20 (twenty) Business Days of receipt of the notice
of its appointment or such other period as the Expert reasonably determines
deliver the determination of the Final EBIT to the Parties for purposes of
determination of whether the Earn-Out Amount is due.
The Expert shall determine the procedure in accordance with the principles
of due process of law. In the event that the Proposed Final EBIT was less than
the EBIT Threshold and the Expert determines that the Final EBIT is more than
the EBIT Threshold, the costs and expenses of the Expert shall be borne by the
Purchaser. In the event that either (i) the Proposed Final EBIT was greater than
the EBIT Threshold or (ii) the Proposed Final EBIT was less than the EBIT
Threshold and the Final EBIT as determined by the Expert is less than the EBIT
Threshold, the costs and expenses of the Expert shall be borne by the Sellers.
Should neither Party retain the Expert within 30 (thirty) Business Days
after Purchaser's receipt of Sellers' notice of Sellers' Objection, the Proposed
Final EBIT shall be the binding and Final EBIT for purposes of determining
whether the Earn-Out Amount is due.
ARTICLE III - CLOSING
SECTION 3.01 PLACE AND DATE
Subject to the fulfilment of each of the terms and conditions hereof, the
closing of the sale and purchase of the Quotas (the "Closing") shall take place
at the Milan offices of Dott. Xxxxx Xxxxxx, Notary in Milan simultaneously with
the execution of this Agreement, the date on which Closing occurs being the
Closing Date.
SECTION 3.02 CLOSING DOCUMENTS AND DELIVERIES
(a) DOCUMENTS TO BE DELIVERED BY THE SELLERS
Upon Closing, the Sellers shall deliver to the Purchaser:
(i) The register of Quotas;
(ii) letters of resignation of members of the managers of the Company,
each containing a statement of the resigning director that he has
been fully compensated for his services rendered to the Company,
that he has no claim of whatever nature against the Company as
the case may be, except for the TFM that has been accrued for
until June 30, 2003. It is agreed that to the extent that TFM has
been accrued for through June 30, 2003, the entire TFM through
June 30, 2003 will be paid to the resigning director promptly
upon receipt of the insurance proceeds from the insurance company
covering the TFM funds covering the period until December 31,
2002.
(iii) The duly executed Castelnuovo Consultant Agreement set forth in
Exhibit 3.02 (iii).
(iv) The TFM insurance certificate stating that such managers
termination leaving funds have been paid until December 31, 2002.
(b) DOCUMENTS TO BE DELIVERED BY THE PURCHASER
Upon Closing, the Purchaser shall deliver to the Sellers:
(i) Evidence of payment of the Cash Payment;
(ii) Release letters to the resigning directors of the Company in the
form attached hereto as Exhibit 3.02 (b) (ii).
(c) CORPORATE ACTIONS
Before Closing, Sellers shall procure that a shareholders' meeting of
the Company is validly held to appoint a sole director of the Company
previously designated by Purchaser and communicated to Sellers.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
Each party hereby makes the representations and warranties contained in this
Article IV to the other Party, each of which is true and correct as of the date
hereof. For the sake of clarity, it is understood that the Sellers give the
representations and warranties set forth in this Article IV as if they were
given by one person only.
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
(a) ORGANIZATION OF THE PURCHASER
The Purchaser is duly organized and validly existing under the laws of
Italy.
(b) AUTHORITY
This Agreement has been duly authorized and validly executed and
delivered by the Purchaser and is valid and enforceable against the
Purchaser in accordance with its terms; the Purchaser has full power
and authority to enter into this Agreement and to carry out the
transactions contemplated by this Agreement.
(c) NO VIOLATIONS
The execution and delivery of this Agreement by the Purchaser does not
violate the Purchaser's articles of association or internal
regulations, any agreement to which it is a signatory or any
governmental law, regulation, order or judgement to which it is
subject.
SECTION 4.02 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers jointly and severally makes the following
representations and warranties to the Purchaser:
(a) OWNERSHIP OF THE QUOTAS
Sellers have, and at Closing the Purchaser shall receive, good and valid
title to the Quotas. The Quotas are or will be on the Closing Date free and
clear of all encumbrances, mortgages, charges, liens, security interests or any
other rights of any third party.
(b) ORGANIZATION OF THE COMPANY/ NO SUBSIDIARIES.
The Company is duly organized and validly existing under the laws of Italy,
has the corporate powers to own and operate its assets and to carry on its
Business as now being conducted. The articles of association and the by-laws of
the Company which are attached hereto as Exhibit 4.02(b) are true, correct,
complete, up-to-date and in compliance with applicable law. The Company does not
own any securities of, or any quotas or other equity interest in any other
corporation, partnership, company limited as to shares or other entity.
(c) AUTHORITY, NO CONFLICT
Each of the Sellers has all necessary power and authority to execute,
deliver and perform this Agreement and any other agreements
contemplated hereby to which he will become a party.
Neither the execution and delivery of this Agreement or of any other
agreements contemplated herein nor the consummation or performance of
any of the other agreements contemplated by this Agreement will
directly or indirectly:
(i) violate, conflict with, or give any governmental body or other
person a right to challenge, in full or in part, any of the
transactions contemplated under this Agreement under any
applicable law or regulation or any order or judicial or
administrative decision to which the Sellers or the Company are
subject;
(ii) violate, conflict with the terms of, or give any governmental
body a right to revoke, suspend, or modify any governmental
authorization held by the Company;
(iii) violate, conflict with, or give any person the right to
terminate, declare a default or exercise any other remedy under,
any agreement to which the Company is a party; and
(iv) result in the creation or imposition of any lien or other charge
on any asset of the Company .
(d) CAPITALIZATION
The Company has the following capital structure: a paid-up capital of
EUR 33'800.-- (thirty-three thousand eight hundred Euros) divided into
33'800 Quotas of EUR 1.-- each. The Quotas represent 100% of the
capital of the Company.
(e) CAPITAL PAID-UP
All the issued and outstanding Quotas of the Company are duly and
validly authorized, issued and fully paid-up.
(f) NO RIGHTS OF THIRD PARTY OVER QUOTAS
There is no option, warrant, conversion privilege, pledge, right of
pre-emption, right to acquire, right of first refusal, right of first
offer or similar or analogous right over or affecting the Quotas or
any equity rights of the Company, nor is there any commitment to give
or create any of the foregoing, and no person has claimed to be
entitled to any of the foregoing.
(g) FINANCIAL STATEMENTS
The Sellers have delivered to the Purchaser the Accounts as well as
the Financial Reports, all as set forth in Exhibit 4.02(g)(1).
The Accounts have been prepared in accordance with the Italian GAAP,
i.e., the provisions of Italian law and generally accepted accounting
principles in Italy, applied consistently throughout the last three
business years. The Accounts are correct and complete and give a true
and fair view of the financial condition and the results of operations
of the Company. The assets are neither individually, nor collectively
overvalued and the liabilities are not undervalued or unaccounted for.
The Financial Reports have been prepared with due care and in good
faith for the purposes of management support in accordance with
Italian GAAP consistently applied and give a true and fair view of the
financial condition and results of operations of the Company.
All disclosed and paid dividends since December 31, 2002, are set
forth in Exhibit 4.02 (g) (2).
(h) NO UNDISCLOSED LIABILITIES
The Accounts and the Financial Reports contain all actual, conditional
and contingent liabilities and all accruals and reserves that,
according to the provisions of Italian law and Italian GAAP should be
contained therein. As of the date hereof, there exist no liabilities
of the Company other than those set out in the Accounts and the
Financial Reports, with the exception of liabilities which have been
incurred in the ordinary course of Business since May 31, 2003.
(i) ACCOUNTS RECEIVABLE; TRADE ACCOUNTS PAYABLE AND OTHER ACCOUNTS PAYABLE
Exhibit 4.02(i)(a) sets forth a true, accurate and complete aging
schedule of all Accounts Receivable of the Company outstanding on the
day immediately prior to the Closing Date. All outstanding Accounts
Receivable of the Company, have arisen out of bona fide transactions
in the ordinary course of Business and will be collected at their
recorded amounts, subject only to the reserve for bad debts on the
face of the Balance Sheet included in the Accounts, by December 31,
2003.
Exhibit 4.02 (i) (b) sets forth a true, accurate and complete aging
schedule of all Trade Accounts Payable of the Company on the day
immediately prior to the Closing Date.
Exhibit 4.02 (i) (c) sets forth a true, accurate and complete schedule
of all Other Accounts Payable of the Company at June 30, 2003.
(j) CAPITAL IMPROVEMENTS
There are no capital improvements or purchases or other capital
expenditures (as determined in accordance with the provisions of
Italian law and Italian GAAP) which the Company has committed to or
contracted for and which have not been completed prior to the date
hereof and the costs and expenses (including professional fees and
charges) reasonably estimated as being required to complete such
transactions.
(k) INVENTORY
The inventory of supplies and finished goods of the Company consists
of items sold to the Company by the Purchaser and others. The quantity
and quality of the items of the inventory reflected in the accounting
books is correct, subject only to any reserve for inventory on the
face of the Balance Sheet included in the Accounts and is merchandable
and fit for particular use.
(l) ABSENCE OF CHANGE
Except as set forth on Exhibit 4.02(l), since December 31, 2002, there
has not been any:
(i) change in the financial condition, assets, liabilities, personnel
or operations of the Company or in its relations with suppliers,
customers, lessors or others, other than changes in the ordinary
course of Business;
(ii) changes which have had or could have a Material Adverse Effect on
the Business or the Company;
(iii) damage, destruction, loss, or other action which may give rise
to any liability or obligation of the Company (whether or not
covered by insurance) adversely affecting their assets;
(iv) Indebtedness for Borrowed Money incurred by the Company, or
forgiveness or cancellation of indebtedness owed to the Company
or waiver of any claims or rights by the Company with regard to
such indebtedness;
(v) increase in the compensation or benefits paid or payable by the
Company to any of their officers or employees or agreement to do
the same;
(vi) dividend, distribution or other disposition or any transfer,
lease, license of assets of the Company to the Sellers;
(vii) encumbrances placed on or created or extended over any of the
assets of the Company;
(viii) amendment or termination of any lease, contract, license or
other agreement of the type described in Section 4.02 to which
the Company is a party, other than in the ordinary course of
Business;
(ix) change in the collection, payment or credit practices of the
Company or in the accounting practices, procedures or methods of
the Company, including, without limitation, any increase or
acceleration in the collection of Account Receivables, or any
delay or increase in the time of payment of accounts payable;
(x) agreement, arrangement or transaction, other than in the ordinary
course of Business consistent with past practice and of an
entirely arm's length nature, between the Company and (i) any of
the Sellers or the Sellers' controlling person, (ii) any officer
or employee of the Company, or (iii) any other person or entity
affiliated with or related to one or both of the Sellers or an
officer or employee of such entity; and
(xii) notice given by any supplier or customer of the Company that
they intend to terminate or by which they terminate a current
contractual relationship with the Company.
(m) INSOLVENCY
(i) No order has been notified and no resolution has been passed for
the winding up of the Company for a provisional liquidator to be
appointed in respect of the Company and no petition has been
presented and no meeting has been convened for the purpose of
winding up the Company.
(ii) No receiver (which expression shall include an administrative
receiver) has been appointed in respect of the Company or all or
any of its assets.
(iii) The Company is not insolvent, unable to pay its debts and has
not stopped paying its debts as they fall due.
(iv) No unsatisfied judgement is outstanding against the Company.
(v) To the Best Knowledge of the Sellers, there are no reasons that
any of the events described under Section (m) above shall occur.
(n) TAXES
(i) Filing of Returns
The Company has filed when due, correct and accurate returns for
Taxes and has otherwise complied in all respects with
requirements relating to the filing of Tax returns and the supply
of all information required to be supplied to any tax authority.
(ii) Payment of Taxes
The Company has complied with all and any requirements relating
to the payment of Taxes, of whatever nature, including interest
and penalties, if any.
(iii) Tax Provisions
The Company has paid and, if not paid, established adequate
provisions in the Accounts for the year 2002 and in the Financial
Reports for any period thereafter for all Taxes of whatever
nature that may be assessed or computed on the results,
operations or transactions of the Company for all periods prior
to the date hereof, regardless of the financial period during
which such Taxes may become due and payable.
For the Company, the amount of the provision for deferred Taxes
in the Audited December 2002 Balance Sheet is adequate and fully
in accordance with Italian law and Italian GAAP and practices
commonly adopted by companies carrying on businesses similar to
those carried on by the Company.
The Company has duly submitted all claims and disclaimers which
have been assumed to have been made for the purposes of the
latest Accounts.
(iv) No Dispute
The Company is not subject to formal proceedings or
investigations related to Taxes (except for requests for
additional information) by the respective authorities and no such
proceedings are threatened against the Company.
(v) No Withholding Tax on Dividends
The Company has not distributed or caused to be distributed, any
hidden dividend, nor distributed or granted any other benefit to
the Sellers or any other person which could lead to the
imposition of any withholding taxes on dividends or constructive
dividends.
(vi) No Adverse Tax Consequences
The acquisition of the Quotas by the Purchaser will not give rise
to any adverse tax consequences for the Company.
(o) ENVIRONMENT
The Company conducts and has always conducted its activities in
conformity with Environmental Law. Until and including the date
hereof, the Company has complied with and not violated any
Environmental Law in all material respects at the time when such law
was applicable. No action has been undertaken or, threatened to be
undertaken by Italian or foreign authorities with respect to
Environmental Law which could have a materially adverse effect
on the Company. No facts, events or conditions in existence on or
prior to the date hereof and relating to the past or present
facilities, properties or operations of the Company will give rise to
any investigatory, remedial or corrective obligations pursuant to
Environmental Law, or give rise to any other liabilities for onsite or
offsite releases of hazardous materials, substances or wastes,
personal injury, contamination of soil, water, air or groundwater,
property damage or damage to natural resources, pursuant to
Environmental Law.
(p) REAL PROPERTY
The Company owns no real property.
Exhibit 4.02(p) sets forth a complete and correct list of the Leased
Real Property, i.e., all real property and premises leased in whole or
in part (including droits reels like superficies, droits de superficie
and similar rights) by or to the Company, as of the date of this
Agreement.
The lease contracts to which the Company is a party as tenant as of
the hereof and as of the Closing Date allow unencumbered use of the
leased property in accordance with the terms and conditions of such
lease contracts. None of the lease contracts is terminable by any
third party, or would be breached, in both cases, as a result of the
transactions contemplated by this Agreement.
Each lease of premises utilized by the Company is legal, valid and
binding, as between the Company and the other party or parties
thereto, and the Company is tenant in good standing thereunder, free
of any default or breach and quietly enjoys the premises provided for
therein. Each rental and other payment due from the Company thereunder
has been duly paid; each act required to be performed by the Company
which if not performed would constitute a breach thereof has been duly
performed; and no act forbidden to be performed by the Company has
been performed thereunder.
All buildings occupied by the Company have been constantly maintained
in accordance with past practice of the Company and in accordance with
any applicable lease. None of such premises or properties has been
condemned or otherwise taken by public authority and no such
condemnation or taking is threatened or contemplated. The Company has
all required legal or governmental approvals for each of the
properties, leased, used or occupied by it.
(q) CONDITION OF PERSONAL PROPERTY AND ASSETS
The equipment, personal property and other tangible assets (other than
inventory) owned by the Company are owned free of third party rights
and are in good repair and operating condition, normal wear and tear
excepted; have been maintained regularly in accordance with past
practice of the Company and reasonably in accordance with any
applicable manufacturer's guidelines; and may be used for their
intended purpose in the normal course of the Business. In the
Financial Reports, the assets are valued in accordance with Italian
GAAP consistently applied, and the assets and the inventory are not
over-valued.
(r) INTELLECTUAL PROPERTY RIGHTS
(i) The Company owns and possesses all right, title and interest in
and to, or has a written, enforceable license to use, all of the
Intellectual Property Rights necessary for the operation of the
Business free and clear of all liens, security interests,
restrictions and encumbrances.
(ii) Exhibit 4.02(r) (ii) is a complete and correct list of the
Registered Trademarks, i.e., all the trademarks that are part of
the Intellectual Property Rights and that the Company has
registered in Italy and abroad.
(iii) No claim by any third party contesting the validity,
enforceability, use or ownership of any Intellectual Property
Rights, including the Registered Trademarks, owned or used by the
Company has been made, is currently outstanding or, to the Best
Knowledge of the Sellers, is threatened, and there are, to the
Best Knowledge of the Sellers, no grounds for such claim.
(iv) The Company has not received any written notices of, nor is it
aware of any facts which indicate a likelihood of, any
infringement or misappropriation of, or other conflict with any
third party with respect to, any Intellectual Property Rights,
owned or used by the Company, nor has the Company received any
claims of infringement or misappropriation of, or conflict with,
any Intellectual Property Rights of any third party.
(v) The Company has not infringed, misappropriated or otherwise acted
in conflict with any Intellectual Property Rights of any third
party, nor is any Seller aware, to their Best Knowledge, of any
infringement, misappropriation or conflict which will occur as a
result of the continued operation of the Business as conducted.
(vi) All Intellectual Property Rights owned or used in connection with
the Business will be owned by or available for use by the Company
on identical terms and conditions immediately subsequent to the
Closing. The Company has taken all reasonable actions to preserve
the value of and to ensure the continuous protection of the
Intellectual Property Rights and their rights therein.
(s) CONTRACTS
Exhibit 4.02(s) sets forth a complete and correct list, of all
(written or oral) contracts, agreements, commitments, instruments or
other consensual obligations to which the Company is a party or by
which the Company, or any of the assets of the Company is bound or
liable (excluding customary inventory purchase orders in the ordinary
course of Business) and:
(i) which each involve a yearly aggregate consideration of EUR 10'000
or more;
(ii) which evidence or provide for the borrowing of any indebtedness
of the Company, excluding lease agreements;
(iii) which guarantee the performance, liabilities or obligations of
any other person (whether legal or natural);
(iv) which restrict the ability of the Company to conduct any business
activities;
(v) which are not in the ordinary course of the Business;
(vi) which are terminable by any third party, or which would be
breached, in both cases, as a result of the transactions
contemplated by this Agreement;
(vii) which relate to Intellectual Property Rights owned by the
Company or which relate to Intellectual Property Rights licensed,
assigned, sold, transferred, or conveyed by or to the Company in
connection with the Business;
(viii) which are concluded for a period of more than one year or
cannot be terminated on a one-year notice; or
(ix) which are otherwise material to the Business.
The agreements listed under Section 4.02(s) are collectively referred to as
the Significant Agreements. The Company is not in breach of any of the
Significant Agreements, nor, to the Best Knowledge of the Sellers, is any
third party in breach of the Significant Agreements or has repudiated any
provision of the Significant Agreements and no event has occurred which
with notice, lapse of time or both would constitute a breach or default or
permit termination, modification or acceleration of any such Significant
Agreement.
(t) CUSTOMERS
Exhibit 4.02(t) lists the 10 largest customers of the Company for each
of the last two fiscal years and for the interim period ended on the
date of the latest Financial Report and sets forth opposite the name
of each such customer the percentage of net sales by the Company
attributable to such customer for each such period. No customer listed
on Exhibit 4.02(t) has indicated that it will stop or decrease the
rate of business done with the Company as a result of the transactions
contemplated by this Agreement or otherwise, it being specified that
Sellers do not make any representation or warranty, neither expressly
nor implicitly, on the continuation of the relationships between the
Company and its present customers.
(u) SUPPLIERS
Exhibit 4.02(u) lists the 10 largest suppliers of the Company for each
of the last two fiscal years and for the interim period ended on the
date of the latest Financial Report and sets forth opposite the name
of each such supplier the approximate percentage of purchases by the
Company attributable to such supplier for each such period. Except
with respect to the Purchaser, no supplier listed on Exhibit 4.02(u)
is a sole source of supply for the Company. No supplier listed on
Exhibit 4.02(u) has indicated that it will stop or decrease the rate
of business done with the Company as a result of the transactions
contemplated by this Agreement or otherwise, it being specified that
Sellers do not make any representation or warranty, neither expressly
nor implicitly, on the continuation of the relationships between the
Company and its present suppliers.
(v) LITIGATION
Except as set forth on Exhibit 4.02(v), there is no claim, action,
suit, arbitration, inquiry, proceeding or investigation by or before
any Italian or foreign governmental commission, court, tribunal or
arbitral body by or against the Company or any of its assets or
properties pending, or, to the Best Knowledge of the Sellers,
threatened to be brought against the Sellers or any of the Company's
officers or staff relating to the Business, by or before any Italian
or foreign governmental commission, court, tribunal or arbitral body
nor, to the Best Knowledge of the Sellers, do any circumstances exist,
which are likely to give rise to any such claim, action suit,
arbitration, inquiry, proceedings or investigation. Except as set
forth on Exhibit 4.02(v), there are no claims of whatever nature
against the Company by any former directors, officers, or employees of
the Company and there are no circumstances which are likely to give
rise to any such claim.
(w) COMPLIANCE WITH LAWS
The Business has been conducted in compliance with all laws and
regulations of local, republican and foreign governmental authorities
applicable to the Company. The Company possesses, and is in compliance
with, all licenses, permits, approvals and other governmental
authorizations necessary to the conduct of the Business, and there is
no reason or circumstance which indicates that such licenses, permits,
approvals and authorizations are likely to be revoked or confer a
right of revocation.
(x) INSURANCE
The Company has entered the insurance contracts listed in Exhibit 4.02
(x). The Company has not received any notice or other communication
from any insurance company within three years prior to the date hereof
cancelling or amending such policies or substantially increasing the
annual or other premiums payable under any of said insurance policies
and no such cancellation or amendment is threatened.
All premiums pertaining to the insurance policies have been paid as
they fell due, or are duly provided for in the Accounts. No policy has
expired without having been renewed.
(y) EMPLOYEES
Exhibit 4.02(y) is a complete and correct list of all employees of the
Company as of the date of this Agreement. This list contains details
about salary (including benefits in kind), age, seniority, length of
service, notice periods for termination, right to severance pay and to
bonus.
Each contract of employment to which the Company is a party can be
terminated by the Company, in accordance with the provisions of
Italian Law and the collective bargaining agreement. In case of
termination there are no damages or compensation to be paid to the
employees other than the ones payable under Italian Law or the
collective bargaining agreement. None of the employment contract
provides the employee with further rights than those he has under
under Italian Law or the collective bargaining agreement.
To the Best Knowledge of the Sellers, no employee of the Company and
no group of employees of the Company has any plans to terminate his,
her or their employment, whether as a result of the transactions
contemplated by this Agreement or otherwise, it being specified that
Sellers do not make any representation or warranty, neither expressly
nor implicitly, on the continuation of the employment relationships
between the Company and its present employees. The Company has
complied at all times with all applicable laws relating to employment
and employment practices and those relating to the calculation and
payment of wages, including but not limited to overtime, maximum hours
of work, equal employment opportunity (including laws prohibiting
discrimination and/or harassment on the basis of race, national
origin, religion, gender, disability, age or otherwise), and other
hiring practices, and occupational safety and health requirements. No
employee of the Company is subject to any secrecy or non-competition
agreement or any other agreement or restriction of any kind that would
impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the business of the
Company.
(z) PROFESSIONAL AND SOCIAL WELFARE
Any and all returns and reports related to Social Security
Contributions that are required to be filed with respect to the
Company prior to the date hereof have been timely and correctly filed.
The Company has paid in full any and all Social Security Contributions
as and when due. No social security authority is now asserting any
deficiency or claim for additional Social Security Contributions (or
interest thereon or penalties in connection therewith) and any and all
Social Security Contributions which (although not due) have accrued on
the basis of the salaries to be paid until the date hereof, have been
fully provisioned.
To the Best Knowledge of the Sellers, there are no facts or
circumstances existing or having arisen prior to the date hereof which
have or may lead to a re-assessment by any social security authority
of Social Security Contributions to be made by the Company relating to
any period prior to the date hereof.
There is no pension fund due except for TFR, which has been timely and
fully paid or reserved for in the Accounts or in the Financial
Reports.
(aa) NO COLLECTIVE BARGAINING
There is no collective bargaining or other union agreement or
arrangement (whether binding or not) other than the applicable
collective agreements as per Italian Law to which the Company is a
party or by which the Company is bound or which is currently being
negotiated and no dispute between the Company and any trade union or
other organization formed for a similar purpose is existing, pending
or threatened. The Company does not have any labor relations problem
pending or, to the Best Knowledge of the Sellers, threatened and its
labor relations are satisfactory. There are no workers' compensation
claims pending against the Company, nor does any Seller have any
knowledge of any facts that would give rise to such a claim.
(bb) AGENTS AND CONSULTANTS
To the Best Knowledge of the Sellers, no sales agent, sales
representative or distributor of the Company has any plans to
terminate his, her or its relationship with the Company, whether as a
result of the transactions contemplated by this Agreement or
otherwise, it being specified that Sellers do not make any
representation or warranty, neither expressly nor implicitly, on the
continuation of the relationships between the Company and its present
sales agents, sales representatives or distributors.
Exhibit 4.02(bb) is a complete and correct list of all agent and
consultants of the Company as of the date of this Agreement. This list
contains details about fees, (including benefits in kind), nature of
services, exclusivity (if any), notice periods for termination (if
any), right to payments. Except for contracts listed in Exhibit
4.02(bb) under the heading Consulting and Agent Agreement with
Termination Payments, each consulting agreement and agent contract to
which the Company is a party can be terminated by the Company, as the
case may be, without damages or compensation (other than that payable
by law) by giving notice of termination in accordance with the notice
periods provided for by law.
(cc) ACCURACY OF INFORMATION
None of the representations, warranties or statements contained in
this Agreement or in the Exhibits hereto contains any untrue statement
of a fact or omits to state any fact necessary in order to make any of
such
representations, warranties, statements or information true and not
misleading as of the date of this Agreement and as of the Closing
Date. All information required to be provided by the Sellers, the
Company or its respective agents pursuant to the terms of this
Agreement is true, complete and correct as of the date hereof and as
of the Closing Date.
(dd) TERMINATION OF AGREEMENTS BETWEEN THE COMPANY AND THE SELLERS
As of the date hereof, except for the agreements listed in Exhibit
4.02(dd) and otherwise contemplated by this Agreement, the Sellers
have terminated all agreements existing between the Company, on the
one hand, and the Sellers or any persons, companies, partnerships or
other legal or business entities with which any of the Sellers is
affiliated or related (except for the Company), on the other hand,
unless the continuation of such agreement is approved by the Purchaser
in writing before the Closing Date or specifically contemplated by
this Agreement. The termination of such agreements does not oblige the
Company to make any payments in compensation of such termination, such
as for example severance payments or any payment for a notification
period extending beyond the date of this Agreement.
(ee) ABSENCE OF QUESTIONABLE PAYMENTS
Neither the Company, nor current or former director, officer, agent or
employee of the Company nor other person acting on behalf of the
Company has used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or
others or established or maintained any unlawful or unrecorded funds
in violation of the laws of any national, federal, state, local or
foreign jurisdiction. Neither the Company nor any current director,
officer, agent or employee of the Company has accepted or received any
unlawful contributions, payments, gifts, or expenditures.
(ff) BROKERAGE
No Person will be entitled to receive any brokerage commission,
finder's fee, fee for financial advisory services or similar
compensation in connection with the transactions contemplated by this
Agreement based on any contract made by or on behalf of the Company or
any Seller for which Purchaser or the Company is or could become
liable or obligated.
ARTICLE V - COVENANTS
SECTION 5.01 COVENANT NOT TO COMPETE AND NOT TO SOLICIT
For the purpose of assuring to the Purchaser the full benefit of the
Business and goodwill of the Company, each of the Sellers severally but not
jointly undertakes by way of further consideration for the obligations of the
Purchaser under this Agreement and as a separate and independent agreement that
each Seller:
(i) will at no time after the Closing disclose to any person or use for
any purpose (i) any information concerning the business, accounts or
finances of the Company, (ii) any information relating to the
Company's clients, agents, consultants or affairs of which such Seller
has knowledge;
(ii) will use his or its best endeavors to prevent the publication or
disclosure of the information described in Section 5.01(i);
(iii) will not, directly or indirectly, use the word "Filsport" as part of
a corporate name, internet domain name (including e-mail address),
trademarks, or any other intellectual property rights. In particular,
Xx. Xxxxxx undertakes to change the name of "Filsport Services" to a
name that will not contain the word "Filsport", at the latest by
September 15, 2003;
(iv) for the following periods:
(1) three years from the Closing Date, as to Xxxxxxxxx Xxxxxx, and
(2) the longer of three years from the Closing Date or two years
after termination of his service to the Company under the
Xxxxxxxx Xxxxxxxxxxx Consultant Agreement as possibly renewed, as
to Xxxxxxxx Xxxxxxxxxxx,
either on his or its own account or for any other person directly
or indirectly solicit, interfere with or endeavour to entice away
from the Company or any member of the Purchaser's group of
companies as then constituted, any person who is, or has during
the immediately preceding three years been, an employee, a
manager, a customer or an agent of the Company to terminate his
or her employment relationship with the Company, or in the habit
of dealing with the Company or any member of the Purchaser's
group of companies as then constituted; and
(v) for the periods set out in Section 5.01(iv) above he will not, alone,
or jointly with, or as manager, agent for, customer or employee of any
person directly or indirectly carry on or be engaged, concerned or
interested in (i) the Business; or (ii) any business competitive with
the Business, with the understanding that this undertaking is assumed
by: (1) Xxxxxxxx Xxxxxx with respect to the Business carried on by the
Company at the Closing Date as specified in Article 1 - Definitions,
and (2) Xxxxxxxx Xxxxxxxxxxx with respect to the Business carried on
by the Company at the Closing Date as well as with respect to any
other business possibly developed by the Company from the Closing Date
until the time of termination of his service to the Company, under the
Xxxxxxxx Xxxxxxxxxxx Management Agreement as possibly renewed.
The Sellers recognize that the activities by the Sellers proscribed by this
Section 5.01 may result in irreparable damage and harm to the Purchaser and
therefore the Sellers agree to pay a penalty amounting to Euros 100'000 (one
hundred thousand Euros) for each breach or violation of their obligation under
this section 5.01. Notwithstanding the preceding sentence, the Sellers hereby
recognize and acknowledge that the Purchaser may in addition and at its election
institute and prosecute proceedings: (a) to obtain damages for such activities
proscribed by this Section 5.01, (b) to seek penalty payment pursuant to the
preceding sentence, (c) to obtain specific performance by the Sellers of this
Section 5.01 (including through provisional or pre-provisional proceedings), (d)
to enjoin the Sellers from engaging in the activities proscribed in this Section
5.01 (including through provisional or pre-provisional proceedings) or (e) to
pursue any one or more of the foregoing or any other remedy available to the
Purchaser under applicable law. The Purchaser shall not, by seeking or obtaining
such relief, be deemed to have precluded itself from obtaining any other relief
to which it may be entitled.
SECTION 5.02 WAIVERS; PAYMENT OF INDEBTEDNESS
To assure that Purchaser obtains the full benefit of this Agreement,
effective as of the Closing Date, each Seller waives any claim it might have
against the Company, whether arising out of this Agreement or otherwise and
specifically including, without limitation any claim to any distribution or
dividend whether or not declared or paid, and irrevocably offers to terminate
any contract between such Seller and the Company at no cost to the Company.
Sellers will cause each Seller, the members of the immediate family of each
Seller and any person controlled by any Seller to repay, in full, prior to the
Closing, all indebtedness owed to the Company by such Person. Effective as of
the Closing Date, each Seller agrees that such Seller will not make any claim
for indemnification against the Company or any Subsidiary by reason of the fact
that such Seller was a director, officer, employee or agent of any such entity
or was serving at the request of any such entity as a partner, trustee,
director, officer, employee or agent of another entity for any loss (whether
such claim is pursuant to any Law, Organizational Document, Contract or
otherwise) with respect to any litigation (whether such litigation is pursuant
to this Agreement, applicable Law or otherwise) and waives and releases any
claim for indemnification such Seller may have against the Company.
ARTICLE VI - INDEMNIFICATIONS
SECTION 6.01 INDEMNIFICATION BY THE SELLERS
The Sellers shall on a pro-rata of the split of the Purchase Price as set
forth in Section 2.01 indemnify and hold harmless the Purchaser from and against
any and all losses, damages, liabilities, obligations, claims, judgements, costs
and expenses including reasonable attorney's fees incurred by the Purchaser or
the Company in connection, directly or indirectly, with (i) a breach of or
inaccuracy in the representations and warranties contained in Section 4.02 of
this Agreement or (ii) a breach of or inaccuracy in any of the other agreements
and covenants contained in this Agreement, and (iii) a breach of any obligation
contained in any agreement contemplated to be entered into in connection with
this Agreement (collectively, the "Damages"), provided, however, that any breach
of the non-compete and non-solicit covenant set forth in Section 5.01 shall be
indemnified exclusively pursuant to the terms of that Section 5.01.
Articles 201 and 210 of the Swiss Code of Obligations shall not be
applicable to any claim arising out of or in connection with the Agreement.
After the Closing, Article 24 Al.1 Ch.4 of the Swiss Code of Obligations
shall not be applicable. Sellers shall indemnify Purchaser, as provided for in
this Article VI, only against Damages definitely ascertained and/or paid by the
Company, or which result to be the object of a definitive payment's obligation
of the Company, with express exclusion of any potential Damages.
The Purchaser shall have the right to direct the Sellers to pay any amount
directly to the Company.
SECTION 6.02 INDEMNIFICATION BY THE PURCHASER
The Purchaser shall indemnify and hold harmless the Sellers from and
against any losses, damages, liabilities, obligations, claims, judgements, costs
and expenses including reasonable attorneys' fees incurred by the Sellers by
reason of or resulting from a breach of or inaccuracy in the representations and
warranties contained in Section 4.01 of this Agreement.
SECTION 6.03 DEDUCTIONS FROM PAYMENTS
(i) All sums payable under this Article VI shall be paid free and clear of
all deductions, withholdings, Taxes whatsoever, except as may be
required by law.
(ii) If any deductions or withholdings are required by law to be made from
any of the sums payable under this Article VI, the paying party shall
be obliged to pay the receiving party such sum as will, after the
deduction or withholding has been made, leave the receiving party with
the same amount as it would have been entitled to receive in the
absence of any such requirement to make a deduction or withholding.
(iii) If any Taxes shall be payable by the receiving party on any sum
payable under this Article VI, the paying party shall be obliged to
pay to the receiving party such sum as will, after the payment of such
Taxes has been made by the receiving party, leave the receiving party
with the same amount as it would have been entitled to receive in the
absence of any such requirement to pay Taxes.
SECTION 6.04 LIMITATION IN TIME
(i) A party to this Agreement may request indemnification as provided in
this Article VI or claim for breach of a warranty contained in Article
IV until December 31, 2005, provided that in the case of a breach of
the Sellers' representations or warranties set forth in Section
4.02(n) and Section 4.02(y), the Purchaser may request indemnification
from the Sellers until the expiration of the applicable statutory
limitation period in the relevant statute of limitations (or
comparable statute) in each relevant jurisdiction, plus 60 days. The
above periods are collectively referred to as the Indemnification
Periods and each an Indemnification Period.
(ii) If reasonable details of any claim have been given by the party
claiming indemnification under this Agreement to the other party
within the Indemnification Period and in conformity with Section 6.07
(if applicable), the delivery of these details to the other party
shall be considered a call for indemnification and the right to
request indemnification shall not lapse with regard to such claim.
SECTION 6.05 LIMITATIONS ON AMOUNT
(a) SELLERS
The Sellers (and the Company with respect to indemnification to be
paid before the Closing) shall have no liability with respect to
matters described in Section 6.01 until the Purchaser has suffered
Damages in excess of EUR 75,000 (the "Threshold") in the aggregate, at
which point the Sellers will be obligated to indemnify the Purchaser
from and against that portion of the amount of Damages from the first
Euro. The total indemnification shall not exceed the Purchase Price.
The limitations contained in this Section 6.05 shall not apply to any
liability arising out of the fraud or wilful misconduct of a Seller.
The amount of Sellers indemnification shall be equal to 100% of the
amount of the Damages resulting after deduction of:
(i) the amount of the specific provisions in respect of the matter
originating the Damages included in the Audited December 2002 Balance
Sheet and/or in the Financial Reports;
(ii) the amount of any insurance proceeds recovered and, in general, any
recoveries payable by and recovered from third parties with respect to
such matter originating the Damages;
(iii) the amount of any effective Tax benefit deriving to the Company for
the entry in its accounts of the cost associated with any such Damages
net of any Tax burden possibly deriving to the Company for the payment
by Sellers of the indemnification to the Company.
(b) PURCHASER
The Purchaser will have no liability with respect to the matters
described in Section 6.02 until the Sellers have suffered damages in
excess of the Threshold in the aggregate, at which point the Purchaser
will be obligated to indemnify the Sellers from and against all such
damages from the first Euro.
(c) THIRD PARTY CLAIMS
Promptly after a Party entitled to indemnification under this Article
VI (an Indemnified Party) shall have received notice (an
Indemnification Notice) of the commencement of any action by any third
party in respect of which the Indemnified Party will or may seek
indemnification under this Article VIII or shall have discovered other
facts that the Indemnified Party believes give rise to a right to
indemnity under this Agreement, the Indemnified Party shall notify the
party providing the indemnification hereunder (the Indemnifying Party)
thereof in writing pursuant to Section 7.02 but no failure to so
notify the Indemnifying Party shall relieve the Indemnifying Party
from any liability that it has to the Indemnified Party except if and
to the extent that the Indemnifying Party shall have been materially
prejudiced thereby. In making any claim under this Section 6.04, the
Indemnified Party will specify with reasonable particularity the item
or items giving rise to the claim and the basis of the claim.
The Indemnified Party shall be entitled to defend lawsuits or actions
(including, without limitation, all administrative appeals,
proceedings, hearing and conferences with any tax authority and all
aspects of any litigation relating to taxes) and to employ and engage
attorneys of its own choice to adequately handle and defend the same.
The fees of such attorneys shall be borne by the Indemnifying Party.
The Indemnifying Party shall have the right to employ its own,
separate counsel who may give non-binding advice to the Indemnified
Party and shall have the right to be consulted by the Indemnified
Party in the defence of such lawsuit or action, but the fees and
expenses of such counsel shall be at the expense of the Indemnifying
Party.
The Indemnifying Party shall co-operate in all respects with the
Indemnified Party and its attorneys in the investigation, trial and
defence of such lawsuit or action and any appeal arising therefrom.
The Indemnified Party shall, in conducting any relevant lawsuit or
action, take into account the reasonable interests of the Indemnifying
Party.
The Indemnified Party shall not make any admission of liability,
agreement or compromise with any person, body or authority in relation
thereto without the prior written consent of the Indemnifying Party
which consent shall not be unreasonably withheld or delayed.
SECTION 6.06 ADJUSTMENT OF INDEMNITY PAYMENT -- ACCOUNTS RECEIVABLE
If any amount is paid by an Indemnifying Party pursuant to this Article VI
in respect of any item, then to the extent that the Indemnified Party later
recovers in respect of such item an amount which, when added to the
indemnification payment previously received in respect thereof pursuant to this
Article VI, exceeds the amount which the Indemnified Party was entitled to
receive in respect of such item in accordance with the terms hereof, the
Indemnified Party will pay to the Indemnifying Party promptly the amount of such
excess.
It is further agreed that, as to the Accounts Receivable, outstanding as of
the Closing Date which have not been paid, notwithstanding all necessary actions
taken to obtain such payment, within December 31, 2003, Purchaser shall cause
the Company to sell such unpaid Accounts Receivable to Sellers, and Sellers
undertakes to purchase them, for a price equal to their face value reduced by
the provision for bad debts equal to Euros 130'000 (one hundred thirty thousand
Euros).
SECTION 6.07 EFFECT OF KNOWLEDGE ON REPRESENTATIONS AND WARRANTIES
Unless, and then only to the extent, expressly contained in this Agreement
and the Exhibits hereto, no knowledge on the part of the Purchaser, its
employees and agents shall limit the Sellers' obligations with respect to, or
liabilities for breach of, representations, warranties, disclosures or other
obligations hereunder.
SECTION 6.08 EXCLUSIVE REMEDY
The sole and exclusive remedy of any party for any misrepresentation
(excluding fraudulent or intentional misrepresentation) or any breach of a
warranty or covenant set forth in or made pursuant to this Agreement shall be a
claim for indemnification under and pursuant to this Article VI, provided,
however, that the Purchaser shall be entitled to specific performance and
injunctive relief where available by applicable law. It is further understood
that after, and only after, the Closing, the Parties may not rescind this
Agreement and agree to exclude the application of Article 24 Al. 1 Ch. 4 of the
Swiss Code of Obligations. Notwithstanding the foregoing, nothing in this
Agreement will prevent any party from bringing an action based upon allegations
of fraud by the other party in connection with this Agreement.
ARTICLE VII - MISCELLANEOUS
SECTION 7.01 SELLERS' RIGHTS
The Sellers shall exercise all their rights jointly and each of the Sellers
hereby acknowledges and undertakes that all and any rights granted to the
Sellers under this Agreement shall be exercised solely by Xx. Xxxxxxxx Xxxxxx
and that any notice of exercise of right, claim, settlement, discharge or
acknowledgement made by Xx. Xxxxxxxx Xxxxxx shall be deemed to be made by the
Sellers collectively.
SECTION 7.02 NOTICES
All notices, requests, demands, waivers and other communications (together
"Notices"), required or permitted to be given under or in connection with this
Agreement shall be in writing and shall be deemed to have been duly given if
sent by registered mail or by telecopy with a confirmation by registered mail,
as follows:
(a) IF TO THE SELLERS, TO:
Xxxxxxxx Xxxxxxxxxxx
Xxx Xxxxxxxxx 00
00000 Xxxxxxxxxx (XX)
Xxxxx
and to
Xx. Xxxxxxxx Xxxxxx
Xxx Xxxxxx 00
00000 Xxxxxxxx Fontotoce (VB)
WITH A COPY TO:
Mr Alessandro Xxxxxx
Xxxxxx, Xxxxxxxxx, Aghina e Ludergnani
Xxx xxxxx Xxxxxxx, 0
00000 Xxxxxx
Facsimile: 0039 02/72023904
(b) IF TO THE PURCHASER, TO:
Compex S.A.
Attn.: Xx. Xxxxx Xxxxx
Zone Industrielle "Larges Pieces"
Xxxxxx xx Xxxxxx
0000 Xxxxxxxx/XX
Xxxxxxxxxxx
Facsimile: + 41 21 695 23 61
WITH A COPY TO:
Xxxx & Staehelin
00 Xxxxx-Xxx
XX-0000 Xxxxxx 11
Attn: Andreas Rotheli
Facsimile: x00 00 000 00 00
or to such other substitute person or address as any Party shall from time to
time specify by notice in writing to the other Party.
Notices and communications made by telecopy shall be deemed to be received
on the date of dispatch provided that an answer-back confirmation is available,
irrespective of the date of receipt of the confirmation by registered mail.
Notices given by registered mail only are deemed to be received upon delivery to
the addressee.
SECTION 7.03 ENTIRE AGREEMENT
This Agreement (including the Exhibits which are part of this Agreement,
and documents and agreements to be delivered in accordance with this Agreement)
constitutes the entire agreement between the Parties hereto and supersedes all
prior agreements and undertakings, oral or written, between the Parties hereto
with respect to the subject matter hereof.
SECTION 7.04 SEVERABILITY OF PROVISIONS
If any term or provision of this Agreement or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement and the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and be enforceable to the fullest extent permitted
by law.
SECTION 7.05 BINDING EFFECT, BENEFIT
With the exception of Section 6.01, this Agreement shall inure to the
benefit of and be binding upon the Parties hereto and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer on any person other than the Parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 7.06 ASSIGNABILITY
Neither Party may assign this Agreement and all or part of any of their
rights under this Agreement without the prior written consent of the other
Party.
SECTION 7.07 AMENDMENT AND MODIFICATION; WAIVER
This Agreement may be amended or modified by a written instrument duly
executed by the Purchaser and the Sellers at any time with respect to any of the
terms contained herein. No waiver by any party of any provision hereof shall be
effective unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken pursuant
to this Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any other or subsequent breach or a
waiver of any other provision of this Agreement.
SECTION 7.08 ANNOUNCEMENTS
(a) EMPLOYEES
The transactions contemplated by this Agreement shall not be announced
to the employees of the Company prior to the issuance of the press
release or public announcement set forth in Section 7.08(b). The form
of the announcement to the employees of the Company shall be in a form
to be agreed upon by the parties and in accordance with applicable
laws.
(b) PRESS RELEASE AND PUBLIC ANNOUNCEMENTS
No announcement concerning this sale and purchase or this Agreement
shall be made before, on or after Closing by any party to this
Agreement except as required by law or any competent regulatory
authority or with the written approval of the other party hereto (such
approval not to be unreasonably withheld or delayed).
SECTION 7.09 CONFIDENTIALITY
The Parties agree to keep the terms of this Agreement and any information
acquired during the course of the negotiations having led to this Agreement
strictly confidential.
SECTION 7.10 ADVISER'S FEES; EXPENSES
Except as otherwise specifically provided in this Agreement, each of the
Parties shall bear its own fees and costs incident to this Agreement and the
transactions contemplated hereby, including those of its financial, technical,
legal and other advisers except for the notarial fees and costs relating to the
transfer of Quotas which shall entirely be borne by the Purchaser.
Without prejudice to the foregoing, the Company shall not bear any fees or
costs in connection with the transactions contemplated hereby.
SECTION 7.11 APPLICABLE LAW
THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES HERETO SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SWITZERLAND, REGARDLESS
OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLE OF CONFLICTS
OF LAW THEREOF.
SECTION 7.12 ARBITRATION
ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT WHICH
CANNOT BE SETTLED BY MUTUAL AGREEMENT BETWEEN THE PARTIES SHALL BE FINALLY
SETTLED UNDER THE RULES OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE,
PARIS, TO THE EXCLUSION OF THE ORDINARY COURTS, BY A THREE-PERSON ARBITRAL
TRIBUNAL (THE "ARBITRAL TRIBUNAL").
THE ARBITRAL TRIBUNAL SHALL HAVE ITS SEAT IN GENEVA AND THE ARBITRATION
PROCEEDINGS, INCLUDING ARGUMENTS AND BRIEFS, SHALL BE CONDUCTED IN ENGLISH.
THE PARTIES HEREBY WAIVE THE FILING OF THE AWARD WITH THE COMPETENT
JUDICIAL AUTHORITY. THE AWARD SHALL BE DELIVERED TO THE PARTIES BY THE ARBITRAL
TRIBUNAL. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION AND VENUE OF THE ARBITRAL TRIBUNAL.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
SELLERS:
/s/ Xxxxxxxx Xxxxxx /s/ Xxxxxxxx Xxxxxxxxxxx
------------------------------------ -----------------------------------
Xxxxxxxx Xxxxxx Xxxxxxxx Xxxxxxxxxxx
PURCHASER:
Compex Italia Srl
Represented by:
/s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
