ACQUISITION AGREEMENT
BY AND AMONG
OI ITALIA S.R.L.
AND
THE SELLERS SET FORTH ON SCHEDULE 1
DATED DECEMBER 16, 1996
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TABLE OF CONTENTS
ARTICLE I
INTERPRETATION. . . . . . . . . . . . 3
1.1 Definitions . . . . . . . . . . . . . . . . . 3
1.2 References. . . . . . . . . . . . . . . . . . 3
ARTICLE II
PURCHASE AND SALE. . . . . . . . . . . 3
2.1 Actions to Occur at Signing . . . . . . . . . 3
2.2 Date and Place of the Closing . . . . . . . . 4
2.3 Conditions to Closing . . . . . . . . . . . . 4
2.4 Actions at the Closing. . . . . . . . . . . . 5
2.5 Consideration . . . . . . . . . . . . . . . . 5
2.6 Contingent Consideration. . . . . . . . . . . 6
2.7 Method of Payment . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS. . . . . . . . . . . . 6
3.1 Escrow Agreement. . . . . . . . . . . . . . . 6
3.2 Consent and Approvals; No Violations. . . . . 6
3.3 Litigation Related to Transactions. . . . . . 7
3.4 Title to Holdings Shares, Company Shares
and Shares/Quotas of the Group Companies. . . 7
3.5 Public Shares . . . . . . . . . . . . . . . . 7
3.6 Corporate Organization; Capitalization. . . . 7
3.7 Merger of Company Subsidiaries;
Expiration of Withdrawal Rights . . . . . . . 8
3.8 Holdings Financial Matters. . . . . . . . . . 8
3.9 Company Financial Statements; Other
Financial Matters . . . . . . . . . . . . . . 8
3.10 Title and Related Matters; Leases;
Encumbrances . . . . . . . . . . . . . . . 10
3.11 Intellectual Property. . . . . . . . . . . 10
3.12 Contracts and Agreements . . . . . . . . . 11
3.13 Customers and Suppliers. . . . . . . . . . 13
3.14 Absence of Certain Changes . . . . . . . . 13
3.15 Insurance. . . . . . . . . . . . . . . . . 14
3.16 Taxes. . . . . . . . . . . . . . . . . . . 15
3.17 Employee Matters; Employee Benefit Plans . 15
3.18 Litigation . . . . . . . . . . . . . . . . 16
3.19 Compliance with Law; Environmental
Matters. . . . . . . . . . . . . . . . . . 16
3.20 Absence of Questionable Payments . . . . . 17
3.21 Products Liability; Product Recall . . . . 17
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER . . . . . . . . . . 17
4.1 Corporate Organization; Etc.. . . . . . . . 18
4.2 Consent and Approvals; No Violations. . . . 18
4.3 Escrow Agreement. . . . . . . . . . . . . . 18
ARTICLE V
COVENANTS OF THE PARTIES. . . . . . . 18
5.1 Full Access . . . . . . . . . . . . . . . . 18
5.2 No other Acquisitions in the European Union 19
5.3 Best Efforts. . . . . . . . . . . . . . . . 19
5.4 Board of Directors Membership; Shareholders and
Board of Directors Meetings . . . . . . . . 19
5.5 Public Shares . . . . . . . . . . . . . . . 19
5.6 Press Release . . . . . . . . . . . . . . . 19
5.7 Customers and Suppliers . . . . . . . . . . 20
5.8 Non-Compete; No Solicitation. . . . . . . . 20
5.9 Action by Sellers . . . . . . . . . . . . . 20
5.10 Shareholders Contribution . . . . . . . . . 20
5.11 Collection of Government Payments . . . . . 20
ARTICLE VI
CONDUCT OF THE BUSINESS . . . . . . . . 21
6.1 Ordinary Course of Business . . . . . . . . 21
6.2 Amendments. . . . . . . . . . . . . . . . . 21
6.3 Capital Changes; Asset Sales; Redemptions . 21
6.4 Certain Investments . . . . . . . . . . . . 21
6.5 Organization. . . . . . . . . . . . . . . . 21
6.6 Certain Changes . . . . . . . . . . . . . . 21
6.7 Contracts . . . . . . . . . . . . . . . . . 22
6.8 No Default. . . . . . . . . . . . . . . . . 23
ARTICLE VII
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES;INDEMNIFICATION. . . . . . . 23
7.1 Investigations; Survival; Exclusive Remedy. 23
7.2 Indemnity by the Sellers; Right of Set-Off. 23
7.3 Indemnity by the Purchaser. . . . . . . . . 24
7.4 Limitation. . . . . . . . . . . . . . . . . 24
7.5 Notice of Claims; Payment.. . . . . . . . . 26
7.6 Defense by Indemnifying Party . . . . . . . 27
ARTICLE VIII
TERMINATION . . . . . . . . . . . 28
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ARTICLE IX
MISCELLANEOUS PROVISIONS . . . . . . . . 29
9.1 Entire Agreement; Amendments and Waivers. . 29
9.2 Waiver of Compliance. . . . . . . . . . . . 29
9.3 Expenses. . . . . . . . . . . . . . . . . . 29
9.4 Transfer Taxes. . . . . . . . . . . . . . . 29
9.5 Tax Amnesty . . . . . . . . . . . . . . . . 29
9.6 Notices . . . . . . . . . . . . . . . . . . 29
9.7 Assignment. . . . . . . . . . . . . . . . . 30
9.8 Publicity . . . . . . . . . . . . . . . . . 30
9.9 Brokers and Finders . . . . . . . . . . . . 30
9.10 Dispute Resolution . . . . . . . . . . . . 30
9.11 Counterparts; Language Conflicts . . . . . 31
9.12 Third Parties. . . . . . . . . . . . . . . 31
9.13 Governing Law. . . . . . . . . . . . . . . 31
SCHEDULES
Schedule 1 - Sellers and the Purchaser
1(a) Holdings' Shareholders
1(b) Direct Shareholders
Schedule 2 - Definitions
Schedule 3 - Disclosure Schedule
Schedule 4 - Additional Payments
4(a) Calculation of Contingent Consideration
4(b) Best Case Projections
Schedule 5 - Holdings Financial Statements
Schedule 6 - Unaudited Consolidated October 31, 1996 Financial Statements
Schedule 7 - Non-Compete and No Solicitation Provisions
Schedule 7.4(a)(v) - Cash Payments from Government Authorities
Schedule 8 - Percentages Applicable to Sellers
Schedule 9 - Notices
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EXHIBITS
Custody Documents
Exhibit A - Forms of Powers of Attorney
Exhibit B - Form of Escrow Agreement
Additional Documents
Exhibit C - Persons who will enter into Management and Non-Competition
Agreements
Exhibit D - Opinions of Sellers' Counsel
Exhibit E - Opinion of Purchaser's Italian Counsel
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT dated December 16, 1996, by and among OI
Italia S.r.l. (formerly, XX.XX. S.r.l. et Co. Import-Export) (the "Purchas-
er"), a company organized and existing under the laws of Italy and an indirect
subsidiary of Xxxxx-Illinois, Inc., represented herein by R. Xxxxx Xxxxxxxx,
pursuant to the power of attorney attached hereto as Exhibit A(i), and the
members of the Maderna and Ricciardi families identified on Schedule 1 hereto
(collectively, the "Sellers"), represented herein by Xxxxx Xxxxxxxxxx pursuant
to the power of attorney attached hereto as Exhibit A(ii).
WHEREAS, certain of the Sellers identified on Schedule 1(a) hereto
(the "Holdings' Shareholders") own 100,300,000 shares (the "Holdings Shares")
representing all of the issued and outstanding capital of Orion, S.p.A. (for-
xxxxx known as Xxxxxx Xxxxxxx & C. S.a.p.A.), a company organized and
existing under the laws of the Republic of Italy ("Holdings");
WHEREAS, certain of the Sellers identified on Schedule 1(b) hereto
(the "Direct Shareholders") own 9,779,410 of the Company Shares (the "Direct
Shares") which constitute 23.290% of the Company Shares in Aziende Vetrarie
Industriali Xxxxxxxxx - AVIR S.p.A. (formerly known as AVIR Finanziaria
S.p.A.), a company organized and existing under the laws of the Republic of
Italy (the "Company" or "AVIR"), a company principally engaged, directly or
through the Group Companies, in the manufacture and sale of glass products in
Italy, Spain and the Czech Republic;
WHEREAS, certain individuals identified on Schedule 1(b) hereto
(the "Minors") own 1,240,000 of the Company Shares which constitute 2.953% of
the Company Shares;
WHEREAS, Holdings owns 22,100,000 of the Company Shares which
constitute 52.633% of the Company Shares;
WHEREAS, the remaining 8,869,830 of the Company Shares which
constitute 21.124% of the Company Shares is owned by the Public Shareholders;
WHEREAS, by virtue of their direct or indirect ownership of
31,879,410 of the Company Shares which constitute 75.922% of the Company
Shares, the Sellers exercise effective control of the Company, and are fully
informed as to the Company's operations, prospects and conditions (financial
or otherwise); and
WHEREAS, the Purchaser wishes to acquire, directly or indirectly,
(i) as a result of the transactions contemplated herein, all of the Company
Shares held, directly and indirectly, by the Sellers and (ii) as a result of
the transactions contemplated in a separate agreement, all of the Company
Shares held by the Minors.
2
NOW, THEREFORE, in consideration of the covenants, representa-
tions, warranties and agreements contained herein, and intending to be legally
bound hereby, the Purchaser and the Sellers agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires,
capitalized terms shall have the meanings ascribed thereto in Schedule 2 here-
to.
1.2 References. The descriptive headings of the Articles,
Sections, Schedules and Exhibits of this Agreement are inserted for conve-
nience of reference only and shall not affect the interpretation of this
Agreement. All references in this Agreement to an "Article", "Section",
"Schedule" or "Exhibit" refer to the corresponding Article, Section, Schedule
or Exhibit of this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1 Actions to Occur at Signing.
(a) At the time of execution and delivery of this Agreement
(the "Signing"), the following actions were taken by or on behalf of the
Parties.
(i) each of the Sellers and the Purchaser con-
firmed the accuracy of the representations and warranties con-
tained in Articles III and IV hereof, respectively;
(ii) each of the Sellers and the Purchaser have
executed and delivered to each other and the Escrow Agent the
original of or counterparts to the Escrow Agreement, in the form
set forth in Exhibit B hereto;
(iii) all of the documents required to transfer
title to the Holdings Shares and Company Shares owned by the
Sellers have been duly deposited with the Escrow Agent, to be held
in accordance with the terms of the Escrow Agreement pending re-
lease upon satisfaction of the terms and conditions for their
transfer under this Agreement;
(iv) the Purchaser has delivered to the Escrow
Agent the Holdings Purchase Consideration and the Direct Shares
Consideration;
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(v) the Company and each of the persons identi-
fied on Exhibit C hereto have executed and delivered to the Pur-
chaser a letter agreement regarding management and non-competition
arrangements subject to Closing, and to become effective as of the
date of the Closing (the "Management and Non-Competition Agree-
ments");
(vi) the Sellers shall have provided the Pur-
chaser with the ability to manage the business and affairs of
Holdings, the Company and the Company Subsidiaries in accordance
with the terms and conditions set forth in Articles V and VI
hereof;
(vii) the Escrow Agent shall execute and deliv-
er to the Purchaser and the Sellers executed copies of the Escrow
Agreement;
(viii) the Sellers shall deliver to the
Purchaser original executed copies of an opinion of Sellers'
Counsel, substantially in the form of Exhibit D, hereto;
(ix) the Purchaser shall deliver to the Sellers
original executed copies of an opinion of the Purchaser's Italian
Counsel, substantially in the form of Exhibit E, hereto; and
(x) the Sellers shall have caused (A) the
resignation of at least 1 director of Holdings (once Holdings has
more than 1 director), at least 3 directors of the Company and at
least 1 director of such of the Company Subsidiaries as the
Purchaser shall designate, and (B) the calling of the Board of
Directors meetings of Holdings, the Company and the Company
Subsidiaries for the appointment by "cooptazione" of at least 1
designee to the Board of Directors of Holdings, at least 3
designees to the Board of Directors of the Company and at least 1
designee to the Board of Directors of each of such of the Company
Subsidiaries as the Purchaser shall designate.
2.2 Date and Place of the Closing.
(a) The Parties agree that each shall use its best efforts
to cause the actions set forth in Section 2.4 hereof (the "Closing") to occur
on or prior to December 31, 1996; provided that all conditions to such Closing
set forth in Section 2.3 have been satisfied or waived in writing.
(b) The Closing shall take place at the offices of the
Escrow Agent in Milan.
2.3 Conditions to Closing. The obligations of the Parties to
complete the Closing shall be subject to the satisfaction or waiver in writing
by the Sellers and the Purchaser of the following conditions:
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(a) No Injunction. There shall be no effective injunction,
writ, preliminary restraining order or any order of any nature issued by a
court of competent jurisdiction directing that the Transactions or any of them
not be consummated as so provided or imposing any material conditions on the
consummation of the Transactions.
(b) Competition Review. Clearance of the transactions
contemplated by this Agreement under relevant antitrust or competition
regulations in Italy and Germany.
(c) Receipt of the Unaudited Consolidated October 31, 1996
Financial Statements with projections of the balance sheet of the Company as
of, and projections of profit and loss accounts for the Company for the twelve
months ending, December 31, 1996.
2.4 Actions at the Closing. Subject to the terms and conditions
and in reliance upon the representations and warranties set forth herein, at
the Closing, the transactions set forth below shall occur, and shall be deemed
to occur simultaneously:
(a) the Escrow Agent, on behalf of the Holdings' Sharehold-
ers, shall endorse to the Purchaser the Holdings Shares;
(b) the Escrow Agent, on behalf of the Direct Shareholders,
shall endorse to the Purchaser the Direct Shares; and
(c) The Escrow Agent shall deliver to the Sellers on behalf
of the Purchaser the cash payment with respect to the Holdings Purchase
Consideration and the Direct Shares Consideration less an amount equal to the
Secured Amount (such sum to be retained by the Escrow Agent).
2.5 Consideration.
(a) Each of the Parties agrees that the following aggregate
amounts shall be paid as consideration to the holders of the various interests
transferred hereunder:
(i) the Holdings Purchase Consideration shall
be approximately LIT 4,666 per Holdings Share, for 100,300,000
Holdings Shares, for an aggregate amount of LIT 468,029,900,526
(the "Holdings Purchase Consideration"); and
(ii) the Direct Shares Consideration shall be
approximately LIT 20,932 per Direct Share, for 9,779,410 Direct
Shares, for an aggregate amount of LIT 204,707,058,490
(the "Direct Shares Consideration").
(b) Subject to approval by CONSOB the Parties acknowledge
that the public offer price proposed to be offered by the Purchaser to the
Public Shareholders in the subsequent public offer shall be approximately LIT
20,932 per Public Share.
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2.6 Contingent Consideration. The Parties acknowledge that the
amounts set forth in Section 2.5 hereof reflect the Purchaser's estimation of
the value of the Company, as of the signing. In the event that the perfor-
xxxxx of the Glass Business for the three fiscal years commencing January 1,
1997 should exceed expectations, the Purchaser agrees to pay an additional
amount (the "Contingent Consideration") to the Sellers, in accordance with the
percentages set forth on Schedule 8, determined as set forth in Schedule 4(a)
hereto, in relation to the Sellers' best case financial projections for the
Company set forth in Schedule 4(b) hereto. In the event that any amount in
respect of the Contingent Consideration is required to be paid to the Public
Shareholders, such amounts shall be deducted from the Contingent Consideration
payable to the Sellers, in accordance with the percentages set forth on
Schedule 8.
2.7 Method of Payment.
(a) Of the amounts to be received by the Sellers upon the
Closing, as set forth in Section 2.5 above, the Parties agree that the Escrow
Agent shall pay the Holdings Purchase Consideration and the Direct Shares
Consideration, plus interest accrued thereon, each in cash, by wire transfer
in immediately available funds to the account or accounts designated by the
Sellers in writing.
(b) The Sellers agree that in order to secure the
Purchaser's right to indemnification provided in Article VII hereof, cash in
the aggregate amount of LIT 26.5 billion (the "Secured Amount") shall be
deposited with the Escrow Agent, pursuant to the Escrow Agreement, to be re-
tained by the Escrow Agent for the period specified in the Escrow Agreement.
(c) The Sellers agree that the Contingent Consideration
shall be, without duplication, subject to the Right of Set-Off, provided,
however, that the Contingent Consideration shall not be considered in provid-
ing for the Secured Amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
The Sellers represent and warrant to the Purchaser as follows:
3.1 Escrow Agreement. Each of the Sellers has taken all action
required by law or otherwise required to be taken by it to authorize the
execution and delivery of the Escrow Agreement, and such agreement is a valid
and binding obligation of each of the Sellers enforceable in accordance with
its terms.
3.2 Consent and Approvals; No Violations.
(a) Except as contemplated by Section 2.3, no consent, ap-
proval or authorization of, or declaration, filing or registration with, any
6
Governmental Authority or any other person is required in connection with the
execution, delivery and performance of this Agreement or the consummation of
the Transactions.
(b) The execution and delivery of this Agreement by the
Sellers, the performance hereof and the consummation of the transactions con-
templated hereby will not (i) violate any provision of the Articles of Asso-
ciation of any of Holdings, the Company or any Group Company, (ii) (assuming
receipt of all governmental approvals contemplated by Section 2.3) violate any
statute, rule, regulation, judgment, order or decree of any Governmental Au-
thority or (iii) conflict with or result in a violation, or breach of, or con-
stitute a default under, or give rise to any right of cancellation or termina-
tion of, any Permit or License or agreement or violate, or be in conflict
with, or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any Lien upon any property or assets of any of Holdings, the
Company or any Group Company under, any Contracts and/or Agreements to which
any of Holdings, the Company or any Group Company is bound, or to which the
property of any of Holdings, any Group Company or the Company is subject.
3.3 Litigation Related to Transactions. There is no action,
suit, inquiry, proceeding or investigation by or before any Governmental
Authority pending or threatened against or involving the Sellers, Holdings,
the Company, any Group Company, or the Glass Business, which questions or
challenges the validity of this Agreement or any action taken or to be taken
by Holdings, the Company, or the Sellers pursuant to this Agreement or in con-
nection with the transactions contemplated hereby; nor is there any valid
basis for any such action, proceeding or investigation.
3.4 Title to Holdings Shares, Company Shares and Shares/Quotas of
the Group Companies. The outstanding shares of capital stock of the Company
and Holdings which are legally or beneficially owned by any of the Sellers,
the outstanding shares of the Company which are legally or beneficially owned
by Holdings, and the outstanding shares/quotas of the Group Companies which
are owned by the Company are as set forth in Schedule 1(a), 1(b) hereto and
3.6(b) of the Disclosure Schedule, respectively, and such shares/quotas are
owned, directly or indirectly, free and clear of all Liens.
3.5 Public Shares. None of the Sellers, Holdings, the Company or
their senior executives and directors nor, to the best of the Sellers' knowl-
edge, any of the Group Companies or their respective Affiliates, senior
executives and directors or any one acting on their behalf, has bid for or
purchased any Public Shares or taken any action for the purpose of creating
actual or apparent trading in or raising the price of the Public Shares.
3.6 Corporate Organization; Capitalization. (a) Each of Hold-
ings, the Company and the Company Subsidiaries is a company duly organized and
existing under the laws of its jurisdiction and has full corporate power and
authority to carry on its business as it is now being conducted. Except for
7
the changes (i) made to the Articles of Association of Avirunion, in
connection with the Company's acquisition of Avirunion, (ii) necessitated by
the merger by incorporation (the "Merger") of various subsidiaries of the
Company into the Company, (iii) necessitated by the change of Holdings from a
SAPA to an S.p.A., and (iv) related to Vetroceramica Turritana S.p.A., the
Articles of Association of each of Holdings, the Company and the Company Sub-
sidiaries have not been amended since January 1, 1996 and have been in full
force and effect since such date. Each of the Sellers has taken all action
required by law or otherwise required to be taken by it to authorize the exe-
cution and delivery of this Agreement and the consummation of the transactions
contemplated hereby, and this Agreement is a valid and binding agreement of
each of the Sellers enforceable in accordance with its terms.
(b) Schedule 3.6(b) of the Disclosure Schedule sets forth
the name, jurisdiction of incorporation and capitalization of each of
Holdings, the Company and the Group Companies. All of the shares of Holdings,
the Company and the Group Companies are duly authorized, validly issued and
fully paid. There are no bonds, debentures, notes or other indebtedness
having voting rights (or convertible into securities having such rights) of
any of Holdings, the Company and the Group Companies issued and outstanding.
Except as and to the extent set forth in Schedule 3.6(b) of the Disclosure
Schedule, none of Holdings, the Company or any Company Subsidiary owns,
directly or indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity or ownership interest in any
business not listed in Schedule 3.6(b) of the Disclosure Schedule.
3.7 Merger of Company Subsidiaries; Expiration of Withdrawal
Rights. (a) As of the date hereof, the deed of merger relating to the Merger
has been executed and has been filed with the competent courts in accordance
with all relevant laws.
(b) Withdrawal rights have been exercised in connection
with the change of the corporate purpose of the Company in connection with the
Merger with respect to 2,194,055 shares of capital stock in the Company (the
"Withdrawn Shares") and, as a result of which an amount equal to LIT11,742 per
share was paid by the Company in respect of the Withdrawn Shares on October
31, 1996, and the Withdrawn Shares have been cancelled. No withdrawal rights
remain outstanding as of the date hereof.
3.8 Holdings Financial Matters. Except as set forth in Schedule
5, Holdings (without regard to the consolidation of its subsidiaries) has no
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise). Upon the Signing, the financial condition of Holdings will
conform to that set forth in the Holdings balance sheet as of October 31, 1996
and statement of profit and loss for the 10 months ending October 31, 1996,
each as set forth in Schedule 5 to this Agreement (the "Holdings Financial
Statements").
3.9 Company Financial Statements; Other Financial Matters. (a)
The Sellers have made available to the Purchaser copies of the Audited Xxxxx-
cial Statements, including the Audited Balance Sheet and the Interim Unaudited
8
Financial Statements, including the Interim Unaudited Balance Sheet.
Unaudited Consolidated October 31, 1996 Financial Statements are attached
hereto as Schedule 6. The Audited Financial Statements, including the Audited
Balance Sheet, the Interim Unaudited Financial Statements, including the
Interim Unaudited Balance Sheet, and the Unaudited Consolidated October 31,
1996 Financial Statements are true, complete and accurate and fairly present
the financial position of the Company and the Company Subsidiaries as at the
dates thereof and the results of operations and changes in financial position
for the periods then ended. The Sellers have used their best efforts to
assure that the Other Financial Information is as true and accurate as
possible. The Sellers have made available to the Purchaser copies of the Fi-
nancial Books and Records. The Financial Books and Records are true, accurate
and complete and contain all information necessary to prepare the Audited Fi-
nancial Statements. The Audited Financial Statements, the Interim Unaudited
Financial Statements and the Unaudited Consolidated October 31, 1996 Financial
Statements were prepared from the Financial Books and Records in accordance
with Italian GAAP consistently applied throughout the periods involved.
(b) Except for liabilities incurred in the Ordinary Course
since the date of the Holdings Financial Statements and the Unaudited Xxxxxxx-
dated October 31, 1996 Financial Statements, respectively, none of Holdings,
the Company or the Company Subsidiaries has any liabilities or obligations of
any nature (absolute, accrued, contingent or otherwise) which are not fully
reflected or reserved against in the Holdings Financial Statements and the
Unaudited Consolidated October 31, 1996 Financial Statements, as the case may
be; and the reserves reflected in the Holdings Financial Statements and the
Unaudited Consolidated October 31, 1996 Financial Statements are adequate, ap-
propriate and reasonable, as determined in accordance with past practice and
Italian GAAP consistently applied.
(c) All Inventory of the Company and each Company
Subsidiary, reflected in the Audited Balance Sheet, the Interim Unaudited
Balance Sheet or the Unaudited Consolidated October 31, 1996 Financial
Statements, is merchantable and fit for the purpose for which it was procured
or manufactured, and consists of a quantity (as reflected in the Unaudited
Consolidated October 31, 1996 Financial Statements) and quality warranted, us-
able and salable in the Ordinary Course. Except in the Ordinary Course, to
the best of the Sellers' knowledge, none of the Company or any Company Sub-
sidiary is under or expected to become subject to any liability or obligation
with respect to the return of inventory or merchandise in the possession of
wholesalers, distributors, retailers or other customers.
(d) The Audited Balance Sheet, the Interim Unaudited
Balance Sheet and the Unaudited Consolidated October 31, 1996 Balance Sheet
each contains all of the assets of the Company and the Company Subsidiaries
necessary to operate the Glass Business in substantially the same manner as it
has been conducted since January 1, 1995.
(e) The Accounts Receivable set forth on the Audited Bal-
ance Sheet, the Interim Unaudited Balance Sheet and the Unaudited Consolidated
October 31, 1996 Balance Sheet represent bona fide sales actually made in the
9
Ordinary Course and are duly reflected on such balance sheets. Each Account
Receivable is valid and not subject to any setoff or counterclaim and is cur-
rent and has been collected in full or will be collected in full, subject to
reserves, in the Ordinary Course.
3.10 Title and Related Matters; Leases; Encumbrances. (a) Each
of Holdings, the Company and the Company Subsidiaries has good, valid and mar-
ketable title to all the assets which they purport to own, including, without
limitation, all the assets reflected in the Audited Balance Sheet, the Interim
Unaudited Balance Sheet and the Financial Books and Records. All assets are
free and clear of all title defects or objections or Liens, except for those
that are disclosed in the Interim Unaudited Balance Sheet and except for those
that are incurred in the Ordinary Course thereafter.
(b) All material leases pursuant to which Holdings, the
Company and the Company Subsidiaries lease Real Property or Personal Property
are valid, binding and enforceable in accordance with their terms, and are in
full force and effect; there are no existing defaults by Holdings, the Company
or the Company Subsidiaries thereunder; no event has occurred which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a default thereunder; and no consent to the
Transactions is needed by the lessors.
(c) With due consideration to the nature of the Glass
Business and the age of the Company's and Company Subsidiaries' plants,
structures and equipment, such plants, structures and equipment are in good
operating condition and they may need routine maintenance and repairs which
are not material in nature or cost.
(d) As of the date hereof, neither the whole nor any
material portion of the assets of Holdings, the Company or the Company Sub-
sidiaries is subject to any decree or order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Authority with or without
payment of compensation therefor, nor, to the best of the Sellers' knowledge,
has any such condemnation, expropriation or taking been proposed.
3.11 Intellectual Property
(a) Schedule 3.11(a) of the Disclosure Schedule identifies
all licenses and other Contracts or Agreements with third parties (other than
Affiliates of the Purchaser and Affiliates of the Company) to which the Compa-
ny or any Company Subsidiary is a party (either as licensor or licensee) or
otherwise subject relating to any Intellectual Property and no claims have
been asserted by any person to the use of any Intellectual Property or chal-
lenging or questioning the validity or effectiveness of any such license or
Contract or Agreement, and neither the Sellers nor the Company knows of any
valid basis for any such claim.
(b) Except as identified in Schedule 3.11(b) of the
Disclosure Schedule, none of the Company nor any Group Company has, nor has
been alleged to have, infringed upon any Intellectual Property or misappro-
10
priated or misused any invention, trade secret or other proprietary informa-
tion entitled to legal protection. None of Holdings, the Company nor any
Group Company has asserted any claim of infringement, misappropriation or
misuse within the past three years.
(c) The Company and the Company Subsidiaries have good and
valid title to, or otherwise possess adequate and sufficient rights to use,
all Intellectual Property and other proprietary information necessary to per-
mit the Company and the Company Subsidiaries to conduct the Glass Business in
the same manner as such business has been conducted prior to the date hereof
and all necessary fees have been properly paid.
3.12 Contracts and Agreements.
(a) Except as set forth in Schedule 3.12(a) of the
Disclosure Schedule, none of Holdings, the Company nor any Group Company has
entered into or is a party to:
(i) except for any contracts with utilities,
any purchase contracts or commitments which continue for a period
of more than twelve months or are in excess of the normal, ordi-
nary and usual requirements of business other than agreements
between Holdings, the Company or a Company Subsidiary, on the one
hand, and Holdings, the Company or a Company Subsidiary, on the
other hand;
(ii) any outstanding sales contracts, commit-
ments, proposals or orders which continue for a period of more
than twelve months, or exceed LIT 7.5 billion or are expected to
result in any material loss upon completion or performance there-
of, after allowance for direct distribution expenses or any out-
standing contracts, bids or sales or service proposals quoting
prices which are expected not to result in a profit in the
Ordinary Course;
(iii) any outstanding contracts with officers,
employees, agents, consultants, advisors, salesmen, sales repre-
sentatives, distributors or dealers, the cancellation of which
requires a notice period longer than the mandatory period required
by applicable law or national collective bargaining agreements,
and without liability, penalty or premium other than as required
by applicable law or national collective bargaining agreements, or
any agreement or arrangement providing for the payment of any
bonus or commission based on sales or earnings other than those
provided by applicable law or national collective bargaining
agreements;
(iv) any employment agreement, or any other
agreement that contains any severance or termination pay liabil-
ities or obligations, other than customary obligations provided by
11
national collective bargaining agreements or otherwise required by law;
(v) any collective bargaining or union con-
tracts or agreements which are not customary in the Glass
Business;
(vi) any agreement with any employee or agent
to pay compensation at the gross annual rate of more than LIT 200
million for services rendered;
(vii) any agreement restricting its ability to
carry on the Glass Business anywhere in the world;
(viii) any agreement with respect to the return
of inventory or merchandise in the possession of wholesalers, dis-
tributors, retailers or other customers;
(ix) any agreements to assume any debt or
similar obligation of others;
(x) any outstanding loan to any person;
(xi) any power of attorney other than those
issued in the Ordinary Course;
(xiiA any agreements concerning confidentiality
or restricting any other entity or person (including, without
limitation, current employees of the Company or any Group Company)
from competing with it in the Glass Business except for agreements
entered into with Affiliates of the Purchaser; and
(xiii) any other agreements, contracts, commit-
ments or restrictions which are material to its business, opera-
tions or prospects taken as a whole or which require the making of
any charitable contribution.
(b) The Sellers have made available to the Purchaser a cor-
rect and complete copy of each written agreement listed on Schedule 3.12(a) of
the Disclosure Schedule described under Section 3.12(a) above.
(c) All of the Contracts and Agreements are legal, valid,
binding, enforceable and in full force and effect and will continue to be
legal, valid, binding and enforceable and in full force and effect on
identical terms following the consummation of the Transactions. To the best
of Sellers' knowledge, no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under, nor has
any party repudiated any provision of, any of the Contracts and Agreements.
(d) None of Holdings, the Company nor any Company Subsid-
iary is in default under or in violation of, nor, to the best of Sellers'
12
knowledge, is there any valid basis for any claim of default under or xxxxx-
tion of, any Contract or Agreement or restriction to which it is a party or by
which it is bound.
3.13 Customers and Suppliers. (a) There has not been any mate-
rial adverse change in the business relationship of any of the Company or any
Group Company with any customer or supplier.
(b) As of the date of this Agreement, other than in the
Ordinary Course, there are no claims against the Company or the Company Sub-
sidiaries to return merchandise by reason of alleged overshipments, defective
merchandise or otherwise, or of merchandise in the hands of customers under an
understanding that such merchandise would be returnable.
3.14 Absence of Certain Changes. Except as set forth in Schedule
3.14 of the Disclosure Schedule, since the date of the Audited Financial
Statements, Holdings, the Company and the Company Subsidiaries have conducted
the Glass Business only in the Ordinary Course, and other than in the Ordinary
Course neither Holdings, the Company, any Company Subsidiary, nor the Glass
Business has:
(i) Suffered any material adverse change in its
financial conditions, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves, business, operations or pros-
pects other than changes reflected in the Unaudited Consolidated
October 31, 1996 Financial Statements, or those arising from or
relating to general economic conditions of the glass industry in
Italy;
(ii) Incurred any liabilities or obligations
(absolute, accrued, contingent or otherwise) other than as
reflected in the Interim Unaudited Financial Statements, or the
Unaudited Consolidated October 31, 1996 Financial Statements, or
increased, or experienced any change in any assumptions underlying
or methods of calculating any bad debt, contingency or other re-
serves;
(iii) Paid, discharged or satisfied any claims,
liabilities or obligations (absolute, accrued, contingent or oth-
erwise) other than the payment, discharge or satisfaction of lia-
bilities and obligations reflected or reserved against in the Au-
dited Financial Statements;
(iv) Permitted or allowed any of its property
or assets (real, personal or fixed, tangible or intangible) to be
subjected to any Lien;
(v) Written down the value of any Inventory
(including write-downs by reason of shrinkage or xxxx-down) or
written off as uncollectible any notes or accounts receivable,
except for immaterial write-downs;
13
(vi) Cancelled any credits or waived any claims
or rights of substantial value;
(vii) Transferred any of its properties or as-
sets (real, personal or fixed, tangible or intangible) except for
sales of properties or assets unrelated to the Glass Business;
(viii) Disposed of or permitted to lapse any
rights to the use of any patent, trademark, trade name or copy-
right, or disposed of or disclosed to any person other than repre-
sentatives of the Purchaser any trade secret, formula, process or
know-how not theretofore a matter of public knowledge;
(ix) Granted any general increase in the com-
pensation of officers or employees (including any such increase
pursuant to any bonus, pension, profit sharing or other plan or
commitment) or any increase in the compensation payable or to
become payable to any officer or employee, and no such increase is
customary on a periodic basis or required by agreement or under-
standing;
(x) Made any capital expenditure or commitment
other than as specifically provided for in the Interim Unaudited
Financial Statements or the Unaudited Consolidated October 31,
1996 Financial Statements;
(xi) Other than in connection with the fiscal
year ended December 31, 1995 and the redemption contemplated by
the Merger, declared, paid or set aside for payment any dividend
or other distribution in respect of its capital stock or redeemed,
purchased, or otherwise acquired, directly or indirectly, any
shares of capital stock or other securities of Holdings, the
Company or any Company Subsidiary;
(xii) Made any change in any method of account-
ing or accounting practice;
(xiii) Paid, loaned or advanced any amount to,
or transferred or leased any properties or assets (real, personal
or fixed, tangible or intangible) to, or entered into any agree-
ment or arrangement with, any of the Sellers, its senior
executives or directors or any Affiliate of any of its senior
executives or directors; or
(xiv) Agreed, whether in writing or otherwise,
to take any action described in this Section 3.14.
3.15 Insurance. All material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by or pro-
viding coverage for the Company and each Company Subsidiary are in full force
and effect, all premiums with respect thereto covering all periods up to and
14
including the date of the Closing have been paid, and no notice of cancella-
tion or termination has been received with respect to any such policy. Such
policies are sufficient for compliance with all requirements of law and of all
agreements to which the Company or any Company Subsidiary is a party; are val-
id, outstanding and enforceable policies; provide adequate insurance coverage
for the assets and operations of the Company and each Company Subsidiary; will
remain in full force and effect through the Closing Date and will not in any
way be affected by, or terminate or lapse by reason of, the execution of this
Agreement. Each of the Company and each Company Subsidiary has been covered
during the past five (5) years by insurance in scope and amount customary and
reasonable for the Glass Business.
3.16 Taxes. (a) Each of Holdings, the Company and Company
Subsidiaries has duly filed all Tax reports and returns required to be filed
by it and has duly paid all Taxes and other charges due or claimed to be due
from it by any Governmental Authority (including, without limitation, those
due in respect of the properties, income, franchises, licenses, sales or pay-
rolls of any of them); the reserves for Taxes reflected in the Audited Balance
Sheet, the Interim Unaudited Balance Sheet and the Unaudited Consolidated
October 31, 1996 Financial Statements are adequate; and there are no Liens for
Taxes upon any property or assets of Holdings, the Company or any Company
Subsidiary. Copies of the tax returns of Holdings, the Company and each
Company Subsidiary in respect of all years not barred by the statute of limi-
tations were made available to the Purchaser; and except as set forth in
Schedule 3.16(a)(i) of the Disclosure Schedule, there are no assessments or
inspections, and except as set forth in Schedule 3.16(a)(ii) of the Disclosure
Schedule, any assessments have been fully paid; and no issue has been raised
by the relevant local tax office in any examination which reasonably could be
expected to result in a proposed deficiency for any period not examined. Fur-
ther, no state of facts exists or has existed which would constitute grounds
for the assessment of any Tax liability with respect to the periods which have
not been audited by the relevant local tax office. Schedule 3.16(a)(iii) of
the Disclosure Schedule contains a list of all the Tax amnesties benefitted by
Holdings, the Company and any of the Company Subsidiaries.
(b) Each of Holdings, the Company and the Company Subsid-
iaries has complied in all material respects with all applicable laws, rules
and regulations relating to the withholding of Taxes and have, within the time
and in the manner prescribed by law, withheld from employees' wages and paid
over to the proper Governmental Authorities all amounts required to be so
withheld and paid over under all applicable laws.
(c) Except as set forth in Schedule 3.16(c) of the
Disclosure Schedule, no power of attorney has been granted by Holdings, the
Company or any Company Subsidiary with respect to any matter relating to Taxes
which is currently in force.
3.17 Employee Matters; Employee Benefit Plans. (a) There is no
labor strike, material dispute, material slowdown or material stoppage actual-
ly pending or, to the best of Sellers' knowledge, threatened against or af-
fecting the Company or any Company Subsidiary and none of the Company nor any
15
Company Subsidiary has experienced any material work stoppage since January 1,
1995.
(b) Any sum due as salary, severance indemnity, social
security contribution, unpaid holidays and other benefits or bonuses due to
their employees by any of the Company or the Company Subsidiaries, and other
reserves concerning such employment relationships have been duly paid or
allocated, in accordance with all applicable laws and regulations concerning
labor and social security matters. All the obligations towards the abovesaid
employees, as well as towards any social security agency have been duly
fulfilled.
(c) All the employees of the Company or any Company
Subsidiary are duly registered in the payroll of said companies.
(d) Except as set forth in Schedule 3.17(d) of the
Disclosure Schedule, no litigation is pending or, to the knowledge of the
Sellers, threatened before any judicial and administrative court or arbitral
tribunal with respect to any of the employees of the Company or any Company
Subsidiary involving more than LIT 150 million.
(A) Any and all obligations concerning Law no. 482 of April
2, 1968, concerning the mandatory hiring of certain categories of employees
(such as disabled, refugees, widows, etc.) have been substantially fulfilled.
3.18 Litigation. Except as disclosed in Schedule 3.16(a)(i) and
3.18(i) of the Disclosure Schedule, there is no action, suit, inquiry,
proceeding or investigation by or before any Governmental Authority pending
or, to the best of Sellers' knowledge, threatened against or involving Hold-
ings, the Company, any Group Company, or the Glass Business, nor is there any
valid basis for any such action, proceeding or investigation. Except as dis-
closed in Schedule 3.18(ii) of the Disclosure Schedule, none of Holdings, the
Company nor any Group Company is subject to any judgment, order or decree en-
tered in any lawsuit or proceeding which may have an adverse effect on its
business practices or on its ability to acquire any property or conduct the
Glass Business in any area.
3.19 Compliance with Law; Environmental Matters. (a) The Glass
Business has been conducted in accordance with all applicable laws, regula-
tions and other requirements of all Governmental Authorities. Except as set
forth in Schedule 3.18(i) and 3.18(ii) of the Disclosure Schedule, none of
Holdings, the Company nor any Group Company has received any notification of
any asserted present or past failure to comply with such laws, rules or regu-
lations.
(b) Except as set forth in Schedule 3.19(b) of the
Disclosure Schedule, the Company and the Company Subsidiaries have obtained
all Permits and Licenses relating to pollution or protection of the environ-
ment, and the Company, the Company Subsidiaries and the Glass Business are in
substantial compliance with all terms and conditions of the required Permits
and Licenses, and are also in substantial compliance with all other limita-
16
tions, restrictions, conditions, standards, prohibitions, requirements, obli-
gations, schedules and timetables contained in those laws or contained in any
relevant regulation, decree or judgment. None of the Company, the Company
Subsidiaries nor the Sellers are aware of, or have received notice of, any
events, circumstances, practices or actions which may interfere with or pre-
vent continued compliance with applicable law, or which may give rise to any
legal liability, or otherwise form the basis of any claim, action, suit, pro-
ceeding, hearing or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste.
3.20 Absence of Questionable Payments. None of Holdings, the
Company, the Company Subsidiaries, the Sellers nor any director or senior
executive nor, to the knowledge of the Sellers, any Group Company other than
the Company Subsidiaries, or any agent, employee or other person acting on
behalf or for the benefit of Holdings, the Company, the Group Companies or the
Sellers, 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 any applicable
law. None of the Sellers, Holdings, the Company, the Company Subsidiaries nor
any current director or senior executive nor, to the knowledge of the Sellers,
any Group Company other than the Company Subsidiaries, or any agent, employee
or other person acting on behalf or for the benefit of the Sellers, Holdings,
the Company or the Group Companies, has accepted or received any unlawful con-
tributions, payments, gifts, or expenditures.
3.21 Products Liability; Product Recall. (a) Each product
manufactured, sold, leased, or delivered by any of the Company or the Company
Subsidiaries has been in conformity with all applicable contractual commit-
ments and all express and implied warranties.
(b) There is no action, suit, inquiry, proceeding or in-
vestigation by or before any Governmental Authority pending or threatened
against or involving the Company or any Company Subsidiary relating to any
product alleged to have been manufactured or sold by the Company or any
Company Subsidiary and alleged to have been defective, or improperly designed
or manufactured, nor is there any valid basis for any such action, proceeding
or investigation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as
follows:
17
4.1 Corporate Organization; Etc. The Purchaser is a corporation
validly existing and in good standing under the laws of Italy. The Purchaser
has full corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The Purchaser has taken all
action required by law or otherwise required to be taken by it to authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and this Agreement is a valid and binding
agreement of the Purchaser enforceable in accordance with its terms.
4.2 Consent and Approvals; No Violations. (a) The execution and
delivery of this Agreement by the Purchaser, the performance hereof and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of its charter documents, (ii) violate any statute, rule, regu-
lation, judgment, order or decree of any public body or authority by which the
Purchaser or any of its property or assets are bound, or (iii) conflict with
or result in a violation, acceleration or breach of, or constitute a default
under, or give rise to any right of cancellation or termination of, any
Contract or Agreement.
(b) Except as contemplated by Section 2.3 hereof, no con-
sent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or any other person is required in connection
with the execution, delivery and performance of this Agreement or the consum-
mation of the Transactions by the Purchaser.
4.3 Escrow Agreement. The Purchaser has duly executed and
delivered the Escrow Agreement, and such agreement is a valid and binding
obligation of the Purchaser enforceable against it in accordance with its
terms.
ARTICLE V
COVENANTS OF THE PARTIES
The Parties covenant and agree as follows:
5.1 Full Access. Between the date of this Agreement and the date
of the Closing, the Sellers shall, and the Sellers shall cause Holdings to,
afford, with respect to Holdings, and shall cause the Company to afford, with
respect to the Company and all Company Subsidiaries, to the Purchaser, its
counsel, accountants and other representatives full access to the plants, of-
fices, warehouses, properties, books and records of Holdings, the Company and
all Company Subsidiaries and the Sellers shall, and the Sellers shall cause
Holdings to, cause the officers and accountants of Holdings, the Company and
all Company Subsidiaries to furnish such additional financial and operating
data and other information as the Purchaser shall from time to time reasonably
request; provided further, that the Sellers shall use reasonable efforts to
provide similar access for all Group Companies other than the Company
Subsidiaries.
18
5.2 No other Acquisitions in the European Union. Prior to the
receipt of approval from the applicable antitrust authorities in Italy and
Germany for the transactions contemplated by this Agreement, the Purchaser
shall not purchase any company in the glass container industry which has its
principal operations in the European Union.
5.3 Best Efforts. Each of the Parties agrees to use its best
efforts to take, or cause to be taken, by the Company or others, all action to
do, or cause to be done, and to assist and cooperate with the other Parties in
doing, all things necessary, proper or advisable to consummate and make
effective the Transactions, including, but not limited to, (a) the obtaining
of all necessary governmental approvals and the making of all necessary reg-
istrations and filings (including, but not limited to, filings with any
Governmental Authority, if any) and the taking of all reasonable steps as may
be necessary to obtain any governmental approval or waiver, or to avoid any
actually or potentially adverse action or proceeding by any Governmental
Authority, and (b) the satisfaction of the conditions to the Closing set forth
in Section 2.3.
5.4 Board of Directors Membership; Shareholders and Board of
Directors Meetings. Pending the Closing, the Sellers (i) shall cause all the
designees of the Purchaser (only 1 in the case of the Board of Directors of
Holdings) to be granted the powers necessary to manage the business and
affairs of Holdings, the Company and the Company Subsidiaries in the Ordinary
Course, (ii) will cause the resignation of all the current directors and will
use their best efforts to cause the resignation of all the statutory auditors
of Holdings, the Company and the Company Subsidiaries, with effect as of the
Closing, and the calling of the relevant shareholders' meetings for the
appointment of new boards that will be selected by the Purchaser and (iii)
subsequent to the date the designees of the Purchaser are granted the powers
described in clause (i) above, will continue to cause the designees of the
Purchaser to remain appointed to the Boards of Directors (as Directors and
Managing Directors) of each of Holdings, the Company and such of the Company
Subsidiaries as the Purchaser shall designate consistent with the provisions
of Section 2.1(a). Any action to be taken at any Board of Directors or Share-
holders meeting of Holdings, the Company or the Company Subsidiaries shall re-
quire the favorable vote of the Purchaser or the Purchaser's designees. With
regard to Shareholders meetings, pending the Closing the Purchaser will be
represented by the Escrow Agent which will vote at said meetings in accordance
with the Escrow Agreement.
5.5 Public Shares. Each of the Sellers agrees that it will not,
and will use its best efforts to cause Holdings, the Company, the Group Compa-
xxxx and their respective Affiliates, officers and directors or any one acting
on their behalf not to, bid for or purchase any Public Shares or take any
action for the purpose of creating actual or apparent trading in or affecting
the price of the Public Shares.
5.6 Press Release. Within five business days after the date of
this Agreement, the Parties hereto agree to issue to the general public and
those publications which report on the glass industry a press release which
19
shall be prepared jointly by the Purchaser and the Sellers, in compliance with
CONSOB regulations.
5.7 Customers and Suppliers. Promptly after the dissemination of
the press release pursuant to Section 5.6, the Sellers shall cause the Company
and Company Subsidiaries to assist in the preparation by the Purchaser of, and
to promptly distribute, letters and other notices to those customers, suppli-
ers, employees and joint venture partners of the Company or any Company
Subsidiary as the Purchaser, in consultation with the Company and Company
Subsidiaries, determines to be necessary or desirable in connection with the
maintenance of the Company's business relations; provided further, that the
Sellers shall use reasonable efforts to cause the Company and the Company
Subsidiaries to assist in the preparation by the Purchaser of, and to promptly
distribute, letters and other notices to those customers, suppliers, employees
and joint venture partners of any Group Company other than the Company Subsid-
iaries as the Purchaser, in consultation with the Company and Company
Subsidiaries, determines to be necessary or desirable in connection with the
maintenance of the Company's business relations.
5.8 Non-Compete; No Solicitation. The Sellers agree to be bound
by the terms and provisions of Schedule 7.
5.9 Action by Sellers. The Sellers irrevocably agree, also in
the interest of the Purchaser, that for all purposes of this Agreement they
will be represented herein by (i) Dott. Xxxxxx Xxxxxxx (born in Naples on
September 1, 1920, domiciled in Naples, Parco Xxxxxxx, 87, Tax Code No. XXX
XXX 00X00 X000X), or (ii) a designee of Dott. Maderna in the event Dott.
Maderna should resign. In the event that (i) Dott. Maderna resigns without
nominating a designee or becomes incapacitated or (ii) the designee of Dott.
Maderna resigns or becomes incapacitated, the Sellers will be represented by
Dott. Xxxxx Xxxxxxxxxx (born in Naples on January 5, 1951, domiciled in
Naples, Xxx Xxxxxxxxx, 00, Tax Code No. XXX XXX 00X00 X000X) and, in the event
that Dott. Xxxxxxxxxx resigns or becomes incapacitated, the Sellers will act
by a majority in interest (evidence of which shall be provided to the
Purchaser) according to the percentages set forth in Schedule 8.
5.10 Shareholders Contribution. The Sellers acknowledge that the
Consideration described in Section 2.5 has been paid also in consideration of
a "shareholders loan dedicated on account of a capital increase" (the "Share-
holders Contribution") of LIT 85,575,960,000 which is reflected as net equity
on the balance sheet contained in the Holdings Financial Statements, and,
accordingly, the Sellers agree that (i) if, subsequent to the date hereof,
Holdings issues any additional shares of capital stock in respect of such
Shareholders Contribution, the Purchaser shall have the exclusive right to
subscribe for, receive and own such shares or (ii) if, subsequent to the date
hereof, Holdings repays, in full or in part, the Shareholders Contribution,
the Purchaser shall be exclusively entitled to such repayment.
5.11 Collection of Government Payments. The Purchaser will seek
to cause the Company and/or the Group Companies to collect the cash payments
from the government authorities as contemplated by Section 7.4(a)(v).
20
ARTICLE VI
CONDUCT OF THE BUSINESS
Pending the Closing, except as otherwise requested by or expressly
consented to or approved by the Purchaser in writing, the Sellers agree to ob-
serve and to cause Holdings, the Company and the Company Subsidiaries to ob-
serve, and the Sellers agree to use reasonable efforts to cause the Group
Companies other than the Company Subsidiaries to observe, the following provi-
sions:
6.1 Ordinary Course of Business. Subject to the provisions of
this Article VI and to the extent permitted by applicable law, the Company and
the other Group Companies shall carry on the Glass Business in the Ordinary
Course under the management and direction of the Purchaser's designees.
6.2 Amendments. No change or amendment shall be made in the
Articles of Association or other constitutive documents of Holdings, the Com-
pany or any Group Company, unless so requested by the Purchaser.
6.3 Capital Changes; Asset Sales; Redemptions. Neither Holdings,
the Company nor any Group Company will issue or sell any shares of its capital
stock or other securities, acquire directly or indirectly, by redemption or
otherwise, any capital stock, reclassify or split-up any such capital stock,
declare or pay any dividends thereon in cash, securities or other property or
make any other distribution, grant or enter into any options, warrants, calls
or commitments of any kind with respect thereto or transfer any assets other
than in the Ordinary Course.
6.4 Certain Investments. Neither Holdings, the Company nor any
Group Company will organize any subsidiary, acquire any capital stock or other
equity securities of any corporation or acquire any equity or ownership inter-
est in any business.
6.5 Organization. Each of Holdings, the Company and each Group
Company shall preserve its corporate existence and business organization
intact, to keep available to the Purchaser, its respective officers and key
employees, and to preserve for the Purchaser's benefit its relationships with
licensors, suppliers, distributors, customers and others having business rela-
tions with it.
6.6 Certain Changes. Neither Holdings, the Company nor any Group
Company will:
(a) Borrow or agree to borrow any funds or incur, or assume
or become subject to, whether directly or by way of guarantee or otherwise,
any obligation or liability (absolute or contingent), except obligations and
liabilities incurred in the Ordinary Course;
(b) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction when due in the Ordinary Course of liabili-
21
ties or obligations reflected or reserved against in the Audited Balance Sheet
or incurred in the Ordinary Course since the date of the Audited Balance
Sheet, or prepay any obligation having a fixed maturity of more than ninety
(90) days from the date such obligation was issued or incurred;
(c) Transfer any of its property or assets (real, personal
or fixed, tangible or intangible) other than in the Ordinary Course, or permit
or allow any such property or asset to be subjected to any Lien of any kind;
(d) Write down the value of any Inventory or write off as
uncollectible any notes or accounts receivable, except for immaterial
write-downs and write-offs in the Ordinary Course;
(e) Cancel any debts or waive any claims or rights of sub-
stantial value or transfer any of its properties or assets, except in the
Ordinary Course;
(f) Dispose of or permit to lapse any rights to the use of
Intellectual Property, or dispose of or disclose to any person any trade
secret, formula, process or know-how not theretofore a matter of public knowl-
edge;
(g) Grant any general increase in the compensation of offi-
cers or employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increase in the compensa-
tion payable or to become payable to any officer or employee;
(h) Make any capital expenditure or commitment other than
in the Ordinary Course;
(i) Pay, loan or advance any amount to, transfer or lease
any properties or assets to, or enter into any agreement or arrangement with,
any of the Sellers or any officers or directors of Holdings, the Company or
any Group Company or any Affiliate of such persons or any of its officers or
directors, except for directors' fees and compensation to officers in the
Ordinary Course;
(j) Grant or extend any power of attorney or act as guar-
antor, surety, co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation of any person, corporation, partnership, joint ven-
ture, association, organization or other entity;
(k) Change the auditors of Holdings, the Company or any of
the other Group Companies, or
(l) Agree, whether in writing or otherwise, to do any of
the foregoing.
6.7 Contracts. Unless so requested by the Purchaser, no Contract
or Agreement will be entered into, and no purchase of raw material or supplies
and no sale of assets will be made, by or on behalf of the Company or any
Company Subsidiary, except (i) any normal Contract or Agreement for the pur-
22
chase of, and normal purchases of, raw materials or supplies, made in the
Ordinary Course, and (ii) any normal Contract or Agreement for the sale of,
and normal sales of, Inventory in the Ordinary Course.
6.8 No Default. Neither the Sellers, Holdings, the Company nor
any Group Company shall do any act or omit to do any act, or permit any act or
omission to act, which would be reasonably like to cause or result in a breach
of or default under any material Contract or Agreement of Holdings, the Com-
pany or any other Group Company, or which would cause the breach of any war-
ranty made hereunder.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES;INDEMNIFICATION
7.1 Investigations; Survival; Exclusive Remedy. (a) The right
to indemnification, payment of Indemnified Costs or other damages or other
remedy based on representations, warranties, covenants and obligations of the
Parties will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or at the date of
the Closing, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant or obligation.
(b) The representations and warranties of the Purchaser
shall be extinguished upon the Closing. The representations and warranties of
the Sellers shall survive until the third anniversary of the Closing, on which
date they shall terminate; provided, however, that any representation or
warranty made by the Sellers relating to (i) Taxes, shall survive until the
tolling of all applicable statutes of limitation, or (ii) title to securities
acquired or to be acquired by the Purchaser hereunder shall survive without
limitation. Any claim made or notified pursuant to this Article VII before
the otherwise applicable termination date shall survive such termination. Un-
less otherwise specified herein, the covenants and agreements of the Parties
shall survive the Closing without limit for purposes of indemnification
hereunder.
(c) Except as provided by Articles 1425-1440, 1483 and 1484
of the Italian Civil Code, the right to indemnification shall be the exclusive
remedy of the Parties.
7.2 Indemnity by the Sellers; Right of Set-Off. (a) Subject to
the limitations set forth in this Article VII, the Sellers hereby, jointly and
severally up to the amount of the limitation contained in Section 7.4(c) and
severally to the extent of liability, if any, in excess of such limitation,
agree to indemnify and hold the Purchaser, Holdings, the Company, and the
other Group Companies, harmless at all times from and against, and shall pay
to the Purchaser, Holdings, the Company and the other Group Companies, as the
case may be, the full amount (but in the event the Purchaser asserts a claim
for indemnification on behalf of the Company in respect of any Group Company
23
other than the Company, the full amount multiplied by the percentage of such
Group Company owned, directly or indirectly, by the Company) of any and all
Indemnified Costs that may be incurred by the Purchaser, Holdings, the Company
and the other Group Companies, including their respective directors and offi-
cers (collectively, "Purchaser Indemnified Party"), arising out of, involving
or relating to, either directly or indirectly, any of the following:
(i) Any inaccuracy in any representations or
warranties of the Sellers set forth in this Agreement, the Disclo-
sure Schedule or any certificate or other document delivered or to
be delivered pursuant hereto;
(ii) The matters disclosed in that report dated
February 1996 delivered by the Sellers to the Purchaser as
initialled by counsel to the Sellers and the Purchaser (the "Phe-
nol Liabilities"), notwithstanding such disclosure or the
Purchaser's actual knowledge with respect thereto;
(iii) Any breach of any covenant, obligation or
agreement of the Sellers set forth in this Agreement, the Escrow
Agreement or any Schedule, Exhibit, certificate or other document
delivered or to be delivered pursuant hereto; and
(iv) Any liabilities or obligations of Holdings
arising prior to the Closing.
(b) Subject to the provisions of this Article VII, a Pur-
chaser Indemnified Party will be obligated to satisfy any Indemnified Costs by
exercise of the right of set-off ("Right of Set-Off") against the Secured
Amount or the Contingent Consideration (but in the case of the Contingent
Consideration, only if such amounts have become or are likely to become pay-
able within 90 days from the date of any Notice of Claim). Satisfaction of
any indemnification claim by exercise of the Right of Set-Off (including any
earned interest thereon) shall not affect the Sellers' indemnification commit-
ments under this Article VII to the extent that such commitments have not
previously been fully satisfied by exercise of the Right of Set-Off. Any con-
tribution arrangements among the Sellers shall not affect any Purchaser
Indemnified Party's rights under this Article VII.
7.3 Indemnity by the Purchaser. The Purchaser hereby indemnifies
and agrees to hold the Sellers harmless from and against, and shall pay to the
Sellers the full amount of any and all Indemnified Costs that may be incurred
by the Sellers, arising out of, involving or relating to, any breach of any
covenant, obligation or agreement of the Purchaser set forth in this Agreement
or any certificate or other document delivered or to be delivered pursuant
hereto.
7.4 Limitation. (a) The amount of Indemnified Costs
for which the Sellers would otherwise be liable to the Purchaser Indemnified
Parties under this Article VII shall be reduced to the extent that:
24
(i) any reserves or accruals for liabilities reflected on
the audited consolidated balance sheet of the Company as of December 31, 1996
(the "December 31, 1996 Balance Sheet") subsequently prove to have been over-
stated with respect to the total amount of the relevant items; provided,
however, that all reserves and accruals on such balance sheet must be audited
and in conformity with past practice and Italian GAAP consistently applied;
(ii) insurance recoveries relating to events occurring prior
to the date hereof exceed the amount of any related insurance receivable
reflected on the December 31, 1996 Balance Sheet; provided, however, that all
receivables on such balance sheet must be audited and in conformity with past
practice and Italian GAAP consistently applied;
(iii) collections relating to Accounts Receivables reflected
on the December 31, 1996 Balance Sheet exceed such reflected amount; provided,
however, that all receivables on such balance sheet must be audited and in
conformity with past practice and Italian GAAP consistently applied;
(iv) debt reflected on the December 31, 1996 Balance Sheet
is forgiven in whole or in part; provided, however, that all debt on such
balance sheet must be audited and in conformity with past practice and Italian
GAAP consistently applied; and
(v) the amount of cash payments that the Company and/or any
Group Company receives during the four year period beginning January 1, 1996
and ending December 31, 1999 from government authorities as per Schedule
7.4(a)(v) exceeds LIT 18,000,000,000 (it should be noted that the amounts
stated in such Schedule 7.4(a)(v) are indicative amounts expected to be
received); provided that, the amount of Indemnified Costs shall not be reduced
for any amount of such cash payments from government authorities in excess of
LIT 43,535,000,000 and, therefore, the maximum reduction of Indemnified Costs
pursuant to this subsection 7.4(a)(v) shall not exceed LIT 25,535,000,000;
provided further, that any reduction made pursuant to this subsection
7.4(a)(v) as a result of cash payments received by any Group Company other
than the Company shall equal the full amount of such cash payment multiplied
by the percentage of the Group Company owned by the Company.
(b) The Sellers shall not be obligated to indemnify any
Purchaser Indemnified Party under this Article VII unless and until the aggre-
gate amount of Indemnified Costs (after taking account of the provisions of
Section 7.4(a) above) incurred by Purchaser Indemnified Parties equals or ex-
ceeds LIT 5.0 billion, in which event Indemnified Costs in excess of such
amount shall be payable pursuant to this Article VII.
(c) Subject to Article 1229 of the Italian Civil Code, the
Indemnified Costs (after taking account of the provisions of Sections 7.4 (a)
and (b) above) arising from (i) any inaccuracy in any representations or
warranties of the Sellers set forth in this Agreement, the Disclosure Schedule
or any certificate or other document delivered or to be delivered pursuant
hereto or (ii) the Phenol Liabilities, notwithstanding such disclosure or the
25
Purchaser's actual knowledge with respect thereto, for which the Sellers may
be liable shall be limited to LIT 26.5 billion (the "Cap"), provided that:
(i) such Cap shall apply to indemnifiable costs arising out
of, involving or relating to, matters of potential liability undisclosed or
inaccurately disclosed in this Agreement or the Disclosure Schedule; and
(ii) such Cap shall not serve to limit liability for
undisclosed (whether known or unknown) or inaccurately disclosed matters which
would result in a breach of (1) Section 3.4 (which covers title to Holdings
Shares, Company Shares and shares/quotas of the Group Companies), (2) Section
3.8 (which covers financial matters relating to Holdings) and (3) Section 3.16
(which covers Taxes); provided that, with regard to any indemnifiable costs
arising out of, involving or relating to, the matters described in clauses
(1), (2) and (3) of this Section 7.4(b)(ii) which are in excess of the Cap,
the Sellers shall be severally, and not jointly, liable for such costs in
excess of the Cap, only after full exhaustion of the Cap, and only to the
extent of LIT 640,236,959,016 in accordance with the percentages set forth in
Schedule 8.
(d) As noted in Section 7.1(b), the representations and
warranties of the Sellers shall survive until the third anniversary of the
Closing, except that (i) any representation or warranty made by the Sellers
relating to Taxes shall survive until the tolling of all applicable statutes
of limitation, and (ii) any representation or warranty made by the Sellers
relating to title to securities acquired or to be acquired by the Purchaser
hereunder shall survive without limitation.
(e) No Phenol Liability shall be deemed to be an
Indemnified Cost except to the extent that the aggregate amount of any Phenol
Liabilities exceed USD 8 million, in which event 50% of the amount by which
such Phenol Liabilities exceed USD 8 million shall be deemed to be Indemnified
Costs for which the Sellers shall remain liable, subject to the limitations
set forth in clauses (a), (b) and (c) of this Section 7.4.
7.5 Notice of Claims; Payment. (a) Notwithstanding any other
provision contained in this Agreement, any Indemnified Party shall be deemed
to have waived any right thereto unless such party gives to the Indemnifying
Party written notice of Claim (the "Notice of Claim"), which Notice of Claim
must be submitted by the Purchaser (in the case of a claim by a Purchaser
Indemnified Party) or by an authorized designee of the Sellers (in the case of
a claim by the Sellers), and shall contain, to the extent known to the Indem-
nified Party, the facts constituting the basis for such Claim.
(b) The Purchaser shall pay to the Sellers all Indemnified
Costs determined pursuant to this Article VII not later than thirty days
after (i) the Sellers provide written Notice of Claim under this Article VII
to the Purchaser and the Purchaser does not object to such Claim or (ii) a
final arbitration award if the Purchaser raises an objection to such Claim.
If the Purchaser wrongfully withholds its payment, it shall be required to pay
interest at an annualized rate equal to the sum of (i) the Applicable Rate
26
charged on the due date plus (ii) two percent (2%) for the period commencing
on the due date and ending on the date such payment is made. For purposes of
this Section 7.5(b), the due date shall be the date thirty days after the
occurrence of either of the events described in clause (i) and (ii) of the
first sentence of this Section 7.5(b).
(c) If the Purchaser Indemnified Party shall have incurred
any Indemnified Costs to which in its judgment it is entitled to be
indemnified by the Sellers pursuant to this Article VII, the Purchaser shall
deliver the Notice of Claim to the Sellers at the addresses specified in
Schedule 9 specifying the amount of such Indemnified Costs to which it main-
tains it is entitled to indemnification and the facts constituting the basis
of such claim. The Sellers may dispute all or any portion of such Indemnified
Costs; provided that the Sellers shall notify the Purchaser in writing of any
disputed amounts, specifying the exact amounts in dispute and the basis for
such dispute, within 45 calendar days of the Sellers' receipt of Purchaser's
Notice of Claim. As promptly as possible after December 31, 1999, the Pur-
chaser shall provide the Sellers with a certificate (the "Officer's Certifi-
cate") of an officer of the Company setting forth (i) the aggregate amount of
Indemnified Costs to which it maintains it is entitled to indemnification and
(ii) the amounts to be deducted from such aggregate amount pursuant to Section
7.4(a) and 7.4(b). The Sellers shall pay to the Purchaser the amount speci-
fied in clause (i) of the previous sentence (plus interest thereon accrued
from the date of the occurrences for which indemnity is so claimed, provided
that interest shall not accrue or be payable with respect to any Indemnified
Cost until all reserves or accruals relating to such Indemnified Cost on the
December 31, 1996 Balance Sheet have been exhausted) minus the amounts speci-
fied in Section 7.4(a)(ii), (iii), (iv) and (v) (plus interest thereon accrued
from the date of the recovery, collection, debt forgiveness and/or receipt of
cash payments from government authorities, as the case may be, referred to in
Section 7.4(a)(ii), (iii), (iv) and (v)) not later than thirty days after (i)
the Purchaser delivers the Officer's Certificate to the Sellers and the
Sellers do not object to the contents of such Officer's Certificate or (ii) a
final arbitration award if the Sellers raise an objection to the contents of
such Officer's Certificate. If the Sellers wrongfully withhold payment, they
shall be required to pay interest at an annualized rate equal to the sum of
(i) the Applicable Rate charged on the due date plus (ii) two percent (2%) for
the period commencing on the due date and ending on the date such payment is
made. For purposes of this Section 7.5(c), the due date shall be the date
thirty days after the occurrence of either of the events described in clause
(i) and (ii) of the fourth sentence of this Section 7.5(c).
7.6 Defense by Indemnifying Party. An Indemnified Party shall
initially undertake the defense of any Third Party Claim (at the expense of
the Indemnifying Party) until the Indemnifying Party has acknowledged in writ-
ing that the Third Party Claim might give rise to an Indemnified Cost, whether
or not involving litigation, at which point the Indemnifying Party will be
entitled to assume the defense of such claim; provided, that the Indemnified
Party may at any time, at its election, participate (including through
representation by attorneys of its own) in such defense, provided, further,
that such participation shall be at the Indemnified Party's own expense. If
27
the Indemnifying Party does not assume control of the defense as provided
above, the Indemnified Party may defend against such claim, in such manner as
it may deem appropriate, including, but not limited to, settling such claim
before or at any stage of the litigation (after giving notice thereof to the
Indemnifying Party) on such terms as the Indemnified Party may deem appropri-
ate; provided, however, that the Indemnified Party shall not settle any such
claim for consideration other than money without the prior written consent of
the Indemnifying Party and the Indemnified Party shall not, without the prior
written consent of the Indemnifying Party, settle or compromise any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the Indemnifying Party
of a release from all liability in respect of such claim. Upon request, the
Indemnified Party shall give the Indemnifying Party access to such information
possessed by the Indemnified Party as the Indemnifying Party reasonably re-
quests relating to such claim. At the Indemnifying Party's reasonable
request, the Indemnified Party will cooperate with the Indemnifying Party in
the preparation of such defense if the Indemnifying Party reimburses the
Indemnified Party for the reasonable expenses incurred in connection with such
request. The Indemnifying Party shall not settle any such claim for consid-
eration other than money or consideration unrelated to the assets or oper-
ations of the Indemnified Party without the prior written consent of the In-
demnified Party and the Indemnifying Party shall not, without the prior writ-
ten consent of the Indemnified Party, settle or compromise any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the Indemnified Party
of a release from all liability in respect of such claim. The party con-
testing or defending a Third Party Claim shall afford to the other party and
its counsel an opportunity to be present at, and to participate in conferences
with all persons, including Governmental Authorities, asserting such claims
and conferences with representatives or counsel for such persons.
ARTICLE VIII
TERMINATION
(a) This Agreement may be terminated by mutual written agreement
of the Purchaser and the Sellers, and shall not come into full force and
effect in the event that the conditions to Closing provided under Section 2.3
have not occurred on or prior to March 31, 1997.
(b) In case of termination of this Agreement under this Article
VIII, all confidential information received by any Party with respect to the
business of any other Party or its Affiliates will be kept confidential and
will not, without the prior written consent of the party disclosing such
information, be disclosed by the party receiving such information (or such
Party's representatives), in whole or in part, and will not be used by the
Party receiving such information (or such Party's representatives), directly
or indirectly, for any purpose other than in connection with completing the
Transactions.
28
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Entire Agreement; Amendments and Waivers. This Agreement
(together with the documents, instruments and writings delivered pursuant
hereto, including the Disclosure Schedule and other Schedules and Exhibits
hereto) supersedes all prior documents, understandings and agreements, oral or
written, relating to these Transactions, including without limitation, the
letter of intent, dated May 30, 1996, between Xxxxx-Illinois, Inc., Holdings
and the Sellers, and, except as contemplated by various written agreements
entered into concurrently herewith, constitutes the entire understanding be-
tween the Parties with respect to the subject matter hereof; provided,
however, that in the event this Agreement is terminated, or does not come into
full force and effect, in accordance with Section 8(a) hereof, the provisions
contained in Section 8(b) shall remain in full force and effect. Any modifica-
tion or amendment to, or waiver of, any provision of this Agreement may be
made only by an instrument in writing executed by the Party against whom
enforcement thereof is sought.
9.2 Waiver of Compliance. Any failure of the Sellers or the Pur-
chaser to comply with any obligation, covenant, agreement or condition herein
may be expressly waived in writing by the Purchaser or the Sellers, respec-
tively, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
9.3 Expenses. Whether or not the Transactions shall be consum-
mated, each Party shall pay all of its own fees and expenses relating to the
transactions contemplated by this Agreement, including, without limitation,
all fees of counsel, actuaries, financial advisors and accountants. The fees
and expenses associated with the Escrow shall be shared equally between the
Sellers, on the one hand, and the Purchaser, on the other hand.
9.4 Transfer Taxes. The Purchaser agrees that it will pay any
stamp duty ("tassa xxx xxxxxxxxx xx xxxxx") and other endorsement costs (other
than taxes) incurred in connection with the endorsement of the Holdings Shares
and the Direct Shares to the Purchaser.
9.5 Tax Amnesty. If a tax amnesty becomes available to Holdings,
the Company and/or the Company Subsidiaries for any period for which the
Sellers may have liability, the Sellers may request that Holdings, the Company
and/or the Company Subsidiaries take advantage of such tax amnesty and the
cost will be borne by the Sellers. If, for any reason, Holdings, the Company
and/or the Company Subsidiaries do not wish to take advantage of the tax
amnesty, they may veto the request of the Sellers in which case the liability
of the Sellers for the relevant period subject to the amnesty will be limited
to the cost of the amnesty.
9.6 Notices. Any notice or other communication to a Party
required or permitted hereunder shall be made in writing and may be sent by
registered mail, return receipt requested, addressed to the address of such
29
Party set forth in Schedule 9 hereto or to such other address as such other
Party shall have communicated to each other Party.
9.7 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the Parties without the prior written consent of the other Party or
Parties, as the case may be, provided, however, that the Purchaser may assign,
without any prior consent of the other Parties, its rights, interests and
obligations to a subsidiary of Xxxxx-Illinois, Inc., provided that the
Purchaser shall remain responsible for its obligations hereunder.
9.8 Publicity. Other than as provided for in Sections 5.6 and
5.7 of this Agreement, no Party hereto shall make or issue, or cause to be
made or issued, any announcement or written statement concerning this Agree-
ment or the Transactions for dissemination to the general public without the
prior written consent of the other Parties. This provision shall not apply,
however, to any announcement or written statement required to be made by law
or the regulations of any Governmental Authority, except that the Party re-
quired to make such announcement shall consult with the other Parties concern-
ing the timing and content of such announcement before such announcement is
made.
9.9 Brokers and Finders. Neither the Sellers, Holdings, nor the
Company or any Group Company or any of their respective officers, directors or
employees have employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the Transac-
tions. Except for Xxxxxx Xxxxxxx & Co., the Purchaser has not employed any
broker or finder or incurred any liability for brokerage fees, commissions or
finder fees in connection with the transactions contemplated by this Agree-
ment.
9.10 Dispute Resolution. The Parties shall attempt to resolve
any dispute arising in connection with this Agreement amicably by mutual
agreement. Any such dispute between the Parties which cannot be settled by
agreement within a period of sixty (60) days shall be finally resolved by
arbitration under the Rules of Conciliation and Arbitration of the ICC. Any
such arbitration shall be initiated by the delivery of a notice in writing by
any Party to the other Party following such sixty (60) day period. The arbi-
tration panel shall be comprised of three (3) arbitrators, one (1) to be ap-
pointed by the Purchaser, and one (1) to be appointed by the Sellers, and the
third by the first two (2) arbitrators. If either of the first two (2) arbi-
trators are not appointed within the time provided by said rules, or the two
(2) arbitrators fail to agree on the choice of the third within thirty (30)
days after the appointment of the second arbitrator becomes effective, such
arbitrator(s) shall be appointed by the International Court of Arbitration of
the ICC. The place of arbitration shall be Geneva, Switzerland. The language
to be used in the arbitral proceeding shall be English. The decision and
award of the arbitral tribunal shall be final, non-appealable and binding on
all parties hereto and their successors and permitted assigns hereunder, shall
30
include a decision regarding the allocation of costs relating to any such
arbitration and all matters related thereto, and shall be enforceable in any
court of competent jurisdiction in accordance with the United Nations Conven-
tion on the Recognition and Enforcement of Foreign Arbitral Awards.
9.11 Counterparts; Language Conflicts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement, including the Disclosure Schedule attached
hereto, is executed in English and in an Italian translation. If any provi-
sion contained in the English version of this Agreement conflicts or is incon-
sistent with any provision in the Italian translation of this Agreement, then
the provision in the English version shall prevail; provided, however, that in
the case of Exhibit A (for which no English version will be produced), the
Italian version shall prevail.
9.12 Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation other than the
Parties hereto and their successors or assigns (including any Affiliate of
Xxxxx-Illinois, Inc.), any rights or remedies under or by reason of this
Agreement.
9.13 Governing Law. This Agreement and the legal relations among
the Parties shall be governed by and construed in accordance with the laws of
the Republic of Italy, without regard to its conflicts of law doctrine.
31
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed, all as of the day and year first above written.
OI ITALIA S.R.L.
By: /s/R. Xxxxx Xxxxxxxx
--------------------
Name: R. Xxxxx Xxxxxxxx
Title: Attorney-in-Fact
SELLERS NAMED ON SCHEDULE 1 HERETO
By: /s/Xxxxx Xxxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxxx
Title: Attorney-in-fact
32
SCHEDULE 2
DEFINITIONS
"Accounts Receivable" shall mean the trade accounts receivable of the
Company and Company Subsidiaries relating to the Glass Business which are out-
standing on the date hereof.
"Affiliate" shall mean, with respect to a specified person, (A) any
person directly or indirectly owning, controlling, or holding five percent or
more of the securities of the specified person, except where such ownership is
a portfolio investment; (B) any person five percent or more of whose securi-
ties are directly or indirectly owned, controlled, or held by such specified
person, except where such ownership is a portfolio investment; (C) any person
directly or indirectly controlling, controlled by, or who is under common con-
trol with, the specified person; (D) any officer, director, partner, copart-
ner, or employee of the specified person; (E) any trust or estate in which the
specified person has a substantial beneficial interest or as to which the
specified person serves as a trustee or in a similar capacity; and (F) any
relative or spouse of the specified person, or any relative of such spouse.
"Applicable Rate" means three-month RIBOR as published in the daily
newspaper "Il sole - 24 Ore."
"Audited Balance Sheet" means the audited, consolidated balance sheet of
the Company as at December 31, 1995, included in the Audited Financial State-
ments.
"Audited Financial Statements" means the audited consolidated Financial
Statements of the Company covering each of the three year periods ended Decem-
ber 31, 1993, 1994 and 1995, in the form as filed by the Company with CONSOB.
"Billion" means one thousand million.
"Business Day" means any day during which banks are generally scheduled
to be open for business in Milan and New York City, and during which regular
trading is scheduled to occur on the Milan Stock Exchange.
"Cap" has the meaning set forth in Section 7.4(c) of this Agreement.
"Claim" means any claim or any legal or equitable action or any arbitra-
tion proceeding by any party, including a Third Party Claim.
"Closing" has the meaning set forth in Section 2.2(a) of this Agreement.
"Company" has the meaning set forth on page 1 of this Agreement.
"Company Shares" means the 41,989,240 shares, par value LIT500 each, of
the Company issued and outstanding as of the date of this Agreement, excluding
the 2,194,055 Withdrawn Shares.
"Company Subsidiary" means the companies set forth under "Subsidiaries"
in Schedule 3.6(b) of the Disclosure Schedule.
1
"CONSOB" means Commissione Nazionale per le Societa e la Borsa, the
Italian national companies and stock exchange commission.
"Contingent Consideration" has the meaning set forth in Section 2.6 of
this Agreement, determined in accordance with Schedule 4(a) hereto.
"Contracts and/or Agreements" means agreements, contracts, commitments,
leases, subleases, indentures, mortgages, instruments, security interests,
guaranties, insurance policies, warranty claims, rights against third parties,
causes of action, other similar arrangements and rights thereunder.
"Direct Shareholders" has the meaning set forth on page 1 of this Agree-
ment.
"Direct Shares" has the meaning set forth in page 1 of this Agreement.
"Direct Shares Consideration" has the meaning set forth in Section
2.5(a)(ii) of this Agreement.
"Disclosure Schedule" means the document entitled Disclosure Schedule,
attached as Schedule 3 to this Agreement, which is delivered by the Sellers to
the Purchaser simultaneously with the execution hereof, and incorporated here-
in by reference, containing the information required to be included therein
pursuant to this Agreement.
"Escrow Agent" means Societa per Amministrazioni Fiduciarie "SPAFID"
S.p.A., an Italian company with registered offices in Xxxxx, 0, Xxxxxx P.
Ferrari.
"Escrow Agreement" is the agreement referred to in Section 2.1(a)(ii) of
this Agreement.
"Financial Books and Records" means all ledgers, books, accounts and
journals used in connection with preparing any Financial Statements, including
certain originals of which are required by law or any Governmental Authority
to be maintained by Holdings, the Company, or any Group Company.
"Financial Statements" means consolidated income statement, balance
sheet, and funds flow statement and accompanying footnotes at or for the peri-
od ending on any specified date.
"Glass Business" means the business of developing, testing, manufactur-
ing, marketing, selling and exporting glass container and packaging products,
tableware and insulators and related support operations, as currently con-
ducted by the Group Companies, as a going concern.
"Governmental Authority" means any court or governmental or other
regulatory or administrative agency, commission body, official or any stock
exchange authority having jurisdiction over the Parties, Holdings, the Company
or any Group Company or any of their properties or operations.
2
"Group Companies" means the Company, any Company Subsidiary and Affili-
ates or investees of the Company set forth in Schedule 3.6(b) of the Disclo-
sure Schedule.
"Holdings" has the meaning set forth on page 1 of this Agreement.
"Holdings Financial Statements" has the meaning set forth in Section 3.8
of this Agreement.
"Holdings Purchase Consideration" has the meaning set forth in Section
2.5(a)(i) of this Agreement.
"Holdings' Shareholders" has the meaning set forth on page 1 of this
Agreement.
"Holdings Shares" has the meaning set forth on page 1 of this Agreement.
"ICC" means the International Chamber of Commerce.
"Indemnified Costs" means penalties, losses, damages, liabilities, costs
or expenses (including, without limitation, reasonable attorneys' fees and
other dispute resolution costs).
"Indemnified Party" means any party entitled to indemnification under
Article VII of this Agreement.
"Indemnifying Party" means any party from whom indemnification is sought
under Article VII of this Agreement.
"Intellectual Property" means all design registrations, patents, patent
applications, service marks, product registrations, scientific data relating
to the safety and efficacy of products, trademarks, trademark registrations,
trademark applications, corporate names, logos, copyrights, copyright applica-
tions, industrial design registrations, utility models, trade names, trade
rights, whether or not registered (or by whatever name or designation), owned
or licensed, directly or indirectly, in whole or in part by the Company or any
Company Subsidiary, and all proprietary data, formula cards and technical,
manufacturing or marketing know-how or information (and materials embodying
such information) in the possession of the Company or any Company Subsidiary,
including new developments, discoveries, inventories and trade secrets and
documentation thereof (including related papers, drawings, models, prototypes,
chemical and biological compositions, formulas, diaries, notebooks, specifica-
tions, methods of manufacture, data-processing cards, disks, tapes and other
software and all data contained therein or thereon), goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions, used in
connection with, or that relate to, or are necessary to the operation of the
Glass Business.
3
"Interim Unaudited Balance Sheet" means the unaudited consolidated
balance sheet of the Company as at June 30, 1996, included in the Interim
Unaudited Financial Statements.
"Interim Unaudited Financial Statements" means the interim unaudited
consolidated Financial Statements of the Company for the six month period
ended June 30, 1996, including the Interim Unaudited Balance Sheet, prepared
by the Company pursuant to Italian GAAP in a manner consistent with the
Audited Financial Statements.
"Inventory" means raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods other than spare parts expensed.
"Italian GAAP" means Italian generally accepted accounting principles.
"Liens" means any claim, mortgage, deed of trust, pledge, security
interest, lien, conditional sales arrangement charge or other encumbrance of
any kind.
"LIT" means Lire (or in the singular Lira), the lawful currency of the
Republic of Italy.
"Management and Non-Competition Agreements" has the meaning set forth in
Section 2.1(a)(v) of this Agreement.
"Merger" has the meaning set forth in Section 3.6(a) of this Agreement.
"Minors" has the meaning set forth on page 1 of this Agreement.
"Notice of Claim" has the meaning set forth in Section 7.5(a) of this
Agreement.
"Ordinary Course" means the ordinary course of business consistent with
(a) past custom and practices of the Glass Business, including with respect to
quantity, price and frequency and (b) the financial plan and accounting
practices reflected in the Audited Financial Statements and the Unaudited
Consolidated October 31, 1996 Financial Statements.
"Other Financial Information" means the statements of accounts, budgets,
income statements, balance sheets, and similar financial information of Hold-
ings, the Company and the Company Subsidiaries including, without limitation,
an estimated statement of profitability (excluding extraordinary items) for
the twelve-month period ending December 31, 1996, with respect to the Glass
Business which have been provided to the Purchaser.
"Parties" means the Purchaser and the Sellers.
"Permits and Licenses" means franchises, approvals, permits, licenses,
including paid up licenses on all computer software, orders, registrations,
certificates, variances, and similar rights obtained from any Governmental
Authority, used in connection with, or that relate to, or are necessary to,
the operation of the Glass Business.
4
"Personal Property" means tangible personal property, whether owned or
leased, including machinery, equipment, computers and computer software, fur-
xxxxxx, automobiles, trucks, tractors, trailers, tools, jigs, and dies, wher-
ever located.
"Phenol Liabilities" shall have the meaning set forth in Section
7.2(a)(ii) of this Agreement.
"Public Shareholders" means such persons, other than Sellers, who may
from time to time own the Public Shares.
"Public Shares" means the 8,869,830 shares of capital stock in the
Company, representing 21.124% of the Company Shares listed for trading on the
Milan Stock Exchange.
"Purchaser" has the meaning set forth on page 1 of this Agreement.
"Purchaser Indemnified Party" has the meaning set forth in Section
7.2(a) of this Agreement.
"Purchaser's Auditors" means Reconta Ernst & Young, [Milan] office.
"Purchaser's Italian Counsel" means Gianni, Origoni & Partners.
"Real Property" means real property, whether owned or leased, including
all buildings, improvements, fixtures, fittings, production lines, equipment,
easements, rights of way and appurtenants thereon and thereto.
"Right of Set-Off" has the meaning set forth in Section 7.2(b) of this
Agreement.
"Secured Amount" has the meaning set forth in Section 2.7(b) of this
Agreement.
"Sellers" has the meaning set forth on page 1 of this Agreement.
"Sellers' Counsel" means Studio Legale e Tributario, 4 Via di Porta
Pinciana, Rome.
"Shareholders Contribution" has the meaning set forth in Section 5.10 of
this Agreement.
"Signing" has the meaning set forth in Section 2.1(a) of this Agreement.
"Tax" or "Taxes" means all taxes, charges, fees, levies and other
assessments, including, without limitation, income, excise, capital, property,
immovable property, sales, use, payroll (including required withholdings),
value added, social security and franchise taxes imposed by any Governmental
Authority, but excluding Transfer Taxes. Such term shall include any inter-
est, penalties or additions payable in connection with such taxes, charges,
fees, levies or other assessments.
5
"Third Party Claim" means any claim or any legal or equitable action or
any arbitration proceeding by a person who is not a party to this Agreement.
"Transactions" shall mean the acquisition, by the means specified in
Article II of this Agreement by the Purchaser, of the Holdings Shares and the
Direct Shares.
"Transfer" means to sell, convey, assign, transfer, deliver or otherwise
dispose, whether voluntarily or by operation of law.
"Transfer Taxes" means all transfer, recording, registration, stamp
duty, capital, sales and similar taxes or fees imposed by law or any Govern-
mental Authority in connection with or otherwise due and payable as a result
of any actions necessary to effect the Transactions.
"Unaudited Consolidated October 31, 1996 Financial Statements" means the
unaudited consolidated balance sheet of the Company as at October 31, 1996 and
the unaudited consolidated profit and loss statement of the Company for the
ten month period ending October 31, 1996.
"Withdrawn Shares" has the meaning set forth in Section 3.7(b) of this
Agreement.
The plural or singular, as the case may be, of any defined term shall have a
meaning correlative to such defined term.
6
