1
(1) - ICO, INC.
- WEDCO ITALY S.R.L
and
(2) - DARC'S S.P.A
- XX XXXXXXXXX XXXXXXX
- XX XXXXXXX XXXXXXX
-----------------------------------
FRAMEWORK AGREEMENT
-----------------------------------
2
THIS AGREEMENT is made on the 21st day of July 1997
BY AND BETWEEN:-
1.:
- ICO, INC., a Texas corporation having its principal offices at 00000
Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, USA;("ICO")
- Wedco Italy Srl, an Italian company having its principal offices at Xxx
Xxxxxx Xxxxxxxxxx 0, 00000 Xxxxx;("XXXXX" or the "DESIGNATED PURCHASER")
(collectively, the "PURCHASERS")
- on one side -
and
2.:
- Xx Xxxxxxx Xxxxxxx, born in Verolavecchia on August 18, 1954, resident
at Verolavecchia, Xxx Xxxxxxxx Xxxxxx 00, tax-payer No.VVN LMS 54M18 L778Z;
- Xx Xxxxxxxxx Xxxxxxx, born in Subiaco, Roma on April 22, 1938, resident
at Milano, Xxx xxxxx Xxxxxxxx 0, tax-payer No.PNZ FNC 38D22 I992I;
- DARC's S.p.A, an Italian company having its registered address at Xxxxxx
xxx Xxxxxx 00, Como hereby represented by its duly authorized Chairman Xx
Xxxxxxx Mezzedimi;
(the "SELLERS" and each a "SELLER")
- on the other side -
WITNESSETH:
A. Whereas, ICO and each of the Sellers have entered into separate Stock Sale
and Purchase Agreements (collectively the "SALE AGREEMENTS" and each a "SALE
AGREEMENT") concerning the sale and transfer by each Seller of his or its
equity interest in Verplast S.p.A an Italian company having its registered
address at Verolanuova, Loc. Breda Libera ("VERPLAST"), which, in the
aggregate, represent 100% of the issued and outstanding share capital of
Verplast;
B. Whereas, under the terms of the Sale Agreements, ICO has the right to
designate a third party to take over all the rights and to assume all the
liabilities of ICO under each Sale Agreement pursuant to Article 1401 et seq.
of the Italian Civil Code, and ICO has elected such third party in the person
of the Designated Purchaser;
2
3
C. Whereas, according to paragraph B above, the Designated Purchaser has
purchased from the Sellers an aggregate number of shares in Verplast
representing 100% of the issued and outstanding share capital of Verplast; D.
Whereas, in accordance with the terms and conditions of the Sale Agreements
each Seller has agreed to indemnify and hold the Purchaser harmless upon
certain circumstances;
E. Whereas, the purpose of this framework agreement is to coordinate the
obligations of each Seller under each Sale Agreement so that the Sellers shall
be considered jointly and severally liable in respect of the Purchasers under
the terms and conditions of the Sale Agreements;
NOW, THEREFORE, the Parties hereto hereby agree as follows
1. DEFINITIONS
Unless otherwise designated in this Agreement, defined terms will have
the same meaning as provided in the Sale Agreements:
1.1 "AGREEMENT": this framework agreement.
1.2 "PARTIES": jointly all the Sellers, ICO and the Designated Purchaser.
2. COORDINATION
2.1 RECITALS. The above recitals constitute an integral part of this
Agreement.
2.2 NO "NOVAZIONE". This Agreement shall not constitute a "Novazione" of any
of the Sale Agreements under the provisions of Article 1230 et seq. of the
Italian Civil Code. All the provisions of the Sale Agreements shall continue
to apply unless expressly derogated by this Agreement. In case of
inconsistency of the provisions of this Agreement with the provisions of any of
the Sale Agreements, the provisions of this Agreement shall prevail.
2.3 JOINT AND SEVERAL LIABILITY OF THE SELLERS. The Sellers shall be
considered jointly and severally liable to Purchasers for any breach of the
Sale Agreements, and the Purchasers may seek to recover any sums due to them
under the terms of the Sale Agreements indifferently in respect of any Seller
for the total amount due.
2.4 INDEMNIFICATION LIMIT. (i) The maximum indemnification to which the
Purchasers shall be entitled under the terms of the Sale Agreements shall in no
event exceed an aggregate Lire 3.000.000.000 (three billion) (the
"INDEMNIFICATION LIMIT") which sum may be claimed indifferently in respect of
any of the Sellers. (ii) The Sellers' obligation to indemnify the Purchasers
under the terms of the Sale Agreements in respect of Loss(es) giving rise to an
Indemnification Claim shall be limited to the extent to which Loss(es) exceed
Lire 250.000.000 (two hundred fifty million); it being understood that in such
case the Purchaser shall be indemnified only for the amount in excess of Lire
250.000.000 (two hundred fifty million) (the "INDEMNIFICATION THRESHOLD").
3
4
2.5 SPECIFIC FISCAL LIABILITIES. In partial derogation to Section 9.1 (b) of
the Sale Agreements, the potential fiscal liabilities concerning undeductible
expenses as highlighted in section 18, 166 and 167 of the Price Waterhouse
report, which relevant extracts are attached hereto as Annex 2.5, will not be
considered Loss(es) unless such liabilities exceed in the aggregate Lire
243.000.000 (two hundred forty three million), in which case the amount up to
Lire 243.000.000 will not be considered Loss and may not be subject to any
Indemnification Claim and the amount in excess of Lire 243.000.000 will be
considered Loss which may be counted towards the Indemnification Threshold and
the Indemnification Limit.
2.6 NON-CONTRAVENTION. The Sellers represent and warrant that the
consummation of each and all the transactions contemplated by the Sale
Agreements will not (a) violate any statute, rule, regulation, judgment, order,
decree, stipulation or injunction to which Verplast is, or shall be, subject,
(b) conflict with or result in a breach of the provisions of the Certificate of
Incorporation or By-laws of Verplast, as amended to date, (c) result in a
breach, default or event of default of any loan agreement to which Verplast is
a party, or (d) result in a breach, default or event of default of any contract
to which Verplast is a party, which breach, default or event of default could
have a material Adverse Effect on Verplast.
2.7 FISCAL COOPERATION. In the event that Verplast should be a party to a
merger procedure or other corporate reorganization, the Sellers shall provide
to Purchasers copies of any documents regarding taxation of the sale of the
Verplast shares to Wedco, as may be required by the Italian tax legislation
then in force, to allow Wedco to maximize any benefits available under such
legislation.
2.8 ARBITRATION. In partial derogation to Section 10.10 of the Sale
Agreements, any disputes arising with respect to or in connection with this
Agreement and/or any Sale Agreement between ICO, the Designated Purchaser and
any of the Sellers, without regard to the number of parties to the procedure,
shall be finally decided by a panel of three arbitrators to be appointed by the
Camera Arbitrale Nazionale ed Internazionale di Milano in accordance with its
Rules of Arbitration. The Arbitrators shall be fluent in both Italian and
English languages both written and spoken and either or both of the two
languages can be used during the procedure. The Arbitrators shall be judging
at law and in accordance with the Italian Civil Code of Procedure. All of the
Sellers party to an arbitration shall always be treated as one and a sole
party. Similarly ICO and the Designated Purchaser shall always be treated as
one and a sole party.
ICO, INC.
By: /s/ XX. XXXXX X. XXXXXXXXX /s/ XXXXXXXXX XXXXXXX
------------------------------------ ----------------------------------
Name: Xx. Xxxxx X. Xxxxxxxxx Xx. Xxxxxxxxx Xxxxxxx
Title: Chairman
/s/ XXXXXXX XXXXXXX
----------------------------------
Xx. Xxxxxxx Xxxxxxx
Wedco Italy S.r.l DARC's S.p.A
By: /s/ XXXXXXXXX XXXXXXXX By: /s/ LUCIANO MEZZEDIMI
------------------------------------ ------------------------------
Name: Xxxxxxxxx Xxxxxxxx Name: Luciano Mezzedimi
Title: Managing Director Title: Chairman
4
5
ANNEX 2.5
5
6
(1) ICO, INC. (ICO)
and
(2) DARC'S S.P.A
___________________________________________
STOCK SALE & PURCHASE AGREEMENT
___________________________________________
7
THIS AGREEMENT is made on the 21st day of July, 1997 (hereinafter "Execution
Date") BY AND BETWEEN:-
1. ICO, Inc., a Texas corporation having its principal offices at 00000
Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 XXX ("ICO" or the "PURCHASER")
- on one side -
and
2. DARC'S S.p.A, an Italian company having its registered address at Como,
Xxxxxx xxx Xxxxxx 00, tax-payer No. 00811900133 hereby represented its
Chairman Xx Xxxxxxx Mezzedimi;
(the "SELLER")
- on the other side -
WITNESSETH:
A. Whereas, the Seller is the beneficial and record owner of 570.000 ordinary
shares having the nominal value of 1.000 Lira each (hereinafter the "SHARES")
and representing 15% of the entire issued and outstanding capital of Verplast
S.p.A, an Italian company having its registered address at Verolanuova, Loc.
Breda Libera ("VERPLAST").
B. Whereas, ICO is willing to purchase from the Seller, either directly or
through a designated party, and the Seller is willing to sell to ICO or a party
designated by ICO, the Shares at a set price.
C. Whereas, ICO is willing to purchase additional shares in Verplast pursuant
to separate agreements to be entered into with the other shareholders of
Verplast so as to increase ICO's equity interest in Verplast.
NOW, THEREFORE, the Purchaser and the Seller hereby agree as follows:
1. DEFINITIONS
In addition to the other terms defined in this Agreement, the
following terms and expressions shall have the following meanings as used
herein:
1.1 "AGREEMENT": this stock sale and purchase agreement.
1.2 "ADVERSE EFFECT": a prejudicial effect on the assets, liabilities,
financial condition, results of operations or future prospects of Verplast.
8
1.3 "BUSINESS DAY": any day other than a holiday on which banks are open
to the public in Milan for the carrying out of their ordinary business.
1.4 "CLOSING": the transfer to the Purchaser or the Designated Purchaser
of any and all rights, title and interest in and to the Shares, the payment by
the Purchaser or the Designated Purchaser of the Purchase Price (as hereinafter
defined) due to the Seller on the Closing Date (as hereinafter defined) and,
more generally, the performance of all the obligations which must be fulfilled
by the Parties (as hereinafter defined) on the Closing Date pursuant to Section
5 and subject to the conditions precedent set forth in Section 4 of this
Agreement.
1.5 "CLOSING DATE": the date of the Closing.
1.6 "ICO GROUP": ICO and any company directly or indirectly controlled by,
or affiliated with, ICO.
2. SALE AND PURCHASE OF THE SHARES
2.1 SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement, on the Closing Date the Seller shall sell and transfer to the
Purchaser and the Purchaser shall purchase from the Seller, free and marketable
title to the Shares representing, in the aggregate, 15% (fifteen per cent) of
the issued and outstanding share capital of Verplast, free and clear from any
and all lien, charge, encumbrance or claim for the price set forth in Section
3.1 hereof:
2.2 DESIGNATED PURCHASER. ICO shall have the right to designate a third
party (the "DESIGNATED PURCHASER") to take over all the rights and to assume
all the liabilities of the Purchaser under this Agreement pursuant to Article
1401 et seq. of the Italian Civil Code, by giving notice thereof to the Seller
on or prior to the scheduled Closing Date, provided that (i) the Designated
Purchaser shall in any event be a company of the ICO Group, and (ii) ICO shall
remain jointly and severally liable with the Designated Purchaser for the
performance of all obligations and covenants of the Purchaser under this
Agreement.
3. PURCHASE PRICE
3.1 PRICE FOR THE SHARES. Subject to the terms and conditions set forth in
this Agreement, the price payable by ICO to the Seller for the purchase of the
Shares (hereinafter, the "PURCHASE PRICE") it is hereby irrevocably set at Lire
4.725.000.000 (four billion seven hundred twenty five million).
3.2 REFERENCE FINANCIAL STATEMENTS. The parties further acknowledge that
this transaction has been based upon the financial statements of Verplast as of
December 31, 1996 (hereinafter the "1996 STATUTORY FINANCIAL STATEMENTS") as
updated on June 30, 1996 (hereinafter the "CLOSING FINANCIAL STATEMENTS")
attached hereto as, respectively, Annex 3.2 (a) and Annex 3.2 (b).
9
3.3 PAYMENT TERMS AND CONDITIONS. Subject to the terms and conditions of
this Agreement, the payment of the Purchase Price to the Seller shall be made
on the Closing Date in Italian Lire in immediately available funds wire
transferred to any such bank account(s) notified to the Purchaser by the Seller
prior to the Closing Date.
4. CONDITIONS PRECEDENT TO THE CLOSING
The obligations of each of the parties hereto to consummate the transactions
which are contemplated by this Agreement to occur at the Closing shall be
subject to the fulfilment or the waiver of the conditions set out in this
Section 4 below on or prior the Closing Date.
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES. On or prior
to the Closing Date, there shall be no action or proceeding initiated by any
governmental agency or by any other local, regional, national or supranational
authority or by any third party which seeks to restrain, prohibit or invalidate
this Agreement or the transactions contemplated herein or to recover
substantial damages or other substantial relief with respect thereto, and no
injunction or restraining order shall have been issued by any court, whether
domestic or foreign, restraining, prohibiting or invalidating this Agreement or
the transactions contemplated therein.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER:
(a) the Seller shall have duly performed all his material obligations
which, pursuant to this Agreement, are required to be performed prior to the
Closing;
(b) without prejudice to the generality of (a) above:
(i) prior to the Closing, each of the other shareholders of Verplast
shall have waived in writing in favor of the Purchaser their rights of first
refusal in respect of the Shares under Section 9 of Verplast's By-laws;
(ii) prior to the Closing, each member of the Board of Directors of
Verplast shall deliver an irrevocable resignation letter as Director of
Verplast immediately effective in which they declare that they have nothing
further to claim from Verplast on account of the offices held; and
(iii) prior to the Closing, each member of the Board of Statutory
Auditors of Verplast (including the "Sindaci Supplenti") shall have delivered
an irrevocable resignation letter as Statutory Auditor immediately effective;
and
(iv) prior to the Closing, an Ordinary Shareholders' meeting of
Verplast shall be held and validly resolve (i) to elect a new Board of
Directors of Verplast consisting of the following individuals: Xx. Xxxxx X.
Xxxxxxxxx (Chairman) Drs. Xxxxxxxxx Xxxxxxxx (Managing Director) Xx Xxxxx X.
Xxxxxxxx, Xx.
10
and (ii) to elect Messrs Xxxxx Xxxxxxxx (Chairman), Paolo Tognolo (Statutory
Auditor), Xxxxxxx Xxxxxxx (Statutory Auditor), Xxxxxx Xxxx (Supplente) and
Piermauro Carabellese (Supplente) as members of the Board of Statutory Auditors
replacing the resigning members.
4.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER:
(a) the Purchaser shall have duly performed all its material
obligations which, pursuant to this Agreement, are required to be performed
prior to the Closing; and
(b) the Purchaser or the Designated Purchaser shall have given to the
Seller adequate evidence of the authority of the officers of the Purchaser
and/or Designated Purchaser who shall carry on the transactions contemplated in
this Agreement.
5. CLOSING
5.1 THE CLOSING. Subject to the satisfaction or waiver of the conditions
precedent contemplated by Section 4 hereof, the Closing shall take place at the
offices of CAB Banca Lombarda, Via Xxxxxx Xxxxxxx 10, Milan (or such other
place as may be agreed upon by the Seller and the Purchaser before the
Closing). At the Closing the parties hereto shall comply with their respective
obligations as set out in this Section 5.1 below and shall take any other
action and/or sign any other document which may be required by law or this
Agreement:
5.1.1 The Seller shall:
(i) duly endorse and transfer the Shares to the Purchaser or the
Designated Purchaser and execute the "Fissato Bollato";
(ii) deliver to the Purchaser an irrevocable first request Bank
guarantee from CAB Banca Lombarda in the form of Annex 5.1 (b) hereto in the
sum of Lire 150.000.000 (hundred and fifty million) lapsing on December 31,
1999.
(iii) execute and deliver to the Purchaser any such other documents as
are contemplated by this Agreement to be executed and delivered to the
Purchaser at the Closing or as may be reasonably requested by the Purchaser in
order to complete the Closing transactions or in connection therewith.
5.1.2 The Purchaser or the Designated Purchaser shall:
(i) pay the Seller the Purchase Price;
(ii) execute the "Fissato Bollato";
(iii) enter into a consultancy agreement with the Seller in the form
of Annex 5.1 (a) hereto;
11
(iv) execute and deliver to the Seller any such other documents as are
contemplated by this Agreement to be executed and delivered to the Seller at
the Closing or as may be reasonably requested by the Seller in order to
complete the Closing transactions or in connection therewith.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby acknowledges and agrees that each of the following
representations and warranties has been an inducement to the Purchaser's
decision to enter into this Agreement:
6.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Verplast is duly
organized, validly existing and fully qualified to carry on its business under
the laws of the jurisdiction in which it is incorporated. Verplast has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
6.2 AUTHORIZATION. The Seller has full right, power and authority to enter
into this Agreement and to consummate the transactions contemplated herein. No
consent of, notice to, or filing with, any lender, trustee, security holder,
spouse or any other person is required for the Seller to enter into this
Agreement and to consummate the transactions contemplated herein.
6.3 BINDING EFFECT. This Agreement has been duly executed by the Seller
and constitutes the legal, valid and binding obligations of the Seller,
enforceable against it in accordance with its terms.
6.4 CAPITALIZATION OF VERPLAST AND DEBENTURES. The issued and outstanding
capital of Verplast amounts to Lire 3.800.000.000 (three billion eight hundred
million) and is divided into 3.800.000 shares as indicated in the shareholders'
book. All shares are fully paid-up and nonassessable, free and clear of any
pledges, liens, claims, security interests, encumbrances and third party's
rights. None of the shares has been issued or transferred in violation of any
preemptive, preferential or contractual right. As disclosed in Annex 6.4
hereto, Verplast has issued and has outstanding awaiting redemption debentures
in the sum of Lire 3.000.000.000 (three billion).
6.5 OWNERSHIP OF THE SHARES. Verplast shareholders' book provides a true,
correct and complete record of the current beneficial and record owners of the
shares. There are no authorized or outstanding options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments to which the Seller and/or Verplast are a party or
which are binding on them providing for the issuance, disposition or
acquisition of any of the Shares.
6.6 SUBSIDIARIES. Verplast owns a quota representing 75% of the issued and
outstanding capital of XXX.XX S.r.l. (hereinafter "XXX.XX QUOTA") a company
having its registered address at Xxx Xxxxxx 00, Xxxxxxxxxx (XX)
12
(hereinafter "XXX.XX"). The XXX.XX Quota is free and clear of any pledges,
liens, claims, security interests, encumbrances and third party's rights. The
XXX.XX Quota has not been issued or transferred in violation of any preemptive,
preferential or contractual right. As evidenced in the shareholders' agreement
included in Annex 6.14 hereto there are outstanding call and put options in
favor of Verplast to acquire additional quotas in XXX.XX up to 100% of the
issued and outstanding capital of XXX.XX from the current quotaholders of
XXX.XX.
6.7 CORPORATE RECORDS AND ACTION. The copies of the minute books of
Verplast are true, complete and accurate. All corporate action which has been
taken by any management body of Verplast and which is to be recorded in minute
books under the applicable law is fairly and accurately summarized in all
material respects in the minute books of Verplast. The extracts of the
shareholders' book of Verplast disclosed in Annex 6.7 hereto are true,
complete and accurate. All issuances, cancellations, transfers and exchanges
of shares of the capital of Verplast are duly recorded in its shareholders'
book.
6.8 FINANCIAL STATEMENTS. The statutory financial statements of Verplast
for the last 5 (five) years (hereinafter collectively referred as to the
"STATUTORY FINANCIAL STATEMENTS") as well as the Closing Financial Statements,
(a) have, been prepared from the books and records of Verplast in accordance
with local generally accepted accounting principles applied on a consistent
basis, and (b) fairly present the financial condition and the results of
operations of Verplast for the period covered by said financial statements.
6.9 UNDISCLOSED LIABILITIES. Verplast has no liability (whether known or
unknown, absolute or contingent, liquidated or unliquidated and whether due or
to become due), including without limitation any liability for Taxes (as
hereinafter defined) or undeductible expenses, except for (a) liabilities
indicated in the balance sheet of Verplast included in the Statutory Financial
Statements and the Closing Financial Statements and (b) liabilities incurred
after the reference date of said Closing Financial Statements in the ordinary
course of business and in accordance with past practices and (c) liabilities
for income taxes in respect of income earned in 1997. Verplast is neither
liable upon nor has guaranteed any debt or obligation of any other person or
entity, including its Directors and shareholders.
6.10 SUBSEQUENT EVENTS. Since July 1st, 1997 there have not been:
(a) any events which, individually or in the aggregate, had or could
have a material Adverse Effect, except to the extent that such Adverse Effect
is a consequence of the transactions contemplated by this Agreement or the
announcement thereof;
(b) any debts incurred as a consequence of money borrowed by Verplast
other than debts incurred in the ordinary course of business or any lien or
security interest granted by Verplast;
13
(c) any sale of any of Verplast's assets, other than sales of
inventory in the ordinary course of business and sales of equipment made in the
ordinary course of business due to the replacement or abandonment thereof;
(d) any capital expenditures paid, incurred or committed to Verplast,
other than capital expenditures incurred in the ordinary course of business
which do not exceed Lire 100.000.000 (hundred million) for any individual item
or group of related items;
(e) any dividend, payment or other distribution with respect to any of
the Shares or any payment made or benefit granted, under whatever forms and to
any title, by Verplast to any of its shareholders or to any party connected
with its shareholders;
(f) any loan to or investment in, or acquisition of any securities or
assets of any other person or entity, other than purchase of inventory and
supplies in the ordinary course of business;
(g) any increase in the rate of compensation or material increase in
the benefits payable or to become payable to any of the Verplast's Directors,
officers or employees (other than raises made in the ordinary course of
business to employees who are not directors or officers provided that such
raise to any such employee shall not exceed 10% of the base compensation of
such employee in effect at the date of execution of this Agreement or unless
such raises are due under applicable labor laws and regulations or Collective
Bargaining Agreements) or any material change to any of the terms of employment
of any of Verplast's Directors, officers or employees.
6.11 TAXES.
(a) Verplast has filed all returns relating to taxes which Verplast
was required to file since 1989 (hereinafter jointly referred as the "TAX
RETURNS"). All Taxes payable by Verplast have been paid and Verplast has no
liability or obligation with regard to Taxes for any period prior to the
Closing Date, except for taxes not yet due; accruals for Taxes not yet due
fully reflect obligations of Verplast for Taxes incurred through the date of
the Closing Financial Statements. As used herein, "TAXES" mean any state,
local or foreign income, gross receipts, franchise, payroll, employment,
excise, withholding, unemployment, personal property, sales, use, value added,
alternative, estimated or other tax of any kind whatsoever, including any
interest, penalty or addition thereto.
(b) None of Verplast's Tax Returns have been audited or are currently
subject to an auditing procedure carried out by a governmental agency and
Verplast has not been notified of any deficiency or alleged deficiency relating
to any of the Taxes paid by it.
6.12 ASSETS GENERALLY. Annex 6.12 hereto lists all the fixed assets owned
by Verplast and includes the documentation relating to Verplast's real
properties.
14
Verplast owns all the assets indicated on the balance sheets of the Closing
Financial Statements (other than inventory which has been sold in the ordinary
course of business, prepaid expenses which have expired in the ordinary course
of business, accounts receivable which have been collected in the ordinary
course of business and equipment which has been replaced, exhausted or
abandoned in the ordinary course of business) free and clear of any mortgage,
pledge, lien, encumbrance or other security interest.
6.13 INTELLECTUAL PROPERTY.
(a) Verplast does not own any patents, trademarks, service marks,
trade names, copyrights and applications therefor. Verplast has the right to
use the "Vertenex" trademark pursuant to the trademark license agreement
attached hereto as Annex 6.13, and there are no patents, trademarks, service
marks, trade names, copyrights or other intellectual property rights, necessary
to conduct the business of Verplast as it is currently conducted. Neither the
Seller nor any other party shall be entitled to any right to file patent
applications for inventions, processes, technologies or know-how necessary to
conduct the business of Verplast as it is currently conducted. Except as
disclosed in Annex 6.13 hereto, Verplast is not subject to any obligation to pay
royalties or any other fees for the use of any third party intellectual
property rights.
(b) During the past 5 years Verplast did not interfere with, infringe,
misappropriate or otherwise conflict with any patent, trademark, service xxxx,
trade name, copyright, trade dress or any other proprietary right of any third
party which reasonably could be expected to have a material Adverse Effect and
Verplast has not been notified of any claim alleging such interference,
infringement, misappropriation or conflict.
6.14 MATERIAL CONTRACTS. In Annex 6.14 hereto are disclosed true, complete
and accurate copies of all material contracts, leases and agreements currently
in force to which Verplast is a party including, but not limited to:
(i) any agreement for the lease of real property;
(ii) any tenancy-rental agreement for real properties owned by
Verplast;
(iii) any agreement or amendment to such agreement under the terms of
which Verplast has created, incurred, assumed or guaranteed any liability for
borrowed money in excess of Lire 30.000.000 (thirty million) including, without
limitation, any term loan or other agreements with any bank or any other
financial institution;
(iv) any agreement under which Verplast has granted a lien, pledge,
security interest or other encumbrance upon any of its assets;
(v) any contract with external consultants for a liability exceeding
Lire 30.000.000 (thirty million) per year, including any bonus or deferred
payment (other than oral retainers of professionals which can be terminated
without notice);
15
(vi) any guaranty, suretyship, performance bond and/or contribution
agreements;
(vii) any material distribution, agency, marketing, licensing, sales
representative and/or dealership agreements;
(viii) any loans or advances to any third party, including, without
limitation, the shareholders, directors and officers of Verplast in excess of
Lire 30.000.000 (thirty million);
(ix) any collective bargaining agreement.
With respect to each material agreement and each license relating to
the Licensed Intellectual Property to which Verplast is a party, except as
otherwise disclosed in Annex 6.14: (i) such agreement is in full force and
effect and constitutes the legal, valid and binding obligation for Verplast and
the other parties thereto and it is enforceable in accordance with its terms,
(ii) to the best of the Seller's knowledge, such agreement will not be
terminated as a result of this Agreement or the consummation of the
transactions contemplated herein, (iii) Verplast is not in default in any
material respect under such agreement and no event has occurred which, with the
passing of time, would become a default, and (iv) no other party is in default
in any material respect under such agreement. No bonus or severance will become
due and payable under any existing agreement between Verplast and any of its
employees as a result of this Agreement or the consummation of the transactions
contemplated herein.
6.15 LITIGATION. Except as disclosed in Annex 6.15, Verplast is not (a)
subject to any outstanding injunction, judgment, order, decree or ruling or (b)
a party to or, to the best of the Seller's knowledge, threatened to be made a
party to, any action, suit, proceeding, hearing or investigation, of or before
any court, quasi-judicial agency, administrative agency or arbitrator
("LITIGATION"). Nor are there facts or circumstances which could be the basis
for Litigation and which, individually or in the aggregate, could have a
material Adverse Effect.
6.16 PRODUCT LIABILITY. No claims or demands have been made or, to the best
of the Seller's knowledge, could be made, against Verplast alleging injury to
individuals or properties as a result of the ownership, possession or use of
any product manufactured or sold by Verplast which, if successful, could have a
material Adverse Effect, individually or in the aggregate.
6.17 INSURANCE. A true complete and accurate list of all the insurance
policies of Verplast currently in force (including, but not limited to,
policies providing for casualty, liability and workers compensation coverage)
is attached as Annex 6.17 hereto. With respect to each such insurance policy:
(i) the policy is legal, valid, binding and in full force and effect and it is
enforceable in accordance with its terms, and (ii) neither the Insurer or
Verplast is in breach or default thereunder, including without limitation any
default with respect to the payment of premiums or the giving of notices.
16
6.18 COMPLIANCE WITH LAWS. Verplast always has complied with all applicable
laws, rules, regulations, ordinances and codes, whether domestic or foreign
("LAWS"), where the failure to so comply reasonably could be expected to have a
material Adverse Effect, and no notice has been received alleging
non-compliance with any Laws which remains uncured as of the date hereof.
6.19 LICENCES AND PERMITS. As disclosed in Annex 6.19, Verplast always has
obtained all licenses, permits and other authorizations the lack of which
reasonably could be expected to have a material Adverse Effect. All of such
licenses, permits and authorizations are in full force and effect and will
remain in full force and effect immediately after the Closing Date. No material
violation exists in respect of any such licence, permit or authorization. No
proceeding is pending, or, to the knowledge of the Seller, threatened to revoke
or limit any such license, permit or any other authorization.
6.20 ENVIRONMENTAL. Except as disclosed in Annex 6.20, Verplast is and
always has operated in strict compliance with the Environmental Laws (as
hereinafter defined) applicable to its business and/or properties where the
failure to do so could have a material Adverse Effect. Without prejudice to the
generality of the foregoing:
(i) no Hazardous Materials (as hereinafter defined), asbestos or
asbestos containing materials ("ACMS") (A) are, or have been, located in or
about any real properties owned or used by Verplast or any of its predecessors
or tenants, (B) have been released by Verplast or its predecessors or tenants
into the environment, or (C) have been discharged, treated, managed, recycled,
placed or disposed of by Verplast or its predecessors, tenants or anyone else,
at, on or under any real properties owned or used by Verplast or any of its
predecessors or tenants;
(ii) no Hazardous Materials or ACMs formerly located on the real
properties owned or used by Verplast or its predecessors or tenants have been
disposed of at any off-site waste disposal facility;
(iii) no portion of any real properties owned or used by Verplast or
rented, leased by it to third parties is being used, or has been used, for the
disposal, storage, recycling, treatment, processing or any other handling
whatsoever of Hazardous Materials and no portion of any real properties owned
or used by Verplast's predecessors or tenants is being used or has been used
for the disposal, storage, recycling, treatment, processing or any other
handling whatsoever of Hazardous Materials;
(iv) no storage tanks (whether above ground or underground) are
located within real properties currently or previously owned or used by
Verplast or its predecessors;
(v) Verplast has not disposed of, and none of its predecessors has
ever disposed of, any substance (other than human sewage) into the plumbing or
septic tank which Verplast owns or uses or which Verplast or any of its
predecessors has owned or used;
17
(vi) no investigation, administrative order or notice, consent, order
and agreement, litigation, settlement or environmental claim or lien with
respect to Hazardous Materials or ACMs is in existence or, to the Seller's
knowledge, proposed or threatened with respect to any real properties now or
previously owned or used by Verplast or its predecessors or tenants, or with
respect to any off-site waste disposal where the wastes of Verplast or of any
of its predecessors or tenants have been disposed; and
(vii) Verplast has not been notified of any summons, citation or
written notice from any person, entity or governmental agency whatsoever
concerning any violation or alleged violation of Environmental Laws.
The following terms shall have the following meanings for purposes of
this Section 6.20:
(a) the term "ENVIRONMENTAL LAWS" shall mean any and all domestic and
European Union laws, regulations, directives and any other requirement
concerning air pollution control, water pollution control, resource
conservation and recovery, solid waste disposal, toxic substance control,
Hazardous Materials or the protection of the environment or the safeguard of
public health; and
(b) the term "HAZARDOUS MATERIAL(S)" shall mean any hazardous, toxic
or dangerous substance, pollutant, contaminant, waste and/or any other material
regulated under Environmental Laws; ACMs; oil and petroleum products and
natural gas, natural gas liquids, liquified natural gas, and synthetic gas
usable for fuel; chemicals subject to Environmental Laws; and industrial
process and pollution control wastes whether or not hazardous within the
meaning of the applicable laws.
6.21 EMPLOYEES - SALES AGENTS - OTHER SELF-EMPLOYED PERSONS.
(i) All the employment contracts to which Verplast is a party are in
compliance with all applicable laws and regulations and Collective Bargaining
Agreements (including Company Agreements). All obligations deriving from the
applicable Collective Bargaining Agreements in force have been duly fulfilled.
There are no economic or legal conditions which are not expressed in the above
employment contracts or Collective Bargaining Agreements (in particular, but
without limitation, bonus arrangements, severance arrangements and fringe
benefits). Annex 6.21 (a) hereto lists all the employees of Verplast and
truly, completely and accurately summarizes their current position, TFR and
applicable benefits, if any.
(ii) Verplast always has been and is currently in full compliance
with all employment, agency and social security laws and regulations as well as
with any laws and regulations concerning accident prevention, safety and
hygiene at work, and to this regard, except as disclosed in Annex 6.21 (b),
Verplast has not been notified nor is it aware of any warnings, assessments or
pending proceedings. No allegation, charge, claim or complaint of age,
disability, sex or race discrimination or similar charge, claim or request of
recognition of the
18
employee status by a self-employed person or any other person not included in
the payroll of Verplast has been made to Verplast or in any way threatened
against it. There is no reasonable ground upon which any such allegation,
charge, claim, complaint or request can be made.
(iii) All social security contributions due with respect to the
employees and the sales agents have always been regularly paid by Verplast and
the TFR and other indemnities due to the employees and sales agents have been
regularly paid or set aside and regularly accrued in the respective Statutory
Financial Statements, as applicable, and, as of the Date of the Closing
Financial Statements, there are no amounts due other than as reflected in the
Closing Financial Statements.
6.22 EMPLOYEE BENEFIT PLANS AND POLICIES. There are no employee benefit
plans which Verplast should have maintained or contributed to, or has
maintained or contributed to for the three years preceding the date hereof or
at any time during this period, which were mandatory in accordance with
Collective Bargaining Agreements or with any other applicable laws and/or
regulations and/or other sources.
6.23 CUSTOMERS AND SUPPLIERS. Verplast has not been notified, nor is the
Seller aware, that any of its customers and/or suppliers intend to cease doing
business with it or to reduce the amount of goods or services purchased and/or
sold on a regular on-going basis from or to it, the cessation or reduction of
which could have a material Adverse Effect. As far as supplies are concerned,
Verplast has not experienced in the past 12 months any material shortage of
supplies or any price increase in such supplies (unless due to significant
variation of the exchange rate between the Italian Lira and the other major
currencies) or changes in terms of dealing with any of its customers or
suppliers, which can be reasonably expected to have a material Adverse Effect.
6.24 POWERS OF ATTORNEY. There are no outstanding powers of attorney
granted by Verplast or its Directors to any other person or entity.
6.25 BROKERAGE FEE Neither the Seller nor Verplast has engaged any
investment banker, finder, broker or similar agent with respect to the
transactions contemplated by this Agreement which could give rise to any
brokerage fee, finder's fee, commission or similar liability on the part of
Verplast or the Purchaser.
6.26 FULL DISCLOSURE. All the representations and warranties of the Seller
contained in this Agreement, the Annexes and the documents executed and
delivered to the Purchaser pursuant hereto are true, complete and accurate and
do not omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
6.27 DUE INQUIRY BY THE SELLER. The representations and warranties of the
Seller contained in this Agreement which are limited by the Seller's knowledge
or awareness, shall require the Seller to conduct a due inquiry to ascertain
the
19
truth and validity of any such representation and warranty given under this
Agreement.
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby acknowledges and agrees that each of the following
representations and warranties has been a material inducement to the Seller's
decision to enter into this Agreement:
7.1 ORGANIZATION AND CORPORATE POWER. ICO and the Designated Purchaser are
corporations duly organized, validly existing and in good standing under the
laws of their own jurisdiction.
7.2 AUTHORIZATION. ICO and the Designated Purchaser have full corporate
power and authority to enter into this Agreement and to perform their
respective obligations hereunder. The entering into this Agreement by ICO and
the Designated Purchaser and the performance of their obligations hereunder
have and shall have been, as applicable, duly authorized by resolutions duly
adopted by their Boards of Directors.
7.3 BINDING EFFECT. This Agreement has been duly executed by ICO and
constitutes the legal, valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles. Except as
contemplated by this Agreement, neither ICO nor the Designated Purchaser is, or
shall be, required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
7.4 NON-CONTRAVENTION. Neither the entering into this Agreement by ICO and
the Designated Purchaser nor the consummation of the transactions contemplated
hereby will (a) violate any statute, regulation, rule, judgment, order, decree,
stipulation or injunction to which ICO or the Designated Purchaser is, or shall
be, subject, or (b) conflict with or result in a breach of the provisions of
the Certificate of Incorporation or By-laws of ICO or the Designated Purchaser,
as amended to date.
7.5 BROKERAGE FEE. Neither the Purchaser nor any member of the ICO Group
has engaged any investment banker, finder, broker or similar agent with respect
to the transactions contemplated by this Agreement which could give rise to any
brokerage fee, finder's fee, commission or similar liability on the part of the
Seller.
7.6 FULL DISCLOSURE. All the representations and warranties of the
Purchaser contained in this Agreement, the Annexes and the documents executed
and delivered to the Seller pursuant hereto are true, complete and accurate and
do not omit to state a material fact necessary in order to make the statements
20
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
8. OTHER AGREEMENTS AND COVENANTS
8.1 NON-COMPETE AGREEMENT. The Seller hereby agrees and undertakes that
for the period from the Closing Date to the fifth anniversary of the Closing
Date, it will not, without the prior written consent of the Purchaser, directly
or indirectly, as a shareholder, partner, director, officer, employee, agent,
consultant or otherwise, (a) invest or engage in any business or other activity
which competes with any activity or business of Verplast, ICO or any company
of the ICO Group (cumulatively, the "COMPANIES"), as conducted at the Closing
Date, or accept employment with or render services to a competitor of the
Companies; or (b) engage, suggest or assist in or influence the engagement or
hiring by any competing organization of any salesman, distributor, contractor,
employee or source of the Companies, or otherwise cause or encourage any
person, firm or corporation having a business relationship with the Companies
including, without limitation, any customer or supplier of any of the
Companies, to sever such relationship with the Companies; provided, however,
that the obligation of the Seller contemplated by in this Section 8.1 (i) shall
not restrict the Seller from owning up to 5% of the capital stock of a competing
publicly traded company. The restrictions contained in this paragraph 8.1 (i)
shall extend to Europe and the United States.
8.2 DEBENTURES. The Purchaser agrees and covenants that, after the Closing
Date and no later than September 30, 1997, it shall purchase from the then
current owners all the debentures issued and outstanding by Verplast at their
nominal value plus interest accrued on the redemption date, unless on or prior
to September 30, 1997 the Purchaser has caused Verplast either (a) to redeem
all the debentures issued and still outstanding by paying to the then current
debenture holders the capital and interest accrued to date or (b) to release a
guarantee on Verplast's assets in favor of the debenture holders. Should
Verplast decide to issue the guarantee pursuant to (b) above, the Seller shall
endeavour to cause the debenture holders to consent at any time to the
redemption of the debentures issued and still outstanding in the event Verplast
will be party to a merger procedure.
8.3 DISCHARGE OF CURRENT DIRECTORS. As soon as practicable, the Purchaser
shall cause Verplast and XXX.XX to hold shareholders' meetings to resolve upon
the full release of the resigning members of their respective Boards of
Directors of Verplast from the resigning Directors' potential liabilities in
respect of Verplast and XXX.XX, respectively, and their respective shareholders
by virtue of the offices held by the resigning Directors.
9. INDEMNIFICATION BY THE SELLER
9.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, the Seller
shall indemnify and hold the Purchaser harmless against and from any and all
21
costs, expenses, losses, damages and liabilities (including, without
limitation, reasonable attorneys' fees) (the "LOSSES" and each a "LOSS")
incurred by the Purchaser with respect to or in connection with:
(a) any breach of any of the representations and warranties of the
Seller under this Agreement; and
(b) additional Taxes resulting from any inquiry, adjustment or
assessment of a deficiency by a governmental agency or authority concerning
Verplast's Tax Returns for any of the fiscal periods open to verification and
ending on or prior to the Closing Date; and
(c) the reclassification or recategorization by a governmental agency
or authority of any item of expense (including amortization of assets), if such
expense was deducted in any fiscal period open to verification and ending on or
prior to the Closing Date or such asset was acquired during any fiscal period
open to verification and ending on or prior to the Closing Date; and
(d) any breach of the Environmental Laws or any other facts or
circumstances contemplated by Section 6.20 hereof or failure to obtain any
licence, authorization, permit or other measure contemplated by Section 6.19
hereof; and
(e) any claims made by any self-employed persons or other persons not
included in the payroll of Verplast and/or by social security agencies on the
grounds of the employment nature of the relationship with such persons based on
circumstances existing prior to the Closing Date.
9.2 LIMITATIONS TO INDEMNIFICATION. The Purchaser's right to
indemnification shall be subject to the following limitations:
(i) in respect of Loss(es) suffered under Section 9.1 (a) above, the
Purchaser's right to indemnification shall lapse if no notice of an
Indemnification Claim shall have been given to the Seller on or before December
31, 1999, except that for Loss(es) suffered for breach of Section 6.21 of this
Agreement, in which case the applicable statutory limitation period (periodo di
prescrizione) shall apply;
(ii) in respect of Loss(es) suffered under Section 9.1 (b), (c), (d)
and (e) above, the Purchaser's right to indemnification shall lapse if no
Indemnification Claim is notified to the Seller on or before the date in which
the applicable statutory limitation period (periodo di prescrizione) will
lapse;
9.3 INDEMNIFICATION PROCEDURE. In order for the Purchaser to be
indemnified and held harmless against and from Losses under this Section 9
other than Losses arising out of Third Party Claims (as hereinafter defined)
under Section 9.4:
22
(a) the Purchaser shall give written notice to the Seller of any
claim (the "INDEMNIFICATION CLAIM"), which notice shall set forth a reasonably
detailed statement of the Indemnification Claim and the cost, expense, loss,
damage and liability the Purchaser and/or Verplast incurred and/or expects to
incur by reason thereof;
(b) such indemnification payment shall be made on the later of (i) the
expiration of thirty (30) days from the date of such notice (the "NOTICE
PERIOD") or, (ii) if such claim is contested as hereinafter provided, within 10
days from the date in which the dispute is resolved in accordance with this
Section 9.3, or (iii) within 10 days from the date in which such
Indemnification Claim becomes liquidated in amount; and
(c) if, prior to the expiration of the Notice of Period, the Seller
notifies the Purchaser in writing of his intention to dispute the
Indemnification Claim, and if such dispute is not resolved within thirty (30)
days after the expiration of the Notice Period (the "RESOLUTION PERIOD"), then
such dispute shall be resolved by a committee of three arbitrators who shall be
appointed within 60 days of the expiration of the Resolution Period and shall
act in accordance with Section 10.10 below. The parties shall cooperate and
diligently pursue the arbitration of such Indemnification Claim in order for a
decision to be made by the arbitrators within 45 days after their appointment.
9.4 INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The provisions of this
Section shall apply to any Losses which arise or may arise as a result of a
claim made by a third party and any related Litigation or similar process or
proceeding ("THIRD PARTY CLAIM").
(a) the Purchaser or the Designated Purchaser shall give notice to the
Seller promptly after the Purchaser or the Designated Purchaser becomes aware
of any Third Party Claim, which notice shall include a copy of any letter,
complaint or similar writing received by the Purchaser, Designated Purchaser
and/or Verplast setting out such Third Party Claim or a written description of
any oral notice received by such party; provided, however, that any delay in
providing such notification shall not constitute a bar or defense to indemnify
except to the extent the Seller has been prejudiced thereby.
(b) Within ten (20) days from the date of such notice to the Seller,
the Seller shall notify the Purchaser in writing if he intends to dispute that
such Third Party Claim constitutes or will constitute a Loss subject to
indemnification hereunder (the "DISPUTE NOTICE"). If the Dispute Notice is
given within said twenty (20) day period, the issue of whether such Third Party
Claim constitutes or will constitute a Loss subject to indemnification
hereunder may be submitted to arbitration in accordance with Section 10.10
hereof, unless an agreement is subsequently reached between the Parties.
(c) For the purpose of this Section 9.4, in the case of a defence of a
Third Party Claim: (i) the Purchaser shall have the right to defend such Third
Party Claim and the costs of such defense, including, without limitation, the
fees and expenses of counsel and other professionals, shall be deemed to be
23
Losses, (ii) the Seller shall have the right to participate in the defense of
the Third Party Claim at its own costs and expenses provided that such right is
not exercised in a way which could prejudice the Purchaser's defense of the
Third Party Claim, and (iii) the Purchaser shall consult with the Seller prior
to reaching a settlement of the Third Party Claim, if any.
(d) In order for the Seller to exercise the right to participate in
the defense of a Third Party Claim, the Seller shall give notice to the
Purchaser within twenty (20) days after receipt of the notice of the Third
Party Claim as to which no Dispute Notice was given. If the Seller fails to
notify the Purchaser within such period, the Seller shall be deemed to have
waived his right to defend such Third Party Claim and the Purchaser shall have
the right to defend such Third Party Claim, and its costs and expense,
including without limitation the fees and expenses of counsel and other
professionals shall be deemed to be Losses.
10. MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement, the Annexes hereto and the documents
executed and delivered pursuant hereto or simultaneously herewith constitute
the entire agreement between the parties in respect to the subject matter
hereof and supersede all prior written and oral agreements and arrangements
between the parties hereto with regard to the subject matter hereof.
10.2 AMENDMENTS. Any amendment to this Agreement shall be valid and binding
upon the parties only if made in writing and signed by the Seller and the
Purchaser.
10.3 COSTS. All the costs relating to the transfer of the Shares to the
Purchaser, including stamp duties, bank fees and registration tax, if any,
shall be borne by the Purchaser (but not capital gains tax which will be borne
by the Seller).
10.4 EFFECTS. The provisions of this Agreement shall be legally binding
upon the parties and their respective heirs, successors and assigns.
10.5 RIGHTS AND REMEDIES. The exercise or failure to exercise by any party
any right or remedy arising out of this Agreement shall not constitute a waiver
of that right or remedy or of any other rights or remedies.
10.6 NOTICES. All notices, demands or requests provided for or permitted to be
given pursuant to this Agreement must be in writing. All notices, demands and
requests shall be deemed to have been properly served if given by telefax
confirmed by registered post, registered post or a reputable overnight carrier,
addressed as follows:
24
If to the Seller: DARC'S S.p.A
Xxxxxx Xxx Xxxxxx 00
Xxxx, Xxxxxx
With a copy to: Avv. Xxxxxxxxx Xxxxxxx
Xxx X. Xxxxxxx 00
00000 Xxxxxx, Xxxxxx
Facsimile No. 0039 2 867391
If to the Purchaser: ICO, Inc.
11490 Westheimer, Xxxxxxx, Xxxxx
00000 XXX
Attn: General Counsel
Facsimile No.: 001 281 721 4222
With copies to: Xxxxxx & Xxxxx
Xxx Xxxxx Xxxxxxxxx 00
00000 Xxxxx Xxxxx
Facsimile No.: 86464548
and to
Xx Xxxxxxxxx Xxxxxxxx
Xxxxxxxx 0
0000 XX Xxxxxxxxx, Xxxxxxxxxxx
Facsimile No.: 0031 10 241 1717
Each notice, demand or request shall be effective upon receipt of
telefax or registered post or upon arrival to the recipient's address by
delivery of a reputable overnight carrier in accordance with the foregoing.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall not adversely impact the
effectiveness of any such notice, demand or request. Any addressee may change
its address for notices hereunder by giving written notice in accordance with
this Section.
10.7 INTERPRETATION. The masculine, feminine or neuter pronouns used herein
shall be interpreted without regard to gender, and the use of the singular or
plural shall be deemed to include the other whenever the context so requires.
The headings in this Agreement are inserted for convenience of reference only
and shall not be a part of or control or affect the meaning of this Agreement.
Unless otherwise expressly stated herein, all references herein to sections and
paragraphs are to Sections and paragraphs in this Agreement and all references
herein to Annexes are to Annexes to this Agreement.
25
10.8 SCHEDULES. The Annexes referred to herein, and attached to this Agreement,
are incorporated herein by reference as if fully set forth in the text hereof.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with Italian law.
10.10 ARBITRATION. Any disputes arising with respect to or in connection with
this Agreement between the Purchaser and/or Designated Purchaser and the
Seller, without having regard to the number of parties to the procedure, shall
be finally decided by a panel of three arbitrators to be appointed by the
Camera Arbitrale Nazionale ed Internazionale di Milano in accordance with its
Rules of Arbitration. The Arbitrators shall be fluent in both Italian and
English languages both written and spoken and either or both of the two
languages can be used during the procedure. The Arbitrators shall be judging
at law and in accordance with the Italian Civil Code of Procedure.
10.11 BUSINESS DAYS. If any date determined pursuant to this Agreement on which
any obligation of the parties is to be fulfilled falls on a day other than a
Business Day, such date shall be automatically postponed to the first
subsequent Business Day.
10.12 SURVIVAL. The representations and warranties of the parties contained in
this Agreement, the provisions of Section 9 and any other provision of this
Agreement which is expressly stated or, by its nature, is intended to remain
valid after the Closing, shall survive such Closing.
THE PURCHASER THE SELLER
By: /s/ XX X. XXXXXXXXX By: /s/ LUCIANO MEZZEDIMI
---------------------- ------------------------
Name: Xx X. Xxxxxxxxx Name: Luciano Mezzedimi
Title: Chairman Title: Chairman
26
(1) ICO, INC. (ICO)
and
(2) XX XXXXXXXXX XXXXXXX
-------------------------------------------
STOCK SALE & PURCHASE AGREEMENT
-------------------------------------------
27
THIS AGREEMENT is made on the 21st day of July, 1997 (hereinafter "Execution
Date") BY AND BETWEEN:-
1. ICO, Inc., a Texas corporation having its principal offices at 00000
Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 XXX ("ICO" or the "PURCHASER")
- on one side -
and
2. Xx Xxxxxxxxx Xxxxxxx, born in Subiaco Roma on April 22, 1938, resident
at Milano, Xxx xxxxx Xxxxxxxx 0, tax-payer No. PNZFNC38D22I992;
(the "SELLER")
- on the other side -
WITNESSETH:
A. Whereas, the Seller is the beneficial and record owner of 950.000 ordinary
shares having the nominal value of 1.000 Lira each (hereinafter the "SHARES")
and representing 25% of the entire issued and outstanding capital of Verplast
S.p.A, an Italian company having its registered address at Verolanuova, Loc.
Breda Libera ("VERPLAST").
B. Whereas, ICO is willing to purchase from the Seller, either directly or
through a designated party, and the Seller is willing to sell to ICO or a party
designated by ICO, the Shares at a set price.
C. Whereas, ICO is willing to purchase additional shares in Verplast pursuant
to separate agreements to be entered into with the other shareholders of
Verplast so as to increase ICO's equity interest in Verplast.
E. Whereas, subject to the terms of this agreement, the Purchaser has requested
the Seller (as partial consideration for the Purchase Price) to continue to
cooperate with Verplast on the basis of the consultancy agreement attached
hereto.
NOW, THEREFORE, the Purchaser and the Seller hereby agree as follows:
1. DEFINITIONS
In addition to the other terms defined in this Agreement, the
following terms and expressions shall have the following meanings as used
herein:
1.1 "AGREEMENT": this stock sale and purchase agreement.
28
1.2 "ADVERSE EFFECT": a prejudicial effect on the assets, liabilities,
financial condition, results of operations or future prospects of Verplast.
1.3 "BUSINESS DAY": any day other than a holiday on which banks are open
to the public in Milan for the carrying out of their ordinary business.
1.4 "CLOSING": the transfer to the Purchaser or the Designated Purchaser
of any and all rights, title and interest in and to the Shares, the payment by
the Purchaser or the Designated Purchaser of the Purchase Price (as hereinafter
defined) due to the Seller on the Closing Date (as hereinafter defined) and,
more generally, the performance of all the obligations which must be fulfilled
by the Parties (as hereinafter defined) on the Closing Date pursuant to Section
5 and subject to the conditions precedent set forth in Section 4 of this
Agreement.
1.5 "CLOSING DATE": the date of the Closing.
1.6 "ICO GROUP": ICO and any company directly or indirectly controlled by,
or affiliated with, ICO.
2. SALE AND PURCHASE OF THE SHARES
2.1 SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement, on the Closing Date the Seller shall sell and transfer to the
Purchaser and the Purchaser shall purchase from the Seller, free and marketable
title to the Shares representing, in the aggregate, 25% (twenty five per cent)
of the issued and outstanding share capital of Verplast, free and clear from
any and all lien, charge, encumbrance or claim for the price set forth in
Section 3.1 hereof:
2.2 DESIGNATED PURCHASER. ICO shall have the right to designate a third
party (the "DESIGNATED PURCHASER") to take over all the rights and to assume
all the liabilities of the Purchaser under this Agreement pursuant to Article
1401 et seq. of the Italian Civil Code, by giving notice thereof to the Seller
on or prior to the scheduled Closing Date, provided that (i) the Designated
Purchaser shall in any event be a company of the ICO Group, and (ii) ICO shall
remain jointly and severally liable with the Designated Purchaser for the
performance of all obligations and covenants of the Purchaser under this
Agreement.
3. PURCHASE PRICE
3.1 PRICE FOR THE SHARES. Subject to the terms and conditions set forth in
this Agreement, the price payable by ICO to the Seller for the purchase of the
Shares (hereinafter, the "PURCHASE PRICE") it is hereby irrevocably set at Lire
7.875.000.000 (seven billion eight hundred seventy five million).
3.2 REFERENCE FINANCIAL STATEMENTS. The parties further acknowledge that
this transaction has been based upon the financial statements of Verplast as of
December 31, 1996 (hereinafter the "1996 STATUTORY FINANCIAL STATEMENTS")
29
as updated on June 30, 1996 (hereinafter the "CLOSING FINANCIAL STATEMENTS")
attached hereto as, respectively, Annex 3.2 (a) and Annex 3.2 (b).
3.3 PAYMENT TERMS AND CONDITIONS. Subject to the terms and conditions of
this Agreement, the payment of the Purchase Price to the Seller shall be made
on the Closing Date in Italian Lire in immediately available funds wire
transferred to any such bank account(s) notified to the Purchaser by the Seller
prior to the Closing Date.
4. CONDITIONS PRECEDENT TO THE CLOSING
The obligations of each of the parties hereto to consummate the transactions
which are contemplated by this Agreement to occur at the Closing shall be
subject to the fulfilment or the waiver of the conditions set out in this
Section 4 below on or prior the Closing Date.
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES. On or prior
to the Closing Date, there shall be no action or proceeding initiated by any
governmental agency or by any other local, regional, national or supranational
authority or by any third party which seeks to restrain, prohibit or invalidate
this Agreement or the transactions contemplated herein or to recover
substantial damages or other substantial relief with respect thereto, and no
injunction or restraining order shall have been issued by any court, whether
domestic or foreign, restraining, prohibiting or invalidating this Agreement or
the transactions contemplated therein.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER:
(a) the Seller shall have duly performed all his material obligations
which, pursuant to this Agreement, are required to be performed prior to the
Closing;
(b) without prejudice to the generality of (a) above:
(i) prior to the Closing, each of the other shareholders of Verplast
shall have waived in writing in favor of the Purchaser their rights of first
refusal in respect of the Shares under Section 9 of Verplast's By-laws;
(ii) prior to the Closing, each member of the Board of Directors of
Verplast shall deliver an irrevocable resignation letter as Director of
Verplast immediately effective in which they declare that they have nothing
further to claim from Verplast on account of the offices held; and
(iii) prior to the Closing, each member of the Board of Statutory
Auditors of Verplast (including the "Sindaci Supplenti") shall have delivered
an irrevocable resignation letter as Statutory Auditor immediately effective;
and
(iv) prior to the Closing, an Ordinary Shareholders' meeting of
Verplast shall be held and validly resolve (i) to elect a new Board of
Directors of Verplast consisting of the following individuals:
30
Xx. Xxxxx X. Xxxxxxxxx (Chairman)
Drs. Xxxxxxxxx Xxxxxxxx (Managing Director)
Xx Xxxxx X. Xxxxxxxx, Xx.
and (ii) to elect Messrs Xxxxx Xxxxxxxx (Chairman), Paolo Tognolo (Statutory
Auditor), Xxxxxxx Xxxxxxx (Statutory Auditor), Xxxxxx Xxxx (Supplente) and
Piermauro Carabellese (Supplente) as members of the Board of Statutory Auditors
replacing the resigning members.
4.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER:
(a) the Purchaser shall have duly performed all its material
obligations which, pursuant to this Agreement, are required to be performed
prior to the Closing; and
(b) the Purchaser or the Designated Purchaser shall have given to the
Seller adequate evidence of the authority of the officers of the Purchaser
and/or Designated Purchaser who shall carry on the transactions contemplated in
this Agreement.
5. CLOSING
5.1 THE CLOSING. Subject to the satisfaction or waiver of the conditions
precedent contemplated by Section 4 hereof, the Closing shall take place at the
offices of CAB Banca Lombarda, Via Xxxxxx Xxxxxxx 10, Milan (or such other
place as may be agreed upon by the Seller and the Purchaser before the
Closing). At the Closing the parties hereto shall comply with their respective
obligations as set out in this Section 5.1 below and shall take any other
action and/or sign any other document which may be required by law or this
Agreement:
5.1.1 The Seller shall:
(i) duly endorse and transfer the Shares to the Purchaser or the
Designated Purchaser and execute the "Fissato Bollato";
(ii) execute a consultancy agreement with Verplast in the form of
Annex 5.1 (a) hereto;
(iii) deliver to the Purchaser an irrevocable first request Bank
guarantee from CAB Banca Lombarda in the form of Annex 5.1 (b) hereto in the
sum of Lire 250.000.000 (two hundred and fifty million) lapsing on December 31,
1999.
(iv) execute and deliver to the Purchaser any such other documents as
are contemplated by this Agreement to be executed and delivered to the
Purchaser at the Closing or as may be reasonably requested by the Purchaser in
order to complete the Closing transactions or in connection therewith.
(v) deliver to the Purchaser a certificate evidencing the
effectiveness of the "regime di separazione dei beni" with his spouse.
31
5.1.2 The Purchaser or the Designated Purchaser shall:
(i) pay the Seller the Purchase Price;
(ii) execute the "Fissato Bollato";
(iii) enter into a consultancy agreement with the Seller in the form
of Annex 5.1 (a) hereto;
(iv) execute and deliver to the Seller any such other documents as are
contemplated by this Agreement to be executed and delivered to the Seller at
the Closing or as may be reasonably requested by the Seller in order to
complete the Closing transactions or in connection therewith.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby acknowledges and agrees that each of the following
representations and warranties has been an inducement to the Purchaser's
decision to enter into this Agreement:
6.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Verplast is duly
organized, validly existing and fully qualified to carry on its business under
the laws of the jurisdiction in which it is incorporated. Verplast has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
6.2 AUTHORIZATION. The Seller has full right, power and authority to enter
into this Agreement and to consummate the transactions contemplated herein. No
consent of, notice to, or filing with, any lender, trustee, security holder,
spouse or any other person is required for the Seller to enter into this
Agreement and to consummate the transactions contemplated herein. The Seller
has entered into the "regime di separazione dei beni" with his spouse.
6.3 BINDING EFFECT. This Agreement has been duly executed by the Seller
and constitutes the legal, valid and binding obligations of the Seller,
enforceable against it in accordance with its terms.
6.4 CAPITALIZATION OF VERPLAST AND DEBENTURES. The issued and outstanding
capital of Verplast amounts to Lire 3.800.000.000 (three billion eight hundred
million) and is divided into 3.800.000 shares as indicated in the shareholders'
book. All shares are fully paid-up and nonassessable, free and clear of any
pledges, liens, claims, security interests, encumbrances and third party's
rights. None of the shares has been issued or transferred in violation of any
preemptive, preferential or contractual right. As disclosed in Annex 6.4
hereto, Verplast has issued and has outstanding awaiting redemption debentures
in the sum of Lire 3.000.000.000 (three billion).
32
6.5 OWNERSHIP OF THE SHARES. Verplast shareholders' book provides a true,
correct and complete record of the current beneficial and record owners of the
shares. There are no authorized or outstanding options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments to which the Seller and/or Verplast are a party or
which are binding on them providing for the issuance, disposition or
acquisition of any of the Shares.
6.6 SUBSIDIARIES. Verplast owns a quota representing 75% of the issued and
outstanding capital of XXX.XX S.r.l. (hereinafter "XXX.XX QUOTA") a company
having its registered address at Xxx Xxxxxx 00, Xxxxxxxxxx (XX) (hereinafter
"XXX.XX"). The XXX.XX Quota is free and clear of any pledges, liens, claims,
security interests, encumbrances and third party's rights. The XXX.XX Quota has
not been issued or transferred in violation of any preemptive, preferential or
contractual right. As evidenced in the shareholders' agreement included in
Annex 6.14 hereto there are outstanding call and put options in favor of
Verplast to acquire additional quotas in XXX.XX up to 100% of the issued and
outstanding capital of XXX.XX from the current quotaholders of XXX.XX.
6.7 CORPORATE RECORDS AND ACTION. The copies of the minute books of
Verplast are true, complete and accurate. All corporate action which has been
taken by any management body of Verplast and which is to be recorded in minute
books under the applicable law is fairly and accurately summarized in all
material respects in the minute books of Verplast. The extracts of the
shareholders' book of Verplast disclosed in Annex 6.7 hereto are true,
complete and accurate. All issuances, cancellations, transfers and exchanges
of shares of the capital of Verplast are duly recorded in its shareholders'
book.
6.8 FINANCIAL STATEMENTS. The statutory financial statements of Verplast
for the last 5 (five) years (hereinafter collectively referred as to the
"STATUTORY FINANCIAL STATEMENTS") as well as the Closing Financial Statements
and the financial statements for XXX.XX as of December 31, 1996 (hereinafter
the "XXX.XX FINANCIAL STATEMENTS", attached hereto as Annex 6.8), (a) have,
been prepared from the books and records of Verplast and/or XXX.XX in
accordance with local generally accepted accounting principles applied on a
consistent basis, and (b) fairly present the financial condition and the
results of operations of Verplast and/or XXX.XX for the period covered by said
financial statements.
6.9 UNDISCLOSED LIABILITIES. Verplast has no liability (whether known or
unknown, absolute or contingent, liquidated or unliquidated and whether due or
to become due), including without limitation any liability for Taxes (as
hereinafter defined) or undeductible expenses, except for (a) liabilities
indicated in the balance sheet of Verplast included in the Statutory Financial
Statements and the Closing Financial Statements and (b) liabilities incurred
after the reference date of said Closing Financial Statements in the ordinary
course of business and in accordance with past practices and (c) liabilities
for income taxes in respect of income earned in 1997. Verplast is neither
liable upon nor
33
has guaranteed any debt or obligation of any other person or entity, including
its Directors and shareholders.
6.10 SUBSEQUENT EVENTS. Since July 1st, 1997 there have not been:
(a) any events which, individually or in the aggregate, had or could
have a material Adverse Effect, except to the extent that such Adverse Effect
is a consequence of the transactions contemplated by this Agreement or the
announcement thereof;
(b) any debts incurred as a consequence of money borrowed by Verplast
other than debts incurred in the ordinary course of business or any lien or
security interest granted by Verplast;
(c) any sale of any of Verplast's assets, other than sales of
inventory in the ordinary course of business and sales of equipment made in the
ordinary course of business due to the replacement or abandonment thereof;
(d) any capital expenditures paid, incurred or committed to Verplast,
other than capital expenditures incurred in the ordinary course of business
which do not exceed Lire 100.000.000 (hundred million) for any individual item
or group of related items;
(e) any dividend, payment or other distribution with respect to any of
the Shares or any payment made or benefit granted, under whatever forms and to
any title, by Verplast to any of its shareholders or to any party connected
with its shareholders;
(f) any loan to or investment in, or acquisition of any securities or
assets of any other person or entity, other than purchase of inventory and
supplies in the ordinary course of business;
(g) any increase in the rate of compensation or material increase in
the benefits payable or to become payable to any of the Verplast's Directors,
officers or employees (other than raises made in the ordinary course of
business to employees who are not directors or officers provided that such
raise to any such employee shall not exceed 10% of the base compensation of
such employee in effect at the date of execution of this Agreement or unless
such raises are due under applicable labor laws and regulations or Collective
Bargaining Agreements) or any material change to any of the terms of employment
of any of Verplast's Directors, officers or employees.
6.11 TAXES.
(a) Verplast has filed all returns relating to taxes which Verplast
was required to file since 1989 (hereinafter jointly referred as the "TAX
RETURNS"). All Taxes payable by Verplast have been paid and Verplast has no
liability or obligation with regard to Taxes for any period prior to the
Closing Date, except for taxes not yet due; accruals for Taxes not yet due
fully reflect obligations of
34
Verplast for Taxes incurred through the date of the Closing Financial
Statements. As used herein, "TAXES" mean any state, local or foreign income,
gross receipts, franchise, payroll, employment, excise, withholding,
unemployment, personal property, sales, use, value added, alternative,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto.
(b) None of Verplast's Tax Returns have been audited or are currently
subject to an auditing procedure carried out by a governmental agency and
Verplast has not been notified of any deficiency or alleged deficiency relating
to any of the Taxes paid by it.
6.12 ASSETS GENERALLY. Annex 6.12 hereto lists all the fixed assets owned
by Verplast and includes the documentation relating to Verplast's real
properties. Verplast owns all the assets indicated on the balance sheets of
the Closing Financial Statements (other than inventory which has been sold in
the ordinary course of business, prepaid expenses which have expired in the
ordinary course of business, accounts receivable which have been collected in
the ordinary course of business and equipment which has been replaced,
exhausted or abandoned in the ordinary course of business) free and clear of
any mortgage, pledge, lien, encumbrance or other security interest.
6.13 INTELLECTUAL PROPERTY.
(a) Verplast does not own any patents, trademarks, service marks,
trade names, copyrights and applications therefor. Verplast has the right to
use the "Vertenex" trademark pursuant to the trademark license agreement
attached hereto as Annex 6.13, and there are no patents, trademarks, service
marks, trade names, copyrights or other intellectual property rights, necessary
to conduct the business of Verplast as it is currently conducted. Neither the
Seller nor any other party shall be entitled to any right to file patent
applications for inventions, processes, technologies or know-how necessary to
conduct the business of Verplast as it is currently conducted. Except as
dislosed in Annex 6.13 hereto, Verplast is not subject to any obligation to pay
royalties or any other fees for the use of any third party intellectual
property rights.
(b) During the past 5 years Verplast did not interfere with, infringe,
misappropriate or otherwise conflict with any patent, trademark, service xxxx,
trade name, copyright, trade dress or any other proprietary right of any third
party which reasonablycould be expected to have a material Adverse Effect and
Verplast has not been notified of any claim alleging such interference,
infringement, misappropriation or conflict.
6.14 MATERIAL CONTRACTS. In Annex 6.14 hereto are disclosed true, complete
and accurate copies of all material contracts, leases and agreements currently
in force to which Verplast is a party including, but not limited to:
(i) any agreement for the lease of real property;
(ii) any tenancy-rental agreement for real properties owned by
Verplast;
35
(iii) any agreement or amendment to such agreement under the terms of
which Verplast has created, incurred, assumed or guaranteed any liability for
borrowed money in excess of Lire 30.000.000 (thirty million) including, without
limitation, any term loan or other agreements with any bank or any other
financial institution;
(iv) any agreement under which Verplast has granted a lien, pledge,
security interest or other encumbrance upon any of its assets;
(v) any contract with external consultants for a liability exceeding
Lire 30.000.000 (thirty million) per year, including any bonus or deferred
payment (other than oral retainers of professionals which can be terminated
without notice);
(vi) any guaranty, suretyship, performance bond and/or contribution
agreements;
(vii) any material distribution, agency, marketing, licensing, sales
representative and/or dealership agreements;
(viii) any loans or advances to any third party, including, without
limitation, the shareholders, directors and officers of Verplast in excess of
Lire 30.000.000 (thirty million);
(ix) any collective bargaining agreement.
With respect to each material agreement and each license relating to
the Licensed Intellectual Property to which Verplast is a party, except as
otherwise disclosed in Annex 6.14: (i) such agreement is in full force and
effect and constitutes the legal, valid and binding obligation for Verplast and
the other parties thereto and it is enforceable in accordance with its terms,
(ii) to the best of the Seller's knowledge, such agreement will not be
terminated as a result of this Agreement or the consummation of the
transactions contemplated herein, (iii) Verplast is not in default in any
material respect under such agreement and no event has occurred which, with the
passing of time, would become a default, and (iv) no other party is in default
in any material respect under such agreement. No bonus or severance will become
due and payable under any existing agreement between Verplast and any of its
employees as a result of this Agreement or the consummation of the transactions
contemplated herein.
6.15 LITIGATION. Except as dislosed in Annex 6.15, Verplast is not (a)
subject to any outstanding injunction, judgment, order, decree or ruling or (b)
a party to or, to the best of the Seller's knowledge, threatened to be made a
party to, any action, suit, proceeding, hearing or investigation, of or before
any court, quasi-judicial agency, administrative agency or arbitrator
("LITIGATION"). Nor are there facts or circumstances which could be the basis
for Litigation and which, individually or in the aggregate, could have a
material Adverse Effect.
36
6.16 PRODUCT LIABILITY. No claims or demands have been made or, to the best
of the Seller's knowledge, could be made, against Verplast alleging injury to
individuals or properties as a result of the ownership, possession or use of
any product manufactured or sold by Verplast which, if successful, could have a
material Adverse Effect, individually or in the aggregate.
6.17 INSURANCE. A true complete and accurate list of all the insurance
policies of Verplast currently in force (including, but not limited to,
policies providing for casualty, liability and workers compensation coverage)
is attached as Annex 6.17 hereto. With respect to each such insurance policy:
(i) the policy is legal, valid, binding and in full force and effect and it is
enforceable in accordance with its terms, and (ii) neither the Insurer or
Verplast is in breach or default thereunder, including without limitation any
default with respect to the payment of premiums or the giving of notices.
6.18 COMPLIANCE WITH LAWS. Verplast always has complied with all applicable
laws, rules, regulations, ordinances and codes, whether domestic or foreign
("LAWS"), where the failure to so comply reasonably could be expected to have a
material Adverse Effect, and no notice has been received alleging non-
compliance with any Laws which remains uncured as of the date hereof.
6.19 LICENCES AND PERMITS. As disclosed in Annex 6.19, Verplast always has
obtained all licenses, permits and other authorizations the lack of which
reasonably could be expected to have a material Adverse Effect. All of such
licenses, permits and authorizations are in full force and effect and will
remain in full force and effect immediately after the Closing Date. No material
violation exists in respect of any such licence, permit or authorization. No
proceeding is pending, or, to the knowledge of the Seller, threatened to revoke
or limit any such license, permit or any other authorization.
6.20 ENVIRONMENTAL. Except as dislosed in Annex 6.20, Verplast is and
always has operated in strict compliance with the Environmental Laws (as
hereinafter defined) applicable to its business and/or properties where the
failure to do so could have a material Adverse Effect. Without prejudice to the
generality of the foregoing:
(i) no Hazardous Materials (as hereinafter defined), asbestos or
asbestos containing materials ("ACMS") (A) are, or have been, located in or
about any real properties owned or used by Verplast or any of its predecessors
or tenants, (B) have been released by Verplast or its predecessors or tenants
into the environment, or (C) have been discharged, treated, managed, recycled,
placed or disposed of by Verplast or its predecessors, tenants or anyone else,
at, on or under any real properties owned or used by Verplast or any of its
predecessors or tenants;
(ii) no Hazardous Materials or ACMs formerly located on the real
properties owned or used by Verplast or its predecessors or tenants have been
disposed of at any off-site waste disposal facility;
37
(iii) no portion of any real properties owned or used by Verplast or
rented, leased by it to third parties is being used, or has been used, for the
disposal, storage, recycling, treatment, processing or any other handling
whatsoever of Hazardous Materials and no portion of any real properties owned
or used by Verplast's predecessors or tenants is being used or has been used
for the disposal, storage, recycling, treatment, processing or any other
handling whatsoever of Hazardous Materials;
(iv) no storage tanks (whether above ground or underground) are
located within real properties currently or previously owned or used by
Verplast or its predecessors;
(v) Verplast has not disposed of, and none of its predecessors has
ever disposed of, any substance (other than human sewage) into the plumbing or
septic tank which Verplast owns or uses or which Verplast or any of its
predecessors has owned or used;
(vi) no investigation, administrative order or notice, consent, order
and agreement, litigation, settlement or environmental claim or lien with
respect to Hazardous Materials or ACMs is in existence or, to the Seller's
knowledge, proposed or threatened with respect to any real properties now or
previously owned or used by Verplast or its predecessors or tenants, or with
respect to any off-site waste disposal where the wastes of Verplast or of any
of its predecessors or tenants have been disposed; and
(vii) Verplast has not been notified of any summons, citation or
written notice from any person, entity or governmental agency whatsoever
concerning any violation or alleged violation of Environmental Laws.
The following terms shall have the following meanings for purposes of
this Section 6.20:
(a) the term "ENVIRONMENTAL LAWS" shall mean any and all domestic and
European Union laws, regulations, directives and any other requirement
concerning air pollution control, water pollution control, resource
conservation and recovery, solid waste disposal, toxic substance control,
Hazardous Materials or the protection of the environment or the safeguard of
public health; and
(b) the term "HAZARDOUS MATERIAL(S)" shall mean any hazardous, toxic
or dangerous substance, pollutant, contaminant, waste and/or any other material
regulated under Environmental Laws; ACMs; oil and petroleum products and
natural gas, natural gas liquids, liquified natural gas, and synthetic gas
usable for fuel; chemicals subject to Environmental Laws; and industrial
process and pollution control wastes whether or not hazardous within the
meaning of the applicable laws.
38
6.21 EMPLOYEES - SALES AGENTS - OTHER SELF-EMPLOYED PERSONS.
(i) All the employment contracts to which Verplast is a party are in
compliance with all applicable laws and regulations and Collective Bargaining
Agreements (including Company Agreements). All obligations deriving from the
applicable Collective Bargaining Agreements in force have been duly fulfilled.
There are no economic or legal conditions which are not expressed in the above
employment contracts or Collective Bargaining Agreements (in particular, but
without limitation, bonus arrangements, severance arrangements and fringe
benefits). Annex 6.21 (a) hereto lists all the employees of Verplast and
truly, completely and accurately summarizes their current position, TFR and
applicable benefits, if any.
(ii) Verplast always has been and is currently in full compliance
with all employment, agency and social security laws and regulations as well as
with any laws and regulations concerning accident prevention, safety and
hygiene at work, and to this regard, except as disclosed in Annex 6.21 (b),
Verplast has not been notified nor is it aware of any warnings, assessments or
pending proceedings. No allegation, charge, claim or complaint of age,
disability, sex or race discrimination or similar charge, claim or request of
recognition of the employee status by a self-employed person or any other
person not included in the payroll of Verplast has been made to Verplast or in
any way threatened against it. There is no reasonable ground upon which any
such allegation, charge, claim, complaint or request can be made.
(iii) All social security contributions due with respect to the
employees and the sales agents have always been regularly paid by Verplast and
the TFR and other indemnities due to the employees and sales agents have been
regularly paid or set aside and regularly accrued in the respective Statutory
Financial Statements, as applicable, and, as of the Date of the Closing
Financial Statements, there are no amounts due other than as reflected in the
Closing Financial Statements.
6.22 EMPLOYEE BENEFIT PLANS AND POLICIES. There are no employee benefit
plans which Verplast should have maintained or contributed to, or has
maintained or contributed to for the three years preceding the date hereof or
at any time during this period, which were mandatory in accordance with
Collective Bargaining Agreements or with any other applicable laws and/or
regulations and/or other sources.
6.23 CUSTOMERS AND SUPPLIERS. Verplast has not been notified, nor is the
Seller aware, that any of its customers and/or suppliers intend to cease doing
business with it or to reduce the amount of goods or services purchased and/or
sold on a regular on-going basis from or to it, the cessation or reduction of
which could have a material Adverse Effect. As far as supplies are concerned,
Verplast has not experienced in the past 12 months any material shortage of
supplies or any price increase in such supplies (unless due to significant
variation of the exchange rate between the Italian Lira and the other major
currencies) or changes in terms of dealing with any of its customers or
suppliers, which can be reasonably expected to have a material Adverse Effect.
39
6.24 POWERS OF ATTORNEY. There are no outstanding powers of attorney
granted by Verplast or its Directors to any other person or entity.
6.25 BROKERAGE FEE. Neither the Seller nor Verplast has engaged any
investment banker, finder, broker or similar agent with respect to the
transactions contemplated by this Agreement which could give rise to any
brokerage fee, finder's fee, commission or similar liability on the part of
Verplast or the Purchaser.
6.26 FULL DISCLOSURE. All the representations and warranties of the Seller
contained in this Agreement, the Annexes and the documents executed and
delivered to the Purchaser pursuant hereto are true, complete and accurate and
do not omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
6.27 DUE INQUIRY BY THE SELLER. The representations and warranties of the
Seller contained in this Agreement which are limited by the Seller's knowledge
or awareness, shall require the Seller to conduct a due inquiry to ascertain
the truth and validity of any such representation and warranty given under this
Agreement.
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby acknowledges and agrees that each of the following
representations and warranties has been a material inducement to the Seller's
decision to enter into this Agreement:
7.1 ORGANIZATION AND CORPORATE POWER. ICO and the Designated Purchaser are
corporations duly organized, validly existing and in good standing under the
laws of their own jurisdiction.
7.2 AUTHORIZATION. ICO and the Designated Purchaser have full corporate
power and authority to enter into this Agreement and to perform their
respective obligations hereunder. The entering into this Agreement by ICO and
the Designated Purchaser and the performance of their obligations hereunder
have and shall have been, as applicable, duly authorized by resolutions duly
adopted by their Boards of Directors.
7.3 BINDING EFFECT. This Agreement has been duly executed by ICO and
constitutes the legal, valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles. Except as
contemplated by this Agreement, neither ICO nor the Designated Purchaser is, or
shall be, required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
40
7.4 NON-CONTRAVENTION. Neither the entering into this Agreement by ICO and
the Designated Purchaser nor the consummation of the transactions contemplated
hereby will (a) violate any statute, regulation, rule, judgment, order, decree,
stipulation or injunction to which ICO or the Designated Purchaser is, or shall
be, subject, or (b) conflict with or result in a breach of the provisions of
the Certificate of Incorporation or By-laws of ICO or the Designated Purchaser,
as amended to date.
7.5 BROKERAGE FEE. Neither the Purchaser nor any member of the ICO Group
has engaged any investment banker, finder, broker or similar agent with respect
to the transactions contemplated by this Agreement which could give rise to any
brokerage fee, finder's fee, commission or similar liability on the part of the
Seller.
7.6 FULL DISCLOSURE. All the representations and warranties of the
Purchaser contained in this Agreement, the Annexes and the documents executed
and delivered to the Seller pursuant hereto are true, complete and accurate and
do not omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
8. OTHER AGREEMENTS AND COVENANTS
8.1 NON-COMPETE AGREEMENT. The Seller hereby agrees and undertakes that
for the period from the Closing Date to the fifth anniversary of the Closing
Date, he will not, without the prior written consent of the Purchaser, directly
or indirectly, as a shareholder, partner, director, officer, employee, agent,
consultant or otherwise, (a) invest or engage in any business or other activity
which competes with any activity or business of Verplast, ICO or any company
of the ICO Group (cumulatively, the "COMPANIES"), as conducted at the Closing
Date, or accept employment with or render services to a competitor of the
Companies; or (b) engage, suggest or assist in or influence the engagement or
hiring by any competing organization of any salesman, distributor, contractor,
employee or source of the Companies, or otherwise cause or encourage any
person, firm or corporation having a business relationship with the Companies
including, without limitation, any customer or supplier of any of the
Companies, to sever such relationship with the Companies; provided, however,
that the obligation of the Seller contemplated by in this Section 8.1 (i) shall
not restrict the Seller fromowning up to 5% of the capital stock of a competing
publicly traded company. The restrictions contained in this paragraph 8.1 (i)
shall extend to Europe and the United States.
8.2 DEBENTURES. The Purchaser agrees and covenants that, after the Closing
Date and no later than September 30, 1997, it shall purchase from the then
current owners all the debentures issued and outstanding by Verplast at their
nominal value plus interest accrued on the redemption date, unless on or prior
to September 30, 1997 the Purchaser has caused Verplast either (a) to redeem
all the debentures issued and still outstanding by paying to the then
41
current debenture holders the capital and interest accrued to date or (b) to
release a guarantee on Verplast's assets in favor of the debenture holders.
Should Verplast decide to issue the guarantee pursuant to (b) above, the Seller
shall endeavour to cause the debenture holders to consent at any time to the
redemption of the debentures issued and still outstanding in the event Verplast
will be party to a merger procedure.
8.3 DISCHARGE OF CURRENT DIRECTORS. As soon as practicable, the Purchaser
shall cause Verplast and XXX.XX to hold shareholders' meetings to resolve upon
the full release of the resigning members of their respective Boards of
Directors of Verplast from the resigning Directors' potential liabilities in
respect of Verplast and XXX.XX, respectively, and their respective shareholders
by virtue of the offices held by the resigning Directors.
9. INDEMNIFICATION BY THE SELLER
9.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, the Seller
shall indemnify and hold the Purchaser harmless against and from any and all
costs, expenses, losses, damages and liabilities (including, without
limitation, reasonable attorneys' fees) (the "LOSSES" and each a "LOSS")
incurred by the Purchaser with respect to or in connection with:
(a) any breach of any of the representations and warranties of the
Seller under this Agreement; and
(b) additional Taxes resulting from any inquiry, adjustment or
assessment of a deficiency by a governmental agency or authority concerning
Verplast's Tax Returns for any of the fiscal periods open to verification and
ending on or prior to the Closing Date; and
(c) the reclassification or recategorization by a governmental agency
or authority of any item of expense (including amortization of assets), if such
expense was deducted in any fiscal period open to verification and ending on or
prior to the Closing Date or such asset was acquired during any fiscal period
open to verification and ending on or prior to the Closing Date; and
(d) any breach of the Environmental Laws or any other facts or
circumstances contemplated by Section 6.20 hereof or failure to obtain any
licence, authorization, permit or other measure contemplated by Section 6.19
hereof; and
(e) any claims made by any self-employed persons or other persons not
included in the payroll of Verplast and/or by social security agencies on the
grounds of the employment nature of the relationship with such persons based on
circumstances existing prior to the Closing Date.
42
9.2 LIMITATIONS TO INDEMNIFICATION. The Purchaser's right to
indemnification shall be subject to the following limitations:
(i) in respect of Loss(es) suffered under Section 9.1 (a) above, the
Purchaser's right to indemnification shall lapse if no notice of an
Indemnification Claim shall have been given to the Seller on or before December
31, 1999, except that for Loss(es) suffered for breach of Section 6.21 of this
Agreement, in which case the applicable statutory limitation period (periodo di
prescrizione) shall apply;
(ii) in respect of Loss(es) suffered under Section 9.1 (b), (c), (d)
and (e) above, the Purchaser's right to indemnification shall lapse if no
Indemnification Claim is notified to the Seller on or before the date in which
the applicable statutory limitation period (periodo di prescrizione) will
lapse;
9.3 INDEMNIFICATION PROCEDURE. In order for the Purchaser to be
indemnified and held harmless against and from Losses under this Section 9
other than Losses arising out of Third Party Claims (as hereinafter defined)
under Section 9.4:
(a) the Purchaser shall give written notice to the Seller of any
claim (the "INDEMNIFICATION CLAIM"), which notice shall set forth a reasonably
detailed statement of the Indemnification Claim and the cost, expense, loss,
damage and liability the Purchaser and/or Verplast incurred and/or expects to
incur by reason thereof;
(b) such indemnification payment shall be made on the later of (i) the
expiration of thirty (30) days from the date of such notice (the "NOTICE
PERIOD") or, (ii) if such claim is contested as hereinafter provided, within 10
days from the date in which the dispute is resolved in accordance with this
Section 9.3, or (iii) within 10 days from the date in which such
Indemnification Claim becomes liquidated in amount; and
(c) if, prior to the expiration of the Notice of Period, the Seller
notifies the Purchaser in writing of his intention to dispute the
Indemnification Claim, and if such dispute is not resolved within thirty (30)
days after the expiration of the Notice Period (the "RESOLUTION PERIOD"), then
such dispute shall be resolved by a committee of three arbitrators who shall be
appointed within 60 days of the expiration of the Resolution Period and shall
act in accordance with Section 10.10 below. The parties shall cooperate and
diligently pursue the arbitration of such Indemnification Claim in order for a
decision to be made by the arbitrators within 45 days after their appointment.
9.4 INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The provisions of this
Section shall apply to any Losses which arise or may arise as a result of a
claim made by a third party and any related Litigation or similar process or
proceeding ("THIRD PARTY CLAIM").
(a) the Purchaser or the Designated Purchaser shall give notice to the
Seller promptly after the Purchaser or the Designated Purchaser becomes aware
of any Third Party Claim, which notice shall include a copy of any letter,
complaint or similar writing received by the Purchaser, Designated Purchaser
43
and/or Verplast setting out such Third Party Claim or a written description of
any oral notice received by such party; provided, however, that any delay in
providing such notification shall not constitute a bar or defense to indemnify
except to the extent the Seller has been prejudiced thereby.
(b) Within ten (20) days from the date of such notice to the Seller,
the Seller shall notify the Purchaser in writing if he intends to dispute that
such Third Party Claim constitutes or will constitute a Loss subject to
indemnification hereunder (the "DISPUTE NOTICE"). If the Dispute Notice is
given within said twenty (20) day period, the issue of whether such Third Party
Claim constitutes or will constitute a Loss subject to indemnification
hereunder may be submitted to arbitration in accordance with Section 10.10
hereof, unless an agreement is subsequently reached between the Parties.
(c) For the purpose of this Section 9.4, in the case of a defence of a
Third Party Claim: (i) the Purchaser shall have the right to defend such Third
Party Claim and the costs of such defense, including, without limitation, the
fees and expenses of counsel and other professionals, shall be deemed to be
Losses, (ii) the Seller shall have the right to participate in the defense of
the Third Party Claim at its own costs and expenses provided that such right is
not exercised in a way which could prejudice the Purchaser's defense of the
Third Party Claim, and (iii) the Purchaser shall consult with the Seller prior
to reaching a settlement of the Third Party Claim, if any.
(d) In order for the Seller to exercise the right to participate in
the defense of a Third Party Claim, the Seller shall give notice to the
Purchaser within twenty (20) days after receipt of the notice of the Third
Party Claim as to which no Dispute Notice was given. If the Seller fails to
notify the Purchaser within such period, the Seller shall be deemed to have
waived his right to defend such Third Party Claim and the Purchaser shall have
the right to defend such Third Party Claim, and its costs and expense,
including without limitation the fees and expenses of counsel and other
professionals shall be deemed to be Losses.
10. MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement, the Annexes hereto and the documents
executed and delivered pursuant hereto or simultaneously herewith constitute
the entire agreement between the parties in respect to the subject matter
hereof and supersede all prior written and oral agreements and arrangements
between the parties hereto with regard to the subject matter hereof.
10.2 AMENDMENTS. Any amendment to this Agreement shall be valid and binding
upon the parties only if made in writing and signed by the Seller and the
Purchaser.
10.3 COSTS. All the costs relating to the transfer of the Shares to the
Purchaser, including stamp duties, bank fees and registration tax, if any,
shall
44
be borne by the Purchaser (but not capital gains tax which will be borne by the
Seller).
10.4 EFFECTS. The provisions of this Agreement shall be legally binding
upon the parties and their respective heirs, successors and assigns.
10.5 RIGHTS AND REMEDIES. The exercise or failure to exercise by any party
any right or remedy arising out of this Agreement shall not constitute a waiver
of that right or remedy or of any other rights or remedies.
10.6 NOTICES. All notices, demands or requests provided for or permitted
to be given pursuant to this Agreement must be in writing. All notices, demands
and requests shall be deemed to have been properly served if given by telefax
confirmed by registered post, registered post ora reputable overnight carrier,
addressed as follows:
If to the Seller: Xx. Xxxxxxxxx Xxxxxxx
Xxx Xxxxx Xxxxxxxx 0
Xxxxxx, Xxxxxx
With a copy to: Avv. Xxxxxxxxx Xxxxxxx
Xxx X. Xxxxxxx 00
00000 Xxxxxx, Xxxxxx
Facsimile No. 0039 2 867391
If to the Purchaser: ICO, Inc.
11490 Westheimer, Xxxxxxx, Xxxxx
00000 XXX
Attn: General Counsel
Facsimile No.: 001 281 721 4222
With copies to: Xxxxxx & Xxxxx
Xxx Xxxxx Xxxxxxxxx 00
00000 Xxxxx Xxxxx
Facsimile No.: 86464548
and to
Xx Xxxxxxxxx Xxxxxxxx
Xxxxxxxx 0
0000 XX Xxxxxxxxx, Xxxxxxxxxxx
Facsimile No.: 0031 10 241 1717
45
Each notice, demand or request shall be effective upon receipt of
telefax or registered post or upon arrival to the recipient's address by
delivery of a reputable overnight carrier in accordance with the foregoing.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall not adversely impact the
effectiveness of any such notice, demand or request. Any addressee may change
its address for notices hereunder by giving written notice in accordance with
this Section.
10.7 INTERPRETATION. The masculine, feminine or neuter pronouns used herein
shall be interpreted without regard to gender, and the use of the singular or
plural shall be deemed to include the other whenever the context so requires.
The headings in this Agreement are inserted for convenience of reference only
and shall not be a part of or control or affect the meaning of this Agreement.
Unless otherwise expressly stated herein, all references herein to sections and
paragraphs are to Sections and paragraphs in this Agreement and all references
herein to Annexes are to Annexes to this Agreement.
10.8 SCHEDULES. The Annexes referred to herein, and attached to this
Agreement, are incorporated herein by reference as if fully set forth in the
text hereof.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with Italian law.
10.10 ARBITRATION. Any disputes arising with respect to or in connection with
this Agreement between the Purchaser and/or Designated Purchaser and the Seller,
without having regard to the number of parties to the procedure, shall be
finally decided by a panel of three arbitrators to be appointed by the Camera
Arbitrale Nazionale ed Internazionale di Milano in accordance with its Rules of
Arbitration. The Arbitrators shall be fluent in both Italian and English
languages both written and spoken and either or both of the two languages can be
used during the procedure. The Arbitrators shall be judging at law and in
accordance with the Italian Civil Code of Procedure.
10.11 BUSINESS DAYS. If any date determined pursuant to this Agreement on
any obligation of the parties is to be fulfilled falls on a day other than a
Business Day, such date shall be automatically postponed to the first subsequent
Business Day.
10.12 SURVIVAL. The representations and warranties of the parties contained
in this Agreement, the provisions of Section 9 and any other provision of this
Agreement which is expressly stated or, by its nature, is intended to remain
valid after the Closing, shall survive such Closing.
THE PURCHASER THE SELLER
By: /s/ XX X. XXXXXXXXX /s/ XXXXXXXXX XXXXXXX
------------------------ ----------------------
Name: Xx X. Xxxxxxxxx Xx Xxxxxxxxx Xxxxxxx
Title: Chairman
46
(1) ICO, INC. (ICO)
and
(2) MR LUIGI XXXXXXX XXXXXXX
-----------------------------------
STOCK SALE & PURCHASE AGREEMENT
-----------------------------------
47
THIS AGREEMENT is made on the 21st day of July, 1997 (hereinafter "Execution
Date") BY AND BETWEEN:-
1. ICO, Inc., a Texas corporation having its principal offices at 00000
Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 XXX ("ICO" or the "PURCHASER")
- on one side -
and
2. Mr Luigi Xxxxxxx Xxxxxxx, born in Verolavecchia on August 18, 1954,
resident at Verolavecchia, Xxx Xxxxxxxx Xxxxxx 00, xxx-xxxxx Xx. XXX LMS 54M18
L778Z;
(the "SELLER")
- on the other side -
WITNESSETH:
A. Whereas, the Seller is the beneficial and record owner of 2.280.000 ordinary
shares having the nominal value of 1.000 Lira each (hereinafter the "SHARES")
and representing 60% of the entire issued and outstanding capital of Verplast
S.p.A, an Italian company having its registered address at Verolanuova, Loc.
Breda Libera ("VERPLAST").
B. Whereas, ICO is willing to purchase from the Seller, either directly or
through a designated party, and the Seller is willing to sell to ICO or a party
designated by ICO, the Shares at a set price.
C. Whereas, ICO is willing to purchase additional shares in Verplast pursuant
to separate agreements to be entered into with the other shareholders of
Verplast so as to increase ICO's equity interest in Verplast.
E. Whereas, subject to the terms of this agreement, the Purchaser has requested
the Seller (as partial consideration for the Purchase Price) to continue to
cooperate with Verplast on the basis of the consultancy agreement attached
hereto.
NOW, THEREFORE, the Purchaser and the Seller hereby agree as follows:
1. DEFINITIONS
In addition to the other terms defined in this Agreement, the following
terms and expressions shall have the following meanings as used herein:
1.1 "AGREEMENT": this stock sale and purchase agreement.
48
1.2 "ADVERSE EFFECT": a prejudicial effect on the assets, liabilities,
financial condition, results of operations or future prospects of Verplast.
1.3 "BUSINESS DAY": any day other than a holiday on which banks are open to
the public in Milan for the carrying out of their ordinary business.
1.4 "CLOSING": the transfer to the Purchaser or the Designated Purchaser of
any and all rights, title and interest in and to the Shares, the payment by the
Purchaser or the Designated Purchaser of the Purchase Price (as hereinafter
defined) due to the Seller on the Closing Date (as hereinafter defined) and,
more generally, the performance of all the obligations which must be fulfilled
by the Parties (as hereinafter defined) on the Closing Date pursuant to Section
5 and subject to the conditions precedent set forth in Section 4 of this
Agreement.
1.5 "CLOSING DATE": the date of the Closing.
1.6 "ICO GROUP": ICO and any company directly or indirectly controlled by,
or affiliated with, ICO.
2. SALE AND PURCHASE OF THE SHARES
2.1 SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement, on the Closing Date the Seller shall sell and transfer to the
Purchaser and the Purchaser shall purchase from the Seller, free and marketable
title to the Shares representing, in the aggregate, 60% (sixty per cent) of the
issued and outstanding share capital of Verplast, free and clear from any and
all lien, charge, encumbrance or claim for the price set forth in Section 3.1
hereof:
2.2 DESIGNATED PURCHASER. ICO shall have the right to designate a third
party (the "DESIGNATED PURCHASER") to take over all the rights and to assume
all the liabilities of the Purchaser under this Agreement pursuant to Article
1401 et seq. of the Italian Civil Code, by giving notice thereof to the Seller
on or prior to the scheduled Closing Date, provided that (i) the Designated
Purchaser shall in any event be a company of the ICO Group, and (ii) ICO shall
remain jointly and severally liable with the Designated Purchaser for the
performance of all obligations and covenants of the Purchaser under this
Agreement.
3. PURCHASE PRICE
3.1 PRICE FOR THE SHARES. Subject to the terms and conditions set forth in
this Agreement, the price payable by ICO to the Seller for the purchase of the
Shares (hereinafter, the "PURCHASE PRICE") it is hereby irrevocably set at Lire
00.000.000.000 (heighteen billion nine hundred million).
3.2 REFERENCE FINANCIAL STATEMENTS. The parties further acknowledge that
this transaction has been based upon the financial statements of Verplast as of
December 31, 1996 (hereinafter the "1996 STATUTORY FINANCIAL STATEMENTS")
49
as updated on June 30, 1996 (hereinafter the "CLOSING FINANCIAL STATEMENTS")
attached hereto as, respectively, Annex 3.2 (a) and Annex 3.2 (b).
3.3 PAYMENT TERMS AND CONDITIONS. Subject to the terms and conditions of
this Agreement, the payment of the Purchase Price to the Seller shall be made
on the Closing Date in Italian Lire in immediately available funds wire
transferred to any such bank account(s) notified to the Purchaser by the Seller
prior to the Closing Date.
4. CONDITIONS PRECEDENT TO THE CLOSING
The obligations of each of the parties hereto to consummate the transactions
which are contemplated by this Agreement to occur at the Closing shall be
subject to the fulfilment or the waiver of the conditions set out in this
Section 4 below on or prior the Closing Date.
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES. On or prior to
the Closing Date, there shall be no action or proceeding initiated by any
governmental agency or by any other local, regional, national or supranational
authority or by any third party which seeks to restrain, prohibit or invalidate
this Agreement or the transactions contemplated herein or to recover
substantial damages or other substantial relief with respect thereto, and no
injunction or restraining order shall have been issued by any court, whether
domestic or foreign, restraining, prohibiting or invalidating this Agreement or
the transactions contemplated therein.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER:
(a) the Seller shall have duly performed all his material obligations
which, pursuant to this Agreement, are required to be performed prior to the
Closing;
(b) without prejudice to the generality of (a) above:
(i) prior to the Closing, each of the other shareholders of Verplast
shall have waived in writing in favor of the Purchaser their rights of first
refusal in respect of the Shares under Section 9 of Verplast's By-laws;
(ii) prior to the Closing, each member of the Board of Directors of
Verplast shall deliver an irrevocable resignation letter as Director of
Verplast immediately effective in which they declare that they have nothing
further to claim from Verplast on account of the offices held; and
(iii) prior to the Closing, each member of the Board of Statutory
Auditors of Verplast (including the "Sindaci Supplenti") shall have delivered
an irrevocable resignation letter as Statutory Auditor immediately effective;
and
(iv) prior to the Closing, an Ordinary Shareholders' meeting of Verplast
shall be held and validly resolve (i) to elect a new Board of Directors of
Verplast consisting of the following individuals:
50
Xx. Xxxxx X. Xxxxxxxxx (Chairman)
Drs. Xxxxxxxxx Xxxxxxxx (Managing Director)
Xx Xxxxx X. Xxxxxxxx, Xx.
and (ii) to elect Messrs Xxxxx Xxxxxxxx (Chairman), Paolo Tognolo (Statutory
Auditor), Xxxxxxx Xxxxxxx (Statutory Auditor), Xxxxxx Xxxx (Supplente) and
Piermauro Carabellese (Supplente) as members of the Board of Statutory Auditors
replacing the resigning members.
4.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER:
(a) the Purchaser shall have duly performed all its material obligations
which, pursuant to this Agreement, are required to be performed prior to the
Closing; and
(b) the Purchaser or the Designated Purchaser shall have given to the
Seller adequate evidence of the authority of the officers of the Purchaser
and/or Designated Purchaser who shall carry on the transactions contemplated in
this Agreement.
5. CLOSING
5.1 THE CLOSING. Subject to the satisfaction or waiver of the conditions
precedent contemplated by Section 4 hereof, the Closing shall take place at the
offices of CAB Banca Lombarda, Via Xxxxxx Xxxxxxx 10, Milan (or such other
place as may be agreed upon by the Seller and the Purchaser before the
Closing). At the Closing the parties hereto shall comply with their respective
obligations as set out in this Section 5.1 below and shall take any other
action and/or sign any other document which may be required by law or this
Agreement:
5.1.1 The Seller shall:
(i) duly endorse and transfer the Shares to the Purchaser or the
Designated Purchaser and execute the "Fissato Bollato";
(ii) execute a consultancy agreement with Verplast in the form of Annex
5.1 (a) hereto;
(iii) deliver to the Purchaser an irrevocable first request Bank
guarantee from CAB Banca Lombarda in the form of Annex 5.1 (b) hereto in the
sum of Lire 600.000.000 (six hundred million) lapsing on December 31, 1999.
(iv) execute and deliver to the Purchaser any such other documents as
are contemplated by this Agreement to be executed and delivered to the
Purchaser at the Closing or as may be reasonably requested by the Purchaser in
order to complete the Closing transactions or in connection therewith.
(v) deliver to the Purchaser a certificate evidencing the effectiveness
of the "regime di separazione dei beni" with his spouse.
51
5.1.2 The Purchaser or the Designated Purchaser shall:
(i) pay the Seller the Purchase Price;
(ii) execute the "Fissato Bollato";
(iii) enter into a consultancy agreement with the Seller in the form of
Annex 5.1 (a) hereto;
(iv) execute and deliver to the Seller any such other documents as are
contemplated by this Agreement to be executed and delivered to the Seller at
the Closing or as may be reasonably requested by the Seller in order to
complete the Closing transactions or in connection therewith.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby acknowledges and agrees that each of the following
representations and warranties has been an inducement to the Purchaser's
decision to enter into this Agreement:
6.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Verplast is duly
organized, validly existing and fully qualified to carry on its business under
the laws of the jurisdiction in which it is incorporated. Verplast has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
6.2 AUTHORIZATION. The Seller has full right, power and authority to enter
into this Agreement and to consummate the transactions contemplated herein. No
consent of, notice to, or filing with, any lender, trustee, security holder,
spouse or any other person is required for the Seller to enter into this
Agreement and to consummate the transactions contemplated herein. The Seller
has entered into the "regime di separazione dei beni" with his spouse.
6.3 BINDING EFFECT. This Agreement has been duly executed by the Seller and
constitutes the legal, valid and binding obligations of the Seller, enforceable
against it in accordance with its terms.
6.4 CAPITALIZATION OF VERPLAST AND DEBENTURES. The issued and outstanding
capital of Verplast amounts to Lire 3.800.000.000 (three billion eight hundred
million) and is divided into 3.800.000 shares as indicated in the shareholders'
book. All shares are fully paid-up and nonassessable, free and clear of any
pledges, liens, claims, security interests, encumbrances and third party's
rights. None of the shares has been issued or transferred in violation of any
preemptive, preferential or contractual right. As disclosed in Annex 6.4
hereto, Verplast has issued and has outstanding awaiting redemption debentures
in the sum of Lire 3.000.000.000 (three billion).
52
6.5 OWNERSHIP OF THE SHARES. Verplast shareholders' book provides a true,
correct and complete record of the current beneficial and record owners of the
shares. There are no authorized or outstanding options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments to which the Seller and/or Verplast are a party or
which are binding on them providing for the issuance, disposition or
acquisition of any of the Shares.
6.6 SUBSIDIARIES. Verplast owns a quota representing 75% of the issued and
outstanding capital of XXX.XX S.r.l. (hereinafter "XXX.XX QUOTA") a company
having its registered address at Xxx Xxxxxx 00, Xxxxxxxxxx (XX) (hereinafter
"XXX.XX"). The XXX.XX Quota is free and clear of any pledges, liens, claims,
security interests, encumbrances and third party's rights. The XXX.XX Quota has
not been issued or transferred in violation of any preemptive, preferential or
contractual right. As evidenced in the shareholders' agreement included in
Annex 6.14 hereto there are outstanding call and put options in favor of
Verplast to acquire additional quotas in XXX.XX up to 100% of the issued and
outstanding capital of XXX.XX from the current quotaholders of XXX.XX.
6.7 CORPORATE RECORDS AND ACTION. The copies of the minute books of Verplast
are true, complete and accurate. All corporate action which has been taken by
any management body of Verplast and which is to be recorded in minute books
under the applicable law is fairly and accurately summarized in all material
respects in the minute books of Verplast. The extracts of the shareholders'
book of Verplast disclosed in Annex 6.7 hereto are true, complete and accurate.
All issuances, cancellations, transfers and exchanges of shares of the capital
of Verplast are duly recorded in its shareholders' book.
6.8 FINANCIAL STATEMENTS. The statutory financial statements of Verplast for
the last 5 (five) years (hereinafter collectively referred as to the "STATUTORY
FINANCIAL STATEMENTS") as well as the Closing Financial Statements and the
financial statements for XXX.XX as of December 31, 1996 (hereinafter the
"XXX.XX FINANCIAL STATEMENTS", attached hereto as Annex 6.8), (a) have, been
prepared from the books and records of Verplast and/or XXX.XX in accordance
with local generally accepted accounting principles applied on a consistent
basis, and (b) fairly present the financial condition and the results of
operations of Verplast and/or XXX.XX for the period covered by said financial
statements.
6.9 UNDISCLOSED LIABILITIES. Verplast has no liability (whether known or
unknown, absolute or contingent, liquidated or unliquidated and whether due or
to become due), including without limitation any liability for Taxes (as
hereinafter defined) or undeductible expenses, except for (a) liabilities
indicated in the balance sheet of Verplast included in the Statutory Financial
Statements and the Closing Financial Statements and (b) liabilities incurred
after the reference date of said Closing Financial Statements in the ordinary
course of business and in accordance with past practices and (c) liabilities
for income taxes in respect of income earned in 1997. Verplast is neither
liable upon nor
53
has guaranteed any debt or obligation of any other person or entity, including
its Directors and shareholders.
6.10 SUBSEQUENT EVENTS. Since July 1st, 1997 there have not been:
(a) any events which, individually or in the aggregate, had or could
have a material Adverse Effect, except to the extent that such Adverse Effect
is a consequence of the transactions contemplated by this Agreement or the
announcement thereof;
(b) any debts incurred as a consequence of money borrowed by Verplast
other than debts incurred in the ordinary course of business or any lien or
security interest granted by Verplast;
(c) any sale of any of Verplast's assets, other than sales of inventory
in the ordinary course of business and sales of equipment made in the ordinary
course of business due to the replacement or abandonment thereof;
(d) any capital expenditures paid, incurred or committed to Verplast,
other than capital expenditures incurred in the ordinary course of business
which do not exceed Lire 100.000.000 (hundred million) for any individual item
or group of related items;
(e) any dividend, payment or other distribution with respect to any of
the Shares or any payment made or benefit granted, under whatever forms and to
any title, by Verplast to any of its shareholders or to any party connected
with its shareholders;
(f) any loan to or investment in, or acquisition of any securities or
assets of any other person or entity, other than purchase of inventory and
supplies in the ordinary course of business;
(g) any increase in the rate of compensation or material increase in the
benefits payable or to become payable to any of the Verplast's Directors,
officers or employees (other than raises made in the ordinary course of
business to employees who are not directors or officers provided that such
raise to any such employee shall not exceed 10% of the base compensation of
such employee in effect at the date of execution of this Agreement or unless
such raises are due under applicable labor laws and regulations or Collective
Bargaining Agreements) or any material change to any of the terms of employment
of any of Verplast's Directors, officers or employees.
6.11 TAXES.
(a) Verplast has filed all returns relating to taxes which Verplast was
required to file since 1989 (hereinafter jointly referred as the "TAX
RETURNS"). All Taxes payable by Verplast have been paid and Verplast has no
liability or obligation with regard to Taxes for any period prior to the
Closing Date, except for taxes not yet due; accruals for Taxes not yet due
fully reflect obligations of
54
Verplast for Taxes incurred through the date of the Closing Financial
Statements. As used herein, "TAXES" mean any state, local or foreign income,
gross receipts, franchise, payroll, employment, excise, withholding,
unemployment, personal property, sales, use, value added, alternative,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto.
(b) None of Verplast's Tax Returns have been audited or are currently
subject to an auditing procedure carried out by a governmental agency and
Verplast has not been notified of any deficiency or alleged deficiency relating
to any of the Taxes paid by it.
6.12 ASSETS GENERALLY. Annex 6.12 hereto lists all the fixed assets owned by
Verplast and includes the documentation relating to Verplast's real properties.
Verplast owns all the assets indicated on the balance sheets of the Closing
Financial Statements (other than inventory which has been sold in the ordinary
course of business, prepaid expenses which have expired in the ordinary course
of business, accounts receivable which have been collected in the ordinary
course of business and equipment which has been replaced, exhausted or
abandoned in the ordinary course of business) free and clear of any mortgage,
pledge, lien, encumbrance or other security interest.
6.13 INTELLECTUAL PROPERTY.
(a) Verplast does not own any patents, trademarks, service marks, trade
names, copyrights and applications therefor. Verplast has the right to use the
"Vertenex" trademark pursuant to the trademark license agreement attached
hereto as Annex 6.13, and there are no patents, trademarks, service marks,
trade names, copyrights or other intellectual property rights, necessary to
conduct the business of Verplast as it is currently conducted. Neither the
Seller nor any other party shall be entitled to any right to file patent
applications for inventions, processes, technologies or know-how necessary to
conduct the business of Verplast as it is currently conducted. Except as
dislosed in Annex 6.13 hereto, Verplast is not subject to any obligation to pay
royalties or any other fees for the use of any third party intellectual
property rights.
(b) During the past 5 years Verplast did not interfere with, infringe,
misappropriate or otherwise conflict with any patent, trademark, service xxxx,
trade name, copyright, trade dress or any other proprietary right of any third
party which reasonablycould be expected to have a material Adverse Effect and
Verplast has not been notified of any claim alleging such interference,
infringement, misappropriation or conflict.
6.14 MATERIAL CONTRACTS. In Annex 6.14 hereto are disclosed true, complete
and accurate copies of all material contracts, leases and agreements currently
in force to which Verplast is a party including, but not limited to:
(i) any agreement for the lease of real property;
(ii) any tenancy-rental agreement for real properties owned by Verplast;
55
(iii) any agreement or amendment to such agreement under the terms of
which Verplast has created, incurred, assumed or guaranteed any liability for
borrowed money in excess of Lire 30.000.000 (thirty million) including, without
limitation, any term loan or other agreements with any bank or any other
financial institution;
(iv) any agreement under which Verplast has granted a lien, pledge,
security interest or other encumbrance upon any of its assets;
(v) any contract with external consultants for a liability exceeding
Lire 30.000.000 (thirty million) per year, including any bonus or deferred
payment (other than oral retainers of professionals which can be terminated
without notice);
(vi) any guaranty, suretyship, performance bond and/or contribution
agreements;
(vii) any material distribution, agency, marketing, licensing, sales
representative and/or dealership agreements;
(viii)any loans or advances to any third party, including, without
limitation, the shareholders, directors and officers of Verplast in excess of
Lire 30.000.000 (thirty million);
(ix) any collective bargaining agreement.
With respect to each material agreement and each license relating to the
Licensed Intellectual Property to which Verplast is a party, except as
otherwise disclosed in Annex 6.14: (i) such agreement is in full force and
effect and constitutes the legal, valid and binding obligation for Verplast and
the other parties thereto and it is enforceable in accordance with its terms,
(ii) to the best of the Seller's knowledge, such agreement will not be
terminated as a result of this Agreement or the consummation of the
transactions contemplated herein, (iii) Verplast is not in default in any
material respect under such agreement and no event has occurred which, with the
passing of time, would become a default, and (iv) no other party is in default
in any material respect under such agreement. No bonus or severance will become
due and payable under any existing agreement between Verplast and any of its
employees as a result of this Agreement or the consummation of the transactions
contemplated herein.
6.15 LITIGATION. Except as dislosed in Annex 6.15, Verplast is not (a)
subject to any outstanding injunction, judgment, order, decree or ruling or (b)
a party to or, to the best of the Seller's knowledge, threatened to be made a
party to, any action, suit, proceeding, hearing or investigation, of or before
any court, quasi-judicial agency, administrative agency or arbitrator
("LITIGATION"). Nor are there facts or circumstances which could be the basis
for Litigation and which, individually or in the aggregate, could have a
material Adverse Effect.
56
6.16 PRODUCT LIABILITY. No claims or demands have been made or, to the best
of the Seller's knowledge, could be made, against Verplast alleging injury to
individuals or properties as a result of the ownership, possession or use of
any product manufactured or sold by Verplast which, if successful, could have a
material Adverse Effect, individually or in the aggregate.
6.17 INSURANCE. A true complete and accurate list of all the insurance
policies of Verplast currently in force (including, but not limited to,
policies providing for casualty, liability and workers compensation coverage)
is attached as Annex 6.17 hereto. With respect to each such insurance policy:
(i) the policy is legal, valid, binding and in full force and effect and it is
enforceable in accordance with its terms, and (ii) neither the Insurer or
Verplast is in breach or default thereunder, including without limitation any
default with respect to the payment of premiums or the giving of notices.
6.18 COMPLIANCE WITH LAWS. Verplast always has complied with all applicable
laws, rules, regulations, ordinances and codes, whether domestic or foreign
("LAWS"), where the failure to so comply reasonably could be expected to have a
material Adverse Effect, and no notice has been received alleging non-
compliance with any Laws which remains uncured as of the date hereof.
6.19 LICENCES AND PERMITS. As disclosed in Annex 6.19, Verplast always has
obtained all licenses, permits and other authorizations the lack of which
reasonably could be expected to have a material Adverse Effect. All of such
licenses, permits and authorizations are in full force and effect and will
remain in full force and effect immediately after the Closing Date. No material
violation exists in respect of any such licence, permit or authorization. No
proceeding is pending, or, to the knowledge of the Seller, threatened to revoke
or limit any such license, permit or any other authorization.
6.20 ENVIRONMENTAL. Except as dislosed in Annex 6.20, Verplast is and always
has operated in strict compliance with the Environmental Laws (as hereinafter
defined) applicable to its business and/or properties where the failure to do
so could have a material Adverse Effect. Without prejudice to the generality of
the foregoing:
(i) no Hazardous Materials (as hereinafter defined), asbestos or
asbestos containing materials ("ACMS") (A) are, or have been, located in or
about any real properties owned or used by Verplast or any of its predecessors
or tenants, (B) have been released by Verplast or its predecessors or tenants
into the environment, or (C) have been discharged, treated, managed, recycled,
placed or disposed of by Verplast or its predecessors, tenants or anyone else,
at, on or under any real properties owned or used by Verplast or any of its
predecessors or tenants;
(ii) no Hazardous Materials or ACMs formerly located on the real
properties owned or used by Verplast or its predecessors or tenants have been
disposed of at any off-site waste disposal facility;
57
(iii) no portion of any real properties owned or used by Verplast or
rented, leased by it to third parties is being used, or has been used, for the
disposal, storage, recycling, treatment, processing or any other handling
whatsoever of Hazardous Materials and no portion of any real properties owned
or used by Verplast's predecessors or tenants is being used or has been used
for the disposal, storage, recycling, treatment, processing or any other
handling whatsoever of Hazardous Materials;
(iv) no storage tanks (whether above ground or underground) are located
within real properties currently or previously owned or used by Verplast or its
predecessors;
(v) Verplast has not disposed of, and none of its predecessors has ever
disposed of, any substance (other than human sewage) into the plumbing or
septic tank which Verplast owns or uses or which Verplast or any of its
predecessors has owned or used;
(vi) no investigation, administrative order or notice, consent, order
and agreement, litigation, settlement or environmental claim or lien with
respect to Hazardous Materials or ACMs is in existence or, to the Seller's
knowledge, proposed or threatened with respect to any real properties now or
previously owned or used by Verplast or its predecessors or tenants, or with
respect to any off-site waste disposal where the wastes of Verplast or of any
of its predecessors or tenants have been disposed; and
(vii) Verplast has not been notified of any summons, citation or written
notice from any person, entity or governmental agency whatsoever concerning any
violation or alleged violation of Environmental Laws.
The following terms shall have the following meanings for purposes of
this Section 6.20:
(a) the term "ENVIRONMENTAL LAWS" shall mean any and all domestic and
European Union laws, regulations, directives and any other requirement
concerning air pollution control, water pollution control, resource
conservation and recovery, solid waste disposal, toxic substance control,
Hazardous Materials or the protection of the environment or the safeguard of
public health; and
(b) the term "HAZARDOUS MATERIAL(S)" shall mean any hazardous, toxic or
dangerous substance, pollutant, contaminant, waste and/or any other material
regulated under Environmental Laws; ACMs; oil and petroleum products and
natural gas, natural gas liquids, liquified natural gas, and synthetic gas
usable for fuel; chemicals subject to Environmental Laws; and industrial
process and pollution control wastes whether or not hazardous within the
meaning of the applicable laws.
58
6.21 EMPLOYEES - SALES AGENTS - OTHER SELF-EMPLOYED PERSONS.
(i) All the employment contracts to which Verplast is a party are in
compliance with all applicable laws and regulations and Collective Bargaining
Agreements (including Company Agreements). All obligations deriving from the
applicable Collective Bargaining Agreements in force have been duly fulfilled.
There are no economic or legal conditions which are not expressed in the above
employment contracts or Collective Bargaining Agreements (in particular, but
without limitation, bonus arrangements, severance arrangements and fringe
benefits). Annex 6.21 (a) hereto lists all the employees of Verplast and
truly, completely and accurately summarizes their current position, TFR and
applicable benefits, if any.
(ii) Verplast always has been and is currently in full compliance with
all employment, agency and social security laws and regulations as well as with
any laws and regulations concerning accident prevention, safety and hygiene at
work, and to this regard, except as disclosed in Annex 6.21 (b), Verplast has
not been notified nor is it aware of any warnings, assessments or pending
proceedings. No allegation, charge, claim or complaint of age, disability, sex
or race discrimination or similar charge, claim or request of recognition of
the employee status by a self-employed person or any other person not included
in the payroll of Verplast has been made to Verplast or in any way threatened
against it. There is no reasonable ground upon which any such allegation,
charge, claim, complaint or request can be made.
(iii) All social security contributions due with respect to the
employees and the sales agents have always been regularly paid by Verplast and
the TFR and other indemnities due to the employees and sales agents have been
regularly paid or set aside and regularly accrued in the respective Statutory
Financial Statements, as applicable, and, as of the Date of the Closing
Financial Statements, there are no amounts due other than as reflected in the
Closing Financial Statements.
6.22 EMPLOYEE BENEFIT PLANS AND POLICIES. There are no employee benefit plans
which Verplast should have maintained or contributed to, or has maintained or
contributed to for the three years preceding the date hereof or at any time
during this period, which were mandatory in accordance with Collective
Bargaining Agreements or with any other applicable laws and/or regulations
and/or other sources.
6.23 CUSTOMERS AND SUPPLIERS. Verplast has not been notified, nor is the
Seller aware, that any of its customers and/or suppliers intend to cease doing
business with it or to reduce the amount of goods or services purchased and/or
sold on a regular on-going basis from or to it, the cessation or reduction of
which could have a material Adverse Effect. As far as supplies are concerned,
Verplast has not experienced in the past 12 months any material shortage of
supplies or any price increase in such supplies (unless due to significant
variation of the exchange rate between the Italian Lira and the other major
currencies) or changes in terms of dealing with any of its customers or
suppliers, which can be reasonably expected to have a material Adverse Effect.
59
6.24 POWERS OF ATTORNEY. There are no outstanding powers of attorney granted
by Verplast or its Directors to any other person or entity.
6.25 BROKERAGE FEE. Neither the Seller nor Verplast has engaged any
investment banker, finder, broker or similar agent with respect to the
transactions contemplated by this Agreement which could give rise to any
brokerage fee, finder's fee, commission or similar liability on the part of
Verplast or the Purchaser.
6.26 FULL DISCLOSURE. All the representations and warranties of the Seller
contained in this Agreement, the Annexes and the documents executed and
delivered to the Purchaser pursuant hereto are true, complete and accurate and
do not omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
6.27 DUE INQUIRY BY THE SELLER. The representations and warranties of the
Seller contained in this Agreement which are limited by the Seller's knowledge
or awareness, shall require the Seller to conduct a due inquiry to ascertain
the truth and validity of any such representation and warranty given under this
Agreement.
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby acknowledges and agrees that each of the following
representations and warranties has been a material inducement to the Seller's
decision to enter into this Agreement:
7.1 ORGANIZATION AND CORPORATE POWER. ICO and the Designated Purchaser are
corporations duly organized, validly existing and in good standing under the
laws of their own jurisdiction.
7.2 AUTHORIZATION. ICO and the Designated Purchaser have full corporate
power and authority to enter into this Agreement and to perform their
respective obligations hereunder. The entering into this Agreement by ICO and
the Designated Purchaser and the performance of their obligations hereunder
have and shall have been, as applicable, duly authorized by resolutions duly
adopted by their Boards of Directors.
7.3 BINDING EFFECT. This Agreement has been duly executed by ICO and
constitutes the legal, valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles. Except as
contemplated by this Agreement, neither ICO nor the Designated Purchaser is, or
shall be, required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
60
7.4 NON-CONTRAVENTION. Neither the entering into this Agreement by ICO and
the Designated Purchaser nor the consummation of the transactions contemplated
hereby will (a) violate any statute, regulation, rule, judgment, order, decree,
stipulation or injunction to which ICO or the Designated Purchaser is, or shall
be, subject, or (b) conflict with or result in a breach of the provisions of
the Certificate of Incorporation or By-laws of ICO or the Designated Purchaser,
as amended to date.
7.5 BROKERAGE FEE. Neither the Purchaser nor any member of the ICO Group has
engaged any investment banker, finder, broker or similar agent with respect to
the transactions contemplated by this Agreement which could give rise to any
brokerage fee, finder's fee, commission or similar liability on the part of the
Seller.
7.6 FULL DISCLOSURE. All the representations and warranties of the Purchaser
contained in this Agreement, the Annexes and the documents executed and
delivered to the Seller pursuant hereto are true, complete and accurate and do
not omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
8. OTHER AGREEMENTS AND COVENANTS
8.1 NON-COMPETE AGREEMENT. The Seller hereby agrees and undertakes that for
the period from the Closing Date to the fifth anniversary of the Closing Date,
he will not, without the prior written consent of the Purchaser, directly or
indirectly, as a shareholder, partner, director, officer, employee, agent,
consultant or otherwise, (a) invest or engage in any business or other activity
which competes with any activity or business of Verplast, ICO or any company
of the ICO Group (cumulatively, the "COMPANIES"), as conducted at the Closing
Date, or accept employment with or render services to a competitor of the
Companies; or (b) engage, suggest or assist in or influence the engagement or
hiring by any competing organization of any salesman, distributor, contractor,
employee or source of the Companies, or otherwise cause or encourage any
person, firm or corporation having a business relationship with the Companies
including, without limitation, any customer or supplier of any of the
Companies, to sever such relationship with the Companies; provided, however,
that the obligation of the Seller contemplated by in this Section 8.1 (i) shall
not restrict the Seller fromowning up to 5% of the capital stock of a competing
publicly traded company. The restrictions contained in this paragraph 8.1 (i)
shall extend to Europe and the United States.
8.2 DEBENTURES. The Purchaser agrees and covenants that, after the Closing
Date and no later than September 30, 1997, it shall purchase from the then
current owners all the debentures issued and outstanding by Verplast at their
nominal value plus interest accrued on the redemption date, unless on or prior
to September 30, 1997 the Purchaser has caused Verplast either (a) to redeem
all the debentures issued and still outstanding by paying to the then
61
current debenture holders the capital and interest accrued to date or (b) to
release a guarantee on Verplast's assets in favor of the debenture holders.
Should Verplast decide to issue the guarantee pursuant to (b) above, the Seller
shall endeavour to cause the debenture holders to consent at any time to the
redemption of the debentures issued and still outstanding in the event Verplast
will be party to a merger procedure.
8.3 DISCHARGE OF CURRENT DIRECTORS. As soon as practicable, the Purchaser
shall cause Verplast and XXX.XX to hold shareholders' meetings to resolve upon
the full release of the resigning members of their respective Boards of
Directors of Verplast from the resigning Directors' potential liabilities in
respect of Verplast and XXX.XX, respectively, and their respective shareholders
by virtue of the offices held by the resigning Directors.
9. INDEMNIFICATION BY THE SELLER
9.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, the Seller
shall indemnify and hold the Purchaser harmless against and from any and all
costs, expenses, losses, damages and liabilities (including, without
limitation, reasonable attorneys' fees) (the "LOSSES" and each a "LOSS")
incurred by the Purchaser with respect to or in connection with:
(a) any breach of any of the representations and warranties of the
Seller under this Agreement; and
(b) additional Taxes resulting from any inquiry, adjustment or
assessment of a deficiency by a governmental agency or authority concerning
Verplast's Tax Returns for any of the fiscal periods open to verification and
ending on or prior to the Closing Date; and
(c) the reclassification or recategorization by a governmental agency or
authority of any item of expense (including amortization of assets), if such
expense was deducted in any fiscal period open to verification and ending on or
prior to the Closing Date or such asset was acquired during any fiscal period
open to verification and ending on or prior to the Closing Date; and
(d) any breach of the Environmental Laws or any other facts or
circumstances contemplated by Section 6.20 hereof or failure to obtain any
licence, authorization, permit or other measure contemplated by Section 6.19
hereof; and
(e) any claims made by any self-employed persons or other persons not
included in the payroll of Verplast and/or by social security agencies on the
grounds of the employment nature of the relationship with such persons based on
circumstances existing prior to the Closing Date.
9.2 LIMITATIONS TO INDEMNIFICATION. The Purchaser's right to indemnification
shall be subject to the following limitations:
62
(i) in respect of Loss(es) suffered under Section 9.1 (a) above, the
Purchaser's right to indemnification shall lapse if no notice of an
Indemnification Claim shall have been given to the Seller on or before December
31, 1999, except that for Loss(es) suffered for breach of Section 6.21 of this
Agreement, in which case the applicable statutory limitation period (periodo di
prescrizione) shall apply;
(ii) in respect of Loss(es) suffered under Section 9.1 (b), (c), (d) and
(e) above, the Purchaser's right to indemnification shall lapse if no
Indemnification Claim is notified to the Seller on or before the date in which
the applicable statutory limitation period (periodo di prescrizione) will
lapse;
9.3 INDEMNIFICATION PROCEDURE. In order for the Purchaser to be indemnified
and held harmless against and from Losses under this Section 9 other than
Losses arising out of Third Party Claims (as hereinafter defined) under Section
9.4:
(a) the Purchaser shall give written notice to the Seller of any claim
(the "INDEMNIFICATION CLAIM"), which notice shall set forth a reasonably
detailed statement of the Indemnification Claim and the cost, expense, loss,
damage and liability the Purchaser and/or Verplast incurred and/or expects to
incur by reason thereof;
(b) such indemnification payment shall be made on the later of (i) the
expiration of thirty (30) days from the date of such notice (the "NOTICE
PERIOD") or, (ii) if such claim is contested as hereinafter provided, within 10
days from the date in which the dispute is resolved in accordance with this
Section 9.3, or (iii) within 10 days from the date in which such
Indemnification Claim becomes liquidated in amount; and
(c) if, prior to the expiration of the Notice of Period, the Seller
notifies the Purchaser in writing of his intention to dispute the
Indemnification Claim, and if such dispute is not resolved within thirty (30)
days after the expiration of the Notice Period (the "RESOLUTION PERIOD"), then
such dispute shall be resolved by a committee of three arbitrators who shall be
appointed within 60 days of the expiration of the Resolution Period and shall
act in accordance with Section 10.10 below. The parties shall cooperate and
diligently pursue the arbitration of such Indemnification Claim in order for a
decision to be made by the arbitrators within 45 days after their appointment.
9.4 INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The provisions of this
Section shall apply to any Losses which arise or may arise as a result of a
claim made by a third party and any related Litigation or similar process or
proceeding ("THIRD PARTY CLAIM").
(a) the Purchaser or the Designated Purchaser shall give notice to the
Seller promptly after the Purchaser or the Designated Purchaser becomes aware
of any Third Party Claim, which notice shall include a copy of any letter,
complaint or similar writing received by the Purchaser, Designated Purchaser
63
and/or Verplast setting out such Third Party Claim or a written description of
any oral notice received by such party; provided, however, that any delay in
providing such notification shall not constitute a bar or defense to indemnify
except to the extent the Seller has been prejudiced thereby.
(b) Within ten (20) days from the date of such notice to the Seller, the
Seller shall notify the Purchaser in writing if he intends to dispute that such
Third Party Claim constitutes or will constitute a Loss subject to
indemnification hereunder (the "DISPUTE NOTICE"). If the Dispute Notice is
given within said twenty (20) day period, the issue of whether such Third Party
Claim constitutes or will constitute a Loss subject to indemnification
hereunder may be submitted to arbitration in accordance with Section 10.10
hereof, unless an agreement is subsequently reached between the Parties.
(c) For the purpose of this Section 9.4, in the case of a defence of a
Third Party Claim: (i) the Purchaser shall have the right to defend such Third
Party Claim and the costs of such defense, including, without limitation, the
fees and expenses of counsel and other professionals, shall be deemed to be
Losses, (ii) the Seller shall have the right to participate in the defense of
the Third Party Claim at its own costs and expenses provided that such right is
not exercised in a way which could prejudice the Purchaser's defense of the
Third Party Claim, and (iii) the Purchaser shall consult with the Seller prior
to reaching a settlement of the Third Party Claim, if any.
(d) In order for the Seller to exercise the right to participate in the
defense of a Third Party Claim, the Seller shall give notice to the Purchaser
within twenty (20) days after receipt of the notice of the Third Party Claim as
to which no Dispute Notice was given. If the Seller fails to notify the
Purchaser within such period, the Seller shall be deemed to have waived his
right to defend such Third Party Claim and the Purchaser shall have the right
to defend such Third Party Claim, and its costs and expense, including without
limitation the fees and expenses of counsel and other professionals shall be
deemed to be Losses.
10. MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement, the Annexes hereto and the documents
executed and delivered pursuant hereto or simultaneously herewith constitute
the entire agreement between the parties in respect to the subject matter
hereof and supersede all prior written and oral agreements and arrangements
between the parties hereto with regard to the subject matter hereof.
10.2 AMENDMENTS. Any amendment to this Agreement shall be valid and binding
upon the parties only if made in writing and signed by the Seller and the
Purchaser.
10.3 COSTS. All the costs relating to the transfer of the Shares to the
Purchaser, including stamp duties, bank fees and registration tax, if any,
shall
64
be borne by the Purchaser (but not capital gains tax which will be borne by the
Seller).
10.4 EFFECTS. The provisions of this Agreement shall be legally binding upon
the parties and their respective heirs, successors and assigns.
10.5 RIGHTS AND REMEDIES. The exercise or failure to exercise by any party
any right or remedy arising out of this Agreement shall not constitute a waiver
of that right or remedy or of any other rights or remedies.
10.6 NOTICES. All notices, demands or requests provided for or permitted to be
given pursuant to this Agreement must be in writing. All notices, demands and
requests shall be deemed to have been properly served if given by telefax
confirmed by registered post, registered post ora reputable overnight carrier,
addressed as follows:
If to the Seller: Mr. Luigi Xxxxxxx Xxxxxxx
Xxx Xxxxxxxx Xxxxxx 00
Xxxxxxxxxxxxx, Xxxxxx
With a copy to: Avv. Xxxxxxxxx Xxxxxxx
Xxx X. Xxxxxxx 00
00000 Xxxxxx, Xxxxxx
Facsimile No. 0039 2 867391
If to the Purchaser: ICO, Inc.
11490 Westheimer, Xxxxxxx, Xxxxx
00000 XXX
Attn: General Counsel
Facsimile No.: 001 281 721 4222
With copies to: Xxxxxx & Xxxxx
Xxx Xxxxx Xxxxxxxxx 00
00000 Xxxxx Xxxxx
Facsimile No.: 86464548
and to
Xx Xxxxxxxxx Xxxxxxxx
Xxxxxxxx 0
0000 XX Xxxxxxxxx, Xxxxxxxxxxx
Facsimile No.: 0031 10 241 1717
65
Each notice, demand or request shall be effective upon receipt of
telefax or registered post or upon arrival to the recipient's address by
delivery of a reputable overnight carrier in accordance with the foregoing.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall not adversely impact the
effectiveness of any such notice, demand or request. Any addressee may change
its address for notices hereunder by giving written notice in accordance with
this Section.
10.7 INTERPRETATION. The masculine, feminine or neuter pronouns used herein
shall be interpreted without regard to gender, and the use of the singular or
plural shall be deemed to include the other whenever the context so requires.
The headings in this Agreement are inserted for convenience of reference only
and shall not be a part of or control or affect the meaning of this Agreement.
Unless otherwise expressly stated herein, all references herein to sections and
paragraphs are to Sections and paragraphs in this Agreement and all references
herein to Annexes are to Annexes to this Agreement.
10.8 SCHEDULES. The Annexes referred to herein, and attached to this
Agreement, are incorporated herein by reference as if fully set forth in the
text hereof.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with Italian law.
10.10 ARBITRATION. Any disputes arising with respect to or in connection with
this Agreement between the Purchaser and/or Designated Purchaser and the
Seller, without having regard to the number of parties to the procedure, shall
be finally decided by a panel of three arbitrators to be appointed by the
Camera Arbitrale Nazionale ed Internazionale di Milano in accordance with its
Rules of Arbitration. The Arbitrators shall be fluent in both Italian and
English languages both written and spoken and either or both of the two
languages can be used during the procedure. The Arbitrators shall be judging
at law and in accordance with the Italian Civil Code of Procedure.
10.11 BUSINESS DAYS. If any date determined pursuant to this Agreement on which
any obligation of the parties is to be fulfilled falls on a day other than a
Business Day, such date shall be automatically postponed to the first
subsequent Business Day.
10.12 SURVIVAL. The representations and warranties of the parties contained in
this Agreement, the provisions of Section 9 and any other provision of this
Agreement which is expressly stated or, by its nature, is intended to remain
valid after the Closing, shall survive such Closing.
THE PURCHASER THE SELLER
By: /s/ XX X. XXXXXXXXX /s/ LUIGI XXXXXXX XXXXXXX
--------------------------- ----------------------------
Name: Xx X. Xxxxxxxxx Mr Luigi Xxxxxxx Xxxxxxx
Title: Chairman
