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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) MAY 30, 1997
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ALLEN TELECOM INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant As Specified in Charter)
Delaware 1-6016 (38-0290950)
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
25101 Chagrin Boulevard, Beachwood, Ohio 44122-5619
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 216/765-5800
---------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index is on Page 6 of this Report.
Page 1 of 65 Pages.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 4, 1997, Allen Telecom Inc. (the "Company") announced that it
had completed its acquisition of the outstanding minority interests in FOR.E.M.
S.p.A. ("FOREM") and now owns 100 percent of FOREM. This acquisition also
increased the Company's effective ownership of FOREM's 62% owned subsidiary,
Mikom GmbH ("MIKOM"). The minority shareholders were comprised of Goffredo
Modena, Managing Director of FOREM, Guiseppe Colombari, Vice President of
Manufacturing and Microwave Division of FOREM, and their respective spouses
(collectively, the "Minority Shareholders").
Pursuant to Sale and Purchase Agreements of a Pre-emptive Right for the
Subscription to New Shares of Common Stock of FOR.E.M. S.p.A., dated as of May
30, 1997 (the "Pre-Emptive Right Purchase Agreements"), between the Company,
Allen Telecom (Italia) S.r.l., a wholly owned Italian subsidiary of the Company
("Purchaser"), and the Minority Shareholders, Purchaser acquired the pre-emptive
rights for the subscription to new shares of common stock of FOREM from the
Minority Shareholders for an aggregate purchase price equal to approximately
$21.7 million in cash and $5 million in common stock of the Company (261,014
shares). The closing of the acquisition of the pre-emptive rights occurred on
May 30, 1997.
On June 2, 1997, Purchaser subscribed to an increase in the capital of
FOREM and made a capital contribution to FOREM in an amount equal to
approximately $3 million. As a result of this capital increase, the Minority
Shareholders' aggregate ownership in FOREM decreased from 20 percent to 7.5
percent.
Pursuant to Sale and Purchase Agreements of Shares of Common Stock of
FOR.E.M. S.p.A., dated as of June 4, 1997 (the "Shares Purchase Agreements"),
between the Company, Purchaser and the Minority Shareholders, Purchaser acquired
the remaining minority interests in FOREM from the Minority Shareholders. The
aggregate purchase price (the "Purchase Price") for the remaining minority
interests will be computed after the net income for FOREM's 1997 fiscal year
(ending October 31, 1997) ("NI97") is finalized and will be based on the
following formula: (NI97/2 x 3.7) - $61,255.80.
In the event NI97 through the first three quarters of FOREM's 1997
fiscal year (ending July 30, 1997) is greater than $5 million but less that $7.5
million, Purchaser will make an interim payment to the Minority Shareholders of
approximately $4.6 million. In the event NI97 through the third quarter is
greater than $7.5 million, Purchaser will make an interim payment to the
Minority Shareholders of approximately $9.2 million. The interim payments, if
any, will be made on or about September 30, 1997.
As security for the payment of the Purchase Price for the acquisition
of the FOREM minority interests, Purchaser has provided the Minority
Shareholders with a
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bank guarantee in the aggregate amount of approximately $22.1 million. In
addition, the Company has the option to use common stock of the Company, in
partial or full payment, of that portion of the Purchase Price, if any, over
$22.1 million.
The cash paid to the Minority Shareholders on May 30, 1997 was financed
from internally generated funds and from existing credit lines. Similarly, the
cash to be paid to the Minority Shareholders on or about September 30, 1997, if
any, and upon the finalization of NI97 will be financed from internally
generated funds and from existing credit lines.
FOREM is the world's leader in the manufacture of filters, combiners,
and tower mount amplifiers for GSM cellular and DCS 1800 wireless communications
systems, and its MIKOM subsidiary is the world's leader in GSM and DCS 1800
repeaters and other forms of coverage enhancement products. The Company acquired
an initial 40 percent interest in FOREM in December 1994 and an additional 40
percent interest in March 1995. Since that time, the businesses have continued
to expand substantially and have become an integral part of the Company's
worldwide success as a supplier of wireless communications products and
services. The Company intends to continue the present use of the assets of FOREM
and MIKOM.
A copy of the form of the Pre-emptive Right Purchase Agreements is
filed as Exhibit 2(a) to this Report; a copy of the form of the Shares Purchase
Agreements is filed as Exhibit 2(b) to this Report; and a copy of the news
release announcing completion of the transactions is filed as Exhibit 99 to this
Report, all of which are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits.
(2)(a) Form of Sale and Purchase Agreement of
Pre-emptive Right to the Subscription to New
Shares of Common Stock of FOR.E.M. S.p.A.
(excluding exhibits), dated as of May 30, 1997,
between the Company, Purchaser and the Minority
Shareholders.
(b) Form of Sale and Purchase Agreement of Shares
of Common Stock of FOR.E.M. S.p.A. (excluding
exhibits), dated as of June 4, 1997, between the
Company, Purchaser and the Minority
Shareholders.
The exhibits to the Pre-emptive Right Purchase
Agreement and the Shares Purchase Agreement are
not filed herewith. The Agreements filed
herewith each contain a table of contents
briefly identifying the contents of the omitted
exhibits, and the
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Company hereby agrees to furnish supplementally
a copy of any such omitted exhibit to the
Securities and Exchange Commission upon request.
(99) News Release dated June 4, 1997.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Pursuant to the Pre-emptive Right Purchase Agreements, on May 30,
1997, Purchaser acquired the pre-emptive rights for the subscription to new
shares of common stock of FOREM from the Minority Shareholders for an aggregate
purchase price equal to approximately $21.7 million in cash and $5 million in
shares of common stock, par value $1.00 per share, of the Company (the
"Shares"). The Shares were issued pursuant to Regulation S, promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
A copy of the form of the Pre-emptive Right Purchase Agreements is
filed as Exhibit 2(a) to this Report, and a copy of the news release announcing
the completion of this transaction is filed as Exhibit 99 to this Report, both
of which are incorporated herein by reference.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLEN TELECOM INC.
(Registrant)
By: /s/ McDara P. Folan, III
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McDara P. Folan, III
Vice President, Secretary
and General Counsel
Date: June 16, 1997
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ALLEN TELECOM INC.
EXHIBIT INDEX
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EXHIBIT NUMBER PAGE
<S> <C> <C>
(2)(a) Form of Sale and Purchase Agreement of Pre-emptive Right to the
Subscription to New Shares of Common Stock of FOR.E.M. S.p.A. (excluding
exhibits), dated as of May 30, 1997, between the Company, Purchaser and the
Minority Shareholders........................................................ 7
(b) Form of Sale and Purchase Agreement of Shares of Common Stock of FOR.E.M.
S.p.A. (excluding exhibits), dated as of June 4, 1997, between the Company,
Purchaser and the Minority Shareholders...................................... 27
The exhibits to the Pre-emptive Right Purchase Agreement and
the Shares Purchase Agreement are not filed herewith. The
Agreements filed herewith each contain a table of contents
briefly identifying the contents of the omitted exhibits,
and the Company hereby agrees to furnish supplementally a
copy of any such omitted exhibit to the Securities and
Exchange Commission upon request.
(99) News Release dated June 4, 1997.................................................... 64
</TABLE>
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EXHIBIT 2(a)
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SALE AND PURCHASE AGREEMENT
BY AND BETWEEN
ALLEN TELECOM GROUP (ITALIA) S.R.L.
(Purchaser)
and
[Name]
(Seller)
OF A PRE-EMPTIVE RIGHT FOR THE SUBSCRIPTION
TO NEW SHARES OF COMMON STOCK OF FOR.E.M. S.P.A.
Dated as of May 30, 1997
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TABLE OF CONTENTS
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<TABLE>
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1. RECITALS AND EXHIBITS page
2. DEFINITIONS
2.1 Allen page
2.2 Allen Common Stock page
2.3 Business Day page
2.4 Closing page
2.5 Closing Date page
2.6 Cash Payment page
2.7 FOREM page
2.8 Pre-emptive Right page
2.9 Price page
2.10 Purchaser's Dispute Notice page
2.11 Purchaser's Indemnification Claim page
2.12 Purchaser's Loss page
2.13 Purchaser's Notice of Contest Period page
2.14 Purchaser's Resolution Period page
2.15 Seller's Dispute Notice page
2.16 Seller's Indemnification Claim page
2.17 Seller's Loss page
2.18 Seller's Notice of Contest Period page
2.19 Seller's Resolution Period page
3. SALE AND PURCHASE OF PRE-EMPTIVE RIGHT page
4. PRICE
4.1 Price page
4.2 Payments page
5. CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to the Obligations of the Parties page
5.2 Conditions Precedent to the Obligations of Purchaser page
5.3 Conditions Precedent to the Obligations of Seller page
6. CLOSING page
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<TABLE>
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7. REPRESENTATIONS AND WARRANTIES OF SELLER
7.1 Capacity of Seller. Authorisation. Binding Effect page
7.2 Non-violation of Laws. Orders and Agreements page
7.3 Pre-emptive Right page
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER
8.1 Capacity. Authorisation. Binding Effect page
8.2 Non-violation of Laws. Orders and Agreements page
8.3 Organisation, Qualification and Corporate Power page
8.4 Allen Common Stock page
9. INDEMNIFICATION BY SELLER
9.1 Indemnification Generally page
9.2 Indemnification Rights for Direct Claims page
9.3 Seller's Indemnification Claims for Third Party Claims page
10. INDEMNIFICATION BY PURCHASER
10.1 Indemnification Generally page
10.2 Indemnification Rights for Direct Claims page
10.3 Purchaser's Indemnification Claims for Third Party Claims page
11. TERMINATION
11.1 Termination page
11.2 Effect of Termination page
12. MISCELLANEOUS
12.1 Entire Agreement page
12.2 Amendments page
12.3 Costs page
12.4 Effects page
12.5 Rights and Remedies page
12.6 Notices page
12.7 Counterparts page
12.8 Interpretation page
12.9 Arbitration page
12.10 Exchange Rate page
12.11 Governing Law page
12.12 Business Days page
12.13 Allen page
</TABLE>
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<TABLE>
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12.14 Survival page
</TABLE>
EXHIBITS
EXHIBIT A Details of Seller's bank account
- ---------
EXHIBIT B1 Form of "Certificate and Agreement with respect to
- ---------- the Purchase of Securities outside the United
States"
EXHIBIT B2 Form of Letter Agreement of Allen
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EXHIBIT C Form of Letter of Waiver
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SALE AND PURCHASE AGREEMENT
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This Sale and Purchase Agreement dated as of May 30, 1997 is entered into by and
between
- - ALLEN TELECOM GROUP (ITALIA) S.R.L., an Italian company with registered office
at Piazza Belgioioso no. 2, Milan, tax number 11319940158
(hereinafter, "PURCHASER")
- on the one side -
and
- -[Name] (hereinafter, "SELLER")
- on the other side -
(Purchaser and Seller hereinafter, collectively, the "PARTIES")
WITNESSETH:
-----------
A. WHEREAS, Seller owns ____________ shares of common stock of FOR.E.M.
S.p.A., an Italian company with registered office at Via Archimede no.
22/24, Agrate Brianza, having an issued and outstanding capital of
ItL. 3,000,000,000 par value divided into 3,000,000 shares of common
stock having an ItL. 1,000 par value each (hereinafter, "FOREM");
B. WHEREAS, by resolution of an extraordinary shareholders' meeting held
on the date hereof FOREM approved an increase in its share capital by
ItL. 5,000,000,000 to be implemented by issuing 5,000,000 new shares
of common stock having an ItL. 1,000 par value each subject to the
shareholders' pre-emptive rights provided for by Article 2441 of the
Italian Civil Code;
C. WHEREAS, Seller owns a pre-emptive right in and with respect to
___________ FOREM shares of common stock to be issued in
implementation of the capital increase resolution referred to in
recital B above pursuant to said Article 2441 of the Italian Civil
Code (hereinafter, the "PRE-EMPTIVE RIGHT");
D. WHEREAS, Purchaser currently owns 2,400,000 shares of common stock of
FOREM;
E. WHEREAS, Seller wishes to sell, transfer and convey to Purchaser, and
Purchaser wishes to purchase from Seller, the Pre-emptive Right
subject to the terms and conditions set forth in this agreement
(hereinafter, the "AGREEMENT");
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NOW, in consideration of the recitals and mutual representations,
warranties and covenants hereunder, the Parties agree as follows:
ARTICLE 1
RECITALS AND EXHIBITS
1.1 The recitals contained in, and the Exhibits annexed to, this Agreement
constitute an integrating and substantial part hereof.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms and expressions shall have the
meanings indicated below unless the context requires otherwise:
2.1 "ALLEN": Allen Telecom Inc., a Delaware (U.S.A.) corporation with
principal offices at 25101 Chagrin Boulevard, Beachwood, Ohio 44112.
2.2 "ALLEN COMMON STOCK": common stock, par value U.S.D. 1 per share, of
Allen.
2.3 "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.
2.4 "CLOSING": the transfer to Purchaser of all right, title and interest
in and to the Pre-emptive Right currently owned by Seller, the payment
by Purchaser of the Cash Payment and the delivery of the Allen Common
Stock due to Seller on the Closing Date and, more generally, the
performance of all the obligations which have to be fulfilled by the
Parties on the Closing Date pursuant to Article 6 hereof and subject
to the conditions precedent set forth in Article 5 of this Agreement.
2.5 "CLOSING DATE": the date of this Agreement or any such other date no
later than October 31, 1997 as may be mutually agreed to by the
Parties.
2.6 "CASH PAYMENT" shall have the meaning assigned to such expression by
Section 4.2 hereof.
2.7 "FOREM" shall have the meaning assigned to such term by recital C
hereof.
2.8 "PRE-EMPTIVE RIGHT" shall have the meaning assigned to such expression
by recital C hereof.
2.9 "PRICE" shall have the meaning assigned to such expression by Section
4.1 hereof.
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2.10 "PURCHASER'S DISPUTE NOTICE" shall have the meaning assigned to such
expression by Paragraph 10.3 hereof.
2.11 "PURCHASER'S INDEMNIFICATION CLAIM" shall have the meaning assigned to
such expression by Paragraph 9.2 hereof.
2.12 "PURCHASER'S LOSS" shall have the meaning assigned to such expression
by Paragraph 9.1 hereof.
2.13 "PURCHASER'S NOTICE OF CONTEST PERIOD" shall have the meaning assigned
to such expression by Paragraph 9.2 hereof.
2.14 "PURCHASER'S RESOLUTION PERIOD" shall have the meaning assigned to
such expression by Paragraph 9.2 hereof.
2.15 "SELLER'S DISPUTE NOTICE" shall have the meaning assigned to such
expression by Paragraph 9.3 hereof.
2.16 "SELLER'S INDEMNIFICATION CLAIM" shall have the meaning assigned to
such expression by Paragraph 10.2 hereof.
2.17 "SELLER'S LOSS" shall have the meaning assigned to such expression by
Paragraph 10.1 hereof.
2.18 "SELLER'S NOTICE OF CONTEST PERIOD" shall have the meaning assigned to
such expression by Paragraph 10.2 hereof.
2.19 "SELLER'S RESOLUTION PERIOD" shall have the meaning assigned to such
expression by Paragraph 10.2 hereof.
ARTICLE 3
SALE AND PURCHASE OF PRE-EMPTIVE RIGHT
3.1 Seller hereby agrees to sell, transfer and convey to Purchaser, and
Purchaser hereby agrees to purchase from Seller, the Pre-emptive Right
on the Closing Date subject to the terms and conditions set forth in
this Agreement.
ARTICLE 4
PRICE
4.1 PRICE. In consideration of the sale, transfer and conveyance of the
Pre-emptive Right, Purchaser agrees to pay Seller a purchase price
equal to U.S.D. ______________ (hereinafter, the "PRICE").
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4.2 PAYMENTS. The Price shall be paid on the Closing Date as follows:
- Purchaser shall pay Seller U.S.D. _________________ (hereinafter,
the "CASH PAYMENT") in immediately available funds wire transferred to
the bank account of Seller the details of which are listed in EXHIBIT
A hereto; and
- Purchaser shall pay Seller U.S.D. ____________________ in the form
of _______________ shares of Allen Common Stock subject to the
agreements set forth in EXHIBIT B1 and EXHIBIT B2 hereto.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
The obligations of each of the Parties to consummate the transactions which are
contemplated by this Agreement to occur at Closing shall be subject to the
fulfillment or the waiver by both Parties or the other Party, as applicable, of
the conditions set out in this Article 5 below on or before the Closing Date.
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES:
(a) Immediately prior to the Closing Date, there shall be no action or
proceeding initiated by any governmental agency or by any other
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; and
(b) The FOREM shareholders other than Purchaser and Seller shall have
waived their statutory rights of first refusal in respect of the sale
and transfer of the Pre-emptive Right by executing a letter in the
form of EXHIBIT C hereto in duplicate original and delivering one
original of such letter to each of Purchaser and Seller.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER:
(a) Seller shall have duly performed all his material obligations
which, pursuant to this Agreement, are required to be performed prior
to the Closing Date;
(b) The representations and warranties of Seller contained in this
Agreement, the Exhibits and the documents executed and delivered to
Purchaser pursuant hereto or simultaneously herewith, shall be true
and correct in all material respects as of the date hereof and as of
the Closing Date; and
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(c) Seller shall have executed and delivered to Allen a "Certificate
and Agreement with respect to the Purchase of Securities Outside the
United States" in the form of EXHIBIT C1 hereto dated as of the Closing
Date.
5.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER:
(a) Purchaser shall have duly performed all its material obligations
which, pursuant to this Agreement, are required to be performed prior
to the Closing Date;
(b) The representations and warranties of Purchaser and Allen contained
in this Agreement, the Exhibits and the documents executed and
delivered to Seller pursuant hereto or simultaneously herewith, shall
be true and correct in all material respects as of the date hereof and
as of the Closing Date; and
(c) Purchaser shall have delivered to Seller a letter-agreement of
Allen in the form of EXHIBIT B2 hereto.
ARTICLE 6
CLOSING
Subject to the satisfaction or waiver of the conditions precedent contemplated
by Section 5 hereof, Closing shall take place at the Milan offices of Gianni,
Origoni & Partners, Piazza Belgioioso No. 2 (or such other place as may be
agreed upon by Purchaser and Seller before Closing) on the Closing Date. On the
Closing Date the Parties shall comply with their respective obligations as set
out in this Section 6 and shall take any other action and/or sign any other
document which may be required by law or this Agreement. At Closing:
6.1. SELLER shall:
(i) execute a notarial instrument of transfer of the Pre-emptive Right
to Purchaser in a form consistent with this Agreement; and
(ii) execute and deliver to Purchaser any such other documents as are
contemplated by this Agreement to be executed and delivered to
Purchaser at Closing or as may be reasonably requested by Purchaser in
order to complete the Closing transactions or in connection therewith.
6.2 PURCHASER shall:
(i) execute the notarial instrument contemplated by Paragraph 6.1(i)
above;
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(ii) make the payments to Seller contemplated by Paragraph 4.2 hereof
(including delivery to Seller of the certificate representing
___________________ shares of Allen Common Stock duly registered in the
name of Seller); and
(iii) execute and deliver to Seller any such other documents as are
contemplated by this Agreement to be executed and delivered to Seller
at the Closing or as may be reasonably requested by Seller in order to
complete the Closing transactions or in connection therewith.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to the Purchaser's decision to enter into this
Agreement, Seller hereby represents and warrants to Purchaser that:
7.1 CAPACITY OF SELLER. AUTHORISATION. BINDING EFFECT. Seller has full
right, power and authority to enter into this Agreement. No consent of,
notice to, or filing with the Seller's spouse or any third party or
entity whatsoever is required for Seller to enter into this Agreement
or to consummate the transactions contemplated herein. This Agreement
has been duly executed by Seller and shall constitute the legal, valid
and binding obligations of Seller, enforceable against him in
accordance with its terms.
7.2 NON VIOLATION OF LAWS. ORDERS AND AGREEMENTS. The execution and
delivery of this Agreement by Seller and the performance of his
obligations hereunder are not in violation or breach of, do not
conflict with, or constitute a default under, and will not accelerate
or permit the acceleration of the performance required by any of the
terms or provisions of the Certificate of Incorporation or the By-laws
of FOREM or any law, order, decree, note, debt instrument, security
agreement, written or oral, to which Seller or FOREM is a party or by
which Seller or FOREM is bound, and will not be an event which, after
notice of lapse of time or both, will result in any such violation,
breach, conflict, default or acceleration.
7.3 PRE-EMPTIVE RIGHT. Seller is the legal and beneficial owner of the
Pre-emptive Right pursuant to a resolution of an extraordinary
shareholders' meeting of FOREM held on the date hereof subject to court
sanction ("omologa"). The owner of the Pre-emptive Right is entitled to
subscribe to and acquire 635,000 FOREM shares of common stock, free and
clear of any pledges, liens, claims, security interests, encumbrances,
any third party's rights of any nature whatsoever, and nonassessable
subject to the terms and conditions of the above resolution and the
applicable provisions of the Italian Civil Code. By effect of the
execution of the notarial instrument indicated in Paragraph 6.1 (i) and
Paragraph 6.2 (i) hereof, Purchaser will validly acquire title to the
Pre-emptive Right free and clear of any
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pledges, liens, claims, security interests, encumbrances and any third
party's rights of any nature whatsoever.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to the Seller's decision to enter into this Agreement
Purchaser hereby represents and warrants to Seller that:
8.1 CAPACITY. AUTHORISATION. BINDING EFFECT. Purchaser has full right,
power and authority to enter into this Agreement. No consent of, notice
to, or filing with any third party or entity whatsoever is required for
Purchaser to enter into this Agreement or to consummate the
transactions contemplated herein. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein
have been duly authorised by the proper body of Purchaser. This
Agreement has been duly executed by Purchaser and constitutes the
legal, valid and binding obligations of Purchaser enforceable against
it in accordance with its terms.
8.2 NON-VIOLATION OF LAWS, ORDERS AND AGREEMENTS. The execution and
delivery of this Agreement by Purchaser and the performance of its
obligations hereunder are not in violation or breach of, do not
conflict with or constitute a default under, and will not accelerate or
permit the acceleration of the performance required by, any of the
terms or provisions of its Certificate of Incorporation or By-laws or
any law, order, decree, note, debt instrument, security agreement,
debenture or mortgage or any other contract or agreement, written or
oral, to which Purchaser is a party or by which Purchaser is bound, and
will not be an event which, after notice or lapse of time or both, will
result in any such violation, breach, conflict, default or
acceleration.
8.3 ORGANISATION, QUALIFICATION AND CORPORATE POWER. Purchaser is duly
incorporated, validly existing and fully qualified to carry on its
business under the laws of Italy.
8.4 ALLEN COMMON STOCK. All of the shares of Allen Common Stock to be
transferred to Seller pursuant to Paragraph 4.2 hereof shall be
transferred out of Allen's Treasury Stock and shall be free and clear
of any pledges, liens, claims, security interests, encumbrances and
third party's right, and are duly authorized, validly issued, fully
paid and nonassessable, and none of Allen's stockholders nor any other
person has any pre-emptive right or any other right of purchase in
respect thereof.
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ARTICLE 9
INDEMNIFICATION BY SELLER
9.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, Seller
shall indemnify and hold Purchaser harmless against and from any and
all costs, expenses, losses, damages and liabilities (including,
without limitation, reasonable attorneys' fees) incurred by Purchaser
with respect to or in connection with any breach of any of the
representations and warranties of Seller under this Agreement
(hereinafter, the "PURCHASER'S LOSSES" and each a "PURCHASER'S LOSS").
Notwithstanding anything to the contrary contained in this Agreement,
Seller shall have no indemnification obligations to Purchaser under
this Article 9 with respect to any claim made by Purchaser for any
Purchaser's Loss, whether or not arising as a result of a claim made by
a third party, of which Seller is notified after the first anniversary
of the Closing Date.
9.2 INDEMNIFICATION RIGHTS FOR DIRECT CLAIMS. In order to be held
indemnified and harmless against and from Purchaser's Losses under this
Article 9 (other than Purchaser's Losses arising from a claim made by a
third party, as to which Section 9.3 shall apply):
(a) Purchaser shall give written notice to Seller of any claim (the
"PURCHASER'S INDEMNIFICATION Claim"), which notice shall set forth a
reasonably detailed statement of the Purchaser's Indemnification Claim
and the cost, expense, loss, damage and liability Purchaser 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
(hereinafter, the "PURCHASER'S NOTICE OF CONTEST PERIOD") or, (ii) if
such claim is contested as hereinafter provided, the date the dispute
is resolved in accordance with this Section 9.2, or (iii) the date in
which such Purchaser's Indemnification Claim becomes liquidated in
amount; and
(c) if, prior to the expiration of the Purchaser's Notice of Contest
Period, Seller notifies Purchaser in writing of his intention to
dispute the Purchaser's Indemnification Claim, and if such dispute is
not resolved within thirty (30) days after the expiration of such
period (hereinafter, the "PURCHASER'S 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 Purchaser's
Resolution Period) and shall be acting in accordance with Section 12.9
below. The Parties shall cooperate and diligently pursue the
arbitration of such Purchaser's Indemnification Claim in order for a
decision to be made by the arbitrators within 45 days after their
appointment.
9.3 PURCHASER'S INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The
provisions of this Section shall apply to any Purchaser's Losses which
arise or may arise as a
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<PAGE> 13
result of a claim made by a third party and any related litigation or
proceeding (hereinafter, the "THIRD PARTY CLAIM").
(a) Purchaser shall give notice to Seller promptly after Purchaser
becomes aware of any Third Party Claim, which notice shall include a
copy of any letter, complaint or similar writing received by Purchaser
and/or FOREM or any of FOREM's consolidated subsidiaries setting out
such Third Party Claim or a written description of any oral notice
received by Purchaser or FOREM or any of FOREM's consolidated
subsidiaries; PROVIDED, HOWEVER, that any delay in providing such
notification shall not constitute a bar or defense to indemnify except
to the extent Seller has been prejudiced thereby.
(b) Within ten (10) days from the date of such notice, Seller shall
notify Purchaser in writing if he intends to dispute that such Third
Party Claim constitutes or will constitute Purchaser's Losses subject
to indemnification hereunder (hereinafter, the "SELLER'S DISPUTE
NOTICE"). If the Seller's Dispute Notice is given within said ten (10)
day period, the issue of whether such Third Party Claim constitutes or
will constitute Purchaser's Losses subject to indemnification hereunder
may be submitted to arbitration in accordance with Section 12.9 hereof
unless an agreement is subsequently reached between the Parties.
(c) For the purpose of this Paragraph (c) and subsequent Paragraphs (d)
and (e) of this Section 9.3 the defense of a Third Party Claim by
either Purchaser or Seller shall include, as the case may be, the
Purchaser's or the Seller's right to designate counsel to be employed
by Purchaser or FOREM or any of FOREM's consolidated subsidiaries in
defending the Third Party Claim and to provide such counsel with
instructions with respect to the defense thereof, as well as the power
to settle the Third Party Claim on behalf of Purchaser or FOREM or any
of FOREM's consolidated subsidiaries in the cases and subject to the
conditions set forth by this Section 9.3. If a Seller's Dispute Notice
with respect to a Third Party Claim is given then: (i) Purchaser shall
have the right to defend such Third Party Claim and the costs of such
defense shall be added to Purchaser's Losses, (ii) Seller shall have
the right to participate in the defense of the Third Party Claim at his
own costs and expenses provided that such right is not exercised in a
way which may prejudice the Purchaser's defense of the Third Party
Claim, and (iii) Purchaser shall consult with Seller prior to reaching
a settlement of the Third Party Claim, if any.
(d) Seller shall have the right to assume the defense of a Third Party
Claim unless:
(i) a Seller's Dispute Notice is sent to Purchaser pursuant to
Paragraph 9.3 (b) hereof; or
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<PAGE> 14
(ii) the named parties to any action constituting such Third Party
Claim (including any impleaded parties) include Seller or any member of the
Seller's family or any party belonging to a group in which Seller may have a
business interest.
(e) In order for Seller to exercise the right to assume the defense of
a Third Party Claim, Seller shall give notice to Purchaser within ten
(10) days after receipt of the notice of the Third Party Claim as to
which no Seller's Dispute Notice was given. If Seller fails to notify
Purchaser within such period, Seller shall be deemed to have waived his
right to defend such Third Party Claim and Purchaser shall have the
right to defend such Third Party Claim and its costs and expense shall
be added to the Purchaser's Losses. If Purchaser assumes the defense of
a Third Party Claim pursuant to this paragraph (e), Purchaser may not
settle such Third Party Claim without the consent of Seller, which
consent cannot be unreasonably withheld. If Seller assumes the defense
of such Third Party Claim then: (i) Purchaser may participate in the
defense of such claim with its own counsel at its own cost and expense,
(ii) Seller may settle such Third Party Claim without the consent of
Purchaser provided such settlement includes an unconditional release of
Purchaser and its subsidiaries from all liability with respect to any
Third Party Claim and does not involve the imposition of any
restriction or obligation on Purchaser or any of its subsidiaries, and
(iii) Seller may not consent to the entry of any judgment (other than a
judgment of dismissal on the merits) except with the written consent of
Purchaser.
ARTICLE 10
INDEMNIFICATION BY PURCHASER
10.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, Purchaser
shall indemnify and hold Seller harmless against and from any and all
costs, expenses, losses, damages and liabilities (including, without
limitation, reasonable attorneys' fees) incurred by Seller with respect
to or in connection with any breach of any of the representations and
warranties of Purchaser under this Agreement (hereinafter, the
"SELLER'S LOSSES" and each a "SELLER'S LOSS").Notwithstanding anything
to the contrary contained in this Agreement, Purchaser shall have no
indemnification obligations to Seller under this Article 10 with
respect to any claim made by Seller for any Seller's Loss, whether or
not arising as a result of a claim made by a third party, of which
Purchaser is notified after the first anniversary of the Closing Date.
10.2 INDEMNIFICATION RIGHTS FOR DIRECT CLAIMS. In order to be held
indemnified and harmless against and from Seller's Losses under this
Article 10 (other than Seller's Losses arising from a claim made by a
third party, as to which Section 10.3 shall apply):
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<PAGE> 15
(a) Seller shall give written notice to Purchaser of any claim (the
"SELLER'S INDEMNIFICATION CLAIM"), which notice shall set forth a
reasonably detailed statement of the Seller's Indemnification Claim and
the cost, expense, loss, damage and liability Seller 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
(hereinafter, the "SELLER'S NOTICE OF CONTEST PERIOD") or, (ii) if such
claim is contested as hereinafter provided, the date the dispute is
resolved in accordance with this Section 10.2, or (iii) the date in
which such Seller's Indemnification Claim becomes liquidated in amount;
and
(c) if, prior to the expiration of the Seller's Notice of Contest
Period, Purchaser notifies Seller in writing of its intention to
dispute the Seller's Indemnification Claim, and if such dispute is not
resolved within thirty (30) days after the expiration of such period
(hereinafter, the "SELLER'S 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 Seller's Resolution
Period) and shall be acting in accordance with Section 12.9 below. The
Parties shall cooperate and diligently pursue the arbitration of such
Seller's Indemnification Claim in order for a decision to be made by
the arbitrators within 45 days after their appointment.
10.3 SELLER'S INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The provisions
of this Section shall apply to any Seller's Losses which arise or may
arise as a result of a Third Party Claim.
(a) Seller shall give notice to Purchaser promptly after Seller becomes
aware of any Third Party Claim, which notice shall include a copy of
any letter, complaint or similar writing received by Seller setting out
such Third Party Claim or a written description of any oral notice
received by Seller; PROVIDED, HOWEVER, that any delay in providing such
notification shall not constitute a bar or defense to indemnify except
to the extent Purchaser has been prejudiced thereby.
(b) Within ten (10) days from the date of such notice, Purchaser shall
notify Seller in writing if it intends to dispute that such Third Party
Claim constitutes or will constitute Seller's Losses subject to
indemnification hereunder (hereinafter, the "PURCHASER'S DISPUTE
NOTICE"). If the Purchaser's Dispute Notice is given within said ten
(10) day period, the issue of whether such Third Party Claim
constitutes or will constitute Seller's Losses subject to
indemnification hereunder may be submitted to arbitration in accordance
with Section 12.9 hereof unless an agreement is subsequently reached
between the Parties.
(c) For the purpose of this Paragraph (c) and subsequent Paragraphs (d)
and (e) of this Section 10.3 the defense of a Third Party Claim by
either Seller or Purchaser shall include, as the case may be, the
Seller's or the Purchaser's right
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<PAGE> 16
to designate counsel to be employed by Seller in defending the Third
Party Claim and to provide such counsel with instructions with respect
to the defense thereof, as well as the power to settle the Third Party
Claim on behalf of Seller in the cases and subject to the conditions
set forth by this Section 10.3. If a Purchaser's Dispute Notice with
respect to a Third Party Claim is given then: (i) Seller shall have the
right to defend such Third Party Claim and the costs of such defense
shall be added to Seller's Losses, (ii) Purchaser 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
may prejudice the Seller's defense of the Third Party Claim, and (iii)
Seller shall consult with Purchaser prior to reaching a settlement of
the Third Party Claim, if any.
(d) Purchaser shall have the right to assume the defense of a Third
Party Claim unless:
(i) a Purchaser's Dispute Notice is sent to Seller pursuant to
Paragraph 10.3 (b) hereof; or
(ii) the named parties to any action constituting such Third Party
Claim (including any impleaded parties) include Purchaser or any party belonging
to a group in which Purchaser may have a business interest.
(e) In order for Purchaser to exercise the right to assume the defense
of a Third Party Claim, Purchaser shall give notice to Seller within
ten (10) days after receipt of the notice of the Third Party Claim as
to which no Purchaser's Dispute Notice was given. If Purchaser fails to
notify Seller within such period, Purchaser shall be deemed to have
waived its right to defend such Third Party Claim and Seller shall have
the right to defend such Third Party Claim and its costs and expense
shall be added to the Seller's Losses. If Seller assumes the defense of
a Third Party Claim pursuant to this paragraph (e), Seller may not
settle such Third Party Claim without the consent of Purchaser, which
consent cannot be unreasonably withheld. If Purchaser assumes the
defense of such Third Party Claim then: (i) Seller may participate in
the defense of such claim with its own counsel at its own cost and
expense, (ii) Purchaser may settle such Third Party Claim without the
consent of Seller provided such settlement includes an unconditional
release of Seller from all liability with respect to any Third Party
Claim and does not involve the imposition of any restriction or
obligation on Seller, and (iii) Purchaser may not consent to the entry
of any judgment (other than a judgment of dismissal on the merits)
except with the written consent of Seller.
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<PAGE> 17
ARTICLE 11
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by either Seller or Purchaser if Closing has not occurred by
October 31, 1997, PROVIDED, HOWEVER, that if Closing has not occurred
by said date due to the infringement of any of the covenants or
agreements of any of the Parties hereunder, the defaulting Party shall
have no right to terminate this Agreement pursuant hereto;
(b) by Purchaser if any condition in Paragraphs 5.1 and 5.2 cannot be
satisfied by the Closing Date; and
(c) by Seller, if any condition in Paragraphs 5.1 and 5.3 cannot be
satisfied by the Closing Date.
11.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 11.1 hereof, this Agreement shall become void and there shall
be no liability or obligation on the part of Purchaser or Seller under
this Agreement, PROVIDED, HOWEVER, that any provisions hereof which
expressly or by their nature are designed to survive the termination of
this Agreement shall survive the termination of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement, the Exhibits annexed hereto and the
agreements and 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.
12.2 AMENDMENTS. Any amendment to this Agreement shall be valid and binding
upon the Parties only if made in writing and signed by Seller and a
duly authorized officer of Purchaser.
12.3 COSTS. Except as otherwise set forth in this Agreement (x) each Party
shall bear its own costs in relation to the negotiations leading up to
the sale and purchase of the Pre-emptive Right and to the drafting,
execution and carrying into effect of this Agreement and all the other
documents referred to herein, and (y) all the costs relating to the
transfer of the Pre-emptive Right to Purchaser, including stamp
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<PAGE> 18
duties and registration tax, if any, shall be borne by Purchaser only
(but not capital gains tax which will be borne by Seller).
12.4 EFFECTS. The provisions of this Agreement shall be legally binding upon
the Parties and their respective successors and assigns.
12.5 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.
12.6 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 personal delivery, or if transmitted by telecopy, or if
delivered to reputable overnight carrier for next Business Day
delivery, charges billed to or prepaid by shipper, or if sent by air
mail, proper postage prepaid, addressed as follows:
If to SELLER: [Name and Address]
With a copy to: Pavia e Ansaldo
Via dell'Annunciata, 7
20121 Milan, Italy
Attn.: Francesco Manara
Facsimile No. 39-2-6551576
If to PURCHASER: Allen Telecom Group (Italia) S.r.l.
c/o Allen Telecom Inc.
25101 Chagrin Boulevard
Beachwood, Ohio 44122 U.S.A.
Attn.: General Counsel
Facsimile No.: 216-7650410
Gianni, Origoni & Partners
Piazza Belgioioso, 2
20121 Milan, Italy
Attn.: Enzo Schiavello
Facsimile No.: 39-2-76009628
Each notice, demand or request shall be effective upon personal
delivery, or upon confirmation of receipt of the applicable telecopy or two (2)
Business Days after delivery to a reputable overnight carrier in accordance with
the foregoing, or upon arrival at the recipient's address if sent by air mail 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
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<PAGE> 19
request. Service by personal delivery upon Purchaser shall be valid only if
delivered personally to an officer of Allen.
Any addressee may change its address for notices hereunder by giving
written notice in accordance with this Section.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original
instrument, but all such separate counterparts shall constitute one and
the same agreement.
12.8 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
Exhibits are to Exhibits to this Agreement.
12.9 ARBITRATION. Any disputes arising with respect to or in connection with
this Agreement between Purchaser and Seller shall be finally decided by
a panel of three arbitrators in accordance with the Rules of
Arbitration of the Chamber of Commerce and Industry of Geneva. The
arbitration shall be conducted in English.
12.10 EXCHANGE RATE. Except as otherwise set forth in this Agreement or the
Exhibits hereto, to the extent a conversion from U.S. Dollars into
another currency or vice versa is required to be made for the purposes
of this Agreement such conversion shall be made at the exchange rate
published by in Il Sole - 24 Ore for the date on which the circumstance
giving rise to the need to make such conversion under or in connection
with this Agreement shall occur.
12.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Italian law without making reference to its
conflict of law rules.
12.12 BUSINESS DAYS. If the date determined pursuant to this Agreement on
which Closing is to occur or any other obligations 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.
12.13 ALLEN. By executing this Agreement, Allen (x) represents and warrants
that the contents of Section 8.4 hereof shall be true and accurate as
of the Closing Date and (y) agrees to indemnify and hold Seller
harmless against and from any Seller's Losses incurred with respect to
or in connection with any breach of Section 8.4 hereof, as well as any
breach of the Allen's undertakings set forth in EXHIBIT B2
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<PAGE> 20
hereto, under and subject to the terms and conditions of Article 10 of
this Agreement.
12.14 SURVIVAL. Any provision of this Agreement which is expressly stated or,
by its nature, is intended to remain valid after Closing including,
without limitation, Articles 7, 8, 9 and 10 hereof shall survive
Closing and any document executed by the Parties on the date of Closing
including, but not limited to, any notarial instrument of transfer of
the Pre-emptive Right to Purchaser.
ALLEN TELECOM GROUP (ITALIA) S.R.L. [Name]
By: ________________________ ___________________
Name: McDara P. Folan, III
Title: Sole Director
For acceptance of Paragraph 12.13 hereabove:
ALLEN TELECOM INC.
By: _____________________
Name: McDara P. Folan, III
Title: Vice-President
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<PAGE> 1
EXHIBIT 2(b)
------------
FORM
----
SALE AND PURCHASE AGREEMENT
BY AND BETWEEN
ALLEN TELECOM GROUP (ITALIA) S.R.L.
(Purchaser)
and
[Name]
(Seller)
OF SHARES OF COMMON STOCK OF FOR.E.M. S.P.A.
Dated as of June 4, 1997
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. RECITALS AND EXHIBITS page
2. DEFINITIONS
2.1 Adjusted Price page
2.2 Adjustment page
2.3 Adjustment Audit Firm page
2.4 Allen page
2.5 Allen Common Stock page
2.6 Approved Audit Firms page
2.7 Audited Reference Financial Statements page
2.8 Bank page
2.9 Bank Guarantee page
2.10 Business Day page
2.11 Closing page
2.12 Closing Date page
2.13 Deloitte & Touche page
2.14 Deloitte & Touche Notice page
2.15 Election Statement page
2.16 Final Reference Financial Statements page
2.17 First Three Quarter Reference Financial Statements page
2.18 FOREM page
2.19 Mikom page
2.20 NI97 page
2.21 Price page
2.22 Purchaser's Auditors page
2.23 Purchaser's Dispute Notice page
2.24 Purchaser's Indemnification Claim page
2.25 Purchaser's Loss page
2.26 Purchaser's Notice of Contest Period page
2.27 Purchaser's Resolution Period page
2.28 Purchaser's Statement page
2.29 Seller's Auditors page
2.30 Seller's Dispute Notice page
2.31 Seller's Indemnification Claim page
2.32 Seller's Loss page
2.33 Seller's Notice of Contest Period page
2.34 Seller's Resolution Period page
2.35 Seller's Statement page
2.36 Shares page
2.37 Statement page
2.38 Audit Firm page
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
2.39 Third Party Claim page
2.40 Unaudited Reference Financial Statements page
2.41 US GAAP page
3. SALE AND PURCHASE OF SHARES page
4. PRICE
4.1 Price page
4.2 Adjustment page
4.3 Bank Guarantee page
4.4 Payments page
4.4.1 First Payment page
4.4.2 Final Payments page
4.5 Payment Terms and Conditions page
4.5.1 Payments in the form of Allen Common Stock page
4.5.2 Other Payment Terms and Conditions page
4.6 Financial Statements page
4.6.1 In General page
4.6.2 First Three Quarter Reference Financial
Statements page
4.6.3 Final Reference Financial Statements page
4.7 Additional Adjustment page
5. CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to the Obligations
of the Parties page
5.2 Conditions Precedent to the Obligations
of Purchaser page
5.3 Conditions Precedent to the Obligations
of Seller page
6. CLOSING page
7. REPRESENTATIONS AND WARRANTIES OF SELLER
7.1 Capacity of Seller. Authorisation. Binding Effect page
7.2 Non-violation of Laws. Orders and Agreements page
7.3 Shares page
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER
8.1 Capacity. Authorisation. Binding Effect page
8.2 Non-violation of Laws. Orders and Agreements page
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
8.3 Organisation, Qualification and Corporate Power page
8.4 Allen Common Stock page
9. INDEMNIFICATION BY SELLER
9.1 Indemnification Generally page
9.2 Indemnification Rights for Direct Claims page
9.3 Seller's Indemnification Claims for Third Party
Claims page
10. INDEMNIFICATION BY PURCHASER
10.1 Indemnification Generally page
10.2 Indemnification Rights for Direct Claims page
10.3 Purchaser's Indemnification Claims for Third Party
Claims page
11. TERMINATION
11.1 Termination page
11.2 Effect of Termination page
12. MISCELLANEOUS
12.1 Entire Agreement page
12.2 Amendments page
12.3 Costs page
12.4 Effects page
12.5 Rights and Remedies page
12.6 Notices page
12.7 Counterparts page
12.8 Interpretation page
12.9 Arbitration page
12.10 Exchange Rates page
12.11 Governing Law page
12.12 Business Days page
12.13 Survival page
12.14 Allen page
12.15 Certificates page
</TABLE>
EXHIBITS
EXHIBIT A Summary of Principal U.S. Generally Accepted Accounting
Principles
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<PAGE> 5
EXHIBIT B Form of Bank Guarantee
EXHIBIT C1 Payments in the Form of Allen Common Stock
EXHIBIT C2 Form of Election Statement
EXHIBIT D Form of Letter Agreement of Allen
EXHIBIT E Form of "Certificate and Agreement with respect to the
Purchase of Securities outside the United States"
EXHIBIT F Details of Seller's Bank Account
EXHIBIT G Details of Purchaser's Bank Account
EXHIBIT H1(i) Form of Certificate of FOREM for a NI as of July 31, 1997
lower than than U.S.D. 5,000,000
EXHIBIT H1(ii) Form of Certificate of FOREM for a NI as of July 31, 1997
equal to, or in excess of, U.S.D. 5,000,000 but lower
than 7,500,000
EXHIBIT H1(iii) Form of Certificate of FOREM for a NI as of July 31, 1997
in excess of U.S.D. 7,500,000
EXHIBIT H2(i) Form of Joint Certificate of the Parties for a NI as of
July 31, 1997 lower than U.S.D. 5,000,000
EXHIBIT H2(ii) Form of Joint Certificate of the Parties for a NI as of
July 31, 1997 equal to, or in excess of, U.S.D. 5,000,000
but lower than U.S.D. 7,500,000
EXHIBIT H2(iii) Form of Joint Certificate of the Parties for a NI as of
July 31, 1997 in excess of U.S.D. 7,500,000
EXHIBIT H3 Form of Certificate of Purchaser concerning the
First Payment
EXHIBIT H4(i) Form of Certificate of Deloitte & Touche for a NI as of
July 31, 1997 lower than than U.S.D. 5,000,000
EXHIBIT H4(ii) Form of Certificate of Deloitte & Touche for a NI as of
July 31, 1997 equal to, or in excess of, U.S.D. 5,000,000
but lower than 7,500,000
EXHIBIT H4(iii) Form of Certificate of Deloitte & Touche for a NI as of
July 31, 1997 in excess of U.S.D. 7,500,000
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<PAGE> 6
EXHIBIT I1 Form of Certificate of Deloitte & Touche concerning the
Final Payments
EXHIBIT I2 Form of Joint Certificate of the Parties concerning the
Final Payments
EXHIBIT I3 Form of Certificate of Purchaser concerning the Final
Payments
EXHIBIT I4 Form of Certificate of the Third Audit Firm concerning the
Final Payments
EXHIBIT L Form of Letter of Waiver
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<PAGE> 7
SALE AND PURCHASE AGREEMENT
---------------------------
This Sale and Purchase Agreement dated as of June 4, 1997 is entered into by and
between
- - ALLEN TELECOM GROUP (ITALIA) S.R.L., an Italian company with registered office
at Piazza Belgioioso no. 2, Milan, tax number 11319940158
(hereinafter, "PURCHASER")
- on the one side -
and
- - [Name];
(hereinafter, "SELLER")
- on the other side -
(Purchaser and Seller hereinafter, collectively, the "PARTIES")
WITNESSETH:
-----------
A. WHEREAS, Seller owns ___________ shares of common stock (hereinafter,
the "SHARES") of FOR.E.M. S.p.A., an Italian company with registered
office at Via Archimede no. 22/24, Agrate Brianza, having an issued and
outstanding capital of ItL. 8,000,000 par value divided into 8,000,000
shares of common stock having an ItL. 1,000 par value each
(hereinafter, "FOREM");
B. WHEREAS, the Shares are represented by certificate no _______
registered in the name of Seller;
C. WHEREAS, Purchaser currently owns 7,400,000 shares of common stock of
FOREM;
D. WHEREAS, Seller wishes to sell, transfer and convey to Purchaser, and
Purchaser wishes to purchase from Seller, the Shares subject to the
terms and conditions set forth in this agreement (hereinafter, the
"AGREEMENT");
NOW, in consideration of the recitals and mutual representations,
warranties and covenants hereunder, the Parties agree as follows:
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<PAGE> 8
ARTICLE 1
RECITALS AND EXHIBITS
1.1 The recitals contained in, and the Exhibits attached to, this Agreement
constitute an integrating and substantial part hereof.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms and expressions shall have the
meanings indicated below unless the context requires otherwise:
2.1 "ADJUSTED PRICE" shall have the meaning assigned to such expression by
Section 4.2 hereof.
2.2 "ADJUSTMENT " shall have the meaning assigned to such expression by
Section 4.7 hereof.
2.3 "ADJUSTMENT AUDIT FIRM" shall have the meaning assigned to such
expression by Section 4.7 hereof.
2.4 "ALLEN": Allen Telecom Inc., a Delaware (U.S.A.) corporation with
principal offices at 25101 Chagrin Boulevard, Beachwood, Ohio 44112.
2.5 "ALLEN COMMON STOCK": common stock, par value U.S.D. 1 per share, of
Allen.
2.6 "APPROVED AUDIT FIRMS" shall have the meaning assigned to such
expression by Paragraph 4.6.3 hereof.
2.7 "AUDITED REFERENCE FINANCIAL STATEMENTS" shall have the meaning
assigned to such expression by Paragraph 4.6.3 hereof.
2.8 "BANK" shall have the meaning assigned to such term by Section 4.3.
2.9 "BANK GUARANTEE" shall have the meaning assigned to such expression by
Section 4.3 hereof.
2.10 "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.
2.11 "CLOSING": the transfer to Purchaser of all right, title and interest
in and to the Shares and, more generally, the performance of all the
obligations which have to be fulfilled by the Parties on the Closing
Date pursuant to Article 6 hereof and subject to the conditions
precedent set forth in Article 5 of this Agreement.
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<PAGE> 9
2.12 "CLOSING DATE": the date of this Agreement or any such other date no
later than October 31, 1997 as may be mutually agreed to by the
Parties.
2.13 "DELOITTE & TOUCHE": Deloitte & Touche S.p.A., an Italian partnership
with offices at Via Carducci no. 40, Milan.
2.14 "DELOITTE & TOUCHE NOTICE" shall have the meaning assigned to such
expression by Section 4.7 hereof.
2.15 "ELECTION STATEMENT" shall have the meaning assigned to such expression
by Paragraph 4.5.1 hereof.
2.16 "FINAL REFERENCE FINANCIAL STATEMENTS" shall have the meaning assigned
to such expression by Paragraph 4.6.3 hereof.
2.17 "FIRST THREE QUARTER REFERENCE FINANCIAL STATEMENTS" shall have the
meaning assigned to such expression by Paragraph 4.6.2 hereof.
2.18 "FOREM" shall have the meaning assigned to such term by recital A
hereof.
2.19 "MIKOM": Mikom GmbH, a German corporation, with principal offices at
8851 Buchdorf, Germany.
2.20 "NI97" shall have the meaning assigned to such expression by Section
4.2 hereof.
2.21 "PRICE" shall have the meaning assigned to such expression by Section
4.1 hereof.
2.22 "PURCHASER'S AUDITORS" shall have the meaning assigned to such
expression by Paragraph 4.7 (iii) (x) hereof.
2.23 "PURCHASER'S DISPUTE NOTICE" shall have the meaning assigned to such
expression by Section 10.3 hereof.
2.24 "PURCHASER'S INDEMNIFICATION CLAIM" shall have the meaning assigned to
such expression by Section 9.2 hereof.
2.25 "PURCHASER'S LOSS" shall have the meaning assigned to such expression
by Section 9.1 hereof.
2.26 "PURCHASER'S NOTICE OF CONTEST PERIOD" shall have the meaning assigned
to such expression by Section 9.2 hereof.
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2.27 "PURCHASER'S RESOLUTION PERIOD" shall have the meaning assigned to such
expression by Section 9.2 hereof.
2.28 "PURCHASER'S STATEMENT" shall have the meaning assigned to such
expression by Section 4.7 hereof.
2.29 "SELLER'S AUDITORS" shall have the meaning assigned to such expression
by Paragraph 4.7 (iii) (y) hereof.
2.30 "SELLER'S DISPUTE NOTICE" shall have the meaning assigned to such
expression by Section 9.3 hereof.
2.31 "SELLER'S INDEMNIFICATION CLAIM" shall have the meaning assigned to
such expression by Section 10.2 hereof.
2.32 "SELLER'S LOSS" shall have the meaning assigned to such expression by
Section 10.1 hereof.
2.33 "SELLER'S NOTICE OF CONTEST PERIOD" shall have the meaning assigned to
such expression by Section 10.2 hereof.
2.34 "SELLER'S RESOLUTION PERIOD" shall have the meaning assigned to such
expression by Section 10.2 hereof.
2.35 "SELLER'S STATEMENT" shall have the meaning assigned to such expression
by Section 4.7 hereof.
2.36 "SHARES" shall have the meaning assigned to such term by recital A
hereof.
2.37 "STATEMENT" shall have the meaning assigned to such expression by
Section 4.7 hereof.
2.38 "THIRD AUDIT FIRM" shall have the meaning assigned to such expression
by Paragraph 4.6.3 hereof.
2.39 "THIRD PARTY CLAIM " shall have the meaning assigned to such expression
by Paragraph 9.3 hereof.
2.40 "UNAUDITED REFERENCE FINANCIAL STATEMENTS" shall have the meaning
assigned to such expression by Paragraph 4.6.3 hereof.
2.41 "US GAAP": the Generally Accepted Accounting Principles in the United
States of America applied on a consistent basis as summarized in the
adjustment guidelines annexed as EXHIBIT A hereto.
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ARTICLE 3
SALE AND PURCHASE OF SHARES
3.1 Seller hereby agrees to sell, transfer and convey to Purchaser, and
Purchaser hereby agrees to purchase from Seller, the Shares subject to
the terms and conditions set forth in this Agreement.
ARTICLE 4
PRICE
4.1 PRICE. In consideration of the sale, transfer and conveyance of the
Shares, Purchaser agrees to pay Seller a purchase price equal to U.S.D.
16,407,602.57 (sixteenmillion fourhundredseventhousand sixhundredtwo
point fiftyseven) (hereinafter, the "PRICE") subject to adjustment
pursuant to Section 4.2 hereof.
4.2 ADJUSTMENT. The Price shall be subject to adjustment upwards or
downwards, as applicable, if NI97 (as hereinafter defined), respectively,
exceeds or falls short of U.S.D. 14,000,000. The Price as adjusted in
accordance with this Section 4.2 shall be referred to as the "ADJUSTED
PRICE" and shall be calculated by applying the following formula:
[Aggregate formula = NI97 x 3.7 - $61,255.80]
-----
2
where:
- "NI97" shall mean the consolidated net income (or loss) of FOREM and
FOREM's consolidated subsidiaries for the fiscal year ending October 31,
1997 determined in accordance with U.S. GAAP and adjusted to reflect
agreed upon items, if any.
4.3 BANK GUARANTEE. On the Closing Date Purchaser shall procure the delivery
to Seller of a guarantee issued by Bayerische Vereinsbank A.G. or other
primary Italian or foreign bank with a branch in Italy (hereinafter, the
"BANK") in substantially the form of EXHIBIT B hereto (hereinafter, the
"BANK GUARANTEE") securing the payments contemplated by Paragraphs 4.4.1
and 4.4.2 hereof up to an amount of U.S.D. 16,407,602.57 (sixteen million
four hundred and seven thousand six hundred and two point fifty seven).
Promptly after any payment secured by the Bank Guarantee is made by
Purchaser pursuant to this Agreement, Seller and Purchaser shall execute
and deliver to the Bank a joint notice informing the Bank of such payment
in such form as is required to reduce the amount of the Bank Guarantee by
a corresponding amount.
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4.4 PAYMENTS. The Adjusted Price shall be paid by installments as follows:
4.4.1 FIRST PAYMENT.
A. If either the joint certificate of the Parties or the
certificate of Deloitte & Touche contemplated by Paragraph
4.6.2 hereof is executed and delivered to the Parties by
September 30, 1997, the following payment shall be made on
September 30, 1997 or 3 (three) Business Days after the
date of the applicable certificate, whichever is later:
(i) if the consolidated net income of FOREM and FOREM's
consolidated subsidiaries for the first three quarters
ending July 31, 1997 of the 1996/97 fiscal year (as
indicated by any one of the certificates referred to at
this point A above of Paragraph 4.4.1) is equal to, or in
excess of, U.S.D. 5,000,000 but less than U.S.D. 7,500,000,
Purchaser shall pay Seller U.S.D. 2,936,875 (two million
nine hundred and thirty six thousand eight hundred and
seventy five); or
(ii) if the consolidated net income of FOREM and FOREM's
consolidated subsidiaries for the first three quarters
ending July 31, 1997 of the 1996/97 fiscal year (as
indicated by any one of the certificates referred to at
this point A above of Paragraph 4.4.1) is equal to, or in
excess of, U.S.D. 7,500,000, Purchaser shall pay Seller
U.S.D. 5,859,602.20 (five million eight hundred and fifty
nine thousand six hundred and two point twenty), in-lieu-of
the payment referred to at point A (i) of this Paragraph
4.4.1.
Interest shall accrue for the benefit of Seller on any
payment made after September 30, 1997, if any, under this
point A of Paragraph 4.4.1 in accordance with Paragraph
4.5.2 hereof.
For the purposes of this point A of Paragraph 4.4.1, the
joint certificate of the Parties, if any, shall prevail
over the certificate of Deloitte & Touche.
B. If neither the joint certificate of the Parties nor the
certificate of Deloitte & Touche contemplated by Paragraph
4.6.2 hereof is executed and delivered to the Parties by
September 30, 1997, Purchaser shall:
(i) ON SEPTEMBER 30, 1997 OR 3 (THREE) BUSINESS DAYS AFTER
THE DATE OF THE PURCHASER'S CERTIFICATE CONTEMPLATED BY
PARAGRAPH 4.6.2 HEREOF, WHICHEVER IS LATER:
- make the payment contemplated by point A (i) or point A
(ii) of this Paragraph 4.4.1, as applicable, based upon the
Purchaser's certificate
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indicated at Paragraph 4.6.2 hereof. Upon receipt by
Seller of the payment contemplated by this point B (i) of
Paragraph 4.4.1, Purchaser and Seller shall send a joint
notice to the Bank pursuant to Section 4.3 hereof in the
form needed to reduce the amount of the Bank Guarantee by
the amount of such payment; and
(ii) 3 (THREE) BUSINESS DAYS AFTER THE DATE OF THE
CERTIFICATE OF DELOITTE & TOUCHE OR THE JOINT CERTIFICATE
OF THE PARTIES CONTEMPLATED BY PARAGRAPH 4.6.2 HEREOF, IF
AVAILABLE BY OCTOBER 31, 1997, OR ON NOVEMBER 5, 1997:
- to the extent a payment to Seller is due pursuant to
point A (i) or point A (ii) of this Paragraph 4.4.1 based
upon the certificate of Deloitte & Touche indicated at
Paragraph 4.6.2 hereof or, if such certificate is not
available by October 31, 1997, the certificate of FOREM
indicated at such Paragraph 4.6.2 make such payment (less
the payment already made pursuant to point B (i) of this
Paragraph 4.4.1, if any). For the purposes of this point B
(ii) of Paragraph 4.4.1, if the Parties reach a final
agreement concerning the applicable income bracket for the
payment contemplated by such point B (ii) of Paragraph
4.4.1 on or before October 31, 1997, as documented by a
certificate in the form of EXHIBIT H2 (I) or EXHIBIT H2
(II) or EXHIBIT H2 (III) hereto, as applicable, such
agreement shall prevail over the certificate of Deloitte &
Touche or the certificate of FOREM contemplated by
Paragraph 4.6.2 hereof, as applicable.
Interest shall accrue for the benefit of Seller on any
payment made after September 30, 1997, if any, under this
point B of Paragraph 4.4.1 in accordance with Paragraph
4.5.2 hereof.
4.4.2 FINAL PAYMENTS.
A. If the joint certificate of the Parties contemplated by
Paragraph 4.6.3 hereof is executed by January 30, 1998, the
following payments shall be made by Purchaser or Seller, as
applicable, on January 30, 1998 or 3 (three) Business Days
after the date of such certificate, whichever is later
(except for payments in the form of Allen Common Stock, if
any, which shall be made within the date set forth in
Paragraph 4.5.1 hereof):
(i) if the Adjusted Price determined on the basis of NI97
(as indicated in the joint certificate of the Parties
referred to at this point A above of Paragraph 4.4.2)
exceeds the payment made by Purchaser pursuant to Paragraph
4.4.1 hereof, Purchaser shall make the following payments:
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<PAGE> 14
(x) the difference between U.S.D. 14,082,852.20
(fourteen million eighty two thousand eight hundred and
fifty two point twenty) and the payment made pursuant to
Paragraph 4.4.1 hereof shall be paid in U.S. Dollars; and
(y) the portion of the Adjusted Price over U.S.D.
14,082,852.20 (fourteen million eighty two thousand eight
hundred and fifty two point twenty), if any, shall be paid:
- in U.S. Dollars; or
- in the form of Allen Common Stock as determined pursuant
to EXHIBIT C1 hereto and subject to the agreements set
forth in EXHIBIT D and EXHIBIT E hereto; or
- in any such combination of U.S. Dollars and Allen Common
Stock as Purchaser may determine pursuant to Paragraph
4.5.1 hereof,
PROVIDED, HOWEVER, that Paragraph 4.5.1 shall apply to the
payment made in the form of Allen Common Stock, if any; or
(ii) if the Adjusted Price determined on the basis of NI97
(as indicated in the joint certificate of the Parties
contemplated by Paragraph 4.6.3 hereof) is less than the
payment already made to Seller pursuant to Paragraph 4.4.1
hereof, the difference shall be paid by Seller to
Purchaser.
Interest shall accrue for the benefit of Seller on any
payment made by Purchaser after January 30, 1998, if any,
under this point A of Paragraph 4.4.2 in accordance with
Paragraph 4.5.2 hereof.
B. If the joint certificate of the Parties contemplated by
Paragraph 4.6.3 hereof is not executed by January 30,
1998, Purchaser shall:
(i) ON JANUARY 30, 1998 OR 3 (THREE) BUSINESS DAYS AFTER
THE DATE OF THE PURCHASER'S CERTIFICATE CONTEMPLATED BY
PARAGRAPH 4.6.3 HEREOF, WHICHEVER IS LATER (EXCEPT FOR
PAYMENTS IN THE FORM OF ALLEN COMMON STOCK, IF ANY, WHICH
SHALL BE MADE WITHIN THE DATE SET FORTH IN PARAGRAPH 4.5.1
HEREOF):
- make the payment contemplated by point A (i) of this
Paragraph 4.4.2 hereof based upon NI97 as indicated in the
Purchaser's certificate issued pursuant to Paragraph 4.6.3
hereof. Upon receipt by Seller of the payment contemplated
by this point B (i) of Paragraph 4.4.2, Purchaser
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<PAGE> 15
and Seller shall send a joint notice to the Bank pursuant
to Section 4.3 hereof in the form needed to reduce the
amount of the Bank Guarantee by the amount of such
payment,
PROVIDED, HOWEVER, that Paragraph 4.5.1 shall apply to the
payments made in the form of Allen Common Stock, if any;
and
(ii) 3 (THREE) BUSINESS DAYS AFTER THE DATE OF THE
CERTIFICATE OF THE THIRD AUDIT FIRM OR THE JOINT
CERTIFICATE OF THE PARTIES CONTEMPLATED BY PARAGRAPH 4.6.3
HEREOF, IF AVAILABLE BY MARCH 31, 1998, OR ON APRIL 3,
1998:
- to the extent a payment to Seller is due pursuant to
point A (i) of this Paragraph 4.4.2 based upon the
certificate of the Third Audit Firm indicated at Paragraph
4.6.3 hereof or, if such certificate is not available by
March 31, 1998, based upon the Deloitte & Touche
certificate indicated at such Paragraph 4.6.3, make such
payment (less the payment already made pursuant to point B
(i) of this Paragraph 4.4.2, if any).
For the purposes of this point B (ii) of Paragraph 4.4.2,
if the Parties reach a final agreement concerning NI97 for
the payment contemplated by such point B (ii) of Paragraph
4.4.2 on or before March 31, 1998, as documented by a
certificate in the form of EXHIBIT I2 hereto, such
agreement shall always prevail over the certificate of the
Third Audit Firm or the certificate of Deloitte & Touche
contemplated by Paragraph 4.6.3 hereof, as applicable.
Interest shall accrue for the benefit of Seller on any
payment made after January 31, 1998, if any, under this
point B of Paragraph 4.4.2 in accordance with Paragraph
4.5.2 hereof.
To the extent the total payments made to Seller under this
Section 4.4 exceeds the payment that would have been due to
Seller based upon the joint certificate of the Parties or
the certificate of the Third Audit Firm indicated in
Paragraph 4.6.3 hereof, Seller shall pay such excess to
Purchaser within 3 (three) Business Days from the delivery
of the joint certificate of the Parties or the certificate
of the Third Audit Firm contemplated by Paragraph 4.6.3
hereof to the Parties.
4.5 PAYMENT TERMS AND CONDITIONS.
4.5.1 PAYMENTS IN THE FORM OF ALLEN COMMON STOCK. On or before
January 30, 1998 Purchaser shall determine the portion of
the Adjusted Price to be
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<PAGE> 16
paid in the form of Allen Common Stock, if any, on the
basis of the joint certificate of the Parties or the
certificate of Purchaser contemplated by Paragraph 4.6.3
hereof by delivering to Seller a letter in the form of
EXHIBIT C2 hereto (hereinafter, the "ELECTION STATEMENT").
Purchaser shall deliver to Seller a certificate
representing the Allen Common Stock (determined in
accordance with EXHIBIT C1 hereto and the Election
Statement) duly registered in the name of Seller within 5
(five) Business Days from the delivery of the Election
Statement to Seller or the date of the joint certificate of
the Parties or the certificate of Purchaser contemplated by
Paragraph 4.6.3 hereof, whichever is later, in any event no
later than February 6, 1998.
Failing delivery of (x) the Election Statement by January
30, 1998 or (y) the certificate representing the Allen
Common Stock by February 6, 1998, Purchaser shall no longer
have the right to elect to pay such portion of the Adjusted
Price in the form of Allen Common Stock or the Election
Statement shall become null and void, as applicable, and
the entire excess of the Adjusted Price over the payment
made by Purchaser pursuant to Paragraph 4.4.1 hereof shall
be paid by Purchaser in U.S. Dollars.
Simultaneously with the delivery of the certificate
contemplated by this Paragraph 4.5.1 (x) Purchaser shall
procure that Allen delivers to Seller a letter-agreement in
the form of EXHIBIT D hereto, and (y) Seller shall deliver
to Allen a Certificate and Agreement in the form of EXHIBIT
E hereto duly signed by Seller.
4.5.2 OTHER PAYMENT TERMS AND CONDITIONS. Except for the payments
permitted to be made in the form of Allen Common Stock
pursuant hereto, all payments owing to Seller under this
Agreement shall be made in U.S. Dollars in immediately
available funds wire transferred to the bank account the
details of which are listed in EXHIBIT F hereto or to the
different bank account of which Purchaser is notified by
Seller with no less than 5 (five) Business Day prior
written notice.
All payments due to Purchaser under this Agreement shall be
made in U.S. Dollars in immediately available funds wire
transferred to the bank account the details of which are
listed in EXHIBIT G hereto, or to the different bank
account of which Seller is notified by Purchaser with no
less than 5 (five) Business Day prior written notice.
If any payment owing to Seller pursuant to Paragraph 4.4.1
hereof is made by, or on behalf of, Purchaser after
September 30, 1997, interest
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shall accrue for the benefit of Seller at the annual rate
of 7 (seven) per cent from October 1, 1997 until the date
of actual payment. If any payment owing to Seller pursuant
to Paragraph 4.4.2 hereof is made by, or on behalf of,
Purchaser after January 31, 1998, interest shall accrue
for the benefit of Seller at the annual rate of 7 (seven)
per cent from February 1, 1998 until the date of actual
payment in U.S. Dollars or the date of the certificate
representing Allen Common Stock, as applicable. Except as
expressly contemplated by this Section 4.5 or for breach
of this Agreement pursuant to the Italian Civil Code, no
interest shall be payable to Seller on any payment due by
Purchaser pursuant to this Agreement.
4.6 FINANCIAL STATEMENTS
4.6.1 IN GENERAL. The Parties shall co-operate and take any such
proper action that is under their respective control as is
required or expedient to enable Deloitte & Touche, the
audit firm designated by Purchaser, if any, the Third
Audit Firm and their respective affiliated firms in the
jurisdictions of FOREM's consolidated subsidiaries to
attend the physical inventories taken by FOREM and FOREM's
consolidated subsidiaries, unless such physical
inventories are deemed unnecessary by Purchaser, Seller
and Deloitte & Touche at the end of the fiscal year ending
October 31, 1997 in relation to the preparation of the
Final Reference Financial Statements.
No physical inventories will be taken by FOREM and FOREM's
consolidated subsidiaries at the end of the first three
quarters of the 1996/97 fiscal year, it being understood
and agreed that the normal practices followed by such
companies in preparing their quarterly reports shall govern
the preparation of the First Three Quarter Reference
Financial Statements.
Purchaser hereby acknowledges that it is aware of the
circumstance that, starting from May 1, 1997 FOREM adopted
new rotating-based inventory procedure. FOREM is also
contemplating the adoption, starting from July 1, 1997, of
a new software package for management production in both
Agrate Brianza and Lallio plants (BPCS package). MIKOM is
contemplating the adoption of a new software to be used for
work in progress inventory at October 31, 1997.
Subject to EXHIBIT A hereto, the closing balances of the
U.S. GAAP financial statements as at October 31, 1996 of
FOREM and FOREM's consolidated subsidiaries shall be final
and binding on the Parties, Deloitte & Touche, the Third
Audit Firm and their respective affiliated firms in the
jurisdictions of FOREM's consolidated subsidiaries.
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<PAGE> 18
4.6.2 FIRST THREE QUARTER REFERENCE FINANCIAL STATEMENTS. As
soon as reasonably practicable after July 31, 1997 but no
later than September 15, 1997, Seller shall cause the
consolidated financial statements of FOREM and FOREM's
consolidated subsidiaries for the first three quarters
ending July 31, 1997 of the 1996/97 fiscal year to be
delivered in 2 originals of which 1 shall be given to
Seller and 1 to Purchaser, with a copy to Deloitte &
Touche, together with (i) FOREM's letter stating that such
consolidated financial statements have been prepared
consistently with U.S. GAAP and (ii) a certificate of
FOREM in the form of EXHIBIT H1(i) or EXHIBIT H1(ii) or
EXHIBIT H1(iii) hereof, as applicable, executed by the
persons referred to at point (ii) of Section 12.15 hereof,
indicating the applicable income bracket for the purposes
of the payments contemplated by Paragraph 4.4.1 hereof
(hereinafter, the "FIRST THREE QUARTER REFERENCE FINANCIAL
STATEMENTS").
Purchaser and Seller shall have the right to review the
First Three Quarter Reference Financial Statements until
September 21, 1997, and during such period they shall take
any such steps as are under their respective control to
afford each other free access to the premises, books,
records and officers of FOREM's and FOREM's consolidated
subsidiaries during normal business hours and shall afford
each other any such co-operation as the other Party may
reasonably request.
If by September 21, 1997:
- Purchaser and Seller reach a final agreement concerning
the First Three Quarter Reference Financial Statements; or
- in the absence of such an agreement, the disputed items
are not material to determining the applicable income
bracket for the purposes of the payments contemplated by
Paragraph 4.4.1 hereof,
then the Parties shall sign a joint certificate in the form
of EXHIBIT H2(i) or EXHIBIT H2(ii) or EXHIBIT H2(iii)
hereto, as applicable, certifying the applicable income
bracket for the purposes of the payments contemplated by
Paragraph 4.4.1 hereof. Such joint certificate shall be
signed in 3 originals of which 2 shall be given to Seller
and 1 to Purchaser.
If the joint certificate referred to above is not executed
by September 21, 1997, then:
(a) within one (1) Business Day from September 21, 1997
Purchaser shall issue a letter addressed to Seller
indicating the items of the First
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Three Quarter Reference Financial Statements disputed by
it and a certificate in the form of EXHIBIT H3 hereto
indicating the applicable income bracket for the purposes
of the payments contemplated by Paragraph 4.4.1 hereof
taking into account the disputed items;
(b) within one (1) Business Day from September 21, 1997
Seller shall issue a letter addressed to Purchaser
indicating the items of the First Three Quarter Reference
Financial Statements disputed by it; and
(c) either Seller or Purchaser or both shall entrust
Deloitte & Touche with the review of the disputed items;
PROVIDED, HOWEVER, that a Party who does not issue a letter
timely under this point (a) or (b) above of Paragraph 4.6.2
may not later dispute additional items not raised in the
other Party's letter, if any, issued under this point (a)
or (b) above of Paragraph 4.6.2.
Deloitte & Touche shall be given copies of the First Three
Quarter Reference Financial Statements and the letter(s) of
Purchaser and/or Seller indicating the disputed items and
shall be instructed by the appointing Party or Parties (x)
to issue their determination concerning the disputed items
and (y) to deliver a certificate in the form of EXHIBIT
H4(i) or EXHIBIT H4(ii) or EXHIBIT H4(iii) hereto, as
applicable, to the Parties (in 3 originals of which 2 shall
be delivered to Seller and 1 to Purchaser) certifying the
applicable income bracket for the purposes of the payments
contemplated by Paragraph 4.4.1 hereof by September 30,
1997 or any such later date as Deloitte & Touche are
prepared to accept, in any event no later than October 31,
1997.
The determination of Deloitte & Touche shall be final and
binding upon the Parties, save in the event of manifest
mistake.
4.6.3 FINAL REFERENCE FINANCIAL STATEMENTS. As soon as reasonably
practicable after October 31, 1997, but no later than
January 5, 1998 Seller shall cause unaudited consolidated
financial statements of FOREM and FOREM's consolidated
subsidiaries as of October 31, 1997 (i) to be prepared
consistently with U.S. GAAP, (ii) to be adjusted to reflect
any items that may be agreed upon in writing between the
Parties, and (iii) to be delivered in 2 originals of which
1 shall be given to Seller and 1 to Purchaser (hereinafter,
the "UNAUDITED REFERENCE FINANCIAL STATEMENTS").
Purchaser and Seller shall have the right to review the
Unaudited Reference Financial Statements until January 23,
1998, and during such period they shall take any such steps
as are under their respective
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<PAGE> 20
control to afford each other free access to the premises,
books, records and officers of FOREM and FOREM's
consolidated subsidiaries during normal business hours and
shall afford each other any such other co-operation as the
other Party may reasonably request. Purchaser may entrust
an audit firm other than Deloitte & Touche designated by
it with the review of the Unaudited Reference Financial
Statements and the exercise of all or part of the rights
of Purchaser with respect to such review.
No later than January 23, 1998 Seller shall cause audited
consolidated financial statements of FOREM and FOREM's
consolidated subsidiaries as of October 31, 1997 to be
delivered in 2 originals of which 1 shall be given to
Seller and 1 to Purchaser together with (i) a letter of
Deloitte & Touche confirming that such consolidated
financial statements are consistent with U.S. GAAP and
reflect the agreed upon adjustments, if any, and (ii) a
certificate of Deloitte & Touche in the form of EXHIBIT I1
indicating NI97 for the purposes of the payments
contemplated by Paragraph 4.4.2 (such consolidated
financial statements, the relevant letter and the
certificate of Deloitte & Touche, hereinafter, the "AUDITED
REFERENCE FINANCIAL STATEMENTS").
Purchaser and Seller shall have the right to review such
Audited Reference Financial Statements until January 30,
1998. If by January 30, 1998 Purchaser and Seller reach a
final agreement concerning NI97, then (x) the Audited
Reference Financial Statements (as adjusted to reflect
agreed changes, if any) shall become final and binding upon
the Parties for the purposes of the payments contemplated
by Paragraph 4.4.2 hereof and shall be referred to herein
as the "FINAL REFERENCE FINANCIAL STATEMENTS", and (y) the
Parties shall sign a joint certificate in the form of
EXHIBIT I2 hereto certifying NI97 for the purposes of the
payments contemplated by Paragraph 4.4.2 hereof. Such joint
certificate shall be signed in 3 originals of which 2 shall
be given to Seller and 1 to Purchaser.
If the joint certificate referred to at point (y) above is
not executed by January 30, 1998, then:
(a) within 1 (one) Business Day from January 30, 1998
Purchaser shall issue a letter addressed to Seller
indicating the items of the Audited Reference Financial
Statements disputed by it and a certificate in the form of
EXHIBIT I3 hereto indicating NI97 for the purposes of the
payments contemplated by Paragraph 4.4.2 hereof taking into
account the disputed items;
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<PAGE> 21
(b) within 1 (one) Business Day from January 30, 1998
Seller shall issue a letter addressed to Purchaser
indicating the items of the Audited Reference Financial
Statements disputed by it, if any; and
(c) either Seller or Purchaser or both shall entrust Arthur
Andersen, Milan, with the preparation of the Final
Reference Financial Statements; PROVIDED, HOWEVER, that a
Party who does not issue a letter timely under this point
(a) or (b) above of Paragraph 4.6.3 may not later dispute
additional items not raised in the other Party's letter, if
any, issued under this point (a) or (b) above of Paragraph
4.6.3.
If Arthur Andersen, Milan does not accept appointment
pursuant to this Paragraph 4.6.3 within 5 (five) Business
Days of its having been notified in writing by the Parties,
or any of them, the Parties shall refer the preparation of
the Final Reference Financial Statements to another audit
firm mutually selected by them amongst Price Waterhouse
(Milan), Reconta Ernst & Young (Milan) and KPMG (Milan)
(the "APPROVED AUDIT FIRMS"). If the Parties do not agree
on the name of one of the Approved Audit Firms within 5
(five) Business Days of expiry of the above 5-day period,
each Party may apply for the appointment of said firm, to
be selected among the Approved Audit Firms, by the Chairman
of the "Ordine dei Dottori Commercialisti" of Milan, who
shall be instructed not to appoint any firm which will be
then auditing, or which will have in the past 10 (ten)
years audited, the financial statements of any of the
Parties or of their respective affiliates or of FOREM or
any of FOREM's consolidated subsidiaries (Arthur Andersen
or the other audit firm hereinafter, the "THIRD AUDIT
FIRM"). The Final Reference Financial Statements shall be
the Audited Reference Financial Statements as adjusted
exclusively to reflect the determination of the Third Audit
Firm concerning the disputed items based on a review of
such items conducted in accordance with generally accepted
audit standards. The Third Audit Firm shall be given copies
of the Audited Reference Financial Statements, the
letter(s) of Purchaser and/or Seller, if any, indicating
the disputed items and shall be instructed by the
appointing Party or Parties (x) to prepare the Final
Reference Financial Statements and (y) to deliver a
certificate in the form of EXHIBIT I4 hereto to the Parties
(in 3 originals of which 2 shall be delivered to Seller and
1 to Purchaser) certifying NI97 for the purposes of the
payments contemplated by Paragraph 4.4.2 hereof by March
31, 1998.
The determination of the Third Audit Firm shall be final
and binding upon the Parties, save in the event of manifest
mistake.
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In the event the Third Audit Firm does not prepare and
deliver to the Parties within March 31, 1998 the Final
Reference Financial Statements, such Final Reference
Financial Statements shall be, for the purposes
contemplated by this Paragraph 4.6.3 and Section 4.7
hereof, the Audited Reference Financial Statements as
prepared and delivered by Deloitte & Touche; PROVIDED,
HOWEVER, that in the event the Parties reach a final
agreement concerning NI97 and execute a joint certificate
pursuant to this Paragraph 4.6.3, the Final Reference
Financial Statements shall be the Audited Reference
Financial Statements (as adjusted to reflect agreed
changes, if any) for the purposes of this Paragraph 4.6.3
and Section 4.7 hereof.
4.7 ADDITIONAL ADJUSTMENT. Notwithstanding anything to the contrary contained
in this Agreement, the payments made to Seller pursuant to Section 4.4
hereof shall be subject to additional adjustment downwards or upwards in
accordance with this Section 4.7.
(i) By the date indicated in point (iii) of this Section 4.7, Purchaser
and/or Seller, as applicable, shall prepare a statement (hereinafter, the
"PURCHASER'S STATEMENT" and/or the "SELLER'S STATEMENT", as applicable,
and each a "STATEMENT") showing the adjustments, if any, which are
required to be made with respect to the Final Reference Financial
Statements in order to remedy errors, omissions, misstatements or fraud,
it being understood and agreed that for the purposes of preparing such
Statement only information available to the Parties or their auditors at
the time the Final Reference Financial Statements become final pursuant
to Paragraph 4.6.3 hereof will be taken into account, PROVIDED, HOWEVER,
that invoices not yet received and/or issued on the date of the Final
Reference Financial Statements but relating to the fiscal year ending on
October 31, 1997, shall entitle Purchaser or Seller, as applicable, to
apply for the Adjustment (as hereinafter defined) contemplated by this
Section 4.7.
(ii) The balance of the positive and negative adjustments shown in the
Statement(s) shall be computed, for purposes of determination of the
Adjustment (as hereinafter defined), net of the higher or lower tax
burden which would have been incurred by FOREM and/or FOREM's
consolidated subsidiaries, had said adjustments been taken into account
in determining the Final Reference Financial Statements. In such
connection, the tax carry forward of losses, if any, shall be calculated
at the conventional rate of 50%. The net figure determined as above shall
be referred to herein as the "ADJUSTMENT". The Adjustment shall be paid
by Seller to Purchaser or vice versa within 15 (fifteen) Business Days of
the date on which the Statement(s) shall have become final pursuant to
point (iii) of this Section 4.7.
(iii) By February 28, 1999, as applicable:
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(x) Purchaser shall cause the Purchaser's Statement to be
delivered to Seller, with a copy to Deloitte & Touche,
together with a letter of an audit firm designated by
Purchaser (hereinafter, the "PURCHASER'S AUDITORS") confirming
that the adjustment items indicated in such Statement are
required to remedy errors, omissions, misstatements or fraud
affecting the preparation of the Final Reference Financial
Statements, pursuant to point (i) of this Section 4.7.
Deloitte & Touche may, within 30 (thirty) days of receipt of
the Purchaser's Statement, object in writing by notice
delivered to Purchaser (hereinafter, the "DELOITTE & TOUCHE
NOTICE"), with a copy to the Purchaser's Auditors, that said
Statement contains adjustments not permitted under point (i)
of this Section 4.7 specifying the disputed items and the
grounds on which their objections are based. Purchaser shall
enable Deloitte & Touche to review the work papers of the
Purchaser's Auditors and to be afforded by the Purchaser's
Auditors, and Purchaser shall afford and cause its
consolidated subsidiaries to afford Deloitte & Touche, all
such assistance and co-operation as Deloitte & Touche may
reasonably request including, but not limited to, access to
the premises and the books and records of FOREM and FOREM's
consolidated subsidiaries, during normal business hours. If
the Deloitte & Touche Notice is received by Purchaser in
accordance with this Section 4.7, the Parties shall endeavor
to reach a common position on the disputed items, which shall
be reflected in a writing executed by each of the Parties and
binding upon them. Should this not occur within 15 (fifteen)
Business Days of the above delivery of the Deloitte & Touche
Notice to Purchaser, the Parties shall refer the disputed
items to Arthur Andersen, Milan; and/or.
(y) Seller shall cause the Seller's Statement to be delivered to
Purchaser, with a copy to Deloitte & Touche, together with a
letter of an audit firm designated by Seller (hereinafter, the
"SELLER'S AUDITORS") confirming that the adjustment items
indicated in such Statement are required to remedy errors,
omissions, misstatements or fraud affecting the preparation of
the Final Reference Financial Statements, pursuant to point
(x) of this Section 4.7. Deloitte & Touche may, within 30
(thirty) days of receipt of the Seller's Statement, object in
writing by notice delivered to Seller (hereinafter, the
"DELOITTE & TOUCHE NOTICE"), with a copy to the Seller's
Auditors, that said Statement contains adjustments not
permitted under point (x) of this Section 4.7 specifying the
disputed items and the grounds on which their objections are
based. Seller shall enable Deloitte & Touche to review the
work papers of the Seller's Auditors and to be afforded by the
Seller's Auditors all such assistance and co-operation as
Deloitte & Touche may reasonably request including, but not
limited to, access to the premises and the books and records
of FOREM and FOREM's consolidated subsidiaries, during normal
business hours. If the Deloitte & Touche Notice is received by
Seller in accordance with this Section 4.7, the Parties shall
endeavor to reach a common position on the disputed items,
which shall be reflected in a writing executed by each of the
Parties and
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binding upon them. Should this not occur within 15 (fifteen)
Business Days of the above delivery of the Deloitte & Touche
Notice to Seller, the Parties shall refer the disputed items
to Arthur Andersen, Milan.
If Arthur Andersen does not accept appointment pursuant to point (x) or
point (y) of this Section 4.7 within 10 (ten) Business Days of its having
been notified in writing by the Parties, or any of them, the Parties
shall refer the disputed items to a third audit firm mutually selected by
them. If the Parties do not agree on the name of such audit firm within
15 (fifteen) Business Days of the expiry of the above 10-day period, each
Party may apply for the appointment of said firm, to be selected among
the audit firms with international standing, by the Chairman of the
"Ordine dei Dottori Commercialisti" of Milan, who shall be instructed not
to appoint any firm which will be then auditing, or which will have in
the past ten (10) years audited, the financial statements of any of the
Parties or of their respective affiliates or of FOREM or any of FOREM's
consolidated subsidiaries (Arthur Andersen or the other audit firm,
hereinafter, the "ADJUSTMENT AUDIT FIRM"). The decision of the Adjustment
Audit Firm shall be issued within 90 (ninety) days of its appointment and
shall be final and binding upon the Parties, save in the event of
manifest mistake. The Statement(s) shall be considered final upon
occurrence of any of the following circumstances:
(a) failure by Deloitte & Touche to issue the applicable Deloitte &
Touche Notice in accordance with this Section 4.7;
(b) common position concerning the disputed items contained in the
Deloitte & Touche Notice(s) being reached by the Parties within 15
(fifteen) Business Days of delivery of the Deloitte & Touche Notice(s) to
Purchaser or Seller, as applicable; or
(c) communication to the Parties of the determination of the Adjustment
Audit Firm.
In the events contemplated at point (b) or (c) above, the Statement(s)
shall be considered final as adjusted to reflect, respectively, the
common position of the Parties or the determination of the Adjustment
Audit Firm.
(iv) Notwithstanding anything to the contrary contained in this Section
4.7, the Adjustment shall not cover (except in the event of fraud) items
disputed by Purchaser or by Seller, as applicable, in the dispute
procedure set forth in Paragraph 4.6.3 hereof which have been
specifically reviewed and resolved by the Parties or the Third Audit Firm
in order for the Final Reference Financial Statements to become final
pursuant to Paragraph 4.6.3 hereof.
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<PAGE> 25
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
The obligations of each of the Parties to consummate the transactions which are
contemplated by this Agreement to occur at Closing shall be subject to the
fulfillment or the waiver by both Parties or the other Party, as applicable, of
the conditions set out in this Section 5 below on or before the Closing Date.
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES:
(a) Immediately prior to the Closing Date, there shall be no action or
proceeding initiated by any governmental agency or by any other
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; and
(b) The FOREM shareholders other than Purchaser and Seller shall have
waived their statutory rights of first refusal in respect of the sale
and transfer of the Shares by executing a written letter in the form of
EXHIBIT L hereto in duplicate original and delivering 1 (one) original
of such letter to each of Purchaser and Seller.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER:
(a) Seller shall have duly performed all his material obligations
which, pursuant to this Agreement, are required to be performed on or
prior to the Closing Date; and
(b) The representations and warranties of Seller contained in this
Agreement, the Exhibits and the documents executed and delivered to
Purchaser pursuant hereto or simultaneously herewith, shall be true and
correct in all material respects as of the date hereof and as of the
Closing Date.
5.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER:
(a) Purchaser shall have duly performed all its material obligations
which, pursuant to this Agreement, are required to be performed on or
prior to the Closing Date; and
(b) The representations and warranties of Purchaser contained in this
Agreement, the Exhibits and the documents executed and delivered to
Seller pursuant hereto or simultaneously herewith, shall be true and
correct in all material respects as of the date hereof and as of the
Closing Date.
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ARTICLE 6
CLOSING
Subject to the satisfaction or waiver of the conditions precedent contemplated
by Section 5 hereof, the Closing shall take place at the Milan offices of
Gianni, Origoni & Partners, Piazza Belgioioso No. 2 (or such other place as may
be agreed upon by Purchaser and Seller before Closing) on the Closing Date. On
the Closing Date the Parties shall comply with their respective obligations as
set out in this Section 6 and shall take any other action and/or sign any other
document which may be required by law or this Agreement. At Closing:
6.1 SELLER shall:
(i) endorse the certificates representing the Shares to Purchaser and
deliver such duly endorsed certificates to it;
(ii) cause the above endorsement to be properly recorded in the FOREM
Shareholders' Register; and
(iii) execute and deliver to Purchaser any such other documents as are
contemplated by this Agreement to be executed and delivered to
Purchaser at Closing or as may be reasonably requested by Purchaser in
order to complete the Closing transactions or in connection therewith.
6.2 PURCHASER shall:
(i) procure the delivery by the Bank of the Bank Guarantee to Seller;
and
(ii) execute and deliver to Seller any such other documents as are
contemplated by this Agreement to be executed and delivered to Seller
at the Closing or as may be reasonably requested by Seller in order to
complete the Closing transactions or in connection therewith.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to the Purchaser's decision to enter into this
Agreement, Seller hereby represents and warrants to Purchaser that:
7.1 CAPACITY OF SELLER. AUTHORISATION. BINDING EFFECT. Seller has full
right, power and authority to enter into this Agreement. No consent of,
notice to, or filing with the Seller's spouse or any third party or
entity whatsoever is required for Seller to enter into this Agreement
or to consummate the transactions contemplated herein. This Agreement
has been duly executed by Seller and shall constitute the legal,
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valid and binding obligations of Seller, enforceable against him in
accordance with its terms.
7.2 NON VIOLATION OF LAWS. ORDERS AND AGREEMENTS. The execution and
delivery of this Agreement by Seller and the performance of his
obligations hereunder are not in violation or breach of, do not
conflict with, or constitute a default under, and will not accelerate
or permit the acceleration of the performance required by any of the
terms or provisions of the Certificate of Incorporation or the By-laws
of FOREM or any law, order, decree, note, debt instrument, security
agreement, written or oral, to which Seller or FOREM is a party or by
which Seller or FOREM is bound, and will not be an event which, after
notice of lapse of time or both, will result in any such violation,
breach, conflict, default or acceleration.
7.3 SHARES. The Shares have been duly authorized and are validly issued,
fully paid and nonassessable. None of the Shares were issued in
violation of any pre-emptive, preferential or contractual right. Seller
is the record and beneficial owner of the Shares free and clear of any
pledges, liens, claims, security interests, encumbrances and third
party's rights. By effect of the endorsement contemplated by Paragraph
6.1 (i) hereof Purchaser will validly acquire title to the Shares free
and clear of any pledges, liens, claims, security interests,
encumbrances and any third party's rights of any nature whatsoever.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to the Seller's decision to enter into this Agreement
Purchaser hereby represents and warrants to Seller that:
8.1 CAPACITY. AUTHORISATION. BINDING EFFECT. Purchaser has full right,
power and authority to enter into this Agreement. No consent of, notice
to, or filing with any third party or entity whatsoever is required for
Purchaser to enter into this Agreement or to consummate the
transactions contemplated herein. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein
have been duly authorised by the proper body of Purchaser. This
Agreement has been duly executed by Purchaser and constitutes the
legal, valid and binding obligations of Purchaser enforceable against
it in accordance with its terms.
8.2 NON-VIOLATION OF LAWS, ORDERS AND AGREEMENTS. The execution and
delivery of this Agreement by Purchaser and the performance of its
obligations hereunder are not in violation or breach of, do not
conflict with or constitute a default under, and will not accelerate or
permit the acceleration of the performance required by, any of the
terms or provisions of its Certificate of Incorporation or By-laws or
any law, order, decree, note, debt instrument, security agreement,
debenture or mortgage
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or any other contract or agreement, written or oral, to which Purchaser
is a party or by which Purchaser is bound, and will not be an event
which, after notice or lapse of time or both, will result in any such
violation, breach, conflict, default or acceleration.
8.3 ORGANISATION, QUALIFICATION AND CORPORATE POWER. Purchaser is duly
incorporated, validly existing and fully qualified to carry on its
business under the laws of Italy.
8.4 ALLEN COMMON STOCK. All of the shares of Allen Common Stock transferred
to Seller pursuant to Paragraph 4.5.1 hereof shall be transferred out
of Allen's treasury stock, shall be free and clear of any pledges,
liens, claims, security interests, encumbrances and third party's
rights and shall be duly authorized, validly issued, fully paid and
nonassessable, and none of Allen's stockholders nor any other person
shall have any pre-emptive right of purchase or any other right in
respect thereof.
ARTICLE 9
INDEMNIFICATION BY SELLER
9.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, Seller
shall indemnify and hold Purchaser harmless against and from any and
all costs, expenses, losses, damages and liabilities (including,
without limitation, reasonable attorneys' fees) incurred by Purchaser
with respect to or in connection with any breach of any of the
representations and warranties of Seller under this Agreement
(hereinafter, the "PURCHASER'S LOSSES" and each a "PURCHASER'S LOSS").
Notwithstanding anything to the contrary contained in this Agreement,
Seller shall have no indemnification obligations to Purchaser under
this Article 9 with respect to any claim made by Purchaser for any
Purchaser's Loss, whether or not arising as a result of a claim made by
a third party, of which Seller is notified after the first anniversary
of the Closing Date.
9.2 INDEMNIFICATION RIGHTS FOR DIRECT CLAIMS. In order to be held
indemnified and harmless against and from Purchaser's Losses under this
Article 9 (other than Purchaser's Losses arising from a claim made by a
third party, as to which Section 9.3 shall apply):
(a) Purchaser shall give written notice to Seller of any claim (the
"PURCHASER'S INDEMNIFICATION Claim"), which notice shall set forth a
reasonably detailed statement of the Purchaser's Indemnification Claim
and the cost, expense, loss, damage and liability Purchaser incurred
and/or expects to incur by reason thereof;
(b) such indemnification payment shall be made on the later of (i) the
expiration of 30 (thirty) days from the date of such notice
(hereinafter, the "PURCHASER'S NOTICE
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OF CONTEST PERIOD") or, (ii) if such claim is contested as hereinafter
provided, the date the dispute is resolved in accordance with this
Section 9.2, or (iii) the date in which such Purchaser's
Indemnification Claim becomes liquidated in amount; and
(c) if, prior to the expiration of the Purchaser's Notice of Contest
Period, Seller notifies Purchaser in writing of his intention to
dispute the Purchaser's Indemnification Claim, and if such dispute is
not resolved within 30 (thirty) days after the expiration of such
period (hereinafter, the "PURCHASER'S RESOLUTION PERIOD"), then such
dispute shall be resolved by a committee of three arbitrators who shall
be appointed (within 60 (sixty) days of the expiration of the
Purchaser's Resolution Period) and shall be acting in accordance with
Section 12.9 below. The Parties shall cooperate and diligently pursue
the arbitration of such Purchaser's Indemnification Claim in order for
a decision to be made by the arbitrators within 45 (fortyfive) days
after their appointment.
9.3 PURCHASER'S INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The
provisions of this Section shall apply to any Purchaser's Losses which
arise or may arise as a result of a claim made by a third party and any
related litigation or proceeding (hereinafter, the "THIRD PARTY
CLAIM").
(a) Purchaser shall give notice to Seller promptly after Purchaser
becomes aware of any Third Party Claim, which notice shall include a
copy of any letter, complaint or similar writing received by Purchaser
and/or FOREM or any of FOREM's consolidated subsidiaries setting out
such Third Party Claim or a written description of any oral notice
received by Purchaser or FOREM or any of FOREM's consolidated
subsidiaries; PROVIDED, HOWEVER, that any delay in providing such
notification shall not constitute a bar or defense to indemnify except
to the extent Seller has been prejudiced thereby.
(b) Within 10 (ten) days from the date of such notice, Seller shall
notify Purchaser in writing if he intends to dispute that such Third
Party Claim constitutes or will constitute Purchaser's Losses subject
to indemnification hereunder (hereinafter, the "SELLER'S DISPUTE
NOTICE"). If the Seller's Dispute Notice is given within said ten (10)
day period, the issue of whether such Third Party Claim constitutes or
will constitute Purchaser's Losses subject to indemnification hereunder
may be submitted to arbitration in accordance with Section 12.9 hereof
unless an agreement is subsequently reached between the Parties.
(c) For the purpose of this Paragraph (c) and subsequent Paragraphs (d)
and (e) of this Section 9.3 the defense of a Third Party Claim by
either Purchaser or Seller shall include, as the case may be, the
Purchaser's or the Seller's right to designate counsel to be employed
by Purchaser or FOREM or any of FOREM's consolidated subsidiaries in
defending the Third Party Claim and to provide such counsel with
instructions with respect to the defence thereof, as well as the power
to settle the
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Third Party Claim on behalf of Purchaser or FOREM or any of FOREM's
consolidated subsidiaries in the cases and subject to the conditions
set forth by this Section 9.3. If a Seller's Dispute Notice with
respect to a Third Party Claim is given then: (i) Purchaser shall have
the right to defend such Third Party Claim and the costs of such
defense shall be added to Purchaser's Losses, (ii) Seller shall have
the right to participate in the defense of the Third Party Claim at his
own costs and expenses provided that such right is not exercised in a
way which may prejudice the Purchaser's defense of the Third Party
Claim, and (iii) Purchaser shall consult with Seller prior to reaching
a settlement of the Third Party Claim, if any.
(d) Seller shall have the right to assume the defense of a Third Party
Claim unless:
(i) a Seller's Dispute Notice is sent to Purchaser pursuant to
Paragraph 9.3 (b) hereof; or
(ii) the named parties to any action constituting such Third Party
Claim (including any impleaded parties) include Seller or any member of
the Seller's family or any party belonging to a group in which Seller
may have a business interest.
(e) In order for Seller to exercise the right to assume the defense of
a Third Party Claim, Seller shall give notice to Purchaser within 10
(ten) days after receipt of the notice of the Third Party Claim as to
which no Seller's Dispute Notice was given. If Seller fails to notify
Purchaser within such period, Seller shall be deemed to have waived his
right to defend such Third Party Claim and Purchaser shall have the
right to defend such Third Party Claim and its costs and expense shall
be added to the Purchaser's Losses. If Purchaser assumes the defense of
a Third Party Claim pursuant to this paragraph (e), Purchaser may not
settle such Third Party Claim without the consent of Seller, which
consent cannot be unreasonably withheld. If Seller assumes the defense
of such Third Party Claim then: (i) Purchaser may participate in the
defense of such claim with its own counsel at its own cost and expense,
(ii) Seller may settle such Third Party Claim without the consent of
Purchaser provided such settlement includes an unconditional release of
Purchaser and its subsidiaries from all liability with respect to any
Third Party Claim and does not involve the imposition of any
restriction or obligation on Purchaser or any of its subsidiaries, and
(iii) Seller may not consent to the entry of any judgment (other than a
judgment of dismissal on the merits) except with the written consent of
Purchaser.
ARTICLE 10
INDEMNIFICATION BY PURCHASER
10.1 INDEMNIFICATION GENERALLY. From and after the Closing Date, Purchaser
shall indemnify and hold Seller harmless against and from any and all
costs, expenses,
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losses, damages and liabilities (including, without limitation,
reasonable attorneys' fees) incurred by Seller with respect to or in
connection with any breach of any of the representations and warranties
of Purchaser under this Agreement (hereinafter, the "SELLER'S LOSSES"
and each a "SELLER'S LOSS"). Nothwistanding anything to the contrary
contained in this Agreement, Purchaser shall have no indemnification
obligations to Seller under this Article 10 with respect to any claim
made by Seller for any Seller's Loss, whether or not arising as a
result of a claim made by a third party, of which Purchaser is notified
after the first anniversary of the Closing Date.
10.2 INDEMNIFICATION RIGHTS FOR DIRECT CLAIMS. In order to be held
indemnified and harmless against and from Seller's Losses under this
Article 10 (other than Seller's Losses arising from a claim made by a
third party, as to which Section 10.3 shall apply):
(a) Seller shall give written notice to Purchaser of any claim (the
"SELLER'S INDEMNIFICATION CLAIM"), which notice shall set forth a
reasonably detailed statement of the Seller's Indemnification Claim and
the cost, expense, loss, damage and liability Seller incurred and/or
expects to incur by reason thereof;
(b) such indemnification payment shall be made on the later of (i) the
expiration of 30 (thirty) days from the date of such notice
(hereinafter, the "SELLER'S NOTICE OF CONTEST PERIOD") or, (ii) if such
claim is contested as hereinafter provided, the date the dispute is
resolved in accordance with this Section 10.2, or (iii) the date in
which such Seller's Indemnification Claim becomes liquidated in amount;
and
(c) if, prior to the expiration of the Seller's Notice of Contest
Period, Purchaser notifies Seller in writing of its intention to
dispute the Seller's Indemnification Claim, and if such dispute is not
resolved within 30 (thirty) days after the expiration of such period
(hereinafter, the "SELLER'S RESOLUTION PERIOD"), then such dispute
shall be resolved by a committee of three arbitrators who shall be
appointed (within 60 (sixty) days of the expiration of the Seller's
Resolution Period) and shall be acting in accordance with Section 12.9
below. The Parties shall cooperate and diligently pursue the
arbitration of such Seller's Indemnification Claim in order for a
decision to be made by the arbitrators within 45 (fortyfive) days after
their appointment.
10.3 SELLER'S INDEMNIFICATION CLAIMS FOR THIRD PARTY CLAIMS. The provisions
of this Section shall apply to any Seller's Losses which arise or may
arise as a result of a Third Party Claim.
(a) Seller shall give notice to Purchaser promptly after Seller becomes
aware of any Third Party Claim, which notice shall include a copy of
any letter, complaint or similar writing received by Seller setting out
such Third Party Claim or a written
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description of any oral notice received by Seller; PROVIDED, HOWEVER,
that any delay in providing such notification shall not constitute a
bar or defense to indemnify except to the extent Purchaser has been
prejudiced thereby.
(b) Within 10 (ten) days from the date of such notice, Purchaser shall
notify Seller in writing if it intends to dispute that such Third Party
Claim constitutes or will constitute Seller's Losses subject to
indemnification hereunder (hereinafter, the "PURCHASER'S DISPUTE
NOTICE"). If the Purchaser's Dispute Notice is given within said ten
(10) day period, the issue of whether such Third Party Claim
constitutes or will constitute Seller's Losses subject to
indemnification hereunder may be submitted to arbitration in accordance
with Section 12.9 hereof unless an agreement is subsequently reached
between the Parties.
(c) For the purpose of this Paragraph (c) and subsequent Paragraphs (d)
and (e) of this Section 10.3 the defense of a Third Party Claim by
either Seller or Purchaser shall include, as the case may be, the
Seller's or the Purchaser's right to designate counsel to be employed
by Seller in defending the Third Party Claim and to provide such
counsel with instructions with respect to the defense thereof, as well
as the power to settle the Third Party Claim on behalf of Seller in the
cases and subject to the conditions set forth by this Section 10.3. If
a Purchaser's Dispute Notice with respect to a Third Party Claim is
given then: (i) Seller shall have the right to defend such Third Party
Claim and the costs of such defense shall be added to Seller's Losses,
(ii) Purchaser 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 may prejudice the Seller's
defense of the Third Party Claim, and (iii) Seller shall consult with
Purchaser prior to reaching a settlement of the Third Party Claim, if
any.
(d) Purchaser shall have the right to assume the defense of a Third
Party Claim unless:
(i) a Purchaser's Dispute Notice is sent to Seller pursuant to
Paragraph 10.3 (b) hereof; or
(ii) the named parties to any action constituting such Third Party
Claim (including any impleaded parties) include Purchaser or any party
belonging to a group in which Purchaser may have a business interest.
(e) In order for Purchaser to exercise the right to assume the defense
of a Third Party Claim, Purchaser shall give notice to Seller within 10
(ten) days after receipt of the notice of the Third Party Claim as to
which no Purchaser's Dispute Notice was given. If Purchaser fails to
notify Seller within such period, Purchaser shall be deemed to have
waived its right to defend such Third Party Claim and Seller shall have
the right to defend such Third Party Claim and its costs and expense
shall be
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added to the Seller's Losses. If Seller assumes the defense of a Third
Party Claim pursuant to this paragraph (e), Seller may not settle such
Third Party Claim without the consent of Purchaser, which consent
cannot be unreasonably withheld. If Purchaser assumes the defense of
such Third Party Claim then: (i) Seller may participate in the defense
of such claim with its own counsel at its own cost and expense, (ii)
Purchaser may settle such Third Party Claim without the consent of
Seller provided such settlement includes an unconditional release of
Seller from all liability with respect to any Third Party Claim and
does not involve the imposition of any restriction or obligation on
Seller, and (iii) Purchaser may not consent to the entry of any
judgment (other than a judgment of dismissal on the merits) except with
the written consent of Seller.
ARTICLE 11
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by either Seller or Purchaser if Closing has not occurred by
October 31, 1997, PROVIDED, HOWEVER, that if Closing has not occurred
by said date due to the infringement of any of the covenants or
agreements of any of the Parties hereunder, the defaulting Party shall
have no right to terminate this Agreement pursuant hereto;
(b) by Purchaser if any condition in Paragraphs 5.1 and 5.2 cannot be
satisfied by the Closing Date; and
(c) by Seller, if any condition in Paragraphs 5.1 and 5.3 cannot be
satisfied by the Closing Date.
11.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 11.1 hereof, this Agreement shall become void and there shall
be no liability or obligation on the part of Purchaser or Seller under
this Agreement; PROVIDED, HOWEVER, that any provisions hereof which
expressly or by their nature are designed to survive the termination of
this Agreement shall survive the termination of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement, the Exhibits annexed hereto and the
agreements and 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
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agreements and arrangements between the Parties hereto with regard to
the subject matter hereof.
12.2 AMENDMENTS. Any amendment to this Agreement shall be valid and binding
upon the Parties only if made in writing and signed by Seller and a
duly authorized officer of Purchaser.
12.3 COSTS. Except as otherwise set forth in this Agreement (x) each Party
shall bear its own costs in relation to the negotiations leading up to
the sale and purchase of the Shares and to the drafting, execution and
carrying into effect of this Agreement and all the other documents
referred to herein, and (y) all the costs relating to the transfer of
the Shares to Purchaser, including stamp duties and registration tax,
if any, shall be borne by Purchaser only (but not capital gains tax
which will be borne by Seller). Furthermore, Seller shall bear 1/7th of
the costs charged by the Bank in connection with the issue of the Bank
Guarantee - equal to 0.375% of the outstanding amount from time to time
which share of the said costs shall be reimbursed by Seller to
Purchaser upon delivery by Purchaser to Seller of each invoice issued
by the Bank to Purchaser in connection with the Bank Guarantee.
12.4 EFFECTS. The provisions of this Agreement shall be legally binding upon
the Parties and their respective successors and assigns.
12.5 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.
12.6 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 personal delivery, or if transmitted by telecopy, or if
delivered to reputable overnight carrier for next Business Day
delivery, charges billed to or prepaid by shipper, or if sent by air
mail, proper postage prepaid, addressed as follows:
If to SELLER: [Name and address]
With a copy to: Pavia e Ansaldo
Via dell'Annunciata, 7
20121 Milan, Italy
Attn. Francesco Manara
Facsimile No. 39-2-6551576
If to PURCHASER: Allen Telecom Group (Italia) S.r.l.
c/o Allen Telecom Inc.
25101 Chagrin Boulevard
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<PAGE> 35
Beachwood, Ohio 44122 U.S.A.
Attn.: General Counsel
Facsimile No.: 216-7650410
With a copy to: Gianni, Origoni & Partners
Piazza Belgioioso, 2
20121 Milan, Italy
Attn.: Enzo Schiavello
Facsimile No.: 39-2-76009628
Each notice, demand or request shall be effective upon personal
delivery, or upon confirmation of receipt of the applicable telecopy or 2 (two)
Business Days after delivery to a reputable overnight carrier in accordance with
the foregoing, or upon arrival at the recipient's address if sent by air mail 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. Service by personal delivery upon Purchaser shall be valid only if
delivered personally to an officer of Allen.
Any addressee may change its address for notices hereunder by giving
written notice in accordance with this Section.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original
instrument, but all such separate counterparts shall constitute one and
the same agreement.
12.8 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
Exhibits are to Exhibits to this Agreement.
12.9 ARBITRATION. Any disputes arising with respect to or in connection with
this Agreement between Purchaser and Seller shall be finally decided by
a panel of three arbitrators in accordance with the Rules of
Arbitration of the Chamber of Commerce and Industry of Geneva. The
arbitration shall be conducted in English.
12.10 EXCHANGE RATES. Except as otherwise set forth in this Agreement or the
Exhibits hereto, to the extent a conversion from U.S. Dollars into
another currency or vice versa is required to be made for the purposes
of this Agreement such conversion shall be made at the exchange rate
published by in II Sole 24 Ore for the date on
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<PAGE> 36
which the circumstance giving rise to the need to make such conversion
under or in connection with this Agreement shall occur. For the
purposes of the conversion of the Price from U.S. Dollars to Italian
Lire as of the Closing Date, the Parties hereby agree to use the
exchange rate published in Il Sole 24 Ore on May 31, 1997.
12.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Italian law without making reference to its
conflict of law rules.
12.12 BUSINESS DAYS. If the date determined pursuant to this Agreement on
which Closing is to occur or any other obligations 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.
12.13 SURVIVAL. Any provision of this Agreement which is expressly stated or,
by its nature, is intended to remain valid after Closing including,
without limitation, Articles 7, 8, 9 and 10 hereof shall survive
Closing and any document executed by the Parties on the date of Closing
including, but not limited to, any formalities of transfer of the
Shares to Purchaser.
12.14 ALLEN. By executing this Agreement, Allen (x) represents and warrants
that the contents of Section 8.4 hereof shall be accurate as of the
Closing Date and (y) agrees to indemnify and hold Seller harmless
against and from any Seller's Losses incurred with respect to or in
connection with any breach of Section 8.4 hereof, as well as any breach
of Allen's undertakings set forth by EXHIBIT D hereof, under and
subject to the terms and conditions of Article 10 of this Agreement.
12.15 CERTIFICATES. For the purposes of Paragraph 4.6.2 and 4.6.3 hereof:
(i) the legal representative pro-tempore of Purchaser shall execute on
behalf of Purchaser by single signature the certificates in the forms of EXHIBIT
H3 and EXHIBIT I3 annexed hereto. Same powers are hereby granted, disjointly, to
James L. LePorte, III, born in New York (U.S.A.) on April 21, 1954 and Robert
Arthur Youdelman, born in New York (U.S.A.) on March 28, 1942;
(ii) Ms. Ornella Villa, born in Bellusco on October 7, 1951 and Mr.
Gianpiero Villa, born in Monza on May 7, 1952 shall execute on behalf of FOREM
by joint signature the certificate in the form of EXHIBIT H1 (I) or EXHIBIT H1
(II) or EXHIBIT H1 (III) annexed hereto. In the event Ms. Ornella Villa has no
possibility, for events beyond her control, to issue and execute such
certificate, it shall be executed by Ms. Valentina Del Campo, born in S. Angelo
Lodigiano on January 9, 1949. In the event Mr. Gianpiero Villa has no
possibility, for events beyond his control, to issue and execute such
certificate, it shall be executed by Mr. Adriano Mauri, born in Caravaggio on
August 30, 1959.
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ALLEN TELECOM GROUP (ITALIA) S.R.L. [Name]
By: ________________________ ____________________
Name: McDara P. Folan, III
Title: Sole Director
For acceptance of Paragraphs 12.13 and 12.14 hereinabove
ALLEN TELECOM INC.
By: _____________________
Name: McDara P. Folan, III
Title: Vice President
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<PAGE> 1
EXHIBIT 99
----------
FOR IMMEDIATE RELEASE
---------------------
ALLEN TELECOM ANNOUNCES ACQUISITION OF
--------------------------------------
FOREM MINORITY INTEREST
-----------------------
Beachwood, Ohio, June 4, 1997-- Allen Telecom Inc. ("Allen Telecom")
announced today that it has acquired the outstanding minority interest in
FOR.E.M. S.p.A. ("FOREM") and now owns 100% of FOREM. This acquisition also
increases Allen Telecom's effective ownership of FOREM's 62% owned subsidiary
MIKOM GmbH ("MIKOM"). The total purchase price for this minority interest will
be computed after the net income for FOREM's 1997 fiscal year is finalized. In a
series of transactions, the Company has paid $21.7 million in cash and $5
million in Allen Telecom common stock to the minority shareholders of FOREM, and
would expect to make additional interim payments in October 1997 and January
1998. Most of the additional purchase price will also be in cash, although the
Company has an option to use Allen Telecom common stock in partial payment for
certain additional amounts.
FOREM is the world's leader in the manufacture of filters, combiners
and tower mount amplifiers for GSM cellular and DCS 1800 wireless communications
systems, and its MIKOM subsidiary is the world's leader in GSM and DCS 1800
repeaters and other forms of coverage enhancement products. Allen Telecom
acquired an initial 40% interest in FOREM in December 1994 and an additional 40%
in March 1995. Since that time, the businesses have continued to expand
substantially and have become an integral part of Allen Telecom's worldwide
success as a supplier of wireless communications products and services.
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<PAGE> 2
Robert G. Paul, President and Chief Executive Officer of Allen Telecom,
stated "The success of the FOREM and MIKOM management teams in establishing
their market leadership position in the GSM and DCS 1800 technologies has been
exceptional. While these technologies have not played a significant role in the
U.S., they are still the leading technologies for new wireless investment around
the world. Since the initial acquisition of FOREM shares in 1994, Allen
Telecom's ability to leverage the capabilities of its European and North
American businesses through technology interchange and a combined worldwide
sales force, have contributed to Allen Telecom's continued growth".
Statements included in this news release which are not historical in
nature are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Allen
Telecom's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q contain
certain detailed factors that could cause the Company's actual results to
materially differ from forward-looking statements made by the Company,
including, among others, the uncertain level of purchases by current and
prospective customers of the Company's products and services and the impact of
competitive products and pricing.
Allen Telecom Inc. (NYSE symbol - ALN) is a leading supplier to the
worldwide two-way wireless communications marketplace of systems expansion
products, site management products and antennas and provides frequency planning,
system engineering services and software design programs to current and emerging
wireless markets.
( 30 )
For further information contact: Robert A. Youdelman
216/765-5820
http://www.allentelecom.com
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