FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 31, 1995
-------------------
Commission File No. 1-6112
-----------------------------------------------
NORTEK, INC.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 05-0314991
- -----------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Kennedy Plaza, Providence, RI 02903-2360
- -----------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(401) 751-1600
- -----------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -----------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last year)
Item 2. Acquisition or Disposition of Assets
On October 31, 1995, pursuant to a stock purchase agreement,
two subsidiaries of a wholly owned subsidiary of Nortek,
Inc., purchased substantially all of the outstanding capital
stock of BEST S.p.A. and Maninvest S.r.l. ("Best" or "Best-
Maninvest Group") for Italian lira ("L") 21.0 billion
(approximately U.S.$13 million at exchange rates in effect
at the acquisition date) consisting of L 16.0 billion
(approximately U.S.$10 million at exchange rates in effect
at the acquisition date) in cash at the closing and an
additional L 5.0 billion (approximately U.S.$3 million at
exchange rates in effect at the acquisition date) in
deferred payments over five years.
In addition, such selling shareholders have the right to
earn purchase price payments of up to L 3.0 billion
(approximately U.S.$1.9 million at exchange rates in effect
at the acquisition date) over the next five years' depending
on the amount of earnings of Best.
See the attached financial statements and pro forma
financial statements of Nortek and Best-Maninvest Group
contained elsewhere herein.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
Unaudited Best-Maninvest Group Combined
Balance Sheet as of June 30, 1995, together
with unaudited Best-Maninvest Group Combined
Statements of Operations, Combined Statements
of Changes in Shareholders' Equity and
Combined Statements of Cash Flows for the six
months ended June 30, 1995 and June 30, 1994.
Audited Best-Maninvest Group Combined Balance
Sheet as of December 31, 1994, together with
audited Best-Maninvest Group Combined
Statement of Operations, Combined Statement
of Changes in Shareholders' Equity and
Combined Statement of Cash Flows for the year
ended December 31, 1994, together with
accompanying Notes.
(b) Pro Forma Financial Information
(1) Nortek, Inc. and Subsidiaries unaudited
pro forma condensed consolidated balance
sheet as of July 1, 1995, together with
Nortek, Inc. and Subsidiaries unaudited
pro forma condensed consolidated
statement of operations from continuing
operations for the year ended December
31, 1994 and the six months ended July
1, 1995.
(c) Exhibits
2.1 Acquisition Agreement dated as of
October 31, 1995 between Nortek, Inc.
and Sergio Mancini and Franco Mantini.
23.1 Consent of Independent Public
Accountants
SIGNATURE
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.
NORTEK, INC.
By: /s/ Almon C. Hall
--------------------------
November 9, 1995
NORTEK, INC. AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated
balance sheet as of July 1, 1995 and the unaudited pro forma
condensed consolidated statements of operations from
continuing operations for the six months ended July 1, 1995
and the twelve months ended December 31, 1994 give effect to
the purchase of all the stock of Best-Maninvest Group by
subsidiaries of Nortek, Inc. See Item 2 which is
incorporated herein by reference.
The pro forma balance sheet assumes that the transaction
occurred as of July 1, 1995, while the statements of
operations assume that the transaction occurred as of
January 1, 1994.
The pro forma data does not purport to be indicative of the
results which would have actually been reported had the
purchase occurred on the dates assumed or which may be
reported in the future. These financial statements should
be read in conjunction with the accompanying notes and the
historical consolidated financial statements and related
notes of Nortek included in its latest annual and quarterly
reports and the Best financial statements included herein.
Interim results are not necessarily indicative of the
results to be expected in the future.
NORTEK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JULY 1, 1995
(Amounts in Millions of U.S.$)
U.S. PRO FORMA
NORTEK GAAP ADJUST-
AS ADD ADJ. SUB- MENTS PRO
REPORTED BEST DR/(CR) TOTAL DR/(CR) FORMA
-------- ---- ---- ----- ------- -----
Current Assets:
Unrestricted--
Cash and investments
at cost which
approximates market $ 78.5 $ 7.0 $ --- $ 7.0 $(10.0)(a) $ 75.5
Marketable securities
available for sale 19.5 --- --- --- --- 19.5
Restricted--
Investments and market-
able securities at
cost which approxi-
mates market 9.4 --- --- --- --- 9.4
Accounts receivable,
less allowances 106.0 17.5 --- 17.5 --- 123.5
Inventories, net 98.1 12.3 --- 12.3 .9(e) 111.3
Prepaid expenses and
other current assets 9.1 4.6 --- 4.6 --- 13.7
U. S. Federal prepaid
income taxes 18.5 --- --- --- --- 18.5
----- ---- ---- ---- --- -----
Total Current Assets 339.1 41.4 --- 41.4 (9.1) 371.4
----- ---- ---- ---- ---- -----
Property and Equipment at
cost, net 98.3 15.4 2.4 17.8 4.4(c) 120.5
----- ---- ---- ---- ---- -----
Other Assets:
Goodwill, less accumu-
lated amortization 71.7 --- --- --- 5.9(g) 77.6
Deferred debt expense 8.0 --- --- --- --- 8.0
Other 9.2 .8 --- .8 --- 10.0
----- ---- ----- ---- ----- -----
88.9 .8 --- .8 5.9 95.6
----- ---- ----- ---- ----- -----
$526.3 $57.6 $ 2.4 $60.0 $ 1.2 $587.5
===== ==== ===== ==== ==== =====
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
NORTEK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Continued)
AS OF JULY 1, 1995
(Amounts in Millions of U.S.$)
U.S. PRO FORMA
NORTEK GAAP ADJUST-
AS ADD ADJ. SUB- MENTS PRO
REPORTED BEST DR/(CR) TOTAL DR/(CR) FORMA
-------- ---- ---- ----- ------- -----
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Notes payable, current
maturities of long-term
debt and other short-
term obligations $ 4.5 $17.6 $ --- $17.6 $ (.6)(a) $ 22.7
Accounts payable 58.8 21.2 --- 21.2 --- 80.0
Accrued expenses and
taxes, net 91.3 7.0 (.2) 7.2 (.9)(d) 99.4
---- ---- ---- ---- ---- -----
Total Current
Liabilities 154.6 45.8 (.2) 46.0 (1.5) 202.1
----- ---- ----- ---- ---- -----
Other Liabilities:
Deferred income taxes 18.2 --- (.5) .5 (2.7)(f) 21.4
Other 7.5 --- --- --- --- 7.5
----- ---- ---- ---- ---- -----
25.7 --- (.5) .5 (2.7) 28.9
----- ---- ---- ---- ---- -----
Notes, Mortgage Notes and
Other Notes Payable 219.6 6.6 (2.2) 8.8 (1.7)(a) 230.1
----- ---- ---- ---- ---- -----
Stockholders' Investment:
Preference stock, $1 par
value; authorized
7,000,000 shares, none
issued --- --- --- --- --- ---
Common Stock, $1 par
value; authorized
40,000,000 shares,
15,829,710 shares
issued 15.8 2.2 --- 2.2 2.2(b) 15.8
Special Common Stock,
$1 par value; author-
ized 5,000,000 shares,
790,233 shares issued .8 --- --- --- --- .8
Additional paid-in
capital 134.6 --- --- --- --- 134.6
Retained earnings 6.5 3.0 .5 2.5 2.5(b) 6.5
Cumulative translation,
pension and other
adjustments (3.2) --- --- --- --- (3.2)
Less - treasury common and
special common stock
at cost, 3,795,210
shares and 271,605
shares, respectively (28.1) --- --- --- --- (28.1)
----- ---- ---- ---- ---- -----
$526.3 $57.6 $(2.4) $60.0 $(1.2) $587.5
===== ==== ==== ==== ==== =====
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
NORTEK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FROM CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(Amounts in Millions of U.S.$, Except Per Share Amounts)
U.S. PRO FORMA
NORTEK GAAP ADJUST-
AS ADD ADJ. SUB- MENTS PRO
REPORTED BEST DR/(CR) TOTAL DR/(CR) FORMA
-------- ---- ---- ----- ------- -----
Net Sales $737.1 $59.8 $ --- $59.8 $ --- $796.9
----- ---- ---- ---- ---- -----
Costs and Expenses:
Cost of products sold 520.3 45.6 --- 45.6 (.6)(l) 565.3
Selling, general and
administrative
expense 166.8 9.0 (.1) 8.9 --- 175.7
----- ---- ---- ---- ---- -----
687.1 54.6 (.1) 54.5 (.6) 741.0
----- ---- ---- ---- ---- -----
Operating earnings 50.0 5.2 (.1) 5.3 (.6) 55.9
Interest expense (26.2) (1.8) .1 (1.9) .3(i) (28.4)
Interest income 5.3 .3 --- .3 .5(j) 5.1
Loss on businesses
sold (1.7) --- --- --- --- (1.7)
Exchange rate losses --- (.4) --- (.4) --- (.4)
----- ----- ---- ---- ---- -----
Earnings from continuing
operations before
provision for income
taxes 27.4 3.3 --- 3.3 .2 30.5
Provision for income
taxes 10.2 1.0 .4 1.4 (.1)(k) 11.5
----- ---- ---- --- ---- -----
Earnings from continuing
operations $ 17.2 $ 2.3 $ .4 $1.9 $ .1 $ 19.0
===== ==== ==== === ==== =====
Net Earnings Per Share:
Continuing operations
Primary $ 1.35 $ 1.50
===== =====
Fully diluted $ 1.34 $ 1.48
===== =====
Weighted Average Number
of Shares:
Primary 12.7 12.7
==== ====
Fully diluted 13.1 13.1
==== ====
NORTEK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FROM CONTINUING OPERATIONS
FOR THE SIX MONTHS ENDED JULY 1, 1995
(Amounts in Millions of U.S.$, Except Per Share Amounts)
U.S. PRO FORMA
NORTEK GAAP ADJUST-
AS ADD ADJ. SUB- MENTS PRO
REPORTED BEST DR/(CR) TOTAL DR/(CR) FORMA
-------- ---- ---- ----- ------- -----
Net Sales $379.0 $35.9 $ --- $35.9 $ --- $414.9
----- ---- ---- ---- ---- -----
Costs and Expenses:
Cost of products sold 280.1 29.2 --- 29.2 (.6)(h) 308.7
Selling, general and
administrative
expense 79.7 4.7 (.1) 4.6 --- 84.3
----- ----- ---- ---- ---- -----
359.8 33.9 (.1) 33.8 (.6) 393.0
----- ---- ---- ---- ---- -----
Operating earnings 19.2 2.0 (.1) 2.1 (.6) 21.9
Interest expense (11.8) (1.2) .1 (1.3) .1(i) (13.2)
Interest income 3.2 .1 --- .1 .3(j) 3.0
Net loss on marketable
securities (.2) --- --- --- --- (.2)
Exchange rate losses --- (.5) --- (.5) --- (.5)
----- ---- ---- ---- ---- -----
Earnings from continuing
operations before
provision for income
taxes 10.4 .4 --- .4 (.2) 11.0
Provision for income
taxes 4.7 .1 .1 .2 .1(k) 5.0
----- ---- ---- ---- ---- -----
Earnings from continuing
operations $ 5.7 $ .3 $ (.1) $ .2 $ (.1) $ 6.0
===== ===== ==== ==== ==== =====
Net Earnings Per Share:
Continuing operations
Primary $ .45 $ .47
===== =====
Fully diluted $ .45 $ .47
===== =====
Weighted Average Number
of Shares:
Primary 12.7 12.7
==== ====
Fully diluted 12.7 12.7
==== ====
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 1, 1995 AND DECEMBER 31, 1994
(a) Entry necessary to reflect the purchase of all the outstanding shares of
Best at an approximate aggregate purchase price of approximately
$10,000,000 in cash and approximately $2,300,000 (net of debt discount at
10.5%) payable in installments over five years.
(b) Elimination of Best's shareholders' equity
(c) Entry necessary to adjust the book value of property and equipment to
estimated fair market value.
(d) Entry necessary to accrue the estimated acquisition costs.
(e) Entry necessary to adjust Best's inventory to estimated fair market value.
(f) Entry necessary to record deferred income taxes in connection with the
allocation of the purchase price to net assets.
(g) Entry necessary to record estimated goodwill arising from the acquisition
of Best.
(h) Adjustment to increase cost of products sold for approximately $72,000,
reflecting the amortization of goodwill of approximately $5,900,000 over a
40-year period, the decrease of approximately $363,000 to reflect the
Company adopting a first-in, first-out method of accounting for Best's
inventory, and a net decrease of approximately $261,000 that is necessary
to record Best's depreciation expense which reflects the net effect of the
increase to fair market value of property and equipment and the Company's
basis of accounting upon acquisition.
(i) Adjustment to interest expense at a rate of 10.5% that is necessary to
reflect amortization of debt discount on a portion of the purchase price
(approximately $3,100,000) that is payable in five annual installments.
(j) Adjustment to interest income that is necessary to reflect the effect of
cash and short-term investments used in connection with the acquisition.
(k) The provision for income taxes reflects the tax effect of the pro forma
adjustments at an assumed effective tax rate of 50%.
(l) Adjustment to increase cost of products sold for approximately $147,000,
reflecting the amortization of goodwill of approximately $5,900,000 over a
40-year period, and a net decrease of $783,000 that is necessary to record
Best's depreciation expense which reflects the net effect of the increase
to fair market value of property and equipment and the Company's new basis
of accounting upon acquisition.
BEST/MANINVEST GROUP
--------------------
COMBINED BALANCE SHEET
----------------
Millions of Italian Lire
ASSETS June 30, 1995
(Unaudited)
FIXED ASSETS
INTANGIBLE FIXED ASSETS
Formation and expansion expenses 32
Research, development and advertising costs 62
Licenses, trademarks and concessions 74
Other charges to depreciate 173
------
341
------
TANGIBLE FIXED ASSETS
Land and buildings 14,158
Plant and machinery 8,308
Industrial and commercial equipment 1,742
Work in progress and advance 853
Other assets 74
------
25,135
------
FINANCIAL FIXED ASSETS
Receivables:
long term 109
------
Total 109
------
TOTAL FIXED ASSETS 25,585
------
CURRENT ASSETS
INVENTORY
Raw, ancillary and consumption materials 9,098
Semi-finished goods 5,730
Finished goods 4,759
Advances 403
------
19,990
------
RECEIVABLES:
Trade receivables 28,611
Other third parties
- short terms 7,026
- long terms 40
------
35,677
------
FINANCIAL ASSETS WHICH ARE NOT
FIXED ASSETS
Investments in not controlled enterprises 104
Other investments 748
------
852
------
CASH AND BANKS
Bank and postal accounts 11,361
Cash and valuables 59
------
11,420
------
TOTAL CURRENT ASSETS 67,939
------
PREPAYMENTS AND ACCRUALS
Accruals and other prepayments 960
------
TOTAL ASSETS 94,484
------
BEST/MANINVEST GROUP
--------------------
COMBINED BALANCE SHEET
----------------
Millions of Italian Lire
LIABILITIES June 30, 1995
(Unaudited)
SHAREHOLDERS' EQUITY
Share Capital 3,550
Legal Reserve 341
Retained Earnings 3,907
Net Income 398
------
Shareholders' Equity of the Group 8,196
------
Capital and Reserve of minority interests 264
Net Income of minority interests 25
------
Total Shareholders' Equity 8,485
------
PROVISIONS FOR RISKS AND EXPENSES
Taxes 918
Others 1,032
------
Total 1,950
------
PERSONNEL LEAVING INDEMNITY 4,000
------
PAYABLES
To banks:
- short term 28,410
- long term 10,339
Other financial institutions:
- short term 278
- long term 442
Advances 234
Trade payables 34,601
Taxes payable 729
To social security institutions 656
Other payables 3,775
------
Total 79,464
------
ACCRUED LIABILITIES AND DEFERRED INCOME
Accruals and other deferred income 585
------
TOTAL LIABILITIES 94,484
------
MEMORANDUM ACCOUNTS
SECURITIES GRANTED
Real securities:
Land and buildings 8,667
Other securities 700
OTHER MEMORANDUM ACCOUNTS 4,348
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF INCOME
----------------
Millions of Italian Lire
For the six months ended June 30, 1995 and 1994
For The
Six Months Ended
--------------------
June 30, June 30,
1995 1994
---- ----
(Unaudited)
VALUE OF PRODUCTION
Net sales revenues 59,358 48,571
Other revenues 1,076 150
------ ------
TOTAL REVENUES 60,434 48,721
PRODUCTION COSTS (48,651) (36,062)
------- -------
Earnings before sales costs and
general expenses 11,783 12,659
------- -------
Sales costs and general expenses (8,682) (6,949)
Financial income and expenses, net (2,778) (1,379)
Other income and expenses, net 290 ---
------- -------
Earnings before income taxes 613 4,331
Provision for income taxes 190 1,863
------- -------
Total net income 423 2,468
Minorities' net income (25) (43)
------- -------
GROUP NET INCOME 398 2,425
------- -------
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
-----------------------------------------------------
Millions of Italian Lire
For the six months ended June 30, 1995
(Unaudited)
Minority Total
Interests Share-
Share Legal Reval.Ret. Net Net hold.
Capital Res. Res. Earn. Inc. Total Inc. Res. Equity
------- ---- ---- ----- ---- ----- ---- ---- ------
BALANCE, December
31, 1994 1,052 196 304 2,570 3,688 7,810 65 180 8,055
Allocation of
1994 income 145 3,543 (3,688) 0 (65) 65 0
Dividends distri-
bution (33) (33) (33)
Reserves utilized
to increase
share capital 2,498 (304) (2,194) 0 0
Changes in the
foreign rate
and other
differences 21 21 19 40
Net income 398 398 25 423
----- --- --- ----- --- ----- -- --- -----
BALANCE, June
30, 1995 3,550 341 0 3,907 398 8,196 25 264 8,485
===== === === ===== === ===== == === =====
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
-------------------------------
Millions of Italian Lire
For the six months ended June 30, 1994
(Unaudited)
Approp.
Balance of 1993 Other 1994 Balance
12/31/93 Result Changes Income 6/30/94
-------- ------ ------- ------ -------
Capital stock 1,052 --- --- --- 1,052
Revaluation reserve 304 --- --- --- 304
Legal reserve 172 30 (6) --- 196
Other and retained
earnings 3,168 (504) (94) --- 2,570
Net income for the period 2,425 2,425
-----
Total group shareholders'
equity 6,547
Minority interests:
Capital stock and reserves 162
Net income for the period 43
-----
Total Minority Interest 205
-----
Total Stockholders' Equity 6,752
-----
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF CASH FLOW
-------------------------------
Millions of Italian Lire
For the six months ended June 30, 1995 and 1994
---------------------------------------
For The
Six Months Ended
--------------------
June 30, June 30,
1995 1994
---- ----
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from operations 3,509 5,218
------ ------
Changes in certain assets and liabilities:
Trade receivables, net (1,957) (5,482)
Inventories, net (7,012) (3,186)
Trade payables, net 4,692 6,510
Other, net (354) 1,718
------ ------
Total adjustments to operations (4,631) (440)
------ ------
Net cash (used in) provided by operating
activities (1,122) 4,778
------ ------
Cash flows from investing activities:
Capital expenditures (5,219) (6,967)
Other, net (253) ---
------ ------
Net cash used in investing activities (5,472) (6,967)
------ ------
Cash flows from financing activities:
Increase in borrowings 4,311 2,763
Other, net 32 (430)
------ ------
Net cash provided by financing activities 4,343 2,333
------ ------
(Decrease) increase in cash in hand and at banks (2,251) 144
Cash in hand and at banks at the beginning
of the period 13,671 9,355
------ ------
Cash in hand and at banks at the end of the
period 11,420 9,499
------ ------
BEST-MANINVEST GROUP
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
AS OF JUNE 30, 1995 AND JUNE 30, 1994
The unaudited combined financial statements as of June 30, 1995 and for
the six months ended June 30, 1995 and June 30, 1994 have been prepared on
the basis of interim financial statements by the management of The Best-
Maninvest Group. These unaudited combined financial statements have been
prepared on the basis of the statutory accounting records at June 30, 1995
and June 30, 1994 integrated by extra-accounting records (such as
depreciation, provision for leaving indemnities, accruals, etc.) which
usually are recorded in the statutory books only at December 31, closing date
of the Fiscal Year. These unaudited combined financial statements should be
read in conjunction with the audited combined financial statements of
Best-Maninvest Group as of December 31, 1994 included elsewhere herein.
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
BEST S.p.A. and MANINVEST S.r.l.
We have audited the combined financial statements of the BEST - MANINVEST GROUP
(which includes BEST S.p.A. and its subsidiary and MANINVEST S.r.l. and its
subsidiaries as indicated in note 1 of these financial statements) for the year
ended December 31, 1994.
Our audit was conducted in accordance with Italian generally accepted auditing
standards which are substantially similar to auditing standards generally
accepted in the United States. In accordance with the Italian standards, we
make reference to the accounting principles issued by the Italian National
Council of Accountants.
In our opinion, the combined financial statements referred to above, taken as a
whole, present fairly, in all material respects, the financial position and
results of operations and cash flow of the BEST - MANINVEST GROUP (as
identified above) for the year ended December 31, 1994, in conformity with
accounting principles generally accepted in Italy.
/s/DELOITTE & TOUCHE
October 20 1995
Ancona, Italy
BEST/MANINVEST GROUP
--------------------
COMBINED BALANCE SHEET
----------------------
ASSETS 12.31.94
Amounts in Lire Millions
A RECEIVABLES FROM SHAREHOLDERS FOR
PAYMENTS STILL DUE 0
--
B FIXED ASSETS
I INTANGIBLE FIXED ASSETS
1 Start-up and expansion expenses 42
2 Research, development and advertising expenses 12
3 Industrial patents and intellectual property rights 32
4 Concessions, licenses, trade marks 17
5 Other intangible fixed assets 12
---
Total intangible fixed assets 115
---
II TANGIBLE FIXED ASSETS
1 Land and buildings 13,204
2 Plant and machinery 7,185
3 Industrial and commercial equipment 1,735
5 Assets under construction and advances to suppliers 433
------
Total tangible fixed assets 22,557
III FINANCIAL FIXED ASSETS
1 Equity investments in:
a) non-combined subsidiaries
b)associated companies
c)other companies
2 Financial receivables due from:
a)non-combined subsidiaries
b)associated companies
c)third parties:
- Short term 21
- Long term 160
3 Other securities 0
---
Total financial fixed assets 181
---
TOTAL FIXED ASSETS 22,853
------
C CURRENT ASSETS
I INVENTORIES
1 Raw materials and other materials 5,821
2 Work in progress and semifinished products 4,285
4 Finished goods and goods for resale 2,478
5 Advance payments to suppliers 394
------
Total inventories 12,978
------
II ACCOUNTS RECEIVABLE:
1 Trade receivables 26,654
5 Other receivables:
- due within 12 months 7,170
- due beyond 12 months 95
------
Total accounts receivable 33,919
------
III CURRENT FINANCIAL ASSETS
3 Other investments 58
5 Other securities 747
------
Total current financial assets 805
------
IV LIQUID FUNDS
1 Bank and post office deposits 13,619
2 Cash and valuables 52
------
Total liquid funds 13,671
------
TOTAL CURRENT ASSETS 61,373
------
D ACCRUED INCOME AND PREPAID EXPENSES 841
------
TOTAL ASSETS 85,067
------
See accompanying Notes to Combined Financial Statements
BEST/MANINVEST GROUP
--------------------
COMBINED BALANCE SHEET
----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.94
Amounts in Lire Millions
A SHAREHOLDERS' EQUITY
I Capital stock 1,052
III Revaluation reserves 304
IV Legal reserve 196
VII Other reserves 2,570
IX Net income (loss) for the year 3,688
-----
GROUP INTEREST IN SHAREHOLDERS' EQUITY 7,810
Minority interest 245
-----
TOTAL SHAREHOLDERS' EQUITY 8,055
-----
B PROVISIONS FOR RISKS AND EXPENSES
2 For taxation 869
3 Other provision s 1,755
Total provisions for risks and expenses 2,624
-----
C PERSONNEL LEAVING INDEMNITY 3,587
-----
D ACCOUNTS PAYABLE
3 Due to banks:
- within 12 months 27,088
- beyond 12 months 7,350
4 Due to other financial institutions:
- within 12 months 161
- beyond 12 months 322
5 Advances 311
6 Trade accounts 29,909
7 Payables represented by securities 254
11 Taxes payable 2,040
12 Payables to social security institutions 1,077
13 Other payables 1,569
------
Total accounts payable 70,081
------
ACCRUED LIABILITIES AND DEFERRED INCOME 720
------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 85,067
------
See accompanying Notes to Combined Financial Statements
MEMORANDUM ACCOUNTS
12.31.94
A. Guarantees given:
- Sureties 77
- Mortgages on land and buildings 19,010
- Guarantees on owned bonds 700
------
Total guarantees given 19,787
------
B. Other memorandum accounts:
- Leasing payables 2,801
------
TOTAL GUARANTEES AND MEMORANDUM ACCOUNTS 22,588
------
See accompanying Notes to Combined Financial Statements
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF INCOME
----------------------------
12.31.94
Amounts in Lire Millions
A PRODUCTION VALUE
1 Revenues from sales and services 96,347
2 Changes in inventories of work in progress,
finished and semi-finished goods 2,548
5 Other income and revenues 820
------
Total production value 99,715
------
B PRODUCTION COSTS
6 Raw, ancillary, consumable materials and goods (32,862)
7 Services (30,791)
8 Utilization of third party assets (1,049)
9 Labour costs
a) wages and salaries (15,240)
b) social contributions (6,129)
c) personnel termination indemnity (1,021)
d) other costs (226)
10 Depreciation, amortization and writedowns:
a) amortization of intangible fixed assets (399)
b) depreciation of tangible fixed assets (2,919)
c) other writedowns of non current assets (116)
d) writedowns of receivables included in working
capital and liquid assets (95)
11 Changes in inventories of raw materials and other
materials 1,919
12 Provision for risks
13 Other provisions
14 Other operating charges (2,501)
-------
Total production cost (91,429)
-------
DIFFERENCE BETWEEN VALUE AND COST OF PRODUCTION 8,286
-------
C FINANCIAL INCOME AND CHARGES
15 Income from investments 4
16 Other financial income:
b) from securities held as financial fixed assets
which do not constitute equity investments 81
c)from securities included among the current
assets which do not constitute equity investments 6
d)financial income other than the above 1,182
17 Interest and other financial charges (4,369)
------
Total financial income and charges (3,096)
------
D ADJUSTMENTS TO THE FINANCIAL ASSETS
18 Revaluations 0
19 Writedowns 0
------
Total adjustments 0
------
E EXTRAORDINARY INCOME AND CHARGES
20 Income:
a) gains on disposals 72
b) sundry gains 81
c) other extraordinary gains 244
21 Charges:
- losses on disposals (200)
- other charges (36)
------
Total extraordinary items 161
------
PROFIT (LOSS) BEFORE TAX 5,351
22 Income taxes for the year
- current (1,558)
- deferred (40)
------
23 COMBINED NET INCOME 3,753
(Profit)/loss pertaining to the minority interests (65)
------
NET INCOME (LOSS) PERTAINING TO THE GROUP 3,688
-----
See accompanying Notes to Combined Financial Statements
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
-----------------------------------------------------
FOR THE YEAR ENDING DECEMBER 31, 1994
-------------------------------------
(Amounts in Lire Millions)
APPROPRIATION
SHAREHOLDERS' BALANCE OF 1993 OTHER 1994 BALANCE
EQUITY 12/31/93 RESULT CHANGES INCOME 12/31/94
- ------------- -------- ------ ------- ------ --------
Pertaining to the Group:
Capital stock 1,052 1,052
Revaluation reserve 304 304
Legal reserve 172 30 (6) 196
Other reserve and
retained earnings 3,168 (504) (94) 2,570
Net income for the
year 3,688 3,688
-----
Total Group shareholders'
equity 7,810
-----
Minority interests:
Capital stock and
reserves 180
Net income for the year 65
-----
Total minority interest 245
-----
TOTAL 8,055
-----
See accompanying Notes to Combined Financial Statements
BEST/MANINVEST GROUP
--------------------
COMBINED STATEMENT OF CASH FLOW
-------------------------------
Million of Italian Lire
For the year ending December 31, 1994
------------------------------------
Cash flow generated by operations:
Net income for the year (before minority interest) 3,753
Adjustments of items which do not affect cash flow
Depreciation and amortization 3,434
Personnel leaving indemnity provision accrued
during the year 1,038
Accrual to provisions 956
Net loss on assets disposed 128 5,556
Changes in current assets and liabilities
Trade receivables (8,063)
Other receivables (3,991)
Inventories (4,822)
Prepayments and accruals (146)
Trade payables 13,863
Other payables 928 (2,231)
------
Total adjustments to Net Income 3,325
------
Cash flow generated by operations 7,078
------
Cash flows from investment activities:
Book value of assets disposed 131
Purchase of tangible fixed assets (12,545)
Increase in intangible fixed assets (64)
(Increase) decrease in investments (50) _______
Net cash used in investing activities (12,528)
-------
Cash flow from financing activities
Personnel leaving indemnity paid during the year (268)
Increase in other non-current assets 82
Increase in payables to banks 7,905
New loans 3,164
Payments of existing loans (598)
Dividends distributed (544) _______
Net cash by financing activities 9,741
-------
Exchange differences arising on translation of foreign
currency financial statements 25
-------
Increase (decrease) in liquid funds 4,316
-------
Cash in hand and at banks at December 31, 1993 9,355
Cash in hand and at banks at December 31, 1994 13,671
-------
Increase (decrease) in cash in hand and at banks 4,316
-------
See accompanying Notes to Combined Financial Statements
BEST-MANINVEST GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS FOR
THE YEAR ENDED DECEMBER 31, 1994
The combined financial statements have been prepared taking into consideration
the regulations introduced by Decree 127/1991 which implements the EC VII
Directive.
The notes to the combined financial statements explain, analyze and, in some
cases, supplement the data reported on the face of the financial statements.
Additional information is also provided in order to present a true and fair
view of the financial and operating position of the Group, even where this is
not required by specific legislation.
Unless otherwise specified amounts indicated in these notes are expressed in
millions of Italian Lire.
ACTIVITIES OF THE GROUP
- -----------------------
BEST-MANINVEST Group, the parent companies, and their subsidiary companies
(collectively the "Group") primarily manufacture and market range hoods, motors
and electrical transformers, plastic materials and stamps for the manufacture
of such plastic materials.
FORM AND CONTENT OF THE COMBINED FINANCIAL STATEMENTS
- -----------------------------------------------------
1) Format and combining area
These financial statements consist of the balance sheet, statement of
income, statement of changes in shareholders' equity and of cash flows
together with explanatory notes.
The combining area consists of the parent companies BEST S.p.A. and
MANINVEST S.r.l. and the companies in which BEST S.p.A. and MANINVEST
S.r.l. have the control, in virtue of the voting rights owned.
In their turn, BEST S.p.A. and MANINVEST S.r.l. are controlled by a common
share structure ending up with two shareholders (individual persons);
therefore, the group is named BEST-MANINVEST GROUP.
These combined financial statements, presented in a format that is not
compared with the prior year, have been prepared in connection with, and
for the purpose of, the possible transfer of the share capital of the two
companies (BEST S.p.A. and MANINVEST S.r.l.).
The list of the companies (that are fully combined on a line-by-line
basis) is the following:
BEST Group:
- Best S.p.A. (Parent company)
- Best Deutschland
Gmbh (Subsidiary at 100%)
MANINVEST Group:
- Maninvest S.r.l. (Parent company)
- Elektromec S.p.A. (Subsidiary at 96%)
- Selea S.r.l. ( " " 90%)
- Teknomec S.r.l. ( " " 100%)
- Interglass S.r.l. ( " " 72%)
- Elektra S.r.l. ( " " 100%)
2) Year end date
The combined financial statements have been prepared by the management of
the Group Parent companies and approved by the legal representatives on
the basis of the statements as at December 31, 1994, approved by the
shareholders.
3) Combining principles
The financial statements used for combining purposes are the statutory
financial statements of the individual group companies.
These financial statements have been suitably reclassified and adjusted in
order to bring them into line with the parent companies BEST S.p.A. and
MANINVEST S.r.l. accounting principles and valuation methods, which comply
with those laid down by articles 2423 et seq. of the Italian Civil Code
and with those recommended by CONSOB. In preparing the combined financial
statements, all assets, liabilities, income and expense items of the
companies included in the combination have been included in their entirety
on a line-by-line basis.
Receivables and payables, income and expenses, profits and losses deriving
from transactions between combined companies have been eliminated. The
book value of investments in combined companies is eliminated against
their corresponding portions of net equity. The difference existing at
the acquisition date between the book value of the investments being
eliminated and the corresponding portion of net equity being included are
entirely booked as an adjustment to combined net equity. Such difference
is immaterial.
The amount of the capital and reserves of subsidiaries pertaining to third
party shareholders is booked to an equity item entitled "Minority
interests"; the portion of the net profit or loss for the year pertaining
to third party shareholders is booked to a profit & loss item entitled
"Profit (loss) pertaining to minority interests".
4) Translation of foreign currency financial statements
Balance sheet items are translated into Italian lire at year end exchange
rate, while the statement of income items are translated at average
exchange rates for the year. The difference between the
profit or loss for the year translated at the average exchange rate and the
figure translated at the year end exchange rate, as well as the effect on
assets and liabilities of the changes in exchange rates between the
beginning and the end of the year, are booked to equity under the Other
reserves. The exchange rate used to translate financial statements not
expressed in Italian lire is shown in the following table:
Currency Average rate Year end rate
DM 999,7 1.047,7
5) Accounting principles and valuation methods
a) General
The accounting principles and valuation methods have been applied
consistently by all of the combined companies. The accounting
principles used in the combined financial statements are those used by
the parent companies BEST S.p.A. and MANINVEST S.r.l. suitably
adjusted to make them homogeneous, and comply with the legal
regulation mentioned earlier, integrated and interpreted by the
Accounting Principles issued by the Italian National Council of
Accountants.
b) Value adjustments and recoveries
Tangible and intangible fixed assets with a limited useful life are
depreciated over that period. If they or other asset items suffer a
permanent loss of value, then they are written down to their actual
value. Depreciation methods and writedowns are explained in detail
later in the notes.
c) Revaluations
No revaluations have been carried out except for those permitted under
specific laws regarding tangible fixed assets.
d) Accounting entries made solely for tax purposes
Certain subsidiaries have made accounting entries in their statutory
financial statements solely for tax reasons, particularly accelerated
depreciation in excess of what is required to charge the cost of the
tangible fixed assets over their estimated useful life. These entries
have been eliminated on combination.
The more important accounting principles and valuation methods are as
follows:
e) Intangible fixed assets
Intangible fixed assets are booked at purchase or internal cost,
including ancillary charges, and amortized on a straight line basis.
Start-up and expansion expenses are shown in a specific item and
amortized over their useful life, which in any case cannot be more
than 5 years.
Research, development costs and advertising expenses are all written
off to the statement of income in the year they are incurred.
Patent rights and rights to use original works are amortized on the
basis of their estimated period of utilization, which in no case can
be longer than the period laid down in the license contract.
Concessions, licenses, trade marks and similar rights that have been
capitalized are amortized over the period for which they are expected
to be used, and in any case no longer than the period set by the
purchase contract; if no contract exists or it is impossible to
quantify a useful life, amortization is charged over a period of five
years.
Intangible fixed assets that at year end appear to have suffered a
permanent loss of value compared with their net book value are written
down to their actual value.
f) Tangible fixed assets and depreciation
Tangible fixed assets are booked at purchase or production cost,
including ancillary expenses.
Cost is only revalued if it is in accordance with national laws
permitting such assets to be restated.
Depreciation is charged on the basis of the cost of the assets, or the
revalued cost where applicable, in such a way as to reflect the
assets' residual useful life. In accordance with the accounting
principles mentioned earlier, tangible fixed assets that at year end
appear to have suffered a permanent loss of value compared with their
net book value are written down to their actual value. Ordinary
maintenance expenses are all written off.
Maintenance expenses that increase the useful life of the assets are
booked to the accounts concerned and depreciated over the residual
useful life.
The depreciation rates consistently applied are as follows:
Buildings
Industrial buildings 3%
Plant and machinery
Generic plant and machinery 10-15,5%
Dies and machine parts 25%
Painting area 15%
Industrial and commercial equipment
Tools and equipment 25%
Other assets
Software and EDP equipment 33%
Furniture and office machinery 12%
Electronic office machinery 20%
Motor vehicles 20-25%
In the case of fixed tangible asset additions, the amount of
depreciation is reduced to 50% to take into consideration the period
of the year in which the asset was purchased.
g) Inventory
Inventories are valued at the lower of purchase or production cost,
including overheads, and realizable value based upon market trends.
Raw, ancillary and consumption materials are valued at the average
purchase cost using the LIFO method.
Work in progress, semifinished goods and finished products are valued
on the basis of the costs incurred depending on the stage of
completion reached at the end of the year.
Obsolete and slow-moving items are written-down taking into account
the chances they have of being utilized or sold at a profit.
h) Receivables
Accounts receivable are shown at their estimated realizable value
which is obtained from reducing their nominal value by the
corresponding provision for bad debts.
i) Current financial assets
Current financial assets that are not long term, are valued at the
lower of the purchase cost and realizable value.
l) Cash and banks
Liquid assets existing in cash and banks are shown at their nominal
value.
m) Prepayments and accruals
These include only income and costs that refer to the financial year
but are payable in future periods, or revenues and expenses paid
during the year but applicable to future periods. In any case, the
items recorded in these accounts are only portion of costs and
revenues that are common to two or more years, the amount of which
varies according to time.
n) Provision for risks and expenses
Risk and expense provisions are made only to cover losses or
liabilities of a specific nature, that certainly or probably exist,
but which are hard to quantify or schedule at the year end.
This account includes the provision for deferred taxation.
o) Personnel leaving indemnity
The personnel leaving indemnity account has been booked in accordance
with Italian laws, labour contracts and local agreements and has been
calculated for each employee.
This account includes the accruals for the pension plan of the
procurator of BEST DEUTSCHLAND GMBH which is determined and adjusted
in accordance with actuarial measurements of the existing benefit
obligation.
p) Payables
Payables are shown at their nominal value.
q) Amounts expressed in foreign currency
Amounts expressed in foreign currency are translated at the historical
exchange rate.
If a net loss arises from the adjustment of the foreign currency
receivables and payables to year end exchange rates, this loss is
booked to the statement of income against a specific account shown
under the provision for risks and expenses.
r) Provision for taxation
Income taxes are calculated on the basis of the taxable income of each
of the combined companies in accordance with local tax regulations.
Deferred taxes are charged in the combination on timing differences
existing between the taxable results of the individual companies and
those combined.
For prudence sake, deferred tax assets are only accounted for up to
the extent of any deferred tax liabilities.
ANALYSIS OF THE ITEMS IN THE FINANCIAL STATEMENTS:
(All amounts in the tables are expressed in Millions of Italian Lire)
ASSETS
------
A) Receivables due from shareholders for payments still due
The balance of this account in the financial statements for the year
ended December 31, 1994, is zero since there are no receivables from
shareholders for share capital subscribed but not paid.
B) Non-current assets
I -Intangible fixed assets
Intangible fixed assets at the year end are made up as follows:
Breakdown: 12/31/1994
Set-up and expansion expenses 42
R&D and advertising expenses 12
Industrial patents and intellectual
property rights 32
Concessions, licenses, trade marks 17
Other intangible fixed assets 12
---
Total 115
---
The above mentioned items are capitalized since they are considered to
be of benefit to the company over many years. They are amortized on a
straight line basis. No revaluations or writedowns have been made
during the current year.
II- Tangible fixed assets
Movements in this account during the year are as follows:
Balance Balance
12/31/93 Additions (Decrease) (Amort.) 12/31/94
-------- --------- ---------- -------- --------
Land and
buildings 5,318 8,197 - 311 13,204
Plant and
machinery 6,420 2,887 69 2,053 7,185
Industrial and
commercial
equipment 1,439 1,028 62 670 1,735
Assets under
construction
and advances
to suppliers 6 433 6 - 433
------ ------ --- ----- ------
TOTAL 13,183 12,545 137 3,034 22,557
------ ------ --- ----- ------
No revaluations or writedowns have been made during the current year.
Certain fixed assets of Best S.p.A. were revalued in prior years in
accordance with specific laws permitting monetary revaluation. No
writedowns have ever been made.
Additions during the year mainly refer to the purchase of an
industrial building by Best S.p.A. and of plants, machineries and
equipments finalized to increase production capacity of the Best and
Maninvest groups, to rationalize and automate it.
Some of the Group's tangible fixed assets are pledged as guarantees
for long-term loans from banks. The amount of such real guarantees is
approximately, at the original value, Lire 19,010 million as of
December 31, 1994. At the year end the Group had commitments for
purchasing fixed assets for about Lire 3,300 million.
Monetary revaluations
Tangible fixed assets in existence at the balance sheet date include
the following amounts (before depreciation) of revaluations carried
out by Best S.p.A. as permitted by Italian law.
12/31/94
--------
land and buildings 372
plant and machinery 126
industrial and commercial equipment 39
---
TOTAL 537
---
III- Financial fixed assets
The account is analyzed as follows:
12/31/94
--------
Financial receivables due from:
third parties 181
---
TOTAL 181
---
The financial fixed assets shown in the balance sheet refer mainly to
guarantee deposits. There are no amounts receivable after five years.
C) Current assets
I -Inventories
Inventories as at December 31, 1994 are analyzed as follows:
Reserve for Net value
Gross depreciation 12/31/94
----- ------------ --------
Raw materials, other materials 5,871 -50 5,821
Work in progress and
semifinished products 4,285 - 4,285
Finished goods and goods
for resale 2,743 -265 2,478
Advance payments to suppliers 394 - 394
------ ---- ------
TOTAL 13,293 -315 12,978
------ ---- ------
The valuation of the inventory at current cost valuation as compared
with the LIFO method resolve in a difference amounting to
approximately Lire 900 million.
II-Accounts Receivable
Accounts receivable are made up as follows:
12/31/94
--------
Accounts receivable:
trade receivables 26,654
other receivables 7,265
------
TOTAL 33,919
------
The amount of the receivables from customers and the provision for bad
debts is the following:
12/31/94
--------
Trade receivables 27,239
Provision for bad debts 585
------
TOTAL 26,654
------
Accounts receivable from customers refer to commercial transactions
and are mainly receivables from European customers.
Some Group companies have obtained insurance cover for collection
risks.
The provision for bad debts is considered adequate to cover potential
risks of not collecting outstanding balances from customers.
The account as at December 31, 1994 includes Lire 72 million
receivables from the related party 3M di Mantini F. & C S.a.S, which
collection is expected to be short-term.
The analysis of the balance Other receivables is the following:
12/31/94
--------
Receivables within 12 months
For VAT from Tax Authorities 5,629
Income tax credit 1,257
Suppliers' debit balances 16
Other receivables 268
-----
Total 7,170
-----
Such receivables, which are all current, are all collectible.
The receivable for VAT is mainly due to the annual fiscal return of
the group companies filing for a reimbursement. Income tax credit
refers to the amount of income tax filed with the prior year return
and the amount will be off-set against future tax due.
Others receivables include an amount of Lire 42 million due from
shareholders which is off-set by an amount of Lire 50 million payable
to shareholders included in Other payables.
These receivables are stated net of the provision for bad debts of
Lire 60 million relevant to the advance to a supplier for the purchase
of a machinery in dispute.
12/31/94
--------
Receivables beyond 12 months
Tax credits 18
Other receivables 77
---
Total 95
---
Receivables after 12 months are mainly due to advance payments to
personnel.
III- Current financial assets
The balance of current financial assets is analyzed as follows:
12/31/94
--------
Current financial assets:
other investments 58
other securities 747
---
TOTAL 805
---
The account Other securities includes bonds given as a guarantee
deposit to Italian tax authorities for Lire 400 million, and to banks
for Lire 300 million.
IV - Liquid funds
Liquid funds are made up as follows:
12/31/94
--------
Liquid funds:
bank and post office deposits 13,619
cash and valuables 52
------
TOTAL 13,671
------
Liquid funds consist of cash at banks and on hand at December 31,
1994.
D) Accrued income and prepaid expenses
Accrued income and prepaid expenses are made up as follows:
12/31/94
--------
Accrued income 68
---
Total accrued income 68
---
Prepaid expenses:
Insurance premiums 32
Installments of financial lease 160
Prepaid interest 262
Prepaid expenses 72
Other prepayments 247
---
Total Prepayments 773
---
TOTAL 841
---
Prepayments and accrued income are accounted for on the accruals
basis.
Prepaid interests refer to interests payable on interest assisted
loans according to the Sabatini law as shown in the balance sheet of
the companies Best S.p.A., Teknomec S.r.l., and Interglass S.r.l.
LIABILITIES AND SHAREHOLDERS' EQUITY
The changes in shareholders' equity for the year 1994 is shown in the
accompanying statement.
A) Shareholders' equity
Shareholders' equity accounts are as follows:
I -Capital Stock
The capital stock, issued and fully-paid, of the Parent companies as
at December 31, 1994 is composed as follows:
No. of stocks Face value Total value
------------- ---------- -----------
- Best S.p.A. 1,001,980 1,000 1,002
- Maninvest S.r.l. 50,000 1,000 50
--------- -----
1,051,980 1,052
--------- -----
Both companies are held 50% by Mr. S. Mancini and 50% by Mr. F.
Mantini.
III- Revaluation reserves
This reserve, amounting to Lire 304 million at December 31, 1994,
shows the residual amount of the revaluation of tangible fixed assets
made by the Group in accordance with Italian law. Taxes have not been
provided in respect of this reserve since, at this time, the
conditions (such as for example distribution) which would give rise to
such taxation, are not expected to occur.
IV - Legal reserve
This reserve refers to the allocation of prior years' profit as
approved by the shareholders' meeting, as requested by Italian law (at
least 5% of annual net income must be allocated to legal reserve until
the balance is equal to 20% of the capital stock).
VII- Other reserves
Other reserves include exchange rates adjustments generated by
translating the foreign currency financial statements of combined
companies to Italian Lire, and profits carryforward which will be
subject to taxation upon distribution or if utilized for purposes
other than covering losses.
The following statement highlights a summary of the differences
between the parents' financial statements and the combined financial
statements in respect to the year result and the equity.
RECONCILIATION BETWEEN THE PARENTS' FINANCIAL STATEMENTS AND THE COMBINED
FINANCIAL STATEMENTS
Shareholders'
Net profit Equity
---------- ------
Balances as per statutory financial
statements:
Best S.p.A. 2,260 4,078
Maninvest S.r.l. 640 709
----- -----
2,900 4,787
Difference between the Group's share
of net equity and the carrying value
of the investment 1,704 2,223
Elimination of intercompany profits on
the sale on intangible assets -20 -66
Elimination of intercompany dividends -1,150 -400
Elimination of intercompany profits
on inventory 67 -190
Elimination of intercompany profits on
the sales of fixed assets -59 -266
Adjustment for depreciation in excess
of the useful life of the assets 516 2,061
Other adjustments -270 -339
----- -----
Balances as per the combined financial
statements 3,688 7,810
----- -----
B) Provisions for risks and expenses
Provisions for risks and expenses are made up as follows:
12/31/94
--------
Provisions for risks and expenses:
for taxation 869
other provisions 1,755
-----
Total 2,624
-----
The provision for taxation includes, for Lire 813 million, deferred
taxes on timing differences between the taxable results and the
financial statements used for combining purposes.
The fiscal years of Best S.p.A. are closed up to 1986. The fiscal
years of Maninvest S.r.l., Elektromec S.p.A. and Interglass S.r.l. are
closed up to 1987 while no fiscal years are closed for Elektra S.r.l.
as the company was recently set-up.
The last tax assessment of Best Deutschland Gmbh concerned fiscal
years from 1988 to 1990. Management, in agreement with tax
consultants, believes that no material liabilities will arise from the
related settlement.
Some Group companies (Best S.p.A., Elektromec S.p.A., Selea S.r.l. and
Teknomec S.r.l.) benefited from the offset of tax exemption (ILOR) not
yet formally recognized by tax authorities.
The account Other provisions is analyzed as follows:
12/31/94
--------
Other provisions:
Provision for exchange rates losses 1,234
Provision for guarantees 521
-----
Total 1,755
-----
The provision for exchange rates losses shows the net effect of
adjusting the foreign currency balances using the year end exchange
rates.
The provision for guarantees represents an estimate of the costs to be
incurred for the repairing of products under warranty sold by Best
Gmbh in the German market.
C) Personnel leaving indemnity
Changes during the year are the following:
12/31/94
--------
Beginning balance 2,817
(+) Accruals 1,038
(-) Payments 268
-----
Ending balance 3,587
-----
The personnel leaving indemnity, applicable to Italian companies, has
been accrued in accordance with the laws in force in the country and
amounts to Lire 3,214 million, while the pension fund of Best Gmbh
amounts to Italian Lire 373 million.
D) Accounts payable
The analysis of the accounts payables based upon nature and due date,
is the following:
12/31/94
--------
Amounts payable
---------------
Within From 1 to 5
1 year years
------ -----
due to banks 27,088 7,350
other financial institutions 161 322
advances 311
trade accounts 29,909
payables represented by securities 254
taxes payable 2,040
payable to social security institutions 1,077
other payables 1,569
------ -----
Total 62,409 7,672
------ -----
There are no amounts payable after five years.
Short-term indebtedness with banks is mainly due to new lines of
credit on current account, advances on exports, and the current
portion of loans (amounting to Lire 1,645 million).
A detail of the medium-long term financial payables is as follows:
12/31/94
--------
Due to banks
Medium term financing to export 663
Industrial loan B.N.L. 2,500
Loan Bimer Banca 3,091
Loan Mediocredito L. 949 318
Financing B.N.L. 778
-----
Total 7,350
-----
Payables to other financial institutions
Financing Law 1329/65 322
---
Total 322
---
All loans given to the companies Best S.p.A., Selea S.r.l. and
Elektromec S.p.A., are guaranteed by mortgages on the buildings owned
by these companies for a total amount, at the original value, of Lire
19,010 million.
Trade accounts
Trade accounts, amounting to Lire 29,909 million, are all current.
Payables represented by securities
Payables represented by securities include the notes payable in
relation to fixed assets purchased under the Sabatini law 1329/65 by
Teknomec S.r.l.
Taxes payable
Taxes payable are made up as follows:
12/31/94
--------
Income taxes 1,022
Tax on shareholders' equity 368
VAT payable 8
Withholding tax payable to Tax Authorities 626
Other taxes and dues 16
-----
Total 2,040
-----
Payables to social security institutions
Payables to social security, amounting to Lire 1,077 million, refer to
both the Group and the employees contributions payable to these
institutions for the month of December paid in January 1995.
Other payables
Other payables are made up as follows:
12/31/94
--------
Personnel 1,029
Other payables 540
-----
Total 1,569
-----
Payables to personnel are related to the salaries of the month of
December 1994 which were paid in January 1995.
Other payables refer to commissions payable and the Directors'
emoluments.
E) Accrued liabilities and deferred income
Accrued liabilities and deferred income are made up as follows:
12/31/94
--------
Accrued liabilities:
Others 652
---
Total accrued liabilities 652
---
Deferred income:
Interest receivables 68
---
Total deferred income 68
---
TOTAL 720
---
The account accrued liabilities as at December 31, 1994 is mainly
represented by the amount of vacations accrued but not used by
personnel.
MEMORANDUM ACCOUNTS
The guarantees given to third parties and shown in the memorandum accounts
refer for Lire 77 million to sureties. Real guarantees, amounting to Lire
19,710 million, refer for Lire 19,010 million to the mortgage on tangible
fixed assets to guarantee medium and long term loans, at the original
value, and for Lire 700 million to guarantees on owned bonds. Other
memorandum accounts include Lire 2,801 million of lease installments
payable which is the residual liabilities to suppliers deriving from
financial leasing contracts of tangible fixed assets.
STATEMENT OF INCOME
-------------------
A) Production value
Analysis of sales and services:
12/31/94
--------
Breakdown of sales by type of activity:
Sales of products, spare parts, accessories 96,133
Repairs, packaging, transports 20
Other sales 800
Services 214
------
Total 97,167
------
Other sales mainly include customs duties recovered on exports of
finished goods.
12/31/94
--------
Geographical breakdown of sales of products,
spare parts, accessories
Italy 12,441
Foreign 83,692
------
Total 96,133
------
B) Production costs
Purchases of raw, ancillary, consumable materials and goods
The analysis of purchases is the following:
12/31/94
--------
Raw materials and components 31,311
Consumable materials 199
Packaging materials 195
Other production materials 677
Other purchases 480
------
Total 32,862
------
Costs of services
The analysis and the breakdown of costs of services are as follows:
12/31/94
--------
Subcontracted work 21,256
Electricity and other utilities 725
Maintenance 2,224
Technical consultancy 569
Commissions 1,275
Legal and consultancy expenses 398
Transport on sales 2,739
Transport on purchases 277
Other services 1,328
------
Total 30,791
------
C) Financial income and charges
The composition of financial charges is the following:
12/31/94
--------
Income from long term securities 81
Interest income on other securities 6
Bank interest income 284
Interest on other current receivables 28
Realized exchange gains 839
Other financial income 35
-----
Total 1,273
-----
The composition of interests payable and other charges is the
following:
12/31/94
--------
Financial charges on:
payable to banks for short term finance 1,881
payable to banks for loan and other medium-
long term borrowings 702
payable to other financial institutions 4
suppliers 62
other payables 58
Other financial charges:
loss on exchange rates 1,512
commissions and bank charges 150
-----
Total 4,369
-----
D) Adjustment to the value of financial assets
The balance is zero.
E) Extraordinary items
Breakdown on extraordinary income
Extraordinary income consists of:
12/31/94
--------
Extraordinary income:
Sundry gains 81
Other extraordinary gains 244
---
Total 325
---
Gains on disposal of assets:
Gains on disposal of fixed assets 72
---
Total 72
---
OTAL 397
---
The breakdown of extraordinary charges is as follows:
12/31/94
--------
Extraordinary charges:
Expenses and losses extraordinary in nature 1
Sundry losses 35
---
Total 36
---
Losses on disposal of fixed assets:
Losses on disposal of fixed assets 200
---
Total 200
---
TOTAL 236
---
Other information
As required by law the following is a breakdown of personnel by
category and the emoluments paid to Directors and Statutory Auditors.
Average number of employees by category
12/31/94
--------
Factory workers 459
Office workers 73
Managers 1
---
Total 533
---
Compensation paid to Directors and Statutory Auditors are the
following:
12/31/94
--------
Directors 511
Statutory Auditors 53
---
Total 564
---
EXPLANATION ADDED FOR TRANSLATION TO ENGLISH
The financial statements have been translated into English from the
original version in Italian. They have been prepared in accordance with
the Italian law related to financial statements, interpreted and
integrated by the accounting principles established by the Italian
Accounting Profession.
EXHIBIT 2.1
ACQUISITION AGREEMENT
Dated as of October 31, 1995
between
NORTEK, INC.
(as Buyer)
and
SERGIO MANCINI
FRANCO MANTINI
(as Sellers)
TABLE OF CONTENTS
Page
1 Acquisition of Gruppo BEST by Nortek on the Closing Date 2
1.1 Purchase and Sale of Gruppo BEST 2
1.2 Purchase Price for the Acquisition Shares 2
1.3 Allocation of the Purchase Price 2
1.4 Additional Adjustment to Purchase Price 3
1.5 Target Value 3
1.6 Operating Earnings 4
2 Closing 4
2.1 Delivery and Recordation of the Acquisition Shares
by Messrs. Mancini and Mantini 4
2.2 Payment to Sellers 5
2.3 Certificates, Opinions, etc 5
3 Representations and Warranties by Sellers 5
3.1 Corporate Status 5
3.2 Capitalization and Ownership of the BEST Shares
and Maninvest Shares 6
3.3 Subsidiaries 6
3.4 Merger of Teknomec S.r.l. and Selea S.r.l 7
3.5 Authority for Agreement 7
3.6 Financial Statements 9
3.7 Absence of Undisclosed Liabilities 10
3.8 Absence of Changes 10
3.9 Taxes 12
3.10 Property 14
3.10.1 Title; Encumbrances 3.10.2 Leases
3.10.3 Condition
3.11 Material Contracts 15
3.12 Accounts Receivable; Inventories 16
3.13 Intellectual Property 17
3.14 Insurance 18
3.15 Litigation 18
3.16 Compliance with Laws; Governmental Authorizations 18
3.17 Environmental, Health and Safety Matters 19
3.18 Brokers, Finders, etc 20
3.19 Directors, Officers and Employees; Compensation 20
3.20 Labor and Employment 21
3.20.2 Schedule of Employee Benefit Plans
3.21 Government Grants 23
3.22 Product Warranty 23
3.23 Product Liability 23
3.24 Customers and Suppliers 24
3.25 No Illegal Payments, etc 24
3.26 Disclosure 24
4 Representations and Warranties by Nortek 25
4.1 Corporate Status 25
4.2 Authority for Agreement 25
4.3 Brokers, Finders, etc 25
5 Expenses 26
6 Additional Covenants of the Parties 26
6.1 General 26
6.2 Conduct of Business 26
6.3 Notices and Consents 27
6.4 Full Access 27
6.5 Notice of Developments 28
6.6 Exclusivity 28
7 Survival of Representations and Warranties 28
8 Indemnification 28
8.1 Indemnity by Sellers 28
8.2 Nortek Indemnity 28
8.3 Certification of Claims 30
8.4 Third Party Actions 30
8.5 Definition of Damages 32
8.6 Right of Set-off 33
9 Post-Closing Covenants 33
9.1 General 33
9.2 Litigation Support 33
9.3 Transition 34
9.4 Confidentiality 34
9.5 Tax Matters 35
9.5.1 Tax Periods Ending on or Before the Closing
Date
9.5.2 Tax Periods Beginning Before and Ending
after the Closing Date
9.6 Non-Competition 35
10 Conditions Precedent to Nortek's Obligations 36
10.1 Performance by Sellers; Certificate 36
10.2 Representations and Warranties; Certificate 36
10.3 Opinions of Counsel 37
10.4 Absence of Litigation 37
10.5 No Material Adverse Change 37
10.6 Due Diligence 37
10.7 Management Consulting Agreements 37
10.8 Non-competition Agreements 37
10.9 Relationships with Customers and Suppliers 37
10.10 Other Consents 37
10.11 [RESERVED] 38
10.12 Limitation on Dividends 38
10.13 Governmental Clearance and Approval 38
10.14 Approval of Proceedings; Documentation 38
10.15 [RESERVED] 38
10.16 Resignations of Members of the Board of Directors
and Board of Auditors 38
11 Conditions Precedent to the Obligations of Sellers. 38
11.1 Performance by Nortek; Certificate 38
11.2 Representations and Warranties; Certificate 39
11.3 Opinion of Counsel 39
11.4 Management Consulting Agreements 39
11.5 Non-competition Agreements 39
11.6 Absence of Litigation 39
11.7 Governmental Clearance and Approval. 39
11.8 Other Consents 40
11.9 Approval of Proceedings; Documentation 40
12 Entire Agreement 40
13 Amendment 40
14 Press Releases 40
15 Headings 40
16 Exhibits, etc 40
17 Assignment, Successors and Assigns; Benefits of Agreement 41
18 Notices 41
19 Intentionally Omitted 42
20 Severability 42
21 Arbitration 43
22 Governing Law 44
23 Counterparts 44
ACQUISITION AGREEMENT made as of October 31, 1995 (this
"Agreement") by and between Nortek, Inc., a Delaware corporation
with its principal offices at 50 Kennedy Plaza, Providence, Rhode
Island 02903 U.S.A. ("Nortek"), Sergio Mancini, an Italian
national ("Mr. Mancini") and Franco Mantini, an Italian national
("Mr. Mantini") (Mr. Mancini and Mr. Mantini are sometimes
referred collectively as the "Sellers").
WHEREAS, Mr. Mancini and Mr. Mantini are the holders of all
of the issued and outstanding capital stock of BEST S.p.A., an
Italian corporation with its principal offices at Via Euplo
Natali, 18 Fabriano, Italy ("BEST"), and all of the issued and
outstanding share capital of Maninvest S.r.l., an Italian
corporation with its principal offices at Via Dante, 71 Fabriano,
Italy ("Maninvest").
WHEREAS, Nortek desires to purchase from Mr. Mancini and Mr.
Mantini the business conducted by BEST and its subsidiary BEST
Deutschland GmbH, a German corporation ("BEST Deutschland"), as
well as the business conducted by Maninvest and its subsidiaries
Elektromec S.p.A., an Italian corporation with its principal
offices at S. S. Settempedena, Montefano, Italy ("Elektromec"),
Elektra S.r.l. with its principal offices at Via Bruno Buozzi,
Fonte Rita, Fabriano, Italy ("Elektra"), and Interglass S.r.l.
with its principal offices at Via Dante, 71 Fabriano, Italy
("Interglass") (such business being hereinafter referred to as the
"Business" and such corporations together with any other
subsidiaries of Maninvest being hereinafter referred to,
collectively, as the "Gruppo BEST Companies").
WHEREAS, prior to the date hereof the Sellers acquired 6.79%
and 28%, respectively, of the share capital of Elektromec and
Interglass, so that as of the date hereof Maninvest holds 93.21%
and the Sellers, collectively, hold 6.79% of the share capital of
Elektromec and Maninvest holds 72% and the Sellers, collectively,
hold 28% of the share capital of Interglass.
WHEREAS, Mr. Mancini and Mr. Mantini, jointly and severally,
desire to sell to Nortek the Business conducted by the Gruppo BEST
Companies.
NOW THEREFORE, and in consideration of the premises and
respective covenants and conditions herein contained, Nortek and
each of the Sellers hereby agree as follows:
1 Acquisition of Gruppo BEST by Nortek on the Closing Date.
1.1 Purchase and Sale of Gruppo BEST. Mr. Mancini and Mr.
Mantini will sell and transfer to Nortek (or, at the option of
Nortek, to one or more direct or indirect subsidiaries of Nortek
designated by Nortek (its "designee" or "designees")) at the
Closing (as defined in Section 2), and Nortek agrees to purchase
(or cause its designee or designees to purchase) from Mr. Mancini
and Mr. Mantini, jointly and severally, at the Closing, (a) all of
the issued and outstanding shares of capital stock of BEST (the
"BEST Shares"), (b) all of the issued and outstanding quotas of
the capital of Maninvest (the "Maninvest Quotas"), (c) all of the
issued and outstanding capital of Elektromec and Interglass,
respectively, not held by Maninvest (the "Elektromec Shares" and
the "Interglass Quotas", respectively), and (d) the issued and
outstanding shares capital of BEST Deutschland not held by BEST
(the "German Shares", which together with the BEST Shares, the
Elektromec Shares, the Maninvest Quotas are referred to
collectively as, the "Acquisition Shares").
1.2 Purchase Price for the Acquisition Shares. In
consideration of the assignment, transfer, conveyance and delivery
by Mr. Mancini and Mr. Mantini of the Acquisition Shares to Nortek
(or its designee or designees) and of the other agreements of Mr.
Mancini and Mr. Mantini stated herein, Nortek (or its designees)
will pay and the Sellers will receive the purchase price for the
Acquisition Shares determined in accordance with Section 1.3
below.
1.3 Allocation of the Purchase Price. Subject to the
adjustment provided for in Section 1.4 below, Nortek agrees to pay
to Sellers an aggregate of Lit. 21 billion (the "Purchase Price"),
of which Lit. 16 billion (the "Initial Purchase Price") shall be
payable at the Closing and Lit. 5 billion (the "Deferred Purchase
Price") shall be payable in five equal installments of Lit. 1
billion following each anniversary of the Closing Date for five
years following such date. The Purchase Price shall be allocated
among the Acquisition Shares on the basis of the following values:
BEST (Lit. 14.25 billion); BEST Deutschland (Lit. 1.5 billion);
Elektromec (Lit. 5 billion); Interglass (Lit. 200 million); and
Elektra (Lit. 50 million). So that the aggregate Purchase Price
for the Acquisition Shares shall be as follows: Lit.15.75 billion
for the BEST Shares and the German Shares and Lit. 5.25 billion
for the Maninvest Quotas, the Elektromec Shares and the Interglass
Quotas.
1.4 Additional Adjustment to Purchase Price. (a) If Operating
Earnings (as defined below) for the year ended December 31 in the
year of the first anniversary of the Closing Date (for ease of
reference 1996) and each subsequent year for four years ( i.e.,
1997, 1998, 1999 and 2000) equals or exceeds the Target Value (as
defined below), then the Purchase Price shall be adjusted upward
and Nortek shall pay to the Sellers Lit. 600 million for each such
year in which Operating Earnings exceeds the Target Value.
It is the intention of the parties that during such five year
period to the extent Operating Earnings exceeds the Target Value
for any such year, such excess shall be applied to Operating
Earnings in prior or subsequent year Target Value would not
otherwise be met; provided that any such excess shall not be
double counted. Accordingly, if in any such year, Operating
Earnings for that year exceeds the Target Value, then to the
extent that such Operating Earnings are in excess of the Target
Value for that year, such excess shall be carried over to the next
succeeding year or years for which Operating Earnings are
calculated and shall cumulate for purposes of determining whether
Operating Earnings for such succeeding year equals or exceeds the
Target Value for such year. Conversely, if in any such year which
is prior to a year in which Operating Earnings exceeds the Target
Value, Operating Earnings for such prior year did not equal or
exceed the Target Value for that year, then such excess shall be
applied to the prior year and if the application of such excess
plus the Operating Earnings for such year equals or exceeds the
Target Value for such prior year, the Purchase Price shall be
adjusted upward retroactively for that year to which such excess
is applied and Nortek shall pay to the Sellers Lit. 600 million
(without interest) in respect of such prior year. Any increase in
Purchase Price hereunder shall be allocated among the Acquisition
Shares in the same proportion as required by Section 1.3. In no
event shall the aggregate increase in Purchase Price resulting
from these adjustments exceed Lit. 3 billion.
(b) The payment to Sellers by Nortek (or its designees) of
any adjustment in the Purchase Price pursuant to this Section 1.4
shall be payable 30 days after Nortek shall have filed its Annual
Report on Form 10-K with the Securities and Exchange Commission by
wire transfer of next day funds to such account or accounts as
each of the Sellers shall so notify Nortek at least 10 business
days prior to such date.
1.5 Target Value. "Target Value" means for any year in which
there is an adjustment to the Purchase Price an amount equal to
Lit. 8.4 billion as adjusted in each year following the Closing
Date for inflation beginning in 1997 based on percentage changes
in the Italian ISTAT index of the production prices of industrial
products for such year as compared with such index for the year
1995.
1.6 Operating Earnings. "Operating Earnings" means for any
period the combined operating earnings of the Gruppo BEST
Companies before providing for interest and for Taxes (as defined
in Section 3.9 hereof) determined on the basis of the financial
statements of the Gruppo BEST Companies for such period computed
in accordance with United States generally accepted accounting
principles consistently applied; provided, however, that any
expense, including without limitation compensation, social
security payments, benefits, reimbursement of expenses and other
expenses incurred by Nortek (or any affiliate thereof) in
connection with the management consulting agreements to which the
Sellers are parties, shall reduce Operating Earnings for such
period.
2 Closing. The purchase of the Acquisition Shares by Nortek or
its designee(s) from Sellers in exchange for the Purchase Price
and the consummation of the transactions contemplated by this
Agreement (the "Closing") shall be held commencing at 10:00 A.M.
at the offices of BEST, S.p.A., 18, Via Euplo Natali 60044
Fabriano (AN), ITALY, on October 31, 1995 (the "Closing Date"), or at such
other time and place as the parties may agree in writing.
At the Closing, the following transactions shall occur all of
which shall be deemed to have occurred simultaneously:
2.1 Delivery and Recordation of the Acquisition Shares by
Messrs. Mancini and Mantini. Messrs. Mancini and Mantini will
deliver to Nortek (or one or more of its designees) certificates
representing the BEST Shares and the Elektromec Shares duly
endorsed, and deeds of transfer of the Maninvest Quotas and the
Interglass Quotas, in each case, in proper form for transfer and
will cause upon said delivery and, with respect to the Maninvest
Quotas and the Interglass Quotas, upon filing of the deed of
transfer with the competent tribunal, the due recordation of such
transfer of such BEST Shares and Elektromec Shares and the
Maninvest Quotas and the Interglass Quotas on the stock ledger
books of the respective corporations and with the appropriate
Italian notary public as may be required to vest in Nortek (or its
designee) all of the right, title and interest in the Acquisition.
In addition, the Sellers shall take such action as is necessary
under German law to transfer or cause the transfer of the German
Shares to Nortek or its designee(s).
2.2 Payment to Sellers. Nortek (or its designees) will
deliver to Sellers Lit.16 billion in cash by wire transfer of
immediately available funds or as the Sellers shall so specify.
Such amount to be paid to Messrs. Mancini and Mantini in
proportion to their ownership interest in the Acquisition Shares,
respectively; provided, however, that if at the Closing the
Sellers are unable to transfer the German Shares to Nortek or its
designee(s), then Nortek or its designee(s) shall be entitled to
withhold Lit. 60 million of the Purchase Price allocated to the
BEST Shares and the German Shares until the Sellers shall have
delivered to Nortek or its designee(s) evidence reasonable
satisfactory to Nortek and its counsel that the German Shares have
been transferred to Nortek or its designee(s) in accordance with
German Law.
2.3 Certificates, Opinions, etc. Each party will deliver to
the other parties such certificates, opinions and other documents
as are contemplated hereby or as may reasonably be requested by
the other parties to evidence compliance with the terms of
Sections 1 and 2 and the other provisions of this Agreement.
3 Representations and Warranties by Sellers. For purposes of
this Section 3, except as the context otherwise indicates, any
reference to accounting terms or accounting principles shall mean
U.S. generally accepted accounting principles ("U.S. GAAP") as in
effect on the date of this Agreement. Except as set forth or
disclosed any schedule delivered in connection with this
Agreement, each of the Sellers, jointly and severally with respect
to each representation and warranty being made by them hereunder,
represents and warrants as follows:
3.1 Corporate Status. Each of BEST and Maninvest is a
corporation duly organized, validly existing and in good standing
under the laws of the Republic of Italy and has all necessary
corporate power and authority to carry on the Business as now
conducted and as proposed to be conducted. The Sellers have
delivered to Nortek complete and correct copies of the charter and
by-laws, each as amended to date, of BEST and Maninvest.
3.2 Capitalization and Ownership of the BEST Shares and
Maninvest Shares. (a) The authorized and issued share capital of
BEST consists of 3,500,000 shares of common stock, nominal value
Lit. 1,000 per share.
(b) The authorized and issued share capital of Maninvest
consists of 50,000 shares of common stock, nominal value Lit.1,000
per share.
(c) The Sellers own of record and beneficially all of the
issued and outstanding share capital of BEST and Maninvest,
respectively, and the Elektromec Shares, the Interglass Quotas and
the German Shares not owned by Maninvest and BEST, respectively,
free and clear of all liens, claims, charges, encumbrances and
restrictions of any kind whatsoever ("Encumbrances"). The legal
patrimonial system between each of the Sellers and their
respective spouses is that of separate ownership of properties. No
other person or entity has or shares any direct or indirect
interest or right with respect to either the BEST Shares or the
Maninvest Shares other than directors qualifying shares which
shall be transferred to Nortek (or its designee(s)) in accordance
with the terms of this Agreement. The BEST Shares and the
Maninvest Shares have been duly authorized and validly issued and
are fully paid and nonassessable. There are no preemptive rights
or rights of first refusal on the part of any holder of any class
of securities of either BEST or Maninvest or any other person.
There are no options, warrants, conversion or other rights,
agreements or commitments of any kind obligating either BEST or
Maninvest, contingently or otherwise, to issue or sell any shares
of its capital stock of any class or any securities convertible
into or exchangeable for any such shares, and no authorization
therefore has been given. Each of the Sellers has full right,
power and authority to transfer the BEST Shares and the Maninvest
Shares to Nortek and/or its designees, free and clear of any
Encumbrances, and such transfer will not constitute a breach or
violation of, or a default under, any agreement or instrument by
which BEST, Maninvest or any Seller is bound.
3.3 Subsidiaries. Schedule 3.3 sets forth the name and
country of incorporation of each wholly owned subsidiary of either
BEST or Maninvest and of each subsidiary comprising part of the
Gruppo BEST Companies (individually, a "Subsidiary" and
collectively, "Subsidiaries"). Other than BEST Deutschland,
Elektra, Elektromec and Interglass and except as set forth on
Schedule 3.3, neither BEST nor Maninvest has any subsidiaries nor
owns directly or indirectly any capital stock or other equity or
ownership interest in any other corporation, partnership,
association, trust, joint venture or other entity or person.
Except as set forth on Schedule 3.3, BEST or Maninvest owns or is
sole beneficiary of all of the issued and outstanding stock
options, warrants, rights or commitments, relating to the issuance
of any shares of capital stock of or equity interests in the
Subsidiaries other than directors qualifying shares which shall be
transferred to Nortek (or its designee(s)) in accordance with the
terms of this Agreement. Each Subsidiary is a duly organized,
validly existing corporation under the laws of its jurisdiction of
incorporation and has all necessary power and authority, corporate
or otherwise, to carry on its business as presently conducted and
as proposed to be conducted. The Sellers have delivered to Nortek
a complete and correct copy of the organizational and governance
documents, each as amended to date, of each Subsidiary.
3.4 Merger of Teknomec S.r.l. and Selea S.r.l. The mergers of
Teknomec S.r.l., an Italian corporation ("Teknomec"), and Selea
S.r.l., an Italian corporation ("Selea") with Elektromec as the
surviving corporation were completed on May 15, 1995 and properly
registered prior to the date hereof (the "Mergers"). All
corporate formalities necessary to authorize the Mergers by
Teknomec and Selea, on the one hand, and Elektromec, on the other
hand, were complied with and no further consents, approvals or
authorizations of any kind are required in order to give effect to
the Mergers and each of the Mergers was effected in accordance
with Italian law. Nortek has been provided true and complete
copies of all documents and instruments executed, delivered and/or
filed with any governmental authority relating to the Mergers.
Except as reflected in the Gruppo BEST Financial Statements
referred to in Section 3.6 hereof, neither Teknomec nor Selea,
prior to giving effect to the Mergers, had any material
liabilities or obligations of any nature, whether absolute,
contingent or otherwise which are not so reflected in the Gruppo
BEST Financial Statements after giving effect to the Mergers.
3.5 Authority for Agreement. (a) Each of the Sellers has
all necessary power and authority to execute and deliver this
Agreement and any other agreement, document or instrument to be
delivered in connection with the consummation of the transactions
contemplated hereby and to carry out his obligations hereunder and
thereunder.
This Agreement and each other agreement, document and instrument
to be delivered in connection with the consummation of the
transaction contemplated hereby and thereby constitutes the valid
and legally binding obligation of each of the Sellers and is
enforceable in accordance with its terms. Except as set forth in
Schedule 3.5, the execution and delivery of this Agreement and the
consummation of any of the other transactions contemplated hereby
will not conflict with, or result in any violation of, or default
with respect to, or require the consent of or notice to any third
parties under, any mortgage, loan, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Gruppo BEST Companies or to the
Sellers. The execution and delivery of this Agreement and of each
other agreement, document and instrument to be delivered in
connection with the consummation of the transactions contemplated
hereby and thereby will not accelerate the maturity of or
otherwise modify in any material respect the terms of any
indebtedness of the Gruppo BEST Companies, or result in the
creation of any Encumbrance upon any of the property or assets of
the Gruppo BEST Companies.
(b) Except as set forth in Schedule 3.5, the assets of the
Gruppo BEST Companies constitute all of the property and property
rights (including contract rights) used in the conduct of the
Business in the manner and to the extent presently conducted since
June 30, 1995 and as proposed to be conducted.
(c) There are no agreements to which any of the Gruppo BEST
companies are a party or by which any of the Gruppo BEST Companies
is bound which restrict the ability of any of the Gruppo BEST
Companies to carry on the Business anywhere in the world. There
are no agreements between any of the Gruppo BEST Companies and any
other person or entity affiliated with the Sellers which require
the repayment or reimbursement of any amounts owed or advanced.
Except as described in Schedule 3.5, there are no agreements to
which any of the Gruppo BEST Companies is a party which upon the
consummation of the transactions contemplated hereby create rights
in any third party, including without limitation "dirigente" (as
such term is used under Italian law to differentiate employees
from those managers who are granted a special status under Italian
law upon a change in control of an Italian corporation)
enforceable against any of Gruppo BEST Companies as a consequence
of a change in control of any of the Gruppo BEST Companies, and no
consent, approval, order or authorization of, recording, or
registration, declaration or filing with any governmental
authority is required in connection with the execution and
delivery of this Agreement or the consummation of any of the other
transactions contemplated hereby by any of the Gruppo BEST
Companies or the Sellers.
3.6 Financial Statements.
(a) Attached hereto as Schedule 3.6 are true and correct
copies of (i) the audited combined Balance Sheet of the Gruppo
BEST Companies at December 31, 1994 and the related combined
statements of operations and cash flows for the twelve months
ended December 31, 1994, together with the auditor's report
thereon and (ii) the unaudited combined balance sheet of the
Gruppo BEST Companies at June 30, 1995 and the related combined
statements of operations and cash flows for the six months ended
June 30, 1995 (collectively, the "Gruppo BEST Financial
Statements").
(b) Except as otherwise indicated in the respective reports of
the auditors for the Gruppo BEST companies or in the notes
thereto, all of the Gruppo BEST Financial Statements have been
prepared in accordance with Italian GAAP consistently applied
throughout the periods indicated, and fairly present, in all
material respects, the financial condition of the Gruppo BEST
Companies and the results of their operations and cash flows as of
the dates and for the periods covered thereby.
(c) The Gruppo BEST Financial Statements are in accordance
with the books and records of the Gruppo BEST Companies. All
material transactions occurring during the periods covered by the
Gruppo BEST Financial Statements have been disclosed in the Gruppo
BEST Financial Statements to the extent required to be disclosed
under the applicable generally accepted accounting principles
referred to above.
3.7 Absence of Undisclosed Liabilities. Except as set forth
in Schedule 3.7 and other than liabilities which have arisen
after [December 31, 1994] in the ordinary course of business and
consistent with past practice, none of the Gruppo BEST Companies
has any material liabilities or obligations of any nature, whether
absolute, contingent or otherwise which are required to be
reflected or reserved against in, or otherwise provided for in the
notes to, the Gruppo BEST Financial Statements under Italian GAAP
and which are not so reflected or reserved against therein or in
the notes thereto.
3.8 Absence of Changes. Except as set forth in Schedule 3.8
since December 31, 1994, (a) there has been no material adverse
change in the condition, financial or otherwise, properties,
assets, liabilities, business or operations or prospects (a
"Material Adverse Change") of the Gruppo BEST Companies and (b)
none of the Gruppo BEST Companies has:
(i) declared, set aside, made or paid any dividend or
other distribution in respect of its capital stock or agreed
to do any of the foregoing, or purchased or redeemed or
agreed to purchase or redeem, directly or indirectly, any
shares of its capital stock;
(ii) issued or sold any shares of its capital stock of
any class or any options, warrants, conversion or other
rights to purchase any such shares or any securities
convertible into or exchangeable for such shares;
(iii) incurred any indebtedness for purchase money or
borrowed money other than in the ordinary course of business
consistent with past practice;
(iv) mortgaged, pledged, or subjected to any
Encumbrance, any of its properties or assets, tangible or
intangible, except Permitted Encumbrances (as defined in
Section 3.10.1);
(v) acquired or disposed of any assets or properties in
any transaction involving money or value in excess of Lit.
16.4 million with any officer, director or salaried employee,
or any relative by blood or marriage, or except in the
ordinary course of business acquired or disposed of any
assets or properties having a value in excess of Lit. 41
million in any transaction
with any other person;
(vi) forgiven or canceled any debts or claims, or
waived any rights, except in the ordinary course of business
and consistent with past practices;
(vii) (A) granted to any officer, director or
consultant or to any employee during the year ended December
31, 1994, any material increase in compensation in any form
(including any material increase in scope of any benefits),
other than annual salary increases consistent with prior
practice, or (B) become subject to any request for severance
or termination pay, or granted any severance or termination
pay, or entered into any employment or severance agreement
with any officer or employee during the year ended December
31, 1994;
(viii) adopted, or amended in any material respect, any
bonus, profit-sharing, compensation, stock option, pension,
welfare, security, retirement, deferred compensation or other
material plan, agreement, trust, fund or arrangement for the
benefit of any employee or employees;
(ix) except as disclosed on Schedule 3.8 experienced
any actual or threatened dispute with a supplier involving
more than Lit. 16.4 million or with a customer involving more
than the lower of (a) Lit. 12.3 million or (b) the full
contract value which is the subject of the dispute;
(x) except as disclosed on Schedules 3.8 and 3.11, made
any capital expenditures or commitment therefor in excess of
Lit. 41 million;
(xi) incurred any liability (absolute, accrued or
contingent) except current liabilities incurred, liabilities
under contracts entered into, borrowings under short-term
lines of credit and liabilities in respect of letters of
credit issued under credit facilities, in each case incurred
in the ordinary course of business consistent with past
practices;
(xii) suffered a loss, damage or destruction, whether
or not covered by insurance, in excess of Lit. 41 million; or
(xiii) extended or modified in any material respect the
terms or provisions of any lease of real property of the
character set forth or described in Section 3.10.2.
(xiv) made any changes in accounting principles or
accounting practices.
(xv) none of the Gruppo BEST Companies has entered
into any currency hedging or similar swap transactions which
are not reflected in the Gruppo BEST Financial Statements.
3.9 Taxes.
(a) The following defined terms shall have the meanings set
forth below:
(i) "Tax" means any (and in the plural "Taxes" shall mean
all) income, gross receipts, license, payroll, employment, agency,
excise, manufacturing, severance, stamp, occupation, premium,
windfall profits, environmental, customs, capital stock, net
worth, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
turnover, alternative or add-on minimum, estimated or other tax,
duty, or other fiscal charge of any kind whatsoever (whether
payable directly, or by way of withholding or on account, and
including those paid or withheld in the capacity as withholding
tax agent), including without limitation any interest, penalty, or
addition thereto, whether disputed or not, imposed by any foreign
or national or local taxing authority or other authority having
jurisdiction to administer or enforce any of the foregoing.
(ii) "Tax Return" means any return, declaration, report,
claim for refund, or information return relating to Taxes,
including without limitation any schedule or attachment thereto,
and any amendment thereof.
(b) Except as set forth on Schedule 3.9:
(i) Each of the Gruppo BEST Companies has filed or caused to
be filed and, from the date hereof until the Closing Date, will
file or cause to be filed all Tax Returns required to be filed by
them in accordance with applicable laws on or before the date
hereof or the Closing Date (as applicable) with respect to Taxes.
None of the Gruppo BEST Companies is a beneficiary of any
extension of time within which to file any Tax Returns required to
be filed by them, and all Tax Returns filed by the Gruppo BEST
Companies were correct and complete in all respects.
(ii) All Taxes, whether or not shown on Tax Returns filed on
or before the date hereof as due from or payable by any of the
Gruppo BEST Companies as well as any other Tax that was or is
required to be withheld and/or paid by any of the Gruppo BEST
Companies under any applicable laws and/or regulations, have been
duly and timely withheld and/or paid in full or adequately
disclosed and fully provided for in the Gruppo BEST Financial
Statements, and all Taxes which are shown on Tax Returns filed
after the date hereof and on or before the Closing Date as due
from or payable by any of the Gruppo BEST Companies as well as any
other Tax that was or is required to be withheld and/or paid by
any of the Gruppo BEST Companies under any applicable laws and/or
regulations, will be duly and timely withheld and/or paid in full
or adequately disclosed and fully reserved for.
(iii) There are no actions, suits, proceedings,
examinations, audits, claims, assessments or material disputes
concerning any of the Gruppo BEST Companies concerning any Taxes
or Tax Returns either (A) claimed or raised by any Italian or
foreign governmental authority; or (B) as to which any of the
Sellers or the directors and officers of any of the Gruppo BEST
Companies has knowledge.
(iv) There are no outstanding agreements or waivers between
any of the Gruppo BEST Companies and any governmental authority
extending the statute of limitations applicable to any Tax Return
of any of the Gruppo BEST Companies for any period;
(v) The Sellers have delivered to Nortek correct and
complete copies of all Tax Returns, examination reports, and
statements of deficiencies for tax years for each of the Gruppo
BEST Companies which are still open to inspection and assessment
and shall deliver all Tax Returns that are filed between the date
hereof and the Closing Date. No Tax deficiency has been assessed
against or proposed in writing to be assessed against any of the
Gruppo BEST Companies by any governmental authority except for Tax
deficiencies that have been paid in full or adequately disclosed
and fully provided for in the Gruppo BEST Financial Statements.
(vi) None of the Gruppo BEST Companies is a party to any Tax
sharing agreement.
(vii) None of the Gruppo BEST Companies is liable, by
contract or as a matter of law, primarily or otherwise, for the
payment of any Taxes for which another person is liable.
3.10 Property.
3.10.1 Title; Encumbrances. Schedule 3.10 sets forth the
location of all real property owned or leased by any of the Gruppo BEST
Companies. Except as stated in Schedule 3.10, each of the Gruppo BEST
Companies (as indicated in Schedule 3.10) has good and marketable title
to all real properties owned by it and to all material tangible
personal property reflected in the December 31, 1994 combined balance
sheets included in the Gruppo BEST Financial Statements or acquired
after such dates (except to the extent of property disposed of since
such dates in the ordinary course of business), and valid leasehold
interests in all real properties leased by the Gruppo BEST Companies
and all material tangible personal properties leased by the Gruppo BEST
Companies, in each case free and clear of all mortgages, liens,
charges, encumbrances, easements, security interests or title
imperfections except (a) liens for current taxes not due and payable or
the validity of which is being contested in good faith, (b) liens
securing Indebtedness reflected on the December 31, 1994 balance sheet
included in the Gruppo BEST Financial Statements, which liens are
listed on Schedule 3.10, (c) purchase money security interests and
liens securing rental payments under leases incurred in the ordinary
course of business, (d) liens arising by operation of law in favor of
mechanics, materialmen and similar parties for work done to the extent
that the obligation secured thereby is not at the time required to be
paid and (e) other encumbrances on real property, such as ordinary
utility easements, rights of way, zoning, building and use
restrictions, that do not materially interfere with the existing use of
such property in the conduct of the Business or materially detract from
the value of such property (the exceptions described in the foregoing
clauses (a), (b), (c), (d) and (e) being referred to herein as
"Permitted Encumbrances").
None of the Gruppo BEST Companies has received any notice or has
any knowledge of any violation of any zoning restrictions and
ordinances, health and fire codes and ordinances, laws or regulations,
affecting any such parcel in any material respect, and have no reason
to believe that any authority contemplates issuing the same. None of
the Gruppo BEST Companies has received any notice of any condemnation
or eminent domain proceeding for any taking of any such parcel, or any
part thereof or of any negotiations for the purchase of any such
parcel, or any part thereof in lieu of condemnation and, to the best of
their knowledge, no condemnation or eminent domain proceedings or
negotiations have been commenced or threatened in connection with any
such property.
3.10.2 Leases. Except as set forth on Schedule 3.10.2, the
Gruppo BEST Companies enjoy peaceful and undisturbed possession under
all leases of real and personal property to which they are parties
(which in the case of personal property means any lease having an
unexpired term of one or more years and remaining rental payments
aggregating in excess of Lit. 16 million) and all such leases are valid
and subsisting. Each of the Gruppo BEST Companies have paid all rent
due and payable under all such leases, and there exists no material
default on the part of any of the Gruppo BEST Companies, or, to the
best of Sellers' knowledge, the lessors, existing thereunder.
3.10.3 Condition. Except as set forth in Schedule 3.10.3,
all structures and other improvements, including fixtures, located on
the real property owned or leased by each of the Gruppo BEST Companies
and all tangible personal property owned or leased by each of the
Gruppo BEST Companies, which in each case are necessary for the conduct
of the Business as presently conducted and as proposed to be conducted,
are in good operating condition in all material respects for property
of its type and age.
3.11 Material Contracts. Schedule 3.11 contains a complete and
correct list of all agreements, contracts and commitments of the
following types, written or oral, to which any of the Gruppo BEST
Companies is a party or by which any of their property is bound as of
the date hereof (collectively the "Material Contracts"):
(a) notes, loans, credit agreements, overdraft facilities,
mortgages, indentures, security agreements and other agreements
and instruments relating to the borrowing of money or extension of
credit to any of the Gruppo BEST Companies or to any guarantee by
any of the Gruppo BEST Companies of any obligations of a third
party;
(b) consulting or professional services agreements, or
employment agreements;
(c) all distribution, agency, commission or sales
representative agreements;
(d) agreements, orders, or commitments for the purchase of
raw materials exceeding Lit. 12.3 million or for the purchase of
supplies or finished products exceeding Lit. 12.3 million or;
(e) agreements, orders or commitments for the sale to
customers of products or services exceeding Lit. 82 million in any
case;
(f) all licenses by or to any of the Gruppo BEST Companies
(other than solely intercompany licenses between any of the Gruppo
BEST Companies) of any Intellectual Property (as defined in
Section 3.12) to or from any affiliated or unaffiliated third
party (excluding any end-user licenses available through normal
commercial channels);
(g) agreements or commitments for capital expenditures in
excess of Lit. 16.4 million for any single project or series of
related projects; and
(h) other agreements or obligations material to any of the
Gruppo BEST Companies involving payments, receipts, assets or
obligations of more than Lit. 16.4 million.
The Sellers have delivered or made available to Nortek complete
and correct copies of all written Material Contracts and accurate
summaries of all oral Material Contracts. Except as disclosed in
Schedule 3.11, all such Material Contracts are in full force and
effect and none of the Gruppo BEST Companies has any outstanding powers
of attorney, except routine powers of attorney relating to
representation before governmental agencies or given in connection with
qualification to conduct business in another jurisdiction.
3.12 Accounts Receivable; Inventories. (a) The accounts
receivable of the Gruppo BEST Companies reflected on the combined
balance sheets of the Gruppo BEST Companies as at December 31, 1994
contained in the Gruppo BEST Financial Statements arose out of bona
fide sales and deliveries of goods or the performance of services in
the ordinary course of the Business in accordance with past practice
and are subject to no set offs or counterclaims and are collectible in
the ordinary course of business.
(b) The inventories reflected on such combined balance sheet as
at December 31, 1994 are in good, usable or saleable condition and have
been reflected on such balance sheet in accordance with Italian GAAP
consistently applied.
3.13 Intellectual Property. (a) For purposes of this Section
3.13, the term "Intellectual Property" shall mean all patents and
patent applications, registered or unregistered trademarks, copyrights,
service marks, applications for registration thereof, trade names,
inventions, processes, designs and design rights, formulas, trade
secrets, know-how, software and computer programs, including all other
items of intellectual property and propriety rights.
(b) BEST and BEST Deutschland own all rights to the name "BEST"
and the other names listed on Schedule 3.13 for all products, and no
other person has acquired or owns any rights thereto. Schedule 3.13
also contains a complete and correct list of all patents, patent
applications, registered or unregistered trademarks, trade names or
service marks, registered trademarks, trade names or service marks
applications, and all copyrights or copyright applications (which
copyrights are listed by general category only), which are, in the case
of each item on said lists, owned by each of the Gruppo BEST Companies
or in which any of the Gruppo BEST Companies has any rights or
licenses. Schedule 3.13 also sets forth the principal products (or
features such as controls) which utilize or are covered by the software
programs which the Gruppo BEST Companies own or have the right to use.
Each of the Gruppo BEST Companies owns, or possesses adequate
rights to use, all Intellectual Property necessary for the conduct of
the Business as presently conducted and as proposed to be conducted.
Except as set forth on Schedule 3.13, none of the Gruppo BEST Companies
has any obligation to make payments of royalties or other amounts or
transfer any interest in such Intellectual Property to any third party,
including Sellers and their other affiliates.
(c) Except as indicated in Schedule 3.13, none of the Gruppo BEST
Companies have granted, transferred or assigned, or acquiesced in or
permitted use without a license of, any right or interest in the
Intellectual Property to any person or entity, except pursuant to non
exclusive end-user license agreements for internal purposes only.
3.14 Insurance. Each of the Gruppo BEST Companies has for the
past 10 years maintained and now maintains, as the case may be, (i)
insurance in scope and amount customary and reasonable on the Business
covering property damage and loss of income by fire and other casualty
to the limits and with the deductibles shown on Schedule 3.14 and (ii)
insurance protection against such liabilities, claims and risks
including product liability, and in such amounts, as is shown on such
Schedule. The Sellers have heretofore delivered to Nortek complete and
correct copies of all such policies together with all riders and
amendments thereto. Such policies are legal, valid and binding and in
full force and effect, all premiums due thereon have been paid, and
each of the Gruppo BEST Companies has complied in all material respects
with the provisions of such policies and has not received notice of
cancellation or of any material increase in insurance premiums payable.
All of such policies will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following
consummation of the transactions contemplated hereby.
3.15 Litigation. (a) Except for the matters described in
Schedules 3.9 and 3.15, there are no judicial or administrative
actions, suits, proceedings or arbitrations or investigations (domestic
or foreign) pending or, to the best knowledge of Sellers, threatened
against any of the Gruppo BEST Companies or their
respective assets, including the BEST Shares or the Maninvest Shares,
or which were pending or threatened at any time since January 1, 1991.
Sellers have heretofore furnished or made available to Nortek true and
complete copies of all relevant court papers, proceeding administrative
request, and other documents relating to the matters specifically set
forth on Schedules 3.9 and 3.15.
3.16 Compliance with Laws; Governmental Authorizations. None of
the Gruppo BEST Companies are in violation of or default in any
material respect under any statute, law, ordinance, rule, regulation,
judgment, order, decree, permit, concession, grant, franchise, license
or other governmental authorization or approval including without
limitation any laws, rules or regulations of the European Union ("EU
Law") applicable to them or to any of their assets, properties,
products or services. All permits, concessions, grants, franchises,
licenses and other governmental authorizations and approvals necessary
for the conduct of the Business have been duly obtained and are in full
force and effect and there are no proceedings pending or, to the
Seller's knowledge, threatened that may result in the revocation,
cancellation or suspension, or any materially adverse modification, of
any thereof.
3.17 Environmental, Health and Safety Matters. Schedule 3.17 is a
true and complete list of all known conditions or states of fact
existing on the date hereof and as of the Closing Date based on or
resulting from the presence in or discharge, spill, disposal, emission,
generation, storage or release of any chemical, pollutant, contaminant,
waste, toxic or hazardous substance or petroleum product into the
environment caused by any of the Gruppo BEST Companies at any location
owned or leased (including any adjacent or adjoining property),
currently or in the past, by any of the Gruppo BEST Companies which
constitutes a violation of or requires remediation under any Health and
Environmental Laws (as defined below).
"Health and Environmental Laws" means any decree, order (including
any administrative act issued by any authority requiring compliance
with applicable laws, statutes, rules and regulations before the issue
of a formal order) or arbitration award of, any EU Regulation and
Decision (as defined below) or any law, statute, or binding decision or
regulation of or any agreement with, or any license, authorization or
permit from, any EU Institution, national, regional or local
governmental authority or court relating to occupational and public
health and safety (including fire prevention), or the environment in
effect as of the date hereof and the Closing Date including, without
limitation, national, regional and local laws, statutes, rules and
regulations relating to environmental matters and contamination of any
type whatsoever.
"EU Institution" shall mean the EU Council, the European
Commission and the European Court of Justice.
"EU Regulations and Decisions" means all applicable regulations
and decisions adopted by the EU Council (or the former Council of the
European Community) or the European Commission (or the former
Commission of the European Community).
3.17.1 Each of the Gruppo BEST Companies has complied and is
in compliance with all applicable Health and Environmental Laws with
respect to the use, transport, import, export, temporary or final
storage, recycling or disposal of any waste, chemical substance or
mixture, pollutant, including without limitation, any contaminant,
irritant, or pollutant or other hazardous or toxic substance
("Hazardous Materials"), which are identified as such in any
jurisdiction in which any of the Gruppo BEST Companies either owns or
leases real property or conducts its business.
3.17.2 Except as disclosed on Schedule 3.17, (i) none of the
Gruppo BEST Companies has received notice from any governmental
authority (or has knowledge that any governmental authority may give
notice) that it is in violation of any applicable Health and
Environmental Laws with respect to the use, transport, import, export,
temporary or final storage, recycling or disposal of any such Hazardous
Materials; (ii) each of the Gruppo BEST Companies has obtained and has
complied with all financial or other conditions contained in all
permits, licenses, authorizations and consents which are required under
any applicable Health and Environmental Laws or may be required for the
use, transport, import, export, temporary or final storage, recycling
and disposal of all Hazardous Materials used in the conduct of the
Business; and (iii) there have been no direct or indirect discharges,
spills, leaks or releases, whether accidental or voluntary, of any
Hazardous Materials caused by any of the Gruppo BEST Companies on any
real property (a) now leased or previously leased or (b) now owned or
previously owned by any of the Gruppo BEST Companies, which in any case
constitutes a violation of or requires remediation under any Health and
Environmental Law.
3.18 Brokers, Finders, etc. Neither the Seller's, nor any of the
Gruppo BEST Companies has retained any financial advisor, broker, agent
or finder or paid or agreed to pay for any financial advisor, broker,
agent, or finder on account of this Agreement or any transaction
contemplated hereby, or any transaction of like character that would be
required to be paid.
3.19 Directors, Officers and Employees; Compensation. The Company
has delivered to Nortek a true and complete list of directors and
officers of each of the Gruppo BEST Companies and of all employees and
consultants of each of the Gruppo BEST Companies whose current total
compensation was for the calendar year ended 1994 at an annual rate in
excess of Lit. 60 million, which list states the annual rate of
compensation of, and the positions held by, the persons listed.
3.20 Labor and Employment.
3.20.1 Except as set forth on Schedule 3.20.1:
(a) each of the Gruppo BEST Companies is in compliance in
all material respects with all applicable EU Regulations and
Decisions, national and state or local laws, rules and regulations
with respect to its employees and employment practices, and terms
and conditions of employment, including without limitation any
provisions thereof relating to wages, bonuses, hours of work and
social security pensions and other mandatory contributions,
medical laws and safety insurance laws and regulations (including
INPS, INAIL and other similar authorities as well as other funds,
entities or agencies, as provided for by the applicable national
collective bargaining agreements);
(b) there is not pending or threatened, and there has not
occurred since January 1, 1991, any material trade union or
collective labor-related disputes or strikes involving any of the
Gruppo BEST Companies;
(c) there are no grievance or arbitration proceedings
arising out of or under any national collective bargaining
agreement pending or threatened, and no claim therefor has been
asserted against any of the Gruppo BEST Companies, in each case
for an amount in excess of Lit. 25 million or in the aggregate
Lit. 82 million;
(d) all pension plans and severance funds required by law to
be funded by any of the Gruppo BEST Companies are funded in
accordance with applicable laws, regulations or statutes; none of
the Gruppo BEST Companies maintains any employee benefit plan that
would subject it to the US Employee Retirement Income Security Act
of 1974, as amended;
(e) there are no material written agreements or
understandings with any unions or shop committees (in regard to
employees outside the United States), except under the provisions
of the applicable national collective bargaining agreements;
(f) Neither of the Sellers is now or has ever been an
employee of any of the Gruppo BEST Companies and, except where
required by law, there are no employment or independent labor
agreements (other than those the terms of which are solely
prescribed by laws, regulations and applicable national collective
bargaining agreements) or agreements for provision of services or
consultancy of whatever nature, which (A) are not terminable by
any of the Gruppo BEST Companies on 90 or fewer days notice at any
time without penalty, (B) have a remaining term, as of the date
hereof, of more than one year in length of obligation on the part
of any of the Gruppo BEST Companies or (C) involve payment by any
of the Gruppo BEST Companies, subsequent to the date hereof, of
more than Lit. 82 million;
(g) there are no employment agreements whatsoever that may
be terminated solely as a result of a change of control of any of
the Gruppo BEST Companies, other than as provided for by any
applicable national collective bargaining agreements; and
(h) no employee or "dirigente" has the right to severance pay
or other benefits for any period of time following the Closing as
a result of a change in control of any of the Gruppo BEST
Companies, other than as provided for by any applicable national
collective bargaining agreements.
3.20.2 Schedule of Employee Benefit Plans. Schedule 3.20.2
contains a true and complete list, as of the date of this Agreement, of
all profit sharing, deferred compensation, severance pay, bonus, stock
option, stock purchase, pension, retainer, consulting, retirement,
change-in-control, welfare or incentive plans, contracts, arrangements,
policies, programs or practices, vacation pay (or socalled "thirteen
months' pay") or other plans, policies or agreements for the benefit of
employees, other than as provided for by any applicable national
collective bargaining agreements(collectively, the "Plans"). True,
current and complete copies of such Plans, all amendments and written
interpretations with respect thereto, if any, have been furnished to
Nortek.
3.20.3 Subcontractors. Schedule 3.20.3 sets forth the name
and address of each subcontractor that has performed any services for
or on behalf of any of the Gruppo BEST Companies during the last three
fiscal years. Each of the named subcontractors is an "independent
enterprise" under Italian law and none of the Gruppo BEST Companies is
liable to INPS, INAIL or any other Italian authority with jurisdiction
over employer/employee relations or the terms and conditions of
employment, including without limitation, wages, bonuses, hours of
work, social security pensions and other mandatory contributions.
Schedule 3.20.3 sets forth for each subcontractor identified therein
(i) the term of the contract (start and end date, if any) and the
identity of the goods or services which are the subject matter of the
subcontract, (ii) the aggregate amount of payments made to such
subcontractor during the term of the subcontract, (iii) the aggregate
number of employees used by such subcontractor in the performance of
such services or supply of such goods and (iv) whether any of the
Gruppo Best Companies supplies the subcontractor with equipment or
provides work space.
3.21 Government Grants. Attached as Schedule 3.23 is a true and
correct list of grants from governmental bodies to the any of the
Gruppo BEST Companies as reflected on the combined balance sheet at
December 31, 1994 included in the Gruppo BEST Financial Statements.
Except as set forth in Schedule 3.23, the funds represented by such
grants have been disbursed by the relevant governmental bodies and
received by the relevant Gruppo BEST Companies, and no Gruppo BEST
Company which is a recipient of any such grant is in default of any of
the terms and conditions specified in the governmental authorization of
such grant.
3.22 Product Warranty. Each product manufactured, sold, leased,
or delivered by any of the Gruppo BEST Companies has been in conformity
with all applicable contractual commitments and all express and implied
warranties, and none of the Gruppo BEST Companies has any liability
(and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any liability) for replacement or
repair thereof or other damages in connection therewith, subject only
to the reserve for product warranty claims set forth on the face of the
most recent combined balance sheet of the Gruppo BEST Financial
Statements (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of the Gruppo BEST Companies. No product
manufactured, sold, leased or delivered by any of the Gruppo BEST
Companies is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease.
Schedule 3.22 includes copies of the standard terms and conditions of
sale or lease for each of the Gruppo BEST Companies (containing
applicable guaranty, warranty, and indemnity provisions).
3.23 Product Liability. None of the Gruppo BEST Companies has any
liability (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any liability) arising out of
any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or
delivered by any of the Gruppo BEST Companies.
3.24 Customers and Suppliers. Set forth on Schedule 3.24 is a
list of all suppliers and customers of the Business that accounted for
over 5% each of the total sales and purchases, respectively, during the
twelve-month period ended December 31, 1994, together with the amount
paid to each such supplier or sold to each such customer.
Except as set forth in Schedule 3.24, none of the Sellers
believes, nor has any of them received any notice which should lead him
or it to believe, that any of the suppliers or customers listed on
Schedule 3.24 will terminate or materially reduce its business with
Gruppo BEST Companies.
3.25 No Illegal Payments, etc. None of the Gruppo BEST Companies
nor any of their respective officers, employees or agents, has (a)
directly or indirectly given or agreed to give any illegal gift,
contribution, payment or similar benefit to any supplier, customer,
governmental official or employee or other person who was, is or may be
in a position to help or hinder the Gruppo BEST Companies (or assist in
connection with any actual or proposed transaction) or made or agreed
to make any illegal contribution, or reimbursed any illegal political
gift or contribution made by any other person, to any candidate for
national, state, local or foreign public office (i) which would subject
any of the Gruppo BEST Companies to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or (ii) the non-
continuation of which has had or will have, individually or in the
aggregate, a material adverse effect on any of the Gruppo BEST
Companies or, after giving effect to the transactions contemplated
hereby, Nortek, under the laws of any jurisdiction including the U.S.
Prohibited Foreign Trade Practices Act or (b) established or maintained
any unrecorded fund or asset or made any false entries on any books or
records for any purpose.
3.26 Disclosure. Neither this Agreement (including without
limitation the Schedules hereto), nor the Gruppo BEST Financial
Statements, nor any other document, certificate, financial statement or
other instrument furnished or to be furnished by or on behalf of
Sellers, contains or will contain any untrue statement of a material
fact, nor, considered as a whole, omit to state a material fact
necessary in order to make the statements contained herein or therein
not misleading.
4 Representations and Warranties by Nortek. Nortek represents and
warrants to the Sellers as follows:
4.1 Corporate Status. Nortek is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to carry on its
business as now conducted.
4.2 Authority for Agreement. Nortek has all necessary corporate
power to execute and deliver this Agreement and to carry out its
obligations hereunder and to cause any of its subsidiaries to carry out
any of its obligations. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary actions on behalf of Nortek on the
date hereof. This Agreement constitutes the valid and legally binding
obligation of Nortek and is enforceable against Nortek in accordance
with its terms, subject to bankruptcy, insolvency, reorganization or
similar laws of general application affecting the rights and remedies
of creditors and to general equity principles.
4.3 Brokers, Finders, etc. Neither Nortek nor any of its
subsidiaries has retained any financial advisor, broker, agent or
finder or paid or agreed to pay for any financial advisor, broker,
agent, or finder on account of this Agreement or any transaction
contemplated hereby, or any transaction of like character that would be
required to be paid.
5 Expenses. Each of the parties hereto shall assume and bear all
expenses, costs and fees (including any fees of investment banks,
financial advisors, professional advisers and legal counsel) incurred
or assumed by such party in the preparation and execution of this
Agreement and compliance herewith, whether or not the transactions
herein provided for shall be consummated except that the fees and
expenses of Studio Legale Verna, Deloitte and Touche and Mr. Latanzi in
the aggregate not greater than Lit. 600,000,000 may be paid by the
Gruppo BEST Companies. Notwithstanding the foregoing, all excise,
documentary, transfer (including indirect transfer of stock of BEST
Deutschland), value added taxes and like taxes, (such as the "fiscata
boilato") or fees (including notarial fees) for the like payable in
connection with the sale, transfer and delivery of the BEST Shares and
the Maninvest Shares to Nortek or its designees (including indirect
transfer of subsidiary shares provisions) shall be paid by Sellers.
6 Additional Covenants of the Parties. The parties further covenant
and agree as follows:
6.1 General. Each of the parties will use his or its reasonable
best efforts to take all action and to do all things necessary, proper,
or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver,
of the closing conditions set forth in Sections 10 and 11 below).
6.2 Conduct of Business. From and after the date of this
Agreement and until the Closing Date, except as Nortek shall otherwise
specifically consent to in writing, each of the Sellers will cause each
of the Gruppo BEST Companies to conduct their affairs so that they:
(a) carry on their respective businesses in, and only in,
the usual, regular and ordinary course in substantially the same
manner as conducted since January 1, 1995 and use reasonable
efforts to preserve intact their respective present business
organizations, to the extent reasonably possible keep available
the services of present officers and employees, and preserve their
respective relationships with customers, suppliers and others
having business dealings with them;
(b) not sell or withdraw assets, including factoring of
receivables, except for inventory in the ordinary course of
business or disposal of assets which are replaced in the ordinary
course.
(c) maintain all of the material structures, equipment and
other tangible personal property used in the conduct of their
respective businesses as conducted since January 1, 1995 in good
repair, order and condition except for ordinary wear and tear;
(d) keep in full force and effect insurance comparable in
amount and scope of coverage to the insurance now carried by them;
(e) perform in all material respects all obligations under
all Material Contracts;
(f) maintain their books of account and records in the
usual, regular and ordinary manner;
(g) comply in all material respects with all applicable
statutes, laws, ordinances, rules and regulations;
(h) not take or permit to be taken any action or incur any
liability or obligation which if taken or incurred prior to the
date hereof would have been required to be disclosed pursuant to
any of the representations and warranties made by Sellers;
(i) not issue any capital stock or other securities; and
6.3 Notices and Consents. The Sellers will cause each of the
Gruppo BEST Companies to give any notices to third parties, and will
cause each of the Gruppo BEST Companies to use its best efforts to
obtain any third party consents, that Nortek may request in order to
permit the consummation of the transactions contemplated hereby. Each
of the parties will (and the Sellers will cause each of the Gruppo BEST
Companies to) give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies required to consummate the
transactions contemplated hereby.
6.4 Full Access. Each of the Sellers will permit, and the
Sellers will cause each of the Gruppo BEST Companies to permit,
representatives of Nortek to have full access to all premises,
properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each of the Gruppo BEST
Companies.
6.5 Notice of Developments. The Sellers will give prompt
written notice to Nortek of any material adverse development causing a
breach of any of the representations and warranties in set forth in
Section 3 hereof. No disclosure by any Party pursuant to this Section
6.5, however, shall be deemed to amend or supplement any Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
6.6 Exclusivity. None of the Sellers will (and the Sellers will
not cause or permit any of the Gruppo BEST Companies to) (i) solicit,
initiate, or encourage the submission of any proposal or offer from any
person or other entity relating to the acquisition of any capital stock
or other voting securities, or any substantial portion of the assets
of, any of the Gruppo BEST Companies (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in
any other manner any efforts or attempt by any person or other entity
to do or seek any of the foregoing. None of the Sellers will vote
their BEST Shares or Maninvest Shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange. The Sellers
will notify Nortek immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
7 Survival of Representations and Warranties. Except as otherwise
specifically provided for in this Agreement, all representations,
warranties and agreements of Sellers contained herein or in any
document, certificate or other instrument required to be delivered
hereunder in connection with the transactions contemplated hereby
shall, subject to any applicable statute of limitations, survive
indefinitely.
8 Indemnification.
8.1 Indemnity by Sellers. Sellers, jointly and severally hereby
agree to indemnify, defend and hold harmless Nortek and its directors,
officers and affiliates against and in respect of any damage that
results from (i) the inaccuracy of any representation or warranty made
by Sellers herein, or resulting from any misrepresentation, breach of
warranty or non-fulfillment of any agreement or covenant of Sellers
contained herein or in any agreement or instrument required to be
entered into in connection herewith and specifically identified herein
or from any misrepresentation in or omission from any schedule,
document, certificate or other instrument required to be furnished by
or on behalf of Sellers hereunder and specifically identified herein;
(ii) any liability of any Gruppo BEST Company for indebtedness in
excess of permitted indebtedness on the Closing Date; (iii) any
liability of any of the Gruppo BEST Companies in respect of any Taxes
attributable to periods beginning before and ending on June 30, 1995
that have not been paid or accrued on the combined balance sheet of the
Gruppo BEST companies through such date; and (iv) any and all claims,
actions, suits and proceedings resulting from any of the foregoing
(hereinafter called a "Nortek Claim" or "Nortek Claims").
For purposes of clause (iii) of this Section 8.1, income Taxes
paid for taxable years beginning before the Closing Date that include
the Closing Date shall be prorated on a daily basis to determine the
income Taxes attributable to the period ending on the Closing Date.
Notwithstanding the foregoing, Sellers shall have no obligation to
indemnify Nortek under this Section 8.1 unless, and only to the extent
that, the aggregate of all amounts for which indemnity would otherwise
be due as a result of or arising out of the matters set forth in
clauses (i) through (iii) of Section 8.1 above exceed Lit. 40 million,
provided that in computing such amount each single indemnity amount (or
any series of amounts relating to a class action or series
of claims arising out of a common set of facts) of less than Lit.8
million shall be disregarded.
8.2 Nortek Indemnity. Nortek hereby agrees to indemnify and hold
harmless Sellers against and in respect of any damage resulting from
(i) the inaccuracy of any representation or warranty made by Nortek or
resulting from any misrepresentation, breach of warranty or non-
fulfillment of any agreement or covenant of Nortek contained herein or
in any agreement or instrument required to be entered into in
connection herewith and specifically identified herein or from any
misrepresentation in or omission from any document, certificate or
other instrument required to be furnished by Nortek hereunder and
specifically identified herein; and (ii) any and all claims, actions,
suits and proceedings resulting from any of the foregoing (hereinafter
called an "Sellers" or "Sellers Claims").
Notwithstanding the foregoing, Nortek shall have no obligation to
indemnify Sellers under this Section 8.2 unless, and only to the extent
that, the aggregate of all amounts for which indemnity would otherwise
be due as a result of or arising out of the matters set forth in
clauses (i) and (ii) above exceed $25,000; provided that in computing
such amount each single indemnity amount (or any series of amounts
relating to a class action or series of claims arising out of a common
set of facts) of less than $5,000 shall be disregarded.
8.3 Certification of Claims. If Nortek or any Seller is of the
opinion that any Nortek Claim or any Seller Claim, as the case may be,
has occurred or will or may reasonably occur, Nortek or any Seller, as
the case may be, shall so notify the other, and each such notice shall
specify the circumstances of such asserted Nortek Claim or any Seller
Claim.
8.4 Third Party Actions.
(a) In the event any claim is made, suit is brought or tax
audit or other proceeding is instituted against Nortek or any
Gruppo BEST Company or any of their respective directors, officers
or affiliates which involves or appears reasonably likely to
involve a Nortek Claim for which indemnification may be sought
against the Sellers hereunder, Nortek will, promptly (and in any
event within 15 days) after receipt of notice of any such claim,
suit, tax audit or proceeding, notify the Sellers of the
commencement thereof. The failure to so notify Sellers of the
commencement of any such claim, suit, tax audit or proceeding will
relieve Sellers from liability only to the extent that such
failure materially adversely affects the ability of Sellers to
defend its interests in such claim, suit, tax audit or proceeding.
Whenever permitted under applicable law, Nortek or any Gruppo BEST
Company or any of their respective directors, officers or
affiliates, as the case may be, shall have the right and option to
bring Sellers as a formal party into the proceedings, and the
Sellers shall have the right and option to join in such
proceedings as a formal party in accordance with applicable
procedural rules. In all cases in which Sellers do not
participate in the proceedings as a formal party, Sellers (at
their expense) shall have the right and shall be given the
opportunity to participate in the defense of such claim, suit, tax
audit or proceeding, provided that Nortek and its counsel shall
maintain the conduct of all matters pertaining to the defense or
settlement of such claim, suit, tax audit or proceeding. Whether
or not Sellers elect to participate in such defense, Nortek shall
not, except at its own cost, make any settlement with respect to
any such claim, suit, tax audit or proceeding without the prior
consent of Sellers, which may not be unreasonably withheld. In
the event that Nortek determines to settle any such claim, suit,
tax audit or proceeding without the prior consent of Sellers (as
provided above), Sellers shall have no indemnification obligations
with respect to such claim, suit, tax audit or proceeding.
Nortek's consent to the settlement of any such claim, suit, tax
audit or proceeding by Sellers shall be required and shall not be
unreasonably withheld.
(b) In the event any claim is made, suit is brought or tax
audit or other proceeding is instituted against Sellers which
involves or appears reasonably likely to involve a Seller Claim
for which indemnification may be sought against Nortek hereunder,
the Sellers will, promptly (and in any event within 15 days) after
receipt of notice of any such claim, suit, tax audit or
proceeding, notify Nortek of the commencement thereof. The
failure to so notify Nortek of the commencement of any such claim,
suit, tax audit or proceeding will relieve Nortek from liability
only to the extent that such failure materially adversely affects
the ability of Nortek to defend its interest in such claim, suit,
tax audit or proceeding. Whenever permitted under applicable law,
Nortek or any Gruppo BEST Company or any of their respective
directors, officers or affiliates, as the case may be, shall have
the right and option to bring Nortek as a formal party into the
proceedings, and Nortek shall have the right and option to join in
such proceedings as a formal party in accordance with applicable
procedural rules. In all cases in which Nortek does not
participate in the proceedings as a formal party, Nortek (at its
expense) shall have the right and shall be given the opportunity
to participate in the defense of such claim, suit, tax audit or
proceeding, provided that Sellers and their counsel shall maintain
the conduct of all matters pertaining to the defense or settlement
of such claim, suit, tax audit or proceeding. Whether or not
Nortek elects to participate in such defense, Sellers shall not,
except at its own cost, make any settlement with respect to any
such claim, suit, tax audit or proceeding without the prior
consent of Nortek, which may not be unreasonably withheld. In the
event that Sellers determines to settle any such claim, suit, tax
audit or proceeding without the prior consent of Nortek (as
provided above), Nortek shall have no indemnification obligations
with respect to such claim, suit, tax audit or proceeding.
Seller's consent to the settlement of any such claim, suit, tax
audit or proceeding by Nortek shall be required and shall not be
unreasonably withheld.
8.5 Definition of Damages. For purposes of this Section 8, the
term "damages" shall mean the amount of any loss, claim, demand,
damage, deficiency, assessment, judgment, remediation, cost or expense
(including reasonable attorneys', consultants' and experts' fees and
expenses) actually incurred. Notwithstanding the foregoing, neither
party will be entitled to any special, exemplary or consequential
damages, including without limitation lost profits, good will or
investments. In the event that an indemnified party hereunder pays a
claim covered by the indemnified party's insurance for which it is
entitled to indemnification by another party hereunder, such
indemnified party shall pay such claim and the indemnifying party shall
reimburse the indemnified party the full amount of such claim (less the
amount of any insurance proceeds previously recovered by the
indemnified party with respect to such claim). If the indemnified
party subsequently receives insurance proceeds with respect to such
claim, the indemnified party shall pay the indemnifying party such
insurance proceeds up to the amount actually paid by the indemnifying
party. In the event of any claim by any third party based on facts
which, if true as alleged, would give rise to any liability for damages
as to which indemnification exists under this Agreement, the amount of
the damages shall be deemed to include the reasonable costs of the
defense thereof, whether or not successful, subject to the rights of
the indemnifying party to assume such defense pursuant to Section 8.4
hereof.
8.6 Right of Set-off. Each of the parties may set off against
any claim for indemnification any amounts owed to the other party
pursuant to this Agreement, including without limitation any purchase
price installments; provided that such amount has been finally
determined.
9 Post-Closing Covenants. The parties agree as follows with respect
to the period following the Closing.
9.1 General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including
the execution and delivery of such further instruments and documents)
as any other party reasonably may request, all at the sole cost and
expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Section 8). The Sellers
acknowledge and agree that from and after the Closing, Nortek will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the
Gruppo BEST Companies.
9.2 Litigation Support. In the event and for so long as any
party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date involving any of
the Gruppo BEST Companies, each of the other parties will cooperate
with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to
their books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting
or defending party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 8).
9.3 Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of any of the
Gruppo BEST Companies from maintaining the same business relationships
with the Gruppo BEST Companies after the Closing as it maintained with
the Gruppo BEST Companies prior to the Closing. Each of the Sellers
will refer all customer inquiries relating to the businesses of the
Gruppo BEST Companies to Nortek or such other persons as it may
designate from and after the Closing.
9.4 Confidentiality. Each of the Sellers will treat and hold as
such all of the Confidential Information (as defined below), refrain
from using any of the Confidential Information except in connection
with this Agreement, and deliver promptly to Nortek or destroy, at the
request and option of Nortek, all tangible embodiments (and all copies)
of the Confidential Information which are in his or its possession. In
the event that any of the Sellers is requested or required (by oral
question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the Seller
will notify Nortek promptly of the request or requirement so that
Nortek may seek an appropriate protective order or waive compliance so
that Nortek may seek an appropriate protective order or waive
compliance with the provisions of this Section 9.4. If, in the absence
of a protective order or the receipt of a waiver hereunder, any of the
Sellers is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the
tribunal; provided, however, that the disclosing Seller shall use his
or its best efforts to obtain, at the request of Nortek, an order or
other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as
Nortek shall designate.
The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately
prior to the time of disclosure. For purposes of this Section 9.4,
"Confidential Information" means any information regarding the Gruppo
BEST Companies that is not already generally available to the public.
9.5 Tax Matters.
9.5.1 Tax Periods Ending on or Before the Closing Date.
Nortek shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Gruppo BEST Companies for all periods
ending on or prior to the Closing Date which are filed after the
Closing Date. Nortek shall permit Sellers to review and comment on
each such Tax Return described in the preceding sentence prior to
filing and shall make such revisions to such Tax Returns as are
reasonably requested by Sellers. Sellers shall reimburse Nortek for
Taxes of the Gruppo BEST Companies with respect to any period ending on
or before June 30, 1995 within fifteen (15) days after payment by
Nortek to the extent such Taxes are not accrued on the combined balance
sheet of the Gruppo BEST Companies through June 30, 1995.
9.5.2 Tax Periods Beginning Before and Ending after the
Closing Date. Nortek shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Gruppo BEST Companies for Tax
periods which begin before the Closing Date and end after the Closing
Date. Sellers shall reimburse Nortek within fifteen (15) days after
payment by Nortek for Taxes of the Gruppo BEST Companies with respect
to such periods an amount equal to the portion of such Taxes paid for
the Taxable period ending on the Closing Date to the extent such Taxes
are payable in respect of any period ending on of before June 30, 1995
and have not been accrued on the combined balance sheet of the Gruppo
BEST Companies at such date; provided that Sellers shall only be liable
in respect of such Taxes required to be accrued through June 30, 1995,
and only to the extent that accrual for such Taxes is required under
Italian GAAP.
9.6 Non-Competition. Each of the Sellers severally covenants
and agrees that for a period which expires at the later of five (5)
years following the Closing or three (3) years after he ceases to be a
director or employee of any of the Gruppo BEST Companies, such Seller
shall not,
(a) directly or indirectly, either as principal, agent,
employee, consultant, officer, director, stockholder (except
as a holder of two percent (2%) or less of the capital stock
of a company whose securities are publicly traded), partner
or in any other capacity, engage in or have a financial
interest in, any business which is competitive with the
business of the Gruppo BEST Companies as conducted either at
the Closing Date or as proposed to be conducted at the time
such Seller ceases to be affiliated or associated with any of
the Gruppo BEST Companies,
(b) induce any employee of the Gruppo BEST Companies to
join with him in any capacity, direct or indirect, in any
business in which he may be or become interested whether or
not competitive with any of the Gruppo BEST Companies, or
(c) solicit in competition with any of the Gruppo BEST
Companies, any customers, suppliers, consultants, or
employees of any of the Gruppo BEST Companies in existence at
any time.
During any period in which a Seller is in breach of this Section
9.6, the non-competition period shall be tolled (but only with respect
to such breaching Sellers and shall recommence when such breach has
ceased.
10 Conditions Precedent to Nortek's Obligations. All obligations of
Nortek under this Agreement are subject to the fulfillment to the
satisfaction of Nortek and its counsel prior to or at Closing of each
of the following conditions, any of which may be waived in writing by
Nortek:
10.1 Performance by Sellers; Certificate. Sellers shall have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by them prior to or at
the Closing, including without limitation, the transfer of equity
interests held by third parties in any of the Gruppo BEST companies to
Nortek or persons designated by Nortek pursuant to Section 1.1 hereof,
and shall deliver to Nortek a certificate or certificates, dated the
Closing Date, to such effect.
10.2 Representations and Warranties; Certificate. The
representations and warranties of Sellers contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date and Nortek shall have received from the Sellers a
certificate or certificates dated the Closing Date to the foregoing
effect.
10.3 Opinions of Counsel. Nortek shall have received such
opinions of counsel for Sellers and the Gruppo BEST Companies with
respect to the subject matter of this Agreement as Nortek and its
counsel shall deem necessary, the form and substance of such opinions
of counsel to be determined by Nortek and its counsel.
10.4 Absence of Litigation. No action or proceeding shall have
been instituted or threatened prior to or at the Closing Date before
any court or governmental agency, body or authority pertaining to the
transactions contemplated hereby, the result of which could prevent or
make illegal the consummation of such transactions.
10.5 No Material Adverse Change. There shall not have occurred
any Material Adverse Change in the financial condition, prospects,
assets or the Business of any of the Gruppo BEST Companies between
December 31, 1994 and the Closing.
10.6 Due Diligence. Nortek and its representatives and counsel
shall have completed their due diligence review of the Gruppo BEST
Companies and shall be satisfied with the results of such review on or
prior to the Closing.
10.7 Management Consulting Agreements. Messrs Mancini and Mantini
shall have entered into management consulting agreements with Nortek or
its designee(s) in form and substance satisfactory to Nortek.
10.8 Non-competition Agreements. Mr. Cannavari as well as other
key employees of the Gruppo BEST Companies, to be designated by Nortek
prior to the Closing, shall have entered into non-competition and
confidentiality agreements with Nortek and its designee(s), including
any of the Gruppo BEST Companies, in form and substance satisfactory to
Nortek.
10.9 Relationships with Customers and Suppliers. None of the
customers and suppliers identified on Schedule 3.21 shall have
indicated to the Sellers or to any officer or director of any of the
Gruppo BEST Companies that it intends to alter its relationship with
any of the Gruppo BEST Companies in a manner which is less favorable
than its existing relationship to the Gruppo BEST Companies.
10.10 Other Consents. The consent of every other party
necessary to approve or consent to the transactions contemplated
hereby, if any, shall have been obtained, except any as may be required
to be obtained by Nortek.
10.11 [RESERVED].
10.12 Limitation on Dividends. None of the Gruppo BEST
Companies shall have declared and paid or set aside for payment any
dividends or other distribution on account of the capital stock of such
companies subsequent to December 31, 1994 except for dividends payable
to the Sellers which have been contributed to the capital of BEST net
of any withholding or other applicable Taxes.
10.13 Governmental Clearance and Approval. All required
filings with all United States, European, federal, national, state,
local and foreign governmental agencies or authorities, the
notification of which, or consent, approval or clearance by which, is
necessary in connection with the consummation of the transactions (or
any of them) contemplated hereby shall have been made, and all
clearances or consents required in order to effect the transactions
contemplated hereby shall have been obtained, or any applicable waiting
period under any applicable statute or regulation shall have expired or
been terminated, without any objection or notice of intent to challenge
the transactions contemplated hereby having been received by any of the
parties hereto or their subsidiaries and not withdrawn by the objecting
or challenging agency.
10.14 Approval of Proceedings; Documentation. All corporate
and other proceedings in connection with the transactions contemplated
by this Agreement, and the form and substance of all opinions,
certificates and other documents hereunder shall be reasonably
satisfactory in form and substance to Nortek and its counsel.
10.15 [RESERVED].
10.16 Resignations of Members of the Board of Directors and
Board of Auditors. All of the members of the boards of directors and
boards of auditors of the Gruppo BEST Companies shall have submitted
their resignations as directors effective upon the Closing.
11 Conditions Precedent to the Obligations of Sellers. The
obligation of Sellers to consummate the transactions contemplated
hereby shall be subject to the fulfillment prior to or at the Closing
of each of the following conditions, any of which may be waived by
Sellers:
11.1 Performance by Nortek; Certificate. Nortek shall have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or at
the Closing on the Closing Date and Nortek shall delivered a
certificate of its President, dated the Closing Date, to such effect.
11.2 Representations and Warranties; Certificate. The
representations and warranties of Nortek contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date, except for changes contemplated by this Agreement or
specifically consented to or approved by Sellers, and Sellers shall
have received a certificate of the President of Nortek to that effect.
11.3 Opinion of Counsel. Sellers shall have received an opinion
of Ropes & Gray, counsel to Nortek and Studio Legale Macchi di Cellere
e Gangemi, special Italian counsel to Nortek, with respect to the
subject matter of this Agreement in form and substance reasonably
satisfactory to Sellers and their counsel.
11.4 Management Consulting Agreements. Messrs Mancini and Mantini
shall have entered into management consulting agreements with Nortek or
its designee(s) in form and substance satisfactory to such of the
Sellers as may be contemplated thereby.
11.5 Non-competition Agreements. Messrs. Cannavari as well as
other key employees of the Gruppo BEST Companies, to be designated by
Nortek five days prior to the Closing, shall have entered into non
competition and confidentiality agreements with Nortek and its
designee(s), including any of the Gruppo BEST Companies, in form and
substance satisfactory to such of the Sellers as may be contemplated
thereby.
11.6 Absence of Litigation. No action or proceeding shall have
been instituted or threatened prior to or at the Closing Date before
any court or governmental agency, body or authority pertaining to the
transactions contemplated hereby, the result of which could prevent or
make illegal the consummation of such transactions.
11.7 Governmental Clearance and Approval. All required filings
with all United States, European, federal, state, local and foreign
governmental agencies or authorities, the notification of which, or
consent, approval or clearance by which, is necessary in connection
with the consummation of the transactions contemplated hereby shall
have been made, and all clearances or consents required in order to
effect the transactions contemplated hereby shall have been obtained,
or any applicable waiting period under any applicable statute or
regulation shall have expired or been terminated, without any objection
or notice of intent to challenge the transactions contemplated hereby
having been received by any of the parties hereto and not withdrawn by
the objecting or challenging agency.
11.8 Other Consents. The consent of every other party necessary
to approve or consent to the transactions contemplated hereby, if any,
shall have been obtained, except any as may be required to be obtained
by Sellers.
11.9 Approval of Proceedings; Documentation. All corporate and
other proceedings in connection with the transactions contemplated by
this Agreement, and the form and substance of all opinions,
certificates and other documents hereunder shall be satisfactory in
form and substance to Sellers and its counsel.
12 Entire Agreement. This Agreement, together with the schedules and
exhibits hereto, constitutes the entire agreement between the parties
hereto pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations, or other agreements between the parties in
connection with the subject matter hereof except as specifically set
forth or incorporated herein
13 Amendment. This Agreement may be amended by the parties hereto at
any time, but only by an instrument in writing duly executed and
delivered on behalf of each of the parties hereto.
14 Press Releases. Each of the parties agrees that they (and their
respective affiliate and subsidiaries) will not issue any announcements
or reports, or confirm any statements by third parties pertaining to
any of the proposed transactions until after the Closing Date under
this Agreement except as may be advisable for Nortek under
U.S. securities laws or except as may be mutually agreed upon by the
parties.
15 Headings. Section headings are not to be considered part of this
Agreement and are included solely for convenience and are not intended
to be full or accurate descriptions of the content thereof. References
to sections are to portions of this Agreement unless the context
requires otherwise.
16 Exhibits, etc. Exhibits and schedules referred to in this
Agreement are an integral part of this Agreement.
17 Assignment, Successors and Assigns; Benefits of Agreement. This
Agreement may not be assigned by any party without the prior written
consent of the other parties hereto, except that Nortek may designate
one or more of its subsidiaries to acquire all or some of the BEST
Shares or the Maninvest Shares in which case Nortek may assign its
rights under this Agreement to such subsidiary. All of the terms and
provisions of this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective transferees,
successors and, subject to the foregoing, their assigns, and shall not
inure to the benefit of, or be enforceable by, any other person or
entity.
18 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand or courier or delivery service or mailed,
first-class postage prepaid,
(a) if to Nortek:
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903 USA
Attn: Chairman and
Chief Executive Officer
In each case, with a copy to:
Ropes & Gray
One International Pace
Boston, MA 02110-2624
USA
Attn: Douglass N. Ellis, Jr., Esq.
and a further copy to:
Studio Legale
Macchi di Cellere e Gangemi
Via G Cuboni
12-00197 Rome
ITALY
Attn: Bruno Gangemi
(b) if to Sellers:
c/o BEST S.p.A.
18 Via Euplo Natali
60044 Fabriano (AN)
ITALY
Address
Attn:
in each case, with a copy to:
Avv. Edmondo Verna
Studio Legale Verna
Viale della Vittoria 2/B
60044 Fabriano (AN), ITALY
or, in each case, at such other address as the party receiving notice
shall have furnished in writing to the party giving notice.
19 Intentionally Omitted.
20 Severability. The provisions of this Agreement are severable, and
in the event that any one or more provisions are deemed illegal or
unenforceable, the remaining provisions shall remain in full force and
effect.
21 Arbitration. All disputes, differences, controversies or claims
arising in connection with, or questions occurring under, this
Agreement or any other agreements, documents or instruments executed in
connection with the transactions contemplated hereby (other than the
management consulting agreements to which such Sellers are parties)
shall be finally settled under the Rules of Arbitration (the "Rules")
of the International Chamber of Commerce ("ICC") by an arbitral
tribunal composed of three arbitrators appointed in accordance with
said Rules.
21.1 Each of Nortek and the Sellers acting jointly shall each
nominate one arbitrator in accordance with the Rules. If a party fails
to nominate an arbitrator within thirty (30) days from the date when
the claimant's request for arbitration has been communicated to the
other party, such appointment shall be made by the ICC International
Court of Arbitration.
21.2 The two arbitrators so appointed shall agree upon the third
arbitrator who shall act as Chairman of the arbitral tribunal. If said
two arbitrators fail to nominate a Chairman within 45 days of the later
of the two appointments referred to in Section 22.1, the Chairman shall
be selected by the ICC International Court of Arbitration.
21.3 In all cases the Chairman of the arbitral tribunal shall be
a lawyer fluent in English and not of the same nationality as either
party.
21.4 The place of arbitration shall be London, England.
21.5 The arbitral proceedings shall be conducted in the English
language.
21.6 The parties hereby exclude any right of appeal to any court
on the merits of the dispute.
21.7 Judgment on the award may be entered in any court having
jurisdiction over the award or any of the parties or their assets.
21.8 At the time of the arbitration, the parties may agree in
writing to submit the dispute to a single arbitrator. In addition, if
nomination of an arbitrator by the Sellers is impossible because of a
disagreement among the Sellers, the arbitral tribunal shall consist of
a sole arbitrator. In either event said single arbitrator shall be
appointed by the ICC International Court of Arbitration, and shall be
subject to the same qualifications as would have been the Chairman
under Section 22.3 hereof.
21.9 Nothing contained in this Section 22 shall prevent either
party from seeking injunctive relief to enforce any of its rights under
Sections 6 and 9 or under any non-competition agreements entered into
by the parties or interim measures of protection in the form of a pre-
award attachment of assets from a court of competent jurisdiction.
22 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws (other than those with respect
to conflict of laws) of the State of Delaware provided that any
question related to Arbitration shall be governed by the laws of
England.
23 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the day and year first above written.
NORTEK, INC.
By /s/Richard L. Bready
Title: President
/s/ Sergio Mancini
Sergio Mancini
/s/ Franco Mantini
Franco Mantini
EXHIBITS AND SCHEDULES TO ACQUISITION AGREEMENT
DATED AS OF OCTOBER 31, 1995
BETWEEN
NORTEK, INC. AND SERGIO MANCINI AND
FRANCO MANTINI
OMITTED ARE AS FOLLOWS:
EXHIBITS
--------
None.
SCHEDULES
---------
Schedule 3.3 Subsidiaries of BEST and Maninvest
Schedule 3.5 Authority for Agreement
Schedule 3.6 Financial Statements
Schedule 3.7 Undisclosed Liabilities
Schedule 3.8 Absence of Changes
Schedule 3.9 Taxes
Schedule 3.10 Property
Schedule 3.10.2 Leases
Schedule 3.10.3 Condition of Structures and Other
Improvements
Schedule 3.11 Material Contracts
Schedule 3.13 Intellectual Property
Schedule 3.14 Insurance
Schedule 3.15 Litigation
Schedule 3.17 Environmental, Health and Safety Matters
Schedule 3.20.1 Labor and Employment
Schedule 3.20.2 Employee Benefit Plans
Schedule 3.20.3 Subcontractors
Schedule 3.22 Terms and Conditions of Sale or Lease
Schedule 3.23 Government Grants
Schedule 3.24 Customers and Suppliers
Pursuant to Section 601(b)(2) of Regulation S-K, the
exhibits and schedules listed above have been omitted and
registrant agrees to furnish supplementally a copy of any
such schedule or exhibit to the Commission on request.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Nortek, Inc.:
As independent public accountants, we hereby consent to the
incorporation of our report on BEST-MANINVEST GROUP dated
October 20, 1995, included in this Form 8-K, into the
Company's previously filed Registration Statements on Form S-
8 (File Nos. 33-22527 and 33-47897).
/s/DELOITTE & TOUCHE S.n.c.
Ancona, Italy
November 6, 1995
