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English Summary of Spanish
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SHARE PURCHASE AGREEMENT
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The Share Purchase Agreement (the " Agreement "),
dated December 16, 2008, is among MTM S.r.L., an indirect, wholly
owned subsidiary of Fuel Systems Solutions, Inc. (" Fuel
Systems ") as buyer (the " Buyer ") and Alessandro
Carlo Evi and Susana Iallonardi, collectively as sellers (the "
Sellers "). The Sellers together own all of the outstanding
equity of Distribuidora Shopping S.A., a company organized under
the laws of the Republic of Argentina
(" Distribuidora "). The Sellers and
Distribuidora together own all of the outstanding equity of
Tomasetto Achille S.A. , a company organized under
the laws of the Republic of Argentina
(" Tomasetto " and together with
Distribuidora, the " Companies "). The Companies
manufacture, import, export and market natural gas kits for
vehicles (the " Companies’ Business ").
At the closing of the transaction described in the Share
Purchase Agreement the Sellers will transfer 100% of the equity of
the Companies (the " Companies’ Shares ") to the
Buyer. The closing is expected to occur on January 15, 2009.
However, because the closing is subject to certain conditions, the
parties cannot predict exactly when the closing will occur or if it
will occur at all.
In exchange for the Companies’ Shares, the Buyer will
pay an aggregate purchase price of $22.0 million, in U.S. dollars,
subject to upward adjustment by adding to the purchase price the
Companies cash and bank account balances at the time of the closing
and to downward adjustment by subtracting from the purchase price
the Companies’ Financial Debt (as defined below) at the time
of the closing. Post-closing adjustments to the purchase price are
described in further detail below.
At the time of the signing of the Share Purchase Agreement,
the Buyer paid the Sellers $2.0 million in cash as a down payment
on the purchase price. The down payment may be forfeit by the
Sellers if the Share Purchase Agreement is terminated in certain
circumstances as described more fully below under "Termination."
The Sellers’ obligation to repay the down payment in those
circumstances is secured by the Companies’ inventory until
the closing.
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At the closing, the Buyer shall pay the
Sellers:
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an additional
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$5.7 million in cash; and
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an additional
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$10.0 million in cash which will
be deposited into an escrow fund
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which will be used to purchase
322,800 shares of Fuel Systems common stock on
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behalf of the Sellers in a
private placement transaction. Of these shares, 129,120 will
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remain in escrow for up to six
years in order to cover unknown or contingent
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liabilities and to satisfy any
claims for indemnification that the Buyer may have
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against the Sellers during that
time. The Buyer’s losses will not be limited to the
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K&E
13888002.2
value of the escrow shares,
but the Buyer must deplete the escrow shares before seeking any
amount in cash from the Sellers. The remaining 193,680 shares will
be released from escrow and given to the Sellers immediately
following the closing.
The balance of any amount owing after these
payments have been made to the Sellers shall be determined and paid
after the closing as described below.
Following the closing, the Companies will each prepare
certificates (the " Closing Certificates ")
reflecting each Company’s cash and bank account balances and
Financial Debt as of the closing. " Financial Debt " is
calculated according to Argentine GAAP and includes all obligations
of the Companies for borrowed money including, but not limited to,
obligations for conditional sales of assets, deferred purchase
price of assets, debt of third parties secured by the
Companies’ assets or guaranteed by the Companies and rental
or lease obligations for capital goods.
Each of the Closing Certificates shall be audited by the
Buenos Aires offices of Deloitte & Touche LLP. The Buyer will
have an opportunity to review the work papers relating to the
Closing Certificates. If the Buyer and the Sellers cannot agree on
the amounts stated in the Closing Certificates, then they have
agreed to submit the matter to binding arbitration. Once this
process is completed, the amounts stated in the Closing
Certificates will be final and shall be used to make any
appropriate purchase price adjustments. Any purchase price
adjustments must be paid either from the Buyer to the Sellers or
from the Sellers to the Buyer within five business days after the
Closing Certificates become final.
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Conditions to the
Closing
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Each party’s obligation to close the transactions
contemplated by the Agreement is subject to the satisfaction or
waiver by each of the parties, at or prior to the closing, of
various conditions, which include the following, among
others:
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the lease agreement between
Distribuidora and Nacion Leasing S.A. (the " Leasing
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Agreement ") has been
assigned to the Sellers or their assigns (the " Leasing
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Assignee ");
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Distribuidora, as lessee, has
entered to a lease with the Leasing Assignee, as lessor;
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the Sellers and Fuel Systems
have entered into an agreement for the private
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placement of the common stock
that is part of the purchase price;
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the parties have entered into
escrow agreements with escrow agents to control the
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cash intended to be used to
purchase the Fuel Systems common stock and to control
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the shares of Fuel Systems
common stock that will be held in escrow after the
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closing; and
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Mr. Evi and Distribuidora have
entered into an employment agreement.
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2
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K&E
13888002.2
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Representations and
Warranties
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The Agreement contains customary representations and
warranties of the Buyer and the Sellers relating to, among other
things:
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the parties’ individual
and corporate authority to enter into the Agreement and
other
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corporate matters; and
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the absence of any conflicts or
violations of each party’s governing documents and
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agreements as a result of the
Agreement.
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In addition, the agreement contains customary
representations and warranties of the Sellers relating to, among
other things:
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the
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Companies’
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capital structure and ownership
of the Companies’ Shares;
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the
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Companies’
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subsidiaries;
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the
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Companies’
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compliance with Argentine law,
regulations and required permits;
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legal proceedings related to the
Companies;
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the
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Companies’
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title to their assets;
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the
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Companies’
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real property and
leaseholds;
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the accuracy of financial
statements and books and records of the Companies;
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the
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Companies’
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employee benefits, labor
relations and related matters;
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the
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Companies’
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ownership and use of
intellectual property;
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the
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Companies’
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accounts payable and
receivable;
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any material adverse changes in
regards to the Companies since April 30, 2008;
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environmental matters related to
the Companies;
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the
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Companies’
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contracts and
commitments;
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the
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Companies’
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clients and inventory;
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the
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Companies’
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filing of tax returns and
payment of taxes; and
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any material misstatement or
omission of any material fact.
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The representations and warranties are, in some respects,
qualified by materiality and knowledge.
K&E
13888002.2
Conduct of Companies’
Business Pending the Merger
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The Sellers agree that until the closing they
will:
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cause the Companies to conduct
their business in the ordinary course in accordance
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with past practices and in
compliance with all applicable laws;
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preserve the organization of the
Companies;
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use their best efforts to keep
available to the Buyer the services of the Companies’
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respective employees;
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cause the Companies to maintain
accurate books and records in accordance with
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Argentine GAAP consistent with
the financial statements presented to the Buyer;
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cause the Companies to maintain
accounting controls to monitor that transactions are
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executed with authorization of
the Companies’ boards of directors and that
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transactions are recorded as
necessary to permit preparation of financial statements
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and to maintain the accounting
of the Companies’ assets;
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not take and cause the Companies
not to take any action that would cause the
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representations and warranties
contained in the Agreement to be not true and correct
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as of the closing;
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give the Buyer prompt notice of
any event, condition or circumstance that would
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constitute a breach or violation
of any representation, warranty, covenant or
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agreement of the Agreement;
and
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not declare or distribute, or
permit the Companies not to declare or distribute, cash,
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stock or other dividends, offer
or issue shares, increase or reduce their capital and, in
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general, carry out any kind of
distributions, whether through release of reserves,
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issuance premium or otherwise
other than the dividends required to pay the
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assignment price of the Leasing
Agreement.
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The parties agreed to the following
covenants:
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1.
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Tax Matters:
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Sellers will prepare and file,
or cause to be prepared and filed, all tax returns
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related to the Companies which
are due before the closing.
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If the Companies have a tax
adjustment related to a ti
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