BUSINESS LEASE AGREEMENT

1 GENERAL DISCIPLINE

1.1 Notion
According to Sec. 2555 ICC a business or ongoing concern (in Italian: “ramo di
azienda”) is represented by the functionally independent whole of the assets
(including employees, contracts, tangible or intangible assets, goodwill and anything
suitable to be logically included into an autonomous productive system) steadily
organized on an ongoing basis by the entrepreneur to carry out his activity.

The owner can dispose of the business even by leasing it.

In case of business lease, the lessee is entitled to dispose of the specific business’
assets provided that any disposition is made in the interest and to the benefit of the
business itself as a whole and without changing either its functional unity and its
efficiency.

At the beginning of the lease the lessee shall draw up the inventory of the business,
listing all the business’ assets with specific reference to both their quantity and
quality.
The difference between the amount of the inventory at the beginning and at the end of
the lease are settled by cash, unless agreed otherwise.

In any case the lessee shall carry on the business under its former trade name and
shall manage it without changing its former destination so as to preserve its efficiency
in terms of organization, plants and customary stocks.

The lessor is entitled to watch over the business and the way the lessee manages it.
Should the lessee – in managing the business – fail to abide by the obligations
binding upon him or however arbitrarily stop managing the business, the lessor can
apply the Court to cause the termination of the lease agreement and, as the case may
be, the restoration of the assets.

The lessee can sublease the business or assign the lease agreement to a third party
only upon prior consent of the lessor. Should the lessee sublease the business without
the lessor’s prior consent the lease agreement is terminated by operation of law and
any sublease should not be enforceable against the lessor who did not assent to it.

1
1.2 Formalities
Any business lease agreement is to be made by either Notary Public authenticated
private instrument or Notary Public deed under seal and enrolled by an Italian Notary
Public with the Italian Register of Companies so to cause the lease to be enforceable
vis à vis any third party.

1.3 Non - Compete

In case a business is leased the lessor shall refrain from competing with the lessee
throughout the whole period of effectiveness of the lease itself.

According to the case law the ban also applies to the lessee after he returned the
business to the lessor owing to the termination of the lease agreement.

The parties can agree to rule non-compete according to different principles

1.4 Agreements relevant to the Business

Unless otherwise provided by the lease agreement the lessee succeeds in all the
agreements executed with reference to the leased business, unless such agreements are
of a “personal” nature. Nevertheless – occurring a just cause – the third counterparty
(that is to say the one who formerly executed the agreement with the lessor) can
withdraw from the agreements within 3 months from the notice of the transfer of the
business to the lessee, but in that case the lessor shall be liable toward the lessee.

1.5 Employment agreements

It is to be remarked that along with any other agreement, also employment
agreements are passed on to the lessee together with the business, so that – according
to the Italian law – in case more than 15 employees be transferred notice of the
expected lease shall be given to trade unions at lest 25 days before the execution of
the lease agreement.
The employee maintains all the rights he formerly had.
The lessor and the lessee are jointly liable toward the employee for all and any credit
due to the employee on the transfer of the business to the lessee.
The lessee shall apply the national collective agreement in force when the lease
agreement was executed until their expiry, unless they are replaced by other national
collective agreements that apply to the lessee’s business. Replacement takes place
only in case of contract of the same level.
Without prejudice to the faculty to the discipline governing dismissal for just cause,
no business lease can be considered as a just cause of dismissal.

1.6 Business’ credits

2
Unless otherwise expressly agreed under the lease agreement any business’ credits is
not transferred to the lessee.

1.7 Business’ liabilities

Business’ liability are not passed on to the lessee.

1.8 Anti Trust Issues

Business lease agreement could be deemed significant for anti-trust purposes.

Particularly considering that the lease agreement under consideration will include also
the possibility for the lessee to purchase the going business, we advise to carefully
evaluate possible anti-trust issues.