Exhibit 10.3
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STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION OF 100% OF THE SHARES OF
CORPORACION ACEROS DM, S.A. DE C.V.
AND CERTAIN SHARES OF THE SUBSIDIARIES LISTED HEREIN
by and among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
as Sellers
and
Grupo Simec, S.A.B. de C.V.,
as Buyer
Dated February 21, 2008
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TABLE OF CONTENTS
RECITALS.........................................................................................................................1
ARTICLE I. Definitions...........................................................................................................1
1.1 Definitions.......................................................................................................1
ARTICLE II. Purchase and Sale of Shares..........................................................................................9
2.1 Purchase and Sale of Shares.......................................................................................9
2.2 Payment of Purchase Price.........................................................................................9
2.3 Working Capital Adjustment........................................................................................9
2.4 Escrow...........................................................................................................13
2.5 Sellers' Representative..........................................................................................14
2.6 Appointment of Tax Representative................................................................................15
2.7 Settlement of Inter-Company Accounts.............................................................................15
ARTICLE III. The Closing: Closing Obligations...................................................................................16
3.1 The Closing......................................................................................................16
3.2 Deliveries by the Sellers........................................................................................16
3.3 Deliveries by the Buyer..........................................................................................18
3.4 Company Shareholders' Meeting....................................................................................18
3.5 Subsidiaries' Shareholders' Meetings.............................................................................19
3.6 Buyer's Shareholders Meeting.....................................................................................19
ARTICLE IV. Representations and Warranties of Each Seller.......................................................................19
4.1 Capacity; Authorization and Authority............................................................................19
4.2 Due Execution and Delivery; Enforceability.......................................................................19
4.3 Consents and Approvals; No Violation to Result...................................................................19
4.4 Ownership of Shares and Subsidiary Shares........................................................................20
4.5 Brokers..........................................................................................................20
ARTICLE V. Representations and Warranties of the Sellers........................................................................20
5.1 Corporate Organization and Authority.............................................................................21
5.2 Subsidiaries of the Company......................................................................................21
5.3 Consents and Approvals; No Violation to Result...................................................................21
5.4 Authorized and Outstanding Capital Stock.........................................................................21
5.5 No Commitment to Issue Capital Stock or Rights to Acquire Capital Stock..........................................22
5.6 Financial Statements.............................................................................................22
5.7 Undisclosed and Contingent Liabilities...........................................................................23
5.8 Absence of Certain Changes.......................................................................................23
5.9 Permits..........................................................................................................25
5.10 Litigation.......................................................................................................25
5.11 Inventory........................................................................................................25
5.12 Real Property; Leases............................................................................................26
5.13 Assets Other than Real Property..................................................................................26
5.14 Contracts........................................................................................................26
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5.15 Environmental Matters............................................................................................27
5.16 Compliance with Laws; Generally..................................................................................28
5.17 Employees; Labor Relations; Compliance and Related Matters.......................................................28
5.18 Intellectual Property; Software..................................................................................29
5.19 Tax Matters......................................................................................................30
5.20 Transactions with Affiliates and Related Parties.................................................................31
5.21 Books and Records................................................................................................31
5.22 Insurance........................................................................................................31
5.23 Banking and Securities Accounts..................................................................................31
5.24 Brokers..........................................................................................................31
5.25 Accuracy.........................................................................................................31
5.26 No Other Representations.........................................................................................32
ARTICLE VI. Representations and Warranties of the Buyer.........................................................................32
6.1 Corporate Organization...........................................................................................32
6.2 Authorization and Approval of Agreement..........................................................................32
6.3 Consents and Approvals; No Violation to Result...................................................................32
6.4 Compliance with Laws.............................................................................................33
6.5 No Governmental Order............................................................................................33
6.6 Litigation.......................................................................................................33
6.7 Credit-Worthiness................................................................................................33
6.8 Source of Funds..................................................................................................33
6.9 Simec Shares.....................................................................................................33
6.10 Brokers..........................................................................................................33
ARTICLE VII. Covenants..........................................................................................................34
7.1 Affirmative Covenants of the Sellers.............................................................................34
7.2 Negative Covenants of the Sellers................................................................................34
7.3 Confidentiality..................................................................................................35
7.4 Competition; Other Regulatory Filing(s)..........................................................................36
7.5 Updating Schedules...............................................................................................36
7.6 Resignations.....................................................................................................37
7.7 Buyer's Shareholders Meeting.....................................................................................37
ARTICLE VIII. Post-Closing Covenants............................................................................................37
8.1 Buyer's Post-Closing Covenants...................................................................................37
8.2 [Intentionally Omitted]..........................................................................................37
8.3 Indemnification of Officers, Directors, Secretaries and Statutory Auditors.......................................37
8.4 Non-Compete; Non-Solicitation; Transition........................................................................38
8.5 Cancellation of Liens............................................................................................38
8.6 Translation......................................................................................................39
ARTICLE IX. Conditions Precedent to Obligations of the Buyer....................................................................39
9.1 Conditions Precedent.............................................................................................39
9.2 Waiver...........................................................................................................39
ARTICLE X. Conditions Precedent to Obligations of the Sellers...................................................................40
10.1 Conditions Precedent.............................................................................................40
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10.2 Waiver...........................................................................................................40
ARTICLE XI. Termination.........................................................................................................40
11.1 Termination......................................................................................................40
11.2 Effect of Termination............................................................................................41
ARTICLE XII. Indemnification....................................................................................................42
12.1 Indemnification by the Sellers...................................................................................42
12.2 Indemnification by the Buyer.....................................................................................43
12.3 Termination of Indemnification...................................................................................43
12.4 Procedures.......................................................................................................43
12.5 Holdback.........................................................................................................45
12.6 Survival of Representations......................................................................................46
12.7 Exclusive Remedy.................................................................................................46
12.8 Limitation on Damages............................................................................................46
12.9 Indemnification Currency.........................................................................................47
12.10 Tax Status of Indemnification Payments...........................................................................47
12.11 Representation of the Sellers....................................................................................47
ARTICLE XIII. Expenses..........................................................................................................47
13.1 Expenses.........................................................................................................47
13.2 Transfer and Other Taxes.........................................................................................47
ARTICLE XIV. Miscellaneous......................................................................................................48
14.1 Issuance of Press Releases.......................................................................................48
14.2 Cooperation Following the Closing................................................................................48
14.3 Benefits and Burdens; Assignment.................................................................................48
14.4 Notices..........................................................................................................48
14.5 Entire Understanding.............................................................................................50
14.6 Amendments; Waivers..............................................................................................50
14.7 Interpretation; Exhibits and Schedules...........................................................................50
14.8 Counterparts.....................................................................................................51
14.9 Severability.....................................................................................................51
14.10 Governing Law....................................................................................................51
14.11 Consent to Jurisdiction..........................................................................................51
Exhibits
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Exhibit A Ownership Proportions
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Schedules
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Schedule 3.4 Powers-of-Attorney
Schedule 3.5 Powers-of-Attorney
Schedule 4.3 Consents and Approvals; No Violation to Result
Schedule 5.2(a) Subsidiaries of the Company
Schedule 5.2(b) Ownership Structure
Schedule 5.3(b) Consents and Approvals; No Violation to Result
Schedule 5.4 Authorized and Outstanding Capital Stock
Schedule 5.6(a) Financial Statements
Schedule 5.6(b) Financial Statements
Schedule 5.6(c)(i) Financial Statements
Schedule 5.6(c)(ii) Financial Statements
Schedule 5.6(d)(i) Financial Statements
Schedule 5.6(d)(ii) Financial Statements
Schedule 5.7 Financial Statements
Schedule 5.8 Absence of Certain Changes
Schedule 5.9 Licenses, Permits and Authorizations
Schedule 5.10 Litigation
Schedule 5.11 Inventory
Schedule 5.12(a)(i) Real Property; Leases
Schedule 5.12(a)(ii) Real Property; Leases
Schedule 5.13 Assets Other than Real Property
Schedule 5.14(a) Contracts
Schedule 5.14(b) Contracts
Schedule 5.14(c) Contracts
Schedule 5.15(a) Environmental Matters
Schedule 5.15(b) Environmental Matters
Schedule 5.15(c) Environmental Matters
Schedule 5.17(a) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.17(b) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.17(c) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.17(d) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.17(e) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.17(f) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.17(g) Employees; Labor Relations; Compliance and Related Matters
Schedule 5.18(a) Intellectual Property; Software
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Schedule 5.18(b) Intellectual Property; Software
Schedule 5.18(c) Intellectual Property; Software
Schedule 5.19 Tax Matters
Schedule 5.20(a) Transactions with Affiliates and Related Parties
Schedule 5.22 Insurance
Schedule 5.23 Banking and Securities Accounts
Schedule 7.1 Affirmative Covenants of the Sellers
Schedule 7.2 Affirmative Covenants of the Sellers
Schedule 7.6 Resignations
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), dated February 21, 2008, by
and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the "Sellers"),
and Grupo Simec, S.A.B. de C.V., a sociedad anonima bursatil de capital variable
organized under the Laws of Mexico (the "Buyer").
1. RECITALS
WHEREAS, the Sellers are the beneficial and record owners of all of the
issued and outstanding shares of common stock of Corporacion Aceros DM, S.A. de
C.V. (the "Company"), a sociedad anonima de capital variable organized and
existing under the Laws of Mexico. Additionally, the Sellers and the Company
hold, directly or indirectly, all of the outstanding shares of common stock of
the Subsidiaries.
WHEREAS, the Buyer desires to purchase from the Sellers, and the Sellers
desire to sell to the Buyer, (i) the total of the Company's issued and
outstanding shares representing 100% (one hundred percent) of the Company's
outstanding capital stock (the "Shares"), and (ii) any shares representing
outstanding capital stock of the Subsidiaries held by the Sellers (the
"Subsidiary Shares") for the Closing Date Purchase Price, pursuant to the terms
and conditions set forth in this Agreement and in the proportions set forth in
Exhibit A.
WHEREAS, it is the intention of the parties hereto (the "Parties") that,
upon consummation of the purchase and sale of the Shares and the Subsidiary
Shares pursuant to this Agreement, the Buyer shall control directly or
indirectly 100% (one hundred percent) of the issued and outstanding shares of
the Company and the Subsidiaries on a fully diluted basis.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the adequacy of which is hereby
acknowledged, and intending to be legally bound, the Parties agree as follows:
2. ARTICLE I. DEFINITIONS
1.1 DEFINITIONS. (a) As used in this Agreement (including its Exhibits and
Schedules), the following terms shall have the meanings set forth or as
referenced below:
"2006 Audited Financial Statements" has the meaning set forth in Section
5.6(c).
"2006 Combined Financial Statements" has the meaning set forth in Section
5.6(a).
"2006 Financial Statement Date" has the meaning set forth in Section
5.6(a).
Execution Version
"2006 Financial Statements" has the meaning set forth in Section 5.6(c).
"2007 Audited Financial Statements" has the meaning set forth in Section
3.2(iv)(x).
"2007 Combined Financial Statements" has the meaning set forth in Section
3.2(iv)(y).
"Adjusted Net Working Capital" means the combined current assets of the
Company less the combined current liabilities of the Company and the
Subsidiaries, determined as of the close of business on the Closing Date and in
accordance with Mexican GAAP; provided, however, that for purposes of
determining Adjusted Net Working Capital, the combined current assets and
current liabilities of the Company and the Subsidiaries shall not include (a)
any cash or cash equivalents or (b) any Debt.
"Aerolineas Morelia" shall mean Aerolineas de Morelia, S.A. de C.V.
"Affiliate" means, (i) with respect to any Person that is a legal entity,
any other Person directly or indirectly controlling, controlled by or under
common control with such Person, and (ii) with respect to any Person who is an
individual, his or her spouse or relatives within the second degree of kinship
(parentesco consanguineo).
"Affiliated and Related-Party Agreements" has the meaning set forth in
Section 5.20(a).
"Aggregate Net Debt" means, as of any date, the aggregate amount of Debt
of the Company as of such date, less the aggregate amount of unencumbered cash
and cash equivalents of the Company, on a combined basis, as of such date, in
each case, determined in accordance with Mexican GAAP.
"Agreement" has the meaning set forth in the preamble hereof.
"Available Escrow Amount" means, as of any date, the aggregate amount
available of the Escrow Amount, as adjusted, released or depleted pursuant to
the terms of Section 2.4 and the Escrow Agreement.
"Banamex Liens" has the meaning set forth in Section 8.5.
"Business Day" means a day other than Saturday, Sunday or other day on
which commercial ▇▇▇▇▇ in Mexico City, Mexico are authorized or required by Law
to close.
"Buyer" has the meaning set forth in the recitals.
"Buyer Indemnified Party" has the meaning set forth in Section 12.1.
"Buyer's Shareholders' Meeting" means the Buyer's shareholders' meeting to
be held in connection with the acquisition of the Shares and all matters related
with this Agreement pursuant to article 47 of the Mexican Securities Market Law
(▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ de Valores).
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"Buyer Voting Control Trust" means the voting control trust (fideicomiso
de voto) created by Industrias CH, S.A.B. de C.V. and Tuberias Procarsa, S.A. de
C.V., in which such entities will transfer the Simec Shares and give irrevocable
instructions to the corresponding trustee (fiduciario) to vote the Simec Shares
in the Buyer's Shareholders' Meeting, which shall be executed in form and
substance reasonably acceptable to the Sellers.
"Claim Notice" has the meaning set forth in Section 12.3.
"Closing" has the meaning set forth in Section 3.1.
"Closing Balance Sheet" has the meaning set forth in Section 2.3(c).
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Date Financial Statements" has the meaning set forth in Section
2.3(c).
"Closing Date Purchase Price" has the meaning set forth in Section 2.3(b).
"Counter Notice" has the meaning set forth in Section 12.5(a).
"Combined Interim Financial Statements" has the meaning set forth in
Section 5.6(b).
"Company" has the meaning set forth in the recitals.
"Company Material Adverse Effect" means any event, change, circumstance or
occurrence which has had or would reasonably be expected to have a material
adverse effect on the business, assets or liabilities (financial, operative or
otherwise), or results of operations of the Company and the Subsidiaries,
considered as a whole.
"Competitive Business" means any business in the steel industry conducted
in the territory of Mexico.
"Consent" means any consent, waiver, approval, authorization, exemption,
registration, license or declaration by any Person or any Governmental
Authority.
"Contracts" means any and all contracts, agreements, commitments or other
binding undertakings, including those that are warranties, understandings,
arrangements, guarantees, leases, mortgages, bonds, notes and other instruments
(whether written, oral, express or implied).
"Damages" means damages and losses (danos y perjuicios) in accordance with
applicable Laws in Mexico, which any Party actually, directly and immediately
suffers, incurs or becomes subject to.
"Debt" means the principal amount (including interest, penalty, fees or
otherwise) of all indebtedness for borrowed money of the Company and the
Subsidiaries on a combined basis including capitalized leases, short term and
long term bank loans, and other financial liabilities
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or similar interest-bearing liabilities outstanding of the Company and any of
the Subsidiaries (without duplication), determined in accordance with Mexican
GAAP.
"Determination Date" means the earlier to occur of (a) if the Sellers'
Representative does not timely deliver a Dispute Notice, the date that is
forty-five (45) calendar days following the date on which the Buyer delivers the
Closing Date Financial Statements to the Sellers' Representative (plus such
number of days during which the Sellers' Representative has not received the
supporting documentation and been granted access to the Company and the
Subsidiaries' books and records, following written request therefore from the
Sellers' Representative to the Buyer, which request must be made within fifteen
(15) calendar days from the date of receipt of the Closing Date Financial
Statements), and (b) if the Sellers' Representative timely delivers a Dispute
Notice, the earlier to occur of (i) the date of which the Buyer and the Sellers'
Representative finally and conclusively resolve any and all disputes set forth
in the Dispute Notice, and (ii) the date of the Final Report of the Independent
Accounting Firm.
"Dispute Notice" has the meaning set forth in Section 2.3(d).
"Dollars" or "US$" means the legal currency of the United States of
America.
"Enterprise Value" means US$850,000,000.00 (eight hundred fifty million
Dollars 00/100), or its Peso equivalent as at the relevant date, which is the
total enterprise value of the Company and the Subsidiaries, considered as a
whole.
"Environmental Claim" means any claim, action, investigation or written
notice to the Company or any of the Subsidiaries by any Person alleging
potential liability (including, without limitation, potential ability for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, personal injuries, or penalties) arising out of, based on, or
resulting from (a) the presence, or release into the environment, of any
Hazardous Substance at any Owned Real Property or (b) circumstances forming the
basis of any violation, or alleged violation of any applicable Environmental
Law.
"Environmental Laws" means any Law of Mexico regulating or relating to
pollution prevention, protection of the environment (including ambient air and
surface or subsurface strata), the use of natural resources, the use of water
(including surface water, groundwater, drinking water supplies and aquifer),
including without limitation, those relating to manufacture, processing,
distribution, use, treatment, emissions, discharges, releases or threatened
releases of Hazardous Substances, or otherwise relating to the storage,
disposal, transport or handling of Hazardous Substances.
"Environmental Permits" means all Permits from any Governmental Authority
required pursuant to any Environmental Law for the operations of the Company or
any of the Subsidiaries as currently conducted.
"Escrow Agent" has the meaning set forth in the Escrow Agreement.
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"Escrow Agreement" has the meaning set forth in Section 2.4(a).
"Escrow Amount" has the meaning set forth in 2.4(a).
"Estimated Adjusted Net Working Capital" has the meaning set forth in
Section 2.3(a).
"Estimated Adjustment Statement" has the meaning set forth in Section
2.3(a).
"Estimated Aggregate Net Debt" has the meaning set forth in Section
2.3(a).
"Estimated Closing Balance Sheet" has the meaning set forth in Section
2.3(a).
"Estimated Financial Statements" has the meaning set forth in Section
2.3(a).
"Estimated Purchase Price" means the amount resulting from subtracting (i)
the JPMorgan Loan outstanding as at the date of this Agreement, from (ii) the
Enterprise Value.
"Exhibits" means each of the exhibits to this Agreement which is delivered
by the Sellers or by the Buyer, as the case may be, and which is attached
hereto.
"FCC" means the Mexican Federal Competition Commission (Comision Federal
de Competencia).
"Final Aggregate Debt" means the amount of the Aggregate Net Debt of the
Company, on a combined basis, as of the close of the business on the Closing
Date, as finally determined in accordance with the provisions of Section 2.4.
"Final Adjusted Working Capital" means the amount of Adjusted Net Working
Capital, as finally determined in accordance with the provisions of Section 2.4.
"Final Report" has the meaning set forth in Section 2.3(e).
"Final Resolution" has the meaning set forth in Section 2.4(d).
"Firm Holdback Amount" means a final and definitive amount to be held by
the Escrow Agent in connection with a dispute related to a certain Requested
Holdback, pursuant to Section 12.5.
"Governmental Authority" means any judicial, legislative or executive
authority (whether federal, state or municipal) or any subdivision, agency,
bureau, court, commission, board, office, instrumentality or other judicial,
administrative or regulatory authority thereof.
"Hazardous Substance" means (a) any pollutant or contaminant or toxic
chemical, material, substance or waste with corrosive, reactive, toxic,
explosive, flammable characteristics or which presents or contains infectious
agents, (including without limitation, any petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas) and (b) any other chemicals, persistent
organic compounds, materials, wastes or substances or the mixture or those,
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regarded, classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
"Indemnified Executives" has the meaning set forth in Section 8.3.
"Indemnified Party" has the meaning set forth in Section 12.4.
"Independent Accounting Firm" has the meaning set forth in Section 2.3(e).
"Individual Interim Financial Statements" has the meaning set forth in
Section 5.6(d).
"Intellectual Property" means any patents, patent applications,
trademarks, trademark registrations, applications for trademark registrations,
trade secrets, service marks, service ▇▇▇▇ registrations, applications for
service ▇▇▇▇ registrations, trade names, labels, slogans, claims of copyright,
copyright registrations, applications for copyright registrations, copyrights,
domain names, drawings, designs and proprietary know-how or information.
"Interim Financial Statement Date" has the meaning set forth in Section
5.6(b).
"Interim Financial Statements" has the meaning set forth in Section
5.6(d).
"Inventory" has the meaning set forth in Section 5.11.
"IT Assets" has the meaning set forth in Section 5.18(d)
"JPMorgan Loan" means any and all amounts owed by the Company under a
certain US$720'000,000.00 (seven hundred twenty million Dollars 00/100) Loan
Agreement, dated as of February 5, 2008, entered into by and between the
Company, as borrower, and JPMorgan ▇▇▇▇▇ Bank, N.A., as lender, as of the
Closing Date.
"Judgment" means any judgment, order, ruling or award of any court,
arbitrator or other Governmental Authority arising out of any Proceeding.
"Knowledge" shall mean, with respect to the Sellers, the actual knowledge
of a fact or matter by any of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ de Dios
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or any of the individuals listed as
Sellers listed in Exhibit A; provided, however, that for purposes of the
representations and warranties included in Article IV, it shall mean, with
respect to each Seller, his or her actual knowledge of a fact or matter, as the
case may be.
"Law" means any and all applicable statutes, laws, rules, regulations,
official standards or norms (normas oficiales), ordinances, codes or decrees,
whether federal, state or municipal.
"Leased Real Property" has the meaning set forth in Section 5.12(a).
"Liens" has the meaning set forth in Section 5.12(a).
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"Mexican GAAP" means generally accepted accounting principles or financial
information standards (normas de informacion financiera), as the case may be, as
in effect from time to time in Mexico.
"Mexico" means the United Mexican States.
"Monthly Financial Statements" has the meaning set forth in Section
3.2(iv)(z).
"Ordinary Course of Business" means, with respect to the Company and the
Subsidiaries, the ordinary performance or execution of any action necessary or
convenient for the adequate and normal development of their corporate purposes
or business activities, which action is consistent in all material respects with
the customs, practices and activities previously performed, executed or carried
out by the Company and the Subsidiaries, as applicable, excluding, consequently,
any act which, based upon the customs, practices and activities previously
conducted by the Company and the Subsidiaries, may be reasonably construed as
extraordinary.
"Owned Real Property" has the meaning set forth in Section 5.12(a).
"Parties" has the meaning set forth in the recitals.
"Permit" means all applicable material permits, authorizations, approvals,
registrations or licenses granted by or obtained from any Governmental
Authority, which are required to operate and conduct the business of the Company
and the Subsidiaries.
"Permitted Liens" has the meaning set forth in Section 5.12(b).
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Peso" means the lawful currency of Mexico.
"Plans" has the meaning set forth in Section 5.17(f).
"Proceeding" means any action, arbitration, audit, examination,
investigation, hearing, litigation, or suit (whether civil, criminal,
administrative, judicial or investigative and whether public or private)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Authority.
"Real Property" has the meaning set forth in Section 5.12(a).
"Referee" has the meaning set forth in Section 12.5(b).
"Related Party" means (i) the Sellers, (ii) any director, officer or
employee in the first level of seniority of the Company or the Subsidiaries,
(iii) any director, officer or employee in the two first levels of seniority of
the company or the Subsidiaries, (iv) any relative within the
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second degree, whether by consanguinity or marriage, of the individuals referred
to in (i) and (ii) above, or (v) any Person with which any of the individuals
referred to in (i) and (ii) above hold a majority interest in his or her
capacity as shareholder, partner or associate thereof, or of which any of the
individuals referred to in (i) and (ii) above is a director or officer in the
first level of seniority, whom shall for purposes of this definition mean the
chief executive officer, the chief financial officer, the chief operating
officer or other similar officer thereof.
"Representatives" means, with respect to any Person, its directors,
officers, employees, counsel, representatives, accountants and auditors, as the
case may be.
"Requested Holdback" means the amount established in a Claim Notice, or if
not then reasonably determinable, the estimated amount, determined in good
faith, of the Damages arising from the claim related to such Claim Notice.
"Seller Indemnified Party" has the meaning set forth in Section 12.2.
"Sellers" has the meaning set forth in the recitals.
"Sellers' Representative" has the meaning set forth in Section 2.5.
"Schedules" means each of the disclosure schedules to this Agreement which
are delivered by the Sellers to the Buyer on the date hereof and which are
attached hereto.
"Shares" has the meaning set forth in the recitals.
"Simec Shares" means the shares representing 75% (seventy five percent) of
the capital stock of the Buyer owned by each of Industrias CH, S.A.B. de C.V.
and Tuberias Procarsa, S.A. de C.V.
"Subsidiaries" has the meaning set forth in Schedule 5.2(a).
"Subsidiary Shares" has the meaning set forth in the recitals.
"Target Aggregate Net Debt" means US$0.00 (zero Pesos 00/100), excluding
the JPMorgan Loan.
"Target Adjusted Net Working Capital" means US$60'000,000.00 (sixty
million Dollars 00/100), or its Peso equivalent as at the relevant date.
"Tax" and "Taxes" shall mean all Mexican taxes, duties, contributions,
imposts, levies, fees, or withholdings recognized as such pursuant to the
applicable tax Laws.
"Tax Authority" means any governmental authority having jurisdiction over
Taxes.
"Third-Party Claim" has the meaning set forth in Section 12.4.
(b) In this Agreement (including its Exhibits and Schedules): (i) words
denoting the singular include the plural and vice versa, and words denoting any
gender include all genders;
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(ii) the words "include," "includes" or "including" as used in this Agreement
shall be deemed to be followed by the words "without limitation;" and (iii) the
words "hereof," "hereby," "herein," "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not only to a particular
section in which such words appear.
3. ARTICLE II. PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES. (a) Upon the terms and subject to the
conditions set forth in this Agreement, the Sellers hereby sell, assign,
transfer and deliver to the Buyer and its designee the Shares and the Subsidiary
Shares, in the proportions set forth in Exhibit A. The parties acknowledge and
agree that the Buyer shall be bound to the Sellers for any obligations of its
designee under this Agreement.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, the Buyer and its designee hereby purchase the Shares and the
Subsidiary Shares from the Sellers and, in full consideration therefore, shall
pay the Closing Date Purchase Price, in cash, to the Sellers, in the proportions
set forth in Exhibit A and subject to the adjustment as provided under Section
2.3.
2.2 PAYMENT OF PURCHASE PRICE. At the Closing, the Buyer shall pay Sellers
the Closing Date Purchase Price by wire transfer to an account or accounts
designated by the Sellers in writing at least two (2) Business Days prior to the
Closing, in immediately available funds. Each Seller shall receive its allocable
portion of the Purchase Price in the proportions set forth in Exhibit A. The
Parties acknowledge and agree that the Escrow Amount shall not be deducted by
the Buyer from the Estimated Purchase Price; conversely, the Escrow shall be
created by the Sellers (whether directly or by means of an Affiliate) pursuant
to Section 2.4 on or before the Closing Date.
2.3 WORKING CAPITAL ADJUSTMENT. (a) Not more than seven (7) Business Days,
but in no event less than three (3) Business Days, before the Closing Date, the
Sellers' Representative shall deliver to the Buyer (i) an estimated unaudited
combined balance sheet of the Company and the Subsidiaries as at the close of
business on the Closing Date (the "Estimated Closing Balance Sheet") prepared
using its estimate of the changes since the month end immediately preceding the
anticipated Closing Date, and (ii) a statement (the "Estimated Adjustment
Statement" and, together with the Estimated Closing Balance Sheet, the
"Estimated Financial Statements"), which Estimated Adjustment Statement shall
set forth the Sellers' good faith estimate of (x) the Aggregate Net Debt (such
estimated amount, the "Estimated Aggregate Net Debt") and (y) the Adjusted Net
Working Capital (such estimated amount, the "Estimated Adjusted Net Working
Capital"), in each case as of the close of business on the Closing Date, with
such amounts being derived from the Estimated Closing Balance Sheet.
Contemporaneously with the delivery of the Estimated Financial Statements, the
Sellers' Representative shall also deliver to the Buyer copies of supporting
calculations that the Sellers used in preparing the Estimated Financial
Statements.
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(b) The Estimated Purchase Price shall be subject to adjustment on the
Closing Date as follows:
(i) If the Estimated Adjusted Net Working Capital is less than the
Target Adjusted Net Working Capital, the Estimated Purchase Price shall be
decreased by an amount equal to the amount by which the Target Adjusted
Net Working Capital exceeds the Estimated Adjusted Net Working Capital. If
the Estimated Adjusted Net Working Capital is greater than the Target
Adjusted Net Working Capital, the Estimated Purchase Price shall be
increased by an amount equal to the amount by which the Estimated Adjusted
Net Working Capital exceeds the Target Adjusted Net Working Capital.
(ii) If the Estimated Aggregate Net Debt is less than the Target
Aggregate Net Debt, the Estimated Purchase Price shall be increased by an
amount equal to the amount by which the Target Aggregate Net Debt exceeds
the Estimated Aggregate Debt. If the Estimated Aggregate Net Debt is
greater than the Target Aggregate Net Debt, the Estimated Purchase Price
shall be decreased by an amount equal to the amount by which the Estimated
Aggregate Net Debt exceeds the Target Aggregate Net Debt.
The Estimated Purchase Price as adjusted pursuant to this Section 2.3(b)
shall be referred to as the "Closing Date Purchase Price".
(c) Within forty five (45) calendar days after the Closing Date, the Buyer
shall prepare and deliver to the Sellers' Representative (i) an unaudited
combined balance sheet statement of the Company and the Subsidiaries as at the
Closing Date (the "Closing Balance Sheet") and (ii) a statement (the "Closing
Adjustment Statement") and, together with the Closing Balance Sheet, the
"Closing Date Financial Statements"), which Closing Adjustment Statement shall
set forth (x) the Aggregate Net Debt and (y) the Adjusted Net Working Capital,
in each case as of the close of business on the Closing Date, with such amounts
being derived from the Closing Balance Sheet. The Closing Date Financial
Statements shall be prepared using the same principles and policies used by the
Sellers to prepare the Estimated Financial Statements but without giving effect
to any purchase accounting adjustments or adjustments resulting from actions
taken by the Buyer after the Closing not otherwise contemplated in this
Agreement. Contemporaneously with the delivery of the Closing Date Financial
Statements, the Buyer shall also deliver to the Sellers' Representative copies
of supporting calculations that the Buyer used in preparing the Closing Date
Financial Statements. The Buyer shall (i) grant the Sellers and their
Representatives, including its independent certified public accountants, access
during normal business hours and upon reasonable notice during the period
between the Closing Date and the Determination Date, to those books and records
used in conjunction with, and those officers and employees primarily involved
in, the preparation of the Closing Date Financial Statements and (ii) otherwise
furnish access to the Sellers and their Representatives to such other financial,
operating and other information relating to the business and operations of the
Company or the Subsidiaries (other than the work papers of independent certified
public
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accountants) as the Sellers or any of their Representatives may reasonably
request during the period between the Closing Date and the Determination Date in
order to review and evaluate the Closing Date Financial Statements and determine
the amount of Sellers' objections thereto, if any.
(d) In the event that the Sellers' Representative either (i) have no
objections to the Closing Date Financial Statements as prepared by the Buyer and
do not deliver a Dispute Notice to the Buyer, or (ii) the Sellers'
Representative otherwise fail to deliver a Dispute Notice to the Buyer within
the time period required by the immediately following sentence, then, on the
date that is forty-five (45) calendar days following the date on which the Buyer
delivers the Closing Date Financial Statements to the Sellers' Representative
(plus such number of days during which the Sellers and their Representatives
have not received the required supporting documentation and been granted access
to the books and records of the Company and the Subsidiaries in accordance with
the terms hereof and following a written request therefore from the Sellers'
Representative to the Buyer), the Closing Date Financial Statements prepared by
the Buyer, including the Aggregate Net Debt and Adjusted Net Working Capital set
forth therein, shall be deemed to be and shall become final, binding and
conclusive on the Sellers. In the event that the Sellers' Representative dispute
the amount of Aggregate Net Debt or the amount of Adjusted Net Working Capital
as set forth in the Closing Date Financial Statements, the Sellers'
Representative shall, within forty-five (45) calendar days following the date on
which the Buyer delivers the Closing Date Financial Statements to the Sellers,
prepare and deliver to the Buyer a written notice of dispute (the "Dispute
Notice"), which Dispute Notice shall (i) specifically identify, and provide a
reasonably detailed explanation of, the basis upon which the Sellers'
Representative have delivered such Dispute Notice, including, without
limitation, the applicable provisions of this Agreement on which the dispute set
forth in such Dispute Notice is based, and (ii) set forth the amount of
Aggregate Net Debt and/or Adjusted Net Working Capital, as applicable, that the
Sellers' Representative believes existed as of the close of business on the
Closing Date, together with supporting documents and information that the
Sellers' Representative has utilized in connection with making such
determinations and calculations.
(e) In the event that the Sellers' Representative timely delivers a
Dispute Notice to the Buyer in accordance with the terms hereof, the Buyer and
the Sellers' Representative shall attempt in good faith to reconcile their
differences, and any resolution by them as to any such disputes shall be final,
binding and conclusive on all of the Parties. If the Buyer and the Sellers'
Representative are unable to resolve any such dispute within fifteen (15)
Business Days of the Buyer's receipt of the Dispute Notice from the Sellers'
Representative, the Buyer and the Sellers' Representative shall submit the items
remaining in dispute for resolution to the financial transaction's services
section of the Mexican affiliates of PricewaterhouseCoopers or, in the event
PricewaterhouseCoopers shall not be available to act, of Deloitte (the
"Independent Accounting Firm"). Upon the selection of the Independent Accounting
Firm, and in any event within five (5) Business Days following such selection,
the Buyer and the Sellers' Representative shall submit to such Independent
Accounting Firm (and the other Party) all
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documentary materials and analyses that the Buyer or the Sellers'
Representative, as the case may be, believes to be relevant to a resolution of
the dispute set forth in the Dispute Notice but excluding any work papers of
independent certified public accountants. The Independent Accounting Firm shall,
within thirty (30) Business Days after receipt of all such submissions by the
Buyer and the Sellers, make a determination in accordance with standards
provided herein and deliver to the Buyer and the Sellers' Representative a
written report (the "Final Report") containing such Independent Accounting
Firm's determination of the disputed matters that were so submitted to it (and
only such matters). The determination of the Independent Accounting Firm that is
contained in the Final Report shall be final, binding and conclusive on the
Buyer and the Sellers. The fees and expenses of the Independent Accounting Firm
shall be borne by the Buyer, on the one hand, and the Sellers, on the other
hand, in such proportion as shall be determined by the Independent Accounting
Firm giving consideration to the Buyer's and Sellers' initial positions with
respect to the Closing Date Financial Statement and how far their respective
positions were from the Independent Accounting Firm's decision.
(f) No later than three (3) Business Days following the Determination
Date, the Sellers or the Buyer, as the case may be, shall make the following
payments, after netting against each other all payments required to be made by
the Sellers and/or the Buyer, as the case may be, pursuant to paragraphs (i) to
(iv) immediately below, with all such payments being made to the applicable
Person(s) via wire transfer of immediately available funds to the account or
accounts designated in writing by the Person(s) entitled to receive such
payment:
(i) If the Estimated Adjusted Net Working Capital is less than the
Final Adjusted Net Working Capital, the Buyer shall pay to the Sellers an
amount equal to the amount by which the Final Adjusted Net Working Capital
exceeds the Estimated Adjusted Net Working Capital, in the proportions set
forth in Exhibit A;
(ii) If the Estimated Adjusted Net Working Capital is greater than
the Final Adjusted Net Working Capital, the Sellers shall pay (on a
pro-rata basis, considering each Sellers' ownership percentage of the
Company immediately prior to the Closing) to the Buyer an amount equal to
the amount by which the Estimated Adjusted Net Working Capital exceeds the
Final Adjusted Net Working Capital;
(iii) If the Estimated Aggregate Net Debt is less than the Final
Aggregate Net Debt, the Sellers shall pay (on a pro-rata basis,
considering each Sellers' ownership percentage of the Company immediately
prior to the Closing) to the Buyer an amount equal to the amount by which
the Final Aggregate Net Debt exceeds Estimated Aggregate Net Debt; and
(iv) If the Estimated Aggregate Net Debt is greater than the Final
Aggregate Net Debt, the Buyer shall pay to the Sellers an amount equal to
the amount by which the Estimated Aggregate Net Debt exceeds Final
Aggregate Net Debt.
(g) Any payments made by the Parties pursuant to this Section 2.3 shall
constitute adjustments to the Closing Date Purchase Price.
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(h) The Parties acknowledge and agree that each of the Adjusted Net
Working Capital, the Estimated Adjusted Net Working Capital, the Final Adjusted
Net Working Capital and the Target Adjusted Net Working Capital shall be
determined in conformity with Mexican GAAP, in a manner consistent with the
Company's or the Subsidiaries' historical accounting practice, as the case may
be, applied on a consistent basis, except as set forth in Schedule 5.6(d)(ii).
2.4 ESCROW. (a) On the Closing Date, the Sellers (directly or indirectly)
shall transfer (on a pro-rata basis, in the proportions set forth in Exhibit A)
an amount equal to 10% (ten percent) of the Enterprise Value (the "Escrow
Amount"), to the Escrow Agent, to secure, on a joint and several basis and
without distinction among the Sellers, payment of any amounts that may be due by
any of the Sellers to the Buyer pursuant to Article XII. The Escrow Amount shall
remain subject to the escrow agreement entered into by each of the Escrow Agent,
the Sellers and the Buyer, which shall be executed in form and substance
reasonably acceptable to the Buyer (the "Escrow Agreement"), until the date
which occurs two (2) years and six (6) months from the date hereof.
(b) Subject to any unresolved claims arising pursuant to the provisions of
Article XII, the Escrow Amount shall be released to the Sellers (on the basis
and to the bank accounts specified in writing by the Sellers' Representative) in
four (4) installments, as follows:
(i) On the first (1st) anniversary of the Closing Date, the Sellers
shall be entitled to receive forty percent (40%) of the Escrow Amount,
minus (1) any amount paid to the Buyer from the Escrow Amount as payment
of any claim under Article XII during the year preceding the first (1st)
anniversary of the Closing Date, minus (2) any Requested Holdback or Firm
Holdback Amount, as applicable, with respect to unresolved Claim Notices,
plus (3) any interest accrued in respect of the Escrow Amount.
(ii) Eighteen (18) months after the Closing Date, the Sellers shall
be entitled to receive twenty (20%) of the Escrow Amount, minus (1) any
amount paid to the Buyer from the Escrow Amount as payment of any claim
under Article XII that either corresponds to the period from the first
(1st) anniversary of the Closing Date to the date in which eighteen (18)
months from the Closing Date have elapsed or, if pertaining to the prior
period, was not already deducted under (i) above, minus (2) any Requested
Holdback or Firm Holdback Amount, as applicable, with respect to
unresolved Claim Notices submitted prior to the date in which eighteen
(18) months from the Closing Date have elapsed, plus (3) any interest
accrued in respect of the Escrow Amount.
(iii) On the second (2nd) anniversary of the Closing Date, the
Sellers shall be entitled to receive twenty (20%) of the Escrow Amount,
minus (1) any amount paid to the Buyer from the Escrow Amount as payment
of any claim under Article XII that either corresponds to the period from
the date in which eighteen (18) months from the Closing Date have elapsed
to the second (2nd) anniversary of the Closing Date or, if
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pertaining to the prior period, was not already deducted under (i) above,
minus (2) any Requested Holdback or Firm Holdback Amount, as applicable,
with respect to unresolved Claim Notices submitted prior to the second
(2nd) anniversary of the Closing Date, plus (3) any interest accrued in
respect of the Escrow Amount.
(iv) Thirty (30) months after the Closing Date, the Sellers shall be
entitled to receive any Available Escrow Amount as of such date, minus (1)
any Requested Holdback or Firm Holdback Amount, as applicable, with
respect to unresolved Claim Notices submitted prior to the date in which
thirty (30) months from the Closing Date have elapsed, plus (2) any
interest accrued in respect of the Escrow Amount.
(c) Subject to the terms hereof, the Buyer shall have no responsibility in
respect of the allocation of the amounts released from the Available Escrow
Account or in connection with whether the applicable Sellers receive the
released amounts, other than, if applicable, causing the transfer of the
released amounts to the relevant accounts by the Escrow Agent.
(d) If on the dates in which an amount is scheduled to be released under
the Escrow Agreement, as set forth in clause (b) of this Section 2.3, including
on the date in which the thirty (30) months from the Closing Date have elapsed,
there are one (1) or several claims hereunder that remain unresolved, the
applicable portions of the Escrow Amount shall remain in escrow pursuant to the
Escrow Agreement, but the Buyer may only collect the applicable amounts (i) as a
result of agreement between the Buyer and the Sellers' Representative, or (ii)
if a final judgment, not subject to appeal, resolves such claim (either (i) or
(ii), a "Final Resolution"), provided that upon Final Resolution of a claim, any
excess amount (not subject to any other claim), shall be released to the
Sellers.
(e) The Parties acknowledge and agree that if any of the Requested
Holdbacks referred to in item (b) above are reduced pursuant to Section 12.5
when becoming Firm Holdback Amounts, then the Escrow Agent shall immediately
release to the Sellers an amount equal to the difference between (i) the
relevant Requested Holdback, minus (ii) the corresponding Firm Holdback Amount.
2.5 SELLERS' REPRESENTATIVE. (a) For purposes of this Agreement, the
Sellers hereby appoint Ms. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as their
representative (the "Sellers' Representative"), with authority to act for
Sellers and to bind any and all Sellers, including any absent Seller or any
Seller not in agreement with an action to be taken or omitted to be taken by the
other Sellers or by the Sellers' Representative, in connection with any action
taken or expected to be taken under Articles II and XII and Section 14.4.
Additionally, the Sellers hereby appoint Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as
alternate Seller's Representative, who shall be entitled to act solely in the
event that Ms. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is deceased or becomes
physically or mentally incapable to act as Seller's Representative. Under such
circumstances, Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have the same authority as the
Seller's Representative and will be considered Seller's Representative for
purposes of this Agreement. In connection with the designation of the Sellers'
Representative and its alternate, the Sellers
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shall grant a power-of-attorney to Ms. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in terms reasonably satisfactory to the Buyer,
which shall be formalized before a notary public in Mexico. Sellers shall
deliver a copy of such powers-of-attorney to the Buyer pursuant to Section
3.2(v).
(b) References in this Agreement to the Sellers' Representative shall also
apply to its alternate, in the event that Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ assumes such role
under the circumstances described in item (a) above.
2.6 APPOINTMENT OF TAX REPRESENTATIVE. (a) All payments made to each of
the Sellers (all of whom are individuals and residents of Mexico for tax
purposes) shall be made after deduction of all applicable Mexican withholding
Taxes, which shall be remitted to the appropriate Tax Authority and shall be
deemed part of the Closing Date Purchase Price (which shall be thus reduced and
delivered to the relevant Sellers, after such Mexican withholding Taxes);
provided, however, that all of the Sellers hereby elect to file a tax report
(dictamen fiscal) in order to avoid such withholding requirement, pursuant to
Article 154 of the Mexican Income Tax Law (Ley del Impuesto sobre la Renta) and
Article 204 of the Mexican Income Tax Law Regulations (Reglamento de la Ley del
Impuesto sobre la Renta). Each of the Sellers shall deliver to the Buyer, within
sixty (60) calendar days following the Closing Date, a copy of the notice
(aviso) to which such Article 204 refers, and a copy of the relevant tax report
(dictamen fiscal) and tax return, in both cases stamped as filed with the
Mexican Tax Authorities. For the avoidance of doubt, the Parties acknowledge and
agree that the Buyer shall not withhold any Taxes to any of the Sellers in
connection with the payments made pursuant to this Agreement, including but not
limited to the Closing Date Purchase Price.
(b) Notwithstanding the foregoing, if any electing Seller shall not timely
comply with any of its obligations set forth in paragraph (a) above, then the
Buyer shall be entitled to (i) pay the applicable taxes (and all related
amounts) on behalf of such Seller to the Mexican Tax Authorities, and (ii)
collect such amount from the relevant Seller, plus interest on the amount paid
by the Buyer, at a rate of one percent (1.00%) per month elapsed, prior to
payment by such Seller to the Buyer.
2.7 SETTLEMENT OF INTER-COMPANY ACCOUNTS. Except as set forth in Section
5.20, at or prior to the Closing, the Sellers shall cause the Company to pay to
the Sellers, their Affiliates or Related Parties all amounts anticipated to be
then due as of the Closing, including merchandise purchased or services provided
which have not been billed to the Company as of the Closing, under stated terms
by the Company to the respective Sellers, their Affiliates or Related Parties,
under inter-company accounts for merchandise purchased through, or services
provided by, the Sellers, their Affiliates or Related Parties, or otherwise owed
by the Company to the Sellers, their Affiliates or Related Parties. Likewise, at
or prior to the Closing, the Sellers shall pay and shall cause any and all of
their Affiliates and Related Parties to pay to the Company or the Subsidiaries
all amounts owed and outstanding to the Company or the Subsidiaries (including,
without limitation, any amounts due and payable between the Company or any of
the Subsidiaries and Aerolineas Morelia).
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4. ARTICLE III. THE CLOSING: CLOSING OBLIGATIONS
3.1 THE CLOSING. (a) The Closing will take place at 8:00 a.m. (Mexico City
time), at the offices of Galicia y ▇▇▇▇▇▇, S.C., located at ▇▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇. ▇▇, 7th floor, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, or at such other time and location as the Parties may
agree in writing, on the third (3rd) Business Day following the fulfillment of
(i) all the conditions set forth in Article IX which have not been waived by the
Buyer, and (ii) all the conditions set forth in Article X which have not been
waived by the Sellers. The date on which the Closing is held is sometimes
referred to herein as the "Closing Date." Subject to the provisions of Article
XI, failure to consummate the purchase and sale provided in this Agreement on
the date and time and at the place determined pursuant to this Section 3.1 shall
not result in the termination of this Agreement and shall not relieve any Party
of any of its obligations under this Agreement.
(b) The Parties acknowledge and agree that the Closing (and, therefore,
the transfer of title of the Shares and the Subsidiary Shares by the Sellers and
the payment of the Closing Date Purchase Price by the Buyer), shall occur if and
only when (i) the conditions precedent provided in Articles IX and X have been
fully satisfied or waived pursuant to this Agreement and (ii) the Parties have
delivered each and every one of the items identified in Sections 3.2 and 3.3
(the "Closing").
3.2 DELIVERIES BY THE SELLERS. At the Closing, the Sellers shall deliver
the Buyer (unless delivered previously) the following:
(i) Stock certificates representing the Shares and the Subsidiary
Shares duly endorsed (endosados en propiedad) in favor of the Buyer and
its designee, as the case may be, accompanied by a certificate issued by
the Secretary of the Company and a notation made on the Company's or the
relevant Subsidiary's shares registry (libro de registro de acciones),
setting forth that the Buyer and its designee have been registered as
owners of the Shares and the Subsidiary Shares, as the case may be;
(ii) Certificates executed by each of the Sellers (y) certifying to
the validity, accuracy and completeness on the Closing Date of such
Seller's representations and warranties set forth in this Agreement, and
(z) stating that such Seller is not in default under any obligation or
provision of this Agreement;
(iii) As to each Seller that is a married individual, a copy of his
or her marriage certificate under separate assets regime (regimen de
separacion de bienes) under the Laws of Mexico;
(iv) Original executed counterpart of the Escrow Agreement by the
Sellers and the Escrow Agent, which shall be executed in form and
substance reasonably
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acceptable to the Buyer, and documents evidencing the transfer of the
Escrow Amount to the Escrow Agent pursuant to Section 2.4;
(v) Original executed counterpart of the put/call agreement
regarding the shares of Acero Transportes SAN, S.A. de C.V., or any other
agreement reasonably satisfactory to the parties for (y) effectively
transferring the business of such company to the Buyer and (z) providing
for the subsequent transfer of the shares representing the capital stock
of Acero Transportes SAN, S.A. de C.V. from the relevant Sellers to the
Buyer within a reasonable period of time;
(vi) Copies of the following financial statements: (x) unaudited
combined balance sheet of the Company and the Subsidiaries as at December
31, 2007, together with the corresponding unaudited combined income
statement of the Company and the Subsidiaries for the fiscal year ended
December 31, 2007 (the "2007 Combined Financial Statements"); (y) audited
balance sheet of each of the Company and the Subsidiaries as at December
31, 2007, together with the corresponding audited income statement of each
of the Company and the Subsidiaries for the fiscal year ended December 31,
2007 (the "2007 Audited Financial Statements"); and (z) within the first
fifteen (15) days of each calendar month that follows the execution of
this Agreement, a copy of the Company and the Subsidiaries monthly
internal financial statements with respect to any monthly period elapsed
after December 31, 2007 (reflecting the annual information to such period)
and concluded at least fifteen (15) calendar days prior to the Closing
Date (the "Monthly Financial Statements");
(vii) Originals of the corporate books (including, the shareholders'
meetings minutes book, the board of directors' minutes book (only with
respect to the Company), the stock registry book and the capital
variations book, as applicable) and other material records of the Company
and the Subsidiaries;
(viii) Copy of the powers-of-attorney in favor of the Sellers'
Representative and its alternate, pursuant to Section 2.5;
(ix) Copy of the shareholders' meeting minutes evidencing the
Company's Shareholders' Meeting and the Subsidiaries' Shareholders'
Meeting held pursuant to Sections 3.4 and 3.5, respectively;
(x) Copy of the documents evidencing any spin-off and/or separation
of the Company's current assets or subsidiaries, as the case may be,
pursuant to Sections 7.1 and 7.2;
(xi) Copies of third party Consents required or necessary for the
execution, performance, validity or enforceability of this Agreement, if
any;
(xii) Originals of the public deeds or other documents evidencing
the Owned Real Property and certificates of existence or non-existence of
liens (certificado de
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libertad o existencia de gravamenes), dated any day between the date of
execution of this Agreement and the Closing Date, evidencing that each of
those properties are free of any Liens (except for Permitted Liens or the
Banamex Liens);
(xiii) Copies of the commercial folios (folio mercantiles) of the
Company and the Subsidiaries, issued by the Public Registry of Commerce
not earlier than December 1, 2007, evidencing that the Company and the
Subsidiaries are free of any Liens (except for Permitted Liens or the
Banamex Liens);
(xiv) Copies of the documents evidencing the settlement of
inter-company accounts between the Sellers, their Affiliates and Related
Parties pursuant to Section 2.7, if any;
(xv) Original executed counterpart of the advisory agreement or
comparable arrangement entered between the Company or any of the
Subsidiaries and Mr. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and
(xvi) Such other documents as the Buyer may reasonably request.
3.3 DELIVERIES BY THE BUYER. At the Closing, the Buyer shall deliver to
the Sellers' Representative (unless delivered previously and except in the case
of 3.3(i), which shall be delivered to each of the Sellers as described therein)
the following:
(i) The full Closing Date Purchase Price pursuant to Sections 2.2
and 2.3, in the proportions set forth in Exhibit A;
(ii) A certificate executed by an authorized officer of the Buyer
(i) certifying to the validity, accuracy and completeness on the Closing
Date of the Buyer's representations and warranties set forth in this
Agreement, and (z) stating that the Buyer is not in default under any
obligation or provision of this Agreement;
(iii) A certificate executed by an authorized officer of the Buyer
evidencing its authority for the execution, delivery and performance of
this Agreement and the consummation by the Buyer of the transactions
contemplated hereby;
(iv) A certified copy of the power-of-attorney (or the relevant
document evidencing sufficient authority) granted to the individual
signing this Agreement on behalf of the Buyer, evidencing sufficient
authority of such individual to execute this Agreement;
(v) Adequate evidence of the authorization by the FCC for the
consummation of the transactions provided in this Agreement; and
(vi) Such other items as the Sellers' Representative may reasonably
request.
3.4 COMPANY SHAREHOLDERS' MEETING. The Sellers shall cause a meeting of
the shareholders of the Company to be convened prior to the Closing at which,
effective as
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of Closing: (i) the executive officers, directors, secretaries and statutory
auditors (comisarios) of the Company listed in Schedule 7.6 shall resign and
such resignations shall be accepted; (ii) new executive officers, directors,
secretaries and statutory auditors shall be appointed, as per instructions of
the Buyer; (iii) those certain powers of attorney granted by the Company listed
on Schedule 3.4 shall be revoked and new powers of attorney will be granted to
those executive officers, directors and secretaries referred to in item (ii)
above, as per instructions of the Buyer; and (iv) the current executive
officers, directors, secretaries and statutory auditors referred to in item (i)
above shall be released and indemnified in accordance with Section 8.3.
3.5 SUBSIDIARIES' SHAREHOLDERS' MEETINGS. The Sellers shall cause a
meeting of the shareholders of each of the Subsidiaries to be convened prior to
the Closing at which, effective as of Closing: (i) the executive officers,
directors, secretaries and statutory auditors listed in Schedule 7.6 shall
resign and such resignations shall be accepted; (ii) new executive officers,
directors and statutory auditors shall be appointed, as per instructions of the
Buyer; (iii) those certain powers of attorney granted by the Subsidiaries listed
on Schedule 3.5 shall be revoked and new powers of attorney will be granted to
those executive officers, directors and secretaries referred to in item (ii)
above, as per instructions of the Buyer; and (iv) the current executive
officers, directors, secretaries and statutory auditors referred to in item (i)
above shall be released and indemnified in accordance with Section 8.3.
3.6 BUYER'S SHAREHOLDERS MEETING. The Buyer shall cause a meeting of the
shareholders of the Buyer to be convened prior to the Closing at which (i) the
acquisition of the Shares and the Subsidiary Shares and any other transactions
and matters related to this Agreement shall be discussed, and (ii) the Simec
Shares shall be voted in favor of such acquisition pursuant to the Buyer Voting
Control Trust. The Buyer shall deliver to the Seller's Representative an
executed copy of the Buyer Voting Control Trust within ten (10) calendar days as
of the execution of this Agreement.
5.
6. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller, severally and not jointly, represents and warrants to the
Buyer with respect to such Seller and the Shares owned by such Seller as
follows:
4.1 CAPACITY; AUTHORIZATION AND AUTHORITY. Each Seller is a natural
person, has sufficient legal capacity and, if married, is married under separate
assets regime under the Laws of Mexico.
4.2 DUE EXECUTION AND DELIVERY; ENFORCEABILITY. Each Seller has duly
executed and delivered this Agreement and it constitutes its legal, valid and
binding obligation, enforceable against each such Seller in accordance with its
terms.
4.3 CONSENTS AND APPROVALS; NO VIOLATION TO RESULT. (a) Except as set
forth in Schedule 4.3, neither the execution and delivery of this Agreement nor
the
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consummation of the transactions contemplated hereby shall (i) violate any
Judgment or Law applicable to such Seller, (ii) violate, or result in a breach
of, or constitute a default under (or would result in or constitute such a
breach or default with notice or lapse of time or both) any provision of any
Contract or Permit to which such Seller is a party, (iii) require the Consent of
any party to any of the items described in subsection (ii) above, or (iv)
require any Consent from a Governmental Authority; other than such violations,
breaches, defaults or failures to obtain Consents which, individually or in the
aggregate, would not have a material adverse effect on the ability of such
Seller to consummate the transactions contemplated hereby.
(b) Except for (i) the authorization required from the FCC, and (ii) the
consent from each of the relevant Seller's spouse referred to in Section
3.2(iii), as applicable, which have been duly obtained at or prior to Closing,
no material consent, approval, order or authorization of, or registration or
filing with, any federal, state or municipal authority or any court of competent
jurisdiction is required to be obtained or made by or with respect to the Seller
in connection with the execution and delivery of this Agreement or the
consummation of the other transactions contemplated hereby.
4.4 OWNERSHIP OF SHARES AND SUBSIDIARY SHARES. (a) Each Seller is, and
will be, immediately prior to the Closing, the record and beneficial owner of
the number Shares and Subsidiary Shares set forth opposite to its name in
Exhibit A. Such Shares and Subsidiary Shares shall be delivered to the Buyer or
its designee (in the proportions set forth in Exhibit A) at the Closing free and
clear of all pledges, security interests, put or call options, liens,
encumbrances and claims or rights of every kind therein or thereto, and the
delivery of such Shares and Subsidiary Shares by such Seller to the Buyer
pursuant to this Agreement shall transfer lawful, valid, marketable and
indefeasible title thereto to the Buyer. Such Seller has not entered into any
contract or agreement, other than this Agreement, to sell or otherwise transfer
any such Shares and Subsidiary Shares or grant any subscription, conversion,
exchange or issuance of warrants, rights or interests therein to any other
party. All legal and other steps necessary for such Seller to transfer and
deliver such Shares of Subsidiary Shares to the Buyer and perform its
obligations hereunder pursuant to all applicable jurisdictions have been, or
will have been, taken as of the Closing.
4.5 BROKERS. The Seller has not engaged any broker, finder or agent with
respect to the transactions contemplated by this Agreement nor with respect to
the Company's sale or merger or any other transaction relating to the
disposition of the Company's assets. Neither the Buyer nor the Company will have
any obligation to pay any broker's, finder's, investment banker's, financial
advisor' s or similar fees, in connection with this Agreement or the
transactions contemplated hereby, by reason of any action taken by or on behalf
of the Seller.
7. ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally and not jointly, represents and warrants to the
Buyer as follows:
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5.1 CORPORATE ORGANIZATION AND AUTHORITY. The Company is a sociedad
anonima de capital variable duly organized and validly existing under the Laws
of Mexico and has all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as now being conducted and
as heretofore been conducted. The Sellers have delivered to the Buyer true,
complete and accurate copies of the bylaws and amendments to the Company's
bylaws.
5.2 SUBSIDIARIES OF THE COMPANY. (a) Except for the subsidiaries set forth
in Schedule 5.2(a), the Company does not own stock of or any equity interest in
any other corporation or legal entity. All of the Subsidiary Shares are directly
or indirectly owned by the Company free and clear of any Liens. Upon Closing,
Seller will not own any right, asset, property or interest used in the business
of the Subsidiaries.
(b) Schedule 5.2(b) sets forth an organizational chart indicating the
equity participation of the Company and each Subsidiary as of the date hereof,
indicating for each Subsidiary its jurisdiction of incorporation and the
ownership interest of the Company and any Person therein.
(c) Each Subsidiary is a corporation duly organized and validly existing
under the Laws of Mexico and each Subsidiary has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as now being conducted and as heretofore been conducted. The Sellers
have delivered to the Buyer true, complete and accurate copies of the bylaws and
amendments to the Subsidiary's bylaws.
5.3 CONSENTS AND APPROVALS; NO VIOLATION TO RESULT. (a) Except for (i) the
authorization required from the FCC, and (ii) the consent from the Seller's
spouse, as applicable, which shall be obtained at or prior to Closing, no
material Consent of any Governmental Authority is required to be obtained or
made by or with respect to the Company or the Subsidiaries in connection with
the execution and delivery of this Agreement or the consummation of the
transactions hereunder.
(b) Except as set forth in Schedule 5.3(b), neither the execution and
delivery of this Agreement by the Seller nor the consummation of the
transactions contemplated hereby shall (i) violate or result in a breach of any
provision of the Company's or the Subsidiaries' bylaws, as applicable, (ii)
violate any Judgment or Law applicable to the Company or the Subsidiaries, (iii)
violate, or result in a breach of, or constitute a default under (or would
result in or constitute such a breach or default with notice or lapse of time or
both) any provision of any Contract or Permit to which the Company or any of the
Subsidiaries is a party, (iv) require the Consent of any party to any of the
items described in subsection (iii) above, or (v) require any Consent from a
Governmental Authority; other than with respect to clauses (ii), (iii), (iv) or
(v) above, such violations, breaches, defaults or failures to obtain Consents
which, individually or in the aggregate, would not cause a Company Material
Adverse Effect.
5.4 AUTHORIZED AND OUTSTANDING CAPITAL STOCK. Except as set forth in
Schedule 5.4, the Company and the Subsidiaries, respectively, have no other
class or series
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Execution Version
of capital stock authorized, issued or outstanding. As of the date of this
Agreement, there is no transfer of shares pending registration in the stock
registry of the Company and the Subsidiaries.
5.5 NO COMMITMENT TO ISSUE CAPITAL STOCK OR RIGHTS TO ACQUIRE CAPITAL
STOCK. The Company has not entered into any Contract or made any commitment to
sell or otherwise transfer or issue any shares of the Company's or any of the
Subsidiaries capital stock, nor are there any outstanding options,
subscriptions, warrants, conversion rights or similar rights of any kind
convertible into any shares of the Company's or any of the Subsidiaries' capital
stock. As of the date of this Agreement, there is no outstanding contribution
towards future capital increases (aportaciones para futuros aumentos de capital)
in the Company or the Subsidiaries.
5.6 FINANCIAL STATEMENTS. (a) The unaudited combined balance sheet of the
Company and the Subsidiaries as at December 31, 2006, together with the
corresponding unaudited combined income statement of the Company and the
Subsidiaries for the fiscal year ended December 31, 2006 (the "2006 Financial
Statement Date"), a copy of which are attached as Schedule 5.6(a), are referred
to herein as the "2006 Combined Financial Statements." The 2006 Combined
Financial Statements were prepared in conformity with Mexican GAAP, except for
the exclusion of inflation accounting effects. The 2006 Combined Financial
Statements were prepared (x) using historical Pesos (i.e., inflation accounting
effects are excluded) and (y) in a manner consistent with the Company's
historical accounting practice applied on a consistent basis
(b) The unaudited combined balance sheet of the Company and the
Subsidiaries as at June 30, 2007, together with the corresponding unaudited,
combined income statement of the Company and the Subsidiaries for the six-month
period ended June 30, 2007 (the "Interim Financial Statement Date"), a copy of
which are attached as Schedule 5.6(b), are referred to herein as the "Combined
Interim Financial Statements." The Combined Interim Financial Statements were
prepared in conformity with Mexican GAAP, except for the exclusion of inflation
accounting effects. The Combined Interim Financial Statements were prepared (x)
using historical Pesos (i.e., inflation accounting effects are excluded) and (y)
in a manner consistent with the Company's historical accounting practice applied
on a consistent basis
(c) The audited balance sheet of each of the Company and the Subsidiaries
as at December 31, 2006, together with the corresponding audited income
statement of each of the Company and the Subsidiaries for the 2006 Financial
Statement Date, copies of which are attached as Schedule 5.6(c)(i), are referred
to herein as the "2006 Audited Financial Statements" (and, together with the
2006 Company Financial Statements, the "2006 Financial Statements"). The 2006
Audited Financial Statements (i) present fairly, in all material respects, the
financial position of each of the Company and the Subsidiaries, as the case may
be, at the 2006 Financial Statement Date, and (ii) were prepared in conformity
with Mexican GAAP, in a manner consistent with the Company's or the
Subsidiaries' historical accounting practice, as the case may be, applied on a
consistent basis, except as set forth in Schedule 5.6(c)(ii).
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(d) The unaudited balance sheet of each of the Company and the
Subsidiaries as at June 30, 2007, together with the corresponding unaudited
income statement of each of the Company and the Subsidiaries for the Interim
Financial Statement Date, copies of which are attached as Schedule 5.6(d)(i),
are referred to herein as the "Individual Interim Financial Statements" (and,
together with the Combined Interim Financial Statements, the "Interim Financial
Statements"). The Individual Interim Financial Statements (i) present fairly, in
all material respects, the financial position of the Company and the
Subsidiaries, as the case may be, at the Interim Financial Statement Date, and
(ii) were prepared in conformity with Mexican GAAP, in a manner consistent with
the Company's historical accounting practice applied on a consistent basis,
subject to year-end closing adjustments, as the case may be, applied on a
consistent basis, except as set forth in Schedule 5.6(d)(ii).
5.7 UNDISCLOSED AND CONTINGENT LIABILITIES. Except (i) as set forth in the
Interim Financial Statements, (ii) for liabilities that have arisen in the
Ordinary Course of Business subsequent to the Interim Financial Statement Date,
(iii) for obligations and liabilities arising under Contracts entered into by
the Company or the Subsidiaries in the Ordinary Course of Business, in each case
of items (ii) and (iii) which could not be reasonably expected to have a Company
Material Adverse Effect, according to Mexican GAAP, and (iv) as set forth in
Schedules 5.7 and 5.8, the Company and the Subsidiaries have no material
liabilities or obligations of a type required to be reflected on the Interim
Financial Statements.
5.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 5.8, since
the Interim Financial Statement Date, the business of the Company and the
Subsidiaries has been conducted in the Ordinary Course of Business, and there
has not been:
(i) any Company Material Adverse Effect, other than changes caused
by events in the Mexican economy, none of which either individually or in
the aggregate has been materially adverse or could reasonably be expected
to be materially adverse to the Company and the Subsidiaries taken as a
whole;
(ii) any damage, destruction, casualty or other similar occurrence
or event (whether or not insured against), which either individually or in
the aggregate has caused or could reasonably be expected to cause a
Company Material Adverse Effect;
(iii) any material mortgage or pledge of or encumbrance attached to
any of the properties or assets of the Company or any of the Subsidiaries;
(iv) any material change in the terms or conditions of employment of
any director, executive officer or first or second level management
employee, including, without limitation, any material increase in the
compensation payable or to become payable by the Company or any of the
Subsidiaries to any of their present or former management employees or any
material bonus or severance payment or arrangement with respect to any of
the foregoing;
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(v) any material strike, labor dispute, apparent or threatened union
organizing activities involving the Company's or any of the Subsidiaries'
employees;
(vi) any audit, outstanding assessments or inspection visits by any
taxing or other Governmental Authority pending or, to the Knowledge of
such Seller, threatened, or any Proceedings against the Company or any of
the Subsidiaries or any of their respective officers, employees or
shareholders;
(vii) any declaration, setting aside or payment of any dividend, or
any other distribution on or in respect of the capital stock of the
Company or any of the Subsidiaries, or any capital reduction or redemption
or other acquisition by the Company or any of the Subsidiaries of any such
stock;
(viii) any capital increase, issuance of shares of capital stock of
the Company or any of the Subsidiaries or any rights, options or
commitments issued by the Company or any such Subsidiary relating to
shares of their capital stock;
(ix) any material change in the accounting methods or practices
followed by the Company or any of the Subsidiaries, including any change
in depreciation or amortization policies or rates adopted by the Company
or any such Subsidiary;
(x) any material obligation or liability, except for liabilities and
obligations incurred under arrangements or agreements entered into in the
Ordinary Course of Business and Taxes not yet due and payable;
(xi) any Debt, encumbrance or guarantee (whether accrued or
contingent, including the entering into any mortgage or pledge, incurred
by the Company or any Subsidiary) of any obligation of another party for
borrowed money;
(xii) any sale, lease, transfer or other disposition by the Company
or any of the Subsidiaries of any assets other than in the Ordinary Course
of Business and in accordance with past practices;
(xiii) any loss of property or waiver of any right or claim, other
than in the Ordinary Course of Business;
(xiv) any amendment to the bylaws of any of the Company or any of
the Subsidiaries;
(xv) any entry into, termination of, or receipt of notice of
termination of any material Contract or Permit;
(xvi) any incurrence or creation of any liability, commitment or
obligation in excess of $4,000,000.00 (four million Pesos 00/100) by the
Company or any of the Subsidiaries, except unsecured trade payables and
other unsecured liabilities incurred in the Ordinary Course of Business,
and capital expenditures or contracts and
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commitments for capital expenditures made or entered into in the Ordinary
Course of Business, which in any such case do not exceed $2,500,000.00
(two million five hundred thousand Pesos 00/100) in the aggregate;
(xvii) any sale, transfer or other disposition by the Company or any
of the Subsidiaries of any of its operating assets in excess of
$2,500,000.00 (two million five hundred thousand Pesos 00/100) in the
aggregate, except for inventory (whether billets or finished product) sold
in the Ordinary Course of Business; or
(xviii) any agreement, whether oral or written, to carry out any of
the actions provided in the preceding items of this Section 5.8.
5.9 PERMITS. Except as set forth in Schedule 5.9, the Company and the
Subsidiaries hold all Permits necessary to conduct their businesses as now
operated and such Permits are valid and in full force and effect. No action or
claim is pending, or, to the Knowledge of such Seller, threatened, to revoke or
terminate any such Permits or to declare any of them void or invalid in any
respect. To the Knowledge of such Seller, the Company and each of the
Subsidiaries is in compliance with the Permits and has exercised all the rights
necessary to preserve the validity of such Permits, except to the extent that
any failure to comply with such Permits or exercise such rights could not be
reasonably expected to have a Company Material Adverse Effect.
5.10 LITIGATION. Except as set forth in Schedule 5.10, there is not
pending against the Company or any of the Subsidiaries, or to the Knowledge of
such Seller, threatened against the Company or any of the Subsidiaries, any
Proceeding of any character, including Proceedings (a) demanding money damages
from the Company or any of the Subsidiaries, or (b) demanding a temporary
restraining order, preliminary injunction or a permanent injunction or order of
specific performance against the Company or any of the Subsidiaries, that could
reasonably be expected to (x) cause any Company Material Adverse Effect, or (y)
prevent, hinder or delay consummation of the transaction contemplated by this
Agreement, declare the same unlawful, or cause the rescission thereof. None of
the Company or the Subsidiaries is subject to any outstanding injunction (medida
precautoria) or Judgment, except to the extent that any such injunction or
Judgment could not be reasonably expected to have a Company Material Adverse
Effect.
5.11 INVENTORY. Except as provided in Schedule 5.11, all of the Company's
and the Subsidiaries' inventory and supplies held for sale or use in connection
with the business of the Company and the Subsidiaries (the "Inventory") was
purchased in the Ordinary Course of Business and is owned by the Company or the
Subsidiaries, free and clear of any liens, security interests and encumbrances,
subject only to such encumbrances which, individually or in the aggregate, do
not materially impair the value of the Inventory or materially impair the
operations of the Company and the Subsidiaries taken as a whole. The Inventory
is recorded in the financial statements of the Company using historical cost
valuation methods and practices consistent with those used in preparing the 2006
Financial Statements.
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5.12 REAL PROPERTY; LEASES. (a) Schedule 5.12(a) sets forth the real
estate property currently owned by the Company or the Subsidiaries, including
property held for resale and property currently leased by the Company or the
Subsidiaries to third parties (the "Owned Real Property"), as well as the real
estate property currently leased by the Company and the Subsidiaries from third
parties (the "Leased Real Property" and together with the Owned Real Property,
the "Real Property").
(b) The Company and the Subsidiaries have good and marketable title to the
Owned Real Property, free and clear of all mortgages, liens, security interests,
easements, rights of way, options, claims or encumbrances of any kind
(collectively, "Liens"), except for (i) such Liens as are set forth in Schedule
5.12(a), and (ii) Liens that secure obligations that are reflected in the
Interim Financial Statements (the Liens described in clause (ii) above are
referred to collectively as "Permitted Liens").
(c) The leases of the Leased Real Property are in full force and effect.
The Company and the Subsidiaries have neither sent nor received written notice
of any default under the leases of the Leased Real Property, and the Company and
the Subsidiaries have not breached any material covenant, agreement or condition
contained on any lease of the Leased Real Property, nor has there occurred any
event which the passage of time or the giving of notice or both would constitute
such a breach by the Company or the Subsidiaries.
5.13 ASSETS OTHER THAN REAL PROPERTY. The Company and the Subsidiaries
have title to all the assets (other than real property interests, which are
subject to Section 5.12) material and related to their respective businesses, in
each case free and clear of all Liens, except for (i) such Liens as are set
forth in Schedule 5.13 or (ii) any Permitted Liens.
5.14 CONTRACTS. (a) Except as set forth in Schedule 5.14(a), neither the
Company nor any Subsidiary is a party to or bound by any:
(i) Contract or series of Contracts to acquire or sell goods (other
than inventory), material assets or properties during calendar years 2007
or 2008, having a value in excess of $4,000,000.00 (four million Pesos
00/100);
(ii) Indenture, note, loan or credit agreement or other Contract
relating to indebtedness of the Company or a Subsidiary or to the direct
or indirect guarantee or assumption of the obligations of any other Person
for borrowed money;
(iii) Any Contract or other currently outstanding instrument under
which the Company or any Subsidiary has, directly or indirectly, made or
entitled to make any advance, loan, extension of credit (other than
accounts receivable) or capital contribution to, or other investment in,
any Person or entity, having a value in excess of $4,000,000 (four million
Pesos 00/100);
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(iv) Contract resulting in material liens, charges, claims and other
encumbrances of any assets of the Company or any Subsidiary, except for
Permitted Liens;
(v) Non-compete or confidentiality Contract;
(vi) Collective bargaining agreement with any labor union;
(vii) Contract containing any provision that provides for a default
thereof as a result of the transactions contemplated by this Agreement,
which would result in a Company Material Adverse Effect; or
(viii) Contract not made in the Ordinary Course of Business of the
Company or the Subsidiaries, as the case may be.
(b) Except as set forth in Schedule 5.14(b), all Contracts listed in
Schedule 5.14(a) and any other material contracts or agreements to which the
Company or any Subsidiary is a party (the "Company Contracts") are valid,
binding and in full force and effect and are enforceable against the Company or
any applicable Subsidiary, and to the Knowledge of such Seller, of each other
party thereto, in accordance with their respective terms.
(c) Except as set forth in Schedule 5.14(c), (i) the Company and any
applicable Subsidiary has performed all material obligations required to be
performed by it under the Company Contracts, and it is not (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the Knowledge of such Seller no other party
to any Company Contract is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder, and
(ii) none of the Company or any applicable Subsidiary has received any notice,
or has Knowledge, of the intention of any party to renegotiate, terminate or
cancel any Company Contract.
(d) Complete and correct copies of all Company Contracts, together with
all modifications and amendments thereto, have been made available to the Buyer
for review prior to the execution of this Agreement.
5.15 ENVIRONMENTAL MATTERS. (a) Except as disclosed in Schedule 5.15(a),
the Company and the Subsidiaries are in compliance in all material respects with
the applicable Environmental Laws relating to the operations of the Company.
(b) Except as disclosed on Schedule 5.15(b), the Company and its
subsidiaries have obtained all Environmental Permits, which are in full force
effect and are in compliance with the terms and conditions thereof, except where
the lack of an Environmental Permit or such non-compliance would not cause or
would not reasonably be expected to cause a Company Material Adverse Effect.
(c) Except as disclosed on Schedule 5.15(c), there are no Environmental
Claims pending or, to the Knowledge of such Seller, threatened, against the
Company or any of the
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Subsidiaries that would cause or reasonably be expected to cause a Company
Material Adverse Effect.
(d) The representations and warranties contained in this Section 5.15 are
the only representations and warranties being made by the Sellers with respect
to compliance with, or liability or claims under, Environmental Laws or with
respect to Permits issued or required under Environmental Laws, and no other
representation or warranty, express or implied, is being made with respect to
environmental matters whatsoever.
5.16 COMPLIANCE WITH LAWS; GENERALLY. Except as set forth in Section 5.16,
the business of the Company and the Subsidiaries is being conducted in material
compliance with all applicable Laws, other than for any such failures which,
individually or on the aggregate, would not cause a Company Material Adverse
Effect.
5.17 EMPLOYEES; LABOR RELATIONS; COMPLIANCE AND RELATED MATTERS. (a)
Schedule 5.17(a) contains a list of the name, position, seniority, salary and
labor benefits of all employees of the first three levels of the Company and the
Subsidiaries with an annual salary in excess of $500,000.00 (five hundred
thousand Pesos 00/100) as of the Closing Date. Except as described in Schedule
5.17(a), such individuals are not entitled to receive any other salaries,
benefits, bonuses, premiums, incentives and/or compensation from the Company and
the Subsidiaries.
(b) Except as set forth in Schedule 5.17(b), none of the Company or the
Subsidiaries has made any arrangements with their respective employees that
would have the effect of depriving any of the Company or the Subsidiaries of the
continued service of any such employee following the Closing.
(c) Except as set forth in Schedule 5.17(c), neither the Company nor any
of the Subsidiaries is a party to any collective bargaining or other similar
labor Contract and, as of the date of execution of this Agreement, none of the
Company or the Subsidiaries is negotiating with the unions mentioned in Schedule
5.17(c) or any other unions any matters different from those arising from and
necessary under any such contracts referred to in Schedule 5.17(c).
(d) Except as set forth in Schedule 5.17(d), since January 1, 2003, there
has not been, there is not presently pending or existing and, to the Knowledge
of such Seller, there is not threatened (i) any strike or work stoppage
proceeding, (ii) any Proceeding against any of the Company or the Subsidiaries
relating to the alleged violation of any material Law pertaining to labor
relations or employment matters of a collective nature against any of the
Company or the Subsidiaries, or (iii) any organizational efforts with respect to
any employees of any of the Company or the Subsidiaries.
(e) Each of the Company and the Subsidiaries has substantially complied
with all material Laws relating to employees and employment. Except as disclosed
in Schedule 5.17(e), none of the Company or the Subsidiaries is liable for the
payment of any compensation, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing
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material Laws. Each of the Company and the Subsidiaries have complied with and
is current in the payment of all contributions to the Mexican Institute of
Social Security (Instituto Mexicano del Seguro Social), the Retirement Savings
System (Sistema de Ahorro para el Retiro) and the Institute of the Workers'
Housing National Fund (Instituto del Fondo Nacional para la Vivienda de los
Trabajadores), except where the failure to make any such payment would not
reasonably be expected to have a Company Material Adverse Effect.
(f) Schedule 5.17(f) sets forth a description of the benefit plans of the
Company and the Subsidiaries. With respect to each employee benefit plan or
arrangement sponsored or maintained by the Company or any of the Subsidiaries
for the benefit of the employees of the Company and the Subsidiaries (the
"Plans"): (i) any employer and employee contributions to each Plan required by
applicable Law or the terms of such Plan have been made, or if applicable,
accrued in accordance with applicable accounting practices in Mexico, and (ii)
each Plan required to be registered has been registered and has been maintained
in good standing with applicable regulatory authorities.
(g) As of the date hereof, the executive officers, directors, secretaries
and statutory auditors of the Company and each of the Subsidiaries are as set
forth in Schedule 5.17(g).
5.18 INTELLECTUAL PROPERTY; SOFTWARE. (a) Except as set forth in Schedule
5.18(a), neither the Company nor any of the Subsidiaries own Intellectual
Property (the "Owned Intellectual Property") that is material to their
respective businesses. The Company and the Subsidiaries have good and marketable
title to the Owned Intellectual Property, free and clear of any liens, charges,
claims and other encumbrances, subject only to such encumbrances of record and
such other imperfections of title, encumbrances, and encroachments which,
individually or on the aggregate, would not have a material adverse effect on
the value of such Owned Intellectual Property or cause any Company Material
Adverse Effect.
(b) Except as set forth in Schedule 5.18(b), to the Knowledge of such
Seller, no event has occurred which causes, or after notice or lapse of time or
both would cause, the revocation or termination of any right to use the Owned
Intellectual Property, and neither the Company nor the Subsidiaries are liable,
in any material respect, to any Person for infringement with respect to any such
rights or Intellectual Property as a result of its business operations.
(c) Schedule 5.18(c) sets forth all the software that the Company and its
subsidiaries use, employ, exploit or utilize in the conduction of their
respective businesses.
(d) The Company and the Subsidiaries' computers, computer software and all
other information technology equipment and all associated documentation
(collectively, the "IT Assets"), operate and perform in all material respects as
currently used to conduct and carry on the business of the Company and the
Subsidiaries, and the Company and the Subsidiaries have implemented on-site
backup in respect of the IT Assets in accordance with past practices.
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(e) The Company and the Subsidiaries use and operate the IT Assets under
agreements and/or licenses granted by third parties which are, to the Knowledge
of such Seller, authorized for that purpose.
5.19 TAX MATTERS. Except as set forth in Schedule 5.19:
(a) All material returns, declarations and reports in respect of Taxes
required to be filed with respect to the Company or any of the Subsidiaries or
any of their income, properties, franchises or operations as of the date hereof
have been timely and properly filed (taking into account all extensions of due
dates) with, withheld and paid to all appropriate governmental authorities, and
all such returns properly reflect the Taxes due by the Company and the
Subsidiaries for the periods thereby covered. The Company and the Subsidiaries
have made adequate reserves for all Taxes accrued but not yet payable and have
delivered or made available to the Buyer copies of all such Tax returns filed
since January 1, 2002. All Taxes attributable to the Company and each of the
Subsidiaries that are due and payable have been paid or otherwise discharged,
except to the extent such Taxes are being contested in good faith and for which
adequate reserves have been set aside on the applicable Company or Subsidiary
books in accordance with Mexican GAAP.
(b) There is no claim or assessment pending against the Company or any of
the Subsidiaries for any alleged deficiency in Taxes.
(c) The Company and the Subsidiaries have on a timely basis filed all
material Tax returns required to be filed by it pursuant to any Tax Laws and any
such Tax returns were true and accurate in all material respects as of the date
of filing. There is no Tax sharing agreement that will require any payment by
the Company or any of the Subsidiaries (other than to, or on behalf of, another
Subsidiary of the Company).
(d) Neither the Company nor any of the Subsidiaries is currently the
beneficiary of any extension of time within which to file any Tax return and no
claim has been made to the Company or any such Subsidiary by any Governmental
Authority in a jurisdiction where the Company or any such Subsidiary does not
file Tax returns that it is or may be subject to taxation by that jurisdiction
in any material respect.
(e) Neither the Company nor any of the Subsidiaries has waived any statute
of limitations in respect of Taxes or has agreed to any extension of time with
respect to a Tax assessment or deficiency.
(f) There are no Liens on any of the Company's or any of the Subsidiaries'
properties or assets with respect to any unpaid Taxes, and neither the Company
nor any such Subsidiary has received any notice of assessment by any Tax
Authority in connection with any Tax returns and there are no pending Tax
examinations of or Tax claims asserted against the Company or any such
Subsidiary, or against Seller that would have a Company Material Adverse Effect,
except for Taxes that are being contested in good faith by appropriate
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proceedings and for which adequate reserves have been set aside on the
applicable Company or Subsidiary books in accordance with Mexican GAAP.
5.20 TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES. Except as set forth
in Schedule 5.20 or for purchase orders for merchandise entered into the
Ordinary Course of Business, neither the Company nor any of the Subsidiaries is
a party to any agreement with any of the Sellers, any of their Affiliates or
Related Parties (the "Affiliated and Related Party Agreements"). The Affiliated
and Related Party Agreements will be terminated as of the Closing Date and the
Company and the Subsidiaries will have no further liabilities or obligations
under such Affiliated and Related Party Agreements, except for services
performed prior to the Closing or as specifically contemplated herein.
5.21 BOOKS AND RECORDS. Except for any failure which is not reasonably
expected to have a Company Material Adverse Effect, each of the Company's and
the Subsidiaries' corporate books and records, including the shareholders minute
book, board of directors minute book, the shares registry book and the capital
variations book (i) are kept complete, accurate and current, and (ii) since
January 1, 2002, such books have been duly prepared and maintained materially in
accordance with all applicable Laws and reflect in all respects all formal
actions taken at the shareholders' meetings and board of directors' meetings.
5.22 INSURANCE. Each of the Company and the Subsidiaries maintains with
financially sound and responsible insurance companies, insurance on all their
material properties in at least such amounts and against at least such risks as
consistent with past practices of the Company and the Subsidiaries, as
applicable. The Company and the Subsidiaries have obtained the insurance
coverage provided by the policies described in Schedule 5.22.
5.23 BANKING AND SECURITIES ACCOUNTS. Schedule 5.25 sets forth all bank
accounts, broker-dealer accounts (contratos de intermediacion) and investment
accounts that the Company and the Subsidiaries currently hold with financial
institutions, securities dealers and other financial institutions, including the
number of the account or agreement, the balance thereof as of the Closing Date,
and the authorized signature and withdrawal provisions under each account.
Except as provided in Schedule 5.25, the funds in such accounts are not subject
to any kind of attachment or lien or encumbrance.
5.24 BROKERS. Except for ▇▇▇▇▇▇ Brothers Inc., which fees shall be paid by
the Company (or any or its Affiliates) on or before the Closing Date, the
Company has not engaged any broker, finder or agent with respect to the
transactions contemplated by this Agreement nor with respect to the Company's
sale or merger or any other transaction relating to the disposition of the
Company's assets. Neither the Buyer nor the Company (except as set forth in the
preceding sentence) will have any obligation to pay any broker's, finder's,
investment banker's, financial advisor' s or similar fees, in connection with
this Agreement or the transactions contemplated hereby, by reason of any action
taken by or on behalf of the Seller.
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5.25 ACCURACY. Any liability, fact, circumstance, act or omission or
generally any matter that could give rise to indemnification hereunder not
included in the 2006 Financial Statements or in the Interim Financial
Statements, but otherwise referred to in this Agreement or its Schedules shall
be considered as disclosed by the Sellers to the Buyer for all purposes under
this Agreement and to the extent such reference is true, valid, accurate and
complete in all material respects, shall not give rise to any liability of the
Sellers hereunder.
5.26 NO OTHER REPRESENTATIONS. Except as and to the extent expressly set
forth in this Agreement and subject to the limitations and restrictions
contained in this Agreement, the Buyer acknowledges that neither the Sellers,
nor the Company, the Subsidiaries or any of their respective agents,
representatives, employees or Affiliates, makes any representation or warranty,
either express or implied.
8. ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that:
6.1 CORPORATE ORGANIZATION. The Buyer is a corporation duly organized and
validly existing under the Laws of Mexico.
6.2 AUTHORIZATION AND APPROVAL OF AGREEMENT. The Buyer has the legal
capacity and all requisite corporate power and authority to enter into this
Agreement and to perform the obligations required to be performed by it
hereunder. Except for the approval of the Buyer's Shareholders' Meeting, which
approval shall be obtained prior to Closing, all corporate proceedings required
by the Buyer's organizational or charter documents or otherwise required by Law
for the execution and delivery of this Agreement and for the consummation of the
transactions provided for herein have been duly taken. Except as set forth in
the preceding sentence, this Agreement has been duly executed and delivered by
the Buyer and constitutes the legal, valid and binding obligation of the Buyer,
enforceable against it in accordance with its terms.
6.3 CONSENTS AND APPROVALS; NO VIOLATION TO RESULT. (a) Except for (i) the
authorization required from the FCC, which shall have been duly obtained at or
prior to Closing, no material Consent of any Governmental Authority is required
to be obtained or made by or with respect to the Buyer in connection with the
execution and delivery of this Agreement or the consummation of the transactions
hereunder.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby shall (i) violate or result
in a breach of any provision of the Buyer's organizational or charter documents,
(ii) violate any Judgment or Law applicable to the Buyer, (iii) violate, or
result in a breach of, or constitute a default under (or would result in or
constitute such a breach or default with notice or lapse of time or both) any
provision of any Contract or Permit to which such Buyer is a party, (iv) require
the Consent of any party to any
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of the items described in subsection (iii) above, or (v) to the Knowledge of the
Buyer, require any Consent from a Governmental Authority; other than with
respect to clauses (ii), (iii), (iv) or (v) above, such violations, breaches
defaults or failures to obtain Consents which, individually or in the aggregate,
would not have a material adverse effect on the ability of the Buyer to
consummate the transactions contemplated hereby.
6.4 COMPLIANCE WITH LAWS. To the Knowledge of the Buyer, its business is
not being conducted in violation of any Law, except for possible violations that
would not reasonably be expected to have a material adverse effect on the
ability of the Buyer to perform its obligations under this Agreement or to
consummate the transactions hereunder.
6.5 NO GOVERNMENTAL ORDER. No Governmental Authority has issued any Law or
Judgment or any other restriction of any kind or character that is in effect and
that has the effect of making any of the transactions contemplated by this
Agreement illegal or otherwise prohibits their consummation.
6.6 LITIGATION. There is not pending against the Buyer, or to the
Knowledge of the Buyer, threatened against the Buyer, any Proceeding of any
character, that could reasonably be expected to (a) cause any material adverse
change in the condition (financial or otherwise), assets, liabilities, business
or operations of the Buyer, or (b) prevent, hinder or delay consummation of the
transactions contemplated by this Agreement, declare the same unlawful, or cause
the rescission thereof.
6.7 CREDIT-WORTHINESS. The Buyer has heretofore provided to the Sellers
its unaudited financial statements prepared under Mexican GAAP as of and for the
period ending on December 31, 2007. The Buyer (i) has the financial resources to
pay in full the Closing Date Purchase Price at Closing, (ii) has sufficient
financial resources to comply with its other obligations under this Agreement,
(iii) is not insolvent, and (iv) there is no event or action that with notice,
the passage of time or both would reasonably be expected to turn the Buyer
insolvent on or before the Closing Date.
6.8 SOURCE OF FUNDS. The funds used by the Buyer for its business and the
funds that the Buyer shall use to pay the Closing Date Purchase Price have
legitimate origins.
6.9 SIMEC SHARES. To its knowledge, the Simec Shares are owned by
Industrias CH, S.A.B. de C.V. and Tuberias Procarsa, S.A. de C.V., as the case
may be, free and clear of any liens, security interests, options, claims or
encumbrances of any kind, and such parties have full and unrestricted voting
rights with respect to their respective Simec Shares.
6.10 BROKERS. The Buyer has not engaged any broker, finder or agent with
respect to the transactions contemplated by this Agreement. None of the Sellers,
the Company or the Subsidiaries will have obligations to pay any broker's,
investment banker's, financial advisor' s or similar fees in connection with
this Agreement or the transactions contemplated hereby, by reason of any action
taken by or on behalf of the Buyer.
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9. ARTICLE VII. COVENANTS
7.1 AFFIRMATIVE COVENANTS OF THE SELLERS. Except as provided in Schedule
7, the Sellers covenant and agree that from the date of this Agreement to the
Closing Date, they shall cause the Company and the Subsidiaries (except as may
otherwise be contemplated by this Agreement or consented to in writing by the
Buyer) to:
(i) Carry on its business in a manner consistent with prior practice
and only in the Ordinary Course of Business, and use reasonable efforts to
preserve its business organization intact and preserve the goodwill and
relationships of its customers, suppliers and others having business
relations with it;
(ii) Maintain its corporate existence in its jurisdiction of
organization plus in each jurisdiction in which the ownership or leasing
of its property or the conduct of its business requires such
qualification;
(iii) Duly and timely file or cause to be filed all reports and
returns required to be filed with any Governmental Authority and promptly
pay or cause to be paid when due all Taxes, including interest and
penalties levied or assessed, unless diligently contested in good faith by
appropriate proceedings;
(iv) Maintain in existing condition and repair, consistent with past
practice, all buildings, offices, shops and other structures located on
the Real Property, and any equipment, fixtures and other tangible personal
property located on the Real Property;
(v) Give the Buyer and the Buyer's employees, counsel, accountants
and advisors, full access upon reasonable notice during normal business
hours to any of the properties, personnel, financial and operating data,
books, Tax returns, contracts, commitments, and records of the Company in
connection with reviewing the Company and its properties and operations;
and
(vi) Maintain in full force and effect any material insurance
policies existing as of this date, including replacements or renewals in
the Ordinary Course of Business.
7.2 NEGATIVE COVENANTS OF THE SELLERS. Except as provided in Schedule 7,
the Sellers covenant and agree that from the date of this Agreement to the
Closing Date, they shall not permit the Company or any of the Subsidiaries
(except as may otherwise be contemplated by this Agreement), without the Buyer's
prior written consent, to:
(i) Amend its bylaws;
(ii) Authorize for issuance, issue or deliver any additional shares
of its capital stock or securities convertible into or exchangeable for
shares of its capital stock, or issue or grant any right, option or other
commitment for the issuance of shares
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of its capital stock or of such securities, or split, combine or
reclassify any shares of its capital stock;
(iii) Declare or pay any dividends or other distributions of any
kind to the Sellers, or directly or indirectly purchase, retire or redeem
or otherwise acquire from the Sellers any shares of its capital stock;
(iv) Incur any liability, commitment or obligation, except unsecured
current and trade liabilities and other unsecured liabilities incurred in
the Ordinary Course of Business;
(v) Borrow, or agree to borrow, any funds other than pursuant to its
existing loan agreements for an amount not to exceed the maximum amount
provided under the JPMorgan Loan;
(vi) Sell, transfer or otherwise dispose of assets, except for the
sale or disposition of obsolete or damaged tangible personal property, the
sale of inventory and other assets in the Ordinary Course of Business and
property held for resale;
(vii) Except for amounts committed for emergency repairs, amounts
contemplated by budgets previously made available to the Buyer, make any
material capital commitments, which shall not exceed $55,000,000.00 (fifty
five million Pesos 00/100);
(viii) Mortgage, pledge or encumber any of its assets or guaranty
the obligations of any party;
(ix) Make any adjustments in the salary rate of, or authorize any
bonus payments to any executive officer or management employee, or enter
into consulting arrangements (except as set forth in Schedule 5.8);
(x) File any claim or any lawsuit, except for claims or lawsuits in
the Ordinary Course of Business consistent with prior practice; and
(xi) Take any action with the intention of causing any of the
representations and warranties made herein to be invalid, inaccurate,
false or incomplete on the Closing Date.
7.3 CONFIDENTIALITY. Each of the Parties agrees that it will treat in
confidence all documents, materials and other information which it shall have
obtained regarding the other Parties during the course of the negotiations
leading to the consummation of the transactions contemplated hereby (whether
obtained before or after the date of this Agreement), the investigation provided
for herein and the preparation of this Agreement and other related documents.
Such documents, materials and information shall not be communicated to any third
Person (other than, in the case of the Buyer, to its counsel, accountants,
financial advisors or lenders, and in the case of Sellers, to their counsel,
accountants or financial advisors). The
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obligation of each Party to treat such documents, materials and other
information in confidence shall not apply to any information which is (i)
previously known on a non-confidential basis by such Party, (ii) in the public
domain through no fault of such Party, (iii) later lawfully acquired by such
Party from sources other than the Parties, (iv) is required to be disclosed
under applicable Law or judicial process, or to any governmental authority
having regulatory authority over such Party or its Affiliates, but only to the
extent it must be disclosed, or (v) such Party reasonably deems necessary to
disclose to obtain any of the consents or approvals contemplated hereby. The
provisions of this Section 7.4 shall not restrict any Party from using
confidential information in performing its obligations under, or enforcing the
terms of, this Agreement or in exercising its rights relating thereto.
7.4 COMPETITION; OTHER REGULATORY FILING(S). (a) The filing with the FCC
for obtaining the authorization from such governmental authority for the
consummation of the transactions provided under this Agreement shall be the
responsibility of the Buyer. The Sellers shall cooperate, and shall cause the
Company and the Subsidiaries to cooperate, with the Buyer and use all
commercially reasonable efforts to provide information required for purposes of
such filing, as well as to obtain such authorization. The Parties acknowledge
and agree that, in the event that the authorization from the FCC imposes any
requirements or conditions to perform or consummate the transactions
contemplated in this Agreement, then the Buyer shall be the sole responsible, at
its own cost and expense, for taking any and all commercially reasonable actions
or remedies in order to comply with any of such conditions or requirements,
provided that such actions or remedies shall in no event reduce the Closing
Purchase Price payable to the Sellers.
(b) For any regulatory filings in addition to the filing provided in the
preceding paragraph of this Section 7.4 that may be required or convenient for
the consummation of the transactions provided under this Agreement, each of the
Sellers and the Buyer shall cooperate with each other and use all commercially
reasonable efforts to obtain any regulatory approvals and/or obtain any consents
which may be required in connection with the transactions contemplated hereby,
including by making any governmental filings which may be required hereunder as
promptly as practicable following the Closing and seeking early termination of
any waiting periods required by Law.
7.5 UPDATING SCHEDULES. If on or after the date of this Agreement and
prior to Closing, the Sellers identify, discover or become aware that by reason
of the occurrence of events or circumstances subsequent to the execution of this
Agreement or otherwise: (i) an item should have been included on a schedule to
this Agreement, or (ii) a representation or warranty becomes inaccurate or
obsolete in a material respect, the Sellers shall promptly inform the Buyer
thereof and provide the Buyer with an appropriately revised schedule or
representation; provided, that if the changes reflected in the supplemented
Schedules would reasonably be expected to result in a Company Material Adverse
Change, then the Buyer may either (x) accept the supplemented Schedules (in
which case it will be substituted in place of the appropriate original Schedules
and thereafter be part of this Agreement), or (y) reject the supplemented
Schedules by written notice to Seller (in which case the Buyer may terminate
this
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Agreement under Article XI). In the case of (x) above, such schedule or
representation shall be deemed revised for any purposes of this Agreement.
7.6 RESIGNATIONS. The Sellers shall obtain effective as of the Closing,
the resignations of each of the members of the board of directors, the
secretaries, the statutory auditors and certain executive officers of the
Company and the Subsidiaries listed in Schedule 7.6.
7.7 BUYER'S SHAREHOLDERS MEETING. The Buyer shall cause that the
shareholders' meeting referred to in Section 3.6 and for the purposes described
thereunder is convened.
10.
11. ARTICLE VIII. POST-CLOSING COVENANTS
8.1 BUYER'S POST-CLOSING COVENANTS. The Buyer covenants and agrees that,
from and after the Closing, it shall and shall cause the Company and the
Subsidiaries to:
(i) Maintain and not dispose any records of the Taxes paid or
payable by the Company (including but not limited to returns, reports,
books, records, financial data, receipts, notices, assessments,
reassessments, earnings and profits data, and work papers) prior to the
tenth (10th) anniversary of the Closing Date, unless the Buyer shall first
have received the written consent of each of the Sellers; and
(ii) Give the Sellers and the Sellers' employees, counsel,
accountants and advisors with all the information and documents that they
reasonably request in writing in connection with the preparation of any
Tax returns, Tax credits, Tax elections or financial statements, or any
judicial, quasi-judicial, administrative, Tax audit or arbitration
proceeding; it being understood that the Sellers shall reimburse all
reasonable and documented expenses incurred by the Buyer in connection
with the provision of information and documentation for purposes of this
item (ii).
8.2 [INTENTIONALLY OMITTED].
8.3 INDEMNIFICATION OF OFFICERS, DIRECTORS, SECRETARIES AND STATUTORY
AUDITORS. The Buyer agrees that it shall cause the Company to indemnify and hold
harmless, each officer, director, secretary and statutory auditor who resigned
in connection with the transactions provided under this Agreement (the
"Indemnified Executives") against any damages, liabilities and associated costs
and expenses arising out of or pertaining to acts or omissions or alleged acts
or omissions (other than illegal acts or acts of fraud), executed, carried out
or omitted by the Indemnified Executive as a result of the lawful performance of
his or her activities as an executive officer, director, secretary or statutory
auditor of the Company or any Subsidiary, to the fullest extent permitted by
applicable Law. No Indemnified Executive may settle any such claim without the
prior written approval of the
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Buyer, unless such approval is unreasonably withheld or delayed. Further, an
Indemnified Executive will not be entitled to indemnification the extent a court
of competent jurisdiction determines that such Indemnified Executive acted with
bad faith, or willful misconduct. The indemnification granted to the Indemnified
Executives pursuant to this Section 8.3 shall not affect or limit in any manner
the Seller's indemnification obligations provided in Article XII.
8.4 NON-COMPETE; NON-SOLICITATION; TRANSITION. (a) Except with the Buyer's
consent, each of the Sellers agrees that, from the Closing Date and for a period
of four (4) years from the such date, it shall not directly or indirectly, (i)
own, manage, operate, control, invest, make loans or acquire an interest in, or
otherwise exploit, engage or participate in, any Competitive Business, or (ii)
promote, facilitate, contribute to, support or otherwise assist or advise any
Person engaged in, or that intends to engage in, any act related to any
Competitive Business that would be prohibited under (i) above, except, in both
cases, for portfolio investments in the equity of listed companies which are
Competitive Businesses not to exceed, in any such case, five percent (5%) of the
aggregate outstanding equity or equity-like securities of each such company.
(b) Except with the Buyer's consent, each of the Sellers agrees that, from
the Closing Date and for a period of three (3) years from such date, it shall
not directly or indirectly, offer employment or employ any of the employees or
officers of the Company and any of the Subsidiaries; provided, however, that the
foregoing shall not prohibit (i) employment of persons accepting employment
through a general solicitation to the public and that have not, in any way, been
contacted independently (provided, however, that the exception in this clause
(i) shall not apply to those employees referred to in Schedule 5.17(a) with an
annual salary in excess of $1,000,000.00 (one million Pesos 00/100)), (ii)
employment of employees fired or terminated by the Company or any of the
Subsidiaries, and (ii) employment of employees which have ceased to be employed
by the Company or by any Subsidiary for a period of six (6) months.
(c) For a period of two (2) years following the Closing Date, the Sellers
will not take any action with the purpose, of or intended to, have the effect of
discouraging any customer, supplier, or other business associate of any of the
Company and the Subsidiaries to maintain the same relationship with the Company
and the Subsidiaries after the Closing as it was maintained prior to the
Closing.
8.5 CANCELLATION OF LIENS. (a) Each of the Sellers hereby represents and
warranties that certain Liens set forth in Schedules 5.12(a) and Schedule
5.13(a) in favor of Banamex (either referred to as Banco Nacional de Mexico,
S.N.C., Banco Nacional de Mexico, S.A, or Banamex, S.A. or by any other similar
corporate name) (the "Banamex Liens"), are (i) not associated to outstanding
obligations (whether of payment of monies or otherwise) of the Company or the
Subsidiaries and have been paid in full, and (ii) suitable for cancellation with
the Public Registry of Property or the Public Registry of Commerce, as
applicable, upon official request of the interested parties.
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(b) Each of the Sellers hereby agrees and covenants to employ commercially
reasonable efforts in any action required or convenient for cancelling the
Banamex Liens with the Public Registry of Property or the Public Registry of
Commerce, either (i) prior to the Closing Date, and (ii) if not practicable, as
promptly as possible, but in no event in later than one hundred twenty (120)
calendar days as of the Closing Date.
8.6 TRANSLATION. The Parties hereto agree to employ good faith efforts to
cause a Spanish translation of this Agreement to be made and agreed upon, within
sixty (60) calendar days following the Closing Date. Such translation shall be
expressly acknowledged in writing by the Parties indicating that each of the
Parties irrevocably agrees to be bound by such translation for any legal effects
whatsoever and waives any right it may have to challenge or invalidate the
translation or any term thereof.
12.
13. ARTICLE IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
9.1 CONDITIONS PRECEDENT. The Buyer's obligation to purchase the Shares
and to take the other actions required to be taken by the Buyer at the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in whole or in part):
(a) Representations, Warranties and Covenants. The representations and
warranties of the Sellers set forth in Sections 4.1 to 4.4 and 5.4 herein shall
be true, valid, accurate and complete on and as of the Closing Date, to the same
extent as if made on and as of such date, and the Sellers shall have complied
with or performed any and all of the provisions and obligations set forth in
Articles III and VII.
(b) Legal Actions. No Judgment has been issued by any Governmental
Authority prohibiting the consummation of the transactions contemplated under
this Agreement.
(c) Authorizations; Consents. The Buyer shall have received (i) a
favorable resolution regarding the transactions provided hereunder by the FCC,
and (ii) duly executed copies of any Consent required for the consummation of
the transactions contemplated by this Agreement with respect to the Sellers, if
any.
(d) Shareholders' Meeting Authorization. The Buyer shall have received the
authorization of its shareholders' meeting to consummate the transactions
contemplated under this Agreement.
(e) Enactment of Laws. No Law preventing the consummation of the
transactions subject matter to this Agreement shall have been enacted or issued,
which continues in full force and effect.
9.2 WAIVER. The Buyer shall have the right to waive the foregoing
conditions, or any of them, wholly or in part; provided, however, that no such
waiver shall be deemed to have
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occurred unless the same is set out in writing and executed by the Buyer. Any
waiver made by the Buyer hereunder shall also constitute a waiver with respect
to any rights or remedies that the Buyer may otherwise have against the Sellers
in respect of or relating to the specific conditions waived.
14. ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
10.1 CONDITIONS PRECEDENT. The Sellers' obligation to sell the Shares and
the Seller's obligations to take the actions required to be taken by them at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the Sellers, in whole or
in part):
(a) Covenants. The Buyer shall have complied with or performed any and all
of the provisions and obligations set forth in Articles III and VII.
(b) Legal Actions. No Judgment has been issued by any Governmental
Authority prohibiting the consummation of the transactions contemplated under
this Agreement.
(c) Authorizations; Consents. The Sellers shall have received (i) evidence
of the authorization of the transactions provided hereunder by the FCC in terms
reasonably satisfactory to the Sellers, and (ii) duly executed copies of any
other Consent required for the consummation of the transactions contemplated by
this Agreement with respect to the Buyer, if any.
(d) Enactment of Laws. No Law preventing the consummation of the
transactions subject matter to this Agreement shall have been enacted or issued,
which continues in full force and effect.
10.2 WAIVER. The Sellers shall have the right to waive the foregoing
conditions, or any of them, wholly or in part; provided, however, that no such
waiver shall be deemed to have occurred unless the same is set out in writing
and executed by the Sellers. Any waiver made by the Sellers hereunder shall also
constitute a waiver with respect to any rights or remedies that the Sellers may
otherwise have against the Buyer in respect of or relating to the specific
conditions waived.
15. ARTICLE XI. TERMINATION
11.1 TERMINATION. (a) This Agreement and the transactions contemplated
hereby may be terminated and abandoned at any time prior to the Closing Date:
(i) by the mutual written consent of the Buyer and the Sellers,
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(ii) either by the Sellers or by the Buyer if the Closing has not
occurred by June 1, 2008, or by such other date as the Parties may agree
in writing, and the Party terminating this Agreement is not in breach, in
any material respect, of any of its obligations under this Agreement, or
(iii) by the Buyer in the event that the Buyer rejects any revised
Schedule or representation pursuant to Section 7.5,
(iv) by the Buyer if, at any time prior to the Closing, there shall
have occurred a breach of (y) any of the representations and warranties of
the Sellers set forth in Sections 4.1 to 4.4 and 5.4, or (z) any of the
provisions and obligations set forth in Articles III and VII; or
(v) by the Sellers if, at any time prior to the Closing, there shall
have occurred a breach of any of the provisions and obligations set forth
in Articles III and VII.
(b) This Agreement may also be terminated by either the Buyer or the
Sellers if (i) any Judgment or other order of a Governmental Authority
preventing the Closing shall have become final and non-appealable, or (ii) there
shall be a Law which makes the transactions provided hereunder illegal.
(c) Notwithstanding the foregoing items (a) and (b), the Parties
acknowledge and agree that if the authorization of the transactions provided
hereunder by the FCC is obtained on or before April 25, 2008, the Closing shall
occur on or before April 30, 2008.
11.2 EFFECT OF TERMINATION. Upon the termination of this Agreement under
the provisions of Section 11.1, no Party shall have any obligation to the other
Party thereafter arising out of this Agreement; provided, however, that: (i) if
the Sellers fail or unreasonably refuse to tender full performance of their
obligations under this Agreement other than a failure of a condition set forth
in Article X and as a result thereof the Buyer terminates this Agreement, the
Buyer shall be entitled to exercise and pursue all legal or equitable rights or
remedies which it may have against the Sellers by reason of any breach of this
Agreement by the Sellers; and (ii) if the Buyer fails or unreasonably refuses to
tender full performance of its obligations under this Agreement other than a
failure of a condition set forth in Article IX and as a result thereof the
Sellers terminate this Agreement, the Sellers shall be entitled to exercise and
pursue any legal or equitable rights or remedies which they may have against the
Buyer by reason of any breach of this Agreement by the Buyer. Notwithstanding
the foregoing, the termination of this Agreement shall not effect the respective
Parties' obligations under Sections 13.1, 13.2, 14.1, 14.10 and 14.11.
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16. ARTICLE XII. INDEMNIFICATION
12.1 INDEMNIFICATION BY THE SELLERS. (a) From and after the Closing,
subject to the terms set forth in this Article XII, the Sellers shall indemnify
the Buyer, its Affiliates and each of their respective officers, directors,
employees, stockholders, agents and representatives (the "Buyer Indemnified
Party") against and hold them harmless from, any Damages suffered or incurred by
such Buyer Indemnified Party to the extent arising from:
(i) any material breach of any representation or warranty of any of
the Sellers set forth in Articles IV and V of this Agreement or in any
Schedule or certificate delivered hereunder; and
(ii) any material breach of any covenant of any of the Sellers
contained in this Agreement.
(b) The Sellers shall not be required to indemnify any Buyer
Indemnified Party:
(i) until the aggregate of all Damages exceeds one percent (1.0%) of
the Enterprise Value, and
(ii) with respect to any Damages indemnifiable at any time after the
Buyer shall have filed a claim that shall have resulted in payment
pursuant to (i) above, any Damages in an amount exceeding, on a cumulative
basis, an amount equal to zero point zero five percent (0.05%) of the
Enterprise Value each; provided, however, that this provision shall not
apply to any claim for indemnification of Damages arising out of a breach
of Sections 4.1 to 4.4, and 5.4;
(c) The Sellers shall only be liable for any Damages up to the Available
Escrow Amount (and under no circumstances in excess of the Escrow Amount),
except for (i) claims arising out of a breach of Sections 5.17 and 5.19, in
which case the Sellers shall only be liable for any Damages up to twenty percent
(20%) of the Enterprise Value (such twenty percent (20%), for the avoidance of
doubt, shall include any amounts paid from the Escrow Account), and (ii) claims
arising out of a breach or Sections 4.1 to 4.4 and 5.4, in which case the
Sellers shall only be liable for any Damages up to the Enterprise Value.
(d) The Sellers shall not be liable for any Damages unless a claim is
timely asserted pursuant to this Agreement during the two (2) years and six (6)
months period following the date hereof, except for (i) claims arising out of a
breach of Sections 5.17 and 5.19, in which case the Sellers shall not be liable
for any Damages unless a claim is timely asserted pursuant to this Agreement
during the five (5) year period following the date hereof, and (ii) claims
arising out of a breach of Sections 4.1 to 4.4 and 5.4, in which case the
Sellers shall not be liable for any Damages unless a claim is timely asserted
pursuant to this Agreement during the statute of limitations period (plazo de
prescripcion) established in accordance with the Laws of Mexico with respect to
such matters.
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(e) The Parties acknowledge and agree that the Sellers' obligation to
indemnify under this Article XII shall be (i) joint and several among all the
Sellers, without any distinction, up to the Available Escrow Amount, and (ii)
several (and not jointly), after the application or distribution of the
Available Escrow Amount, on a pro-rata basis, considering each Sellers'
ownership percentage of the Company immediately prior to the Closing, as set
forth in Exhibit A.
(f) In the event that the Buyer makes a claim for indemnification which
remains unresolved or disputed by the Parties for a period of twelve (12) months
from the date the claim is asserted, for amounts that continue to be withheld as
Available Escrow Amounts to secure such claim, the Buyer shall be required to
file a formal lawsuit associated with such claim against all or a portion of the
Sellers, within a period of thirty (30) calendar days counted from the date of
expiration of such twelve (12)-month period, being all expenses related to such
lawsuit recoverable as Damages, to the extent such claims shall be payable under
this Article XII, provided that, a failure to file the relevant lawsuit within
the specified period, shall entitle Sellers to withdraw the applicable Available
Escrow Amounts, as if no such claim had been submitted.
12.2 INDEMNIFICATION BY THE BUYER. From and after the Closing, the Buyer
and the Company, jointly and severally, shall indemnify, defend and hold the
Sellers, their Affiliates and each of their respective officers, directors,
employees, stockholders, agents and representatives and their permitted
successors and assigns (each, a "Seller Indemnified Party") harmless from and
against all Damages resulting from (i) any breach of a representation and
warranty contained in Article VI during the period when such representation and
warranty is in existence under Section 12.6, and (ii) any breach or default in
the performance of any of the covenants and agreements made by the Buyer in this
Agreement or in any schedule, certificate, instrument or agreement delivered
pursuant hereto including, without limitation, the documents attached hereto as
Schedules.
12.3 TERMINATION OF INDEMNIFICATION. The obligations of the Sellers and
the Buyer to indemnify and hold harmless any Indemnified Party pursuant to
Sections 12.1 and 12.2 shall terminate when the applicable representation or
warranty terminates pursuant to Section 12.6; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the relevant Indemnified Party shall have, before the
expiration of the applicable period (provided under Section 12.6) previously
made a claim by delivering a notice of such claim (stating in reasonable detail
the basis of such claim) (a "Claim Notice") to the Party to be providing the
indemnification and such claim remains unresolved upon expiration of the
applicable period under Section 12.6.
12.4 PROCEDURES. (a) Third-Party Claims. For a Person to be entitled to
any indemnification (the "Indemnified Party") provided for in Sections 12.1 and
12.2 in respect of, arising out of, or involving, a claim made by any Person
against any such Indemnified Party (a "Third-Party Claim"), such Indemnified
Party must deliver a Claim Notice to the indemnifying party in writing (and in
reasonable detail) of the Third-Party Claim within five (5) Business
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Days after receipt by such Indemnified Party of notice of the Third-Party Claim,
together with copies of all notices and documents (including court papers, if
any) received by the Indemnified Party relating to the Third-Party Claim.
Thereafter, the Indemnified Party shall deliver to the indemnifying party,
within five (5) Business Days after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third-Party Claim. Failure by any Indemnified
Party so to notify the indemnifying party shall relieve the indemnifying party
from any liability that it may have to such Indemnified Party under Section
12.1.
(b) Assumption of Defense against Third-Party Claims. If a Third-Party
Claim is made against an Indemnified Party, the indemnifying party shall be
entitled to participate in the defense thereof and, if it so chooses, to assume
the defense thereof with counsel selected by the indemnifying party; provided,
however, that such counsel is not reasonably objected to by the Indemnified
Party. Should the indemnifying party so elect to assume the defense of a
Third-Party Claim, the indemnifying party shall not be liable to the Indemnified
Party for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. If the indemnifying party assumes such
defense, the Indemnified Party shall have the right to participate in the
defense thereof and to employ counsel (not reasonably objected to by the
indemnifying party), at its own expense, separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying party shall
control such defense, unless, in both cases, the Indemnified Party shall have an
interest conflicting with that of the indemnifying party. The indemnifying party
shall be liable for reasonable and documented fees and expenses of counsel (for
a total amount not exceeding $1,000,000.00 (one million Pesos 00/100), in the
aggregate) employed by the Indemnified Party for any period during which the
indemnifying party has not assumed the defense thereof. If the indemnifying
party chooses to defend or prosecute a Third-Party Claim, all the Indemnified
Parties shall cooperate in the defense or prosecution thereof. Such cooperation
shall include the engagement and (upon the indemnifying party's request) the
access and delivery to the indemnifying party of records and information that
are reasonably relevant to such Third-Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the indemnifying
party assumes the defense of a Third-Party Claim, the Indemnified Party shall
not admit any liability with respect to, or settle, compromise or discharge,
such Third-Party Claim without the indemnifying party's prior written consent
(which consent shall not be unreasonably withheld). If the indemnifying party
assumes the defense of a Third-Party Claim, the Indemnified Party shall agree to
any settlement, compromise or discharge of a Third-Party Claim that the
indemnifying party may recommend and that by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third-Party Claim, which releases the Indemnified Party completely in
connection with such Third-Party Claim and that would not otherwise adversely
affect the indemnified party.
(c) Other Claims. In the event any Indemnified Party should have a claim
against any indemnifying party under Section 12.1 different from a Third-Party
Claim being asserted
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against or sought to be collected from such Indemnified Party, the Indemnified
Party shall deliver a Claim Notice with reasonable promptness to the
indemnifying party, which in no event shall be delivered in a period exceeding
three (3) calendar months from the date in which the Indemnified Party gained
knowledge of the fact or circumstance giving rise to such claim. If the
indemnifying party does not notify the Indemnified Party within fifteen (15)
Business Days following its receipt of such Claim Notice that the indemnifying
party disputes its liability to the Indemnified Party under Section 12.1, such
claim specified by the Indemnified Party in such Claim Notice shall be deemed a
liability of the indemnifying party under Section 12.1, unless otherwise
evidenced by the indemnifying party, and the indemnifying party shall pay the
amount of such liability to the indemnified party on demand or, in the case of
any Claim Notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined.
12.5 HOLDBACK. (a) If the Buyer notifies a claim to the Sellers'
Representative, the Sellers' Representative may elect to dispute the Requested
Holdback specified in connection with the claim, by delivering a notice (a
"Counter Notice") to the Buyer within ten (10) Business Days of receipt of such
notice. If no Counter Notice is received by the Buyer within such ten (10)
Business Day period, then the Requested Holdback claimed by the Buyer in the
Claim Notice shall be a Final Holdback Amount.
(b) If a Counter Notice is duly delivered by the Sellers' Representative
with respect to a Claim Notice, after discussions shall have been held by the
Buyer and the Sellers' Representative for a period of no less than sixty (60)
calendar days and no agreement shall have been reached, then the dispute, but
only in respect of the Requested Holdback, shall be submitted for resolution to
the financial transaction's services section of the Mexican affiliates of
PricewaterhouseCoopers or, in the event PricewaterhouseCoopers shall not be
available to act, of Deloitte (the "Referee"). The Referee shall determine the
Firm Holdback Amount within thirty (30) calendar days after the dispute is
submitted to it, by:
(i) establishing whether the Requested Holdback is a reasonable sum
of money to be held in the Escrow Agreement in relation to the nature and
description of the claims contained in the Claim Notice, and
(ii) if applicable, reducing the Requested Holdback to an amount the
Referee determines, in its discretion, to be reasonable considering the
nature and description of the claims contained in the Claim Notice.
(c) The Buyer shall cause the Company to, and the Buyer and the Sellers'
Representative shall, provide the Referee, with any information required by the
Referee and reasonably available, during the aforementioned thirty (30) calendar
day period, so that the Referee may reach a final decision. The Referee shall
issue its final decision in the form of a written notice delivered to the Buyer
and the Sellers' Representative, which decision shall be binding and conclusive
with respect to the Firm Holdback Amount.
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(d) The Sellers and the Buyer expressly acknowledge and agree that the
Referee (i) may only verify the reasonableness of the Requested Holdback in
connection with the claims set forth in the Claim Notice and may not, and is not
directed to, make any assessment or determination as to the merits of any such
claim, and (ii) may not increase the amount of the Requested Holdback.
Furthermore, the Sellers and the Buyer expressly acknowledge and agree that (1)
a submission of a dispute to the Referee pursuant to this Section 12.1 shall
not, in any way, limit the ability of the Buyer to submit the claim underling
the Claim Notice to a competent court pursuant to this Article XII or otherwise
initiate an action against the Sellers, to resolve the merits of such claim, and
(2) the determination of the Firm Holdback Amount does not impose any limitation
on the amounts to be indemnified under this Article XII or otherwise shall be
deemed to have any impact on the merits of the relevant claim.
(e) In the event the Sellers' Representative decides to submit a Counter
Notice, then:
(i) if the Requested Holdback is reduced by the Referee, the Buyer
shall pay such Referee's fees and expenses, and
(ii) if the Requested Holdback is confirmed by the Referee, the
Referees' fees and expenses shall be paid by the Sellers.
12.6 SURVIVAL OF REPRESENTATIONS. The representations, warranties and
covenants of Sellers shall survive the Closing solely for purposes of this
Article XII as follows (i) the representations and warranties in Article IV and
Article V (except for Section 5.19) shall survive for a two (2) years and six
(6) months period from the date hereof, (ii) the representations and warranties
contained in Section 5.19 shall survive for five (5) years from the date hereof,
and (iii) the representations and warranties contained in Sections 4.1 to 4.4
and 5.4 shall survive for the statute of limitations period established in
accordance with the Laws of Mexico with respect to such matters; except as set
forth in Section 12.3.
12.7 EXCLUSIVE REMEDY. The Buyer acknowledges and agrees that the
indemnification provided in this Article XII shall be the sole and exclusive
remedy against the Sellers with respect to any and all Damages arising under
this Agreement or any of the transactions contemplated hereunder, other than
claims of, or causes of action arising from, fraud (fraude) or willful
misconduct (dolo) under the Laws of Mexico. The Parties acknowledge and agree
that no Person who was an officer, director, secretary, statutory auditor or
stockholder of the Company or the Subsidiaries, as the case may be, prior to the
Closing, nor any of their Affiliates, shall have any liability to make any
payment with respect to any breach of any representation or warranty made in
this Agreement, except for Seller's indemnification obligations under this
Article XII.
12.8 LIMITATION ON DAMAGES. Notwithstanding anything herein to the
contrary, any Damages incurred by any Indemnified Party shall be calculated
after considering any insurance proceeds and other benefits received or
receivable by the Indemnified Party.
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12.9 INDEMNIFICATION CURRENCY. All indemnification payments under this
Agreement shall be payable in Pesos. If any indemnification claims are incurred
in a currency other than Pesos, then such amount denominated in such foreign
currency shall be converted into an amount denominated in Pesos pursuant to
applicable Law, at the time of payment thereof.
12.10 TAX STATUS OF INDEMNIFICATION PAYMENTS. Any indemnification made in
respect of a breach of representation or warranty hereunder shall constitute an
adjustment of the Enterprise Value and the Parties shall, within a reasonable
time of payment and receipt of such payment, as applicable, and in any event
within two (2) months of such payment, file any amendments to their respective
current and past income Tax returns as may be necessary to reflect the
foregoing.
12.11 REPRESENTATION OF THE SELLERS. In addition to the matters set forth
in Article II, Sellers' Representative shall be vested with any necessary power
and authority that may be required and is hereby authorized to act on behalf of
any and all Sellers in connection with the indemnification provisions set forth
in this Article XII, it being understood that such Sellers' Representative shall
be the sole person authorized to (i) give any instruction or take any action
(including acceptance and settlement of claims) in connection with the
provisions of this Article XII, and (ii) receive and deliver notices under
Sections 12.4 and 12.5. Independent actions taken by any of the Sellers without
being undertaken through, or accepted by, the Sellers' Representative, shall be
understood not to have any legal force or effect. Furthermore, each of the
Sellers hereby expressly and absolutely releases the Sellers' Representative and
the Buyer from any and all liabilities that may be associated with its role as
Sellers' Representative hereunder and expressly agree and ratify any action
taken by the Sellers' Representative and from taking any actions agreed with or
instructed by the Sellers' Representative, respectively, except in the event of
fraud or willful misconduct (dolo). Nothing to the contrary herein set forth
shall preclude the right of the Buyer to notify any of the Sellers through a
representative of each such Seller, different from the Sellers' Representative.
17. ARTICLE XIII. EXPENSES
13.1 EXPENSES. Except as provided in Sections 5.24 and 13.2, the Sellers
and the Buyer shall each pay its own expenses in connection with the
negotiations leading up to and the preparation of this Agreement and the
consummation of the transactions provided for herein (collectively, "Expenses"),
including without limitation fees and expense of their respective investment
advisors, brokers, legal counsel, accountants and, in the case of the Buyer,
other outside experts retained by it to conduct due diligence.
13.2 TRANSFER AND OTHER TAXES. Any and all transfer, withholding, stamp,
sales, use and excise Taxes and other similar charges, fees and assessments
resulting from or imposed with respect to the transactions contemplated by this
Agreement by any applicable jurisdiction shall be borne by the Party responsible
under applicable Law.
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18. ARTICLE XIV. MISCELLANEOUS
14.1 ISSUANCE OF PRESS RELEASES. Neither the Buyer nor any of the Sellers
shall, without the approval of the other Parties, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that any such Party shall be so required
by Law, in which case the other Parties shall be advised and the Parties shall
use their commercially reasonable efforts to cause a mutually agreeable release
or announcement to be issued. Notwithstanding the foregoing, after the Closing,
each of the Buyer and the Sellers shall be authorized to issue a customary press
release or other public announcements with respect to the Closing, provided that
the other Parties shall have been given a reasonable opportunity to review and
comment on such press release or public announcement prior to its issuance and,
provided, further that under no circumstance may the Buyer make public in any
announcement or otherwise, the price or other material terms of the transaction
contemplated by this Agreement nor the name or identity of the Sellers, without
their prior written consent.
14.2 COOPERATION FOLLOWING THE CLOSING. Following the Closing, the Sellers
and the Buyer shall deliver to the other such further information and documents
and shall execute and deliver to the other such further information and
documents and shall execute and deliver such further instruments and agreements
as the other shall reasonably request in order to consummate or confirm the
transactions provided hereunder, to accomplish the purpose of this Agreement or
to assure to the other the benefits of this Agreement.
14.3 BENEFITS AND BURDENS; ASSIGNMENT. (a) This Agreement shall inure to
the benefit of and shall be binding upon the Sellers and the Buyer, and the
respective successors and permitted assigns of the Sellers and the Buyer.
(b) No assignment of this Agreement or any rights or obligations hereunder
may be made by either the Seller or the Buyer without the prior written consent
of the other parties hereto and any attempted assignment without the required
consents shall be void..
14.4 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing
(including telecommunications) and shall be deemed to have been duly given if
personally delivered or sent by (i) telecopy or other wire transmission with
request for assurance of receipt, or (ii) Federal Express or other overnight air
express and receipted for by the recipient or an agent of the recipient. Any
notices delivered to a Party to this Agreement or to legal counsel for such
Party shall be sent to the following addresses:
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If to the Sellers' Representative:
----------------------------------
Original:
Ms. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Bucareli No. 103 Esq. ▇▇▇▇▇▇▇ Fdo. ▇▇▇▇▇▇
Las Aguilas C.P. 78279
San ▇▇▇▇ Potosi, S.L.P.
Telephone: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Substitute:
Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇ ▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇. ▇.▇. ▇▇▇▇▇
San ▇▇▇▇ Potosi, S.L.P.
Telephone: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
In any case, with a copy to (which copy shall not constitute notice):
Galicia y ▇▇▇▇▇▇, S.C.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇▇ ▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇.
Telephone: ▇▇▇ (▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: +52 (55) 5540-9202 ext. 2215
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇. and/or ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.
If to the Buyer:
----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Telephone: + ▇▇ (▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: + ▇▇ (▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Execution Version
With a copy to (which copy shall not constitute notice):
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Cortes y Fuentes, S.C.
▇▇▇▇▇▇ Urales 505, 3er Piso
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇.
Telephone: ▇▇▇ (▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇ (▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address or to such other Person or Persons designated in
writing by such Party or counsel, as the case may be. Notices delivered pursuant
to this Section 14.4 shall be deemed to have been received on the Business Day
following their actual delivery.
14.5 ENTIRE UNDERSTANDING. This Agreement and any Exhibit and Schedules
referred to herein represent the entire understanding of the Parties with
respect to the subject matter herein and supersede any correspondence,
memoranda, conversations or other communications with respect thereto.
14.6 AMENDMENTS; WAIVERS. This Agreement may be amended only by an
instrument in writing signed by the Sellers and the Buyer. Subject to the
provisions set forth in Sections 9.2 and 10.2, any term or provision of this
Agreement may be waived, or the time for its performance may be extended, by the
Party or Parties entitled to the benefit thereof. Any such waiver shall be
validly and sufficiently authorized for the purposes of this Agreement if, as to
any party, it is authorized in writing by an authorized representative of such
Party. The failure of any Party hereto to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the right
of any Party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
14.7 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings contained in
this Agreement, in any Exhibit or Schedule hereto and in the table of contents
to this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in
any Exhibit or Schedule but not otherwise defined therein, shall have the
meaning as defined in this Agreement. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated.
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Execution Version
14.8 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument, and, when signed by any
of the Parties, shall become legally binding on such Parties effective as of the
date set forth at the beginning of this Agreement.
14.9 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
14.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of Mexico.
14.11 CONSENT TO JURISDICTION. Each Party irrevocably submits to the
exclusive jurisdiction of the federal courts located in Mexico City, Federal
District, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby. Each Party irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby and further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum,
and further waives any right to which it may be entitled on account of place of
residence or domicile.
[The remainder of this page is intentionally left blank]
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Execution Version
IN WITNESS WHEREOF, the Parties have executed or caused to be executed
this Agreement as of the date first written above.
SELLERS:
By: ________________________________ By: ________________________________
Name: Name:
By: ________________________________ By: ________________________________
Name: Name:
By: ________________________________ By: ________________________________
Name: Name:
By: ________________________________ By: ________________________________
Name: Name:
By: ________________________________ By: ________________________________
Name: Name:
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Execution Version
BUYER:
By: ________________________________
Name:
Title:
[The remainder of this page is intentionally left blank]
[Signature page of the Stock Purchase Agreement for the Acquisition of 100% of
the shares of Corporacion Aceros DM, S.A. de C.V. and certain subsidiaries
listed herein, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Sellers, and
Grupo Simec, S.A.B. de C.V., as Buyer, dated as of February 21, 2008.]
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