ASSET PURCHASE AGREEMENT
AMONG
MATSUSHITA BATTERY INDUSTRIAL CORPORATION OF AMERICA
MATSUSHITA BATTERY INDUSTRIAL DE MEXICO, S.A. de C.V.
C&D TECHNOLOGIES, INC.
and
C&D TECHNOLOGIES REYNOSA, S. de R.L. de C.V.
August 27, 2003
TABLE OF CONTENTS
Page
Article I DEFINITIONS..................................................1
1.1 Certain Definitions..........................................1
1.2 Terms Defined Elsewhere in this Agreement....................6
1.3 Other Definitional and Interpretive Matters..................7
Article II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.......8
2.1 Purchase and Sale of Assets..................................8
2.2 Excluded Assets..............................................9
2.3 Assumption of Liabilities...................................10
2.4 Excluded Liabilities........................................10
2.5 Nonassignable Rights........................................11
2.6 Purchase Price; Allocation..................................11
3.1 Closing Date................................................12
3.2 Documents to Be Delivered by Sellers........................12
3.3 Documents to Be Delivered by Buyers.........................13
3.4 Simultaneity................................................14
Article IV REPRESENTATIONS AND WARRANTIES OF SELLERS...................14
4.1 Organization; Due Authorization.............................14
4.2 No Violation; Consent and Approval..........................15
4.3 Absence of Certain Developments.............................15
4.4 The Purchased Assets; Sufficiency of Tangible Assets........16
4.5 Facility....................................................16
4.6 Leased Property.............................................16
4.7 Litigation..................................................17
4.8 Purchased Contracts.........................................17
4.9 Compliance with Laws, Permits...............................17
4.10 Environmental Matters.......................................18
4.11 Labor and Employment........................................18
4.12 Insurance...................................................18
4.13 Inventory...................................................18
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TABLE OF CONTENTS
(continued)
Page
4.14 No Broker...................................................19
4.15 No Other Representations or Warranties; Schedules...........19
Article V REPRESENTATIONS AND WARRANTIES OF BUYERS....................19
5.1 Organization; Due Authorization.............................19
5.2 No Violation; Consents and Approvals........................20
5.3 Litigation..................................................20
5.4 Availability of Funds.......................................20
5.5 Acknowledgement.............................................20
5.6 No Broker...................................................21
Article VI COVENANTS...................................................21
6.1 Access to Information.......................................21
6.2 Actions of Sellers in Connection with Transaction...........22
6.3 Conduct of the Business; Etc................................23
6.4 Reasonable Best Efforts; Further Assurances.................24
6.5 Public Announcements........................................24
6.6 Certain Tax Matters.........................................25
6.7 Employees...................................................26
6.8 Ancillary Agreements........................................26
6.9 Use of Name.................................................26
6.10 Contacts with Suppliers, Employees and Customers............26
6.11 Confidentiality.............................................26
6.12 U.S. Buyer Guarantee........................................27
6.13 U.S. Seller Guarantee.......................................27
6.14 Remediation Plan............................................27
6.15 Proration of Taxes and Certain Charges; Deposits............28
6.16 Supplementation and Amendment of Schedules..................29
Article VII CONDITIONS TO OBLIGATIONS OF BUYERS TO CLOSE................29
7.1 Representations and Warranties..............................29
7.2 Compliance with Covenants...................................29
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TABLE OF CONTENTS
(continued)
Page
7.3 Consent and Approvals.......................................29
7.4 Opinions of Counsel.........................................30
7.5 Further Assurances..........................................30
Article VIII CONDITIONS TO OBLIGATIONS OF SELLERS TO CLOSE...............30
8.1 Representations and Warranties..............................30
8.2 Compliance with Covenants...................................30
8.3 Consents and Approvals......................................30
8.4 Opinions of Counsel.........................................31
8.5 Further Assurances..........................................31
9.1 Termination.................................................31
9.2 Effect of Termination.......................................32
Article X INDEMNIFICATION.............................................32
10.1 Survival of Representations and Covenants...................32
10.2 Indemnification.............................................32
10.3 Indemnification Procedures..................................33
10.4 Certain Limitations on Indemnification......................34
10.5 Environmental Indemnification...............................35
10.7 Varela Land Claim Indemnification...........................36
10.8 Indemnification for Breach of Title Representations.........37
10.9 Calculation of Losses.......................................37
10.10 Characterization of Indemnity Payments......................38
10.11 Excluded Liabilities; Assumed Liabilities...................38
10.12 No Consequential Damages....................................38
10.13 Exclusive Remedy............................................39
Article XI MISCELLANEOUS...............................................39
11.1 Fees and Expenses...........................................39
11.2 Notices.....................................................39
11.3 Entire Agreement............................................40
11.4 Waiver of Bulk Sales Requirements...........................41
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TABLE OF CONTENTS
(continued)
Page
11.5 Severability................................................41
11.6 Non-Recourse................................................41
11.7 Binding Effect; Assignment..................................41
11.8 No Third-Party Beneficiaries................................41
11.9 Counterparts................................................41
11.10 Governing Law...............................................41
11.11 Submission to Jurisdiction; Consent to Service of Process...42
11.12 Amendments and Waivers......................................42
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 27, 2003 (the "Agreement"),
among C&D Technologies, Inc., a Delaware corporation ("U.S. Buyer"), C&D
Technologies Reynosa, S. de R.L, de C.V., a limited liability company organized
under the laws of Mexico ("Mexican Buyer", and together with U.S. Buyer, the
"Buyers", and each a "Buyer"), Matsushita Battery Industrial Corporation of
America, a Delaware corporation ("U.S. Seller"), and Matsushita Battery
Industrial de Mexico, S.A. de C.V., a company organized under the laws of Mexico
("Mexican Seller", and together with U.S. Seller, the "Sellers", and each a
"Seller").
W I T N E S S E T H:
WHEREAS, Mexican Seller has been engaged in the business of manufacturing
lead-acid storage batteries with rated capacity equal to or greater than 960
amp. hours (the "Business");
WHEREAS, U.S. Seller owns certain assets, more fully described herein, that
are used in the operation of the Business;
WHEREAS, Sellers desire to sell, transfer and assign to Buyers, and Buyers
desire to acquire from Sellers, the Purchased Assets and, in connection
therewith, assume the Assumed Liabilities, all as more specifically provided
herein; and
WHEREAS, certain terms used in this Agreement are defined in Section 1.1;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:
Article I
DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1.1:
"Affiliate" shall mean, with respect to any Person, any other Person
that, directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person, and the
term "control" (including the terms "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities, by contract or
otherwise.
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"Ancillary Agreements" shall mean, collectively, the U.S. Bill of
Sale, the Mexican Bill of Sale, the Facility Transfer Deed, the U.S.
Assignment and Assumption Agreement, the Mexican Assignment and Assumption
Agreement, the Technology License Agreement, and the Technical Services
Agreement, and "Ancillary Agreement" shall mean any such agreement.
"Business Day" shall mean any day of the year on which national
banking institutions in New York are open to the public for conducting
business and are not required or authorized to close.
"Business Records" shall mean the books and records of Mexican Seller
to the extent used primarily in the operation of the Business, but
excluding (i) files, records, correspondence and other documents relating
to products manufactured and sold by Sellers; (ii) marketing, advertising
or promotional materials; (iii) customer files and documents (including
credit information); (iv) financial records of Sellers; (v) except to the
extent set forth in the Technology License Agreement, materials relating to
intellectual property; (vi) the corporate minute books, capital stock books
or tax returns of Sellers, (vii) the books and records relating primarily
to the Excluded Assets, (viii) personnel files for individuals employed by
Sellers, (ix) other books and records that Sellers are required by Law to
retain, and (x) production records, but only to the extent such records
have been removed from the Facility pursuant to the terms of the Technology
License Agreement.
"Buyer Material Adverse Effect" shall mean any change, circumstance or
event that, individually or in the aggregate, would materially hinder or
delay Buyers' ability (collectively or individually) to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements.
"Contract" shall mean any contract, lease or other written agreement.
"Environmental Law" shall mean, to the extent applicable to the
Facility, any Law promulgated by a Mexican Governmental Entity with
authority over Mexican Seller and applicable to the Facility, as well as
any applicable common law, as and to the extent in effect on the date of
this Agreement and/or on the Closing Date, regulating (i) the protection of
the environment from actual or potential exposure (or the effects of
exposure) to any actual or potential Release (whether past or present) of
any Hazardous Substance or (ii) the presence, manufacture, processing,
generation, production, refinement, distribution, use, treatment, storage,
disposal, transfer, transport or handling of any Hazardous Substance.
"Environmental Liability" shall mean any Liability, loss, damage,
fine, penalty or out-of-pocket costs or expenses incurred as a result of
any claim by any third party (including a Governmental Entity) arising
under any Environmental Law or out of a violation of any Environmental Law
by Mexican Seller prior to the Closing Date, including the cost of any
Remedial Action pursuant to the Remediation Plan.
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"Facility" shall mean that certain parcel of land located in Reynosa,
Tamaulipas, Mexico and the buildings thereon, in each case, as more
particularly described on Schedule 4.5 hereto.
"Facility Transfer Deed" shall mean the instrument to be dated as of
the Closing Date and duly executed before a notary public and reported in
the Public Registry of Property in accordance with the laws of Mexico,
pursuant to which Mexican Seller shall transfer the Facility to Mexican
Buyer, free and clear of all Liens other than Permitted Liens.
"Governmental Entity" shall mean any government or regulatory body or
agency thereof, or any court, whether foreign, federal, state or local, of
Mexico or the United States.
"Hazardous Substance" shall mean any substance, material or waste
classified or regulated as hazardous or toxic under any Environmental Law,
including, but not limited to, petroleum and petroleum related products,
asbestos, polychlorinated biphenyls, lead, barium, chromium, or radioactive
substance or waste.
"Inventory" shall mean all raw materials and work in process inventory
of the Business owned by U.S. Seller on the Closing Date and used in the
manufacture of finished goods offered for sale in the ordinary course which
is purchased by Buyers pursuant to Section 2.6(c).
"Law" shall mean any law, statute or regulation of any Governmental
Entity.
"Liability" shall mean any debt, liability or obligation (whether
direct or indirect, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, due or to become due or determined or
determinable), and including all costs and expenses relating thereto.
"Lien" shall mean any mortgage, lien, security interest, charge,
pledge or similar encumbrance.
"Material Adverse Effect" shall mean any circumstance, change in, or
effect that, individually or in the aggregate, results in a material
adverse effect on (i) the properties, assets and operations of the Business
or (ii) the ability of either Buyer to operate or conduct the Business
substantially in the manner in which it has been conducted by Sellers in
the three (3) years prior to the Closing Date during which Sellers were
engaged in the manufacture of MSE960 model and higher valve regulated lead
acid batteries; provided, however, that the following shall be excluded
from any determination as to whether a Material Adverse Effect has
occurred: (a) the effect of any change (i) in United States, Mexican or
foreign economies or securities or financial markets in general, (ii) in
applicable Laws or accounting rules, (iii) that generally affects any
industry in which Business operates, or (iv) in connection with earthquakes
or other natural disasters, or acts of war, sabotage or terrorism or
military actions, or any escalation or material worsening of any thereof
existing or underway as of the date of this Agreement, (b) any effect
resulting from the public announcement of this Agreement, compliance with
terms hereof or the consummation of the transactions contemplated hereby,
including the impact thereof on relationships, contractual or otherwise,
3
with customers, suppliers, distributors or employees or (c) the effect of
any action taken by Buyers or their Affiliates with respect to the
transactions contemplated hereby or with respect to the Business, including
employees thereof.
"Mexican Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement, to be dated as of the Closing Date,
between Mexican Seller and Mexican Buyer.
"Mexican Bill of Sale" shall mean a Bill of Sale, to be dated as of
the Closing Date, from Mexican Seller to Mexican Buyer, pursuant to which
Mexican Seller shall transfer the Mexican Purchased Assets, other than the
Facility (which shall be transferred by the Facility Transfer Deed), to
Mexican Buyer.
"Mexican Equipment" shall mean the machinery, equipment (including
computer hardware, as well as computer software used in connection
therewith) and spare parts, as well as all furniture, furnishings, vehicles
and other tangible personal property owned by Mexican Seller, including all
desks, chairs, tables, copiers, transferable telephone lines and equipment
(other than telephone lines and equipment which connect the Mexican Seller
with the U.S. Seller), telecopy machines and other telecommunication
equipment, cubicles, office furnishings and supplies which are used in
connection with the Business and identified as such on Schedule 4.4(c)
hereto, together with the Mexican Equipment, if any, to be purchased by
Buyers pursuant to Section 2.6(c), and all warranties pertaining to the
same, to the extent that such warranties may exist and be assignable.
"Order" shall mean any order, injunction, judgment, decree or ruling,
of a Governmental Entity.
"Permit" shall mean any approvals, authorizations, consents, licenses,
registrations, waivers, exemptions, agreements, permits or certificates and
any modifications or amendments thereto of a Governmental Entity or public
or quasi-public utility issued with respect to the Business.
"Permitted Liens" shall mean (i) liens for Taxes which are not yet due
or are being contested in good faith; (ii) carriers', warehousemen's,
landlords', mechanics', materialmen's, repairmen's or other like liens
arising in the ordinary course of business; (iii) deposits to secure the
performance of utilities, leases, statutory or workers' compensation or
unemployment insurance obligations, warranties or other contractual
obligations, and surety and appeal bonds or other obligations of a similar
nature incurred in the ordinary course of business; (iv) the matters listed
on Schedule 1.1(a) (none of which interfere in any material respect with
the ordinary course of conduct of the Business) or referred to in any title
report for the Facility provided to Buyers prior to the date of this
Agreement (specifically excluding, however, any superior rights of any
third party which would interfere in any material respect with the ordinary
conduct of the Business or which, individually or in the aggregate,
materially adversely affect the use of the Facility as presently used in
the Business); (v) the title and other interests of a lessor under a
capital or operating lease; and (vi) easements, rights of way, zoning
restrictions and other imperfections of title or similar matters not
interfering in any material respect with the ordinary conduct of the
4
Business or which do not, individually or in the aggregate, materially
adversely affect the use of the Facility as used in the Business during the
three (3) year period prior to the Closing Date.
"Person" shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity,
including a Governmental Entity.
"Purchased Contracts" shall mean the Contracts entered into by Mexican
Seller in connection with the Business and identified as such on Schedule
4.8 hereto.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching migration.
"Remedial Action" shall mean all actions required by applicable
Environmental Laws to clean up, remove, treat or in any other way address
any Hazardous Substance in the environment at concentrations exceeding
those allowed by Environmental Laws.
"Remediation Plan" shall mean the plan to implement the Remedial
Actions with respect to the Facility to be performed by Sellers, as set
forth on Schedule 6.14 hereto. For the avoidance of doubt, Sellers'
responsibility for any Remedial Action shall be limited to actions set
forth in the Remediation Plan.
"Taxes" shall mean all taxes, charges, fees, levies, imposts, tariffs,
duties, penalties or other assessments imposed or required to be withheld
by any federal, state or local taxing authority of the United States,
Mexico or any other country, including, but not limited to, income, gross
receipts, license, stamp, occupation, premium, environmental, excise,
property, sales, use, transfer, franchise, payroll, employment,
withholding, severance, social security, profits, gains, alternative or
add-on minimum, value added, windfall, property (real or personal), capital
stock, employment, unemployment insurance, disability, ad valorem, or other
tax of any kind whatsoever, including any interest, penalties or additions
attributable thereto, whether disputed or not, including, with respect to
the Mexican Purchased Assets, any increase in penalties imposed on unpaid
Taxes based on factors derived from the Mexican National Consumer Price
Index.
"Tax Return" shall mean any return, declaration, report or information
return required to be filed with any taxing authority with respect to
Taxes.
"Technical Services Agreement" shall mean the Technical Services
Agreement, dated as of date hereof, between U.S. Seller and U.S. Buyer, a
copy of which is attached hereto as Exhibit A.
"Technology License Agreement" shall mean the Technology License
Agreement, dated as of the date hereof, between Matsushita Battery
Industrial Co. Ltd., a corporation organized and existing under the laws of
Japan, and U.S. Buyer, a copy of which is attached hereto as Exhibit B.
5
"Transfer Tax" or "Transfer Taxes" shall mean any sales, use,
transfer, conveyance, documentary transfer, recording, or other similar
Tax, fee, or charge imposed upon the sale, transfer, or assignment of
property or any interest therein or the recording thereof, but excluding
any tax on, based upon or measured by, the net income, gains or profits
from such sale, transfer, or assignment of the property or any interest
therein.
"U.S. Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement, to be dated as of the Closing Date, between U.S.
Seller and U.S. Buyer.
"U.S. Bill of Sale" shall mean a Bill of Sale, to be dated as of the
Closing Date, from U.S. Seller to U.S. Buyer, pursuant to which U.S. Seller
shall transfer the U.S. Purchased Assets to U.S. Buyer.
"U.S. Equipment" shall mean the machinery, equipment (including
computer hardware, as well as all computer software used in connection
therewith) and spare parts, as well as all furniture, furnishings, vehicles
and other tangible personal property owned by U.S. Seller, including all
desks, chairs, tables, copiers, telecopy machines, cubicles, office
furnishings and supplies which are used in connection with the Business and
identified as such on Schedule 4.4(c) hereto, together with the U.S.
Equipment, if any, to be purchased by Buyers pursuant to Section 2.6(c),
and all warranties pertaining to the same, to the extent that such
warranties may exist and be assignable.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:
Term Section
---- -------
Assumed Liabilities 2.3(b)
Basket 10.4
Business Recitals
Buyer Recitals
Buyer Indemnified Parties 10.2(a)
Closing 3.1
Closing Date 3.1
Confidentiality Agreement 6.1(a)
Deposit Certificate 6.15(c)
Environmental Certification 6.14
Excluded Assets 2.2
Excluded Liabilities 2.4
Expenses 10.2(a)
General Indemnification Cap 10.4(b)
Leases 4.6
Losses 10.2(a)
Mexican Assumed Liabilities 2.3(b)
Mexican Buyer Recitals
Mexican Buyer Obligations 6.12
6
Term Section
---- -------
Mexican Closing 3.1
Mexican Purchase Price 2.6(a)
Mexican Purchased Assets 2.1(b)
Mexican Seller Recitals
Mexican Seller Obligations 6.13
Purchased Assets 2.1(b)
Off-Site Environmental Liabilities 10.5(b)
On-Site Environmental Liabilities 10.5(a)
Purchase Price 2.6(a)
Seller Recitals
Seller Indemnified Parties 10.2(b)
Seller Marks 6.9
Survival Period 10.1
Tax Benefit 10.9(b)
Termination Date 6.3
U.S. Assumed Liabilities 2.3(a)
U.S. Buyer Recitals
U.S. Closing 3.1
U.S. Purchase Price 2.6(a)
U.S. Purchased Assets 2.1(a)
U.S. Seller Recitals
Utility Deposits 6.15(c)
Varela Land Claim 10.7
1.3 Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of this Agreement, the following rules of
interpretation shall apply:
Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period
is a non-Business Day, the period in question shall end on the next
succeeding Business Day.
Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall
include the plural and vice versa and references to Sellers or to Buyers
shall include each Seller or each Buyer, as the case may be.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion
of headings are for convenience of reference only and shall not affect or
be utilized in construing or interpreting this Agreement. All references in
this Agreement to any "Article" or "Section" are to the corresponding
Article or Section of this Agreement unless otherwise specified.
7
Herein. The words "herein," "hereinafter," "hereof," and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any
general statement that it follows to the specific or similar items or
matters immediately following it.
Schedules and Exhibits. The Schedules and Exhibits attached to this
Agreement shall be construed with and as an integral part of this Agreement
to the same extent as if the same had been set forth verbatim herein. Any
matter disclosed by either of the Sellers on any one Schedule shall be
deemed disclosed by Sellers for purposes of all other Schedules, and to the
extent any matter disclosed on any Schedule conflicts with any
representation, warranty or covenant any of the Sellers contained in this
Agreement, such party or parties shall not have any liability with respect
such representation, warranty or covenant.
Representations, Covenants and Obligations of Sellers. Notwithstanding
anything to the contrary contained herein, in each instance where a Seller
makes any representation or warranty or undertakes or covenants to do or
omit to do any act or thing or perform or incur any obligation (including,
for the avoidance of doubt, the provision of an indemnity to any Person)
with respect to the Business or the Purchased Assets, such representation,
warranty, undertaking or covenant shall be limited in effect to that
portion of the Business which is conducted by such Seller or those
Purchased Assets owned or otherwise held by such Seller, as applicable.
Currency. Unless otherwise indicated, all dollar amounts referred to
in this Agreement and the Ancillary Agreements, including the symbol $,
refer to lawful money of the United States.
Article II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets.
(a) U.S. Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, U.S. Seller shall sell,
transfer, assign, convey and deliver to U.S. Buyer, and U.S. Buyer shall
purchase, acquire and accept from U.S. Seller, all of U.S. Seller's right,
title and interest in, to and under the U.S. Purchased Assets. "U.S.
Purchased Assets" shall mean the following assets of U.S. Seller as of the
Closing to the extent primarily related to the Business:
(i) the U.S. Equipment; and
(ii) the Inventory.
8
(b) Mexican Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Mexican Seller shall sell,
transfer, assign, convey and deliver to Mexican Buyer, and Mexican Buyer
shall purchase, acquire and accept from Mexican Seller, all of Mexican
Seller's right, title and interest in, to and under the Mexican Purchased
Assets. "Mexican Purchased Assets" shall mean the following assets of
Mexican Sellers as of the Closing to the extent primarily related to the
Business:
(i) the Facility;
(ii) the Purchased Contracts;
(iii) the Business Records; and
(iv) the Mexican Equipment.
The U.S. Purchased Assets, together with the Mexican Purchased Assets
are collectively referred to herein as the "Purchased Assets". The
Purchased Assets shall be conveyed and delivered to Buyers free and clear
of all Liens, other than Permitted Liens.
2.2 Excluded Assets. Nothing contained herein shall be deemed to sell,
transfer, assign or convey the Excluded Assets to either of the Buyers, and
Sellers shall retain all right, title and interest to, in and under the
Excluded Assets. "Excluded Assets" shall mean all assets, properties,
interests and rights of Sellers other than the Purchased Assets, including
without limitation each of the following assets:
(a) all cash, cash equivalents, bank deposits, cash advancements or
similar cash items of either of the Sellers;
(b) all deposits (including customer deposits and security deposits
for rent, electricity, telephone or otherwise) and prepaid charges and
expenses of Mexican Seller;
(c) all machinery, equipment or spare parts other than the Mexican
Equipment and the U.S. Equipment;
(d) any accounts or notes receivable, arising from the operation of
the Business prior to the Closing Date;
(e) all Contracts that are not Purchased Contracts;
(f) all Tax losses, Tax loss carry forwards and all claims, rights or
interest of either of the Sellers in or to any refund, rebate, abatement or
other recovery for Taxes, together with any interest due thereon or penalty
rebate arising therefrom, for any Tax period (or portion thereof) ending on
or before the Closing Date;
(g) all rights, demands, claims, actions and causes of action which
either of the Sellers or any of their Affiliates may have against any other
Person exclusively with respect to any Excluded Assets;
9
(h) any claim, right or interest of either of the Sellers relating to
the Excluded Liabilities;
(i) all insurance policies or rights to proceeds thereof relating to
the assets, properties, business or operations of either of the Sellers;
(j) all books and records of either of the Sellers other than the
Business Records; and
(k) any rights, claims or causes of action of either of the Sellers
against third parties relating to assets, properties, business or
operations of Sellers arising out of events occurring on or prior to the
Closing Date.
2.3 Assumption of Liabilities.
(a) U.S. Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing U.S. Buyer shall
assume, effective as of the Closing, and shall timely perform and discharge
in accordance with their respective terms, all Liabilities which accrue on
or after the Closing Date arising from or related to the U.S. Purchased
Assets or the operation of the Business on or after the Closing Date
(collectively, the "U.S. Assumed Liabilities").
(b) Mexican Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing Mexican Buyer shall
assume, effective as of the Closing, and shall timely perform and discharge
in accordance with their respective terms, all Liabilities which accrue on
or after the Closing Date arising from or related to the Mexican Purchased
Assets or the operation of the Business on or after the Closing Date
(collectively, the "Mexican Assumed Liabilities", and together with the
U.S. Assumed Liabilities, the "Assumed Liabilities").
2.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyers
will not assume or be liable for any Liabilities arising from or related to
the U.S. Purchased Assets, the Mexican Equipment or the operation of the
Business prior to the Closing (the "Excluded Liabilities") including,
without limitation, the following:
(a) any Liabilities arising in connection with any Taxes of Sellers
for any period prior to the Closing Date, but excluding (i) any Transfer
Taxes, which are the responsibility of Buyers pursuant to Section 6.6(c)
and (ii) any Taxes incurred on or after the Closing Date as a result of
actions taken by Buyers following the Closing;
(b) any Liabilities arising out of the Excluded Assets, including with
respect to Contracts that are not Purchased Contracts;
(c) any Liabilities arising under any plan or agreement relating to
employee benefits, employment, severance or compensation of employees of
Sellers prior to the Closing or from the actions, prior to the Closing, of
employees and agents of Sellers;
10
(d) any Liabilities arising from (i) product liability claims or other
claims for injury to person or property relating to products of the
Business manufactured or sold prior to the Closing, and (ii) product
warranty or similar claims relating to demands for refunds or returns with
respect to products of the Business manufactured or sold prior to the
Closing; and
(e) subject to Sections 10.5 and 10.6 hereof, any Environmental
Liability arising out of Mexican Seller's ownership or operation of the
Facility prior to the Closing.
2.5 Nonassignable Rights.
(a) There shall be excluded from the transactions contemplated by this
Agreement any Purchased Asset or right which is not assignable or
transferable without the consent of any Person other than Sellers or their
Affiliates to the extent that such consent shall not have been given prior
to the Closing; provided, however, that each of the parties hereto shall
have the continuing obligation for 180 days after the Closing to use its
commercially reasonable efforts to endeavor to obtain all necessary
consents to the assignment thereof that are material to the conduct of the
Business (provided, that neither Sellers nor any of their Affiliates shall
be required to expend money, commence litigation or offer or grant any
accommodation (financial or otherwise) to any third party) and, upon
obtaining the requisite consents thereto, such Purchased Assets or rights
shall be transferred and assigned to Buyers hereunder. In the event
consents to the assignment of any Purchased Asset cannot be obtained prior
to Closing, Sellers shall, until the earlier of (i) 180 days after the
Closing Date or (ii) such time as the Purchased Assets or other rights are
transferred and assigned to Buyers, take or cause to be taken at Buyers'
expense such actions as Buyers may reasonably request and are permitted
under applicable Law so as to provide Buyers with the benefits thereof.
(b) Buyers agree that (i) the Purchase Price will not be reduced as a
result of, and neither Sellers nor any of their Affiliates shall have any
Liability whatsoever arising out of or relating to, the failure to obtain
any consents that may be required in connection with the transactions
contemplated by this Agreement and (ii) no representation, warranty or
covenant of Sellers contained herein shall be breached or deemed breached,
and no condition to Buyers' obligations to close the transactions
contemplated by this Agreement shall be deemed not satisfied, as a result
of the failure to obtain any such consent.
2.6 Purchase Price; Allocation.
(a) The aggregate consideration for the Purchased Assets (excluding
the assets purchased under Section 2.6(c) below) shall be (i) an amount in
cash equal to US$9,100,000 (the "Purchase Price") and (ii) the assumption
of the Assumed Liabilities. The portion of the Purchase Price allocated to
the U.S. Purchased Assets in accordance with Section 2.6(b) below (the
"U.S. Purchase Price") shall be paid by U.S. Buyer to U.S. Seller at the
U.S. Closing and the portion of the Purchase Price allocated to the Mexican
Purchased Assets in accordance with Section 2.6(b) below (the "Mexican
Purchase Price") shall be paid by Mexican Buyer to Mexican Seller at the
Mexican Closing, in each case by wire transfer of immediately available
funds to such account or accounts as shall have been designated by Sellers
not less than five (5) Business Days prior to the Closing Date.
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(b) Prior to the Closing, the Sellers and Buyers shall agree on the
allocation of the Purchase Price and the Assumed Liabilities among the
Purchased Assets, and shall report such allocation for all Tax purposes in
a manner consistent with such allocation. The parties agree that if any
Governmental Entity does not agree with such allocation, the parties shall
use their commercially reasonable efforts and good faith to agree upon a
different allocation acceptable to that Governmental Entity and, if the
parties are so able to agree, they shall amend the allocation and relevant
Tax Returns accordingly, provided that nothing contained herein shall be
construed so as to require any party to commence or participate in any
proceedings challenging the determination so made by any Governmental
Entity. The parties hereto shall cooperate in the filing of any forms
(including Form 8594 and any analogous Mexican provision) with respect to
the foregoing allocations.
(c) Not later than seven (7) days prior to the Closing Date, Sellers
and Buyers shall agree on the quantities and types of Inventory and
additional Mexican Equipment and U.S. Equipment, if any, to be purchased by
Buyers from Sellers and the purchase price therefor; provided, however,
that Buyers shall not be obligated to purchase any Inventory or any
additional Mexican Equipment or U.S. Equipment (in each case, other than as
included on Schedule 4.4(c)); and provided further, however, that if the
parties are unable to agree on the purchase price for any of such items,
such items will not be sold to Buyers. Each of the parties shall signify in
writing their respective approval of such quantities and types of, and
purchase price for, the Inventory and additional Mexican Equipment or U.S.
Equipment, if any, to be purchased hereunder, which written agreement shall
become part of this Agreement for all purposes without any further action
of the parties. The title to the Inventory and the additional Mexican
Equipment and U.S. Equipment, if any, purchased by Buyers shall be
transferred to Buyers at Closing pursuant to the U.S. Bill of Sale and the
Mexican Bill of Sale, as the case may be. The amounts to be paid by Buyers
to Sellers under this Section 2.6(c) shall be paid at Closing, by wire
transfer of immediately available funds to such account or accounts as
shall have been designated by Sellers not less than five (5) Business Days
prior to the Closing Date.
Article III
CLOSING
3.1 Closing Date. Subject to the satisfaction of the conditions set
forth in Articles VII and VIII (or the waiver thereof by the party entitled
to waive that condition), the closing of the purchase and sale of the U.S.
Purchased Assets and the assumption of the Assumed Liabilities provided for
in Article II shall take place at the offices of Weil, Gotshal & Manges LLP
located at 767 Fifth Avenue, New York, New York (or at such other place as
the parties may mutually agree) at 10:00 a.m. (New York City time) (the
"U.S. Closing") and, simultaneously therewith, the purchase and sale of the
Mexican Purchased Assets shall take place at such location in the United
Mexican States (the "Mexican Closing") as mutually agreed upon by the
parties hereto, on a date to be specified by the parties, which date shall
be no later than the second Business Day after satisfaction or waiver of
the conditions set forth in Articles VII and VIII (other than conditions
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that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of such conditions), unless another time or date, or
both, are agreed to in writing by the parties hereto. The U.S. Closing and
the Mexican Closing are collectively referred to in this Agreement as the
"Closing", and the date on which the Closing shall be held is referred to
in this Agreement as the "Closing Date."
3.2 Documents to Be Delivered by Sellers.
(a) U.S. Seller. At the Closing, U.S. Seller shall deliver, or cause
to be delivered, to U.S. Buyer the following:
(i) duly executed documents of transfer and assignment required
to transfer title to the U.S. Purchased Assets to U.S. Buyer,
including without limitation the U.S. Bill of Sale and the U.S.
Assignment and Assumption Agreement;
(ii) a certificate of an officer of U.S. Seller certifying that
the closing conditions set forth in Section 7.1 (with respect to
Sellers' representations and warranties) and Section 7.2 (with respect
to Sellers' covenants) have been satisfied;
(iii) originally executed versions of the other Ancillary
Agreements (other than the Technology License Agreement and the
Technical Services Agreement, which were executed on the date hereof)
executed by all parties thereto other than Buyers;
(iv) the legal opinion of U.S. counsel described in Section 7.4;
and
(v) such other certificates and documents as U.S. Buyer or its
counsel reasonably may request in order to evidence the performance by
U.S. Seller of its obligations under this Agreement and the Ancillary
Agreements and as may be necessary or appropriate to carry out the
purposes of this Agreement and the Ancillary Agreements.
(b) Mexican Seller. At the Closing, Mexican Seller shall deliver, or
cause to be delivered, to Mexican Buyer the following:
(i) executed documents of transfer and assignment required to
transfer title to the Mexican Purchased Assets to Mexican Buyer,
including without limitation the Mexican Bill of Sale, the Facility
Transfer Deed and the Mexican Assignment and Assumption Agreement;
(ii) the legal opinion of Mexican counsel described in Section
7.4; and
(iii) such other certificates and documents as Mexican Buyer or
its counsel reasonably may request in order to evidence the
performance by Mexican Seller of its obligations under this Agreement
and the Ancillary Agreements and as may be necessary or appropriate to
carry out the purposes of this Agreement and the Ancillary Agreements.
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3.3 Documents to Be Delivered by Buyers.
(a) At the Closing, U.S. Buyer shall deliver to U.S. Seller the
following:
(i) evidence of the wire transfer of the U.S. Purchase Price
referred to in Section 2.6(a) and, if applicable, Section 2.6(c)
hereof;
(ii) a certificate of an officer of U.S. Buyer certifying that
the closing conditions set forth in Section 8.1 (with respect to
Buyers' representations and warranties) and Section 8.2 (with respect
to Buyers' obligations and covenants) have been satisfied;
(iii) the U.S. Assignment and Assumption Agreement;
(iv) originally executed versions of the other Ancillary
Agreements (other than the Technology License Agreement and the
Technical Services Agreement, which were executed on the date hereof)
executed by all parties thereto other than Sellers;
(v) the legal opinion of U.S. counsel described in Section 8.4;
and
(vi) such other certificates and documents as U.S. Seller or its
counsel reasonably may request in order to evidence the performance by
U.S. Buyer of its obligations under this Agreement and the Ancillary
Agreements and as may be necessary or appropriate to carry out the
purposes of this Agreement and the Ancillary Agreements.
(b) At the Closing, Mexican Buyer shall deliver to Mexican Seller the
following:
(i) evidence of the wire transfer of the Mexican Purchase Price
referred to in Section 2.6(a) and, if applicable, Section 2.6(c)
hereof;
(ii) the Mexican Assignment and Assumption Agreement;
(iii) a copy of the articles of organization of Mexican Buyer,
which allows for the appointment of proxies to carry out the purchase
and sale of the Mexican Purchased Assets hereunder;
(iv) evidence that a Maquiladora Program Authorization has been
obtained from the Mexican Ministry of Economy, including evidence of
proper authorization and registration with the Ministry of Economy of
the Mexican government to temporarily import the Equipment and
Inventory;
(v) the legal opinion of Mexican counsel described in Section
8.4; and
(vi) such other certificates and documents as Mexican Seller or
its counsel reasonably may request in order to evidence the
performance by Mexican Buyer of its obligations under this Agreement
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and the Ancillary Agreements and as may be necessary or appropriate to
carry out the purposes of this Agreement and the Ancillary Agreements.
3.4 Simultaneity. All actions to be taken at the Closing shall be
deemed, to the extent feasible, to have taken place simultaneously. Any
action, the taking of which is a necessary condition to the taking of any
other action, shall be taken subject to the condition that all other
actions to be taken at the Closing take place immediately thereafter.
Article IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers hereby represents and warrants to Buyers,
jointly and severally, that as of the date hereof:
4.1 Organization; Due Authorization. U.S. Seller is a corporation validly
existing and in good standing under the laws of the State of Delaware. Mexican
Seller is a sociedad anonima de capital variable validly existing and in good
standing under the laws of the United Mexican States. Each Seller has the
requisite corporate power and authority to enter into, execute and deliver this
Agreement and the Ancillary Agreements to which it is or will be a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
Seller of this Agreement and the Ancillary Agreements to which it is or will be
a party and the performance of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Sellers. Each Seller
has full corporate power and authority to conduct such portion of the Business
conducted by it in the manner conducted and to own, operate or lease properties
and assets it owns, operates or leases in connection with the Business. Mexican
Seller is duly qualified and in good standing in each jurisdiction where the
nature of the Business conducted by it or the character of the properties owned,
operated or leased by it makes such qualification necessary. This Agreement has
been, and each of the Ancillary Agreements to which a Seller is a party has been
or will be at or prior to the Closing, duly executed and delivered by the Seller
party thereto and (assuming the due authorization, execution and delivery by
Buyers) this Agreement and each of the Ancillary Agreements constitute, or when
so executed and delivered will constitute, legal, valid and binding obligations
of Sellers, enforceable against Sellers in accordance with their respective
terms. The U.S. Seller owns all of the shares of capital stock of Mexican
Seller, other than one share held by Mr. Kenji Seko.
4.2 No Violation; Consent and Approval. (a) The execution, delivery and
performance by each Seller of this Agreement and the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated hereby
or thereby do not (i) violate or conflict with any provision of the certificate
of incorporation or bylaws or the comparable organizational documents of such
Seller, (ii) subject to obtaining the consents referred to in Schedule 4.2(a),
conflict with any provision of, or result in the breach of, constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the giving of notice or the lapse of time or both) of any right or obligation of
Mexican Seller under any Purchased Contract to which Mexican Seller is a party
15
or to which its respective assets are bound, (iii) result in the creation or
imposition of any Lien (other than a Permitted Lien) on any of the Purchased
Assets, and (iv) assuming compliance with the matters set forth in Sections
4.2(b) and 5.2(b), violate or conflict with any Law to which either Seller is
subject; except, with respect to clauses (ii), (iii) and (iv), for any
violations, breaches, conflicts, defaults, terminations, cancellations or
accelerations that would not reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth on Schedule 4.2(b), no Permit is required on
the part of Sellers in connection with the execution and delivery of this
Agreement or the Ancillary Agreements, the compliance by Sellers with any
of the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby.
4.3 Absence of Certain Developments. Except as expressly contemplated by
this Agreement or as set forth on Schedule 4.3, since December 31, 2002:
(a) there has not been any damage, destruction or loss, whether or not
covered by insurance, with respect to the Purchased Assets having a
replacement cost of more than $5,000 in the aggregate;
(b) except in the ordinary course of business as contemplated hereby,
neither Seller has entered into any contract or other arrangement for the
purchase or disposition of any material property or assets or mortgaged,
pledged or subjected any of the Purchased Assets to a Lien (other than
Permitted Liens) or sold, assigned, transferred or otherwise disposed of
any material Purchased Asset; and
(c) neither Seller has agreed, whether in writing or not, to do any of
the things set forth in subsections (a) and (b) above.
4.4 The Purchased Assets; Sufficiency of Tangible Assets.
(a) Except with respect to the Facility (as to which certain
representations are made under to Section 4.5 hereof), each Seller has good
and marketable title to the Purchased Assets owned by it free and clear of
all Liens, except Permitted Liens.
(b) Except as set forth on Schedule 4.4(b) hereto and except for (i)
the Excluded Assets and (ii) items disposed of following the date of this
Agreement in the ordinary course of business and not in violation of
Section 6.3 hereof, the Purchased Assets, together with the rights, goods
and services granted, transferred or to be performed or made available by
Sellers pursuant to the Ancillary Agreements, constitute all material real
property interests and tangible assets used by Sellers in the operation of
the Business substantially as it has been conducted during the three (3)
year period prior to the Closing Date. In the event this Section 4.4(b) is
breached because a Seller has in good faith failed to identify and transfer
any assets or properties used in the Business, such breach shall be deemed
cured if such Seller promptly transfers such properties or assets to the
applicable Buyer at no additional cost.
16
(c) Schedule 4.4(c) sets forth a complete and reasonably detailed list
of all Purchased Assets (other than Inventory and any additional Mexican
Equipment or additional U.S. Equipment purchased by Buyers pursuant to
Section 2.6(c)) being sold by Sellers hereunder.
4.5 Facility. Except as set forth on Schedule 4.5, (a) Mexican Seller owns
in fee good and marketable title to the Facility, free and clear of any Liens,
except for Permitted Liens, and (b) no interest of Mexican Seller in the
Facility is subject to any right of first refusal or right or option to
purchase, lease or license the Facility or any portion therein. There are no
condemnation actions pending or, to Sellers' knowledge, threatened against the
Facility. Except as set forth on Schedule 4.5, the Facility is in good repair
and operating condition and, to the knowledge of Sellers, is structurally sound,
subject in each case to ordinary wear and tear. Neither Seller has received
notification or correspondence within the three (3) year period prior to the
Closing Date that it is in violation of any applicable building or zoning Law in
respect to their operations of the Facility, except for such violations that, in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Mexican Seller is the sole occupant of the Facility. No Person has the
right to acquire the Facility or any part thereof or development rights with
respect thereto and, to the knowledge of Sellers, no Person has asserted any
such right. The Facility is serviced by water, sewer, sanitary sewer,
electricity or natural gas sufficient to operate the Business as conducted
during the three (3) year period prior to the Closing Date. Notwithstanding the
foregoing, no representation is being made herein by Sellers with respect to the
sufficiency of such water, sewer, sanitary sewer, electricity and natural gas
services for any period following the Closing, the sole responsibility for which
shall be Buyers.
4.6 Leased Property. Schedule 4.6 sets forth a list of all leases in
respect of real and personal property leased by Mexican Seller and used in
connection with the Business (collectively, the "Leases"). Each of the Leases is
in full force and effect and, to the knowledge of Sellers, Mexican Seller has
not received any written notice of any default or event that with notice or
lapse of time, or both, would constitute a default by Mexican Seller under any
of the Leases.
4.7 Litigation. Except as set forth on Schedule 4.7, there is no claim,
action, suit, investigation, inquiry or Order pending or, to Sellers' knowledge,
threatened against Sellers that (i) as of the date hereof, seeks to restrain or
prohibit or otherwise challenge the consummation, legality or validity of the
transactions contemplated by this Agreement or by the Ancillary Agreements, or
(ii) would, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
4.8 Purchased Contracts. Schedule 4.8 sets forth a list of all of the
Purchased Contracts. Complete and correct copies of the Purchased Contracts have
been delivered to U.S. Buyer. Except as set forth on Schedule 4.8, no consent or
approval of any Person is necessary to assign to Buyers, on the terms of this
Agreement or the Ancillary Agreements, any rights or interests of Mexican Seller
in the Purchased Contracts. Except as set forth on Schedule 4.8, the Purchased
Contracts are (assuming the due execution and delivery thereof by the other
parties thereto) valid, binding and in full force and effect, and (except that
17
with respect to Contracts with utilities, no representation is being made).
Except as set forth on Schedule 4.8 (i) Mexican Seller is not in breach or
default in any material respect under any Purchased Contract, (ii) to the
knowledge of Sellers, no condition exists that with notice or lapse of time or
both would constitute a default under a Purchased Contract, (iii) to the
knowledge of Sellers, no other party to any of the Purchased Contracts is in
material breach or default thereunder; and (iv) neither Mexican Seller nor, to
Sellers' knowledge, any other party thereto, has received or been provided
notice of cancellation or termination of any Purchased Contract.
4.9 Compliance with Laws, Permits.
(a) Except with respect to Environmental Laws (which are the subject
of Section 4.10) and except for matters set forth on Schedule 4.9, Mexican
Seller is in compliance in all material respects with all Laws applicable
to the ownership or operation of the Business. Sellers have not received
from any Governmental Entity any written notice of or been charged with the
violation of any Laws applicable to the ownership or operation of the
Business.
(b) Except as set forth on Schedule 4.9, Mexican Seller currently has
all Permits that are required for the operation of the Business as
conducted during the three (3) year period prior to the Closing Date,
except Permits the absence of which would not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 4.9, all of
such Permits issued to Mexican Seller are valid and in full force and
effect, and Sellers have duly performed and are in compliance in all
material respects with all of their respective obligations under such
Permits, except for such non-compliance as would not reasonably be expected
to have a Material Adverse Effect. Mexican Seller has not received any
notice from any Governmental Entity claiming a violation of any term,
condition or provision of any Permit required for the operation of the
Business, except for violations which would not reasonably be expected to
have a Material Adverse Effect and, to the knowledge of Sellers, no
suspension or cancellation of any such Permits is threatened.
4.10 Environmental Matters. Except as disclosed on Schedule 4.10 and for
matters set forth in or contemplated by the Remediation Plan:
(a) The operations of Mexican Seller have been and are in material
compliance with all applicable Environmental Laws, which compliance
includes the possession, maintenance and compliance with all permits,
licenses and authorizations required by such Environmental Laws;
(b) Mexican Seller is not subject to any pending or, to the knowledge
of Sellers, threatened claim, action, proceeding, or suit alleging
noncompliance with any Environmental Law;
(c) To the knowledge of Sellers, there are no current facts,
circumstances or conditions arising out of or relating to the operations of
the Business that would reasonably be expected to result in Mexican Seller
incurring liabilities under Environmental Laws;
18
(d) Sellers, with respect to the Business, have not undertaken and are
not under any obligation to conduct any Remedial Action as a result of a
Release of Hazardous Substances in violation of Environmental Laws;
(e) To Sellers' knowledge, there are no underground storage tanks
(active or abandoned) at or under the Facility;
(f) To Sellers' knowledge without any obligation of inquiry, there are
not any off-site migration of Hazardous Substances that would reasonably be
expected to materially and adversely affect the use or value of the
Facility (other than conditions or events that affect the economy, real
estate values or the industry of the Business generally); and
(g) No Lien has been perfected against the Property under any
Environmental Law.
4.11 Labor and Employment. Except as set forth on Schedule 4.11, (i)
Mexican Seller is not a party to any labor or collective bargaining agreement
with any employees of Mexican Seller, and (ii) Mexican Seller has not made any
commitments with any labor union or employee collective bargaining association
with respect to any future agreements relating to its employees.
4.12 Insurance. Except as set forth on Schedule 4.12, to Sellers'
knowledge, there are no outstanding requirements or recommendations by any
insurance company that has issued a policy covering any part of the real
property owned or leased by Mexican Seller by any Board of Fire Underwriters or
other body exercising similar functions or by any Governmental Entity requiring
any repairs or other work to be done on or with respect to the Facility or any
of the real property owned or leased by Mexican Seller or requiring any
equipment or facilities to be installed on or in connection with the Facility or
any of the real property owned or leased by Mexican Seller.
4.13 Inventory. The Inventory is in good condition and is fit for the
purpose for which the Inventory is intended.
4.14 No Broker. In connection with the transactions contemplated by this
Agreement and by the Ancillary Agreements, neither Sellers nor any of their
Affiliates is a party to any agreement, arrangement or understanding with any
Person which will result in the obligation of Buyers or any of their Affiliates
to pay any finders fee, brokerage commission or similar payment.
4.15 No Other Representations or Warranties; Schedules. Except for the
representations and warranties made by Sellers in this Article IV (as modified
by the Schedules hereto), the documents delivered by a Seller at or in
connection with the Closing, and in the Ancillary Agreements (including the
schedules thereto), neither Sellers nor any other Person makes any other express
or implied representation or warranty with respect to Sellers, the Business, the
Purchased Assets, the Assumed Liabilities or the transactions contemplated by
this Agreement, and Sellers disclaim any other representations or warranties,
whether made by Sellers, any Affiliate of Sellers or any of their respective
19
officers, directors, employees, agents or representatives; provided, however,
that to the extent any document referred to in any Schedule hereto is delivered
or made available to Buyers or their representatives, Sellers represent that
such document is complete and correct in all material respects. Except for the
representations and warranties contained in Article IV hereof (as modified by
the Schedules hereto), the documents delivered by a Seller at or in connection
with the Closing, and in the Ancillary Agreements (including the schedules
thereto), each Seller (a) expressly disclaims and negates any representation or
warranty, expressed or implied, at common law, by statute, or otherwise,
relating to the condition of the Purchased Assets (including any implied or
expressed warranty of merchantability or fitness for a particular purpose, or of
conformity to models or samples of materials) and (b) hereby disclaims all
liability and responsibility for any representation, warranty, projection,
forecast, statement, or information made, communicated, or furnished (orally or
in writing) to Buyers or their Affiliates or representatives (including any
opinion, information, projection, or advice that may have been or may be
provided to Buyers by any director, officer, employee, agent, consultant, or
representative of Sellers or any of their Affiliates). Sellers make no
representations or warranties to Buyers regarding the probable success or
profitability of the Business. The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed.
Article V
REPRESENTATIONS AND WARRANTIES OF BUYERS
Each Buyer hereby represents and warrants to Sellers, jointly and
severally, that as of the date hereof:
5.1 Organization; Due Authorization. U.S. Buyer is a corporation validly
existing and in good standing under the laws of the State of Delaware. Mexican
Buyer is a sociedad de responsabilidad limitada de capital variable duly and
validly existing under the laws of Mexico. Each Buyer has the requisite
corporate power and authority to enter into, execute and deliver this Agreement
and the Ancillary Agreements to which it is or will be a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each Buyer of
this Agreement and the Ancillary Agreements to which it is or will be a party,
the performance of its obligations hereunder and thereunder and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of U.S. Buyer and all necessary
organizational action on the part of Mexican Buyer. This Agreement has been, and
each of the Ancillary Agreements to which a Buyer is a party is, or will be at
or prior to the Closing, duly executed and delivered by Buyers party thereto and
(assuming the due authorization, execution and delivery by Sellers) this
Agreement and each of the Ancillary Agreements constitute, or when so executed
and delivered will constitute, legal, valid and binding obligations of Buyers,
enforceable against Buyers in accordance with their respective terms
5.2 No Violation; Consents and Approvals. (a) The execution, delivery and
performance by each Buyer of this Agreement and the Ancillary Agreements to
20
which it is a party and the consummation of the transactions contemplated hereby
or thereby do not (i) violate or conflict with any provision of the certificate
of incorporation or bylaws or the comparable organizational documents of such
Buyer, (ii) subject to obtaining the consents referred to in Schedule 5.2(a),
conflict with any provision of, or result in the breach of, constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the giving of notice or the lapse of time or both) of any right or obligation of
Buyers under any Contract to which either Buyer is a party or to which its
respective assets are bound, (iii) assuming compliance with the matters set
forth in Sections 4.2(b) and 5.2(b), violate or conflict with any Law to which
either Buyer is subject; except, with respect to clauses (ii) and (iii), for any
violations, breaches, conflicts, defaults, terminations, cancellations or
accelerations that would not reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth on Schedule 5.2(b), no Permit is required on
the part of Buyers in connection with the execution and delivery of this
Agreement or the Ancillary Agreements, the compliance by Buyers with any of
the provisions hereof or thereof, or the consummation of the transactions
contemplated hereby or thereby, except for Permits the failure of which to
obtain would not reasonably be expected to have a Buyer Material Adverse
Effect.
5.3 Litigation. Except as set forth on Schedule 5.3, there is no
claim, action, suit, investigation, inquiry or Order pending or, to Buyers'
knowledge, threatened against Buyers that (i) as of the date hereof, seeks
to restrain or prohibit or otherwise challenge the consummation, legality
or validity of the transactions contemplated by this Agreement or by the
Ancillary Agreements, or (ii) would reasonably be expected to have a Buyer
Material Adverse Effect.
5.4 Availability of Funds. U.S. Buyer has, and Mexican Buyer at the
Closing will have, (i) sufficient cash to enable it to pay the U.S.
Purchase Price and the Mexican Purchase Price, and otherwise consummate the
transactions contemplated by this Agreement and the Ancillary Agreements,
and (ii) the resources and capabilities (financial or otherwise) to perform
its obligations hereunder.
5.5 Acknowledgement. Buyers and their representatives and agents have
had and have exercised, prior to the date hereof, the right to enter upon
the Facility and to make all inspections and investigations of the Business
and the Purchased Assets deemed necessary or desirable by Buyers. Buyers
are purchasing the Purchased Assets based solely on the results of their
inspections and investigations and on the representations and warranties of
Sellers expressly set forth in this Agreement and in the documents
delivered by a Seller at or in connection with the Closing. Each Buyer
acknowledges and agrees that neither Seller is making any representations
or warranties whatsoever, express or implied, beyond those expressly given
by them in Article IV hereof (as modified by the Schedules hereto) and in
the documents delivered by a Seller at or in connection with the Closing,
and each Buyer acknowledges and agrees that, except for the representations
and warranties contained therein, the Purchased Assets and the Business are
being transferred on a "where is" and, as to condition, "as is" basis. Any
claims Buyers may have for breach of representation or warranty shall be
based solely on the representations and warranties of Sellers set forth in
Article IV hereof (as modified by the Schedules hereto) and in the
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documents delivered by a Seller at or in connection with the Closing. Each
Buyer agrees that neither Sellers nor any of their Affiliates or any other
Person will have or be subject to any liability to Buyers or any other
Person resulting from the distribution to Buyers or their representatives
or Buyers' use of, any information regarding Sellers, the Business or the
transactions contemplated by this Agreement not expressly set forth in this
Agreement and the documents delivered by a Seller at or in connection with
the Closing, including any confidential memoranda distributed on behalf of
either of Sellers relating to the Business or other publication or data
room information provided to Buyers or their representatives, or any other
document or information in any form provided to Buyers or their
representatives in connection with the sale of the Business and the
transactions contemplated hereby.
5.6 No Broker. Neither Buyer is party to any agreement, arrangement or
understanding with any Person which will result in the obligation of
Sellers or any of their Affiliates to pay any finders fee, brokerage
commission or similar payment in connection with the transactions
contemplated by this Agreement and by the Ancillary Agreements.
Article VI
COVENANTS
6.1 Access to Information.
(a) Pre-Closing Access. Sellers agree that, prior to the Closing
Date, Buyers shall be entitled, through their representatives
(including, without limitation, their legal advisors, environmental
consultants and accountants), to make such investigation of the
properties, businesses and operations of the Business and such
examination of the Business Records, the Purchased Assets and
information relating to the Assumed Liabilities (and to make copies
thereof and to take abstracts therefrom) and to discuss the affairs of
Mexican Seller and the Business with Sellers' officers, senior staff
personnel and independent accountants, as Buyers reasonably request.
Any such investigation and examination shall be conducted during
regular business hours upon reasonable advance notice and under
reasonable circumstances and shall be subject to restrictions under
applicable Law; provided, however, that no such access shall
unreasonably interfere with the operation by Sellers of their
respective businesses, including the Business. Notwithstanding
anything herein to the contrary, no such investigation or examination
shall be permitted to the extent that it would require either Seller
or any of its Affiliates to disclose information which would disrupt,
interfere or endanger an attorney-client privilege or conflict with
any confidentiality obligations to which either Seller or any of its
Affiliates are bound; provided that Sellers promptly inform Buyers
that they will not provide any such information requested during the
course of such examination or investigation as a result thereof. All
information disclosed to Buyers in connection with the transactions
contemplated hereby shall be subject to the provisions of the
Confidentiality Agreement, dated as of September 17, 2002, previously
executed by U.S. Buyer and U.S. Seller (the "Confidentiality
Agreement").
(b) Post-Closing Access. Following the Closing, Buyers shall
maintain the Contracts, if any, books and records and other documents
relating to the Business for a period of not less than seven (7) years
following the Closing Date. Following the Closing and until the
seventh (7th) anniversary of the Closing Date, Buyers shall provide
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Sellers and their representatives (including, without limitation,
their legal advisors, environmental consultants and accountants)
reasonable access, during regular business hours and upon reasonable
advance notice and under reasonable circumstances, to the Contracts,
documents and books and records of Buyers and their Affiliates
relating to the Business as conducted during the three (3) year period
prior to the Closing Date for any reasonable business purpose
(including, without limitation, preparing Tax Returns and defending or
pursuing claims), and Buyers shall cooperate and cause their
Affiliates to cooperate and permit Sellers and their representatives
to examine and copy, at Sellers' expense, such Contracts, documents
and books and records. In the event that either Buyer wishes to
destroy such records after that time, such Buyer shall first give
sixty (60) days prior written notice to U.S. Sellers, and U.S. Sellers
shall have the right at its option and expense, upon prior written
notice given to Buyers within that sixty (60) day period, to take
possession of the records within sixty (60) days after the date of
such notice upon reasonable advance notice to Buyers; provided,
however, that such taking possession shall not unreasonably interfere
with the operation by Buyers of their respective businesses.
6.2 Actions of Sellers in Connection with Transaction.
(a) Removal of Excluded Assets. Sellers shall use commercially
reasonable efforts to remove all Excluded Assets from the Facility
prior to the Closing. To the extent that any Excluded Assets remain at
the Facility on or after the Closing (all of which shall have been
listed or specifically described in Schedule 6.2), Buyers shall
provide Sellers reasonable access to the Facility upon reasonable
advance notice and under reasonable circumstances for purposes of
removing such Excluded Assets, all of which shall be removed within
sixty (60) days after the Closing Date. After such sixty (60) day
period, any such Excluded Assets which remain at the Facility shall be
deemed to have been abandoned by Sellers, and Buyers shall have the
right to destroy and remove from the Facility all such then remaining
Excluded Assets at Sellers' reasonable expense. During the foregoing
sixty (60) day period, Buyers shall, at Sellers' request and
reasonable expense, provide assistance of appropriate employees as
necessary to disconnect and remove any such Excluded Assets from the
Facility; provided, however, that such disconnection and removal shall
be performed at a time so as to not unreasonably interfere with the
operation by Buyers of their respective businesses.
(b) Change of Registered Address. Promptly after the Closing,
Sellers shall take all actions which may be necessary or appropriate
to change the registered address of Mexican Seller.
6.3 Conduct of the Business; Etc. From and after the date hereof and
until the earlier of the Closing and the date, if any, on which this
Agreement is terminated pursuant to Section 9.1 hereof (the "Termination
Date"), and except (x) with the prior written consent of U.S. Buyer (which
consent shall not be unreasonably withheld or delayed) and (y) as may be
contemplated or permitted by this Agreement, Sellers shall:
(a) except as set forth on Schedule 6.3(a), use reasonable
efforts to preserve intact the Business and the Business'
relationships with those persons having material business dealings
with the Business;
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(b) not permit Mexican Seller to engage in any material line of
business other than the lead-acid battery business and activities
reasonably related thereto;
(c) not acquire any material properties or assets that would be
Purchased Assets or sell, assign, license, transfer, convey, lease or
otherwise dispose of any of the Purchased Assets (except pursuant to
existing contracts to the extent identified on Schedule 6.3(c), for
fair consideration in the ordinary course of business or for the
purpose of disposing of obsolete or worthless assets);
(d) not create any Lien (other than Permitted Liens) on the
Purchased Assets, other than in the ordinary course of business;
(e) not enter into any transaction which would cause any
representation or warranty contained in this Agreement to be untrue in
any material respect, or which would result in the breach in any
material respect of any covenant contained in this Agreement such that
the closing condition set forth in Section 7.2 could not be satisfied;
(f) not amend or terminate, or waive any rights under any
Purchased Contract;
(g) promptly give written notice to Buyers of any actions,
claims, proceedings or investigations threatened or commenced against
either Seller which would adversely affect the transactions
contemplated by this Agreement or against the Business;
(h) not enter into any new leases of real property or new
material agreements or material modifications of existing arrangements
affecting the Facility;
(i) use commercially reasonable efforts to complete the Remedial
Actions contained in the Remediation Plan that are required to be
completed prior to Closing to Buyers' reasonable satisfaction
(j) give prompt written notice to Buyers of any condition or
circumstance of which Sellers become aware which would cause any of
Sellers' representations and warranties which are contained in this
document or in any Ancillary Agreement to be untrue at the Closing in
any material respect; and
(k) not authorize, or commit or agree to take, any of the
foregoing actions.
6.4 Reasonable Best Efforts; Further Assurances.
(a) Subject to the terms and conditions of this Agreement and
applicable Law, each of the parties shall act in good faith and use
reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or
advisable to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements as soon as reasonably
practicable. Without limiting the foregoing and subject to Section
2.5, the parties shall, and shall cause their respective Affiliates to
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(i) obtain all Permits or other permissions or actions by, and give
all necessary notices to, and make all filings with and applications
and submissions to, any Governmental Entity or other Person required
for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements as promptly as reasonably
practicable; (ii) provide all such information concerning such party
and its officers, directors, employees, partners and Affiliates as may
be necessary or reasonably requested in connection with the foregoing;
(iii) avoid the entry of, or have vacated or terminated, any Order
that would restrain, prevent, or delay the consummation of the
transactions contemplated by this Agreement and the Ancillary
Agreements, including but not limited to defending through litigation
on the merits any claim asserted in any court by any Person; and (iv)
take any and all reasonable steps necessary to avoid or eliminate
every impediment under any antitrust, competition, foreign investment
or trade regulation law that is asserted by any Governmental Entity
with respect to the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements so as to enable the
consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements to occur as expeditiously as possible. If
reasonably practicable, prior to making any application to or filing
with a Governmental Entity or other Person in connection with this
Agreement or any Ancillary Agreement, each party shall provide the
other party with drafts thereof and afford the other party a
reasonable opportunity under the circumstances to comment on such
drafts.
(b) Without limiting the foregoing, Mexican Buyer shall take all
actions necessary to obtain a Maquiladora Program Authorization from
the Mexican Ministry of Economy and such other Permits or other
permissions of any Mexican Governmental Entity necessary to allow
Mexican Buyer to operate as a Maquiladora and to consummate the
transactions contemplated by this Agreement and the Ancillary
Agreements.
(c) Buyers and Sellers shall each keep each other reasonably
apprised of the status of material matters relating to the completion
of the transactions contemplated by this Agreement and the Ancillary
Agreements, including promptly furnishing the others with copies of
notices or other material communications received by a Buyer or a
Seller, as the case may be, or by any of their respective Affiliates,
from any third party and/or any Governmental Entity with respect to
the transactions contemplated by this Agreement and the Ancillary
Agreements.
6.5 Public Announcements. No party hereto shall, nor shall they permit
any of their respective Affiliates to, make any public announcement in
respect of this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby without the prior written consent of the
other parties hereto (which consent shall not be unreasonably withheld or
delayed), unless, in the sole judgment of a Buyer or a Seller, disclosure
is otherwise required by applicable Law or by the applicable rules of any
stock exchange, provided, however, that the party intending to make such
release shall use its best efforts consistent with such applicable Law to
consult with the other parties with respect to the text thereof.
6.6 Certain Tax Matters.
(a) Buyers and Sellers agree to furnish or cause to be furnished
to each other, and each at their own expense, as promptly as
practicable, such information (including access to books and records)
and assistance, including making employees reasonably available on a
25
mutually convenient basis to provide additional information and
explanations of any material provided, as is reasonably necessary for
(i) the filing of any Tax Returns, for the preparation for any audit,
and for the prosecution or defense of any claim, suit or proceeding
relating to any adjustment or proposed adjustment with respect to
Taxes, and (ii) pertaining to employees of Mexican Seller. Buyers
shall retain in its possession and shall provide Sellers reasonable
access to (including the right to make copies of), such supporting
books and records and any other materials that Sellers may specify
with respect to matters relating to Taxes for any taxable period
ending on or prior to the Closing Date until the relevant statute of
limitations has expired. After such time, Buyers may dispose of such
material; provided, that prior to such disposition Buyers shall give
Sellers a reasonable opportunity to take possession of such materials.
(b) Except as set forth on Schedule 6.6(b), U.S. Seller has not
submitted to the United States Internal Revenue Service any
documentation that describes a methodology for determining transfer
pricing for (i) transfers of property by Mexican Seller to an
Affiliate thereof or by U.S. Seller or any Affiliate thereof to
Mexican Seller and (ii) any other types of transactions between
Mexican Seller, on the one hand, and U.S. Seller or any Affiliate
thereof (other than Mexican Seller) on the other hand. U.S. Seller and
other Matsushita Affiliates in the United States have been parties to
an advance pricing agreement that is applicable to the transfer
pricing for all of the transactions, in the aggregate and on a
combined basis, between Matsushita Affiliates outside of the United
States and Matsushita Affiliates in the United States, and U.S.
Seller, in reliance on such advance pricing agreement, has not
prepared the documentation that is described in section
1.6662-6(d)(2)(iii)(B) and (C) for submission to the US Internal
Revenue Service.
(c) Buyers shall be responsible for (and shall indemnify and hold
harmless Sellers against) any Transfer Taxes applicable to the
Purchased Assets and for all other applicable value added taxes,
transfer or similar fees or taxes or governmental charges (including
real property transfer gains taxes, real estate, title recording or
filing fees and other amounts payable in respect of transfer filings)
in connection with the transactions contemplated by this Agreement
(other than Taxes measured by or with respect to income imposed on
Sellers or their Affiliates).
6.7 Employees. Sellers shall terminate the employment, in accordance
with applicable Law, of any individual employed by either Seller at the
Facility as of the day immediately preceding the Closing Date or such
earlier date as may be agreed among the parties. Sellers shall be
responsible for the severance payments arising from the termination of any
employee of either Seller who has been employed at the Facility.
6.8 Ancillary Agreements. At the Closing, each Buyer and each Seller,
to the extent that it is a party thereto, shall enter into, execute and
deliver each of the Ancillary Agreements (other than the Technical License
Agreement and the Technical Services Agreement, which were executed on the
date hereof).
6.9 Use of Name. Neither Buyers, nor any of their respective
Affiliates, shall have any right, title or interest in the names
"Panasonic" or "Matsushita" (or any variations thereof) or any other
trademarks, trade names, logo or symbols of Sellers and their Affiliates.
26
Buyers agree that it shall (i) as soon as reasonably practicable following
the Closing (and in any event, within sixty (60) days thereafter), cease to
make any use of the name "Panasonic" or "Matsushita" or any service marks,
trademarks, trade names, identifying symbols, logos, emblems, signs or
insignia related thereto or containing or comprising the foregoing,
including any name or mark confusingly similar thereto (collectively, the
"Seller Marks"), and (ii) immediately after the Closing, cease to hold
itself out as having any affiliation with Sellers or any of their
Affiliates. In furtherance thereof, as promptly as practicable but in no
event later than ninety (90) days following the Closing Date, Buyers shall
remove, strike over or otherwise obliterate all Seller Marks from any
properties, assets, molds, Mexican Equipment or U.S. Equipment of the
Business and all other materials including, without limitation, any
vehicles, business cards, stationery, packaging materials, displays, signs,
promotional materials, internal manuals not intended for third party
distribution, forms and computer software.
6.10 Contacts with Suppliers, Employees and Customers. Notwithstanding
anything to the contrary contained herein, prior to the Closing, without
three (3) days prior written notice to, and the prior written consent of,
Sellers, which may be withheld for any reason, Buyers shall not contact any
suppliers to, or customers of, the Business (provided that Buyers shall not
be restricted from their normal and customary contacts with any suppliers
or customers with whom Buyers have current relationships, if with respect
to such relationships).
6.11 Confidentiality. . The parties acknowledge that the information
provided to them in connection with this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby are subject
to the terms of the Confidentiality Agreement, the terms of which are
incorporated herein by reference. The parties shall not, and shall cause
their respective Affiliates and their respective officers, directors,
employees, consultants and advisors not to, make any public disclosure of
any kind of the transactions contemplated hereby or of any confidential and
proprietary information obtained in connection therewith (whether via the
due diligence process or otherwise) without the other parties' prior
written consent; provided, that such disclosure may be made without such
consent (i) to consultants, advisors and Affiliates of a party as necessary
in connection with effecting the transactions contemplated hereby, but only
to the extent such consultant, advisor or Affiliate has been advised of the
confidential nature of the information, or (ii) as required by Law; and
provided, further, that until the Closing, Buyers and Sellers also may
agree to issue one or more press releases regarding the existence and
general nature of the transactions contemplated hereby, the text of which
must be mutually agreed upon in writing, in all cases in accordance with
Section 6.5 hereof.
6.12 U.S. Buyer Guarantee. U.S. Buyer hereby unconditionally,
irrevocably and absolutely guarantees to Sellers the due and punctual
performance and discharge of all of Mexican Buyer's obligations under this
Agreement existing on the date hereof or hereafter of any kind or nature
whatsoever, including, without limitation, the due and punctual payment of
the Mexican Purchase Price and any other amount as and when the same may
become due and payable pursuant to this Agreement (collectively, the
"Mexican Buyer Obligations"). Sellers may, at their option, proceed against
U.S. Buyer for the performance of any such Mexican Buyer Obligations, or
for damages for default in the performance thereof, without first
proceeding against Mexican Buyer or against any of its properties. The
guarantee under this Section 6.12 is a guarantee of timely payment and
27
performance of the Mexican Buyer Obligations and not merely of collection.
In connection with this Section 6.12, U.S. Buyer unconditionally waives:
(i) any right to receive demands, protests, or other notices of any kind or
character whatsoever, as the same may pertain to Mexican Buyer, (ii) any
defense based upon an election of remedies by Sellers, (iii) any duty of
Sellers to advise U.S. Buyer of any information known to Sellers regarding
Mexican Buyer or its ability to perform under this Agreement, and (iv) all
suretyship and other defenses of every kind and nature; provided, however,
that U.S. Buyer reserves the right to assert defenses which Mexican Buyer
may have to the payment of the Mexican Buyer Obligations, other than
defenses arising from the bankruptcy or insolvency of Mexican Buyer.
6.13 U.S. Seller Guarantee. U.S. Seller hereby unconditionally,
irrevocably and absolutely guarantees to Buyers the due and punctual
performance and discharge of all of Mexican Seller's obligations under this
Agreement existing on the date hereof or hereafter of any kind or nature
whatsoever, including, without limitation, the due and punctual payment of
any amount as and when the same may become due and payable pursuant to this
Agreement (collectively, the "Mexican Seller Obligations"). Buyers may, at
their option, proceed against U.S. Seller for the performance of any such
Mexican Seller Obligations, or for damages for default in the performance
thereof, without first proceeding against Mexican Seller or against any of
its properties. The guarantee under this Section 6.13 is a guarantee of
timely payment and performance of Mexican Seller Obligations and not merely
of collection. In connection with this Section 6.13, U.S. Seller
unconditionally waives (i) any right to receive demands, protests or other
notices of any kind or character whatsoever, as the same may pertain to
Mexican Seller, (ii) any defense based upon an election of remedies by
Buyers, (iii) any duty of Buyers to advise U.S. Seller of any information
known to Buyers regarding Mexican Seller or its ability to perform under
this Agreement, and (iv) all suretyship and other defenses of every kind
and nature; provided, however, that U.S. Seller reserves the right to
assert defenses which Mexican Seller may have to the payment of the Mexican
Seller Obligations, other than defenses arising from the bankruptcy or
insolvency of Mexican Seller.
28
6.14 Remediation Plan. Sellers shall complete the Remediation Plan at
Sellers' sole expense and to the mutual satisfaction of Buyers and Sellers.
Following completion of the work prescribed under the Remediation Plan, the
parties agree that the Facility shall be re-tested at Sellers' sole expense
by the environmental consultant whose identity is included in the
Remediation Plan, who shall certify that Remedial Actions set forth in the
Remediation Plan have been completed in accordance with the Remediation
Plan (the "Environmental Certification"). If such environmental consultant
determines that further Remedial Action is required to complete the work
prescribed under the Remediation Plan, Sellers, at their sole expense,
shall complete such work to the reasonable satisfaction of Buyers and
Sellers. From and after the Closing, Buyers agree that Sellers and their
agents and representatives shall have access to enter upon the Facility for
the purpose of performing the Remedial Action and carrying out their rights
and obligations under this Section 6.14, provided that such access is under
reasonable terms and conditions so as to not interfere with normal business
operations.
6.15 Proration of Taxes and Certain Charges; Deposits.
(a) All real property Taxes, personal property Taxes or similar
ad valorem obligations levied with respect to the Purchased Assets for
any taxable period that includes the day before the Closing Date and
ends after the Closing Date, whether imposed or assessed before or
after the Closing Date, shall be prorated between Sellers and Buyers
as of 12:01 A.M. (eastern time) on the Closing Date. To the extent
that the proportionate amount of such Taxes paid (or, in the event a
refund of any portion of such Taxes previously paid is received, such
refund) can be calculated or estimated on or before the Closing Date,
the party entitled thereto shall send a written notice of such
calculation or estimation to the other party at least three (3)
Business Days prior to the Closing Date, and such amounts shall be
paid to the other party at Closing. Calculations of any other
prorations shall be made as soon as possible, but in no event later
than sixty (60) days after Closing (unless the invoice for such Taxes
or obligations is received later than fifty-three (53) days after
Closing, in which event no later than five (5) Business Days after
receipt), and any remaining adjustment obligations shall be paid
promptly upon demand.
(b) All municipal, utility or authority charges for water, sewer,
electric or gas charges, garbage or waste removal for any period in
which the Closing Date occurs shall be apportioned as of the Closing
Date and each party shall pay its proportionate share promptly upon
the receipt of any bill, statement or other charge with respect
thereto. If such charges or rates are assessed either based upon time
or for a specified period, such charges or rates shall be prorated as
of 12:01 A.M. (eastern time) on the Closing Date. If such charges or
rates are assessed based upon usage of utility or similar services,
such charges shall be prorated based upon meter readings taken on the
Closing Date. To the extent that the proportionate amount of such
charges paid (or in the event a refund of any portion of such charges
previously paid is received, such refund) can be calculated or
estimated on or before the Closing Date, the party entitled thereto
shall send a written notice of such calculation or estimation to the
other party at least three (3) Business Days prior to the Closing
Date, and such amounts shall be paid to the other party at Closing.
Calculations of any other prorations shall be made as soon as
possible, but in no event later than sixty (60) days after Closing
(unless the invoice for such charges or rates is received later than
fifty-three (53) days after Closing, in which event no later than five
29
(5) Business Days after receipt), and any remaining adjustment
obligations shall be paid promptly upon demand.
(c) A list of all utility deposits and other deposits of a
similar nature (collectively, the "Utility Deposits") of Mexican
Seller in respect of the Business shall be provided by Mexican Seller
to Mexican Buyer at least three (3) Business Days prior to the Closing
Date (the "Deposit Certificate"). Mexican Seller will assign to
Mexican Buyer all Utility Deposits listed on the Deposit Certificate
which are assignable, and Mexican Buyer shall pay to Mexican Seller
the aggregate amount of Utility Deposits set forth on the Deposit
Certificate at Closing.
6.16 Supplementation and Amendment of Schedules. From time to time
prior to the Closing (but in no event within three (3) Business Days prior
to the Closing), Sellers shall have the right to supplement or amend the
Schedules with respect to any matter hereafter arising or discovered after
the delivery of the Schedules pursuant to this Agreement that, if existing
or known at, or occurring prior to, the date of this Agreement, would have
been required to be set forth or described on such Schedules. No such
supplement or amendment shall have any effect on the satisfaction of the
condition to closing set forth in Section 7.1 (such condition shall apply
without regard to any such supplement or amendment); provided, however, if
the Closing shall occur, then Buyers shall be deemed to have waived any
right or claim pursuant to the terms of this Agreement or otherwise,
including pursuant to Article X hereof, with respect to any and all matters
disclosed pursuant to any such supplement or amendment at or prior to the
Closing.
Article VII
CONDITIONS TO OBLIGATIONS OF BUYERS TO CLOSE
The obligations of Buyers to consummate the transactions under
this Agreement are subject to the satisfaction of the following
conditions at or prior to the Closing Date, any one or more of which
may be waived by Buyers in their sole discretion to the extent
permitted by applicable Law:
7.1 Representations and Warranties. The representations and warranties
of Sellers set forth in this Agreement shall be true and correct at and as
of the Closing Date, except to the extent that such representations and
warranties relate to an earlier date (in which case such representations
and warranties shall be true and correct on and as of such earlier date);
provided, however, that in the event of a breach of a representation or
warranty the condition set forth in this Section 7.1 shall be deemed
satisfied unless the effect of all such breaches of representations and
warranties taken together result in a Material Adverse Effect, and U.S.
Buyer shall have received a certificate, in form and substance reasonably
satisfactory to U.S. Buyer, signed by an authorized officer of U.S. Seller,
dated the Closing Date, to the foregoing effect; and, provided further,
however, that any such breach shall not be deemed waived for purposes of
asserting a claim for Losses under Section 10.2.
7.2 Compliance with Covenants. Each Seller shall have performed in all
material respects all obligations, covenants and agreements required to be
30
performed by such Seller under this Agreement at or prior to the Closing
Date, and U.S. Buyer shall have received a certificate signed by an
authorized officer of U.S. Seller, dated the Closing Date, to the foregoing
effect.
7.3 Consent and Approvals. All filings with, or approvals of, any
Governmental Entity necessary to permit consummation of the transactions
contemplated hereby and listed on Schedule 7.3 hereto shall have been made
or obtained, and no injunction prohibiting the consummation of the
transactions contemplated hereby shall have been issued by any Governmental
Entity of competent jurisdiction and be in force.
7.4 Opinions of Counsel. There shall have been delivered to Buyers the
opinion of Obregon, Quintana y Fernandez Del Valle, S.C., counsel for
Mexican Seller, in the form attached as Exhibit C-1, and the opinion of
Weil, Gotshal & Manges LLP, counsel for U.S. Seller, in the form attached
as Exhibit C-2.
7.5 Further Assurances. Sellers shall have furnished to Buyers all
such other certificates and documents as Buyers may reasonably request in
order to evidence performance by Sellers of their obligations under this
Agreement and the Ancillary Agreements or as may be necessary to carry out
the purposes of this Agreement and the Ancillary Agreements.
Article VIII
CONDITIONS TO OBLIGATIONS OF SELLERS TO CLOSE
The obligations of Sellers to consummate the transactions under
this Agreement are subject to the satisfaction of the following
conditions at or prior to the Closing Date, any one or more of which
may be waived by Sellers in their sole discretion to the extent
permitted by applicable law:
8.1 Representations and Warranties. The representations and warranties
of Buyers set forth in this Agreement shall be true and correct at and as
of the Closing, except to the extent that such representations and
warranties relate to an earlier date (in which case such representations
and warranties shall be true and correct on and as of such earlier date);
provided, however, that in the event of a breach of a representation or
warranty the condition set forth in this Section 8.1 shall be deemed
satisfied unless the effect of all such breaches of representations and
warranties taken together result in a Buyer Material Adverse Effect, and
U.S. Seller shall have received a certificate, in form and substance
reasonably satisfactory to U.S. Seller, signed by an authorized officer of
U.S. Buyer, dated the Closing Date, to the foregoing effect; and, provided
further, however, that any such breach shall not be deemed waived for
purposes of asserting a claim for Losses under Section 10.2.
8.2 Compliance with Covenants. Each Buyer shall have performed in all
material respects all obligations, covenants and agreements required to be
performed by such Buyer under this Agreement at or prior to the Closing
Date, and U.S. Seller shall have received a certificate signed by an
authorized officer of U.S. Buyer, dated the Closing Date, to the foregoing
effect.
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8.3 Consents and Approvals. All filings with, or approvals of, any
Governmental Entity necessary to permit consummation of the transactions
contemplated hereby and listed on Schedule 8.3 hereto shall have been made
or obtained, and no injunction prohibiting the consummation of the
transactions contemplated hereby shall have been issued by any Governmental
Entity of competent jurisdiction and be in force.
8.4 Opinions of Counsel. There shall have been delivered to Sellers
the opinion of Ernesto Verlarde-Danache, Inc., counsel for Mexican Buyer,
in the form attached as Exhibit D-1, and the opinion of Warshaw Burstein
Cohen Schlesinger & Kuh, LLP, Counsel for U.S. Buyer, in the form attached
as Exhibit D-2.
8.5 Further Assurances. Buyers shall have furnished to Sellers all
such other certificates and documents as Sellers may reasonably request in
order to evidence performance by Buyers of their obligations under this
Agreement and the Ancillary Agreements or as may be necessary to carry out
the purposes of this Agreement and the Ancillary Agreements.
Article IX
TERMINATION
9.1 Termination. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time prior to the
Closing Date as follows:
(a) by mutual written agreement of the parties hereto;
(b) by U.S. Buyer upon a breach of any representation or warranty
of Sellers or any covenant or agreement of Sellers set forth in this
Agreement such that the conditions set forth in Article VII hereof
would be incapable of being satisfied; provided, however, that the
right to terminate this Agreement pursuant to this Section 9.1(b)
shall only be available to U.S. Buyer after Sellers have received
written notice of such breach and a reasonable opportunity (of not
less than twenty (20) Business Days) to cure the same;
(c) by U.S. Seller upon a breach of any representation or
warranty of Buyers or any covenant or agreement of Buyers set forth in
this Agreement such that the conditions set forth in Article VIII
hereof would be incapable of being satisfied; provided, however, that
the right to terminate this Agreement pursuant to this Section 9.1(c)
shall only be available to U.S. Seller after Buyers have received
written notice of such breach and a reasonable opportunity (of not
less than 20 Business Days) to cure the same;
(d) by U.S. Buyer or U.S. Seller, at any time after October 31,
2003, if the Closing has not occurred on or before October 31, 2003
for any reason; provided, however, that the right to terminate this
Agreement pursuant to this Section 9.1(d) shall not be available to
U.S. Buyer, in the case of a breach of this Agreement by Buyers, or to
U.S. Seller, in the case of a breach of this Agreement by Sellers,
where such breach has been the cause of, or resulted in, the failure
of the Closing to occur by such date; or
32
(e) by U.S. Buyer or U.S. Seller, if any court of competent
jurisdiction or other Governmental Entity of competent jurisdiction
having valid enforcement authority has issued a final and
non-appealable Order permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement.
9.2 Effect of Termination. In the event that this Agreement is validly
terminated pursuant to the provisions of this Article IX, except as set
forth below, this Agreement shall forthwith become wholly void and of no
force and effect and there shall be no liability or obligation on the part
of the parties hereto (or any of their respective officers, directors,
employees, agents or Affiliates), except that the provisions of this
Section 9.2, the provisions of Section 6.5, Section 6.11 and Article XI
hereof and the Confidentiality Agreement shall continue to apply following
any such termination, and nothing contained herein shall relieve any party
hereto from liability for any willful breach of its covenants or agreements
contained in this Agreement prior to such termination.
Article X
INDEMNIFICATION
10.1 Survival of Representations and Covenants. The representations
and warranties contained in Articles IV and V of this Agreement shall
survive the Closing until the twenty-four (24) month anniversary of the
Closing Date, and the agreements and covenants contained in this Agreement
(other than Sections 10.5 and 10.7) shall survive the Closing through and
including the twenty-four (24) month anniversary of the Closing Date or in
accordance with their terms, if any (in each case, the "Survival Period");
provided, however, that any obligations to indemnify and hold harmless
shall not terminate with respect to any Losses (as defined below) as to
which the Person to be indemnified shall have given notice (stating in
reasonable detail, to the extent known, the basis of the claim for
indemnification) to the indemnifying party in accordance with Section 10.3
before the termination of the applicable Survival Period.
10.2 Indemnification. (a) Sellers' Agreement to Indemnify. Subject to
the provisions of Section 6.12 and this Article X, Sellers hereby agree,
jointly and severally, to defend, indemnify and hold Buyers and their
respective directors, officers, employees, Affiliates, successors and
permitted assigns (collectively, the "Buyer Indemnified Parties") harmless
from and against:
(i) any and all losses, liabilities, obligations, damages, costs
and expenses (collectively, "Losses") based upon, attributable to or
resulting from the failure of any representation or warranty of
Sellers set forth in this Agreement, or in any document, instrument,
certificate or affidavit to be delivered by Sellers at, in connection
with, or as a condition to the Closing, to be true and correct at the
Closing Date (other than for Losses arising from (A) Environmental
Liabilities, which is the subject of Section 10.5 below, (B) the
Varela Land Claim, which is the subject of Section 10.7 below, and (C)
a breach of Sections 4.4(a) (title to the Purchased Assets) and 4.5(a)
(title to the Facility), which is the subject of Section 10.8 below);
33
(ii) any and all Losses based upon, or arising directly from any
breach of any covenant or other agreement on the part of Sellers under
this Agreement, or in any document, instrument, certificate or
affidavit to be delivered by Sellers at or in connection with, or as a
condition to the Closing, (other than for Losses arising from (A)
Environmental Liabilities, which is the subject of Section 10.5 below,
and (B) the Varela Land Claim, which is the subject of Section 10.7
below);
(iii) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and reasonably
incurred expenses, including attorneys' and other professionals' fees
and disbursements (collectively, "Expenses") incident to any and all
Losses with respect to which indemnification is provided under this
Section 10.2(a).
(b) Buyers' Agreement to Indemnify. Subject to the provisions of this
Article X, Buyers hereby agree to defend, indemnify and hold Sellers and
their respective directors, officers, employees, Affiliates, agents,
successors and permitted assigns (collectively, the "Seller Indemnified
Parties") harmless from and against:
(i) any and all Losses based upon, attributable to or resulting
from the failure of any representation or warranty of Buyers set forth
in this Agreement, or in any document, instrument, certificate or
affidavit to be delivered by Buyers at, in connection with, or as a
condition to the Closing, to be true and correct at the Closing Date;
(ii) any and all Losses based upon, or arising directly from any
breach of any covenant or other agreement on the part of Buyers under
this Agreement, or in any document, instrument, certificate or
affidavit to be delivered by Buyers at, in connection with, or as a
condition to the Closing;
(iii) any and all Losses arising out of, based upon or relating
to any Purchased Asset or Buyers' operation of the Business, in each
case after the Closing Date; and
(iv) any and all Expenses incident to any and all Losses with
respect to which indemnification is provided under this Section
10.2(b).
10.3 Indemnification Procedures. (a) If any of the Persons to be
indemnified under this Article X has suffered or incurred any Loss
(regardless of any limitations provided in Section 10.4), the indemnified
party shall so notify the party from whom indemnification is sought
promptly in writing describing such Loss, the amount or estimated amount
thereof, if known or reasonably capable of estimation, and the method of
computation of such Loss, all with reasonable particularity, to the extent
then known, and containing a reference to the provisions of this Agreement
in respect of which such Loss shall have occurred. If any action at Law or
suit in equity is instituted by or against a third party with respect to
which the indemnified party intends to claim any Loss under this Article X,
the indemnified party shall promptly notify the indemnifying party of such
action or suit and tender to the indemnifying party the defense of such
34
action or suit. A failure by the indemnified party to give notice and to
tender the defense of the action or suit in a timely manner pursuant to
this Section 10.3 shall not limit the obligations of the indemnifying party
under this Article X, except (i) to the extent such indemnifying party is
prejudiced thereby, (ii) to the extent expenses are incurred during the
period in which notice was not provided and (iii) as provided by Section
10.1.
(b) If any claim, demand or Liability is asserted by any third party
against any Person entitled to indemnification hereunder, the indemnifying
party shall be entitled to assume control of the defense of any actions or
proceedings brought against the indemnified party in respect of matters
embraced by the indemnity and thereafter shall not be liable for the
expenses of the indemnified party. If the indemnifying party fails to
assume the defense of any such matter within thirty (30) days after request
by the indemnified party to assume such defense or does not thereafter
reasonably diligently prosecute such defense, the indemnified party may
assume control of the defense of the claim. In all cases, the party without
the right to control the defense of the indemnifiable claim may participate
in the defense at its own expense. Notwithstanding anything in this Section
10.3 to the contrary, neither the indemnifying party nor the indemnified
party shall, without the written consent of the other party, which consent
shall not be unreasonably withheld, settle or compromise any indemnifiable
claim or permit a default or consent to entry of any judgment unless the
claimant and such party provide to such other party an unqualified release
from all liability in respect of the indemnifiable claim. Notwithstanding
the foregoing, if a settlement offer solely for money damages is made by
the applicable third party claimant, and the indemnifying party notifies
the indemnified party in writing of the indemnifying party's willingness to
accept the settlement offer and, subject to any applicable limitations in
Sections 10.4, 10.5 and 10.6, pay the amount called for by such offer, and
the indemnified party declines to accept such offer, the indemnified party
may continue to contest such indemnifiable claim, free of any participation
by the indemnifying party, and the amount of any ultimate liability with
respect to such indemnifiable claim that the indemnifying party has an
obligation to pay hereunder shall be limited to the lesser of (i) the
amount of the settlement offer that the indemnified party declined to
accept plus the Losses of the indemnified party relating to such
indemnifiable claim through the date of its rejection of the settlement
offer or (ii) the aggregate Losses of the indemnified party with respect to
such indemnifiable claim. If the indemnifying party makes any payment on
any indemnifiable claim, the indemnifying party shall be subrogated, to the
extent of such payment, to all rights and remedies of the indemnified party
to any insurance benefits or other claims of the indemnified party with
respect to such indemnifiable claim.
10.4 Certain Limitations on Indemnification. (a) Notwithstanding the
provisions of this Article X, neither of Sellers nor Buyers shall have any
indemnification obligations for Losses under Section 10.2(a) (the Sellers'
general indemnification provision) or Section 10.2(b) (the Buyers' general
indemnification provision), unless the aggregate amount of all such Losses
exceeds $100,000 (the "Basket"), provided that once the Basket has been
exceeded, the indemnifying party shall be liable to the indemnified party
for the full amount of such Losses, including the Basket, and provided
further that any amounts to be indemnified by Sellers under Sections
10.5(a) and 10.8 hereunder shall be applied towards the Basket for purposes
of determining whether the Basket has been exceeded.
35
(b) Subject to the next succeeding sentence, in no event shall
the aggregate indemnification to be paid by either Sellers or Buyers
for Losses under Sections 10.2(a) and Section 10.2(b) exceed
$4,550,000 (the "General Indemnification Cap"); provided, however,
that the General Indemnification Cap shall not apply with respect to
(i) Liabilities arising from a breach of Sections 4.4(a) and 4.5(a),
which is the subject matter of Section 10.8 below, (ii) Environmental
Liabilities, which is the subject matter of Section 10.5 below, and
(iii) the Varela Land Claim, which is the subject of Section 10.7
below. Notwithstanding anything to the contrary contained in this
Agreement, the aggregate indemnification to be paid by Sellers under
Sections 10.2(a), 10.5(a) and 10.8 of this Agreement shall in no event
collectively exceed $4,550,000.
(c) No representation or warranty of Sellers contained herein
shall be deemed untrue or incorrect, and Sellers shall not be deemed
to have breached a representation or warranty, as a consequence of the
existence of any fact, circumstance or event of which (i) its
applicability is reasonably apparent in response to another
representation or warranty contained in this Agreement or (ii) Buyers
are aware as of the Closing Date.
(d) Each Buyer acknowledges and agrees that Sellers shall not
have any Liability under any provision of this Agreement for any Loss
to the extent that such Loss relates to action taken by Buyers or any
other Person (other than Sellers in breach of this Agreement) after
the Closing Date. Each Buyer shall take, and shall cause its
Affiliates to take, all reasonable steps to mitigate any Loss upon
becoming aware of any event which would reasonably be expected to, or
does, give rise thereto, including incurring costs (which shall be
deemed to be a Loss) only to the extent reasonably necessary to remedy
the breach which gives rise to the Loss.
10.5 Environmental Indemnification.
(a) On-Site Indemnification. For a period of eighteen (18) months
following the receipt by the parties of the Environmental
Certification, Sellers agree, jointly and severally, to defend,
indemnify and hold harmless the Buyer Indemnified Parties from and
against any Environmental Liability that is unknown to Buyers on the
date of this Agreement and relates to any contamination remaining at
the Facility after the Environmental Certification has been issued
that Buyers reasonably demonstrate results from or arises out of a
Release of Hazardous Substances at the Facility prior to the Closing
Date (collectively, the "On-Site Environmental Liabilities").
Notwithstanding anything to the contrary contained herein, (A) Sellers
shall have no liability for any On-Site Environmental Liability unless
the aggregate amount of all such Losses exceeds the Basket, provided
that once the Basket has been exceeded, Sellers shall be liable to
Buyers for the full amount of such Losses, including the Basket, and
provided further that any amounts to be indemnified by Sellers under
Sections 10.2(a) and 10.8 hereunder shall be added to amounts
indemnified under this Section 10.5(a) for purposes of determining
whether the Basket has been exceeded; and (B) the aggregate
indemnification to be paid by Sellers to Buyers for any On-Site
Environmental Liabilities shall in no event exceed $2,051,000.
(b) Off-Site Indemnification. For a period of seven (7) years
following the Closing Date, Sellers shall defend, indemnify and hold
36
harmless the Buyer Indemnified Parties from and against any
Environmental Liabilities arising out of any off-site migration of
Hazardous Substances that results from any disposal or Release of such
Hazardous Substances originating from the Facility (the "Off-Site
Environmental Liabilities") prior to the Closing Date. Notwithstanding
the foregoing, Sellers shall have no indemnification obligation with
respect to Off-Site Environmental Liabilities to the extent that
Buyers' actions or inactions are the cause of such off-site migration,
and Buyers agree to defend, indemnify and hold harmless the Seller
Indemnified Parties from and against any Off-Site Environmental
Liabilities arising out of Buyers' actions or inactions relating to
any such Off-Site Environmental Liabilities. With respect to Off-Site
Environmental Liabilities, Buyers and Sellers agree that where a
Governmental Entity of competent jurisdiction has determined that
Off-Site Environmental Liabilities were caused by acts or omissions
which occurred both before and after the Closing Date, responsibility
between Buyers and Sellers shall be allocated between the two parties
based upon the relative contribution of acts or omissions during each
period to the injury or harm as determined by such Governmental
Entity; provided, that each party shall bear their own costs and
expenses (including attorney's fees) incurred as a result of any such
claim. Where a court of competent jurisdiction has determined that
Environmental Liabilities were caused by acts or omissions of solely
one party, such party shall bear responsibility for all costs and
expenses incurred as a result of such claim.
10.6 Certain Limitations on Environmental Indemnification.
Notwithstanding anything contained in this Agreement, Sellers shall have no
obligation to indemnify, defend and hold harmless Buyers from and against
Environmental Liabilities to the extent that the Environmental Liabilities:
(a) results from a condition that either Buyer has actual
knowledge of as of the date of this Agreement, other than Remedial
Actions specifically set forth in the Remediation Plan; or
(b) (i) results from, or (ii) with respect to clause (y) below
only, would not have arisen but for: (x) Buyers or any Buyer
Indemnified Party undertaking any drilling (excluding Environmental
Liabilities discovered during any excavation conducted by Buyers in
the ordinary course of operating the Facility but only to the extent
that such excavated soil, based on visual inspection or smell, appears
to look or smell unusual) or sampling of soil or groundwater other
than (1) as affirmatively required by an Order of a Governmental
Entity with jurisdiction over the Facility and the environment or (2)
as agreed to in writing by Sellers in their sole discretion; or (y)
any change in the use of the real property to non-industrial purposes.
10.7 Varela Land Claim Indemnification. Sellers hereby agree to
defend, indemnify and hold harmless the Buyer Indemnified Parties from and
against any and all Liabilities arising out of or relating to the claim
filed by Mr. Juan Jose Varela against Jarachina del Sur, S.A. de C.V.
(Jarachina), Edificadora Jarachina, S.A. de C.V., Mexican Seller and
Copeland Compresores Termicos, S.A. de C.V, as more fully described on
Schedule 4.7 (the "Varela Land Claim"), including any claims brought by Mr.
Varela which are contemplated by Resolution Three of that certain decision,
dated March 28, 2003, of Carlos Alejandro Corona Gracia, First Judge of
First Instance in Civil Matters of the Fifth Judicial District in the State
37
of Tamaulipas related to the Varela Land Claim. Sellers shall have
exclusive control of the defense of such claim and all negotiations
relating thereto, and Buyers shall assist Sellers in all necessary respects
in defense of such claim, including providing Sellers reasonable and timely
access to any documents, employees, or the like required for the defense of
such claims.
10.8 Indemnification for Breach of Title Representations. Sellers
hereby agree to defend, indemnify and hold harmless the Buyer Indemnified
Parties from and against any and all Liabilities arising out of or relating
to the failure of the representations of Sellers relating to title of the
Purchased Assets set forth in Sections 4.4(a) and 4.5(a) of this Agreement
to be true and correct at the Closing Date. Notwithstanding anything to the
contrary contained herein, (A) Sellers shall have no liability for any
Losses under this Section 10.8 unless the aggregate amount of all such
Losses exceeds the Basket, provided that once the Basket has been exceeded,
Sellers shall be liable to Buyers for the full amount of such Losses,
including the Basket, and provided further that any amounts to be
indemnified by Sellers under Sections 10.2(a) and 10.5(a) hereunder shall
be added to the amounts indemnified under this Section 10.8 for purposes of
determining whether the Basket has been exceeded; and (B) the aggregate
indemnification to be paid by Sellers to Buyers under this Section 10.8
shall in no event exceed $4,550,000.
10.9 Calculation of Losses. (a) The amount of any Losses for which
indemnification is provided under this Article X shall be net of any
amounts actually recovered or recoverable by the indemnified party under
insurance policies (provided that any increased insurance premium resulting
from payment of such amounts shall be deemed to be Losses) or otherwise
with respect to such Losses (net of any Tax or expenses incurred in
connection with such recovery).
(b) If the amount of any Loss for which indemnification is
provided under this Article X gives rise to a currently realizable Tax
Benefit (as defined below) to the Indemnified Party making the claim,
then the indemnity claim shall be (i) increased to take account of any
net Tax cost incurred by the indemnified party arising from the
receipt of indemnity payments hereunder (grossed up for such increase)
and (ii) reduced to take account of any net Tax Benefit realized by
the indemnified party arising from the incurrence or payment of any
such Loss. To the extent such indemnity claim does not give rise to a
currently realizable Tax Benefit, if the amount with respect to which
any indemnity claim is made gives rise to a subsequently realized Tax
Benefit to the indemnified party that made the claim, such indemnified
party shall refund to the indemnifying party the amount of such Tax
Benefit (with and including any gross-up payment made pursuant to this
Section 10.9 with respect to such Tax Benefit) when, as and if
realized (it being understood that such indemnified party shall use
its reasonable efforts to realize such Tax Benefit). For purposes of
this Section 10.9, a "Tax Benefit" means an amount by which the Tax
liability of the party (or group of corporations including the party)
is actually reduced (including by deduction, reduction of income by
virtue of increased tax basis or otherwise, entitlement to refund,
credit or otherwise) plus any related interest received from the
relevant taxing authority. In computing the amount of any such Tax
cost or Tax Benefit, the indemnified party shall be deemed to
recognize all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified
Loss. For purposes of this Section 10.9, a Tax Benefit is "currently
realizable" to the extent that such Tax Benefit can be realized in the
38
current taxable period or year or in any tax return with respect
thereto (including through a carryback to a prior taxable period) or
in any taxable period or year prior to the date of the indemnity
claim. The amount of any increase, reduction or payment hereunder
shall be adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect
to the indemnified party's liability for Taxes, and payments between
the parties to this Agreement to reflect such adjustment shall be made
if necessary. Any indemnity payment under this Article X shall be
treated as an adjustment to the value of the asset upon which the
underlying claim was based, unless a final determination (which shall
include the execution of a Form 870-AD or successor form) with respect
to the indemnified party or any of its Affiliates causes any such
payment not to be treated as an adjustment to the value of the asset
for United States federal income tax purposes.
10.10 Characterization of Indemnity Payments. The parties hereto agree
to treat any indemnity payment made pursuant to this Article X as an
adjustment to the Purchase Price for federal, state, local and foreign
income tax purposes.
10.11 Excluded Liabilities; Assumed Liabilities.
(a) Notwithstanding anything to the contrary set forth herein,
but subject to Sections 10.5 and 10.6 hereof, Buyers shall have no
responsibility with respect to Excluded Liabilities. In the event
Buyers receive any notice that any Person is making or has made a
claim of any kind against Buyers with respect to any Excluded
Liabilities, Buyers shall promptly notify Sellers thereof, and shall
immediately forward to Sellers all information then known to Buyers
regarding such claim (including, without limitation, any written
materials related thereto, or setting forth the basis for or asserting
such claim). Sellers shall defend any such claim, to the extent
related to an Excluded Liability, and shall reimburse Buyers for any
and all reasonably incurred costs related to any such claim (insofar
as related solely to an Excluded Liability).
(b) Notwithstanding anything to the contrary set forth herein,
Sellers shall have no responsibility with respect to the Assumed
Liabilities. In the event Sellers receive any notice that any Person
is making or has made a claim of any kind against Sellers with respect
to any Assumed Liabilities, Sellers shall immediately notify Buyers
thereof, and shall immediately forward all information then known to
Sellers regarding such claim (including, without limitation, any
written materials related thereto, or setting forth the basis for or
asserting such claim). Buyers shall defend any such claim, to the
extent related to an Assumed Liability, and shall reimburse Sellers
for any and all reasonably incurred costs related to any such claim
(insofar as related solely to an Assumed Liability).
10.12 No Consequential Damages. Notwithstanding anything to the
contrary elsewhere in this Agreement, no party (or any of its Affiliates)
shall, in any event, be liable to any other party (or any of its
Affiliates) for any consequential, incidental, indirect, special, exemplary
or punitive damages of such other party (or any of its Affiliates), even if
the other party has been advised of the possibility of such damages,
including without limitation, damages for loss of future revenue, income or
profits, diminution of value or loss of business reputation or opportunity
relating to the breach or alleged breach hereof, except to the extent
arising from the willful misconduct of a party hereto.
39
10.13 Exclusive Remedy. The sole and exclusive remedy for any breach
or inaccuracy, or alleged breach or inaccuracy, of any representation,
warranty, covenant or agreement made by Sellers or Buyers shall be as
provided in accordance with this Article X, except to the extent such
breach is caused by the willful misconduct of a party hereto. In
furtherance of the foregoing, the parties hereby waive, to the fullest
extent permitted by applicable Law, any and all other rights, claims and
causes of action (including rights of contributions, if any) known or
unknown, foreseen or unforeseen, which exist or may arise in the future,
that it may have against Sellers or any of their Affiliates, or Buyers or
any of their Affiliates, as the case may be, arising under or based upon
any federal, state, local or foreign Law (including any such Law relating
to environmental matters or arising under or based upon any securities Law,
common Law or otherwise).
Article XI
MISCELLANEOUS
11.1 Fees and Expenses. Except as otherwise specifically provided in
this Agreement, each party to this Agreement shall bear all costs and
expenses incurred by such party in connection with, or in anticipation of,
this Agreement and the consummation of the transactions contemplated
hereby; provided, however, that any and all notary public fees and expenses
incurred in connection with any documents to be delivered in connection
with this Agreement or the Ancillary Agreements or the transactions
contemplated hereby or thereby, including the Facility Transfer Deed, shall
be paid by the Buyers.
11.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if delivered
personally, sent by facsimile transmission (with written confirmation of
receipt) or reputable overnight courier, or mailed (certified or registered
mail, return receipt requested):
If to either Seller:
Matsushita Battery Industrial Corporation of America
One Mutec Drive,
Suite 100
Columbus, Georgia 31907
Attention: Jumpei Sakakibara
President & Chief Executive Officer
Attention: John Rowe
General Manager, Administration
With a copy to:
Matsushita Electric Corporation of America
40
One Panasonic Way
Secaucus, NJ 07094
Attention: Robert S. Marin
General Counsel and Secretary
If to either Buyer, to:
C&D Technologies, Inc.
1400 Union Meeting Road
P.O. Box 3053
Blue Bell, PA 19422
Attention: Vice President - Finance and Chief
Financial Officer
(215) 619-7835 (telephone)
(215) 619-7816 (facsimile)
Vice President and General Counsel
(215) 619-7817 (telephone)
(215) 619-7816 (facsimile)
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers
and communications shall be deemed to have been received on the date on
which so hand-delivered or telecommunicated or delivered by overnight
courier (unless not received during a Business Day in which event receipt
shall be deemed to occur on the next occurring Business Day) or if mailed
on the Business Day actually delivered or on which refusal to accept
delivery is given, except for a notice of change of address which shall be
effective only upon receipt thereof.
11.3 Entire Agreement. This Agreement, the Ancillary Agreements, the
Schedules and the Exhibits hereto and thereto and the Confidentially
Agreement contain the entire understanding of the parties hereto with
respect to their subject matter. This Agreement supersedes all prior
agreements and understandings, oral and written, with respect to its
subject matter. Items or information may be disclosed in the Schedules
hereto which Sellers are not required to disclose under this Agreement;
disclosure of such items or information shall not affect (directly or
indirectly) the interpretation of this Agreement or the scope of the
disclosure obligation under this Agreement. In addition, inclusion of such
information herein shall not be construed as an admission that such
information is "material" for any purpose.
11.4 Waiver of Bulk Sales Requirements. Buyers hereby waive compliance
by Sellers with any bulk-sales notice requirements of applicable U.S. Law.
11.5 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any law or public
policy, all other terms or provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
41
other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
11.6 Non-Recourse. Except as expressly provided herein, no past,
present or future director, officer, employee, incorporator, member,
partner or stockholder of Sellers (except U.S. Seller with respect to
Mexican Seller as provided under this Agreement or the Ancillary
Agreements) shall have any liability for any obligations or liabilities of
Sellers under this Agreement or the Ancillary Agreements of or for any
claim based on, in respect of, or by reason of, the transactions
contemplated hereby and thereby.
11.7 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and
any purported assignment without such consent shall be null and void.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, directly or indirectly, by any party hereto
without the prior written consent of the other parties; provided, however,
that any party may assign this Agreement and any or all of the rights,
interests and obligations hereunder to any of its Affiliates, and upon any
such permitted assignment, the references in this Agreement to the
assigning party shall also apply to any assignee unless the context
otherwise requires, but no such assignment will relieve the assigning party
of its obligations hereunder in the event such assignee fails to satisfy
such obligations in accordance with the terms of this Agreement.
11.8 No Third-Party Beneficiaries. This Agreement is not intended, and
shall not be deemed, to confer upon or give any Person (including, without
limitation, any past or current employee of the Business) except the
parties hereto (and, with respect to Article X hereof, the Buyer
Indemnified Parties and the Seller Indemnified Parties) and their
respective successors and permitted assigns any remedy, claim, liability,
reimbursement, cause of action or other right under or by reason of this
Agreement.
11.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
11.10 Governing Law. This Agreement and any claim related directly or
indirectly to this Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except with regard to
the purchase and sale of the Mexican Purchased Assets, the assumption of
the Assumed Mexican Liabilities and any claims related thereto, which shall
be governed by, and construed in accordance with the laws of the State of
Tamaulipas and, in the absence thereof, the federal laws of Mexico.
11.11 Submission to Jurisdiction; Consent to Service of Process. Each
of the parties irrevocably submits to the non-exclusive jurisdiction of any
federal or state court located within the State of New York over any
dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each of the parties hereto hereby
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irrevocably agrees that all claims in respect of such dispute or any suit,
action proceeding related thereto may be heard and determined in such
courts. Each of the parties irrevocably waives, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter
have to the laying of venue of any such dispute brought in such court or
any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner
provided by law.
11.12 Amendments and Waivers. This Agreement can be amended,
supplemented or changed, and any provision hereof can be waived, only by
written instrument making specific reference to this Agreement signed by
the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No action taken pursuant to this
Agreement shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a
further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of such right,
power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
MATSUSHITA BATTERY INDUSTRIAL
CORPORATION OF AMERICA, INC.
By: /s/ Jumpei Sakakibara
-------------------------------
Name: Jumpei Sakakibara
Title: President & Chief
Executive Officer
MATSUSHITA BATTERY INDUSTRIAL DE
MEXICO, S.A. de C.V.
By: /s/ Kenji Seko
--------------------------------
Name: Kenji Seko
Title: President
C&D TECHNOLOGIES, INC.
By: /s/ Wade H. Roberts Jr.
--------------------------------
Name: Wade H. Roberts, Jr.
Title: President & Chief
Executive Officer
C&D TECHNOLOGIES REYNOSA S. de R.L.
de C.V.
By: /s/ Stephen E. Doyle Markert, Jr.
--------------------------------
Name: Stephen E. Doyle Markert, Jr.
Title: Legal Representative
44