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Exhibit 10.28
VITROCRISA, S.A. DE C.V.
SHAREHOLDERS AGREEMENT
THIS AGREEMENT is made and entered effective as of August 29, 1997, by
and among LIBBEY INC., a corporation organized under the laws of the State of
Delaware ("LIBBEY"), LGA3 CORP., a corporation organized under the laws of the
State of Delaware and a wholly-owned subsidiary of Libbey ("LGA3"), VITRO, S.A.,
a sociedad anonima organized under the laws of the United Mexican States
("VITRO"), VITROCRISA HOLDING, S.A. DE C.V., a sociedad anonima with variable
capital organized under the laws of the United Mexican States ("VC HOLDING"),
and VITROCRISA, S.A. DE C.V., a sociedad anonima with variable capital organized
under the laws of the United Mexican States ("VITROCRISA"). LGA3, VC Holding,
and Vitro are sometimes singularly referred to herein as a "Shareholder" and
collectively referred to herein as the "SHAREHOLDERS," and LGA3 and Vitro are
sometimes singularly referred to herein as a "VOTING SHAREHOLDER" and
collectively referred to herein as the "VOTING SHAREHOLDERS."
Introduction
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Libbey and Vitro desire to establish a joint business venture to
manufacture in Mexico and to market, distribute, and sell glass tableware and
related industrial glass products in North America, Central America, and South
America. To achieve these goals, Libbey (and certain of its subsidiaries) and
Vitro (and certain of its subsidiaries) entered into that certain Master
Investment Agreement dated of even date (the "MASTER INVESTMENT AGREEMENT").
Pursuant to the Master Investment Agreement, (a) all of the issued and
outstanding capital stock of Vitrocrisa owned of record by Vitro Corporativo,
S.A. de C.V. was purchased by VC Holding, (b) all of the issued and outstanding
capital stock of Vitrocrisa owned of record by VC Holding was converted into
999,900 Series C Shares, which are nonvoting shares, (c) Vitro purchased 51
Series A Shares, which represents fifty-one percent (51%) of the issued and
outstanding voting capital stock of Vitrocrisa, and (d) LGA3 purchased 49 Series
B Shares, which represents forty-nine percent of the voting capital stock of
Vitrocrisa.
Libbey, LGA3, Vitro, VC Holding, and Vitrocrisa each desire to enter
into this Agreement for the purpose of setting forth the principles for the
adoption of decisions in Vitrocrisa. Therefore, in consideration of the mutual
promises contained herein, together with other consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
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Basic Structure of Vitrocrisa
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1.1. FORM. Vitrocrisa was incorporated pursuant to public deed number
247, dated August 18, 1936, granted before Mr. Hector Gonzalez, a Notary Public
for Monterrey, Nuevo Leon, recorded with the Public Registry of Commerce for the
District of Monterrey, State of Nuevo Leon, under number 138, Volume 82, Book
Three, Second, on September 25, 1936. A copy of the Revised Vitrocrisa Estatutos
is attached hereto as EXHIBIT A.
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1.2. NAME. The name of Vitrocrisa shall continue to be Vitrocrisa, S.A.
de C.V.
1.3. PLACE OF BUSINESS. The corporate domicile and principal place of
business of Vitrocrisa shall continue to be located in Monterrey, Nuevo Leon, or
such other place as the Shareholders may from time to time designate.
1.4. PURPOSE. The purposes for which Vitrocrisa has been and will
continue to be organized include, but are not limited to, the following: (a) the
manufacture, distribution, and sale of glass tableware and certain related
industrial products, including coffee pots, meter covers, glass covers for
cooking ware, blender jars, and lighting fixtures sold to original equipment
manufacturers, and (b) to engage in such other activities as are lawful and
approved by unanimous vote of the Voting Shareholders.
1.5. ENDORSEMENT OF CERTIFICATES. At the Closing (as defined in the
Master Investment Agreement), Vitrocrisa shall issue new stock certificates and
deliver them to its Shareholders in exchange for their existing certificates,
which shall be immediately canceled. All certificates representing shares of
Vitrocrisa stock issued after the date of this Agreement shall comply with the
terms of the Revised Vitrocrisa Estatutos and shall contain substantially the
following legend:
"The shares represented by this certificate are subject to and are
transferable only in compliance with a Shareholders Agreement by and
among Libbey Inc., a corporation organized under the laws of the State
of Delaware, LGA3 Corp., a corporation organized under the laws of the
State of Delaware, Vitro, S.A., a sociedad anonima organized under the
laws of the United Mexican States, Vitrocrisa Holding, S.A. de C.V., a
sociedad anonima with variable capital organized under the laws of the
United Mexican States, and Vitrocrisa, S.A. de C.V., a sociedad anonima
with variable capital organized under the laws of the United Mexican
States, as the same may be amended from time to time, dated August 29,
1997. Title to the shares represented hereby can be transferred only in
accordance with the terms of said Shareholders Agreement. Any purported
transfer of title other than in the manner provided in the Shareholders
Agreement is void, without force and effect, and will not be recognized
by Vitrocrisa, S.A. de C.V."
Vitrocrisa shall not transfer any shares or issue or reissue any certificates
except as provided in this Agreement.
ARTICLE II
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Financial Arrangements
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2.1. CAPITAL STOCK OF VITROCRISA. The capital stock of Vitrocrisa will
be divided into Class I and Class II shares, representing the fixed and variable
portions of such capital, respectively. In addition, both Class I and Class II
shares will be divided into Series A Shares, Series B Shares, and Series C
Shares, initially representing 0.0051%, 0.0049%, and 99.99% of the capital
stock, respectively. The Series A Shares, Series B Shares, and Series C Shares
will be free subscription shares. The Series A Shares and the Series B Shares
will be voting shares, and the Series C Shares
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will be nonvoting shares. Vitro will initially own all of the issued and
outstanding Series A Shares, LGA3 will initially own all of the issued and
outstanding Series B Shares, and VC Holding will initially own all of the issued
and outstanding Series C Shares. The Series A Shares, Series B Shares, and
Series C Shares will be deemed to constitute separate classes of shares for
purposes as are specifically provided herein or in the Revised Vitrocrisa
Estatutos, but otherwise shall rank PARI PASSU in all respects as if they
constituted one class of shares.
2.2. CAPITAL EXPENDITURES, REPAIRS, AND MAINTENANCE FOR VITROCRISA.
Attached hereto as EXHIBIT B is a three-year capital expenditure, repairs, and
maintenance plan for Vitrocrisa (the "CAPITAL EXPENDITURE, REPAIRS, AND
MAINTENANCE PLAN"). Each of the Voting Shareholders shall cause their respective
members on the board of directors of Vitrocrisa (the "VITROCRISA BOARD") to vote
for the Capital Expenditure, Repairs, and Maintenance Plan, such vote to be
conducted in accordance with the terms of this Agreement. Expenditures made by
Vitrocrisa pursuant to the Capital Expenditure, Repairs, and Maintenance Plan
shall be made at such times and for such amounts and purposes as the Vitrocrisa
Board shall from time to time approve, subject to the limitations set forth in
SECTION 3.2(d). At any time and from time to time, the Vitrocrisa Board may
waive or otherwise alter certain expenditures set forth in the Capital
Expenditure, Repairs, and Maintenance Plan, subject to the limitations set forth
in SECTION 3.2(d). Additional capital expenditures, repairs, and maintenance
must be approved by the Vitrocrisa Board in accordance with the terms of SECTION
3.2(d).
2.3. STRATEGIC PLAN FOR VITROCRISA. As soon as possible, the Managing
Director shall prepare a three-year strategic plan for Vitrocrisa (the "INITIAL
STRATEGIC PLAN"), which shall contain (a) working capital requirements,
including a breakout of accounts receivable, inventory, and accounts payable,
(b) sources of revenue (by geographic area, ware type, trade areas, established
areas of distribution, etc.), (c) SGA expense detail, (d) interest expense and
income, (e) repairs and maintenance expense, (f) capital expenditures, (g)
manufacturing objectives, including yield objectives by ware type and planned
capacity, (h) distribution objectives, (i) information technology objectives,
(j) engineering objectives, (k) sales plan, (l) marketing plan, including
marketing programs, (m) finance goals, (n) general administrative goals, and (o)
income statement, balance sheet, and statement of cash flows. Upon preparation
of the Initial Strategic Plan, the Managing Director shall promptly submit the
Initial Strategic Plan to the Vitrocrisa Board for approval by Extraordinary
Directors Action (as defined below). If the Initial Strategic Plan is not
approved by Extraordinary Directors Action, the Managing Director will revise
the Initial Strategic Plan as soon as possible and resubmit it to the Vitrocrisa
Board for approval by Extraordinary Directors Action and shall continue to do so
until the Initial Strategic Plan is so approved; provided, however, that failure
to approve the Initial Strategic Plan by Extraordinary Directors Action within
one hundred eighty (180) days of the date of this Agreement shall constitute a
Final Impasse (as defined below) and each Voting Shareholder shall be entitled
to immediately invoke the provisions of SECTION 6.4. Expenditures made by
Vitrocrisa pursuant to the Initial Strategic Plan shall be made at such times
and for such amounts and purposes as the Vitrocrisa Board shall from time to
time approve, subject to the limitations set forth in SECTION 3.2(d). At any
time and from time to time, the Vitrocrisa Board may waive or otherwise alter
certain expenditures set forth in the Initial Strategic Plan, subject to the
limitations set forth in SECTION 3.2(d).
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2.4. CASH REMITTANCE TO SHAREHOLDERS. Attached hereto as EXHIBIT D is a
policy of cash remittance, dividends, and other remuneration to be paid no less
than annually by Vitrocrisa to the holders of Series A Shares, Series B Shares,
and Series C Shares (the "DIVIDEND POLICY"). Each of the Voting Shareholders
will cause their respective Members (as defined below) of the Vitrocrisa Board
to vote for the Dividend Policy and cause monies to be paid to the Shareholders
in accordance with the Dividend Policy.
ARTICLE III
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Management of Vitrocrisa
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3.1. THE SHAREHOLDERS MEETINGS; QUORUM. The shareholders meeting is the
supreme authority of Vitrocrisa. The shareholders meetings may be ordinary (an
"ORDINARY SHAREHOLDERS MEETING") or extraordinary (an "EXTRAORDINARY
SHAREHOLDERS MEETING"), depending on the matters to be discussed at each
meeting. They will be held at the corporate domicile of Vitrocrisa in accordance
with the call for the meeting made pursuant to the Revised Vitrocrisa Estatutos.
According to the General Law of Mercantile Companies of Mexico, resolutions may
be adopted outside of a shareholders meeting by unanimous vote of the Voting
Shareholders, provided that the Voting Shareholders subsequently confirm the
adoption of such resolutions in writing to the Chairman or the Secretary of the
Vitrocrisa Board. An Ordinary Shareholders Meeting will be held at least once a
year within the four (4) months following the closing of each fiscal period.
Ordinary Shareholders Meetings may be those called to discuss any of the matters
that are not expressly reserved by law or this Agreement to the Extraordinary
Shareholders Meeting. The matters reserved for Extraordinary Shareholders
Meetings are:
(a) any matter that is required to be resolved by the
Extraordinary Shareholders Meeting according to Article 182 of
the General Law of Mercantile Companies;
(b) the declaration or payment of dividends pursuant to the
Dividend Policy; and
(c) any matter specified in SECTION 3.2(d) that is referred to the
Shareholders by the Vitrocrisa Board.
An Ordinary Shareholders Meeting shall take place by virtue of a first
call of any Shareholder if the holders of fifty-five percent (55%) of the voting
capital stock are present or duly represented thereat. If such a quorum does not
exist for the holding of the meeting by virtue of the first call, the call shall
be repeated, and the meeting shall be considered validly held whatever number of
Voting Shareholders are present or represented. Resolutions in Ordinary
Shareholders Meetings shall be adopted by the affirmative vote of the majority
of the shares entitled to vote that are present or represented thereat.
An Extraordinary Shareholders Meeting shall be held by virtue of the
first call if the Shareholders holding at least seventy-five percent (75%) of
the voting capital stock are present or represented thereat. If such a quorum
does not exist for such meeting, the call shall be repeated, and the meeting
shall be considered validly held only with the attendance of Shareholders or
their proxies representing at least fifty-five percent (55%) of the voting
capital stock of Vitrocrisa.
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Resolutions in Extraordinary Shareholders Meetings held either in first or
subsequent calls shall be adopted by the affirmative vote of Shareholders or
their representatives holding at least fifty-five percent (55%) of the voting
capital stock of Vitrocrisa.
If holders of seventy-five percent (75%) of the voting capital stock
are not present or represented at the first call of any Extraordinary
Shareholders Meeting and if holders of fifty-five percent (55%) of the voting
capital stock are not present or represented at any repeated call of such
meeting, either Voting Shareholder shall have the right, but shall not be
obligated, to declare the occurrence of a Deadlock Event under SECTION 6.1.
In addition to any other requirement imposed by Mexican law, calls for
an Ordinary Shareholders Meeting of Vitrocrisa and calls for an Extraordinary
Shareholders Meeting of Vitrocrisa must be in writing and must be delivered to
each Voting Shareholder at least fifteen (15) days prior to such meeting, unless
such notice is waived by the Voting Shareholders in writing.
3.2. Board of Directors.
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(a) COMPOSITION AND APPOINTMENT. The Vitrocrisa Board shall consist of
seven (7) members (hereinafter referred to singularly as a "MEMBER" and
collectively as "MEMBERS"). The Members shall not be required to be Mexican
nationals. As the owner of Series A Shares of Vitrocrisa, Vitro shall be
entitled, in its sole and absolute discretion, to designate four (4) Members
(and their alternates) to the Vitrocrisa Board (hereinafter referred to
singularly as a "VITRO MEMBER" and collectively as "VITRO MEMBERS"), provided
that each such designee is also a member or alternate, as the case may be, of
the Board of Directors of VC Holding. As the owner of Series B Shares of
Vitrocrisa, LGA3 shall be entitled, in its sole and absolute discretion, to
designate three (3) Members (and their alternates) to the Vitrocrisa Board
(hereinafter referred to singularly as a "LIBBEY MEMBER" and collectively as
"LIBBEY MEMBERS"), provided that each such designee is also a member or
alternate, as the case may be, of the Board of Directors of VC Holding. The
owner of Series C Shares shall not be entitled to designate any Member or
alternate to the Vitrocrisa Board. The names of the Members of the Vitrocrisa
Board as at the date of this Agreement and their alternates are set out in
EXHIBIT E attached hereto.
(b) REMOVAL. Each Voting Shareholder, in its sole and absolute
discretion, may remove and, in conjunction therewith, shall replace any or all
of the Members and alternates it has designated. Notwithstanding the foregoing,
each Voting Shareholder hereby agrees to consult with the other Voting
Shareholder in connection with the designation, removal, and replacement of any
Member and alternate of the Vitrocrisa Board and to consider reasonable
objections of any Voting Shareholder to the designation, removal, and
replacement of any Member and alternate of the Vitrocrisa Board; provided,
however, such consultation shall not affect the sole and absolute discretion of
each Voting Shareholder to designate, remove, or replace the Members and
alternates it has designated. Any alternate may substitute for any Member
designated by such Voting Shareholder at any meeting of the Vitrocrisa Board. No
Member or alternate of the Vitrocrisa Board shall be removed or replaced other
than by the Voting Shareholder that designated such Member or alternate.
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(c) POWER AND AUTHORITY OF THE VITROCRISA BOARD. Except for those
matters set forth in SECTION 3.1 requiring approval of the Voting Shareholders
at an Extraordinary Shareholders Meeting, the Shareholders shall, and do hereby,
delegate all power and authority for the operations of Vitrocrisa to the
Vitrocrisa Board, which, by way of illustration and not limitation, shall
include the power and authority to:
(i) direct, manage, control, and operate Vitrocrisa;
(ii) set strategic direction for Vitrocrisa;
(iii) direct all of Vitrocrisa's business and management
policies and specific business and operational
decisions in the ordinary course of business;
(iv) acquire and dispose of assets of Vitrocrisa;
(v) control litigation and administrative proceedings of
Vitrocrisa;
(vi) enter into contracts on behalf of Vitrocrisa; and
(vii) assume all other responsibilities not specifically
reserved to the Shareholders by this Agreement or by
law, including powers under Article 2554 of the Civil
Code for the Federal District and Articles 9 and 85
of the General Law of Negotiable Instruments and
Credit Operations.
(d) EXTRAORDINARY DIRECTORS ACTIONS. Notwithstanding anything contained
herein to the contrary, the following matters, except for those matters already
included in the Initial Strategic Plan, shall not be deemed approved by the
Vitrocrisa Board unless (i) approved by a majority of the Members of the
Vitrocrisa Board, and (ii) such approving majority shall have consisted of at
least one Libbey Member and at least one Vitro Member (hereinafter singularly
referred to as an "EXTRAORDINARY DIRECTORS ACTION" and collectively referred to
as "EXTRAORDINARY DIRECTORS ACTIONS"). Such Extraordinary Directors Actions are
as follows:
(i) Approval of any cash remittance, dividend, or other
remuneration from Vitrocrisa to any Shareholder in
accordance with SECTION 2.4;
(ii) Approval of any loan or series of loans for
Vitrocrisa that are made following the date of this
Agreement in an amount in excess of US$1,500,000;
(iii) Approval of the acquisition, sale, or transfer in any
single transaction or series of related transactions
of assets by Vitrocrisa in excess of US$1,500,000;
(iv) Approval of transactions that would dilute any
Shareholder's interest in Vitrocrisa;
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(v) The granting by Vitrocrisa of guarantees in favor of
third parties such that the aggregate amount of money
guaranteed by Vitrocrisa at any time exceeds
US$1,500,000;
(vi) The granting by Vitrocrisa of loans in an aggregate
amount in excess of US$100,000 to third parties,
including, without limitation, employee loans;
(vii) The entering by Vitrocrisa of agency, distribution,
or commission agreements other than in the ordinary
course of business;
(viii) The approval by the Vitrocrisa Board of annual
operating budgets and three-year strategic plans
pursuant to ARTICLE VII;
(ix) The approval of any expenditures in excess of 120% of
the allotment for such expenditures as set forth in
the annual operating budget for Vitrocrisa as
determined in accordance with ARTICLE VII;
(x) The adoption of employee benefit plans and policies
for Vitrocrisa after the date of this Agreement,
except for benefit plans and policies substantially
similar to benefit plans and policies adopted by
other members of the Vitro 100% Group (as defined in
ARTICLE IV) applicable to all "workers" (known as
trabajadores in Vitrocrisa) or all "salaried
employees" (known as empleados in Vitrocrisa) or all
"executives" (known as ejecutivos in Vitrocrisa;
approximately thirty (30) in number) of Vitrocrisa,
provided further that such benefit plans and policies
under this exception are subject to the majority
approval of the Vitrocrisa Board;
(xi) Entering into any contract, agreement, or
understanding with a fair market value in excess of
US$1,500,000;
(xii) Formation of a partnership or joint venture between
Vitrocrisa and another business entity;
(xiii) Submittal to the Ordinary Shareholders Meeting of the
financial statements and report for approval;
(xiv) Any change to the personnel policy attached hereto as
EXHIBIT F;
(xv) Any increase or decrease in the compensation or rates
payable to Vitro or Libbey under the terms of the
Management and Administrative Services Agreements set
forth in SECTION 3.5;
(xvi) Any increase or decrease in the fees or rates payable
to any of the Shareholders in connection with the
guarantee of Vitrocrisa loans as set forth in SECTION
3.6; and
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(xvii) The establishment of compensation or policies
therefor for management, including, but not limited
to, executive officers and key employees, except as
provided by SECTION 3.2(d)(x) above.
Notwithstanding any provision of the foregoing to the contrary, to the
extent a contract or other agreement has previously been approved by
Extraordinary Directors Action, the subsequent expenditure pursuant to such
contract or other agreement need not be approved by Extraordinary Directors
Action. The amount in United States dollars to be attributed to any matter in
this SECTION 3.2(d) shall be determined, if necessary, by reference to the
exchange rate for the purchase of dollars, as announced by Banca Serfin, S.A.,
on the date of the Vitrocrisa Board's vote on such matter.
(e) MEETINGS. The Vitrocrisa Board shall meet at least twice annually,
the first meeting being within thirty (30) days after year-end audited financial
statements have been delivered to all Members of the Vitrocrisa Board, but in no
event more than four (4) months after the end of each fiscal year, or more
frequently at the request of any Shareholder or any Member. Notice of each
meeting of the Vitrocrisa Board shall be delivered to all Members at least
fifteen (15) days in advance of the date of such meeting. At least four (4)
Members of the Vitrocrisa Board or their alternates must be present to transact
business. Each meeting of the Vitrocrisa Board shall take place at 10:00 a.m. on
the fifteenth (15th) day after notice has been delivered to all Members, or at a
time and place mutually agreed upon by the Members. If Members sufficient to
transact business are not present at the meeting, the date of the meeting shall
be postponed for one (1) day, and if Members sufficient to transact business are
not present at that meeting, the date of the meeting shall be postponed for an
additional day. If Members sufficient to transact business are not present at
that meeting, either Voting Shareholder shall have the right, but shall not be
obligated, to declare the occurrence of a Deadlock Event under SECTION 6.1
hereof.
(f) WAIVER OF NOTICE; VOTING. The Members can waive the requirement of
the written call, and same will not be required, when all of the Members or
their alternates are present at the meeting. Except as otherwise provided
herein, all decisions of the Vitrocrisa Board shall require the approval of a
majority of its Members. All decisions of the Members on any matters requiring
their approval, consent, or action may be made by the Members in each of their
sole and absolute discretion.
(g) ACTION WITHOUT MEETING. Whenever the Vitrocrisa Board is required
or permitted to take any action pursuant to a meeting of the Vitrocrisa Board,
such action may be taken without a meeting upon a written consent setting forth
the action so taken that is signed by each of the Members.
3.3. INDEMNIFICATION OF THE VITROCRISA BOARD. Each Member shall be
indemnified by Vitrocrisa against all liability for any claim, demand, loss,
damage, liability, or expense (including, without limitation, amounts paid in
settlement, reasonable costs of investigation, and reasonable legal expenses)
resulting from any threatened, pending, or completed action, suit, or proceeding
naming any of them as defendant by reason of acts or omissions made or omitted
in good faith within the scope of their authority as set forth in this Agreement
to the maximum extent permitted by law.
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3.4. TRANSACTIONS WITH SHAREHOLDERS OR THEIR AFFILIATES. Vitrocrisa may
enter into contracts and agreements with a Shareholder or its affiliates in the
ordinary course of business, provided, however, that any contract or agreement
not in the ordinary course of business must be approved by Extraordinary
Directors Action.
3.5. MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENTS WITH VITRO AND
LIBBEY. The Vitrocrisa Board shall cause Vitrocrisa to enter into a Management
and Administrative Service Agreement with each of Vitro and Libbey,
substantially in the form of EXHIBIT G-1 and EXHIBIT G 2. The aggregate annual
fees to be paid to Vitro in connection with the Management and Administrative
Service Agreement will initially be equal to 1-1/2% of the gross sales of
Vitrocrisa, and the aggregate annual fees to be paid to Libbey in connection
with the Management and Administrative Service Agreement will initially be
US$1,000,000.
3.6. CORPORATE GUARANTEES. The Shareholders hereby agree that any
Shareholder may charge and collect from Vitrocrisa monthly a fee for all
Vitrocrisa loans guaranteed by such Shareholder in an amount equal to 1-1/2% per
annum of the average daily balances of such loans.
3.7. CORPORATE OPPORTUNITY. No person or entity of the Libbey 100%
Group (as defined in ARTICLE IV) and no person or entity of the Vitro 100% Group
(as defined in ARTICLE IV) has any duty to communicate or offer any Corporate
Opportunity (as defined below) to Vitrocrisa, and neither the Libbey 100% Group
nor the Vitro 100% Group shall be liable to Vitrocrisa or any Shareholder for
breach of any fiduciary duty or duty of loyalty to Vitrocrisa by reason of the
fact that it pursues or acquires a Corporate Opportunity for itself or directs a
Corporate Opportunity to another person or entity. For purposes of this section,
"CORPORATE OPPORTUNITY" means a business or other opportunity that Vitrocrisa is
or could reasonably be expected to become financially able to undertake, which
relates to Vitrocrisa's line of business and in which Vitrocrisa has or would
have an interest or a reasonable expectancy of interest. To the extent this
SECTION 3.7 contradicts any term or provision in the Distribution Agreement,
dated of even date, by and among Vitro, Vitrocrisa, Libbey, and Libbey Glass
Inc., the Distribution Agreement, dated of even date, by and among Vitro, Crisa
Corporation, Vitrocrisa, Libbey, and Libbey Glass Inc. (together, the
"DISTRIBUTION AGREEMENTS"), or the Covenant Not to Compete, dated of even date,
by and between Libbey and Vitro (the "COVENANT NOT TO COMPETE"), the terms and
provisions of the Distribution Agreements or the Covenant Not to Compete shall
control.
ARTICLE IV
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Transfers, Withdrawals and Admission of Additional Shareholders
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4.1. Transfers and Encumbrance of Interests.
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(a) TRANSFERS. No Shareholder shall transfer all or any portion of its
interest in Vitrocrisa or its rights under this Agreement, or agree to do so,
without the written consent of each of Libbey and Vitro. Notwithstanding the
foregoing, no Shareholder may transfer all or any portion of its interest in
Vitrocrisa or its rights under this Agreement, or agree to do so, for a period
of four
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(4) years from the date of this Agreement. After such four-year period, any
Shareholder may transfer all, but not less than all, of its interest in
Vitrocrisa pursuant to the terms of SECTION 4.2. A Shareholder may transfer or
otherwise sell its shares pursuant to this ARTICLE IV for any reason.
(b) ENCUMBRANCE. Except as otherwise provided in this Agreement, no
Shareholder may encumber, mortgage, pledge, hypothecate, or place a lien or make
any disposition similar thereto (collectively an "ENCUMBRANCE") upon all or any
portion of its interest in Vitrocrisa or its rights under this Agreement, or
agree to do so, without the prior written consent of the other Shareholder,
which consent shall not be unreasonably withheld but may be subject to such
reasonable conditions as Libbey and Vitro may require.
(c) VIOLATION. Any purported transfer or Encumbrance in violation of
the terms of this Agreement shall be null and void and shall not be recognized
by Vitrocrisa.
4.2. Shareholders First Option to Purchase Joint Venture Interest.
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(a) DEFINITIONS. In this SECTION 4.2, the following words shall bear
the following meanings:
"JOINT VENTURE INTEREST" in the case of LGA3, (a) shares of
Vitrocrisa capital stock held, directly
or indirectly, by LGA3, (b) shares of
VC Holding capital stock held, directly
or indirectly, by LGA3, (c) shares of
Crisa Libbey, S.A. de C.V., a sociedad
anonima with variable capital organized
under the laws of the United Mexican
States ("NEWCO FINANCE"), capital stock
held, directly or indirectly, by LGA3,
and (d) membership interests in Crisa
Industrial, L.L.C., a Delaware limited
liability company (the "LLC"), owned,
directly or indirectly, by LGA4 Corp.,
a Delaware corporation and wholly-owned
subsidiary of Libbey; and in the case
of Vitro, (a) shares of Vitrocrisa
capital stock held, directly or
indirectly, by Vitro, (b) shares of VC
Holding capital stock held, directly or
indirectly, by Vitro, (c) shares of
Newco Finance capital stock held,
directly or indirectly, by Vitro, and
(d) membership interests in the LLC
owned, directly or indirectly, by
Vitro;
"PRESCRIBED PRICE" the price for the Joint Venture
Interest specified in the Transfer
Notice;
"PROPOSING TRANSFEROR" a Voting Shareholder proposing to
transfer or dispose of all of its Joint
Venture Interest;
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"PURCHASER" a Voting Shareholder willing to
purchase all of the Joint Venture
Interest comprised in, or offered for
purchase pursuant to the serving of, a
Transfer Notice;
"TRANSFER NOTICE" a written notice served by a Voting
Shareholder;
"100% GROUP" in the case of the Vitro, Vitro or any
other person or entity that directly or
indirectly controls, is controlled by,
or is under common control with Vitro,
but excluding VC Holding (the "VITRO
100% GROUP"), and in the case of LGA3,
LGA3 or any other person or entity that
directly or indirectly controls, is
controlled by, or is under common
control with LGA3 (the "LIBBEY 100%
GROUP").
(b) LIMITATION ON TRANSFERS. The right to transfer or dispose of shares
of Vitrocrisa or any interest therein shall (save in respect of transfers made
pursuant to SECTION 4.2(i) hereof) be subject to the restrictions set forth in
this SECTION 4.2. A Voting Shareholder may not transfer or dispose of its shares
in Vitrocrisa unless it transfers or disposes of all of its Joint Venture
Interest. Except as provided otherwise herein, no Voting Shareholder may
transfer or dispose of its Joint Venture Interest (save in respect of transfers
made pursuant to SECTION 4.2(i)) without the prior written consent of the other
Voting Shareholder.
(c) FIRST OPTION. Before transferring or disposing of its Joint Venture
Interest (or any interest therein), the Proposing Transferor shall serve a
Transfer Notice on the other Voting Shareholder stipulating the Prescribed
Price. Upon receipt of a Transfer Notice, the other Voting Shareholder shall
have the right and first option for a period of thirty (30) days to purchase the
Joint Venture Interest at the Prescribed Price.
(d) TRANSFER ON EXERCISE OF OPTION. If the Proposing Transferor is
given notice under SECTION 4.2(c) that the other Voting Shareholder has
exercised its option to purchase all, but not less than all, of the Joint
Venture Interest, the Proposing Transferor shall be bound, on payment of the
Prescribed Price, to transfer the Joint Venture Interest to the Purchaser or its
designees. The sale and purchase shall be completed at the office of Vitrocrisa,
or at such other place as the Proposing Transferor and the other Voting
Shareholder shall agree, during normal business hours on the first business day
after the expiration of ninety (90) days after the expiration of the option
period set forth in SECTION 4.2(c).
(e) TRANSFER ON EXPIRATION OR TERMINATION OF OPTION. If the option
granted by SECTION 4.2(c) is not exercised as to all of the Joint Venture
Interest, then such option shall become void AB INITIO and the Proposing
Transferor may sell all of the Joint Venture Interest to any third party free of
the restrictions set forth in this ARTICLE IV, subject to the following
restrictions: (i) the Joint Venture Interest may not be sold after the
expiration of one hundred eighty (180) days after the expiration of the option
period set forth in SECTION 4.2(c), (ii) the Joint Venture Interest must be sold
in a bona fide sale at a price not being less that the Prescribed Price, and
(iii) the third party
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transferee of the Joint Venture Interest must execute and deliver an undertaking
under which such third party shall become a party hereto, to the Vitrocrisa
Holding, S.A. de C.V. Shareholders Agreement dated of even date (the "VC HOLDING
SHAREHOLDERS AGREEMENT"), to the Crisa Libbey, S.A. de C.V. Shareholders
Agreement dated of even date (the "NEWCO FINANCE SHAREHOLDERS AGREEMENT"), and
to the Limited Liability Company Agreement of Crisa Industrial, L.L.C. dated of
even date (the "LLC AGREEMENT," and collectively with this Agreement, the VC
Holding Shareholders Agreement, and the Newco Finance Shareholders Agreement,
the "JOINT VENTURE SHAREHOLDERS AGREEMENTS") in place of the Proposing
Transferor.
(f) EXERCISE. An option granted by SECTION 4.2(c) may be exercised only
by the holder thereof and only by the delivery of a written notice of exercise
to the Proposing Transferor prior to the expiration of the relevant option
period.
(g) WAIVER. The restrictions imposed by this ARTICLE IV may be waived
in relation to any proposed transfer of a Voting Shareholder's Joint Venture
Interest with the consent of all Shareholders who would otherwise have been
entitled to have such Joint Venture Interest offered to them in accordance
herewith.
(h) FAILURE TO TIMELY EXERCISE. Failure of a Voting Shareholder to
exercise an option granted by SECTION 4.2(C) prior to the expiration of the
option period shall be deemed to be a waiver of that option as of the date the
option period expired. The waiver of an option granted by SECTION 4.2(c) will
not constitute a waiver of any subsequent option granted by SECTION 4.2(c).
(i) INTRA-GROUP TRANSFERS. Notwithstanding the foregoing, all, but not
less than all, of a Voting Shareholder's Joint Venture Interest may be
collectively transferred to any member of the Vitro 100% Group (in the case of
Vitro) and to any member of the Libbey 100% Group (in the case of LGA3), but
only (i) if the transferee is already a party to each of the Joint Venture
Shareholders Agreements or shall have first agreed to adhere to and be bound by
the provisions of each of the Joint Venture Shareholders Agreements by executing
and delivering in favor of the other parties to each of the Joint Venture
Shareholders Agreements an undertaking to the intent and with the effect that
from the date of such undertaking, or, if later, the date of the transfer, the
transferee shall become a party to each of the Joint Venture Shareholders
Agreements, in place of the transferor, to the extent that the transferor ceases
to hold shares in Vitrocrisa, VC Holding, Newco Finance, and the LLC as a result
of such transfer; and (ii) on terms that the transferee shall re-transfer the
relative Joint Venture Interest to a member of the Vitro 100% Group (in the case
of Vitro) or to a member of the Libbey 100% Group (in the case of LGA3) on the
same terms as set forth in this SECTION 4.2(i), prior to such transferee ceasing
to be a member of the Vitro 100% Group or the Libbey 100% Group (as the case may
be).
(j) OPTION TO PARTICIPATE IN SALE. In lieu of exercising the option
granted in SECTION 4.2(c), a Voting Shareholder may elect to participate in any
sale by the Proposing Transferor contemplated by SECTION 4.2 at the Prescribed
Price. Upon such election, the Voting Shareholder will be entitled to sell all,
but not less than all, of its Joint Venture Interest. The election to
participate in a sale must be in writing and must be delivered to the selling
Shareholder within thirty (30) days of receipt of the Transfer Notice. Failure
to timely deliver a written election
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to participate in a sale within thirty (30) days of the Transfer Notice will
constitute a waiver of such Voting Shareholder's right to participate in the
sale.
ARTICLE V
---------
Termination
-----------
5.1. CAUSES OF TERMINATION. Except as otherwise provided in this
Agreement, this Agreement shall terminate:
(a) upon the unanimous written consent of the parties hereto;
(b) if Vitrocrisa is declared bankrupt, has a receiver appointed
over all or substantially all of its assets, or is dissolved;
(c) by decree of a court of competent jurisdiction; or
(d) upon the merger of Vitrocrisa into VC Holding; provided,
however, that the parties agree that, upon the consummation of
such merger, the parties shall enter into a new agreement
having terms substantially similar to, and with the same
intent of, the terms of this Agreement.
5.2. EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an event of default ("EVENT OF DEFAULT") hereunder on the part
of the Shareholder with respect to whom such event occurs (the "DEFAULTING
PARTY") without any requirement of notice or passage of time except as
specifically set forth in any such subparagraph:
(a) the violation by a Shareholder of any of the restrictions set
forth in ARTICLE IV;
(b) failure of a Voting Shareholder's Member of the Vitrocrisa
Board to (i) vote for and use reasonable efforts to implement
the Capital Expenditure, Repairs, and Maintenance Plan as set
forth in SECTION 2.2 or (ii) use reasonable efforts to
implement the Initial Strategic Plan as set forth in SECTION
2.3;
(c) failure of a Voting Shareholder's Member of the Vitrocrisa
Board to vote for and use reasonable efforts to implement the
Dividend Policy as set forth in SECTION 2.4;
(d) the institution by a Shareholder or Libbey of a case or other
proceeding in bankruptcy;
(e) the institution against a Shareholder or Libbey of a case or
other proceeding in bankruptcy, which proceeding is not
dismissed, stayed, or discharged within a period of sixty (60)
days after the filing thereof;
(f) a proposed plan of arrangement or other action by a
Shareholder's or Libbey's creditors taken as a result of a
general meeting of the creditors of a Shareholder or
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Libbey, respectively, which arrangement or other action is not
dismissed, stayed, or discharged within a period of sixty (60)
days after such general meeting;
(g) the appointment of a receiver, custodian, trustee, or like
officer, to take possession of the assets of a Shareholder or
Libbey if the pendency of said receivership would reasonably
tend to have a materially adverse effect upon the performance
by the Shareholder or Libbey, respectively, of its obligations
under this Agreement, which receivership remains undischarged
for a period of sixty (60) days from the date of its
imposition;
(h) attachment, execution, or other judicial seizure of all or any
substantial part of a Shareholder's or Libbey's assets or of a
Shareholder's or Libbey's shares of Vitrocrisa, or any part
thereof, such attachment, execution, or seizure remaining
undismissed or undischarged for a period of sixty (60) days
after the levy thereof, if the occurrence of such attachment,
execution, or other judicial seizure would reasonably tend to
have a materially adverse effect upon the performance by the
Shareholder or Libbey, respectively, of its obligations under
this Agreement; provided, however, that said attachment,
execution, or seizure shall not constitute an Event of Default
hereunder if the Shareholder or Libbey, respectively, posts a
bond sufficient to fully satisfy the amount of such claim or
judgment within sixty (60) days after the levy thereof and the
respective Shareholder's or Libbey's assets are thereby
released from the lien of such attachment;
(i) material default in performance of or a failure to comply with
any obligations or undertakings of a Shareholder or Libbey
under the Covenant Not to Compete dated of even date by and
between Vitro and Libbey, and such default continues for a
period of thirty (30) days following notice of such default by
another Shareholder;
(j) the occurrence of an Event of Default (as defined therein)
under ARTICLE V of the VC Holding Shareholders Agreement; and
(k) the occurrence of a Libbey Change of Control or a Vitro Change
of Control (both as defined in SECTION 5.6 below);
(l) during fiscal years 1998, 1999, and 2000, the wrongful failure
of a member of the Libbey 100% Group to maintain the rights of
Vitrocrisa to distribute Libbey Glass' glass tableware under
the Distribution Agreement (as defined in the Master
Investment Agreement) in which Vitrocrisa is the distributor;
provided, however, that an adjustment of the price to be paid
for the glass tableware to be purchased by the distributor in
accordance with the Distribution Agreement shall not
constitute an Event of Default;
(m) during fiscal years 1998, 1999, and 2000, the wrongful failure
of a member of the Vitro 100% Group to maintain the rights of
Libbey Glass to distribute Vitrocrisa's glass tableware under
the Distribution Agreement (as defined in the Master
Investment Agreement); provided, however, that an adjustment
of the price to be
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paid for the glass tableware to be purchased by the
distributor in accordance with the Distribution Agreement
shall not constitute an Event of Default;
(n) the inability, occurring on or before the third anniversary of
this Agreement, of Vitrocrisa's auditors to provide a clean
opinion on its financial statements pursuant to generally
accepted accounting principles of the United Mexican States
for any reason (other than due to the difference in standards
imposed by Mexican legislation) that could have a material
adverse effect on the proper recording of the financial
statements of Vitrocrisa;
(o) the violation, occurring on or before the third anniversary of
this Agreement, of the principles under the section titled
"Debt" set forth on EXHIBIT C;
(p) the violation, occurring on or before the third anniversary of
this Agreement, of the principles in the personnel policy
attached hereto as EXHIBIT F; and
(q) the failure, occurring on or before the third anniversary of
this Agreement, of Vitrocrisa to use reasonable efforts to
maintain the glass tableware production capacity as outlined
in the section titled "Glass Tableware Production Capacity"
set forth on EXHIBIT C.
5.3. REMEDY ON DEFAULT. If an Event of Default is declared by a Voting
Shareholder pursuant to (a) SECTION 5.2(b), (b) SECTION 5.2(c) with respect to
dividends to be paid for the performance of Vitrocrisa during fiscal years 1998,
1999, or 2000, (c) SECTION 5.2(k) with respect to a Libbey Change of Control or
a Vitro Change of Control occurring on or before the third anniversary of this
Agreement, (d) SECTION 5.2(l), (e) SECTION 5.2(m), (f) SECTION 5.2(n), (g)
SECTION 5.2(o), (h) SECTION 5.2(P), or (i) SECTION 5.2(q), then such Voting
Shareholder may, in addition to any other remedy at law or in equity, invoke the
provisions of SECTION 5.5. If an Event of Default is declared at any time (a) by
a Voting Shareholder pursuant to SECTIONS 5.2(a), (d), (e), (f), (g), (h), (i),
or (j), or (b) by any party to this Agreement pursuant to SECTION 5.2(c) with
respect to dividends to be paid for the performance of Vitrocrisa after fiscal
year 2000, or (c) by a Voting Shareholder pursuant to SECTION 5.2(k) with
respect to a Libbey Change of Control or a Vitro Change of Control occurring
after the third anniversary of this Agreement, then such Voting Shareholder may,
in addition to any other remedy at law or in equity, invoke the provisions of
SECTION 5.4.
5.4. BUY/SELL PROVISION. Within forty-five (45) days of an Event of
Default, the non-defaulting party (the "OFFERING SHAREHOLDER") may deliver a
written offer (the "OFFER") to purchase all, but not less than all, of the other
Voting Shareholder's Joint Venture Interest at a cash purchase price (the "OFFER
PRICE"), fully payable on or before sixty (60) days after notice of the Offer.
Within thirty (30) days after receipt of the Offer, the other Voting Shareholder
may notify the Offering Shareholder in writing that it will either (i) sell to
the Offering Shareholder all, but not less than all, of its Joint Venture
Interest at the Offer Price, on or before the sixtieth day after receipt of the
Offer or (ii) buy from the Offering Shareholder all, but not less than all, of
the Offering Shareholder's Joint Venture Interest at (A) if Vitro is the
Offering Shareholder, 51/49 of the Offer Price or (B) if LGA3 is the Offering
Shareholder, 49/51 of the Offer Price (the "ADJUSTED OFFER Price"), on or
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before the sixtieth day after receipt of the Offer. If the other Voting
Shareholder fails to notify the Offering Shareholder within the thirty (30) day
period that it will (i) sell all of its Joint Venture Interest to the Offering
Shareholder at the Offer Price or (ii) buy all of the Joint Venture Interest
from the Offering Shareholder at the Adjusted Offer Price, then the Offering
Shareholder must purchase in cash all, but not less than all, of the other
Voting Shareholder's Joint Venture Interest at the Offer Price and the other
Voting Shareholder must sell all, but not less than all, of its Joint Venture
Interest at the Offer Price, on or before the sixtieth day after notice of the
Offer. Upon the purchase or sale of shares pursuant to this SECTION 5.4, this
Agreement and the VC Holding Shareholders Agreement shall automatically
terminate without further action by either Voting Shareholder. Failure by the
non-defaulting party to deliver an Offer within forty-five (45) days of notice
of an Event of Default shall constitute a waiver of such party's rights under
this SECTION 5.4 with respect to the particular Event of Default.
5.5. Dispute Resolution; Put/Call Option.
------------------------------------
(a) DISPUTE RESOLUTION. If an Event of Default is declared by a Voting
Shareholder pursuant to (i) SECTION 5.2(B), (ii) SECTION 5.2(c) with respect to
dividends to be paid for the performance of Vitrocrisa during fiscal years 1998,
1999, or 2000, (iii) SECTION 5.2(k) with respect to a Libbey Change of Control
or a Vitro Change of Control occurring on or before the third anniversary of
this Agreement, (iv) SECTION 5.2(l), (v) SECTION 5.2(m), (vi) SECTION 5.2(n),
(vii) SECTION 5.2(o), (viii) SECTION 5.2(p), or (ix) SECTION 5.2(q), such Voting
Shareholder shall promptly (but in no event later than thirty (30) days after
such Voting Shareholder's knowledge of such Event of Default) send notice of
such Event of Default to the other Voting Shareholder (the "DEFAULT NOTICE").
Upon receipt of the Default Notice, the alleged defaulting party will have
thirty (30) days to cure such default. If the default is not cured within such
thirty (30) day period or if the party receiving the Default Notice contests
that a default has occurred, the chief executive officers of Libbey and Vitro
(collectively, the "CEOS") shall meet within ninety (90) days of the expiration
of the cure period in a good faith effort to resolve the Event of Default. If
the Event of Default is not resolved within such ninety (90) day period, the
CEOs may select an independent mediator and subject the dispute to non-binding
mediation, which must take place within thirty (30) days of the expiration of
such ninety (90) day period. If both CEOs do not consent to non-binding
mediation or if the mediation fails to resolve the Event of Default, the Event
of Default shall be submitted to binding arbitration to be conducted in
accordance with the provisions of SECTION 8.10(b), (c), (d), and (e), the sole
purpose of which is to decide whether a default exists and, if so, which Voting
Shareholder is in default. The arbitrators will consider all issues currently in
dispute between the Voting Shareholders and must certify their ruling in writing
to each Voting Shareholder (the date of such certification is referred to herein
as the "CERTIFICATION DATE"). If the arbitrators determine and certify that one
Voting Shareholder is in default, then such Voting Shareholder shall have thirty
(30) days from the Certification Date to cure the default. If the Event of
Default is not cured within such thirty (30) day period, the non-defaulting
party may invoke the provisions of SECTION 5.5(b). If the arbitrators cannot
resolve which party has caused the Event of Default or determine that both
Voting Shareholders have caused the Event of Default and so certify, then either
of the Voting Shareholders may invoke the provisions of SECTION 5.4 within
thirty (30) days of the Certification Date.
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(b) Put/Call Option With Penalty.
-----------------------------
(i) PUT/CALL OPTION WITH PENALTY. If the arbitrators determine
that Vitro or any member of the Vitro 100% Group is in default and such
default shall not be cured within thirty (30) days of the Certification
Date, then Libbey shall have the right to sell to Vitro, and Vitro
shall be obligated to purchase from Libbey, all, but not less than all,
of Libbey's Joint Venture Interest at forty-nine percent (49%) of the
Joint Venture Value (as defined below) multiplied by one hundred twenty
percent (120%) (the "PUT OPTION"). If the arbitrators determine that
Libbey or any member of the Libbey 100% Group is in default, then Vitro
shall have the right to buy from Libbey, and Libbey shall be obligated
to sell to Vitro, all, but not less than all, of Libbey's Joint Venture
Interest at forty-nine percent (49%) of the Joint Venture Value (as
defined below) multiplied by eighty percent (80%) (the "CALL Option").
The Put Option and the Call Option are collectively referred to herein
as the "OPTION."
(ii) VALUATION OF THE JOINT VENTURE. If the party in default
does not cure the Event of Default within thirty (30) days of the
Certification Date, the non-defaulting party may request a valuation of
the joint venture as a going concern, which will include a valuation of
the combined businesses of Vitrocrisa, VC Holding, Newco Finance, and
the LLC (collectively, the "JOINT VENTURE"), within thirty (30) days of
the expiration of the cure period. Within thirty (30) days of the date
of such request, the CEOs will meet, and each CEO will select one
investment banker, and the two selected investment bankers will then
select a third investment banker, for the purpose of establishing a
value for the Joint Venture as a going concern. Upon selection, each of
the three investment bankers will independently determine the value for
the Joint Venture as a going concern, the average of which will be
deemed to be the joint venture value (the "JOINT VENTURE VALUE").
(iii) EXERCISING OPTION. The non-defaulting party may exercise
the Option by giving the defaulting party written notice of its intent
to exercise the Option within thirty (30) days of the date that the
Joint Venture Value is determined by the investment bankers.
(iv) CLOSING OF OPTION. The closing of the Option will take
place at a time and place mutually agreed upon by Libbey and Vitro;
provided, however, that in no event will the closing take place more
than sixty (60) days from the date of the notice of exercise set forth
in SECTION 5.5(b)(iii).
(v) INVESTMENT BANKER FEES. Fees and expenses incurred in
connection with the determination of the Joint Venture Value,
including, without limitation, investment banker fees, will be paid by
the party in default as certified by the arbitrators; provided,
however, that all such fees and expenses will be paid by the
non-defaulting party if the non-defaulting party fails to exercise the
Option.
5.6. DEFINITION OF CHANGE OF CONTROL. In this ARTICLE V, the following
words shall bear the following meanings:
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(a) "LIBBEY CHANGE OF CONTROL" shall be deemed to have occurred when
(i) any person or entity, together with any group of controlled companies not in
the Libbey 100% Group, acquires beneficial ownership, directly or indirectly, of
shares of stock of Libbey entitling such person or entity to exercise more than
50% of the total voting power of all classes of stock of Libbey entitled to vote
in elections of directors, or (ii) Libbey sells, leases or otherwise transfers
all or substantially all of its assets to any person or entity not in the Libbey
100% Group.
(b) "VITRO CHANGE OF CONTROL" shall be deemed to have occurred when (i)
any person or entity, together with any group of controlled companies not in the
Vitro 100% Group, acquires beneficial ownership, directly or indirectly, of
shares of stock of Vitro entitling such person or entity to exercise more than
50% of the total voting power of all classes of stock of Vitro entitled to vote
in elections of directors, or (ii) Vitro sells, leases or otherwise transfers
all or substantially all of its assets to any person or entity not in the Vitro
100% Group.
ARTICLE VI
----------
Deadlock and Impasse
--------------------
6.1. DEADLOCK. A "DEADLOCK EVENT" shall be deemed to occur at such time
as a Voting Shareholder (the "NOTIFYING SHAREHOLDER") delivers to the other
Voting Shareholder a notification in writing (the "DEADLOCK NOTICE") stating
that, in the opinion of the Notifying Shareholder, (a) the other Voting
Shareholder's chief executive officer ("CEO") failed to meet with the Notifying
Shareholder's CEO to resolve a controversy or claim regarding a business and
operational decision customarily exercised by the management of Vitrocrisa
within the time limits set forth in SECTION 8.10(a), (b) the other Voting
Shareholder has, or the other Voting Shareholder's Members of the Vitrocrisa
Board have, deliberately prevented the occurrence of a quorum as set forth in
SECTION 3.1 or SECTION 3.2(e), respectively, or (c) the Voting Shareholders or
the Vitrocrisa Board are unable to reach agreement on any of the actions set
forth in SECTION 3.1(a), (b), or (c) or SECTION 3.2(d), respectively, and
setting out the reasons therefor, and there is no resolution or agreement that
has been approved by both Voting Shareholders (which approval may be given or
withheld, or made subject to such conditions, as are determined by the Voting
Shareholders in their respective sole and absolute discretion) within seven (7)
days after delivery of the Deadlock Notice. A Deadlock Event shall be resolved
in accordance with the provisions of this ARTICLE VI.
6.2. RESOLUTION OF DEADLOCK. In the event of a Deadlock Event, either
Voting Shareholder may deliver notice of a meeting of the Shareholders (an
"EMERGENCY NOTICE") to the other Voting Shareholder, and they shall immediately
meet at a time and place mutually agreed upon or, if no time and place is
agreeable, at Vitrocrisa's principal place of business at 10:00 a.m. on the
fifteenth (15th) day after the date of such Emergency Notice. Notwithstanding
anything in this Agreement to the contrary, if either Voting Shareholder does
not attend such meeting, either Voting Shareholder may immediately invoke the
provisions of SECTION 6.4.
6.3. DECLARATION OF IMPASSE. If, at the meeting contemplated in SECTION
6.2, the Voting Shareholders are unable to agree on a course of action to
address the reason for the meeting, any Voting Shareholder may declare an
impasse ("IMPASSE") by giving written notice to the other Voting Shareholder (an
"IMPASSE NOTICE"). Within twenty (20) days after receipt of such Impasse
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Notice, the CEOs shall meet in a good faith effort to reach accords that will
end the Impasse. If a decision is not made by common accord that ends the
Impasse within thirty (30) days after the date that the CEOs meet, either Voting
Shareholder may declare a final Impasse ("FINAL IMPASSE") by written notice to
the other Voting Shareholder. Notwithstanding anything in this Agreement to the
contrary, if either CEO refuses to meet with the other CEO, either Voting
Shareholder may immediately invoke the provisions of SECTION 6.4.
6.4. FINAL IMPASSE. Within forty-five (45) days of notice of Final
Impasse (or pursuant to the provisions of SECTION 2.3 or of SECTIONS 6.2 or
6.3), either Voting Shareholder (the "OFFERING SHAREHOLDER") may deliver a
written Offer to purchase all, but not less than all, of the Joint Venture
Interest held by the other Voting Shareholder at a cash Offer Price, fully
payable on or before sixty (60) days after notice of the Offer. Within thirty
(30) days after receipt of the Offer, the other Voting Shareholder may notify
the Offering Shareholder in writing that it will either (a) sell to the Offering
Shareholder all, but not less than all, of its Joint Venture Interest at the
Offer Price on or before the sixtieth day after receipt of the Offer or (b) buy
from the Offering Shareholder all, but not less than all, of the Offering
Shareholder's Joint Venture Interest at the Adjusted Offer Price on or before
the sixtieth day after receipt of the Offer. If the other Voting Shareholder
fails to notify the Offering Shareholder within the thirty (30) day period that
it will (a) sell all of its Joint Venture Interest to the Offering Shareholder
at the Offer Price or (b) buy all of the Joint Venture Interest from the
Offering Shareholder at the Adjusted Offer Price, then the Offering Shareholder
must purchase in cash all, but not less than all, of the other Voting
Shareholder's Joint Venture Interest at the Offer Price and the other Voting
Shareholder must sell all, but not less than all, of its Joint Venture Interest
at the Offer Price, on or before the sixtieth day after notice of the Offer.
Upon the purchase or sale of shares pursuant to this SECTION 6.4, this Agreement
and the VC Holding Shareholders Agreement shall automatically terminate without
further action. Failure by either Voting Shareholder to deliver an Offer within
forty-five (45) days of notice of a Final Impasse shall constitute a waiver of
each Voting Shareholder's rights under this SECTION 6.4 with respect to the
particular Final Impasse.
ARTICLE VII
-----------
Annual Operating Budgets for Vitrocrisa
---------------------------------------
7.1. SUBMISSION OF ANNUAL OPERATING BUDGET. At least forty-five (45)
days prior to the end of the calendar year beginning with November 16, 1997, the
Managing Director of Vitrocrisa shall prepare a report on Vitrocrisa's working
capital requirements and operating budget for the succeeding calendar year,
which will substantially contain an estimate or projection of (a) working
capital requirements, including a breakout of accounts receivable, inventory,
and accounts payable, (b) sources of revenue (by geographic area, ware type,
trade areas, or established areas of distribution), (c) the cost of goods sold,
(d) selling, general, and administrative expense detail, (e) interest expense,
(f) an income statement, balance sheet, and statement of cash flows, all on a
quarterly basis, (g) funding requirements, capital expenditures, and repairs and
maintenance expense, (h) manufacturing objectives, including yield objectives by
ware type and planned capacity, (i) distribution objectives, (j) information
technology objectives, (k) engineering objectives, (l) sales plan, (m) marketing
plan, including marketing programs, (n) finance goals, (o) general
administrative goals, and (p) all expenditures proposed to be
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undertaken by Vitrocrisa for such year (the "PROPOSED BUDGET"). Upon preparation
of the Proposed Budget, the Managing Director shall promptly submit the Proposed
Budget to the Vitrocrisa Board for consideration.
7.2. PREPARATION OF THREE-YEAR STRATEGIC PLAN. In addition to the
annual preparation of the Proposed Budget, the Managing Director shall prepare a
strategic plan for the next succeeding three fiscal years (the "THREE-YEAR
STRATEGIC PLAN"), which shall substantially contain the three-year estimates or
projections of the following items for Vitrocrisa: (a) working capital
requirements, including accounts receivable, inventory, and accounts payable,
(b) sources of revenue (by geographic area, ware type, trade areas, etc.), (c)
selling, general, and administrative expense detail, (d) interest income and
interest expense, (e) repairs and maintenance expense, (f) capital expenditures,
(g) manufacturing objectives, including yield objectives by ware type and
planned capacity, (h) distribution objectives, (i) information technology
objective, (j) engineering objectives, (k) sales plan, (l) marketing plan,
including marketing programs, (m) finance goals, (n) general administrative
goals, and (o) income statement, balance sheet, and statements of cash flow. The
Managing Director shall distribute the Three-Year Strategic Plan to the
Vitrocrisa Board along with the Proposed Budget.
7.3. APPROVAL OF ANNUAL OPERATING BUDGET. Promptly after receipt of the
Proposed Budget and the Three-Year Strategic Plan, but in any event not less
than thirty (30) days prior to the end of the calendar year, the Vitrocrisa
Board shall meet to review the Proposed Budget and the Three-Year Strategic
Plan. Upon such review, the Vitrocrisa Board will vote on the Proposed Budget
and the Three-Year Strategic Plan. If the Proposed Budget is approved by
Extraordinary Directors Action, the Proposed Budget shall become Vitrocrisa's
operating budget for the next succeeding calendar year. If the Proposed Budget
is not approved by Extraordinary Directors Action, the Managing Director will
revise the Proposed Budget as soon as possible and resubmit it to the Vitrocrisa
Board for consideration by Extraordinary Directors Action. The operating budget
for the previous calendar year shall continue to govern the operations of
Vitrocrisa (but (a) revised to the extent the parties agree and (b) in any
event, adjusted for inflation provided that such adjustment does not affect
Libbey's Expected Sales target (as defined in the Distribution Agreement, dated
of even date, by and among Vitro, Crisa Corporation, Vitrocrisa, Libbey, and
Libbey Glass Inc.)) until such time as a Proposed Budget is approved by the
Vitrocrisa Board by Extraordinary Directors Action. If the Three-Year Strategic
Plan is approved by Extraordinary Directors Action, the Three-Year Strategic
Plan shall become Vitrocrisa's strategic plan for the next succeeding three
fiscal years. If the Three-Year Strategic Plan is not approved by Extraordinary
Directors Action, the Managing Director will revise the Three-Year Strategic
Plan as soon as possible and resubmit it to the Vitrocrisa Board for
consideration by Extraordinary Directors Action.
ARTICLE VIII
------------
Miscellaneous Provisions
------------------------
8.1. GOVERNING LANGUAGE. Notwithstanding the translation of this
Agreement or any of its Exhibits into Spanish or any other language, the English
language version of this Agreement and any of its Schedules and Exhibits shall
be controlling and shall govern in any legal proceeding;
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provided, however, that with respect to the Revised Vitrocrisa Estatutos the
Spanish language version shall control.
8.2. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
8.3. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties related to the subject matter hereof and supersedes any prior
understandings, agreements, or representations by or among the parties, written
or oral, that may have related in any way to the subject matter hereof.
8.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns.
8.5. ASSIGNMENT. No party may assign or otherwise transfer any of its
rights or obligations under this Agreement by operation of law or otherwise,
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld. Any purported or attempted assignment contrary to the
terms hereof shall be null and void and of no force or effect.
8.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
8.7. HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and are not part of this Agreement
and shall not affect in any way the meaning or interpretation of this Agreement.
8.8. NOTICES. All notices, demands, requests, and other communications
given hereunder shall be made in writing in English and shall be delivered in
person or by courier or overnight delivery service (delivery charge prepaid) or
telecopy (provided that the telecopy is confirmed by notice by certified mail,
courier, or overnight delivery service). Any notice, demand, request, or other
communication shall be effective only if and when it is received by the
addressee. For the purposes of the foregoing, the addresses and telecopier
numbers of the parties hereto are as follows:
If to Libbey or to LGA3, such notices shall be addressed to:
Libbey Inc.
300 Madison Avenue
Toledo, Ohio 43604
USA
Attn: General Counsel Fax No. (419) 325-2585
or to any subsequent address of which Libbey may notify the other parties in
writing.
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If to Vitro, such notices shall be addressed to:
Vitro Corporativo, S.A. de C.V.
Av. del Roble 660
Col. Valle del Campestre
Garza Garcia, N.L.
Mexico 66225
Attn: Director Juridico Internacional
Fax No. (528) 329-1372
or at any subsequent address of which Vitro may notify the other parties in
writing.
If to Vitrocrisa or VC Holding, such notices shall be
addressed to:
Vitrocrisa, S.A. de C.V.
Doblado 1627 Nte.
Col. Terminal
Monterrey, N.L. 64580
Attn: Director General Fax No. (528) 329-3009
or at any subsequent address of which Vitrocrisa may notify the other parties
in writing.
Any party hereto may change its address or telecopier number for the purposes
hereof by giving notice thereof to the other parties in the manner provided
herein.
8.9. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the United Mexican States.
8.10. Dispute Resolution.
-------------------
(a) The parties to this Agreement shall exert good faith efforts to
promptly resolve any controversy or claim arising out of or related to this
Agreement or the breach thereof within fifteen (15) days of receipt of notice by
one party from another party that such a controversy or claim exists. If the
parties fail to resolve such controversy or claim within such fifteen (15) day
period, they shall, unless otherwise provided in this Agreement, give notice in
writing to the CEOs, who will meet within fifteen (15) days of receipt of such
notice at a mutually acceptable time and place to attempt to resolve any such
controversy or claim. In the event the CEOs fail to meet or to resolve the
controversy or claim within such fifteen (15) day period, the controversy or
claim (other than business and operational decisions customarily exercised by
management in entities similar to Vitrocrisa) shall be settled by arbitration in
accordance with the then existing International Arbitration Rules of the
American Arbitration Association (hereinafter "AAA"), which shall commence upon
one party providing the other parties with a written demand for arbitration (the
"DEMAND FOR ARBITRATION").
(b) The arbitral tribunal shall be composed of three arbitrators, and
Libbey and Vitro shall each appoint one arbitrator. If Libbey or Vitro fail to
appoint an arbitrator within thirty (30) days after the date the claimant's
Demand for Arbitration is communicated to the other parties
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(hereinafter the "NOTIFICATION DATE"), the AAA shall make such appointment. The
two arbitrators thus appointed shall attempt to agree upon the appointment of a
third arbitrator to serve as chairman of the arbitral tribunal. If said two
arbitrators fail to agree upon the appointment of such third arbitrator within
sixty (60) days after the Notification Date, the AAA shall make such
appointment. The place of arbitration shall be Dallas, Texas, United States of
America. The arbitral proceeding shall be conducted in the English language.
(c) To the extent that they may validly so agree, the parties hereby
exclude any right of appeal to any court in connection with the arbitral award.
Judgment upon the arbitral award may be entered in any court having jurisdiction
thereof or having jurisdiction over any party or any party's assets.
(d) The validity of this SECTION 8.10 shall be governed by the United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards
or the Inter-American Convention on International Commercial Arbitration, to
which Mexico and the United States of America have adhered.
(e) All costs of arbitration and enforcement thereof, including
reasonable attorneys' fees and court costs, costs of expert witnesses,
transportation, lodging, and meal costs of the parties and witnesses, costs of
transcript preparation, and other reasonable and necessary direct and incidental
costs shall be apportioned to one or more of the parties by a majority of the
arbitrators as they deem appropriate. In the event any party to this Agreement
commences legal proceedings to enforce the arbitral award, the expense of such
litigation (including reasonable attorneys' fees and costs of court) shall be
borne by the party or parties not prevailing therein.
(f) This SECTION 8.10 will not apply to any matter that is to be
resolved pursuant to ARTICLE V or pursuant to ARTICLE VI.
8.11 CONFIDENTIALITY.
----------------
8.11.1. Each Shareholder shall use best efforts to maintain in
confidence and protect the confidentiality of all Confidential Information and
shall not disclose any Confidential Information to any third party not
affiliated with a Shareholder without the prior written consent of the other
Shareholder, provided that each Shareholder shall be entitled to use the
Confidential Information for any and all lawful purposes relating to its
business, operations and activities, including the financing and auditing
thereof. For purposes of this Agreement "Confidential Information" shall mean
all confidential or proprietary information of Vitrocrisa relating to its
business or operations or of a Shareholder which is provided for or in
connection with the business or operations of Vitrocrisa, which is provided to a
Shareholder or any of their respective Representatives (as defined below) by
Vitrocrisa or by any other Shareholder or any of its Representatives and
identified as confidential or proprietary as required by Section 8.11.6;
provided, however, that the term shall not include (i) information known to the
recipient prior to receipt thereof from the other Shareholder or from Vitrocrisa
in connection with this Agreement, (ii) information which, at the time of
disclosure hereunder, is already in the public domain, (iii) information which,
after disclosure hereunder, becomes part of the public domain by publication or
otherwise through no fault of the recipient, (iv) information obtained by a
recipient from a
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third party (not Affiliated with a Shareholder) in lawful possession of such
information which is not under a confidentiality obligation to the Person (as
defined below) from whom such information originated or (v) information that is
independently developed without the benefit of the Confidential Information.
8.11.2. Notwithstanding the provisions of Section 8.11.1, each
Shareholder may disclose Confidential Information to its or its Affiliates'
respective Representatives, provided that (a) such Representative has a need to
receive such Confidential Information to perform its duties, (b) the disclosing
Shareholder advises such Representative of the confidential nature of the
disclosed Confidential Information, and (c) the disclosing Shareholder uses all
reasonable efforts to cause such Representative to protect and maintain the
confidentiality of the disclosed Confidential Information as provided herein.
8.11.3. Notwithstanding the provisions of Section 8.11.1, each
Shareholder may disclose Confidential Information (i) in connection with reports
of earnings of a Shareholder, (ii) to the extent, in the opinion of such
Shareholder's legal counsel, required by the laws applicable to such
Shareholder, including without limitation, all securities laws, or (iii) in
cases involving dispute resolution under the procedures set forth in 8.10.
8.11.4 For purposes of this Section 8.11, the following terms
shall have the meanings given them below:
"Representatives" shall mean, with respect to any Person, such Person's owners,
stockholders, partners, directors, officers, employees, agents, consultants,
advisors (including, without limitation, auditors, engineers, financial
analysts, financial managers and attorneys), and lenders;
"Person" shall mean any natural person, any corporation, partnership, limited
liability company, trust or other entity, and any governmental or judicial
authority, body or entity;
"Affiliate" shall mean, with respect to any Person, the following: (i) any other
Person that directly, or indirectly through one or more intermediaries, controls
such Person, (ii) any other Person that is controlled by or is under common
control with such Person, or (iii) any subsidiary of such Person.
8.11.5. The obligations of the Shareholders under this Section
8.11 shall survive the expiration or termination of this Agreement to the
maximum extent permitted by applicable law.
8.11.6. To be Confidential Information, all information
disclosed in tangible form shall be conspicuously marked confidential or
proprietary at the time of initial disclosure to the recipient and information
conveyed orally shall be identified as confidential or proprietary at the time
of initial disclosure to the recipient and summarized in writing, conspicuously
marked confidential or proprietary and given to the recipient within thirty days
after the initial disclosure. Information not so identified will not be deemed
to be Confidential Information.
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8.11.7 In the event any Shareholder is requested or required
(by deposition, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or similar process), in
connection with any proceeding, to disclose any Confidential Information, the
Shareholder that is requested or required will give Vitrocrisa and the other
Shareholder written notice of such request or requirement so that the
Shareholder receiving the notice or Vitrocrisa may seek an appropriate
protective order or other remedy. In the event such protective order or other
remedy is not obtained in a timely manner, the Shareholder to whom such request
or requirement is directed will furnish only that portion of the Confidential
Information that, in the opinion of counsel to such Shareholder, is legally
required to be disclosed and, upon the request of the other Shareholder or
Vitrocrisa, use its best efforts to obtain assurances that confidential
treatment will be accorded to such information.
8.12. AMENDMENTS AND WAIVERS. This Agreement may be amended, modified,
superseded, or canceled and any of its terms, covenants, representations,
warranties, undertakings, or conditions may be waived only by an instrument in
writing signed by (or by some person duly authorized by) all of the parties
hereto or, in the case of a waiver, by the party waiving compliance.
8.13. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
8.14. EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
8.15. PRESS RELEASES AND ANNOUNCEMENTS. No party shall issue any press
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other parties hereto; provided, however, that
any party may make any public disclosure it believes in good faith is required
by law or regulation (in which case the disclosing party will advise the other
party prior to making the disclosure).
8.16. NO VIOLATION OF LAW. This Agreement shall not be construed to
require either party to be compelled, and no party will compel Vitrocrisa, to do
any act or remain in any situation in violation of any law of a governmental
authority applicable to such party.
8.17. VITRO UNDERTAKING. Vitro agrees to do such things and take such
actions so as to enable VC Holding and Vitrocrisa to fulfill its obligations
under this Agreement.
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8.18. LIBBEY UNDERTAKING. Libbey agrees to do such things and take such
actions so as to enable LGA3, VC Holding, and Vitrocrisa to fulfill its
obligations under this Agreement.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
LIBBEY INC.,
a Delaware corporation
By: /s/ A. H. Smith
---------------------------------------
Name:A. H. Smith
------------------------------------------
Title: Vice President
-----------------------------------
LGA3 CORP.,
a Delaware corporation
By: /s/ A. H. Smith
---------------------------------------
Name:A. H. Smith
------------------------------------------
Title: Vice President
-----------------------------------
VITRO, S.A., a sociedad anonima organized
under the laws of the United Mexican States
By: /s/ Claudio Del Ville
--------------------------------------
Name: Claudio Del Ville
------------------------------------
Title: Attorney in Fact
-----------------------------------
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VITROCRISA HOLDING, S.A. DE C.V., a sociedad
anonima with variable capital organized under
the laws of the United Mexican States
By: /s/ Roberto B. Rubio
--------------------------------------
Name: Roberto B. Rubio
------------------------------------
Title: Director General
-----------------------------------
VITROCRISA, S.A. DE C.V.,
a sociedad anonima with variable capital
organized under the laws of the United
Mexican States
By: /s/ Roberto B. Rubio
--------------------------------------
Name: Roberto B. Rubio
------------------------------------
Title: Director General
-----------------------------------
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