Exhibit 10.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BETWEEN
SOLUTIA INC.,
VITRO, S.A. DE C.V.
AND
VITRO PLAN, S.A. DE C.V.
FOR THE SERIES A, CLASS I AND CLASS II CAPITAL STOCK OF
QUIMICA M, S.A. DE C.V.
NOVEMBER 23, 2005
TABLE OF CONTENTS
Page
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ARTICLE 1 CONSTRUCTION AND DEFINITIONS.......................................2
1.1 Construction.......................................................2
1.2 Definitions........................................................2
ARTICLE 2 PURCHASE AND SALE OF SHARES; CLOSING..............................12
2.1 Purchase and Sale of Shares.......................................12
2.2 Payment of Purchase Price.........................................13
2.3 Closing...........................................................13
2.4 Closing Deliveries................................................13
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGEMENTS OF VITRO AND SELLER..............................14
3.1 Due Organization and Good Standing................................14
3.2 Enforceability; No Conflict.......................................15
3.3 Capitalization; Ownership of Equity...............................16
3.4 Financial Statements..............................................17
3.5 Books and Records.................................................17
3.6 Accounts Receivable...............................................17
3.7 Inventories.......................................................18
3.8 No Undisclosed Liabilities........................................18
3.9 No Material Adverse Effect........................................18
3.10 Absence of Certain Changes and Events.............................18
3.11 Real Estate Property; Encumbrances................................20
3.12 Condition and Sufficiency of Tangible Assets......................21
3.13 Intellectual Property.............................................21
3.14 Contracts; No Defaults............................................23
3.15 Customers and Suppliers...........................................25
3.16 Insurance.........................................................26
3.17 Taxes.............................................................26
3.18 Employee Benefit Plans............................................27
3.19 Employee Restrictions.............................................27
3.20 Labor Relations, Compliance with Law; Employees...................27
3.21 Environmental, Health and Safety Matters..........................28
3.22 Legal Proceedings; Orders.........................................30
3.23 Transactions with Affiliates......................................30
3.24 Brokers and Finders...............................................31
3.25 No Other Agreement................................................31
3.26 Customs Compliance................................................31
3.27 Product Warranty..................................................31
3.28 No Additional Representations.....................................31
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF BUYER..........31
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TABLE OF CONTENTS (Cont'd)
4.1 Due Organization and Good Standing................................32
4.2 Enforceability; No Conflict.......................................32
4.3 Certain Proceedings...............................................33
4.4 Investment Intent.................................................33
4.5 Brokers or Finders................................................33
4.6 Availability of Funds.............................................33
4.7 Investment Experience, Access to Information......................33
4.8 No Additional Representations.....................................33
ARTICLE 5 COVENANTS OF SELLER...............................................34
5.1 Access and Investigation..........................................34
5.2 Operation of the Business of the Company..........................34
5.3 Negative Covenant.................................................34
5.4 Required Approvals................................................35
5.5 Notification......................................................35
5.6 No Negotiation....................................................35
5.7 Reasonable Best Efforts...........................................36
5.8 Interim Financial Statements......................................36
5.9 Non-Competition and Non-Solicitation..............................36
5.10 Survey............................................................38
5.11 Water Rights......................................................38
ARTICLE 6 COVENANTS OF BUYER................................................39
6.1 Required Approvals................................................39
6.2 Reasonable Best Efforts...........................................39
6.3 Non-Solicitation..................................................39
6.4 Approval Order....................................................40
6.5 Notification......................................................40
6.6 Names, Trade or Service Marks.....................................41
6.7 Licensed Company Intellectual Property............................41
6.8 ASRAC Foundation..................................................41
6.9 Post Closing Cooperation..........................................41
6.10 Insurance.........................................................42
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE...............42
7.1 Accuracy of Representations and Warranties........................42
7.2 Seller's and Vitro's Performance..................................42
7.3 Consents and Approvals............................................43
7.4 Additional Documents..............................................43
7.5 No Proceedings....................................................44
7.6 No Claim Regarding Equity Ownership or Sale Proceeds..............44
7.7 No Prohibition....................................................44
7.8 No Adverse Change.................................................44
7.9 Intercompany Accounts.............................................44
7.10 Dividend..........................................................44
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TABLE OF CONTENTS (Cont'd)
7.11 Approval Order....................................................45
7.12 Survey............................................................45
7.13 Water Rights......................................................45
7.14 Frustration of Closing Conditions.................................45
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE..............45
8.1 Accuracy of Representations and Warranties........................46
8.2 Buyer's Performance...............................................46
8.3 Consents and Approvals............................................46
8.4 No Proceedings....................................................46
8.5 No Prohibition....................................................46
8.6 Intercompany Accounts.............................................47
8.7 Dividend..........................................................47
8.8 Approval Order....................................................47
8.9 Frustration of Closing Conditions.................................47
ARTICLE 9 TERMINATION.......................................................47
9.1 Termination Events................................................47
9.2 Effect of Termination.............................................48
ARTICLE 10 INDEMNIFICATION; REMEDIES.........................................48
10.1 Survival; Knowledge; Waiver.......................................48
10.2 Indemnification by Seller.........................................49
10.3 Indemnification by Buyer..........................................50
10.4 Time Limitations..................................................50
10.5 Limitations on Amount - Seller....................................51
10.6 Limitations on Amount - Buyer.....................................52
10.7 Procedure for Indemnification - Defense of Third Party Claims.....52
10.8 Procedure for Indemnification - Other Claims......................54
10.9 Calculation of Losses.............................................54
10.10 Sole Remedy.......................................................54
ARTICLE 11 TAX MATTERS.......................................................54
11.1 Tax Returns.......................................................54
11.2 Characterization of Indemnity Payment.............................55
11.3 Tax Records.......................................................55
11.4 Survival..........................................................55
11.5 Transfer Taxes....................................................56
11.6 Refunds and Credits...............................................56
ARTICLE 12 GENERAL PROVISIONS................................................56
12.1 Intercompany Accounts.............................................56
12.2 Dividend Payment..................................................56
12.3 Expenses..........................................................57
12.4 Public Announcements..............................................57
12.5 Notices...........................................................57
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TABLE OF CONTENTS (Cont'd)
12.6 Incorporation of Schedules and Exhibits...........................59
12.7 Entire Agreement and Negotiation..................................59
12.8 Seller's Disclosure Schedule......................................59
12.9 Time of Essence...................................................59
12.10 Drafting and Representation.......................................59
12.11 Severability......................................................60
12.12 Assignment; Successors; No Third-Party Rights.....................60
12.13 Enforcement of Agreement..........................................60
12.14 Waiver............................................................60
12.15 Governing Law.....................................................61
12.16 Jurisdiction; Service of Process..................................61
12.17 Counterparts......................................................61
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of
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November 23, 2005 by and between Solutia Inc., a corporation incorporated
under the laws of the State of Delaware, United States of America,
("Buyer"), Vitro, S.A. de C.V., a corporation incorporated under the laws of
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Mexico ("Vitro"), and Vitro Plan, S.A. de C.V., a corporation incorporated
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under the laws of Mexico ("Seller").
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RECITALS
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WHEREAS, Vitro owns sixty-five percent (65%) of the outstanding
equity securities of Seller;
WHEREAS, Buyer and Seller own all of the outstanding equity
securities of Quimica M, S.A. de C.V., a Mexican corporation (the
"Company");
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WHEREAS, Seller and Buyer, as assignee and successor in interest of
Monsanto International Holdings, Inc., entered into that certain Joint
Venture Agreement dated April 3, 1995 (the "JVA"), to set forth the terms
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and conditions of their joint participation in the Company;
WHEREAS, Seller owns 7,764 common, registered, outstanding, Series
"A" of Class I shares of stock, with par value of MxP$1.00 (One Peso 00/100
Mexican currency) per share (the "Class I Shares"), and 3,103,236 common,
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registered, outstanding, Series "A" of Class II shares of stock, with par
value of MxP$1.00 (One Peso 00/100 Mexican currency) per share (the
"Class II Shares" and, together with the Class I Shares, the "Shares"),
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which Shares represent an aggregate ownership interest of 51% (fifty one
percent) of the issued and outstanding capital stock of the Company and 100%
(one hundred percent) of Seller's ownership interest in the Company;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Shares for the Purchase Price and upon the terms
and conditions set forth in this Agreement;
WHEREAS, the parties hereto acknowledge their mutual authority to
execute this Agreement and to carry out the transactions contemplated
herein, authority which has not been limited, restricted or revoked in any
manner whatsoever as of the date of execution hereof; and
WHEREAS, Seller desires to sell and transfer all right, title and
interest in and to the Shares to Buyer, free and clear of any Encumbrance,
and Buyer desires to purchase from Seller the Shares, subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby expressly acknowledged, the
parties hereto agree as follows:
ARTICLE 1
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CONSTRUCTION AND DEFINITIONS
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1.1 CONSTRUCTION.
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Any reference in this Agreement to an "Article," a "Section" or a
"Schedule" refers to the corresponding Article, Section or Schedule of or to
this Agreement, unless the context indicates otherwise. The headings of
Articles and Sections are provided for convenience only and should not
affect the construction or interpretation of this Agreement. All words used
in this Agreement should be construed to be of such gender or number as the
circumstances require. The terms "include" and "including" indicate examples
of a foregoing general statement and not a limitation on that general
statement. Any reference to a statute refers to the statute, any amendments
or successor legislation, and all regulations promulgated under or
implementing the statute, as in effect at the relevant time. Any reference
to a Contract or other document as of a given date means the Contract or
other document as amended, supplemented and modified from time to time
through such date.
1.2 DEFINITIONS.
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For the purposes of this Agreement, the following terms and
variations on them have the meanings specified in this Section:
"$" means, unless the context specifically requires otherwise,
-
United States dollars.
"Accounts Receivable" means (a) all trade accounts receivable and
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other rights to payment from customers of the Company and the full benefit
of all security for such accounts or rights to payment, including all trade
accounts receivable representing amounts receivable in respect of goods
shipped, products sold or services rendered to customers of the Company, (b)
all other accounts or notes receivable of the Company and the full benefit
of all security for such accounts or notes, and (c) any claim, remedy or
other right related to any of the foregoing.
"Adverse Consequence" means any Liability, loss, damage (including
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incidental damages and lost profits, but excluding consequential and
punitive damages), claim, cost, deficiency, or expense (including costs of
investigation and defense, penalties and attorneys' fees and costs), whether
or not involving a third-party claim.
"Affiliate or "Affiliates", as applied to any Person that is not a
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human individual, means any other Person directly or indirectly controlling,
controlled by or under common control with such Person, including, but not
limited to, any Person and, as applied to any Person that is a human
individual, any other individual that is a member of such human individual's
immediate family (by blood, marriage or adoption), a member of such
individual's household, or an entity in which such individual participates
in management or an employer of such individual. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with") as used with respect to any
Person means (i) the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through ownership of voting securities, by contract or
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otherwise or (ii) the right to exercise directly or indirectly, 50% (fifty
percent) or more of the voting rights related to the shares or other equity
interest of such Person.
"Agreement" means this Stock Purchase Agreement, including Seller's
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Disclosure Schedule and Buyer's Disclosure Schedule and all Exhibits hereto,
as they may be amended from time to time in accordance with their terms.
"Ancillary Agreements" means the Supply Agreements, the Real Estate
--------------------
Sale and Purchase Agreement, the Transition Services Agreement, the Mutual
Release, the Confidentiality Agreement, the JVA Termination Agreement and
the Master Termination Agreement.
"Approval Order" has the meaning set forth in Section 7.11.
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"Bankruptcy Code" has the meaning set forth in Section 7.11.
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"Bankruptcy Court" has the meaning set forth in Section 7.11.
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"Business Day" means a day other than a Saturday, Sunday or other
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day on which banks located in Mexico City, Mexico are authorized or required
by Law to close.
"Business Sale" has the meaning set forth in Section 5.6.
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"Buyer" has the meaning set forth in the first paragraph of this
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Agreement.
"Buyer Indemnitees" has the meaning set forth in Section 10.2.
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"Buyer's Disclosure Schedule" means the Disclosure Schedule
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delivered pursuant to Article 4 by Buyer to Seller not less than five
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Business Days' prior to the execution and delivery of this Agreement,
together with any updates to it permitted by this Agreement.
"Bylaws" means the Company's bylaws, as amended.
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"Clarifying Letter" has the meaning set forth in Section 5.11(a).
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"Class I Shares" has the meaning set forth in the Recitals.
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"Class II Shares" has the meaning set forth in the Recitals.
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"Cleanup" means any investigative, monitoring, cleanup, removal,
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containment or other remedial or response action required by any
Environmental Law or Occupational Safety and Health Law.
"Closing" means the consummation and completion of the purchase and
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sale of the Shares.
"Closing Date" means the date on which the Closing actually takes
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place.
"Company" has the meaning set forth in the Recitals.
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"Company Contract" means any Contract under which at any time prior
----------------
to the Closing Date (a) the Company has or may acquire rights, (b) the
Company is or may become subject to Liability or (c) the Company or any of
its assets is or may become bound.
"Company Intellectual Property" has the meaning set forth in
-----------------------------
Section 3.13(a).
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"Company Real Estate Property" means a plot of land with a surface
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area of approximately 30,122.69 square meters owned by the Company as
reflected in the corresponding title deed, including the Improvements,
owned, leased or occupied by the Company on such property.
"Conditions Precedent for Closing" means the conditions precedent
--------------------------------
for Closing set forth in Articles 7 and 8.
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"Confidentiality Agreement" means the Confidentiality and Non-Use
-------------------------
Agreement substantially in the form attached hereto as Exhibit A.
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"Confidential Information" means any information concerning the
------------------------
business and affairs of the Company that is not already generally available
to the public, including any business plans, practices and procedures,
pricing information, sales figures, costs, profit or loss figures,
information relating to markets, customers, clients, suppliers, sources of
supply and customer lists, technology, products, product applications,
inventions, ideas, know-how, trade secrets, improvements, methods,
techniques, research and development, pilot plan programs, specifications,
processes, drawings, photographs, operational, technical and other data,
models, prototypes, designs, materials, quality control and test methods,
formulae, compositions, sketches, samples, discoveries, current and
anticipated client and customer requirements, data and other confidential or
proprietary business information.
"Consent" means any approval, consent, ratification, waiver or
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other authorization.
"Contemplated Transactions" means all of the transactions to be
-------------------------
carried out in accordance with this Agreement and the Ancillary Agreements,
including the purchase and sale of the Shares, the performance by the
parties of their other obligations under this Agreement and the execution,
delivery and performance of this Agreement and the Ancillary Agreements.
"Contract" means any contract, agreement, commitment,
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understanding, lease, license, franchise, warranty, guaranty, mortgage,
note, bond or other instrument (provided that such other instrument is
legally binding).
"Controlling Interest" means, with respect to any Person, the
--------------------
possession, directly or indirectly, of the power to direct or cause the
direction of the management, conduct or policies of such Person, whether
through ownership of voting securities, by contract or otherwise.
"Dividend" has the meaning set forth in Section 12.2.
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"Employee Benefit Plan" has the meaning set forth in Section 3.18(a).
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"Encumbrance" or "Encumbrances" means any charge, claim, mortgage,
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servitude, easement, right of way, community, covenant, equitable interest,
license, lease or other possessory interest, lien, option, pledge, security
interest, preference, priority, right of first refusal, limitation of domain
and/or use or similar restriction.
"Environment" means soil, land surface or subsurface strata,
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surface waters (including navigable water and ocean waters), groundwaters,
drinking water supply, stream sediments, ambient air (including indoor air),
plant life, animal life and any other similar medium or natural resource.
"Environmental, Health and Safety Liabilities" means any Adverse
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Consequence arising from or under Environmental Law or Occupational Safety
and Health Law, including those consisting of or relating to (a) any
environmental, health or safety matter or condition (including on-site or
off-site contamination, occupational safety and health and regulation of any
chemical substance or product), (b) any fine, penalty, judgment, award,
settlement, Proceeding, damages, loss, claim, demand and response,
investigative, monitoring, remedial or inspection cost or expense arising
under Environmental Law or Occupational Safety and Health Law, (c) financial
responsibility under any Environmental Law or Occupational Safety and Health
Law for Cleanup costs or corrective action, (whether or not such Cleanup has
been required or requested by any Governmental Body or other Person) and for
any natural resource damage, or (d) any other compliance, corrective or
remedial measures required due to non-compliance with or violation of any
Environmental Law or Occupational Safety and Health Law.
"Environmental Law" or "Environmental Laws" has the meaning set
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forth in Section 3.21(a).
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"Facility" means the Company Real Estate Property and its Improvements.
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"GAAP" means the generally accepted accounting principles for
----
financial reporting in Mexico ("Principios de Contabilidad Generalmente
Aceptados"), consistently applied.
"GCCL" means the Mexican General Commercial Companies Law ("Ley
----
General de Sociedades Mercantiles").
"General Law of Ecological Equilibrium and Environmental
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Protection" means the Mexican "Ley General del Equilibrio Ecologico y la
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Proteccion al Ambiente" and its regulations, as amended.
"Governing Document" means any charter, articles, bylaws,
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certificate, statement, statutes or similar document adopted, filed or
registered in connection with the creation, formation or organization of an
entity.
"Governmental Authorization" means any Consent, license, permit or
--------------------------
registration issued, granted, given or otherwise made available by or under
the authority of any Governmental Body or pursuant to any Law.
"Governmental Body" means any (a) nation (including Mexico and the
-----------------
United States), region, state, county, city, town, village, district or
other jurisdiction, (b) federal, state, local,
5
municipal, foreign or other government, (c) governmental or
quasi-governmental authority of any nature (including any governmental
agency, branch, department or other entity and any court or other tribunal),
(d) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, policy, regulatory or taxing authority or power of
any nature, or (e) official of any of the foregoing.
"Hazardous Material" or "Hazardous Materials" means any waste or
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other substance that is listed, defined, designated or classified as, or
otherwise determined to be, hazardous, radioactive or toxic or a pollutant
or a contaminant under any Environmental Law, including any admixture or
solution thereof, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefore and asbestos or
asbestos-containing materials.
"Housing Law" means the Mexican "Ley del Instituto del Fondo
-----------
Nacional para la Vivienda de los Trabajadores" and its regulations, as
amended.
"Improvements" means all buildings, structures, fixtures and other
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improvements located over the Real Estate Property.
"Indemnified Person" has the meaning set forth in Section 10.7(a).
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"Indemnifying Person" has the meaning set forth in Section 10.7(a).
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"Insurance Policies" has the meaning set forth in Section 3.16.
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"Intellectual Property" means any and all intellectual property and
---------------------
other proprietary rights (including rights in and to Confidential
Information) in any jurisdiction throughout the world including (a) patents,
patent applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) trademarks, service marks, trade dress, trade
names, trade secrets, logos, slogans, and designs, all applications,
registrations and renewals in connections therewith, and all goodwill
associated with any of the foregoing (collectively, "Marks"), (c)
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copyrights, works of authorship, and all registrations, applications and
renewals in connection therewith, (d) mask works and all registrations,
applications and renewals in connection therewith, (e) computer software
(including source and object codes), databases, data models or structures,
algorithms, system architectures and related documentation, data and
manuals, (f) rights in Internet web sites and domain names, (g) rights in
electronic mail addresses and in telephone, facsimile, cable or similar
numbers, and (h) all copies and tangible embodiments of any of the foregoing
(in whatever form or medium).
"Intercompany Accounts" means all accounts, notes and other monies
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(a) receivable by the Company from Buyer or its Affiliates, or Seller or its
Affiliates, or (b) payable by the Company to Buyer or its Affiliates, or
Seller or its Affiliates.
"Interim Balance Sheet" has the meaning set forth in Section 3.4.
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"Inventory" or "Inventories" means all inventories of the Company,
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wherever located, including all finished goods, work-in-process, raw
materials, spare parts and all other materials and supplies to be used or
consumed by the Company in the production of finished goods.
6
"Investment" as applied to any Person means (a) any direct or
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indirect purchase or other acquisition by such Person of any capital stock,
equity securities (including warrants, options and other securities
convertible directly or indirectly into equity securities) or other
ownership interests (including limited liability company, partnership and
joint venture interests) of any other Person and (b) any capital
contribution by such Person to any other Person.
"JVA" has the meaning set forth in the Recitals.
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"JVA Termination Agreement" means the JVA Termination Agreement
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substantially in the form attached hereto as Exhibit B.
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"Knowledge" means, with respect to Seller, the actual knowledge
---------
after reasonable investigation by or on behalf of the individuals listed on
Schedule I of Seller's Disclosure Schedule.
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"Law" or "Laws" means, with respect to any Person, any
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constitution, law, statute, treaty, rule, regulation, ordinance, code,
binding case law, principle of common law, or notice of any Governmental
Body (including those Governmental Bodies of the United States and Mexico),
applicable to such Person.
"Latest Balance Sheet" has the meaning set forth in Section 3.4.
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"Liabilities" includes liabilities or obligations of any nature,
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whether known or unknown, whether asserted, absolute, accrued, contingent,
choate, inchoate or otherwise, whether due or to become due, and whether or
not required to be reflected on a balance sheet prepared in accordance with
GAAP, including any liability for current and deferred Taxes.
"Master Termination Agreement" means the Master Termination
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Agreement substantially in the form attached hereto as Exhibit C,
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terminating (a) the existing PVB Sheet supply agreements dated April 3, 1995
between the Company and, respectively, Cristales Inastillables de Mexico,
S.A. de C.V. and Shatterproof, S.A. de C.V., (b) the letter agreement
between Buyer, Seller and the Company, dated as of April 1, 1995, concerning
Vitro Flex's purchase of PVB Sheet, (c) the letter agreement between Buyer
and Seller, dated as of December 19, 2001, concerning VVP America, Inc.'s
and Vidrios Templados Colombianos, S.A.'s purchase of PVB Sheet, (d) the
Administrative Services Termination Agreement dated May 1, 2000 between the
Company and Vitro Corporativo, S.A. de C.V., (e) the Directional Expense
Distribution Agreement dated January 1, 1994 between Vidrio Plano de Mexico,
S.A. de C.V., Cristales Inastillables de Mexico, S.A. de C.V., Shatterproof,
S.A. de C.V., Auto Templex S.A. de C.V. and the Company, as amended, and (f)
the Divisional Expense Distribution Agreement dated January 1, 1994 between
Vidrio, Vidrio Plano de Mexico, S.A. de C.V., Vitro Flotado, S.A. de C.V.,
Cristales Inastillables de Mexico, S.A. de C.V., Shatterproof, S.A. de C.V.,
Auto Templex S.A. de C.V. and the Company, as amended.
"Material" or "materially" means as interpreted by case Law of the
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State of New York.
"Material Adverse Effect" means any effect or change that would be
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(or could reasonably be expected to be) materially adverse to the business,
assets, condition (financial or otherwise), operating results, operations,
or business prospects of the Company, or to the ability of Seller to
7
consummate timely the Contemplated Transactions regardless of whether or not
such adverse effect or change can be or has been cured at any time or
whether Buyer has knowledge of such effect or change on the date hereof,
except for any effect or change that arises or results primarily from (a)
changes in economic, regulatory or political conditions generally, (b)
changes in conditions affecting the industries in which the Company operates
that have not had a disproportionate effect on the Company or (c) the loss
of any customers or suppliers of the Company as a result of the announcement
of the Contemplated Transactions.
"Material Contract" has the meaning set forth in Section 3.14(b).
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"Mexican" refers to something pertaining to the country of Mexico.
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"Mexican Federal Labor Law" means the Mexican "Ley Federal del
-------------------------
Trabajo", as amended.
"Mexican Income Tax Law" means the Mexican "Ley del Impuesto sobre
----------------------
la Renta", as amended.
"Mexico" means the United Mexican States.
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"Monthly Interim Financial Statements" has the meaning set forth in
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Section 5.8.
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"Mutual Release" shall mean the Mutual Release substantially in the
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form of Exhibit D attached hereto.
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"Non-Compete Parties" has the meaning set forth in Section 5.9(a).
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"Non-Compete Period" has the meaning set forth in Section 5.9(a).
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"Non-Solicitation Period" has the meaning set forth in Section
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5.9(d).
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"Occupational Safety and Health Law" means any Law designed to
----------------------------------
provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program that is legally binding or
imposed by a Governmental Body designed to provide safe and healthful
working conditions.
"Officer's Certificate" means a certificate of a Person signed on
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such Person's behalf by such Person's president or its chief financial
officer, stating that (i) the officer signing such certificate has made or
has caused to be made such investigations as are necessary to permit him to
verify the accuracy of the information set forth in such certificate and
(ii) to such Person's and such officer's knowledge, such certificate does
not misstate any material fact and does not omit to state any fact necessary
to make the certificate not misleading.
"Order" means any judicial order, injunction, judgment, decree
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(other than decrees applicable to the public in general), ruling, assessment
or arbitration award of any Governmental Body or arbitrator and any Contract
with any Governmental Body pertaining to compliance with Law.
8
"Ordinary Course of Business" refers to actions taken in the
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Company's normal operation, consistent with its past practice and having no
Material Adverse Effect on the financial or other condition, results of
operations, assets, Liabilities, equity, business or prospects of the
Company.
"Permitted Encumbrances" refers to (a) Encumbrances reflected on
----------------------
the face of Latest Balance Sheet or disclosed in the footnotes thereto, (b)
Encumbrances for Taxes that are not yet due and payable or that may
hereafter be paid without material penalty or that are being contested in
good faith, (c) statutory Encumbrances of landlords and workers', carriers',
materialmens', suppliers' and mechanics' or other like non-consensual
Encumbrances incurred in the Ordinary Course of Business, which are not yet
due and payable, (d) Encumbrances arising under original purchase price
conditional sales contracts and equipment leases with third parties entered
into in the Ordinary Course of Business, (e) Encumbrances disclosed in the
public record as of the date hereof that do not materially detract from the
value or materially interfere with the present or intended use of the
properties or assets to which they relate, (f) zoning, building and other
similar restrictions existing on the Real Estate Property prior to the
execution of this Agreement and that were imposed by competent authorities,
which do not materially impair the continued use or operation of the Real
Estate Property to which they relate in the conduct of the business of the
Company as currently conducted, (g) both (A) easements, covenants,
rights-of-way and other similar restrictions, each of which are disclosed in
the public record, and (B) any conditions that would be disclosed by an
optical inspection, which, in either case, do not materially impair the
continued use or operation of the Real Estate Property to which they relate
in the conduct of the business of the Company as conducted before the
Closing and do not cause, individually or in the aggregate, a Material
Adverse Effect, (h) other Encumbrances to which Buyer consents in writing,
and (i) Encumbrances set forth on Section 3.11(c)(iii) of Seller's
--------------------
Disclosure Schedule.
"Person" refers to an individual or an entity, including a
------
corporation, share company, limited liability company, partnership, trust,
association, Governmental Body or any other body with legal personality
separate from its equityholders or members.
"Pre-Closing Period" means the Taxable period, or portion thereof
------------------
(including all prior Taxable years or periods) ending on and including the
Closing Date, including that portion of any Straddle Period ending on the
Closing Date.
"Principal" shall mean a principal, employee, partner, shareholder,
---------
member, officer, director, agent, consultant or trustee.
"Proceeding" or "Proceedings" means any action, arbitration, audit,
---------- -----------
examination, investigation, hearing, litigation or suit (whether civil,
criminal, administrative, judicial or investigative, whether formal or
informal, and whether public or private), including, but not limited to,
labor strikes, collective or union disputes, claim of legal entitlement and
administration of any collective bargaining agreement by any labor union
("demanda de titularidad"), slowdowns or work stoppage, commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental
Body or arbitrator.
"Purchase Price" has the meaning set forth in Section 2.2.
-------------- -----------
9
"PVB Competitor" means any potential investor in Seller that both
--------------
(i) is listed on Schedule II of Seller's Disclosure Schedule, and (ii) at
-------------------------------------------
the time of any Investment in Seller by such potential investor either (x)
produces or sells PVB Sheet or (y) has a Controlling Interest in a Person
that produces or sells PVB Sheet.
"PVB Sheet" or "PVB Sheets" means clear and colored polyvinyl
--------- ----------
butyral sheet (including plasticizer and other additives incorporated
therein), optionally including a gradient color band, for automotive or
architectural applications.
"PVB Technology" means technical, engineering and manufacturing
--------------
information and know-how related to the production of PVB Sheet as practiced
by the Company and/or Buyer, including formulations and properties of and
specifications for PVB Sheet, mixing and processing of polyvinyl butyral
resin, plasticizers and additives, PVB Sheet extrusion, extruder screw and
sheeting die configurations, gradient color bands, sheet surface roughening,
moisture conditioning, operating procedures, quality control procedures,
manufacturing equipment design information, all improvements to any of the
foregoing (regardless of the developer or author thereof), and all
Intellectual Property and Confidential Information related to any of the
foregoing.
"Real Estate Property" means, collectively, the Company Real Estate
--------------------
Property and the Vidrio Real Estate Property.
"Real Estate Sale and Purchase Agreement" means the agreement for
---------------------------------------
the transfer of the Vidrio Real Estate Property to be executed on the
Closing Date, by the Company and Vidrio for a price of $400,000 on the terms
and conditions substantially similar to the form attached hereto as Exhibit E.
---------
"Release" means any release, spill, emission, leaking, pumping,
-------
pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration on or into the Environment, or into or out
of the Company Real Estate Property.
"Representative" means, with respect to a particular Person, any
--------------
director, officer, employee, agent, consultant, advisor, legal counsel,
accountant or other representative of that Person.
"Restricted Business" means the production, manufacture,
-------------------
distribution or sale of PVB Sheet.
"Restricted Territory" shall mean anywhere in the world where Buyer
--------------------
or any of its Affiliates currently or at any time during the Non-Compete
Period produces or sells PVB Sheet.
"Retirement Savings Law" means the Mexican "Ley de los Sistemas de
----------------------
Ahorro para el Retiro" and its regulations, as amended.
"Securities Act" means the Securities Act of 1933, as amended, and
--------------
the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of this
------
Agreement.
10
"Seller's Disclosure Schedule" means the Disclosure Schedule
----------------------------
delivered pursuant to Article 3 by Seller to Buyer concurrently with the
---------
execution and delivery of this Agreement, together with any updates to it
permitted by this Agreement.
"Shares" has the meaning set forth in the Recitals.
------
"Social Security Law" means the Mexican "Ley del Seguro Social" and
-------------------
its regulations, as amended.
"Straddle Period" means any Taxable year or period beginning on or
---------------
before the Closing Date and ending after the Closing Date.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity
of which (a) if a corporation, a majority of the total voting power of
capital entitled (without regard to the occurrence of any contingency and
whether contractually or otherwise) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (b) if a limited liability company,
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned
or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity
if such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses
or shall be or control any managing director or general partner of such
limited liability company, partnership, association or other business
entity.
"Supply Agreements" means, collectively, the VAU Supply Agreement
-----------------
and Vitro Flex Supply Agreement.
"Tax" or "Taxes" means (i) all federal, state, local and other
--- -----
taxes (whether domestic or foreign), charges, fees, duties (including
customs duties), levies or assessments, including income, assets, gross
receipts, net proceeds, alternative or add-on minimum, ad-valorem, turnover,
real and personal property (tangible and intangible), sales, use, franchise,
excise, value added, stamp, leasing, lease, user, transfer, fuel, excess
distributions, occupational, interest equalization, windfall profits,
severance, license, payroll, environmental, capital stock, disability,
employee or employment taxes, housing fund (INFONAVIT), employee's income
withholding, social security (IMSS) and retirement savings fund (SAR) and
other withholding and unemployment taxes, that are imposed by any
Governmental Body, and including any interest, penalties or additions to tax
attributable thereto, (ii) any Liability for a payment of the type described
in clause (i) as a result of being part of a consolidated, combined or
unitary group or being required to be included in any Tax Return related
thereto, and (iii) any Liability of the type described in clauses (i) or
(ii) as a result of any obligation to indemnify or otherwise assume or
succeed to the Liability of any Person.
"Tax Return" means any report, return or other information required
----------
to be supplied to a Governmental Body in connection with any Taxes.
11
"Transfer Pricing Study" means all documentation required by the
----------------------
Mexican Income Tax Law in its article 86, Section XII and related
provisions, in connection with transactions carried out by the Company and
its related parties resident abroad.
"Transfer Taxes" means sales, use, transfer, real property
--------------
transfer, recording, documentary, stamp, registration, stock transfer, goods
and services, harmonized sales or other value-added Taxes and any similar
Taxes.
"Transition Services Agreement" means the Transition Services
-----------------------------
Agreement substantially in the form attached hereto as Exhibit G to be
---------
executed on the Closing Date by the Company and Vitro Corporativo, S.A. de
C.V.
"VAU Supply Agreement" means the agreement for the supply of PVB
--------------------
Sheet to be executed on the Closing Date, by Buyer and/or one of its
Affiliates and Vitro Automotriz, S.A. de C.V., on the terms and conditions
substantially similar to the form attached hereto as Exhibit F.
---------
"Vidrio" means Vidrio Plano, S.A. de C.V., a corporation
------
incorporated under the laws of Mexico.
"Vidrio Real Estate Property" means a plot of land with a surface
---------------------------
area of approximately 22,756.72 square meters owned by Vidrio as reflected
in the corresponding title deed, including the Improvements, owned, leased
or occupied by the Company on such property.
"Vitro Flex" means Vitro Flex, S.A. de C.V., a corporation
----------
incorporated under the Laws of Mexico.
"Vitro Flex Supply Agreement" means the agreement for the supply of
---------------------------
PVB Sheet to be executed on the Closing Date, by Buyer and/or one of its
Affiliates and Vitro Flex, on the terms and conditions substantially similar
to the form attached hereto as Exhibit H.
---------
ARTICLE 2
---------
PURCHASE AND SALE OF SHARES; CLOSING
------------------------------------
2.1 PURCHASE AND SALE OF SHARES.
---------------------------
Subject to the terms, conditions and full satisfaction and/or
waiver of the Conditions Precedent for Closing set forth in this Agreement,
at the Closing Date, Seller will sell, assign, transfer, convey and deliver
to Buyer and Buyer will acquire, purchase and take delivery and assignment
from Seller, the Shares, free and clear of any and all Encumbrances;
provided, however, that in order to comply with Mexican Law, one of the
- -------- -------
Shares shall be purchased and acquired by Monchem International Inc.,
designated to that effect.
12
2.2 PAYMENT OF PURCHASE PRICE.
-------------------------
(a) The purchase price for the Shares (the "Purchase Price") shall
--------------
be the amount of nineteen million six hundred thousand dollars ($19,600,000)
legal currency of the United States of America, payable by Buyer to Seller
on the Closing Date.
(b) Payment of the Purchase Price required under this Section 2.2,
-----------
shall be made by wire transfer of immediately available funds to a bank
account designated in writing by Seller to Buyer and confirmed in writing by
Seller to Buyer no less than two Business Days prior to the Closing Date.
2.3 CLOSING.
-------
The Closing will take place at the offices of Kirkland & Ellis LLP,
Citigroup Center, 153 East 53rd Street, New York, New York 10022, commencing
at 9:00 a.m. (local time) on the next Business Day following full
satisfaction or waiver of the Conditions Precedent for Closing or such later
date as may be mutually agreed in writing by the parties hereto.
2.4 CLOSING DELIVERIES.
------------------
On the Closing Date:
(a) Seller or Vitro, as the case may be, shall deliver to Buyer:
(i) the definitive certificates representing the
Shares, Nos. 1 and 3 duly endorsed in property to
Buyer and Monchem International Inc.;
(ii) the Ancillary Agreements executed by Vitro,
Seller and its Affiliates, as applicable, and
such agreements shall be in full force and
effect;
(iii) an Officer's Certificate of each of Seller and
Vitro as to the accuracy of, respectively,
Seller's and Vitro's, representations and
warranties as of the date of this Agreement and
as of the Closing in accordance with Section 7.1,
-----------
and, solely in the case of Seller's Officer's
Certificate (A) its compliance with and
performance of its covenants and obligations to
be complied with or performed on or before the
Closing Date in accordance with Sections 7.2(a)
---------------
and 7.2(b)(ii) and (B) the satisfaction of the
----------
conditions set forth in Sections 7.3, 7.5, 7.6,
------------ --- ---
7.7 and 7.8;
--- ---
(iv) a certificate executed by the Secretary of the
Board of Directors of the Company on behalf of
the Company and not in a personal capacity as to
(A) the authorization of the Secretary to execute
and deliver documents on behalf of the Company,
(B) the capitalization (including all shares of
capital stock and all equity securities
exercisable for or convertible into shares of
capital stock) of the Company as of the Closing
Date and (C) the proper transfer of the Shares
from Seller to Buyer and the proper recordation
thereof in the stockholders' ledger of the
Company;
13
(v) an Officer's Certificate executed by Seller to
the effect that the Company is in possession of
copies of the charter and bylaws of the Company,
which are duly registered before the
corresponding Public Registry of Commerce, as
well as any and all amendments thereof;
(vi) the Company's stockholders' ledger, minute book
and capital variations book;
(vii) resignations effective as of the Closing Date of
those directors, alternate directors and
secretaries of the Company requested by Buyer in
writing at least 5 Business Days prior to the
Closing Date; and
(viii) all documents referred to in Section 7.4 hereof.
-----------
(b) Buyer shall deliver to Seller:
(i) the Purchase Price as specified in Section 2.2
-----------
hereof;
(ii) the Ancillary Agreements executed by Buyer and/or
its Affiliates, as applicable, and such
agreements shall be in full force and effect; and
(iii) an Officer's Certificate of Buyer as to (A) the
accuracy of Buyer's representations and
warranties as of the date of execution of this
Agreement and as of the Closing Date, in
accordance with Section 8.1 (B) as to its
-----------
compliance with and performance of its covenants
and obligations to be performed or complied with
on or before the Closing Date in accordance with
Sections 8.2(a) and 8.2(b)(ii) and (C) the
--------------- ----------
satisfaction of the conditions set forth in
Sections 8.3, 8.4 and 8.5; and
------------ --- ---
(iv) a copy of the Approval Order.
ARTICLE 3
---------
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF VITRO AND SELLER
--------------------------------------------------------------------
Each of Seller and, where applicable, Vitro represents, warrants
and acknowledges to Buyer that as of the date hereof and as of the Closing
Date (as though made then and as though the Closing Date were substituted
for the date of this Agreement throughout this Article 3), except as set
---------
forth in Seller's Disclosure Schedule:
3.1 DUE ORGANIZATION AND GOOD STANDING.
----------------------------------
(a) The Company is a corporation duly organized and validly
existing under the Laws of Mexico, with full corporate power and authority
to conduct its business as presently conducted, to own or use the properties
and assets that it purports to own or use, and to carry out or perform all
its obligations under all Company Contracts. The Company is duly qualified
to do
14
business in Mexico and is in good standing in each jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it in such jurisdiction, requires such
qualification, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a Material Adverse Effect. Seller has delivered to Buyer true and
complete copies of the Company's articles of incorporation and bylaws,
together in each case with all amendments through the date of this Agreement
and the Closing Date.
(b) Each of Vitro and Seller is a corporation duly organized and
validly existing under the Laws of Mexico, with full corporate power and
authority to conduct its business as presently conducted, to own or use the
properties and assets that it purports to own or use, and to carry out or
perform all its obligations under its material Contracts. Each of Vitro and
Seller is duly qualified to do business in Mexico and is in good standing in
each jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it in such
jurisdiction, requires such qualification, except in such jurisdictions
where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.
3.2 ENFORCEABILITY; NO CONFLICT.
---------------------------
(a) Each of Vitro, Seller and their Affiliates have the absolute
and unrestricted right, power and authority (including corporate power and
authority) to execute and deliver this Agreement and the Ancillary
Agreements to which they are a party and to perform their obligations under
this Agreement and such Ancillary Agreements, which actions have been duly
authorized and approved by all necessary action of each of Vitro, Seller and
their Affiliates. This Agreement has been duly authorized, executed and
delivered by Vitro and Seller and, assuming due authorization, execution and
delivery of this Agreement by Buyer, this Agreement constitutes the legal,
valid and binding obligation of each of Vitro and Seller, enforceable
against Vitro and Seller in accordance with its terms. Assuming due
authorization, execution and delivery of each Ancillary Agreement by Buyer,
each Ancillary Agreement to which any of Vitro, Seller or their Affiliates
becomes a party will, upon execution and delivery, be duly authorized,
executed and delivered and will constitute Vitro's, Seller's and each of
such Affiliates' legal, valid and binding obligation, enforceable against
each of Vitro, Seller and each such Affiliate, as the case may be, in
accordance with its terms.
(b) Except as disclosed on Section 3.2(b) of Seller's Disclosure
--------------
Schedule, none of Vitro, Seller or the Company are or will be required to
give any material notice to, or make any filing with, any Person or obtain
any Consent or Governmental Authorization in connection with the execution
and delivery of this Agreement or any Ancillary Agreement or the
consummation or performance of any of the Contemplated Transactions.
(c) Neither the execution and delivery of this Agreement nor any
Ancillary Agreement nor the consummation or performance of any of the
Contemplated Transactions will directly or indirectly (with or without
notice or lapse of time):
(i) contravene, violate, or result in a breach or
failure to comply with, any provision of the
Governing Documents of the Company, Vitro or
Seller or
15
any of their Affiliates which are a party to this
Agreement or any Ancillary Agreement;
(ii) contravene, violate, or result in a breach or
failure to comply with, any Company Contract,
Governmental Authorization, Law or Order to which
the Company, Vitro or Seller, or any of the
assets owned or used by the Company, may be
subject;
(iii) result in the imposition or creation of any
Encumbrance upon or with respect to the Shares or
any asset owned or used by the Company; or
(iv) give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated
Transactions.
3.3 CAPITALIZATION; OWNERSHIP OF EQUITY.
-----------------------------------
(a) The entire authorized capital stock of the Company consists as
of the date hereof of (i) 15,223 common, issued and outstanding Class I
shares of stock, with par value MxP$1.00 (One Peso 00/100 Mexican currency)
per share, representing the minimum fixed capital stock of the Company and
(ii) 6,084,777 common, issued and outstanding Class II shares of stock, with
par value of MxP$1.00 (One Peso 00/100 Mexican currency) per share,
representing the variable portion of the capital stock of the Company. There
are no other shares of capital stock of the Company issued or outstanding.
No legend or other reference to any purported Encumbrance appears upon any
certificate representing the Shares. Other than pursuant to this Agreement,
there are no Contracts providing for the issuance, sale or transfer of the
Shares. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its equity securities. Other
than as set forth on Section 3.3(a) of Seller's Disclosure Schedule, there
--------------
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company. Other than the
JVA and the Company's Bylaws, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock
of the Company, excluding any such voting trust, proxy or other agreement or
understanding entered into by Buyer with a party other than Vitro or Seller.
None of the outstanding shares of capital stock was issued in violation of
any Law. Except as set forth in Section 3.3(a) of Seller's Disclosure
--------------
Schedule, the Company does not own, or have any Contract to acquire, any
option, warrant, subscription, equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business.
(b) Seller is the record holder and has good, valid and marketable
legal and beneficial title to the Shares, free and clear from any and all
Encumbrances, other than those set forth in the JVA and the Bylaws. The
Shares represent an aggregate interest of 51% (fifty-one percent) of the
issued and outstanding capital stock of the Company and 100% (one hundred
percent) of Seller's ownership interest in the Company. All of the Shares
have been duly authorized, are validly issued, fully paid, and
non-assessable, and are held of record by Seller.
16
3.4 FINANCIAL STATEMENTS.
--------------------
Attached hereto as Exhibit I are the following financial
---------
statements: (a) audited balance sheets of the Company as of December 31,
2004 (the "Latest Balance Sheet") and December 31, 2003 including the notes
--------------------
thereto, and the related audited statements of income, changes in
stockholder's equity and cash flow for each of the fiscal years then ended,
together with the report thereon of Galaz, Yamazaki, Ruiz Urquiza, S.C.,
independent certified public accountants, and (b) an unaudited balance sheet
of the Company as of October 31, 2005 (the "Interim Balance Sheet") and the
---------------------
related unaudited statements of income, changes in stockholder's equity and
cash flow as of and for the ten months then ended, including in each case
the notes thereto. Such financial statements and notes have been prepared in
accordance with the books and records of the Company and fairly present, in
all material respects, the financial condition and the results of
operations, changes in stockholder's equity and cash flow of the Company as
at the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, except as otherwise noted in the
notes or schedules thereto, subject in the case of interim financial
statements to normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, cause a Material Adverse
Effect). The financial statements referred to in this Section reflect the
consistent application of GAAP throughout the periods involved, except in
each case as described in the notes or schedules thereto. No financial
statements of any Person other than the Company are required by GAAP to be
included in the financial statements of the Company.
3.5 BOOKS AND RECORDS.
-----------------
Except as set forth in Section 3.5(a) of Seller's Disclosure
--------------
Schedule (i) the books of account, minute books and other corporate records
of the Company dated or pertaining to events which occurred after July 1,
1995, all of which have been made available to Buyer, are accurate and
complete in all material respects and have been maintained in detail
sufficient to maintain proper records and to prepare the financial
statements of the Company in accordance with GAAP, and (ii) the minute books
of the Company contain accurate and complete records of all corporate action
taken by the Company's stockholders and directors required to be contained
therein and no such action has been taken for which minutes have not been
prepared and are not contained in such minute books. At the time of the
Closing, all of those books and records will be in the possession of the
Company or delivered to Buyer, except for books and records listed on
Section 3.5(b) of Seller's Disclosure Schedule and pertaining to both the
- --------------
Company and other business operations of Seller, which portions pertaining
to the Company's operations Seller will make available to Buyer after the
Closing promptly upon Buyer's request.
3.6 ACCOUNTS RECEIVABLE.
-------------------
All Accounts Receivable are reflected properly on the books and
records of the Company in which they have to be reflected and, to the extent
outstanding on the Closing Date, represent or will represent as of the
Closing Date valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. To the Knowledge of
Seller all such Accounts Receivable are and will be as of the Closing Date,
good and collectible at the aggregate recorded amounts thereof, net of any
applicable reserves for doubtful accounts reflected on the Interim Balance
Sheet in accordance with GAAP, and except as set forth on
17
Section 3.6 of Seller's Disclosure Schedule, there is no contest, claim,
- -----------
defense or right of setoff, other than returns in the Ordinary Course of
Business, under any Contract with any obligor of an Account Receivable in
excess of $5,000 individually or $10,000 in the aggregate relating to the
amount or validity of such Account Receivable. Section 3.6 of Seller's
-----------
Disclosure Schedule contains an accurate and complete list of all Accounts
Receivable in excess of $5,000 as of the date of the Interim Balance Sheet,
which list sets forth the aging of each such Account Receivable.
3.7 INVENTORIES.
-----------
Except as set forth in Section 3.7 of Seller's Disclosure Schedule,
-----------
all items included in the Inventories are of a quality and quantity usable
and, with respect to finished goods, salable in the Ordinary Course of
Business, except for obsolete items and items of below-standard quality, all
of which have been or will be written off or written down to net realizable
value on the Interim Balance Sheet or the accounting records of the Company
as of the Closing Date, as the case may be. All of the Inventories not
written off have been valued at net realizable value in accordance with
GAAP. Work-in-process Inventories are now valued and on the Closing Date
will be valued according to GAAP applied on a basis consistent with the
basis on which the Interim Balance Sheet was prepared. All Inventories,
except for such Inventory that is in transit, are maintained at the location
of the Real Estate Property listed in Section 3.11(a) of Seller's Disclosure
---------------
Schedule.
3.8 NO UNDISCLOSED LIABILITIES.
--------------------------
Except as disclosed on Section 3.8 of Seller's Disclosure Schedule,
-----------
the Company has no Liabilities (and there is no basis for any present or
future Proceeding against the Company giving rise to any Liability) except
for (i) Liabilities reflected or reserved against on the face of the Latest
Balance Sheet (including the notes thereto), (ii) current Liabilities
incurred in the Ordinary Course of Business since the date thereof and (iii)
Liabilities disclosed in Seller's Disclosure Schedule (which shall include
the performance obligations of the Company in accordance with the Company
Contracts disclosed in Section 3.14 of Seller's Disclosure Schedule and the
payment obligations of the Company in accordance with the employee benefit
plans disclosed in Section 3.18 of Seller's Disclosure Schedule) (in each
case with respect to (i), (ii) and (iii) above, none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach
of contract, breach of warranty, tort, infringement, or violation of Law).
3.9 NO MATERIAL ADVERSE EFFECT.
--------------------------
Except as set forth on Section 3.9 of Seller's Disclosure Schedule,
-----------
since the date of the Latest Balance Sheet there has not been any event or
occurrence which has had, or is reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect.
3.10 ABSENCE OF CERTAIN CHANGES AND EVENTS
-------------------------------------
Except as set forth on Section 3.10 of Seller's Disclosure
------------
Schedule, since the date of the Latest Balance Sheet, the Company has
conducted its business only in the Ordinary Course of Business and, except
for any actions required to be taken to consummate the Contemplated
Transactions, there has not been any:
18
(a) grant by the Company, Seller or Vitro of any equity option or
right to purchase shares of the Company; issuance by the Company, Seller or
Vitro of any security convertible into such equity; grant of any
registration rights; purchase, redemption, retirement or other acquisition
by the Company of any shares; or declaration or payment of any dividend or
other distribution or payment with respect to any of its shares;
(b) amendment to the Governing Documents of the Company;
(c) payment (except in the Ordinary Course of Business) or increase
by the Company of any bonuses, salaries or other compensation to any
director, officer or employee whose base annual salary exceeds $25,000;
(d) damage to or destruction or loss of any asset or property of
the Company which such asset or property had an aggregate book value to the
Company prior to such damage, destruction or loss in excess of $50,000,
whether or not covered by insurance;
(e) entry into, acceleration, modification, cancellation or
termination, or receipt of notice of termination, of (i) any license,
insurance, distributorship, dealer, sales representative, joint venture,
credit, guaranty or similar Company Contract, or (ii) any Contract or
transaction involving a total remaining commitment by or to the Company of
at least $50,000;
(f) sale, lease, license or other disposition of any asset or
property of the Company with a value that exceeds $10,000 (other than for
fair consideration and in the Ordinary Course of Business or for the
disposition of obsolete or worn-out assets in the Ordinary Course of
Business), including Intellectual Property, or the creation of any
Encumbrance on any material asset of the Company, including Intellectual
Property, except for Permitted Encumbrances;
(g) material acceleration or delay in the payment of accounts
payable or in the collection of Accounts Receivable;
(h) material change in the accounting methods used by the Company,
other than as required by GAAP;
(i) except as expressly contemplated by the annual budget that is
duly approved by the Company's board of directors in accordance with the
terms of the JVA, any capital expenditure (or series of related capital
expenditures) either involving more than $10,000 or outside the Ordinary
Course of Business;
(j) capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) by the Company, either involving more
than $10,000 or outside the Ordinary Course of Business;
(k) any indebtedness, note, bond, or other debt security created,
incurred, assumed, or guaranteed by the Company for borrowed money or
capitalized lease obligation either involving more than $25,000 singly, or
$50,000 in the aggregate;
19
(l) cancellation, compromise, waiver, or release by the Company of
any right or claim (or series of related rights or claims) either involving
more than $25,000 or outside the Ordinary Course of Business;
(m) any loan by the Company to, entrance by the Company into any
other transaction with, or modification of any existing arrangement with,
any of the Company's Affiliates, directors, officers, and employees (other
than the payment of compensation for employment and prepaid expenses or
advances for travel and entertainment to employees in the Ordinary Course of
Business);
(n) entrance by the Company into any employment contract outside
the Ordinary Course of Business or collective bargaining agreement, written
or oral, or modification to the terms of any such existing contract or
agreement;
(o) adoption, amendment, modification or termination of any bonus,
profit sharing, incentive, severance, or other plan, contract, or commitment
for the benefit of any of the Company's directors, officers, and employees
(or taken any such action with respect to any other Employee Benefit Plan);
(p) to Seller's Knowledge, no development, fact or circumstance has
arisen that could reasonably be expected to result in the loss, lapse or
abandonment of any Company Intellectual Property; or
(q) Contract by the Company to do any of the foregoing.
3.11 REAL ESTATE PROPERTY; ENCUMBRANCES.
----------------------------------
(a) Section 3.11(a) of Seller's Disclosure Schedule sets forth (i)
---------------
accurate legal descriptions, addresses and tax parcel identification numbers
("numeros de registro predial") of the Real Estate Property, (ii) an
accurate description of all leases of the Real Estate Property in which the
Company is a lessee and (iii) a description of any other interest in real
property used by the Company in its business.
(b) Except as set forth on Section 3.11(b) of Seller's Disclosure
---------------
Schedule, the Company owns good and valid legal and beneficial title and
marketable title to the Company Real Estate Property, free and clear of any
and all Encumbrances, except Permitted Encumbrances.
(c) Except as disclosed on Section 3.11(c) of Seller's Disclosure
---------------
Schedule, Seller has made available to Buyer true and complete copies of (i)
the most recent title deeds relating to the Real Estate Property, (ii) all
title insurance policies and surveys in the possession of Seller, the
Company or Vidrio of or pertaining to the Real Estate Property, and (iii)
all Contracts and other documents evidencing, creating or constituting
Encumbrances upon the Real Estate Property.
(d) Use of the Company Real Estate Property for the various
purposes for which it is presently being used is permitted as of right under
applicable zoning Law. All Improvements are in compliance with applicable
Law, including those pertaining to zoning, building and the disabled. No
part of any Improvement encroaches on any real property not included in the
Real
20
Estate Property, and there are no other Improvements primarily situated on
adjoining property which encroach on any part of the Real Estate Property.
Except as set forth on Section 3.11(d) of Seller's Disclosure Schedule, the
---------------
Company Real Estate Property on which each Improvement is located (i) abuts
on and has direct vehicular access to a public road or has access to a
public road via a permanent easement benefiting such parcel of Real Estate
Property and comprising a part of the Real Estate Property, (ii) is supplied
with public or quasi-public utilities and other services appropriate for the
operation of the Improvement, for which all capacity, "aportacion,"
connection, contracting, hook up, installation and infrastructure fees have
already been paid in full and (iii) is fully in possession of the Company.
To Seller's Knowledge, there is no existing or proposed plan to modify or
realign any street or highway or any existing or proposed eminent domain
Proceeding that would result in the taking of all or any part of the Real
Estate Property or that would prevent or hinder the continued use of the
Real Estate Property as heretofore used in the conduct of the business of
the Company.
3.12 CONDITION AND SUFFICIENCY OF TANGIBLE ASSETS.
--------------------------------------------
The Improvements are structurally sound, are in good operating
condition and repair, ordinary wear and tear excepted, are free from latent
and patent defects, and are adequate for the uses to which they are being
put. Except as set forth on Section 3.12 of Seller's Disclosure Schedule,
------------
each item of tangible personal property of the Company is in good operating
condition and repair, ordinary wear and tear excepted, is free from latent
and patent defects and is suitable for immediate use in the Ordinary Course
of Business for the uses to which they are being put. The Company has good
and marketable title to, or a valid leasehold interest in, the properties
and assets used by it, located on its premises, or shown on the Latest
Balance Sheet or acquired after the date thereof, free and clear of all
Encumbrances (other than Permitted Encumbrances), except for properties and
assets disposed of in the Ordinary Course of Business since the date of the
Latest Balance Sheet. The Real Estate Property and tangible personal
property of the Company constitute all such assets used by the Company or
necessary for the continued operation of the Company after the Closing in
the same manner as within the 12 (twelve) months prior to the Closing.
Except as set forth on Section 3.12 of Seller's Disclosure Schedule, the
------------
Company does not own or lease real estate property or tangible personal
property (a) not used in its business which is used by any other Person, or
(b) used in its business but the use of which is made available to other
entities for matters unrelated to the Company's business.
3.13 INTELLECTUAL PROPERTY.
---------------------
(a) Section 3.13(a) of Seller's Disclosure Schedule lists all
---------------
material Intellectual Property owned or used by the Company in the operation
of the Company's business as presently conducted, specifying whether such
Intellectual Property is owned or licensed by the Company, and also
indicating which of the Intellectual Property owned by the Company is
registered. The Company owns, free and clear of all Encumbrances, or has the
right to use pursuant to a valid and enforceable Contract all right, title
and interest in, to and under all Intellectual Property necessary for or
used in the operation of the Company's business as presently conducted
(together with the Intellectual Property owned by the Company, and
including, for the avoidance of doubt, the PVB Technology, the "Company
-------
Intellectual Property"). Except as set forth in Section 3.13(a) of Seller's
- --------------------- ---------------
Disclosure Schedule, each item of Company Intellectual Property will be
owned or available for use by the Company immediately after Closing on terms
and
21
conditions substantially similar to the terms and conditions under which the
Company owned or used such Intellectual Property immediately prior to the
Closing. The Company has taken all necessary actions to maintain and protect
each item of material Company Intellectual Property. The Company
Intellectual Property owned by the Company is valid, subsisting and
enforceable and the Company Intellectual Property licensed by the Company is
used pursuant to a valid and enforceable Contract. Except as set forth on
Section 3.13(a) of Seller's Disclosure Schedule, no loss or expiration of
- ---------------
any of the Company Intellectual Property is pending, or to Seller's
Knowledge, threatened or reasonably foreseeable.
(b) The Company is not interfering with, infringing, or otherwise
contravening any Intellectual Property of third parties, and, since the date
which is three (3) years prior to the date hereof, the Company has not
received any notice or other communication (whether oral or written)
regarding any actual, alleged or potential interference, infringement,
misappropriation or contravention (including offers or demands to license
any Intellectual Property) of any Intellectual Property of third parties. To
Seller's Knowledge, no event has occurred or circumstance exists that may
(with or without notice or lapse of time or both) constitute or result, nor
will the continued operation of the Company's business after the Closing as
presently conducted constitute or result, directly or indirectly, in any
such interference, infringement, misappropriation or contravention. To
Seller's Knowledge, no third party has interfered with, infringed upon,
misappropriated or otherwise contravened any Company Intellectual Property.
There are no claims or other Proceedings against the Company that were
either made within the past three (3) years or are presently pending
contesting the validity, use, ownership, enforceability or registrability of
any of the Company Intellectual Property, and, to the Knowledge of Seller,
no event has occurred or circumstance exists that may give rise to such a
challenge. No Intellectual Property owned by the Company is subject to any
outstanding Order. The Company has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other
contravention with respect to any Intellectual Property owned by the
Company.
(c) Section 3.13(c) of Seller's Disclosure Schedule identifies each
---------------
issued patent and each registered Mark, Internet domain name and copyright
owned by the Company and identifies each pending patent application or
application for registration of any Intellectual Property owned by the
Company. Seller has delivered to Buyer true and complete copies of all such
patents, registrations and applications, each as amended to date, and has
made available to Buyer true and complete copies of all other written
documentation evidencing ownership of each such item listed in Section
-------
3.13(c) of Seller's Disclosure Schedule. The Company is listed in the
- -------
records of the appropriate Mexican registry as the sole current owner of
record for each patent, registration and application for registration listed
in Section 3.13(c) of Seller's Disclosure Schedule.
---------------
(d) All past and present employees of, and consultants to, the
Company have entered into agreements pursuant to which such employee or
consultant agrees to protect the Confidential Information of the Company and
assign to the Company all Intellectual Property developed by such employee
or consultant in the course of his or her relationship with the Company,
without any restrictions or obligations whatsoever on the use of such
Intellectual Property by the Company.
22
(e) The material computer systems, including the software,
hardware, networks and interfaces, used in the operation of the Company's
business (collectively, "Systems") are sufficient for the current needs of
-------
the Company. The Systems set forth in Section 3.13(e) of the Seller's
---------------
Disclosure Schedule constitute all the Systems that are owned and operated
by the Company.
3.14 CONTRACTS; NO DEFAULTS.
----------------------
(a) Section 3.14(a) of Seller's Disclosure Schedule contains an
---------------
accurate and complete list of:
(i) each Company Contract that involves performance
of services or delivery of goods or materials by
the Company of an amount or value in excess of
$25,000 within a twelve (12) month period;
(ii) each Company Contract that involves performance
of services for or delivery of goods or materials
to the Company of an amount or value in excess of
$50,000 within a twelve (12) month period;
(iii) each Company Contract that was not entered into
in the Ordinary Course of Business that involves
the expenditure or receipt by the Company of an
amount or value in excess of $25,000 within a
twelve (12) month period;
(iv) each Company Contract that is a (A) mortgage,
indenture, note, installment obligation or other
instrument relating to the borrowing of money,
(B) letter of credit, guarantee, surety, bond or
other indemnity (including letters of credit,
bonds or other indemnities as to which the
Company is the beneficiary but excluding
obligations to indemnify customers in the
Ordinary Course of Business and endorsements of
instruments for collection in the Ordinary Course
of Business) or (C) currency or interest rate
swap, collar or hedge Contract;
(v) each Company Contract affecting the ownership of,
leasing of, title to, use of, or any other
interest in any real or material personal
property;
(vi) each Company Contract granting or obtaining any
rights to Intellectual Property (including
Contracts with current or former employees,
consultants or contractors regarding the
appropriation or the non-disclosure of any of the
Intellectual Property, none of which are required
to be disclosed in Section 3.14(a)(vi) of
-------------------
Seller's Disclosure Schedule but all of which
will be deemed to be "Material Contracts" for
purposes of this Agreement), except for (A)
licenses implied by the sale of a product and (B)
perpetual, paid-up licenses for commercially
available software programs with a replacement
cost and/or annual license fee of less than
$25,000 under which the Company is the licensee,
in each case identifying those licenses pursuant
to which the Company uses Intellectual Property
owned by a third party and the subject
Intellectual Property;
23
(vii) each Company Contract with any labor union or
other employee representative of a group of
employees;
(viii) each Company Contract involving a sharing of
profits, losses, costs or Liabilities by the
Company with any other Person;
(ix) each Company Contract containing confidentiality
covenants (other than Contracts entered into in
the Ordinary Course of Business containing
standard confidentiality clauses) or containing
covenants that in any way purport to restrict the
business activity of the Company or limit the
freedom of the Company to engage in any line of
business or to compete with any Person, or to use
any Intellectual Property (including settlement
and co-existence agreements);
(x) each Company Contract providing for annual
payments in excess of $25,000 to or by any Person
based on or determined by reference to sales,
purchases or profits, other than direct payments
for goods or services;
(xi) each power of attorney granted by the Company
that is currently effective and outstanding;
(xii) each Company Contract or other arrangement of the
Company involving a partnership or joint venture,
or similar Contract or arrangement;
(xiii) each Company Contract or other arrangement of the
Company with Seller or its Affiliates;
(xiv) each Contract or arrangement under which the
Company has advanced or loaned any amount in
excess of $5,000 to any of its directors,
officers, or employees;
(xv) each Company Contract under which the
consequences of a default or termination could
have a Material Adverse Effect, other than such
Contracts set forth in Section 3.14(c)(ii) of the
-------------------
Seller's Disclosure Schedule;
(xvi) each Company Contract for a sales agency, sales
representative, distributorship or franchise
agreement involving annual sales of $10,000 or
more; and
(xvii) each written warranty, guaranty or other similar
undertaking with respect to contractual
performance extended by the Company other than in
the Ordinary Course of Business.
(b) Seller has made available to Buyer a true and complete copy of
each of the Company Contracts listed on Section 3.14(a) of Seller's
---------------
Disclosure Schedule (each, a "Material Contract").
-----------------
24
(c) With respect to each Material Contract, except as disclosed in
Section 3.14(c) of Seller's Disclosure Schedule, (i) such Material Contract
- ---------------
is, with respect to the Company and, to Seller's Knowledge, with respect to
the other parties thereto, legal, valid, binding, enforceable, and in full
force and effect; (ii) such Material Contract will continue to be, with
respect to the Company, and, to Seller's Knowledge, with respect to the
other parties thereto, legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the Contemplated
Transactions, excluding such Contracts that will be terminated as set forth
on Schedule 3.14(c)(ii) of the Seller's Disclosure Schedule; (iii) the
Company is not, and, to Seller's Knowledge, no other party is in breach or
default in any material respect thereof, and no event has occurred that with
notice or lapse of time would constitute a breach or default in any material
respect thereof, or permit termination, modification, or acceleration, under
such Material Contract; and (iv) neither the Company nor to Seller's
Knowledge, any other party to a Material Contract has repudiated any
provision of such Material Contract. The Company has not given or received
notice or any other communication regarding any actual, alleged or potential
contravention of any Material Contract, it being understood that Seller
shall not be liable to Buyer for any losses or damages resulting from any
breach of the terms of any Material Contract by the other parties thereof
committed after the Closing Date (unless such breach also constitutes a
breach by Seller or the Company of any of the representations or warranties
or other terms of this Agreement).
(d) Except as set forth in Section 3.14(d) of Seller's Disclosure
Schedule, there currently are no renegotiations of or attempts to
renegotiate any Material Contracts, nor has any written demand for
renegotiation been made.
3.15 CUSTOMERS AND SUPPLIERS.
-----------------------
Section 3.15 of Seller's Disclosure Schedule lists the names of the
------------
20 largest customers and the 10 largest suppliers (measured in each case by
dollar volume of purchases or sales during the year ended on December 31,
2004) of the Company and the dollar amount of purchases or sales which each
such customer or supplier represented during the years ended on December 31,
2003 and on December 31, 2004. Except as set forth in Section 3.15 of
------------
Seller's Disclosure Schedules, there exists no actual, and Seller has no
Knowledge of any threatened, termination, cancellation or material
limitation of, or any material change in, the business relationship of the
Company with any customer, supplier, group of customers or group of
suppliers listed in Section 3.15 of Seller's Disclosure Schedule. No
------------
customer of the Company has any right to any credit or refund for products
sold or services rendered or to be rendered by the Company pursuant to any
Contract, understanding or practice of the Company other than pursuant to
the Ordinary Course of Business
The representations and warranties in this Section 3.15 shall not
------------
be deemed breached by a failure of any customer or supplier listed in
Section 3.15 of Seller's Disclosure Schedule to continue to be a customer or
- ------------
supplier of the Company after the date hereof, if such failure results from
the announcement of any of the Contemplated Transactions (provided that at
or prior to Closing Seller did not have any Knowledge that the foregoing was
pending or threatened).
25
3.16 INSURANCE.
---------
The Company maintains in full force and effect insurance policies
of such types and in amounts customary for the industry in which the Company
operates. Section 3.16 of Seller's Disclosure Schedule contains a list and
------------
brief description of each insurance policy (the "Insurance Policies") issued
------------------
to the Company as a "named insured" or otherwise providing insurance to the
Company as an insured party or additional insured party, or on any other
basis, that is currently or was during the past two years in effect. For
each such insurance policy, Section 3.16 of Seller's Disclosure Schedule
------------
sets forth the type of coverage provided by the policy, the identity of the
named insured, the policy number, the name of the insurance carrier, the
annual premium, the policy period and the policy liability limits. Section
-------
3.16 of Seller's Disclosure Schedule also contains a list and brief
- ----
description of all circumstances, potential claims, claims, damages,
injuries, occurrences, losses and lawsuits for which the Company, or any
Person on its behalf, has provided notice to any insurer or otherwise sought
coverage under any insurance policy or program identified in Section 3.16 of
------------
Seller's Disclosure Schedule currently outstanding. Seller and the Company
have complied in all material respects with each such insurance policy and
program and have not failed to give any material notice or present any
material claim thereunder in a due and timely manner which failure would
reasonably be expected to result in a loss or forfeiture of any right
thereunder.
3.17 TAXES.
-----
(a) The Company has filed (or has had filed on its behalf) on a
timely basis all Tax Returns required by applicable Law to be filed with any
Governmental Body with respect to any Pre-Closing Period on or before the
date hereof, and each such Tax Return is accurate and complete in all
material respects. The Company has paid or adequately reserved against on
the Interim Balance Sheet all Taxes due and owing by the Company pursuant to
applicable Law with respect to any Pre-Closing Period. The Company has not
requested an extension of time within which to file any Tax Return, which
has not since been filed. Seller and the Company have made available to
Buyer or its counsel, true and complete copies of all Tax Returns.
(b) The Company has and will have no additional Liability for Taxes
for Pre-Closing Periods, other than those (i) reflected as liabilities or
reserved against on the Interim Balance Sheet, and (ii) incurred in the
Ordinary Course of Business since the date of the Interim Balance Sheet,
consistent in type and amount with past practices of the Company. The
amounts reflected as liabilities or reserved against on the Interim Balance
Sheet for all Taxes are adequate to cover all unpaid Liabilities for all
such Taxes, whether or not disputed, that have accrued with respect to or
are applicable to the period ending on the date of the Interim Balance Sheet
and for which the Company may be directly or contingently liable in its own
right or as a transferee of the assets of, or successor to, any Person, as
of such date.
(c) Except as disclosed on Section 3.17 of the Seller's Disclosure
------------
Schedule, there are no federal, state, local or foreign audits or other
Proceedings exist with regard to any Taxes or Tax Returns of the Company.
Since November 23, 2002, neither Seller nor the Company has received any
written notice that an audit or other Proceeding is pending or threatened
with respect to any Taxes due from or with respect to the Company or any Tax
Return filed by or with
26
respect to the Company. Neither Seller nor the Company has granted or been
requested to grant any waiver of any statutes of limitations applicable to
any claim against the Company for Taxes.
(d) All Tax deficiencies that have been claimed, proposed or
asserted in writing against the Company have been fully paid or finally
settled, except for those Taxes that are being contested in good faith by
the Company, and no issue has been raised in writing in any examination
which, by application of similar principles, could be expected to result in
the proposal or assertion of a Tax deficiency for any other year not so
examined.
(e) No written position has been taken on any Tax Return with
respect to the business or operations of the Company for a taxable year for
which the statute of limitations for the assessment of any Taxes with
respect thereto has not expired that is contrary to any publicly announced
position of a taxing authority or that is substantially similar to any
position which a taxing authority has successfully challenged in the course
of an examination of a Tax Return of the Company.
(f) All Taxes that the Company is required by Law to withhold or
collect, including value added Taxes and amounts required to be withheld for
Taxes of employees, have been duly withheld or collected and, to the extent
required, have been paid over to the proper taxing authority or are held in
separate bank accounts for such purpose.
(g) There are no Encumbrances upon any properties or assets of the
Company arising from any failure or alleged failure to pay any Tax other
than Permitted Encumbrances.
3.18 EMPLOYEE BENEFIT PLANS.
----------------------
Section 3.18(a) of Seller's Disclosure Schedule, lists each plan,
---------------
fund or arrangements providing for benefits to the Company's employees
(each, an "Employee Benefit Plan").
---------------------
(a) Section 3.18(a) of Seller's Disclosure Schedule reflects all of
---------------
the Company's Employee Benefit Plans under which the Company has any
Liability; and
(b) All Employee Benefit Plans comply with and have received, if
required, favorable determination under applicable Law.
3.19 EMPLOYEE RESTRICTIONS.
---------------------
To Seller's Knowledge, and except for resignations requested by
Buyer pursuant to the terms of this Agreement, no director, officer, key
employee or group of employees of the Company intends to terminate his or
their employment with the Company.
3.20 LABOR RELATIONS, COMPLIANCE WITH LAW; EMPLOYEES.
-----------------------------------------------
(a) The Company has complied in all material respects with all Law
relating to employment practices, terms and conditions of employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining and plant closing. The Company is not liable
for the payment of any fines, penalties or other amounts, however
27
designated, for failure to comply with any applicable Law, other than such
fines, penalties or other amounts that, individually or in the aggregate,
will not exceed $10,000.
(b) Except as set forth in Section 3.20(b) of Seller's Disclosure
---------------
Schedule, there are no outstanding, or, to Seller's Knowledge, threatened,
individual or collective Proceedings pending with respect to (i) the alleged
violation of any Law pertaining to labor relations or employment matters,
(ii) profit sharing, (iii) any employment benefits, (iv) any other
employment related obligations of any kind, including, but not limited to
any and all mandatory as well as non mandatory benefits, contributions,
salaries, agreed-on benefits, hiring, promotion, dismissal, discrimination
or any kind of employment termination of employees involving the Company,
(v) any grievance or arbitration that might cause a Material Adverse Effect
upon the Company or the conduct of its business or (vi) any charge of
discrimination filed against the Company, nor does Seller have Knowledge of
any facts which could give rise to any such Proceeding. All mandatory and
voluntarily acquired contributions and employment related payments that are
required to be paid as of the Closing Date, have been legally and timely
paid.
(c) Since January 1, 2000, there has not been, there is not
presently pending or existing, and to Seller's Knowledge there is not
threatened, any strike, slowdown, picketing, employee grievance process or
other work stoppage or labor dispute involving the Company or the Facility.
Except as set forth on Schedule 3.20(c) of Seller's Disclosure Schedule, no
----------------
event has occurred or circumstance exists that may provide the basis for any
such work stoppage or labor dispute. There is no lockout of any employees by
the Company, and the Company contemplates no such action.
(d) Section 3.20(d) of Seller's Disclosure Schedule, contains a
---------------
list of the following information for each director, officer, and employee
of the Company, including each employee on leave of absence or layoff
status, and each independent contractor, consultant and agent with annual
compensation in excess of $10,000: name, job title, date of hiring or
engagement; and current compensation paid or payable and any change in
compensation since January 1, 2005.
3.21 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS.
----------------------------------------
(a) Except as disclosed on Section 3.21(a) of Seller's Disclosure
---------------
Schedule, the Company has obtained all environmental and material
non-environmental permits, licenses, surveys, studies and other
authorizations (each, a "Material Permit") that are required to carry on its
---------------
business as currently conducted under federal, state and municipal Laws
relating to pollution or protection of the environment, including Laws
relating to emissions, discharges, Releases or threatened Releases or
discharges of Hazardous Substances and Wastes (as those terms are defined in
the 1988 General Law of Ecological Equilibrium and Environmental Protection,
as amended from time to time and all rules and regulations enacted there
under, and any other applicable state and local Laws) into the Environment
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances
and Wastes (the "Environmental Laws").
------------------
(b) Except as disclosed on Section 3.21(b) of Seller's Disclosure
---------------
Schedule, the Facility is in compliance in all material respects with all
terms and conditions of all
28
environmental Material Permits and in all respects with all terms and
conditions of all non-environmental Material Permits.
(c) Except as disclosed on Section 3.21(c) of Seller's Disclosure
---------------
Schedule, there is no outstanding or, to the Knowledge of Seller, threatened
Proceeding, pending against the Company or the Company Real Estate Property
relating in any way to the breach or violation by the Company of
Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
there under applicable to the Company.
(d) Except as disclosed on Section 3.21(d) of Seller's Disclosure
---------------
Schedule, to Seller's Knowledge, the Company has not, placed, stored,
buried, dumped, transported or disposed of any Hazardous Substances and
Wastes or materials produced by, or resulting from the Business, activities,
operations, or processes carried out by the Company or any third parties
operating in their benefit, on, beneath, or adjacent to the Company Real
Estate Property, except for inventories of such substances to be used, and
wastes generated there from, in the Ordinary Course of Business of the
Company (which inventories and wastes, if any, were stored, transported and
disposed of in accordance with Environmental Laws and regulations and in a
manner such that there was no unlawful release of any such substances into
the environment).
(e) Except as disclosed on Section 3.21(e) of Seller's Disclosure
---------------
Schedule, no Release or Cleanup occurred at the Company Real Estate Property
used or occupied by the Company which could give rise to Environmental,
Health and Safety Liabilities, or the assertion or creation of an
Encumbrance on the Company Real Estate Property, by any Governmental
Authority with respect thereto, nor has any such assertion of an Encumbrance
been made by any Governmental Authority with respect thereto.
(f) Except as disclosed on Section 3.21(f) of Seller's Disclosure
---------------
Schedule, since November 23, 2000 neither the Company nor third parties
operating in its benefit have received any notice from any Governmental Body
or private or public entity advising it that it is responsible for or
potentially liable for remedial costs with respect to a Release, a
threatened Release or Cleanup of Hazardous Substances and Wastes or other
chemicals or materials procured by, or resulting from, the business,
activities, operations, or process being carried out by them, nor Seller is
aware of any facts which might reasonably give rise to such notice or to
Environmental, Health and Safety Liabilities.
(g) Except as disclosed on Section 3.21(g) of Seller's Disclosure
---------------
Schedule, with regard to the Company Real Estate Property, there are no past
or present or, to the Knowledge of Seller, future events, conditions,
circumstances, activities, practices, incidents, actions, or plans which may
interfere with or prevent compliance or continued compliance with the
Environmental Laws as in effect on the date hereof or with any regulation,
code, plan, order decree, judgment, injunction, notice or demand letter
issued, entered promulgated or approved there under applicable to the
Company.
29
3.22 LEGAL PROCEEDINGS; ORDERS.
-------------------------
(a) Section 3.22(a) of Seller's Disclosure Schedule lists any
---------------
Proceeding which is current or pending or which has been current or pending
at any time since November 23, 2002 (i) by or against the Company or that
otherwise relate to or may affect (x) the Shares, or (y) the business of, or
any of the assets owned or used by, the Company (excluding any Proceedings)
that could not result in Adverse Consequences to the Company in excess of
$10,000) or (ii) that challenge, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions. To Seller's Knowledge, no other such Proceeding
has been threatened, and no event has occurred or circumstance exists that
give rise to, or serve as a basis for the commencement of any such
Proceeding. Seller has made available to Buyer copies of all material
documents relating to such Proceedings. Such Proceedings will not
individually or in the aggregate have a Material Adverse Effect.
(b) Section 3.22(b) of Seller's Disclosure Schedule lists each
---------------
Order to which the Shares or, in the last 2 years, the Company or any of the
assets owned or used by it is or has been subject. To Seller's Knowledge, no
officer, director, agent or employee of the Company is subject to any Order
that prohibits such officer, director, agent or employee from engaging in or
continuing any conduct, activity or practice relating to the business of the
Company.
(c) The Company is, and at all times since December 31, 2003, has
been, in full compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it, is or has been
subject. Since November 30, 2004, no event has occurred or circumstance
exists that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement of
any Order to which the Shares, the Company, or any of the assets owned or
used by the Company, is subject. Neither Seller nor the Company has
received, at any time since December 31, 2003, any notice or other
communication from any Governmental Body or any other Person regarding any
actual, alleged or potential violation of, or failure to comply with, any
term or requirement of any Order to which the Shares, the Company, or any of
the assets owned or used by the Company, is or has been subject.
3.23 TRANSACTIONS WITH AFFILIATES.
----------------------------
(a) Except as disclosed in Section 3.23(a) of Seller's Disclosure
---------------
Schedule and for what is contemplated in the Ancillary Agreements, neither
Seller nor any Affiliate of Seller or the Company (i) has any interest in
any property (whether real, personal or mixed and whether tangible or
intangible), used in the Company's business, (ii) since December 31, 2002
has had any interest in any property (whether real, personal or mixed and
whether tangible or intangible), used in the Company's business, other than
properties used by the Company pursuant to an arm's length transaction
consummated in the Ordinary Course of Business on commercially reasonable
terms authorized in accordance with the terms of the JVA and Bylaws, if
necessary, and (iii) is a party to any Contract or other transaction with,
or has any claim or right against, the Company.
(b) Section 3.23(b) of Seller's Disclosure Schedule, describes all
---------------
services that Seller or an Affiliate of Seller provides to the Company
utilizing either assets not owned by the Company or persons not employed by
the Company.
30
3.24 BROKERS AND FINDERS.
-------------------
No finder, broker, agent, or other intermediary, acting on behalf
of Vitro, Seller or the Company, is entitled to a brokerage or finders' fees
or agents' commissions or other similar payment in connection with the
Contemplated Transactions.
3.25 NO OTHER AGREEMENT.
------------------
Neither Seller nor the Company, has any Contract or any kind of
arrangement or understanding with respect to a Business Sale.
3.26 CUSTOMS COMPLIANCE.
------------------
Except as disclosed on Section 3.26 of Seller's Disclosure
------------
Schedule, all duties, tariffs, taxes and land assessment on the importation
of the assets used, leased or owned by the Company were duly and timely
paid. The Company has complied and is in compliance with all non-tariff Law
requirements to which the assets, and their importation into or stay in
Mexico or the United States, are subject.
3.27 PRODUCT WARRANTY.
----------------
The Company has no known Liability (and, to Seller's Knowledge,
there is no basis for any present or future Proceeding against the Company
giving rise to any Liability) for replacement or repair of the products
manufactured and sold by it or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth in the
Interim Balance Sheet as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of the Company.
3.28 No Additional Representations.
-----------------------------
Seller acknowledges that, except as set forth in this Agreement,
the Ancillary Agreements and the certificates to be delivered hereunder, (i)
Buyer has not made any representation or warranty, expressed or implied, as
to the accuracy or completeness of any information furnished or made
available to Seller or its Representatives, (ii) Seller has not relied on
any representation or warranty from Buyer in determining to enter into this
Agreement, and (iii) Buyer and its Representatives shall not have or be
subject to any Liability to Seller resulting from the distribution to the
Seller, or Seller's use of, any such information and any information,
documents or material made available to Seller in any form in expectation of
the Contemplated Transactions.
ARTICLE 4
---------
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF BUYER
--------------------------------------------------------
Buyer represents, warrants and acknowledges to Seller that as of
the date hereof and as of the Closing Date (as though made then and as
though the Closing Date were substituted for the
31
date of this Agreement throughout this Article 4), except as set forth in
---------
Buyer's Disclosure Schedule:
4.1 DUE ORGANIZATION AND GOOD STANDING.
----------------------------------
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, with full corporate
power and authority to conduct its business as presently conducted, to own
or use the properties and assets that it purports to own or use, and to
carry out or perform all its obligations under this Agreement. Buyer is in
good standing in each jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities
conducted by it in such jurisdiction, requires such qualification, except
such jurisdictions where the failure to be so qualified or in good standing,
individually or in the aggregate, would not have a Material Adverse Effect.
4.2 ENFORCEABILITY; NO CONFLICT.
---------------------------
(a) Subject, with respect to Buyer, to entry of the Approval Order,
Buyer and its Affiliates have all requisite corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which
they are a party and to perform their obligations under this Agreement and
such Ancillary Agreements, which actions have been duly authorized and
approved by all necessary corporate action of Buyer. Assuming due
authorization, execution and delivery of this Agreement by Seller and
subject to entry of the Approval Order, this Agreement constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms. Assuming due authorization, execution and
delivery by the other parties thereto and subject to entry of the Approval
Order, each Ancillary Agreement to which Buyer and its Affiliates become a
party will, upon execution and delivery, constitute Buyer and its
Affiliates', as the case may be, legal, valid and binding obligation,
enforceable against Buyer and its Affiliates in accordance with its terms.
(b) Except as disclosed on Section 4.2(b) of Buyer's Disclosure
--------------
Schedule and for any notice required to be delivered to or consent to be
obtained from the Bankruptcy Court (including entry of the Approval Order),
Buyer is not and will not be required to give any notice to any Person or
obtain any Consent or Governmental Authorization in connection with the
execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
(c) Subject to entry of the Approval Order, neither the execution
and delivery of this Agreement nor the consummation or performance of any of
the Contemplated Transactions will directly or indirectly (with or without
notice or lapse of time):
(i) contravene, violate, or result in a breach or
failure to comply with, any provision of the
Governing Documents of Buyer;
(ii) contravene, violate, or result in a breach or
failure to comply with, any Contract,
Governmental Authorization, Law or Order to which
Buyer may be subject; or
32
(iii) give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated
Transactions pursuant to any provision of Buyer's
Governing Documents, any resolution adopted by
the board of directors or the stockholders of
Buyer, any Law or Order to which Buyer may be
subject, or any Contract to which Buyer is a
party or by which Buyer may be bound.
4.3 CERTAIN PROCEEDINGS.
-------------------
Other than Buyer's proceedings under Chapter 11 of the Bankruptcy
Code, there is no pending Proceeding that has been commenced or Order issued
against Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's knowledge, no such Proceeding or Order
has been threatened.
4.4 INVESTMENT INTENT.
-----------------
Buyer is acquiring the Shares for its own account pursuant to this
Agreement and not with a view to their public distribution within the
meaning of Section 2(11) of the Securities Act.
4.5 BROKERS OR FINDERS.
------------------
No finder, broker, agent or other intermediary acting on behalf of
Buyer is entitled to a brokerage or finders' fees or agents' commissions or
other similar payment in connection with the Contemplated Transactions.
4.6 AVAILABILITY OF FUNDS.
---------------------
Buyer has cash available sufficient to enable it to consummate the
Contemplated Transactions.
4.7 INVESTMENT EXPERIENCE, ACCESS TO INFORMATION.
--------------------------------------------
Buyer (i) is an investor experienced in the ownership of businesses
similar to the Company, (ii) has knowledge and experience in financial,
business and investment matters as to be capable of evaluating the merits
and risks of the Contemplated Transactions, and (iii) has the ability to
bear the economic risks of the Contemplated Transactions.
4.8 NO ADDITIONAL REPRESENTATIONS.
-----------------------------
Buyer acknowledges that, except as set forth in this Agreement, the
Ancillary Agreements, Seller's Disclosure Schedule and the certificates to
be delivered hereunder, (i) Seller has not made any representation or
warranty, expressed or implied, as to the accuracy or completeness of any
information furnished or made available to the Buyer or its Representatives,
(ii) Buyer has not relied on any representation or warranty from Seller in
determining to enter into this Agreement, and (iii) Seller and its
Representatives shall not have or be subject to any Liability to Buyer
resulting from the distribution to the Buyer, or Buyer's use of, any such
33
information and any information, documents or material made available to
Buyer in any form in expectation of the Contemplated Transactions.
ARTICLE 5
---------
COVENANTS OF SELLER
-------------------
5.1 ACCESS AND INVESTIGATION.
------------------------
Between the date of this Agreement and the Closing Date and upon
reasonable advance notice from Buyer, Seller will, and will cause the
Company and its Representatives to, (a) afford Buyer and its Representatives
and prospective lenders and their Representatives, if any, full and free
access to the Company's directors, officers and other personnel and
Representatives, properties (including for the purpose of conducting
subsurface testing), Contracts, invoices, books and records, Tax records and
other documents and data, equipment, inventory, customers and suppliers,
provided, however, that such access does not unreasonably disrupt the normal
operations of the Company, (b) furnish Buyer and its Representatives copies
of all such Company Contracts, books and records, and other documents and
data as Buyer may reasonably request, and (c) furnish Buyer and its
Representatives such additional financial, operating and other data and
information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
----------------------------------------
Between the date of this Agreement and the Closing Date, Seller
will, and will cause the Company to (a) conduct the business of the Company
only in the Ordinary Course of Business, (b) use its best efforts to
preserve intact the current business of the Company, keep available the
services of the current officers, employees and agents of the Company, and
maintain relations and goodwill with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with
the Company, (c) at the Buyer's reasonable request, confer with Buyer and
its Representatives concerning operational matters and (d) at the Buyer's
reasonable request, otherwise report periodically to Buyer concerning the
Company, including the status of the business, operations and finances of
the Company.
5.3 NEGATIVE COVENANT.
-----------------
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Seller will not, and will
not cause or permit the Company to, without the prior consent of Buyer,
which may not be unreasonably withheld, (a) take any affirmative action, or
fail to take any reasonable action within its control, as a result of which
any of the changes or events in Section 3.10 would occur or be likely to
------------
occur, (b) make any modifications to any Material Contract or Governmental
Authorization, (c) permit the levels of Inventories to vary materially from
the levels customarily maintained, (d) enter into any compromise or
settlement of any pending or threatened Proceeding to which the Company is a
party or for which the Company has any Liability, (e) make or change any
election with respect to Taxes or file any amended Tax Return or (f) make
any dividend payment or other distribution to the holders of its equity
interests other than the Dividend.
34
5.4 REQUIRED APPROVALS.
------------------
As promptly as practicable after the execution of this Agreement,
Seller will, and will cause the Company to, make all filings that they are
required by Law to make to consummate the Contemplated Transactions,
including any filings identified in Seller's Disclosure Schedule as an
exception to Section 3.2(b). Between the date of execution of this Agreement
--------------
and the Closing Date, Seller will, and will cause the Company to, (a)
reasonably cooperate with Buyer with respect to all filings that Buyer
elects to make or that Buyer is required by Law to make in connection with
the Contemplated Transactions, including, but not limited to, the
preparation and submittal of any and all filings required before the Mexican
Federal Competition Commission (Comision Federal de Competencia), and (b)
reasonably cooperate with Buyer in obtaining any Governmental Authorizations
and Consents required by the Bankruptcy Court or identified in Buyer's
Disclosure Schedule as an exception to Section 4.2(b); provided, however,
-------------- -------- -------
that this Section 5.4 will not require Seller to dispose of or make any
change in any portion of its business or to incur any other unreasonable
burden.
5.5 NOTIFICATION.
------------
Between the date of this Agreement and the Closing Date, Seller
will promptly notify Buyer in writing if the Company or Seller obtains
Knowledge of (a) any fact or condition that causes or constitutes a breach
of any of Seller's representations and warranties as of the date of this
Agreement, or (b) the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or
warranty had that representation or warranty been made as of the time of the
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in Seller's Disclosure Schedule, Seller will
promptly deliver to Buyer a supplement to Seller's Disclosure Schedule
specifying such change. Such delivery will not affect any rights of Buyer
under Article 9 and Article 10. During the same period, Seller will promptly
--------- ----------
notify Buyer of the occurrence of any breach of any covenant of Seller in
this Article or of the occurrence of any event that may make the
satisfaction of any of the conditions in Article 7 impossible or unlikely.
---------
5.6 NO NEGOTIATION.
--------------
Seller will, and will cause the Company and its and the Company's
Representatives to, immediately discontinue any negotiations or discussions
with any Person (other than Buyer and its Representatives) relating to any
business combination transaction involving the Company, including the sale
of any of the shares of the Company, any merger or consolidation, or the
sale (other than in the Ordinary Course of Business), of any of the assets
of the Company (any such transaction, a "Business Sale"). Until such time,
-------------
if any, as this Agreement is terminated pursuant to Article 9, Seller will
---------
not, and will cause the Company and each of Seller's and the Company's
Representatives not to, directly or indirectly, solicit, initiate, encourage
or entertain any inquiries or proposals from, discuss or negotiate with,
provide any information to, or consider the merits of any inquiries or
proposals from, any Person (other than Buyer and its Representatives)
relating to any Business Sale involving the Company. Seller will immediately
notify Buyer regarding any contact between Seller, the Company or their
respective Representatives and any other Person regarding any such
transaction or any related inquiry.
35
5.7 REASONABLE BEST EFFORTS.
-----------------------
Seller shall, and shall cause its Representatives to, execute such
documents and other instruments and take such further actions as may
reasonably be required or desirable to carry out the provisions hereof and
consummate the Contemplated Transactions. Seller will use its reasonable
best efforts to cause the conditions in Article 7 to be fully satisfied and
---------
do all things reasonably necessary, proper, or advisable in order to
consummate and make effective the Contemplated Transactions; provided,
however, that Seller will not be required to make any material change to its
business, dispose of any material asset, expend material funds, incur any
material burden or take actions that would result in a material adverse
change in the benefits to Seller of this Agreement and the Contemplated
Transactions.
5.8 INTERIM FINANCIAL STATEMENTS.
----------------------------
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Closing Date,
Seller will use its reasonable best efforts to provide Buyer within thirty
(30) days of the end of each calendar month, the Company's unaudited
consolidated balance sheet and the related consolidated statements of
income, changes in stockholder's equity and cash flow as of the end of or
for such month, as applicable (the "Monthly Interim Financial Statements").
The Monthly Interim Financial Statements will be prepared in a manner and
containing information consistent with the Company's current practices and
will be accompanied by an Officer's Certificate as to compliance with
Section 3.4.
- -----------
5.9 NON-COMPETITION AND NON-SOLICITATION
------------------------------------
(a) Covenant Not to Compete. Vitro and its Subsidiaries, including
-----------------------
but not limited to Seller (collectively, the "Non-Compete Parties"), hereby
-------------------
agree that for a period of five (5) years from and after the Closing Date
(the "Non-Compete Period"), no Non-Compete Party shall, and Vitro and Seller
------------------
shall not cause or permit any Non-Compete Party to
(i) engage, directly or indirectly, in the Restricted
Business in the Restricted Territory, or
(ii) advise, consult with or assist (whether or not
for consideration) in any way with respect or
pertaining to the Restricted Business, or provide
financial resources (except for payments made by
a Non-Compete Party pursuant solely to good faith
arm's length transactions entered into by such
Non-Compete Party in the Ordinary Course of
Business with a third party for the purchase of
goods or services required by such Non-Compete
Party in connection with the operation of its
business) in connection with the Restricted
Business, to any Person engaged, directly or
indirectly, in the Restricted Business in the
Restricted Territory,
in each case, through (x) any entity or as a Principal or (y) any
other means or in any other capacity or position, which means, capacity or
position (including those listed in (x) above) gives any Non-Compete Party a
Controlling Interest in another Person engaged in the Restricted Business in
the Restricted Territory.
36
(b) Any proposed Investment in Seller or any Subsidiary of Seller
by a PVB Competitor during the Non-Compete Period shall be subject to
Buyer's prior written consent, which will not be unreasonably withheld. The
ownership or control by any PVB Competitor of up to five percent (5%) of the
outstanding voting securities or any other class of securities of Seller or
any Subsidiary of Seller which are listed on a national securities exchange
or over-the-counter market shall not be deemed a violation of this Section
5.9(b).
(c) Notwithstanding the foregoing, nothing in Section 5.9(a) shall
--------------
limit or restrict the ability of any Non-Compete Party to continue to engage
in any business (other than the Restricted Business) in which it is
currently engaged, including, without limitation, the production,
manufacture, distribution, installation or sale of any flat glass, glassware
and glass container products, in which PVB Sheet is used. Further, the
ownership or control by any Non-Compete Party of up to five percent (5%) of
the outstanding voting securities or any other class of securities of Seller
or any Subsidiary of Seller which are listed on a national securities
exchange or over-the-counter market shall not be deemed a violation of this
Section 5.9(a).
(d) Non-Solicitation. Except to the extent Buyer may otherwise
----------------
consent in writing and except for individuals that are employed by Seller or
any of its Affiliates (but excluding the Company) as of the Closing Date,
for a period of three (3) years from and after the Closing Date (the
"Non-Solicitation Period"), each of Vitro, Seller and their Affiliates shall
-----------------------
not, and they shall cause each of their directors, officers, employees and
Affiliates not to, directly or indirectly induce or attempt to induce any
director, officer or employee of the Company to leave the employ of the
Company, or hire any Person who is at the time Vitro, Seller or any of their
Affiliates solicits such Person for employment, a director, an officer or an
employee of the Company.
(e) Enforceability. Vitro and Seller hereby specifically agree and
--------------
acknowledge that: (i) the covenants set forth in this Section 5.9 are
-----------
commercially reasonable and reasonably limited in time, scope of business
and geographical scope and in all other respects and are reasonably
necessary in light of the confidential and proprietary information of the
Company and Buyer to which Vitro and Seller have had access, (ii) the
covenants set forth in this Section 5.9 are reasonably necessary in light of
-----------
Buyer's desire to protect the legitimate interests it will acquire in the
Company and the difficulties of insuring such protection through any other
means and (iii) Buyer would not have entered into this Agreement but for the
covenants of Vitro and Seller under this Section 5.9 and the covenants
-----------
contained therein have been made to induce Buyer to enter into this
Agreement and to consummate the Contemplated Transactions. If the final
judgment of a court of competent jurisdiction declares that any term or
provision or any part thereof of this Section 5.9 is invalid or
-----------
unenforceable because it is more extensive (whether as to time period,
geographic area, scope of business or otherwise) than is deemed reasonable
in the circumstances, Buyer, Vitro and Seller agree that such term or
provision shall not be void and the court making the determination of
invalidity or unenforceability shall have the power to reduce the time
period, scope of business, geographic 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.
37
(f) Remedies. Vitro and Seller recognize and affirm that any breach
--------
of any provision of this Section 5.9 will result in irreparable harm for
-----------
which money damages would be inadequate and Buyer would have no adequate
remedy at law. Accordingly, Vitro and Seller agree (x) not to engage in any
practice or take or fail to take any action the purpose of which is to evade
the provisions of this Section 5.9, and (y) that in the event of a breach or
-----------
a threatened breach by Vitro or any of its Subsidiaries of any of the
provisions of this Section 5.9, Buyer, in addition and supplementary to
-----------
other rights and remedies existing in its favor, shall be entitled to seek
from any court of law or equity of competent jurisdiction specific
performance and/or injunctive or other relief in order to enforce or prevent
any violations of the provisions hereof (without posting a bond or other
security).
5.10 SURVEY.
------
Seller shall perform and deliver to Buyer a topographical survey
(the "Survey"), to be carried out by a topographer acceptable to Buyer, over
------
the Real Estate Property, to verify that the total physical area, metes and
boundaries of the Real Estate Property coincide to those contained in the
respective title deeds, as recorded before the Public Registry of Property
and Commerce and the Cadastre Office, located in Tlaxcala, State of
Tlaxcala, Mexico. If required prior to the Closing Date or within a
reasonable time after the Closing Date, Seller at its cost and expense shall
(i) update and deliver to Buyer the updated title to the Real Estate
Property, before the Public Registry of Property and Commerce located in
Tlaxcala, Mexico, and (ii) update and deliver to Buyer the total
construction surface information over the Real Estate Property before the
Cadastre Office, and pay the Real Estate Property Taxes, fines, charges,
fees and expenses relating to such update.
5.11 WATER RIGHTS.
------------
(a) Seller shall submit a clarifying letter before the National
Water Commission to clarify that the legal ground quoted as article 282- A
of the Federal Rights Law in the payment forms submitted by the Company in
connection to the payment of federal rights related to (i) the waste water
concession title number 04TLX101825/18FMGE00, (ii) the wastewater discharge
contaminants and (iii) the Company's compliance with the Official Mexican
Standards, is incorrect, and quote as the correct legal ground that the
Company should have used for the presentation of such payment forms Article
282, section I of the Federal Rights Law (the "Clarifying Letter").
-----------------
(b) Seller shall provide to Buyer the resolution issued by the
National Water Commission in response to the Clarifying Letter, promptly
upon issuance by the National Water Commission of such document, and shall
use its best efforts to obtain such resolution within a reasonable period of
time following Closing.
(c) Seller shall provide Buyer, within 6 (six) months following the
Closing Date, the original Water Concession Title, Wastewater Concession
Title and the Federal Land Concession Title and with evidence of their
inscription before the Public Registry of Water Rights.
38
ARTICLE 6
---------
COVENANTS OF BUYER
------------------
6.1 REQUIRED APPROVALS.
------------------
As promptly as practicable after the date of execution of this
Agreement, Buyer will make all filings that it is required by Law to make to
consummate the Contemplated Transactions, including any filings identified
in Buyer's Disclosure Schedule as an exception to Section 4.2(b). Between
--------------
the date of this Agreement and the Closing Date, Buyer will (a) cooperate
with Seller with respect to all filings Seller elects to make or that it is
required by Law to make in connection with the Contemplated Transactions
including, but not limited to, the preparation and submittal of any and all
filings required before the Mexican Federal Competition Commission (Comision
Federal de Competencia) and (b) cooperate with Seller in obtaining any
Governmental Authorizations and Consents required under the Bankruptcy Code
or identified in Seller's Disclosure Schedule as an exception to Section
-------
3.2(b); provided, however, that this Section will not require Buyer to
- ------ -------- -------
dispose of or make any change in any portion of its business or to incur any
other unreasonable burden.
6.2 REASONABLE BEST EFFORTS.
-----------------------
Buyer shall, and shall cause its Representatives to, execute such
documents and other instruments and take such further actions as may
reasonably be required or desirable to carry out the provisions hereof and
consummate the Contemplated Transactions. Except as set forth in the
provision to Section 6.1, Buyer will use its reasonable best efforts to
-----------
cause the conditions in Article 8 to be fully satisfied and do all things
---------
reasonably necessary, proper, or advisable in order to consummate and make
effective the Contemplated Transactions; provided, however, that Buyer will
-------- -------
not be required to make any material change to its business, dispose of any
material asset, expend material funds, incur any material burden or take
actions that would result in a material adverse change in the benefits to
Buyer of this Agreement and the Contemplated Transactions.
6.3 NON-SOLICITATION.
----------------
(a) Except to the extent Seller may otherwise consent in writing
and except for individuals that are employed by Buyer and its Affiliates or
the Company as of the Closing Date, during the Non-Solicitation Period,
Buyer and its Affiliates shall not, and Buyer shall cause its directors,
officers, employees and Affiliates not to, directly or indirectly induce or
attempt to induce any director, officer or employee of Seller or its
Affiliates (other than the Company) to leave the employ of Seller or its
Affiliates (other than the Company), or hire any Person who is at the time
Buyer or any of its Affiliates solicits such Person for employment, a
director, officer or employee of Seller or its Affiliates (other than the
Company).
(b) Buyer hereby specifically agrees and acknowledges that: (i) the
covenant set forth in this Section 6.3 is commercially reasonable and
-----------
reasonably limited in time, scope of business and geographical scope and in
all other respects and is reasonably necessary, (ii) the covenant set forth
in this Section 6.3 is reasonably necessary in light of Seller's desire to
-----------
protect
39
its legitimate interests and the difficulties of insuring such protection
through any other means and (iii) Seller would not have entered into this
Agreement but for the covenant of Buyer under this Section 6.3 and the
covenant contained herein has been made to induce Seller to enter into this
Agreement and to consummate the Contemplated Transactions. If the final
judgment of a court of competent jurisdiction declares that any term or
provision or any part thereof of this Section 6.3 is invalid or
-----------
unenforceable because it is more extensive (whether as to time period,
geographic area, scope of business or otherwise) than is deemed reasonable
in the circumstances, Buyer, Vitro and Seller agree that such term or
provision shall not be void and the court making the determination of
invalidity or unenforceability shall have the power to reduce the time
period, scope of business, geographic 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.
(c) Buyer recognizes and affirms that any breach of any provision
of this Section 6.3 will result in irreparable harm for which money damages
-----------
would be inadequate and Seller would have no adequate remedy at law.
Accordingly, Buyer agrees that in the event of a breach or a threatened
breach by Buyer or any of its Affiliates of any of the provisions of this
Section 6.3, Seller, in addition and supplementary to other rights and
- -----------
remedies existing in its favor, shall be entitled to seek from any court of
law or equity of competent jurisdiction specific performance and/or
injunctive or other relief in order to enforce or prevent any violations of
the provisions hereof (without posting a bond or other security).
6.4 APPROVAL ORDER.
--------------
As soon as practicable following the execution of this Agreement,
Buyer shall file with the Bankruptcy Court a motion seeking entry of the
Approval Order. Buyer agrees that it shall use commercially reasonable
efforts to have the Bankruptcy Court enter the Approval Order as soon as
practicable following execution of this Agreement. Seller agrees that it
shall promptly take actions, and Seller agrees to cause the Company to take
actions promptly, as are reasonably requested by Buyer to assist in
obtaining the Approval Order, including furnishing affidavits or other
documents or information for filing with the Bankruptcy Court.
6.5 NOTIFICATION.
------------
Between the date of this Agreement and the Closing Date, Buyer will
promptly notify Seller in writing if Buyer obtains knowledge of (a) any fact
or condition that causes or constitutes a breach of any of Buyer's
representations and warranties as of the date of this Agreement, or (b) the
occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence or
discovery of such fact or condition. Such notice will not affect any rights
of Seller under Article 9 and Article 10. During the same period, Buyer will
--------- ----------
promptly notify Seller of the occurrence of any breach of any covenant of
Buyer in this Article or of the occurrence of any event that may make the
satisfaction of any of the conditions in Article 7 impossible or unlikely.
---------
40
6.6 NAMES, TRADE OR SERVICE MARKS.
-----------------------------
Following the Closing, neither Buyer nor any of its Affiliates
(including the Company) shall use or permit the use of any Marks including
or similar to "Vitro", "Vitro Plan", the "V" block logo owned by Vitro or
any variants or derivatives thereof (the "Excluded Marks"). Buyer
--------------
acknowledges that as between Buyer and Seller the Excluded Marks are the
exclusive property of Vitro and agrees on behalf of itself and its
Affiliates (including the Company) that it will not attack the Excluded
Marks in any way nor use, register or seek to register any Mark which is the
same as or confusingly similar to an Excluded Mark.
6.7 LICENSED COMPANY INTELLECTUAL PROPERTY.
--------------------------------------
Buyer acknowledges that after the Closing, except as provided in
the Transition Services Agreement, the Company will have no right or
interest in, nor any right to use, any software or hardware that is
identified as "licensed" by the Company from Vitro or any of its Affiliates
on Section 3.13(a) of Seller's Disclosure Schedule. Within sixty days after
---------------
the Closing, the Company shall deliver any written and electronic material
in its possession relating to any software or hardware that is identified as
"licensed" by the Company from Vitro or any of its Affiliates on Section
-------
3.13(a) of Seller's Disclosure Schedule.
- -------
6.8 ASRAC FOUNDATION.
----------------
The Company and its employees participate in the employee savings
plan arrangement sponsored for Seller and its Affiliates by ASRAC Caja de
Ahorro, A.C. (the "ASRAC Foundation"). Within 60 days after the Closing,
----------------
Buyer shall cause the Company to create a separate employee savings plan for
the employees of the Company. The parties and Vitro shall cooperate with the
Company in good faith to transition the Company's employees then using the
services of the ASRAC Foundation from the ASRAC Foundation to the separate
employee savings plan to be created by the Company. Such cooperation shall
include the verification of account balances and outstanding employee loans,
as required by Law and the ASRAC Foundation's Governing Documents, and
completion of all necessary actions in connection with (a) the transfer of
funds to the Company or its employees equal to such amounts to which the
Company's employees are entitled, (b) the collection of amounts due to the
ASRAC Foundation by the Company's employees and (c) the Company's separation
from the ASRAC Foundation and the transfer of any partnership interest
(parte social) of the ASRAC Foundation owned by the Company to Seller or one
of its Affiliates for no further consideration.
6.9 POST CLOSING COOPERATION.
------------------------
After the Closing, upon reasonable written notice, Seller, on the
one hand, and Buyer, on the other hand, shall furnish or cause to be
furnished to each other, and their respective Affiliates and Representatives
access, during normal business hours, to such information and assistance
relating to the Company as is reasonably necessary for financial reporting,
human resources and accounting matters; provided that the party receiving
access to such information and assistance shall (i) execute a mutually
acceptable confidentiality agreement in favor of the party providing such
information and access, and (ii) reimburse the party providing such
information and access for all reasonable costs and expenses incurred in
connection with the cooperation required by this
41
Section 6.9. Neither party shall be required by this Section 6.9 to take any
- ----------- -----------
action that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations (or, in the case of Buyer, those
of the Company).
6.10 INSURANCE.
---------
Buyer agrees that, except as provided in this Section 6.10, the
coverage provided to the Company by the insurance policies in effect
immediately prior to the Closing Date, which are identified in Section 3.16
------------
of Seller's Disclosure Schedule, shall terminate at the Closing Date.
Without limiting the generality of the foregoing, Seller shall not have any
obligation with respect to the provision of insurance to Buyer or the
Company after the Closing Date; provided, however, that any circumstances,
-------- -------
damages, injuries, occurrences or losses occurring prior to the Closing
Date, but arising after the Closing Date, shall be covered by the Company's
insurance policies for up to two years after the date on which Buyer
acknowledges such circumstances, damages, injuries, occurrences or losses,
pursuant to articles 81 and 82 of the Mexican Insurance Agreement Law (Ley
sobre el Contrato de Seguro). Seller agrees to reasonably cooperate with the
Buyer and the Company in asserting any claims for recovery under such
policies.
ARTICLE 7
---------
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
---------------------------------------------------
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to full
satisfaction, on or before the Closing Date, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
The representations and warranties of each of Vitro and Seller
contained in this Agreement that are qualified as to materiality shall be
true and correct and the representations and warranties of Vitro and Seller
set forth in this Agreement and that are no so qualified shall be true and
correct in all material respects, in each case on the date of this Agreement
and on the Closing Date as though made on the Closing Date, except (i) those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time, which need only be
true and correct (or true and correct in all material respects, as
applicable) as of such date or with respect to such period and (ii) for
breaches or inaccuracies of representations or warranties required to be
taken to consummate the Contemplated Transactions or consented to in writing
by Buyer.
7.2 SELLER'S AND VITRO'S PERFORMANCE.
--------------------------------
(a) All of the covenants and obligations that each of Vitro or
Seller is required to perform or to comply with under this Agreement on or
before the Closing Date (considered both in the aggregate or individually)
must have been duly performed and complied with in all material respects.
42
(b) In addition, each of Seller and Vitro, as applicable, must have
delivered each document that Section 2.4(a) requires it to deliver, and
--------------
Seller must have performed and complied with, in all material respects, each
of the covenants and obligations in Sections 5.4 and 5.7 and each of the
------------ ---
covenants and obligations in this Agreement that each of Vitro and Seller is
required to perform or comply with on or before the Closing Date that
contains an express materiality qualification.
7.3 CONSENTS AND APPROVALS.
----------------------
Each of the Governmental Authorizations and Consents identified in
Section 3.2(b) of Seller's Disclosure Schedule required and necessary for
- --------------
the consummation of the Contemplated Transactions, shall have been obtained,
including, but not limited to, approval by Seller's Board of Directors and
the Company's General Ordinary and Extraordinary Shareholders' Meeting, in
order to carry out the Contemplated Transactions and the clearance from the
Mexican Federal Competition Commission (Comision Federal de Competencia).
7.4 ADDITIONAL DOCUMENTS.
--------------------
Each of the following documents must have been delivered by Seller
to Buyer:
(a) an opinion of Seller's and Vitro's outside New York counsel
dated the Closing Date, in form and substance reasonably acceptable to
Seller and Buyer, and which shall contain, at a minimum, an opinion
regarding enforceability;
(b) a General Ordinary Shareholders' Meeting minutes of the
Company, to be held on or before the Closing Date, whereby the following
resolutions will be adopted:
(i) approval of the Contemplated Transactions;
(ii) ratification of all corporate resolutions
previously adopted by the Company as from the
date of its incorporation and all actions taken
in performance of such resolutions;
(iii) the resignation of the proprietary and alternate
directors appointed by Seller, from their
positions as members of the board of directors of
the Company all of whom are set forth on Schedule
--------
7.8(b)(iii) attached hereto; and
-----------
(iv) revocation of all general and special powers of
attorney previously granted by the Company in
favor of the proprietary and alternate directors,
officers and attorneys-in-fact appointed by
Seller, except those general and special powers
of attorney and attorneys-in-fact as designated
by Buyer at least five (5) Business Days prior to
the Closing Date and the appointment, as designed
by Buyer at least five (5) Business Days prior to
the Closing Date, of new members of the board of
directors, attorneys-in-fact and their
corresponding powers of attorney.
43
(v) the approval by the ordinary shareholders of the
Company of the financial statements of the
Company as from December 31, 1999 through
December 31, 2004; and
(c) any other documentation reasonably required by Buyer to be
provided by Seller to Buyer to consummate the Contemplated Transactions.
7.5 NO PROCEEDINGS.
--------------
Since the date of this Agreement, there must not have been
commenced or threatened against Seller, or against any Affiliate of Seller,
any Proceeding (other than a Proceeding instituted by Buyer against Seller)
(a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING EQUITY OWNERSHIP OR SALE PROCEEDS.
----------------------------------------------------
There must not have been made or threatened by any Person who is
not a party to this Agreement any claim asserting that such Person (a) is
the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of or any other voting, equity or
ownership interest in the Company, or (b) is entitled to all or any portion
of the Purchase Price.
7.7 NO PROHIBITION.
--------------
The consummation or the performance of any of the Contemplated
Transactions must not directly or indirectly (with or without notice or
lapse of time), contravene, or cause Buyer or any Affiliate of Buyer to
suffer any Adverse Consequence under, (a) any applicable Law, Order or
Governmental Authorization or (b) any Law or Order that has been published,
introduced or otherwise proposed by or before any Governmental Body.
7.8 NO ADVERSE CHANGE.
-----------------
Since the date of execution of this Agreement, there shall not have
been a Material Adverse Effect.
7.9 INTERCOMPANY ACCOUNTS.
---------------------
Except to the extent permitted pursuant to Section 12.1, all
------------
Intercompany Accounts payable by Seller or its Affiliates to the Company, or
by the Company to Seller or its Affiliates shall have been paid and settled
in full, and no amounts shall be owed, in respect of the Company, by or from
Seller or its Affiliates.
7.10 DIVIDEND.
--------
Buyer shall have received, or shall receive in connection with the
Closing, 49% of the Dividend.
44
7.11 APPROVAL ORDER.
--------------
The United States Bankruptcy Court for the Southern District of New
York or any other court having jurisdiction over Buyer with respect to
Buyer's proceedings under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Court") shall have entered an order authorizing Buyer,
----------------
pursuant to Section 363 of Title 11 of the United States Code (as amended,
the "Bankruptcy Code"), to enter into this Agreement and the Ancillary
---------------
Agreements and consummate the Contemplated Transactions (the "Approval
--------
Order").
- -----
7.12 SURVEY.
------
Buyer shall have received the Survey, which shall be in form and
substance reasonably satisfactory to Buyer.
7.13 WATER RIGHTS.
------------
Buyer shall have received evidence, in form and substance
reasonably satisfactory to Buyer, that the Clarifying Letter was delivered
to the National Water Commission.
7.14 FRUSTRATION OF CLOSING CONDITIONS.
---------------------------------
Buyer may not rely on the failure of any condition set forth in
this Article 7 to be satisfied if such failure was caused solely by Buyer's
---------
failure to act in good faith or to use its reasonable efforts to cause the
Closing to occur as required by Section 6.2.
-----------
ARTICLE 8
---------
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
----------------------------------------------------
Seller's obligation to sell the Shares and to take the other
actions required to be taken by Seller at the Closing is subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions (any of which may be waived by Seller, in whole or in part):
45
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties of Buyer contained in this Agreement that are qualified as to
materiality shall be true and correct and the representations and warranties
of Buyer set forth in this Agreement and that are no so qualified shall be
true and correct in all material respects, in each case on the date of this
Agreement and on the Closing Date as though made on the Closing Date, except
(i) those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which
need only be true and correct (or true and correct in all material respects,
as applicable) as of such date or with respect to such period and (ii) for
breaches or inaccuracies of representations or warranties required to be
taken to consummate the Contemplated Transactions or consented to in writing
by Seller.
8.2 BUYER'S PERFORMANCE
-------------------
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with under this Agreement on or before the Closing Date
(considered both collectively and individually) must have been duly
performed and complied with in all material respects.
(b) In addition, Buyer must have (i) delivered each document that
Section 2.4(b) requires it to deliver, and (ii) performed and complied with,
- --------------
in all material respects, each of the covenants and obligations in Sections
--------
6.1 and 6.2 and each of the covenants and obligations in this Agreement that
- --- ---
Buyer is required to perform or comply with on or before the Closing Date
that contains an express materiality qualification.
8.3 CONSENTS AND APPROVALS.
----------------------
Each of the Governmental Authorizations and Consents identified in
Section 4.2(b) of Buyer's Disclosure Schedule required and necessary for the
- --------------
consummation of the Contemplated Transactions, shall have been obtained,
including, but not limited to, Buyer's Board of Directors and the Company's
General Ordinary and Extraordinary Shareholders' Meeting, in order to carry
out the Contemplated Transactions, and clearance from the Mexican Federal
Competition Commission (Comision Federal de Competencia).
8.4 NO PROCEEDINGS.
--------------
Since the date of this Agreement, there must not have been
commenced or threatened against Buyer, or against any Affiliate of Buyer,
any Proceeding (other than a Proceeding instituted by Seller or Vitro
against Buyer) (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions, or (b) that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the Contemplated Transactions.
8.5 NO PROHIBITION.
--------------
The consummation or the performance of any of the Contemplated
Transactions must not directly or indirectly (with or without notice or
lapse of time), contravene, or cause Seller or any Affiliate of Seller to
suffer any Adverse Consequence under, (a) any applicable Law, Order or
Governmental Authorization or (b) any Law or Order that has been published,
introduced or otherwise proposed by or before any Governmental Body.
46
8.6 INTERCOMPANY ACCOUNTS.
---------------------
Except to the extent permitted pursuant to Section 12.1, all
------------
Intercompany Accounts payable by Buyer or its Affiliates to the Company, or
by the Company to Buyer or its Affiliates shall have been paid and settled
in full, and no amounts shall be owed, in respect of the Company, by or from
Buyer or its Affiliates.
8.7 DIVIDEND.
--------
Seller shall have received, or shall receive in connection with the
Closing, 51% of the Dividend.
8.8 APPROVAL ORDER.
--------------
The Bankruptcy Court shall have entered the Approval Order.
8.9 FRUSTRATION OF CLOSING CONDITIONS.
---------------------------------
Seller may not rely on the failure of any condition set forth in
this Article 8 to be satisfied if such failure was caused solely by Seller's
---------
failure to act in good faith or to use its reasonable efforts to cause the
Closing to occur as required by Section 5.7.
-----------
ARTICLE 9
---------
TERMINATION
-----------
9.1 TERMINATION EVENTS.
------------------
Subject to Section 9.2, this Agreement may, by notice given before
-----------
or at the Closing, be terminated:
(a) by mutual written consent of Buyer and Seller;
(b) by Buyer if a Material Adverse Effect has occurred;
(c) by Buyer if Seller has committed a material breach of any
provision of this Agreement, Buyer has not waived such
breach and such breach is not curable, or, if curable, is
not cured within 20 days after written notice of such
breach is given to Seller by Buyer;
(d) by Seller if Buyer has committed a material breach of any
provision of this Agreement and Seller has not waived such
breach and such breach is not curable, or, if curable, is
not cured within 20 days after written notice of such
breach is given to Buyer by Seller;
(e) by Buyer if the satisfaction of any condition in Article 7
---------
is or becomes impossible (other than through the failure
of Buyer to comply with its obligations under this
Agreement) and Buyer has not waived such condition;
47
(f) by Seller if the satisfaction of any condition in Article
-------
8 is or becomes impossible (other than through the failure
-
of Seller to comply with its obligations under this
Agreement) and Seller has not waived such condition; or
(g) by Seller or Buyer, if the Closing does not occur within
120 days of the execution of this Agreement by Buyer and
Seller;
provided, however, that Buyer, if Buyer is seeking termination
pursuant to clause (e) or (g), or Seller, the Company or Vitro, if
Seller is seeking termination pursuant to clause (f) or (g), is not
then in material breach of any of its (or their) representations,
warranties, covenants or agreements contained in this Agreement.
9.2 EFFECT OF TERMINATION.
---------------------
Each party's right of termination under Section 9.1 is in addition
-----------
to any other rights it may have under this Agreement or otherwise, and the
exercise of such right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 9.1, all obligations of
-----------
the parties under this Agreement will terminate, except that the
representations in Sections 3.24 (Brokers and Finders) and 4.5 (Brokers and
----------------------------------- ----------------
Finders) and the obligations in Sections 12.3 (Expenses), 12.4 (Public
- -------- ------------------------ ------------
Announcements), and 12.16 (Service of Process) will survive; provided,
- -------------- -------------------------- --------
however, that if this Agreement is terminated by a party because of the
- -------
breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue
all legal remedies will survive such termination unimpaired.
ARTICLE 10
----------
INDEMNIFICATION; REMEDIES
-------------------------
10.1 SURVIVAL; KNOWLEDGE; WAIVER.
---------------------------
All representations, warranties, covenants and obligations in this
Agreement and any certificates (including Officer's Certificates) delivered
pursuant to this Agreement will survive the Closing and the consummation of
the Contemplated Transactions, subject to the limitations set forth in this
Article 10 and Article 11. The right to indemnification, payment of damages
- ---------- ----------
or other remedy based on such representations, warranties, covenants and
obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of having been acquired) about,
the accuracy or inaccuracy of or compliance or noncompliance with, any such
representation, warranty, covenant or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of damages or other remedy
based on such representation, warranty, covenant or obligation.
48
10.2 INDEMNIFICATION BY SELLER.
-------------------------
(a) Seller shall, subject to the other terms and conditions set
forth in Article 10, indemnify and hold harmless Buyer and its Affiliates,
including the Company, and their respective Representatives and equity
owners (collectively, the "Buyer Indemnitees") from and against, and will
-----------------
pay to the Buyer Indemnitees fifty-one percent (51%) of the monetary value
of, any Adverse Consequences arising, directly or indirectly, from or in
connection with:
(i) any breach of any representation or warranty made
by Seller to the extent made with respect to or
of, or regarding, the Company in (A) this
Agreement (B) any Officer's Certificate delivered
pursuant to the terms of this Agreement or (C)
any other certificate or document delivered by
Seller pursuant to this Agreement;
(ii) any Liabilities of the Company, except for
Liabilities (x) reflected or reserved against on
the face of the Latest Balance Sheet (including
the notes thereto), (y) incurred in the Ordinary
Course of Business since the date of the Latest
Balance Sheet and (z) Liabilities disclosed in
Seller's Disclosure Schedule (which shall include
the performance obligations of the Company in
accordance with the Company Contracts disclosed
in Section 3.14 of Seller's Disclosure Schedule
and the payment obligations of the Company in
accordance with the employee benefit plans
disclosed in Section 3.18 of Seller's Disclosure
Schedule), existing at or arising out of a state
of facts existing at or before the Closing Date,
except to the extent Seller indemnifies Buyer
Indemnitees from and against such Liabilities
under Section 10.2(a)(i) or Section 10.2(b); and
------------------ ---------------
(iii) any Taxes with respect to a Pre-Closing Period
(including, without limitation, any Taxes arising
from or relating to any Tax or Tax Return with
respect to a Pre-Closing Period arising from any
Transfer Pricing Study).
(b) Notwithstanding the foregoing, Seller shall, subject to the
other terms and conditions set forth in Article 10, indemnify and hold the
Buyer Indemnitees harmless from and against, and will pay to the Buyer
Indemnitees one hundred percent (100%) of the monetary value of, any Adverse
Consequences arising, directly or indirectly, from or in connection with:
(i) any breach of any representation or warranty made
by Seller with respect solely to itself or its
Affiliates (except to the extent any such
representation or warranty is made with respect
to or of, or regarding, the Company) in (A)
Article 3 of this Agreement, (B) an Officer's
---------
Certificate delivered pursuant to the terms of
this Agreement, or (C) any other certificate or
document delivered by Seller pursuant to this
Agreement, other than the Mutual Release, the JVA
Termination Agreement and the Confidentiality
Agreement;
49
(ii) any breach or violation by Seller of any covenant
or obligation in this Agreement; provided, that
the covenants of the Ancillary Agreements shall
not be considered to be covenants of this
Agreement;
(iii) any matter disclosed in Section 3.23
------------
(Transactions with Affiliates) of Seller's
Disclosure Schedule;
(iv) any gross negligence, willful or fraudulent
misconduct, or knowing or intentional violations
of Law, of or by Vitro, Seller or the Company;
and
(v) the failure to complete or file in a timely
manner a Transfer Pricing Study.
10.3 INDEMNIFICATION BY BUYER.
------------------------
Buyer shall, subject to the other terms and conditions set forth in
Article 10, indemnify and hold harmless Seller and its Affiliates and their
respective Representatives (collectively, the "Seller Indemnitees") from and
against and will pay to Seller one hundred percent (100%) of the monetary
value of any Adverse Consequences arising, directly or indirectly, from or
in connection with:
(a) any breach of any representation or warranty made by Buyer
with respect solely to itself or its Affiliates in (A)
Article 4 of this Agreement, (B) any Officer's Certificate
---------
delivered pursuant to the terms of this Agreement, or (C)
any other certificate or document delivered by Buyer
pursuant to this Agreement, other than the Supply
Agreements and the Real Estate Purchase and Sale
Agreement;
(b) any breach by Buyer of any covenant or obligation in this
Agreement, provided, that the covenants of the Ancillary
Agreements shall not be considered to be covenants of this
Agreement; and
(c) any gross negligence, willful or fraudulent misconduct, or
knowing or intentional violations of Law, of or by Buyer.
10.4 TIME LIMITATIONS.
----------------
(a) Seller's indemnity obligations and Buyer's right to make a
claim under Section 10.2 for breach of a representation or warranty, other
------------
than those in Section 3.3 (Capitalization; Ownership), 3.17 (Taxes), 3.21
--------------------------------------- ------------ ----
(Environmental Health and Safety), 3.23 (Affiliate Transactions), 3.24
- --------------------------------- ----------------------------- ----
(Brokers and Finders) or 3.25 (No Other Agreement), will expire on the
- --------------------- -------------------------
second anniversary of the Closing Date unless on or before the second
anniversary of the Closing Date, Buyer notifies Seller of a claim specifying
the factual basis of that claim in reasonable detail to the extent then
known by Buyer. Seller's indemnity obligations and Buyer's right to make a
claim under Section 10.2 for breach of any covenant or obligation of Seller
------------
to be performed or complied with after the Closing Date will expire upon the
expiration of the applicable statute of limitations. Seller's indemnity
obligations and Buyer's right to make a claim under Section 10.2 for breach
------------
of:
(i) Section 3.3 (Capitalization; Ownership), will not
---------------------------------------
expire;
50
(ii) Section 3.23 (Affiliate Transactions), Section
------------------------------------- -------
3.24 (Brokers and Finders) and Section 3.25 (No
-------------------------- ----------------
Other Agreement), will expire upon the expiration
----------------
of the applicable statute of limitations;
(iii) Section 3.17 (Taxes), will expire upon the
--------------------
expiration of the applicable statute of
limitations unless such statute of limitations is
extended solely as a result of Buyer's actions
(excluding actions taken in response to an
inquiry from a Governmental Body), in which case
Seller's indemnity obligations under Section 10.2
------------
for breach of Section 3.17 will expire on the
------------
fifth anniversary of the Closing Date;
(iv) Section 3.8 (No Undisclosed Liabilities) will
----------------------------------------
expire on the third anniversary of the Closing
Date; and
(v) Section 3.21 (Environmental Health and Safety)
----------------------------------------------
will expire on the fifth anniversary of the
Closing Date.
unless, prior to the expiration date thereof, Buyer
notifies Seller of a claim in connection with such a
breach specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer.
(b) Buyer's indemnity obligations under Section 10.3 for breach of
------------
a representation or warranty other than those in Section 4.1, which will not
-----------
expire, will expire on the second anniversary of the Closing Date unless on
or before the second anniversary of the Closing Date, Seller notifies Buyer
of a claim specifying the factual basis of that claim in reasonable detail
to the extent then known by Seller. Buyer's indemnity obligations and
Seller's right to make a claim under Section 10.3 for breach of any covenant
------------
or obligation of Buyer to be performed or complied with after the Closing
Date will expire upon the expiration of the applicable statute of
limitations.
10.5 LIMITATIONS ON AMOUNT - SELLER.
------------------------------
The Buyer Indemnitees shall not be entitled to indemnification for
Adverse Consequences under Section 10.2(a)(i): (i) with respect to any
------------------
individual item or matter, or items or matters arising out of similar facts
and circumstances, unless the amount of Adverse Consequences with respect to
such item(s) or matter(s) exceeds $5,000 and (ii) unless and until the total
monetary value of all Adverse Consequences exceeds $225,000, but then to the
full extent of such Adverse Consequences, including the initial $225,000;
provided, however, that an indemnification obligation of Seller pursuant to
Section 10.2(a)(iii) with respect to Taxes incurred in the taxable period
- --------------------
commencing January 1, 2005 shall not be deemed an Adverse Consequence solely
for purposes of this Section 10.5(ii). The foregoing limitations shall not
apply, however, to (a) Seller's breach of Section 3.3 (Capitalization;
----------------------------
Ownership), 3.8 (No Undisclosed Liabilities), 3.17 (Taxes), 3.21
- ---------- -------------------------------- ------------ ----
(Environmental Health and Safety), 3.23 (Affiliate Transactions), 3.24
- --------------------------------- ----------------------------- ----
(Brokers and Finders) or 3.25 (No Other Agreement) or any of its other
- --------------------- -------------------------
representations and warranties of which breach Seller had Knowledge before
the date on which Seller made such representation and warranty, or (b)
Seller's breach of any covenant or obligation under this Agreement.
Notwithstanding the foregoing, Seller shall not be liable under
51
Section 10.2 hereof for any Adverse Consequences in excess of the amount of
- ------------
the Purchase Price.
10.6 LIMITATIONS ON AMOUNT - BUYER.
-----------------------------
The Seller Indemnitees shall not be entitled to indemnification for
Adverse Consequences under Section 10.3(a): (i) with respect to any
---------------
individual item or matter, or items or matters arising out of similar facts
and circumstances, unless the amount of Adverse Consequences with respect to
such item(s) or matter(s) exceeds $5,000 and (ii) unless and until the total
monetary value of all Adverse Consequences exceeds $225,000, but then to the
full extent of such Adverse Consequences, including the initial $225,000.
The foregoing limitations shall not apply, however, to (a) Buyer's breach of
Section 4.5 (Brokers or Finders) or any of its other representations and
- --------------------------------
warranties of which breach Buyer had knowledge before the date on which it
made such representation and warranty, or (b) Buyer's breach of any covenant
or obligation. Notwithstanding the foregoing, Buyer shall not be liable
under Section 10.3 hereof for any Adverse Consequence in excess of the
amount of the Purchase Price.
10.7 PROCEDURE FOR INDEMNIFICATION - DEFENSE OF THIRD PARTY CLAIMS.
-------------------------------------------------------------
(a) As soon as reasonably practicable after receipt by a Person
entitled to indemnity under Section 10.2 or 10.3 (an "Indemnified Person")
------------ ---- ------------------
of notice of the assertion of a third-party claim or Proceeding
(collectively, a "Third Party Claim") against it, the Indemnified Person
-----------------
will, if a claim is to be made against a Person obligated to indemnify under
such Section (an "Indemnifying Person"), give notice to the Indemnifying
-------------------
Person of the assertion of such claim in writing and describing in
reasonable detail (to the extent known) the nature of the claim, the grounds
of the claim and the calculation (or an estimate) of the amount of the
claim. Thereafter, the Indemnified Person shall deliver to the Indemnifying
Person, promptly after the Indemnified Person's receipt thereof, copies of
all notices and documents (including court papers), if any, received by the
Indemnified Person relating to the Third Party Claim. An Indemnified
Person's failure to notify or delay in notifying an Indemnifying Person of a
Third Party Claim will not relieve the Indemnifying Person of any Liability
that it may have to the Indemnified Person, except to the extent that the
Indemnifying Person demonstrates that the resolution of such Third Party
Claim is prejudiced by the Indemnified Person's failure or delay to give
such notice.
(b) If any Third Party Claim is brought against an Indemnified
Person and the Indemnified Person gives notice to the Indemnifying Person of
such Third Party Claim, the Indemnifying Person will be entitled to
participate in and, to the extent that it wishes, to assume and control the
defense of such Third Party Claim with counsel selected by the Indemnifying
Person; provided, however, that such counsel is not reasonably objected to
by the Indemnified Person (unless the Indemnifying Person is also a party to
such Proceeding and the Indemnified Person shall have been advised by
counsel that there are one or more legal or equitable defenses available to
the Indemnifying Person and that the joint representation of both parties by
the same counsel would create a conflict of interest, in which case the
Indemnified Party may, at its option, assume and control the defense of such
Third Party Claim at the Indemnifying Party's expense using counsel
reasonably satisfactory to the Indemnifying Party). If the Indemnifying
Person elects to assume the defense of any Third Party Claim, it shall
within ten Business Days after its receipt of notice of a Third Party Claim
from the Indemnified Person, notify the
52
Indemnified Person in writing of such election. After notice from the
Indemnifying Person to the Indemnified Person of its election to assume the
defense of such Proceeding, the Indemnifying Person will not, as long as it
diligently conducts such defense, be liable to the Indemnified Person under
this Article for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently
incurred by the Indemnified Person in connection with the defense of such
Proceeding, other than reasonable costs of investigation. If the
Indemnifying Person chooses to defend or prosecute a Third Party Claim, all
the Indemnified Persons shall provide reasonable cooperation in the defense
or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Person's request) the provision to the Indemnifying
Person of records and information that are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. If the Indemnifying Person assumes the defense of a Proceeding,
(i) the Indemnified Person shall agree to any reasonable settlement,
compromise or discharge of a Third Party Claim that the Indemnifying Person
may recommend and that by its terms (1) obligates the Indemnifying Person to
pay the full amount of the Liability in connection with such Third Party
Claim, (2) expressly releases in full the Indemnified Person with respect to
such Third Party Claim, (3) involves only money damages and does not seek an
injunction or other equitable relief, and (4) would not otherwise adversely
affect the Indemnified Person, and (ii) in the event that the terms of any
settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Person may recommend do not release the Indemnified Person
completely in connection with such Third Party Claim or would otherwise
adversely affect the Indemnified Person, no compromise or settlement of such
claims may be effected by the Indemnifying Person without the Indemnified
Person's written consent.
(c) If notice is given to an Indemnifying Person of the
commencement of any Third Party Claim and the Indemnifying Person does not,
within ten Business Days after the Indemnified Person's notice is given,
give notice to the Indemnified Person of its election to assume the defense
of such Third Party Claim, the Indemnifying Person will be bound by any
determination made with respect to such Third Party Claim or any compromise
or settlement effected in good faith by the Indemnified Person.
(d) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result
of monetary damages for which it would be entitled to indemnification under
this Agreement, the Indemnified Person may, by notice to the Indemnifying
Person, assume the exclusive right to defend, compromise or settle such
Proceeding, but the Indemnifying Person will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
(e) Notwithstanding the provisions of Sections 10.7(a) through
----------------
10.7(d), Buyer will be entitled to assume control of any Cleanup and related
- -------
Proceeding arising from a claim relating to any Environmental, Health and
Safety Liability.
53
10.8 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS.
--------------------------------------------
A claim for indemnification for any matter not involving a
Third-Party Claim may be asserted by notice to the party obligated to
indemnify and will be paid promptly after such notice. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common Law remedy (including without limitation any
such remedy arising under Environmental Law or Occupational Safety and
Health Law) any party may have with respect to the Contemplated
Transactions.
10.9 CALCULATION OF LOSSES.
---------------------
The amount of any Third Party Claim for which indemnification is
provided under this Article 10 shall be net of any amounts actually
----------
recovered by the Indemnified Person under insurance policies with respect to
such Third Party Claim, provided, however, any increase in amounts payable
under such policies as a result of claims filed in respect of Adverse
Consequences hereunder shall be deemed to be Adverse Consequences for which
indemnification may be sought pursuant to the terms of this Agreement.
10.10 SOLE REMEDY.
-----------
Except as otherwise specifically provided in this Agreement and
except for claims or causes of action arising from fraud, each of Seller and
Buyer acknowledge that, following the Closing, its sole and exclusive
monetary remedy with respect to any and all claims relating to this
Agreement, and the transactions contemplated hereby shall be pursuant to the
indemnification provisions set forth in this Article 10.
----------
ARTICLE 11
----------
TAX MATTERS
-----------
11.1 TAX RETURNS.
-----------
(a) Seller shall cause the Company to prepare and file, or cause to
be prepared and filed, all of the Company's Tax Returns due on or before the
Closing Date for all taxable years or periods ending on or before the
Closing Date (to the extent the Company has not already done so) in a manner
consistent with the accounting methods and other practices used by the
Company in preparing its prior Tax Returns. The Company will pay any Taxes
shown as due thereon.
(b) As to Tax Returns of the Company due after the Closing Date for
tax periods ending on or before the Closing Date, Seller shall prepare (or
cause to be prepared) such Tax Returns in a manner consistent with the
accounting methods and other practices used by the Company in preparing its
prior Tax Returns; provided, however, that (i) Seller shall deliver (or
cause to be delivered) any such Tax Return to Buyer at least twenty (20)
days before it is due, (ii) Buyer shall be entitled to comment on such Tax
Return by written notice given within ten (10) Business Days after delivery
thereof, (iii) Seller shall consider each written comment in good faith,
(iv) Seller shall submit such Tax Return to Buyer at least two (2) Business
Days before such Tax Return is due (and such submitted Tax Return shall
reflect Buyer's written comments
54
to the extent Seller deems appropriate in accordance with the immediately
preceding clause (iii)), and (v) Buyer shall cause such submitted Tax Return
to be filed on a timely basis by the Company.
(c) As to any Tax Return of the Company for a Straddle Period,
Buyer shall cause the Company to prepare and file, or cause to be prepared
and filed, on a timely basis, such Tax Return in a manner consistent with
the accounting methods and other practices used by the Company in preparing
its prior Tax Returns. The Company will pay, or cause to be paid, all Taxes
shown as due thereon; provided, however, that with respect to any Tax Return
--------
for which Seller may be liable for an indemnity under Article 10: (i) Buyer
shall deliver (or cause to be delivered) any such Tax Return to Seller at
least twenty (20) days before it is due, (ii) Seller shall have the right to
examine and comment on any such Tax Return prior to the filing thereof, and
such Tax Return will not be filed without the prior written consent of
Seller, which consent shall not be unreasonably withheld, conditioned or
delayed, and (iii) Seller shall either provide such written consent or
notice of objection no later than ten (10) days before the Tax Return is
due. The provisions set forth herein will not affect Buyer's right to
indemnification as provided in Section 10.2.
------------
(d) After the Closing Date, the Company shall not, without the
prior written consent of Seller, which consent shall not be unreasonably
withheld, conditioned or delayed, file any amended Tax Return for a
Pre-Closing Period or a Straddle Period if Seller or any Affiliate thereof
might be liable for additional Taxes on such Tax Return under Article 10.
The provisions set forth herein will not affect Buyer's right to
indemnification as provided in Section 10.2.
------------
11.2 CHARACTERIZATION OF INDEMNITY PAYMENT.
-------------------------------------
All amounts paid by Buyer or Seller, as the case may be, by reason
of Section 10.2 or 10.3 will be treated to the extent permitted under
------------ ----
applicable Law as adjustments to the Purchase Price for all Tax purposes.
11.3 TAX RECORDS.
-----------
Seller will make available to Buyer and the Company such records as
Buyer and the Company may require for the preparation of any Tax Return and
such records as Buyer may require for the defense of any Proceeding
concerning such Tax Return. Buyer and the Company will make available to
Seller such records as Seller may require for the preparation of any Tax
Return and such records as Seller may require for the defense of any
Proceeding concerning any such Tax Return.
11.4 SURVIVAL.
--------
Except as set forth in Section 10.4, the covenants and agreements
------------
of the parties contained in this Article 11 and the representations and
warranties contained in Section 3.17 will survive the Closing and the
------------
consummation of the Contemplated Transactions and will remain in full force
and effect until the expiration of all applicable statutes of limitations.
55
11.5 TRANSFER TAXES.
--------------
Buyer, on the one hand, and Seller, on the other hand, shall pay
equally all Transfer Taxes arising out of or in connection with the
Contemplated Transactions. Buyer shall indemnify, defend, and hold harmless
Seller and Seller's Affiliates with respect to the portion of the Transfer
Taxes for which the Buyer is so responsible, and Seller shall indemnify,
defend, and hold harmless the Buyer with respect to the portion of the
Transfer Taxes for which Seller is so responsible.
11.6 REFUNDS AND CREDITS
-------------------
Seller shall be entitled to retain, or receive immediate payment
from the Company or Buyer of fifty one percent (51%) of any Tax refund or
credit of the Company (together with any interest thereon received with
respect thereto from the applicable Taxing Authority) attributable to any
Pre-Closing Period (or other Taxes for which Seller has paid under Article
10), including, without limitation, such refunds or credits with respect to
(a) the overpayment of Taxes relating to the "Impuesto Sobre la Renta" for
fiscal year 1994, (b) the non-deduction of the "Participacion de los
Trabajadores en las Utilidades" from Taxes paid for fiscal year 2004 and (c)
the deduction of the fiscal value of the Company's inventory as of December
31, 2004 from the Company's cost of sales, all of which are currently being
claimed in good faith by the Company; provided that any refund of Taxes with
respect to a Pre-Closing Period arising from a carryback of a loss arising
for any taxable period (or portion thereof) beginning after the Closing Date
(a "Post-Closing Period") shall be deemed to be a refund arising in a
Post-Closing Period. Buyer and Seller shall cooperate, and Buyer shall cause
the Company to cooperate with Seller, in claiming any Tax refund or credit
referred to in this Section 11.7, including without limitation by notifying
Seller of the existence of any facts that would constitute a reasonable
basis for claiming such a Tax refund, providing all relevant information
available to Seller or the Company with respect to any such claim, and
filing and diligently pursuing such claim. Any refund or credit of Taxes of
the Company for a Post-Closing Period shall be for the account of the
Company. Buyer and the Company shall permit Seller or its designated
Affiliate to control the prosecution of any such Tax refund or credit claim.
ARTICLE 12
----------
GENERAL PROVISIONS
------------------
12.1 INTERCOMPANY ACCOUNTS.
---------------------
At all times following the Closing Seller shall pay, and shall
cause each of its Affiliates to pay or cause to be paid, in full any Company
invoices outstanding as of the Closing or issued thereafter for PVB Sheet
ordered by and delivered to Seller or its Affiliates by the Company prior to
the Closing Date, as and when such invoices become due.
12.2 DIVIDEND PAYMENT.
----------------
Immediately prior to Closing, Buyer and Seller shall cause the
Company to declare a dividend to Buyer and Seller, payable 51% to Seller and
49% to Buyer, in an amount equal to the
56
amount of cash held by the Company as of Closing Date (as Buyer and Seller
jointly reasonably determine in good faith) less $1,500,000 (the
"Dividend").
--------
12.3 EXPENSES.
--------
Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of its
Representatives. Buyer will pay the Mexican Federal Competition Commission
filing fee. Seller and Buyer will cause the Company not to incur, and the
Company will not incur, any out-of-pocket fees or expenses in connection
with this Agreement. If this Agreement is terminated, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
12.4 PUBLIC ANNOUNCEMENTS.
--------------------
Except to the extent required by (i) Law, (ii) the rules of any
stock exchange on which the capital stock of a party hereto is traded or
(iii) as required in connection with Buyer's and its Affiliates' Proceedings
with the United States Bankruptcy Court, including Buyer's discussions with
its creditor constituents concerning this Agreement and the Contemplated
Transactions, no public announcement or similar publicity with respect to
this Agreement or the Contemplated Transactions will be issued by any party,
if at all, without the prior written consent of the other party. Seller and
Buyer will not and will not permit the Company to make any disclosure of the
Contemplated Transactions to any Person, except with their mutual written
consent or as required by Law (in which case each party will use its best
efforts to advise the other party prior to making the disclosure). Seller
and Buyer will consult with each other concerning the means by which the
Company's employees, customers, suppliers and others having dealings with
the Company will be informed of the Contemplated Transactions, and both
parties will have the right to be present for any such communication.
12.5 NOTICES.
-------
All notices, consents, waivers and other communications under this
Agreement must be in writing and shall be delivered by hand or sent postage
prepaid, by registered, certified or express mail (return receipt requested)
or internationally recognized overnight courier service and will be deemed
given to a party (a) one day following delivery to the proper address by
hand or by nationally recognized overnight courier service (costs prepaid),
(b) when sent by facsimile with confirmation of transmission by the
transmitting equipment (provided that within one day of transmittal such
facsimile is followed by delivery of the notice to the proper address by
hand or by nationally recognized overnight courier service (costs prepaid),
or (c) when received or rejected by the addressee, if sent by certified
mail, return receipt requested; in each case to the following addresses or
facsimile numbers and marked to the attention of the individual (by name or
title) designated below (or to such other address, facsimile number or
individual as a party may designate by notice to the other parties):
57
If to Seller:
Attention: Mr. Ramon Leal Chapa/Chief Financial Officer
Address: Av. Ricardo Margain 444
Col. Valle del Campestre
Garza Garcia, N.L., Mexico 66265
Facsimile No.: (52 81) 8863-1503
with a copy (which will not constitute notice) to:
Vitro Corporativo, S.A. de C.V.
Attention: Mr. Javier Arechavaleta Santos/General Counsel
Address: Av. Ricardo Margain 440
Col. Valle del Campestre
Garza Garcia, N.L., Mexico 66265
Facsimile No.: (52 81) 8863 1372
If to Buyer:
Attention: Chief Financial Officer
Attention: General Counsel
Solutia Inc.
Address: 575 Maryville Center Drive
P.O. Box 66760
St. Louis, MO 63166
Facsimile No.: (314) 674-5469
E-mail Address: (314) 674-1000
with a copy (which will not constitute notice) to:
Baker & McKenzie Abogados, S.C.
Attention: Jorge Pelaez-Bolanos and/or Jose Enrique
Guzman-Quiroga
Address: Blvd. Antonio L. Rodriguez 1884 Poniente
Colonia Santa Maria
65640 Monterrey, Nuevo Leon, Mexico
Facsimile No.: (52-55) 5279-2907 and (52-81) 8399-1399
and
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022
Attention: Thomas W. Christopher
Facsimile No. 212-446-6460
58
12.6 INCORPORATION OF SCHEDULES AND EXHIBITS.
---------------------------------------
The Schedules and Exhibits identified in this Agreement, including
Seller's Disclosure Schedule and Buyer's Disclosure Schedule, are
incorporated herein by reference and made a part of this Agreement.
12.7 ENTIRE AGREEMENT AND NEGOTIATION.
--------------------------------
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter (including the Letter of Intent between
Buyer and Seller dated June 3, 2005) and constitutes (along with the
Ancillary Agreements and the other documents delivered pursuant to this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may
not be amended, supplemented or otherwise modified except by a written
document executed by the party against whose interest the modification will
operate.
12.8 SELLER'S DISCLOSURE SCHEDULE.
----------------------------
The Seller's Disclosure Schedule is not intended to constitute, and
shall not be construed as constituting, representations or warranties of
Vitro or Seller except as and to the extent provided in this Agreement.
Inclusion of information therein shall not be construed as an admission that
such information is material to the operations or financial condition of
Vitro, Seller, or the Company.
Matters reflected in the Seller's Disclosure Schedule are not
necessarily limited to matters required by the Agreement to be reflected in
the Seller's Disclosure Schedule. Such additional matters are set forth for
information purposes and do not necessarily include other matters of a
similar nature. Nothing in such Seller's Disclosure Schedule will be
adequate to disclose an exception to any representation or warranty made in
Article 3 or Article 4 unless the applicable Seller's Disclosure Schedule
- --------- ---------
identifies the exception with reasonable particularity. Without limiting the
generality of the foregoing, the listing or inclusion of a copy of a
document or other item will not be adequate to disclose an exception to any
representation or warranty made in this Agreement unless the representation
or warranty relates to the existence of the document or item itself. In the
event of any inconsistency between the statements in the body of this
Agreement and those in such Seller's Disclosure Schedule (other than an
exception expressly set forth as such in a Seller's Disclosure Schedule with
respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
12.9 TIME OF ESSENCE.
---------------
With regard to all dates and time periods set forth or referred to
in this Agreement, time is of the essence.
12.10 DRAFTING AND REPRESENTATION.
---------------------------
The parties have participated jointly in the negotiation and
drafting of this Agreement. No provision of this Agreement will be
interpreted for or against any party because that party or its legal
representative drafted the provision.
59
12.11 SEVERABILITY.
------------
If a court of competent jurisdiction holds any provision of this
Agreement invalid or unenforceable, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
12.12 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS.
---------------------------------------------
Neither party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the
other party. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the
parties' successors and permitted assigns. Nothing expressed or referred to
in this Agreement will be construed to give any Person, other than the
parties to this Agreement, any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement
except such rights as may inure to a successor or permitted assignee under
this Section.
12.13 ENFORCEMENT OF AGREEMENT.
------------------------
Each party acknowledges and agrees that the other could be damaged
irreparably if any of the provisions of this Agreement are not performed in
accordance with the specific terms and that any breach of this Agreement by
either party could not be adequately compensated in all cases by monetary
damages alone. Accordingly, each party agrees that, in addition to any other
right or remedy to which the other party may be entitled, at law or in
equity, it will be entitled to enforce any provision of this Agreement by a
decree of specific performance and to temporary, preliminary and permanent
injunctive relief to prevent breaches or threatened breaches of any of the
provisions of this Agreement, without posting any bond or other undertaking.
12.14 WAIVER.
------
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither any failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or
any of the documents referred to in this Agreement will operate as a waiver
of such right, power or privilege, and no single or partial exercise of any
such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power
or privilege. To the maximum extent permitted by applicable Law, (a) no
claim or right arising out of this Agreement or any of the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in a written
document signed by the other party, (b) no waiver that may be given by a
party will be applicable except in the specific instance for which it is
given, and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
60
12.15 GOVERNING LAW.
-------------
This Agreement will be governed by and construed under the Laws of
the State of New York, without regard to conflicts of laws principles that
would require the application of any other law.
12.16 JURISDICTION; SERVICE OF PROCESS.
--------------------------------
Any action, hearing, suit or proceeding arising out of or relating
to this Agreement or any Contemplated Transactions must be brought in the
courts of the State of New York, United States of America, or, if it has or
can acquire jurisdiction, in the United States District Court for the
Southern District of the State of New York. Each of the parties irrevocably
submits to the exclusive jurisdiction of each such court in any such
Proceeding and waives any objection it may now or hereafter have to venue or
to convenience of forum. The parties agree that any or all of them may file
a copy of this Section with any court as written evidence of the knowing,
voluntary and bargained agreement between the parties irrevocably to waive
any objections to venue or to convenience of forum. The foregoing shall not
limit the rights of any party hereto to serve process in any other manner
permitted by Law in any other jurisdiction; provided that no service of
process shall cause (i) this Agreement to be governed by and construed under
the Laws of a jurisdiction other than the State of New York, or (ii) any
conflict hereunder to be brought in any court other than the courts of the
State of New York, or, if it has or can acquire jurisdiction, in the United
States District Court for the Southern District of the State of New York.
12.17 COUNTERPARTS. This Agreement may be executed simultaneously in one or
------------
more counterparts, all of which together shall constitute one and the same
document. On the date of execution of this Agreement, each party shall
deliver in person or send via overnight courier service, duly executed
original signature pages to the other party.
The parties have executed and delivered this Agreement as of the
date indicated in the first sentence of this Agreement.
[SIGNATURE PAGE FOLLOWS]
61
SOLUTIA INC.
By:/s/ David P. McCool
-------------------------------------
Name: David P. McCool
Title: V.P. & Deputy General Counsel
VITRO, S.A. DE C.V.
By: /s/ Jose M. Domene
-------------------------------------
Name: Jose M. Domene
Title: Attorney in Fact
By: /s/ Ramon A. Leal
-------------------------------------
Name: Ramon A. Leal
Title: Attorney in Fact
VITRO PLAN, S.A. DE C.V.
By: /s/ Jose M. Domene
-------------------------------------
Name: Jose M. Domene
Title: CEO
By: /s/ Ramon A. Leal
-------------------------------------
Name: Ramon A. Leal
Title: CFO
62