STOCK PURCHASE AGREEMENT
------------------------
Agreement made as of the _______day of February, 1996 by and between Performance
Industries, Inc., an Ohio corporation having an address at 0000 Xxxx Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter referred to as "Seller"),
and Xxxxxxxx LLC, a New York limited liability company, with an address at 00
Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 or its assignee (hereinafter referred
to as "Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
Whereas, Seller is the owner of six hundred twenty four (624) shares of common
stock, one peso par value, of Fabricaciones Metalicas Mexicanas, S.A., a
corporation formed under the laws of Mexico (the "Corporation"), represented by
stock certificate number 1, constituting ninety-nine and 84/100 (99.84%) percent
of all of the issued and outstanding capital stock of the Corporation;
Whereas, Xxx Xxxxxx ("Xxxxxx") is the owner of one (1) share of common stock, 1
peso par value, of the Corporation (the "Hrudka Stock"), represented by stock
certificate number 6, constituting sixteen one hundredths (.16%) percent of all
of the issued and outstanding capital stock of the Corporation, which stock is
owned beneficially by Seller (the shares of common stock of the Corporation
owned by Performance and Hrudka are hereinafter collectively referred to as the
"Shares");
Whereas, the Corporation is the owner of certain tangible, intangible, real and
personal property, including, without limitation, that certain improved
industrial real property situated in the City of Mexicali, Baja, California, at
Xxxxx Xxxxx Xxxxxxx, #0000 y Avenida Navolato, Colonia, Xxxxxxxx, and the
fixtures, equipment and machinery used in connection with the operation thereof;
and
Whereas, Seller desires to sell to Purchaser and Purchaser desires to purchase
from Seller the Shares, subject to and in accordance with the terms and
conditions hereinafter set forth.
Now, therefore, in consideration of the premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. PURCHASE AND SALE OF SHARES
---------------------------
(a) Purchase and Sale of Shares. Subject to the terms and conditions contained
in this Agreement and effective at the Closing (as hereinafter defined), Seller
hereby agrees to sell, assign, transfer, convey and deliver to Purchaser all of
Seller's right, title and interest in and to the Shares and, on the basis of the
representations, warranties and covenants of Seller herein contained, Purchaser
hereby agrees to purchase, acquire and accept the Shares from Seller.
(b) Purchase Price. The total purchase price for the Shares shall be an amount
equal to the difference between (a) Three Million (US$3,000,000.00) Dollars and
(b) the outstanding principal balance of that certain indebtedness owed by the
Corporation to Seller, together with interest accrued thereon (the
"Indebtedness"), determined and confirmed as of the day of Closing. The
Indebtedness is evidenced by that certain promissory note, dated
____________________, given by the Corporation, as maker and obligor, to Seller,
as payee and obligee, in the outstanding principal amount of US$2.1 million (the
"Note") (hereinafter referred to as the "Purchase Price"), as same may be
adjusted as set forth below. The Purchase Price shall be payable as follows: (i)
the sum of One Hundred Thousand (US$100,000.00) Dollars (the "Deposit") on the
signing of this Agreement by check subject to collection or by wire transfer of
funds, the receipt of which is hereby acknowledged; and (ii) at the consummation
of the Closing in accordance with all of the terms and conditions herein, the
balance of the Purchase Price by good certified check, bank check or by wire
transfer of funds. The Deposit shall be delivered to Xxxxxx and Xxxxxx, P.C., as
escrow agent (the "Escrow Agent"), to be held in escrow in a federally insured
interest bearing account in accordance with an escrow agreement in the form of
Exhibit "A" annexed hereto and made a part hereof.
(c) Closing. Subject to the provisions hereinafter set forth, the closing
("Closing") of the transaction contemplated by this Agreement shall take place
at the offices of Seller or such other location agreed upon by the parties
hereto, commencing at 10:00 a.m. on May 15, 1996 (the "Closing Date"), subject
to the satisfaction or waiver of all conditions precedent to the obligations of
the parties to consummate the Closing. At the Closing, Seller and Purchaser
shall each deliver to the other all of the documentation required to be
delivered by such party as set forth in Article 6 below. Notwithstanding
anything to the contrary herein contained, if (a) Seller shall have satisfied
all of the conditions precedent to Closing required to be satisfied by Seller on
or before the Closing Date and is ready, willing and able to consummate the
transaction contemplated hereby in accordance with all of the terms and
conditions herein set forth and (b) Purchaser shall elect for any reason not to
close on such
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date, then Purchaser shall be entitled to adjourn the Closing up to June 15,
1996. In such event, Purchaser shall pay to Seller the sum of Two Hundred
(US$200.00) Dollars per day (the "Extension Fee") for each day beyond the
Closing Date that Purchaser postpones the Closing. At any time after the Closing
Date up to and including June 15, 1996, Purchaser shall have the right to either
consummate the transaction subject to and in accordance with the terms and
conditions hereof or to terminate this Agreement, in which event Seller shall
forthwith return to Purchaser the Deposit, plus accrued interest thereon, less
the Extension Fee due from Purchaser to Seller pursuant to the provisions of
this subparagraph, and upon such refund being made, this Agreement shall
terminate, be null and void and of no further force or effect and neither party
shall have any further obligations or liabilities hereunder. Notwithstanding
anything to the contrary herein contained, if (a) Seller shall have satisfied
all of the conditions precedent to Closing required to be satisfied by Seller on
or before June 15, 1996 and is ready, willing and able to consummate the
transaction contemplated hereby in accordance with all of the terms and
conditions herein set forth, (b) Purchaser has elected to adjourn the Closing up
to June 15, 1996 as provided above and (c) Purchaser shall elect for any reason
not to close on or before June 15, 1996, then Purchaser shall be entitled to
adjourn the Closing up to August 31, 1996 (the "Extended Closing Date"). At any
time after June 15, 1996 up to and including the Extended Closing Date,
Purchaser shall have the right to either consummate the transaction subject to
and in accordance with the terms and conditions hereof or to terminate this
Agreement, in which event Seller may retain the Deposit and the Deposit shall be
deemed liquidated damages and this Agreement shall terminate, be null and void
and of no further force or effect and neither party shall have any further
obligations or liabilities hereunder.
(d) Closing Adjustments. Purchaser shall be charged at the Closing with the
following items, adjusted as of midnight of the day immediately preceding the
Closing: prepaid real estate taxes apportioned on the basis of the real estate
tax year; prepaid water and sewer rents apportioned on the basis of the
applicable payment period; the reasonable value of fuel on hand; and the
pro-rated value of all existing policies of insurance. Purchaser shall likewise
be credited at the Closing with the following items: (i) accrued real estate
taxes apportioned on the basis of the real estate tax year; (ii) accrued real
estate assessments; (iii) charges accrued for electricity, sewer, water, steam
and gas; (iv) prepaid rents covering any period from and after the Closing (it
being understood and agreed that for purposes hereof, "prepaid rents" shall not
be deemed to include the amount of free rent to which American Tissue
Corporation is entitled under its lease with the Corporation of a portion of the
real property owned by the Corporation); (v) an amount equal to the deposits
made by tenants under leases; (vi) an amount equal to all items
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carried by the Corporation, or which should be carried, for rent refunds; (vii)
accounts payable; (viii) an amount equal to the sum of all unpaid Taxes (as
hereinafter defined) (other than real estate taxes) of the Corporation for any
fiscal year up to and including its fiscal year ended December 31, 1995,
together with the amount of Taxes, if any, accrued for the elapsed part of the
fiscal year of the Corporation commencing January 1, 1996, and ending at
Closing. Such apportionment, however, shall not be deemed conclusive upon
Purchaser or prejudice any of Purchaser's rights or claims in respect of the
Corporation's unpaid Taxes or liabilities, if any; (ix) an amount equal to the
sum of operating expenses and insurance, unpaid and accrued as of the Closing,
exclusive of water charges, if any, payable by tenants. The term "operating
expenses" shall be deemed to include (but not be limited to) employee's salaries
and wages and apportioned vacation pay; and (x) an amount equal to the total of
all transfer taxes payable in connection with the transfer of the Shares by
Seller to Purchaser and such amount shall be applied to the payment of the
transfer taxes.
(e) Purchase and Sale of Note. Subject to the terms and conditions contained in
this Agreement and effective at the Closing, Seller hereby agrees to sell,
assign, transfer, convey and deliver to Purchaser all of Seller's right, title
and interest, as payee and obligee, in and to the Note, and, on the basis of the
representations, warranties and covenants of Seller herein contained, Purchaser
hereby agrees to purchase, acquire and accept the Note from Seller. The total
purchase price for the Note shall be the outstanding amount of the Indebtedness
as of the day of Closing (the "Note Price"). The Note Price shall be payable at
the consummation of the Closing in accordance with all of the terms and
conditions herein by good certified check, bank check or wire transfer of funds.
At the Closing, Seller shall deliver to Purchaser all of the documentation
relating to the Note required to be delivered as set forth in Article 6 below.
2. REPRESENTATIONS AND WARRANTIES OF SELLER AND HRUDKA
---------------------------------------------------
As a material inducement to Purchaser to execute and deliver this Agreement, and
to purchase and pay for the Shares and the Note, Seller and Hrudka each hereby
represent, warrant and, where applicable, covenant as set forth below. Each of
the representations and warranties contained herein are true, accurate and
complete as of the date of this Agreement and shall be true, accurate and
complete as of the Closing as though made as of such date and as though the date
of the Closing were substituted for the date of this Agreement:
(i) Organization and Authorization of Seller. Seller is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has
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full corporate power and authority to execute this Agreement and to
perform its obligations hereunder. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and legally
binding agreement of Seller enforceable in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency
or other laws affecting generally the enforceability of creditors'
rights and by application of equitable principles. Seller need not give
any notice to, make any filing with or obtain any authorization,
consent or approval of any government or governmental agency in order
to consummate the transaction contemplated hereby.
(ii) Shares. With the exception only of the Hrudka Stock, Seller holds
of record and owns beneficially all of the Shares. The Shares are owned
by Seller and Hrudka free and clear of any and all restrictions on
transfer, taxes, mortgages, deeds of trust, pledges, liens, security
interests, purchase rights, contracts, commitments, equities,
violations, adverse claims, beneficial interests, assessments and/or
other charges or encumbrances of any nature whatsoever (collectively
"Charges"). The Shares are not subject to any voting trusts, options,
warrants, other agreements or restrictions with respect to
transferability, except those restrictions as may be imposed by law
upon unregistered shares of stock of privately held corporations. There
are no agreements or understandings, written or oral, to which Seller
or Hrudka is a party relating to the acquisition, disposition or voting
of the Shares or otherwise affecting the Shares. Seller has the full
right and power to sell and transfer the Shares to Purchaser under and
pursuant to the terms and conditions of this Agreement. The transfer of
the Shares to Purchaser hereunder will convey and transfer to Purchaser
good, marketable, indefeasible and valid title to the Shares, free and
clear of any and all Charges. The Shares constitute all of the issued
and outstanding shares of capital stock, securities or other property
interests of any kind or nature owned beneficially or of record by
Seller and Hrudka, or any person or entity related to Seller or Hrudka,
including, without limitation, any member of Hrudka's family, in or
relating to the Corporation. From and after the Closing, the Seller,
Hrudka and any related party shall have no further interest of any
nature whatsoever in the Corporation or its businesses, assets or
operations.
(iii) Note. Seller is the sole owner and holder of Seller's interest,
as payee and obligee, in and to the Note. The Note is owned by Seller
free and clear of any and all Charges, including, without limitation,
collateral or other assignments or security arrangements in respect of
Seller's interest therein. The Note is fully negotiable and Seller
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has the full right and power to sell, assign and transfer Seller's
interest in and to the Note to Purchaser under and pursuant to the
terms and conditions of this Agreement. The Indebtedness is currently
in the outstanding principal amount of US$2.1 million, together with
interest thereon at the annual rate of ___________ ( %) percent; the
Indebtedness is payable in equal monthly installments of interest only
and matures on _________________, 19___. The Note constitutes the
legal, valid and binding indebtedness of the Corporation owed to
Seller, enforceable and due and payable in accordance with its terms.
There exists no offsets, defenses or counterclaims of any nature
whatsoever to the liability of the Corporation for the Indebtedness.
The interest rate payable under the Note is not in excess of the
maximum interest rate which the Corporation is permitted by law to
contract or agree to pay, nor could such rate subject the holder of the
Note to either civil or criminal liability as a result of such rate
being in excess of the maximum legal interest rate under applicable
usury laws or otherwise. The Corporation is not in breach or default
under the Note, all sums due and owing thereunder have been fully paid
and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default.
(iv) Noncontravention by Seller. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency or court to
which Seller is subject, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or
require notice under, any agreement, contract, lease, license,
instrument or other arrangement to which Seller is a party or by which
Seller is bound or to which any of Seller's assets is subject, or (c)
violate any provision of the charter, certificate of incorporation or
by-laws of Seller.
(v) Organization, Qualification and Corporate Power of the Corporation.
The Corporation (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, (b) is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such
qualification is required, and there are no actions or proceedings
pending or threatened to dissolve the Corporation or to declare any or
all of its corporate rights, powers, franchises or privileges null and
void, (c) has full corporate power and authority and all licenses,
permits and authorizations
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necessary to carry on the businesses in which it is engaged, as now
being conducted, and to own and use the properties owned and used by
it, (d) is solvent and not in the hands of a receiver, nor is any
application for receivership pending, and (e) does not contemplate
insolvency and no proceedings are pending by or against it in
bankruptcy or reorganization in any court, nor has it filed any
petition in bankruptcy. Seller has delivered to Purchaser correct and
complete copies of the charter, notarial deed and other organizational
documents of the Corporation (as amended to date). The organizational
documents have never been amended and, to the best of Seller's
knowledge, no proceeding has been instituted or authorized for the
purpose of any such amendment. The minute books (containing the records
of meetings of the stockholders, the board of directors and any
committees of the board of directors), the stock certificate books and
the stock record books of the Corporation are correct and complete. To
the best of Seller's knowledge, there are no minutes other than those
contained in the minute book and such books fully, correctly and fairly
reflect the Corporation's affairs. To the best of Seller's knowledge,
there have been no meetings of directors or shareholders except as
reflected in the minute book of the Corporation. The Corporation is not
in default under or in violation of any provision of its charter,
certificate of incorporation, by-laws or other organizational
documents.
(vi) Capitalization. The entire authorized capital stock of the
Corporation consists of 625 common shares, one peso par value all of
are issued and outstanding. The Shares have been duly authorized, are
validly issued, fully paid and nonassessable. There are no outstanding
or authorized options, equity securities of any class or kind,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights or other contracts or commitments that could require
the Corporation to issue, sell or otherwise cause to become outstanding
any of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights
with respect to the Corporation.
(vii) Noncontravention by the Corporation. Neither the execution and
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any government, governmental agency or
court to which the Corporation is subject or any provision of the
charter, certificate of incorporation, by-laws or other organizational
documents of the Corporation, (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right
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to accelerate, terminate, modify, or cancel, or require any notice
under, any agreement, contract, lease, license, instrument or other
arrangement to which the Corporation is a party or by which it is bound
or to which any of its assets is subject, or (c) result in the
imposition of any security interest, Charge or encumbrance upon any of
its assets. The Corporation is not required to give any notice to, make
any filing with, or obtain any authorization, consent or approval of
any governmental agency in order for Seller and Purchaser to consummate
the transactions contemplated by this Agreement.
(viii) Broker's Fees. The Corporation has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect
to the transactions contemplated by this Agreement. Seller has no
liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement for which Purchaser could become liable or obligated.
(ix) Title to Assets. The Corporation has good, marketable and
indefeasible title to all properties and assets owned or used by it,
located on its premises and shown on the balance sheet of the Most
Recent Financial Statements (as hereinafter defined) or acquired after
the date thereof, free and clear of all Charges except as may be set
forth on the disclosure schedule annexed hereto and made a part hereof
as Schedule "A" (the "Disclosure Schedule"). Seller acknowledges that
for purposes of this Agreement and the representations and warranties
set forth herein, nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without
limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the
existence of the document or other item itself).
(x) Subsidiaries. The Corporation does not own a majority of the common
stock or have the power to vote or direct the voting of sufficient
securities to elect a majority of the directors of any entity and
otherwise has no subsidiaries.
(xi) Financial Statements. Annexed hereto and made a part hereof as
Exhibit "B" are the following financial statements (collectively, the
"Financial Statements") (i) audited and unaudited balance sheets and
statements of income, changes in stockholders' equity and cash flow as
of and for the
8
fiscal years ended December 31, 1992, December 31, 1993, December 31,
1994, and December 31, 1995 (the "Most Recent Fiscal Year End") for the
Corporation; and (ii) unaudited balance sheets and statements of
income, changes in stockholders' equity and cash flow (the "Most Recent
Financial Statements") as of and for the month ended January 31, 1996
(the "Most Recent Fiscal Month End") for the Corporation. The Financial
Statements (including the notes thereto) (a) have been prepared in
accordance with the applicable standard of GAAP applied on a consistent
basis throughout the periods covered thereby, (b) present completely,
fairly and accurately the financial condition of the Corporation as of
such dates and the results of operations of the Corporation for such
periods, including all of the Corporation's assets and liabilities of
every kind and nature, whether accrued, absolute, contingent or
otherwise, (c) are correct and complete, and (d) are consistent with
the books and records of the Corporation (which books and records are
correct and complete).
(xii) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the
business, financial condition, operations, results of operations or
future prospects of the Corporation. Without limiting the generality of
the foregoing, since that date: (a) the Corporation has not sold,
leased, transferred or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the ordinary course
of business; (b) the Corporation has not entered into any agreement,
contract, lease or license (or series of related agreements, contracts,
leases or licenses) either involving more than Ten Thousand
(US$10,000.00) Dollars or outside the ordinary course of business; (c)
no party (including the Corporation) has accelerated, terminated,
modified or cancelled any agreement, contract, lease or license (or
series of related agreements, contracts, leases or licenses) involving
more than Five Thousand (US$5,000.00) Dollars, to which the Corporation
is a party or by which it is bound; (d) the Corporation has not imposed
any security interest, charge, restriction or encumbrance or other
Charge upon any of its assets, tangible or intangible; (e) the
Corporation has not made any capital expenditure (or series of related
capital expenditures) involving more than Five Thousand (US$5,000.00)
Dollars; (f) the Corporation has not made any 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 or
acquisitions) involving more than Five Thousand (US$5,000.00) Dollars;
(g) the Corporation has not issued any note, bond or other debt
security or created, incurred, assumed or guaranteed any indebtedness
for borrowed money or capitalized lease
9
obligation either involving more than Five Thousand ($5,000.00) Dollars
singly or Ten Thousand (US$10,000.00) Dollars in the aggregate; (h) the
Corporation has not delayed or postponed the payment of accounts
payable or other liabilities outside the ordinary course of business;
(i) the Corporation has not cancelled, compromised, waived or released
any right or claim (or series of related rights to claims) either
involving more than Five Thousand (US$5,000.00) Dollars or outside the
ordinary course of business; (j) there has been no change made or
authorized in the charter, certificate of incorporation, by-laws or
other organizational documents of the Corporation; (k) the Corporation
has not issued, sold or otherwise disposed of, any of its capital
stock, or granted any options, warrants or other rights to purchase or
obtain (including upon conversion, exchange or exercise) any of its
capital stock; (l) the Corporation has not redeemed, purchased or
otherwise acquired any of its capital stock; (m) the Corporation has
not experienced any damage, destruction or loss (whether or not covered
by insurance) to its properties; (n) the Corporation has not made any
loan to, or entered into any other transaction with, any of its
directors, officers or employees; (o) the Corporation has not entered
into any employment contract or collective bargaining agreement,
written or oral, or modified the terms of any such existing contract or
agreement; (p) the Corporation has not granted any increase in the base
compensation of any of its directors, officers or employees; (q) the
Corporation has not adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, severance or other plan, contract or
commitment for the benefit of any of its directors, officers or
employees (or taken any such action with respect to any other employee
benefit plan); (r) the Corporation has not made any other change in
employment terms for any of its directors, officers or employees; (s)
the Corporation has not made or pledged to make any charitable or other
capital contribution outside the ordinary course of business; (t) there
has not been any other occurrence, event, incident, action, failure to
act or transaction outside the ordinary course of business involving
the Corporation; (u) the Corporation has not committed to any of the
foregoing; and (v) there has not been an occurrence, event, incident,
action, failure to act or other transaction which has or may have an
adverse effect on the Corporation not heretofore disclosed to
Purchaser.
(xiii) Undisclosed Liabilities. The Corporation has no liability
(whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, due or to
become due), and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against
10
the Corporation giving rise to any material liability except for (a)
liabilities set forth on the balance sheet contained within the Most
Recent Financial Statements, and (b) liabilities which have arisen
after the Most Recent Fiscal Month End in the ordinary course of
business (none of which adversely affect the financial condition or
operation of the Corporation or 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). As used herein,
"material liability" means liability or liabilities in an amount equal
to or exceeding US$10,000.00 in the aggregate. All liabilities of the
Corporation, whether disclosed or undisclosed, "material" or
non-material, shall be paid and discharged by Seller at or prior to the
Closing, except the indebtedness evidenced by the Note.
(xiv) Legal Compliance. Each of the Corporation and, to the best of
Seller's knowledge, its predecessors has complied with all applicable
laws, rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings and charges of all Mexican and other governments (and
all agencies and political subdivisions thereof including the Town and
City of Mexicali) relating to it, its assets and properties and no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed or commenced against any of them
alleging any failure so to comply.
(xv) Tax Matters. (a) The Corporation has filed all returns,
declarations, reports, information returns or statements ("Tax
Returns") relating to any Mexican or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated and/or other tax of every kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not
(collectively, "Taxes") that it was required to file. All such Tax
Returns were correct and complete in all respects. All Taxes owed by
the Corporation (whether or not shown on any Tax Return) have been
paid. The Corporation is not currently the beneficiary of any extension
of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where the Corporation does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no liens, charges or encumbrances on any of the
assets of the Corporation that arose in connection with any failure (or
alleged failure) to pay any
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Taxes; (b) the Corporation has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other
third party; (c) neither Seller nor Hrudka or a director or officer (or
employee responsible for Tax matters) of the Corporation expects any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any
liability for Taxes of the Corporation either claimed or raised by any
authority in writing or as to which any of Seller and Hrudka, the
directors and officers (and employees responsible for Tax matters) of
the Corporation has knowledge based upon personal contact with any
agent of such authority. None of the Corporation's Tax Returns has been
audited and none are currently the subject of audit. Seller has
delivered to Purchaser correct and complete copies of all Tax Returns;
(d) the Corporation has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency; (e) the unpaid Taxes of the Corporation
(A) did not, as of the Most Recent Fiscal Month End, exceed the reserve
for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
set forth on the face of the balance sheet in the Most Recent Financial
Statements (rather than in any notes thereto), and (B) do not exceed
that reserve as adjusted for the passage of time through the Closing in
accordance with the past custom and practice of the Corporation in
filing its Tax Returns; and (f) if the amount referred to in
subparagraph (e) above as having been set aside for the Corporation's
Taxes for the fiscal year or period ended before the Closing is found
to be insufficient, Seller shall pay Purchaser the amount of such
deficiency. If at any time hereafter, by reason of any examination or
audit made by the Mexican or other governments, any additional Taxes or
assessments, with interest or penalties (other than those now set forth
in the reserve account), are levied or assessed against the Corporation
for the fiscal year or period ended before the Closing, Seller shall
forthwith pay such amounts to Purchaser. If the Mexican or any other
government makes or asserts any claim for additional Taxes or
assessments against the Corporation for any fiscal year or period ended
before the Closing, Seller may employ Seller's own counsel to contest
such claims, and to litigate such claims at Seller's expense. In such
case, however, Seller shall indemnify the Corporation and Purchaser
against any damage resulting from the failure to pay such claims while
such litigation is pending, and shall pay or discharge such assessment
or assessments, with interest and penalties, as finally fixed and
determined.
12
(xvi) Contracts. The Disclosure Schedule lists the following contracts
and other agreements to which the Corporation is a party: (a) any
agreement (or group of related agreements) for the lease of personal
property to or from any person or entity; (b) any agreement concerning
a partnership or joint venture; (c) any agreement for the purchase or
sale of supplies, products, goods, materials, commodities or other
personal property or for the receipt of labor or services, including
the management of the Corporation's real property, the performance of
which will or may extend over a period of more than one year or involve
consideration in excess of Five Thousand (US$5,000.00) Dollars; (d) any
agreement (or group of related agreements) under which the Corporation
has created, incurred, assumed or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, or under which it
has imposed a Charge on any of its assets, tangible or intangible; (e)
any agreement concerning confidentiality or non-competition; (f) any
agreement with either Seller or Hrudka; (g) any profit sharing, stock
option, stock purchase, stock appreciation, deferred compensation,
severance or other plan or arrangement for the benefit of its current
or former directors, officers, and employees; (h) any collective
bargaining agreement; (i) any agreement for the employment of any
individual on a full-time, part-time, consulting or other basis; (j)
any agreement under which it has advanced or loaned any amount to any
of its directors, officers or employees; (k) any agreement under which
the consequences of a default or termination could have an adverse
effect on the business, financial condition, operations, results of
operations or future prospects of the Corporation; and (l) any other
agreement (or group of related agreements) the performance of which
involves consideration in excess of Five Thousand (US$5,000.00)
Dollars. Seller has delivered to Purchaser a correct and complete copy
of each written agreement listed in the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions
of each oral agreement referred to in the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable and in full force and effect; (B) the agreement
will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the consummation of the
transaction contemplated hereby; (C) no party is in breach or default,
and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement, and the Corporation has fully
performed and observed all terms and provisions of each agreement, and
(D) no party has repudiated any provision of the agreement. There will
be no commitments, agreements or contracts
13
outstanding as of the Closing except as set forth in the Disclosure
Schedule.
(xvii) Notes and Accounts Receivable. All notes and accounts receivable
of the Corporation, including the Note, are reflected properly on its
books and records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in
accordance with their terms at their recorded amounts, subject only to
the reserve for bad debts set forth on the balance sheet of the Most
Recent Financial Statement as adjusted for the passage of time through
the Closing in accordance with the past custom and practice of the
Corporation.
(xviii) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Corporation.
(xix) Insurance. The Disclosure Schedule sets forth the following
information with respect to each insurance policy (including policies
providing property, casualty, liability and worker's compensation
coverage and bond and surety arrangements) to which the Corporation has
been a party, a named insured or otherwise the beneficiary of coverage
at any time within the past ten (10) years: (a) the name, address, and
telephone number of the agent; (b) the name of the insurer, the name of
the policyholder, and the name of each covered insured; (c) the policy
number and the period of coverage; (d) the scope (including an
indication of whether the coverage was on a claims made, occurrence or
other basis) and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and (e) a description
of any retroactive premium adjustments or other loss-sharing
arrangements. With respect to each such insurance policy: (A) the
policy is, or during the life of such policy was, legal, valid,
binding, enforceable and in full force and effect; (B) the policy, to
the extent currently in effect, will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms
following the consummation of the transaction contemplated hereby; (C)
neither the Corporation nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification or acceleration under the policy; and (D) no
party to the policy has repudiated any provision thereof. The
Corporation has been covered during the past ten (10) years by
insurance in scope and amount customary and reasonable for the business
in which it has engaged during the aforementioned period. The
Disclosure Schedule describes any self-insurance arrangements affecting
the Corporation.
14
In the event of damage to or destruction of the properties,
appurtenances or personal property of the Corporation prior to the
Closing, Seller shall make good such damage at Seller's expense and if
such damage is insured against, Seller shall be entitled to
reimbursement for such expense out of the net amount of insurance
proceeds. Seller shall not take or permit any action, or omit to take
any action, which would or might cause any existing policies to lapse
or be invalidated or the rights of the Corporation thereunder to be
impaired.
(xx) Litigation. No suit, proceeding or litigation is pending or
threatened against or relating to the Corporation or its properties,
assets or business. The Corporation is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge, and is not a
party or threatened to be made a party to any action, suit, proceeding,
hearing or investigation of, in or before any court or quasi-judicial
or administrative agency of any Mexican or other jurisdiction or before
any arbitrator. None of the Seller, Hrudka, the directors or officers
(or employees with responsibility for litigation matters) of the
Corporation knows, or has reasonable grounds to know, of any basis for
any such action, suit, proceeding, hearing or investigation or has any
reason to believe that any such action, suit, proceeding, hearing or
investigation may be brought or threatened against the Corporation.
(xxi) Employees. The Disclosure Schedule lists all persons employed by
the Corporation, their respective title, job description and annual
salary. There is no contract of employment with any officer, director
or employee of the Corporation which is not terminable at will. The
Corporation is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes. The
Corporation has not committed any unfair labor practice. None of the
Seller, Hrudka, the directors or officers (or employees with
responsibility for employment matters) of the Corporation has any
knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees
of the Corporation.
(xxii) Employee Benefits. The Disclosure Schedule lists each employee
benefit plan that the Corporation maintains or to which the Corporation
contributes. Each such plan (and each related trust, insurance contract
or fund) complies in form and in operation in all respects with the
requirements of applicable laws and regulations and orders.
15
(xxiii) Guaranties. The Corporation is not a guarantor or otherwise
liable for any liability or obligation (including indebtedness) of any
other individual, partnership, corporation, association, trust,
unincorporated organization or other entity.
(xxiv) Environment, Health and Safety. To the extent applicable to the
Corporation and its assets and to the best of Seller's knowledge, its
predecessors, have complied with all Environmental, Health and Safety
Laws as hereinafter defined, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been
filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, each
of the Corporation and, to the best of Seller's knowledge, its
predecessors, has obtained and been in compliance with all of the terms
and conditions of all permits, licenses and other authorizations which
are required under applicable Mexican federal, state and municipal
environmental and occupational safety and health laws, and has complied
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables which
are contained in, all Environmental, Health and Safety Laws. For
purposes hereof, "Environmental, Health and Safety Laws" include all
laws, statutes, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges of the country of
Mexico, its political subdivisions, departments, agencies, commissions,
regulatory and quasi-governmental bodies, including the Town and City
of Mexicali, and to the extent applicable to the Corporation and its
assets, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act of
1976, the Occupational Safety and Health Act of 1970, the Toxic
Substances Control Act, the General Law of Ecological Balance and
Environmental Protection of 1988, its Regulations in the area of (i)
Environmental Impact, (ii) Prevention and Control of Air Pollution,
(iii) Prevention and Control of Water Pollution and (iv) Hazardous
Wastes, the National Waters Law of 1992 and its Regulations, the
Regulations on Land Transportation of Hazardous Wastes of 1993, the Law
of Ecological Balance and Environmental Protection of the State of Baja
California of 1992, and its Regulations in the area of (i)
Environmental Impact and (ii) Prevention and Control of Air, Water and
Soil Pollution, the General Regulations of Safety and Hygiene in the
Workplace of 1978, each as amended, and all other laws, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges of federal, state, local and foreign governments
(and all agencies thereof including, without limitation, the United
States Environmental Protection Agency, the Department of
16
Environment, Natural Resources and Fisheries, the National Institute of
Ecology, the Federal Bureau of Environmental Protection, the General
direction of Ecology of the State of Baja California, and the
Department of Labor and Social Welfare) to the extent applicable to the
Corporation and its assets, concerning pollution or protection of the
environment, public health and safety, or employee health and safety
including laws relating to (a) emissions, discharges, releases or
threatened releases of pollutants, contaminants or chemical,
industrial, hazardous or toxic materials or wastes into ambient air,
surface water, ground water or lands or (b) the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants or chemical, industrial,
hazardous or toxic materials or wastes. The Corporation has no
liability, (whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, due or
to become due ("Liability") and has not handled or disposed of any
substance, arranged for the disposal of any substance, exposed any
employee or other individual to any substance or condition or owned or
operated any property or facility in any manner that could form the
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the
Corporation giving rise to any Liability for damage to any site,
location or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual or for any
reason under any Environmental, Health and Safety Law. All properties
and equipment owned or used in the business of the Corporation and its
predecessors are and have been free of all hazardous substances,
including, without limitation, asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzofurans
and hazardous substances.
(xxv) Disclosure. The representations and warranties contained in this
Article 2 do not contain any untrue statement of a fact or omit to
state any fact necessary in order to make the statements and
information contained in this Article 2 not misleading.
(xxvi) Books and Records. If Purchaser or the Corporation, or the
representatives of either, at any time within one year after the
Closing, require the aid or assistance of, or consultation with, the
Corporation's present accountants in connection with its books,
records, tax return and reports or financial transactions before the
Closing, Seller shall make available the services of its accountants
for such purposes at no cost to Purchaser or the Corporation.
3. REAL PROPERTY
-------------
17
(a) Ownership. The Corporation is, and will be at the Closing, (i) the owner in
fee simple of the real property and all buildings and improvements thereon
situated in the City of Mexicali, Baja, California, at Xxxxx Xxxxx Xxxxxxx,
#0000 y Avenida Navolato Xxxxxxxx and more particularly described on Exhibit "C"
annexed hereto and made a part hereof (the "Property"), together with all
hereditaments and appurtenances thereto, and (ii) the owner of all fixtures,
machinery, equipment and articles of personal property attached to or used in
connection with the Property ("Personal Property").
(b) Representations and Warranties of Seller. As a material inducement to
Purchaser to execute and deliver this Agreement, and to purchase and pay for the
Shares and the Note, Seller represents and warrants and, where applicable,
covenants, as set forth below. Each of the statements set forth herein are true,
accurate and complete as of the date of this Agreement and shall be true,
accurate and complete as of the Closing as though made then and as though the
date of Closing were substituted for the date of this Agreement:
(i) The Corporation has good, marketable, indefeasible and valid title
to the Personal Property free and clear of all Charges of any nature
whatsoever.
(ii) The Corporation has good, indefeasible, insurable and marketable
title to the Property, which title as of Closing will be insured by a
duly licensed reputable title company in the amount of Three Million
(US$3,000,000.00) Dollars, free and clear of all Charges, including,
without limitation, all mortgages, liens, covenants, restrictions,
conditions, encumbrances, security interests, underlying or ground
leases, easements, encroachments and any other matters affecting title,
other than the matters of public record set forth in the Disclosure
Schedule (the "Permitted Encumbrances"). The Permitted Encumbrances:
are not violated by existing structures or the maintenance and
operation thereof or the use of the Property for industrial,
manufacturing, warehousing and office purposes, and customary accessory
uses; do not interfere with the maintenance, use, occupancy or value of
the Property; do not render title unmarketable or uninsurable; and do
not require the expenditure of monies or other affirmative acts by the
Corporation. In addition, the Property is not burdened by any
covenants, restrictions, liens, rights-of-way or easements not of
record or utility easements not limited to within fifteen (15) feet of
the street line or with any greater privilege than keep lines clear a
distance of not more than fifteen (15) feet.
18
(iii) There is no mortgage, deed of trust or other lien or security
agreement, instrument or interest encumbering the Property.
(iv) The legal description for the Property contained in the deed
thereof describes the Property fully and adequately. All buildings and
improvements are located within the boundary lines of the Property and
are not in violation of applicable municipal or subdivision
regulations, including, without limitation, setback requirements,
zoning laws or ordinances. Neither the Property nor the buildings or
improvements thereon are subject to "permitted non-conforming use" or
"permitted non-conforming structure" classifications or encroach on any
easement which may burden the Property. The Property does not serve any
adjoining property for any purpose inconsistent with the use of the
Property. To the best of Seller's knowledge, in the construction of all
buildings and improvements on the Property, all applicable laws,
ordinances, rules and regulations (including all applicable zoning
laws, ordinances and regulations) of all federal, local and foreign
governmental and quasi-governmental authorities having jurisdiction of
the Property, including, without limitation, the country of Mexico and
its political subdivisions, including the Town and City of Mexicali,
were fully and faithfully complied with. To the best of Seller's
knowledge, prior to construction of such buildings, plans therefor and
all other requisite data were duly filed with all governmental and
quasi-governmental authorities having jurisdiction of the Property
including, without limitation, the country of Mexico and its political
subdivisions, including the Town and City of Mexicali. Prior to and in
the course of the construction of such buildings, all permits needed
from any governmental or quasi-governmental authorities including,
without limitation, from the country of Mexico and/or its political
subdivisions, including the Town and City of Mexicali, were duly issued
and procured. Certificates of occupancy were duly issued for each such
building, and all of such certificates of occupancy are in full force
and effect. The use of the Property for industrial, office,
manufacturing and warehouse purposes and all customary accessory uses
is currently permitted under the certificate of occupancy for, and all
other laws, rules and regulations affecting, the Property. The Property
is currently in full compliance with all federal, state, local and
foreign laws, rules, ordinances, orders, regulations and requirements
applicable to the Property including the laws, rules, ordinances,
orders, regulations and requirements of the country of Mexico and its
political subdivisions, including the Town and City of Mexicali, all
applicable Environmental, Health and Safety Laws (collectively, "Laws")
and is free of all hazardous substances. No alterations
19
have been made to the Property which would require an amended
certificate of occupancy. No zoning or other ordinance is currently
violated by the current use and maintenance of all structures and
improvements erected on the Property.
(v) Seller has not received any notice of any violation of Laws and
knows of no facts, circumstances, conditions, bases or grounds for any
such violations. There are no actions, suits, claims or proceedings
seeking money damages, injunctive relief, remedial action or any other
remedy pending or threatened relating to a violation of Laws. Seller,
for the benefit of the Corporation, shall comply with all violations of
Laws against or affecting the Property, including those issued by the
state or municipal departments having authority as to lands, housing,
buildings, fire, health and labor conditions, whether noted before or
after the Closing, provided the condition existed before the Closing
and violated the then existing Laws.
(vi) No portion of the Property is subject to or affected by any
assessment for public improvements, whether or not presently a lien
thereon. No notice of pending assessable public improvements issued by
any governmental authority has been served upon the Corporation. No
notice or order by any governmental or other public authority has been
served upon the Corporation or otherwise issued for assessments for
public improvements which remain unpaid or which (a) requires the
performance of any work or the making of any repairs or alterations on
the Property or in the streets bounding thereon or (b) orders the
construction, repair or alteration of any public improvements on or
about the Property or on the streets bounding thereon which may become
a lien on the Property. The real estate taxes for the Property are
currently US$____________ per annum.
(vii) All buildings, improvements, facilities and appurtenances are in
good condition. All fixtures, plumbing, air conditioning, sprinkler,
heating, electrical and other systems are in good working order and
condition. The roof of each building at the Property is free of leaks
and in good condition. The basement (if any) of each building at the
Property is, and at the time of Closing will be, free of seepage,
leakage and/or standing water.
(viii) No person, firm, corporation or other entity has any legal or
equitable rights or interests in or rights to acquire the Property or
any part thereof. There are no outstanding options or rights of first
refusal to purchase the Property or any part thereof or interest
therein.
20
(ix) Seller has received no written notice and has no knowledge of (i)
any pending or contemplated annexation or condemnation proceedings or
private purchase in lieu thereof, affecting or which may affect the
Property, or any part thereof, (ii) any proposed or pending proceeding
to change or redefine the zoning classification of all or any part of
the Property, (iii) any proposed or pending special assessments
affecting the Property or any portion thereof, or (iv) any proposed
change(s) in any road or grades with respect to the roads providing a
means of ingress and egress to the Property.
(x) No work has been performed or is in progress at, and no materials
have been furnished to the Property on behalf of the Corporation which
might give rise to mechanic's, materialmen's or other liens against the
Property or any portion thereof. If any lien for such work is filed
before or after the Closing hereunder, Seller on behalf of the
Corporation shall promptly discharge the same at Seller's sole cost and
expense.
(xi) No default, breach or violation exists under any covenants,
conditions, restrictions, rights-of-way, easements, obligations,
agreements or contracts, if any, affecting or all or any portion of the
Property.
(xii) There is no litigation, at law or in equity, or proceedings
before any commission, agency or other administrative authority pending
or, to the knowledge of Seller, threatened against or affecting the
Property or arising out of or by virtue of the Corporation's ownership
of the Property. There is no pending, and Seller has no notice of any
threatened, judicial, municipal or administrative proceedings affecting
the Property or in which the Corporation is or may be a party by reason
of the ownership of the Property or any portion thereof. There are no
outstanding decrees, orders, awards or specific administrative
determinations relating to the Corporation or any part of the Property
or any other matters adversely affecting the current use, occupancy or
value thereof.
(xiii) All facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and
maintained in accordance with applicable Laws.
(xiv) There are no parties in possession of the Property, other than
tenants under leases disclosed in the Disclosure Schedule, all of whom
are in possession of space to which they are entitled.
21
(xv) The Property is connected to and supplied as of right by a public
water system. The sanitary sewage disposal system and/or septic system
is located entirely within the bounds of the Property and such system
and all equipment appurtenant thereto are in good working order. All
facilities located on the Property are supplied with utilities and
other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer and storm
sewer, all of which services are installed and operating and adequate
in accordance with all applicable Laws, and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefitting
the Property. All installation and connection charges have been fully
paid.
(xvi) The Property abuts on and has direct vehicular access to a public
road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefitting the Property, and access to the
Property is provided by paved public right-of-way with adequate curb
cuts available.
(xvii) The Property is not located within a "flood plain", "flood way"
or "flood hazard area".
(xviii) Except as set forth in the Disclosure Schedule, no material has
been manufactured, stored or disposed of on the Property which material
is a hazardous substance, toxic waste or other prohibited or regulated
substance under any Environmental Health and Safety Laws. With respect
to any such material manufactured, stored or disposed of on the
Property as set forth on the Disclosure Schedule, (a) all such material
has been removed from the Property and disposed of strictly in
accordance with all applicable Environmental Health and Safety Laws,
(b) any and all remediation work required with respect thereto has been
fully and properly completed in accordance therewith, and (c)
certification thereof has been duly issued by all applicable regulatory
or governmental agencies having jurisdiction of the Property. To the
best of Seller's knowledge at no time prior to or during the
Corporation's ownership of the Property were hazardous materials or
waste disposed of on or about the Property or adjacent thereto; no
material or equipment which contain PCBs exists or is installed on the
Property; no storage tanks for gasoline, petroleum products or other
substance are located either on the Property or underground at the
Property; and the Property is not affected by any subsurface
encroachment of toxic chemicals or waste.
(xix) The Corporation has received no notice from any insurer,
insurance underwriter, agency or mortgagee requiring performance of any
maintenance work with respect
22
to the Property in accordance with the terms of applicable policies or
agreements, which work has not been completed and paid for.
(xx) The Property consists of 272,409 rentable square feet, of which
272,409 is rented pursuant to written leases. The leases annexed hereto
and made a part hereof as Exhibit "D" are true, accurate and complete
copies of all leases, tenancies and rights of possession and/or
occupancy affecting the Property. There are no leases, occupancy
agreements or other agreements for the use or occupancy of the
Property, except those set forth in the Disclosure Schedule and Exhibit
"D". The rents, expiration dates and securities listed therein are
true, accurate and complete in all respects. The rents listed are the
amounts actually and currently being collected and there are no rents
past due. There are no applications, orders, protests or complaints
with reference to rents, services or equipment pending with any rental
authority or court and there has been no diminution of services and/or
equipment. If any of the rentable space becomes vacant between the date
of this Agreement and the Closing, the same shall not be relet. The
Corporation shall not modify, terminate or amend any lease after the
date hereof, without Purchaser's prior written consent. With respect to
each lease listed in the Disclosure Schedule: (A) the lease is legal,
valid, binding, enforceable and in full force and effect and has not
been modified or amended in any respect; (B) the lease will continue to
be legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transaction
contemplated hereby; (C) no party to the lease is in breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder; (D) no party to the lease has repudiated any
provision thereof; (E) no tenant has been granted any allowance or
concession in connection with rents; (F) only those tenants indicated
as lease tenants have leases; no written agreements, except such
leases, have been entered into with any tenant related to or in
connection with their occupancy of the Property; (G) all work provided
to be done or equipment to be furnished by the landlord under such
leases has been done or furnished; (H) there are no deposits by a
tenant as prepayment of rent; (I) there are no disputes, oral
agreements or forbearance programs in effect as to the lease; (J) the
Corporation has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold; (K) all
facilities leased are legally occupied and have received all approvals
of governmental authorities (including (i) to the best of Seller's
knowledge, licenses and permits and (ii) certificates of occupancy)
required in connection with the
23
operation thereof and have been operated and maintained in accordance
with all applicable Laws; (L) all facilities leased are supplied with
utilities and other services necessary for the operation of said
facilities; and (M) there are no claims, counterclaims or offsets by
any tenant. Seller shall deliver to Purchaser prior to Closing tenant
estoppel letters executed by each of the tenants and subtenants of any
portion of the Property in the form annexed hereto and made a part
hereof as Exhibit "E" and otherwise acceptable to Purchaser.
(c) Assessments. If at the Closing all or any part of the Property is or has
been affected by any one or more assessments which are or may become payable in
annual installments of which the first installment is then a charge or lien, or
has been paid, for the purpose of this Agreement, all of the unpaid installments
of any such assessment, including those that are due and payable after the
Closing, shall be deemed to be due and payable and shall be paid and discharged
by Seller at the Closing.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby represents and warrants that this Agreement has been duly
executed and delivered by Purchaser and this Agreement constitutes the valid and
legally binding agreement of Purchaser enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
laws affecting generally the enforceability of creditors' rights and by
application of equitable principles.
5. PRE-CLOSING COVENANTS OF SELLER
-------------------------------
(a) Undertakings of Seller. Seller covenants and agrees that from and after the
date of this Agreement and until the Closing, the Corporation shall not: change,
modify or amend its corporate structure or its certificate of incorporation,
by-laws or other organizational documents; make any change in the amount of its
authorized or issued shares or redeem, purchase or otherwise acquire any of its
capital stock; extend the time for payment, modify or otherwise amend the terms
of the Note; in any manner sell or encumber the properties or appurtenances
owned by it; make any commitment for compensation for services to any of its
officers or directors; enter into any transaction, contractual arrangement or
obligation, or incur any expenses other than in the ordinary course of business;
make or enter into any lease of the Property or terminate, modify or amend any
lease thereof; make any agreement of employment or increase compensation payable
or paid by the Corporation to any of its employees or agents; default under the
Note or any agreement to which the Corporation is a party or in the maintenance
of all policies of insurance in effect; default in the filing of any reports or
returns due to any Mexican or foreign authority; or engage in any practice or
24
take any action outside of the ordinary course of business consistent with past
custom and practice (including with respect to quantity and frequency). In
addition, Seller shall (i) operate the business of the Corporation only in the
normal and ordinary manner consistent with past practice; (ii) operate and
manage the Property in the ordinary course of business and in the same manner
operated and managed to date and perform such necessary repairs and replacements
so that the Property is in the condition required hereunder; (iii) maintain all
services in connection with the Property as presently maintained; (iv) not cause
or permit any waste or nuisance to or against the Property; (v) pay in full when
due and payable all bills and invoices for labor, goods, materials and services
of any kind relating to the Property; and (vi) pay when due and payable all
installments due under the Note. Seller will cause the Corporation to keep its
business and properties substantially intact, including its present operations,
physical facilities, working conditions and relationships with lessors, lessees,
suppliers, vendors and employees.
(b) Access. Seller shall permit, and cause the Corporation to permit,
representatives of Purchaser to have full access to all premises, properties,
personnel, books, records, contracts and documents of or pertaining to the
Corporation.
(c) Notice. Seller shall give Purchaser prompt written notice of any material
adverse development causing a breach of any of the representations, warranties
or covenants of Seller herein contained, provided, however, no such disclosure
shall be deemed to cure any misrepresentation, breach of warranty or breach of
covenant.
(d) Removal of Property. The Corporation covenants and agrees that on or before
Closing, it will remove its office files and other personalty from the locked
office which adjoins Purchaser's leased premises at the Property.
6. DELIVERY OF CLOSING DOCUMENTS
-----------------------------
(a) Delivery by Seller. At the Closing, Seller shall deliver to Purchaser the
following:
(i) certificates representing the Shares, each such certificate to be
duly endorsed to Purchaser or accompanied by a separate stock power
duly endorsed for transfer, with the signature of Seller guaranteed by
an officer of a national bank or duly notarized, and with all revenue
stamps necessary to transfer such Shares and the certificates
representing such Shares affixed and cancelled;
(ii) the original Note, duly endorsed to Purchaser with the signature
of Seller guaranteed by an officer of a national
25
bank or duly notarized, together with (x) a duly executed and
acknowledged Assignment of Note, with covenant, warranty,
representation and full recourse against Seller; and (y) an estoppel
letter and certification of the Corporation, signed by an authorized
officer thereof, certifying that, or confirming, as the case may be (a)
the Note is in full force and effect; (b) the outstanding principal
balance of the Indebtedness, accrued interest thereon and the terms of
payment thereof; (c) the maturity date of the Note; (d) the Note
constitutes the legal, valid and binding indebtedness of the
Corporation and is enforceable and due and payable in accordance with
its terms; (e) there exists no off-sets, defenses or counterclaims of
any nature whatsoever to the liability of the Corporation for the
Indebtedness; (f) the interest rate payable under the Note is not in
excess of the maximum interest rate which the Corporation is permitted
by law to contract or agree to pay; and (g) the Corporation is not in
breach or default under the Note, all sums due and owing thereunder
have been fully paid and no event has occurred which, with notice or
lapse of time, would constitute such a breach or default.
(iii) the minute books of the Corporation with a complete and accurate
record of all meetings and transactions of its shareholders and
directors from its inception to the time of Closing;
(iv) the Corporation's share certificate and share transfer books and
seal;
(v) deed or deeds to the Property, title policy issued by a title
insurer acceptable to Purchaser and all other papers relating to title
to the Property and all certificates of occupancy for each building
owned by the Corporation and any other plans of the Property or the
improvements erected thereon in Seller's possessions;
(vi) all original executed leases, together with an estoppel
certificate of each tenant in the form required pursuant to Article 3
above;
(vii) all certificates and policies of insurance;
(viii) copies of all tax returns and reports filed by the Corporation
in the seven (7) years preceding the Closing;
(ix) all of the Corporation's books, records, papers, documents,
agreements, instruments, invoices, bills, vouchers, bankbooks,
checkbooks and books of original account and entry;
26
(x) the certificate of Seller to the effect that no default exists as
to any items warranted by Seller hereunder;
(xi) an opinion from counsel to Seller in form and substance as set
forth in Exhibit "F" annexed hereto and made a part hereof, addressed
to Purchaser and dated as of the Closing;
(xii) written resignations of each officer and director of the
Corporation, effective as of the Closing, together with a certificate
of the Corporation's resigning secretary, duly certified by the
resigning president and each resigning director, certifying that at a
meeting of the Corporation's directors, duly called and held and at
which a quorum was present, the resignation of each officer and
director was accepted and that there were duly elected, in their place
as officers and directors, persons designated in writing by Purchaser;
and
(xiii) a general release running in favor of the Corporation from
Seller, Hrudka and each director and officer, duly executed and
acknowledged in the form annexed hereto and made a part hereof as
Exhibit "G" (collectively, "Seller Documents").
(b) Acts of Seller at Closing. On the Closing date, concurrent with the
deliveries provided for in subparagraph (a) above, Seller shall do and cause to
be done all things necessary and proper to cause the Corporation to elect as new
officers and directors the persons designated by Purchaser, and to cause the
Corporation to register in the name of and issue to Purchaser, or any persons
Purchaser designates, new certificates for the Shares of the Corporation.
(c) Delivery by Purchaser. At the Closing, upon delivery of the Shares and
Seller Documents to Purchaser, Purchaser shall deliver to Seller the cash
consideration to be paid to Seller in accordance with the provisions of Article
1 above.
(d) Breach and/or Failure to Close. Seller acknowledges that (a) neither the
Shares nor the Note are readily marketable, (b) the Shares and the Note are
unique, and (c) Seller's failure to close in accordance with the provisions
hereof or the breach or inaccuracy of any of the representations, warranties or
covenants of Seller made herein, will cause irreparable damage to Purchaser for
which remedies at law will not be adequate. Seller hereby consents to a decree
of specific performance entitling Purchaser, without limiting Purchaser's other
rights or remedies at law, in equity and hereunder, to specifically enforce all
of the provisions of this Agreement and all costs and expenses, including
attorneys' fees, court costs and disbursements which Purchaser shall incur in
connection therewith, shall be paid by Seller to Purchaser forthwith upon demand
therefor.
27
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
--------------------------------------------
Without limiting Seller's remedies under this Agreement, the obligation of
Seller to sell the Shares and the Note at the Closing is subject to the
following conditions precedent, one or both of which may be waived by Seller, at
Seller's sole discretion:
(i) Each of the representations and warranties of Purchaser contained
in Article 4 hereof shall be true and correct in all respects at and as
of the time of the Closing with the same effect as though all such
representations and warranties were made at and as of the time of the
Closing; and
(ii) Purchaser shall have observed and performed all of the covenants
on Purchaser's part to be observed and performed through the Closing.
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
-----------------------------------------------
Without limiting Purchaser's remedies under this Agreement, the obligation of
Purchaser to purchase the Shares and the Note at the Closing is subject to the
following conditions precedent, one or more of which may be waived by Purchaser,
at Purchaser's sole discretion:
(i) Each of the representations and warranties of Seller contained in
Articles 2 and 3 hereof shall be true and correct in all respects at
and as of the time of the Closing with the same effect as though all
such representations and warranties were made at and as of the time of
the Closing;
(ii) Seller shall have observed and performed all of the covenants on
Seller's part to be observed and performed through the Closing;
(iii) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would or might (A) prevent consummation of the transactions
contemplated by this Agreement, (B) cause the transactions contemplated
by this Agreement to be rescinded following consummation, (C) affect
adversely the right of Purchaser to own the Shares or the Note or to
collect all payments due thereunder and to control the Corporation, or
(D) affect adversely the right of the Corporation to own its assets and
to operate its businesses and no such injunction, judgment, order,
decree, ruling or charge shall be in effect;
28
(iv) Purchaser shall have obtained on terms and conditions satisfactory
to Purchaser all of the financing Purchaser needs in order to
consummate the transactions contemplated hereby and fund the working
capital requirements of the Corporation;
(v) All actions to be taken by Seller in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby shall be in form and
substance reasonably satisfactory to Purchaser;
(vi) The physical condition of the Property and the buildings and
improvements erected thereon, including, without limitation, all
structural components, roofs, systems, equipment, facilities, utilities
and appurtenances thereof, shall be satisfactory to Purchaser and no
unrestored loss or damage by fire or other casualty or by eminent
domain or condemnation proceedings shall have occurred to all or any
portion of the Property. Purchaser shall be satisfied with the terms,
covenants and conditions of all leases;
(vii) A current title report of the Property issued by a title insurer
acceptable to Purchaser shall indicate that title to the Property is as
represented by Seller hereunder and title to the Property shall be
reinsured in such amount as Purchaser reasonably determines to be the
fair market value of the Property under a policy of title insurance
which shall (a) insure title to the Property and all recorded easements
benefitting the Property to be in the Corporation, subject only to the
Permitted Encumbrances, (b) contain an extended coverage endorsement
and ALTA zoning endorsement (or equivalent); (c) contain an endorsement
insuring that the Property is the same real estate as shown on the
survey delivered with respect to the Property; (d) contain an
endorsement insuring that each street adjacent to the Property is a
public street and that there is direct and unencumbered pedestrian and
vehicular access to such street from the Property; (e) at Purchaser's
expense, contain an inflation endorsement providing for annual
adjustments in the amount of coverage corresponding to the annual
percentage increase, if any, in the United States Department of
Commerce Composite Construction Cost Index (Base Year = 95); (f) if the
Property consists of more than one record parcel, contain a
"contiguity" endorsement insuring that all of the record parcels are
contiguous to one another; and (g) contain a "non-imputation"
endorsement to the effect that title defects known to the officers,
directors and stockholders of the owner prior to the Closing shall not
be deemed "facts known to the insured" for
29
purposes of the policy. Any survey of the Property shall not disclose
any survey defect or encroachment from or onto the Property which has
not been cured or insured over prior to Closing; and
(ix) All of the Corporation's debts, contractual arrangements and
liabilities, other than the indebtedness evidenced by the Note, shall
have been paid, extinguished and satisfied, as the case may be, prior
to or concurrently with the Closing.
9. POST-CLOSING COVENANTS
----------------------
(a) Further Action. If, at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this Agreement, Seller and
Purchaser shall each take such further action, and Seller shall cause Hrudka to
take such further action (including the execution and delivery of such further
instruments and documents), as the other reasonably may request, all at the sole
cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor hereunder).
(b) Non-Intervention. Seller shall not take any action that is designed or
intended to have the effect of discouraging any lessor, lessee, licensor,
vendor, customer, supplier or other business associates of the Corporation from
maintaining the same business relationships with the Corporation after the
Closing as it maintained with the Corporation prior to the Closing. Seller will
refer all inquiries relating to the businesses or properties of the Corporation
to Purchaser from and after the Closing.
(c) Confidential Information. Seller shall treat and hold as such all
Confidential Information as hereinafter defined, refrain from using any
Confidential Information except in connection with this Agreement, and deliver
promptly to Purchaser or destroy, at the request and option of Purchaser, all
tangible embodiments (and all copies) of Confidential Information which are in
his or its possession. In the event that either Seller or Hrudka is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, Seller will notify Purchaser
promptly of the request or requirement so that Purchaser may seek an appropriate
protective order or waive compliance with the provisions of this Section. As
used herein, "Confidential Information" includes any information concerning the
business, properties or affairs of the Corporation that is not already generally
available to the public.
30
10. REMEDIES FOR BREACH OF THIS AGREEMENT
-------------------------------------
As a material inducement to Purchaser to execute and deliver this Agreement and
to purchase the Shares and the Note, Seller hereby agrees that:
(i) All of the warranties, representations, covenants and agreements
made by Seller herein shall be deemed continuing warranties,
representations, covenants and agreements which shall forever survive
the Closing and the execution and delivery of all instruments and
documents, notwithstanding any investigation at any time made by or on
behalf of Purchaser or that Purchaser had reason to know of any
misrepresentation or breach of warranty at the time of Closing.
(ii) Without limiting any of Purchaser's other rights or remedies
including, without limitation, the right of specific performance,
Seller hereby agrees to and shall indemnify and hold Purchaser and the
Corporation, or both, as the case may be, harmless from and against any
and all losses, liabilities, obligations, demands, damages, actions,
causes of action, fines, deficiencies, penalties, taxes, suits,
proceedings, liens, hearings, investigations, charges, claims,
injunctions, judgments, orders, decrees, rulings, costs and expenses
(including, without limitation, attorneys' fees, court costs and
disbursements) (collectively, "Claims") resulting from, arising out of,
relating to or in connection with (A) any misrepresentation, omission,
breach of warranty or nonfulfillment of any covenant or agreement by
Seller under or relating to this Agreement; (B) the unenforceability or
invalidity of the Note or the rate of interest payable thereunder; (C)
any Taxes or assessments imposed upon the Corporation other than as
reflected on its Tax Returns previously filed; (D) each Liability of
the Corporation (other than the Note) of any nature existing on or
before Closing, (E) all liabilities of or claims against the
Corporation arising out of the conduct of its business between the date
of this Agreement and the Closing date; and (F) all liabilities of or
claims against the Corporation arising out of any suits, claims,
demands, obligations, debts, liabilities, contract commitments or other
matters. The provisions hereof shall survive the Closing and the
delivery and acceptance of the Note and the Shares.
(iii) If any third party shall notify Purchaser with respect to any
matter (a "Third Party Claim") which may give rise to a claim for
indemnification against Seller, then Purchaser shall promptly notify
Seller thereof in writing; provided, however, that no delay on the part
of Purchaser in notifying Seller shall relieve Seller from any
obligation
31
hereunder unless (and then solely to the extent) Seller is prejudiced
thereby. Seller shall have the right to defend Purchaser against the
Third Party Claim with counsel of its choice satisfactory to Purchaser
so long as (A) Seller notifies Purchaser in writing within fifteen (15)
days after Purchaser has given notice of the Third Party Claim that
Seller will indemnify Purchaser from and against any liability
Purchaser may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (B) Seller provides
Purchaser with evidence acceptable to Purchaser that Seller will have
the financial resources to defend against the Third Party Claim and
fulfill it indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or
other equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not adverse to the continuing
business interests of Purchaser, and (E) Seller conducts the defense of
the Third Party Claim actively and diligently. So long as Seller is
conducting the defense of the Third Party Claim in accordance with the
provisions hereof, (i) Purchaser may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, (ii) Purchaser will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of Seller, and (iii) Seller will not consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of
Purchaser. However, unless Seller fully complies with the provisions
hereof, Purchaser may defend against and consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim in any manner Purchaser may deem appropriate (and Purchaser need
not consult with, or obtain any consent from Seller in connection
therewith); Seller shall reimburse Purchaser promptly and periodically
for the costs of defending against the Third Party Claim (including
attorneys' fees, court costs and disbursements); and Seller shall
remain responsible for any liability Purchaser may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided herein. The foregoing
indemnification provisions are in addition to, and not in derogation
of, any statutory, equitable, contractual or common law remedy
Purchaser may have for Seller's breach of representation, warranty or
covenant.
11. MISCELLANEOUS PROVISIONS
------------------------
(a)
Notices. Any notice required or permitted to be given under this Agreement shall
be in writing and shall be sent by United States
32
registered or certified mail, postage prepaid, return receipt requested, by
personal delivery, receipt requested, or facsimile transmission with a
confirmation copy delivered on the next business day by recognized overnight
courier service addressed as set forth below or to such other person or persons
at such address or addresses as may be designated by written notice hereunder.
Notices shall be deemed to be given three (3) business days after mailing in any
post office or branch post office regularly maintained by the United States
government, on the date personal delivery or facsimile transmission is effected,
as the case may be:
(1) If to Seller: Performance Industries, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xx Xxxxxxxx, Xx.
Facsimile No.: (000) 000-0000
with a copy to: Industrial Brokerage, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xx 00000
Attention: Xx. Xxxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
(2) If to Purchaser: Xxxxxxxx, LLC
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxx and Xxxxxx, P.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
(b) Entire Agreement. This Agreement and any documents referred to herein
contain the entire agreement between the parties hereto with respect to the
transactions contemplated herein, and no modification hereof shall be effective
unless in writing and signed by the party against which it is sought to be
enforced.
(c) Further Action. At any time and from time to time, whether prior or
subsequent to the Closing, each of the parties hereto, at its or his own
expense, shall take such actions and execute and deliver such documents as may
be necessary or reasonably requested by the other party hereto to carry out,
consummate and effectuate the transactions contemplated in this Agreement.
(d) Expenses. Each of the parties hereto shall bear such party's own expenses in
connection with this Agreement and the
33
transactions contemplated herein, including, without limitation, the fees and
expenses of such party's respective legal counsel.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Country of Mexico applicable in the case of
agreements made and to be entirely performed within such Country.
(f) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
(g) Captions. The Article and Section captions used herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(h) Binding Effect. This Agreement shall bind and inure to the benefit of the
parties and their respective heirs, legal representatives, successors and
permitted assigns.
(i) Waiver. No waiver of any of the provisions hereof shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed a continuing waiver or waiver in respect of any subsequent
breach or default, whether of similar or different nature, unless expressly so
stated in writing.
(j) Assignment. Seller shall not assign this Agreement without the prior written
consent of Purchaser, which consent may be withheld for any reason.
(k) Severability. If any provision of this Agreement is found to be void or
unenforceable by a court of competent jurisdiction, the remaining provisions of
this Agreement shall nevertheless be binding upon the parties with the same
effect as though the void or unenforceable part had been severed and deleted.
In witness whereof, this Agreement has been duly executed by the parties hereto
as of the date first above written.
Seller:
Performance Industries, Inc.
By:____________________
Its:___________________
-----------------------
Xxx Xxxxxx
34
Purchaser:
Xxxxxxxx LLC
By:_______________________
Its: Member
35
SCHEDULE OF EXHIBITS AND SCHEDULES
----------------------------------
Exhibit A Form of Escrow Agreement
Exhibit B Financial Statements
Exhibit C Property Description
Exhibit D Leases
Exhibit E Form of Estoppel Letter
Exhibit F Form of Opinion Letter
Exhibit G Form of General Release
Schedule A Disclosure Schedule
36
Xxxxxx and Xxxxxx, P.C.
Counselors at Law
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
xxxxxxx x. xxxxxx (000) 000-0000 xxxxxx xxxxxxx
xxxxx x. xxxxxx xxxxx x. xxxxxx
xxxxxx x. xxxxxxx counsel
xxxxxxxxx x. schrero+
xxxxxxxx x. xxxxxx
---- ----
xxxxxx x. xxxxx
xxxxx x. xxxxxx*
xxxxxx x. xxxxxx facsimile
xxxxxxx xxxxxx (000)000-0000
xxxxxx x. xxxxxxx* (000)000-0000
xxxxx x. xxxxxxx~
xxxxx x. nadel+ writer's direct number:
xxxxxxxxx x. xxxxxxx
*also admitted in new jersey
+also admitted in massachusetts (000)000-0000
~also admitted in connecticut
March 20, 1997
VIA FACSIMILE (000) 000-0000
AND VIA FEDERAL EXPRESS
-----------------------
Xx. Xxxxxxxx Xxxxx
Industrial Brokerage, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Re: Xxxxxxxx LLC with PerformanceiIndustries, Inc.
----------------------------------------------
Dear Xxxxxxxx:
Thank you for your voice mail message of April 16, 1996. As you
requested,iincorderbto:properly document the contract amendment which
Performance Industries, Inc. ("PI") has proposed and which is acceptable to
Xxxxxxxx LLC ("Xxxxxxxx"), it is necessary to amend Section 1(c) of the Stock
Purchase Agreement dated as of February 15, 1996 between PI and Xxxxxxxx.
Therefore, Section 1(c) of the Stock Purchase Agreement is hereby deemed deleted
and replaced in its entirety by the following:
"(c) Closing. Subject to the provisions hereinafter set forth, the closing
("Closing") of the transaction contemplated by this Agreement shall take place
at the offices of Seller or such other location agreed upon by the parties
hereto, commencing at 10:00 a.m. on May 15, 1996 (the "Closing Date"), subject
to the satisfaction or waiver of all conditions precedent to the obligations of
the parties to consummate the Closing. At the Closing, Seller and Purchaser
shall each deliver to the other all of the documentation required to be
delivered by such party as set forth in Article 6 below. Notwithstanding
anything to the contrary herein contained, if (a) Seller shall have satisfied
all of the conditions precedent to Closing required to be satisfied by Seller on
or before the Closing Date and is ready, willing and able to consummate the
transaction contemplated hereby in accordance with all of the terms and
conditions herein set forth and (b) Purchaser shall elect for any reason not to
close on such
Xxxxxx and Xxxxxx, P.C.
Industrial Brokerage, Inc.
March 20, 1997
Page -2-
date, then Purchaser shall be entitled to adjourn the Closing up to July 15,
1996. In such event, Purchaser shall pay to Seller the sum of Two Hundred
(US$200.00) Dollars per day (the "Extension Fee") for each day beyond June 15,
1996 that Purchaser postpones the Closing. At any time after the Closing Date up
to and including July 15, 1996, Purchaser shall have the right to either
consummate the transaction subject to and in accordance with the terms and
conditions hereof or to terminate this Agreement, in which event Seller shall
forthwith return to Purchaser the Deposit, plus accrued interest thereon, less
the Extension Fee, if any, due from Purchaser to Seller pursuant to the
provisions of this subparagraph, and upon such refund being made, this Agreement
shall terminate, be null and void and of no further force or effect and neither
party shall have any further obligations or liabilities hereunder.
Notwithstanding anything to the contrary herein contained, if (a) Seller shall
have satisfied all of the conditions precedent to Closing required to be
satisfied by Seller on or before July 15, 1996 and is ready, willing and able to
consummate the transaction contemplated hereby in accordance with all of the
terms and conditions herein set forth, (b) Purchaser has elected to adjourn the
Closing up to July 15, 1996 as provided above and (c) Purchaser shall elect for
any reason not to close on or before July 15, 1996, then Purchaser shall be
entitled to adjourn the Closing up to August 31, 1996 (the "Extended Closing
Date"). At any time after July 15, 1996 up to and including the Extended Closing
Date, Purchaser shall have the right to either consummate the transaction
subject to and in accordance with the terms and conditions hereof or to
terminate this Agreement, in which event Seller may retain the Deposit and the
Deposit shall be deemed liquidated damages and this Agreement shall terminate,
be null and void and of no further force or effect and neither party shall have
any further obligations or liabilities hereunder."
Please confirm PI's acceptance of the foregoing amendment to the Stock Purchase
Agreement by having an authorized representative of PI execute a copy of this
letter under the caption "Accepted and Agreed to:" and return a copy of the
executed letter to me by facsimile and the original by overnight delivery.
Following countersignature of this letter by Xxxxxxxx, we will prepare revised
pages for insertion into the Stock Purchase Agreement.
Xxxxxx and Xxxxxx, P.C.
Industrial Brokerage, Inc.
March 20, 1997
Page -2-
We are looking forward to a prompt closing of this matter.
Sincerely,
Xxxxxxxx X. Xxxxxx
NJK/sdw
cc: Xx. Xxxxxx Xxxxxxxx
Xx. Xxxxxxxxx Xxxxxxxxxx
Xx. Xxxxx Xxxxxxxxxx
Xxxxx X. Xxxxxx, Esq.
ACCEPTED and AGREED TO:
PERFORMANCE INDUSTRIES, INC.:
By:___________________________
XXXXXXXX LLC
By:__________________________
Xxxxxxxx LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
July 15, 1996
Xx. Xxxxxxxx Xxxxx
Industrial Brokerage, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Re: Xxxxxxxx LLC
-with-
Performance Industries, Inc.
----------------------------
Dear Xxxxxxxx:
Reference is made to that certain Stock Purchase Agreement dated February 15,
1996, between Performance Industries, Inc. ("PI") and Xxxxxxxx LLC ("Xxxxxxxx"),
as amended by that certain letter agreement dated April 18, 1996 (the Stock
Purchase Agreement and letter agreement are hereinafter collectively referred to
as the
"Agreement").
The parties desire to further amend the Agreement, effective as of the date
hereof, by making certain modifications to the Agreement, all on the terms and
conditions hereinafter set forth.
1. Capitalized terms not otherwise defined herein shall have the same meanings
as set forth in the Agreement.
2. Section 1(b) of the Agreement is hereby amended by the deletion of the
language after "The Purchase Price shall be payable as follows:" and the
following shall be inserted in its place:
(i) the sum of One Million (US$1,000,000.00) Dollars by wire
transfer pursuant to the directions provided by Seller at
Closing, adjusted as of the Closing Date (as hereinafter
defined) pursuant to Section 1(d) below, said One Million
(US$1,000,000.00) Dollars consisting of (x) the sum of One
Hundred Thousand (US$100,000.00) Dollars (the "Deposit") on
the signing of this letter amendment by wire transfer from the
attorney escrow account of Xxxxxx and Xxxxxx, P.C., which sum
is being held pursuant to that certain escrow agreement dated
February 15, 1996 among Purchaser, Seller and Xxxxxx and
Xxxxxx, P.C., receipt of which is hereby acknowledged; and (y)
the sum of
page 2
Nine Hundred Thousand (US$900,000.00) Dollars, receipt of
which is hereby acknowledged; and (ii) at the consummation of
the Closing in accordance with all of the terms and conditions
herein, the balance of the Purchase Price evidenced by a duly
executed promissory note in the principal amount of Two
Million (US$2,000,000.00) Dollars, made by Purchaser payable
to the order of Seller in the form annexed hereto and made a
part hereof as Exhibit "A", together with interest thereon at
the rate of Ten (10%) percent per annum, payable in eighteen
(18) equal consecutive monthly installments of principal and
interest, commencing August 15, 1996, and on the fifteenth day
of each month thereafter.
3. Section 1(c) of the Agreement is hereby deleted in its entirety and the
following is inserted as Section 1(c):
The closing ("Closing") of the transaction contemplated by
this Agreement shall take place at the offices of Seller or
such other location agreed upon by the parties hereto,
commencing at 10:00 a.m. on July 15, 1996 (the "Closing
Date"). At the Closing, Seller and Purchaser shall each
deliver to the other all of the documentation required to be
delivered by such party as set forth in Article 6 below. If
Seller shall have satisfied all of the conditions precedent to
Closing required to be satisfied by Seller on or before the
Closing Date and is ready, willing and able to consummate the
transaction contemplated hereby in accordance with the terms
and provisions hereof, and in the event the Closing should not
occur as a result of a failure of Purchaser to perform its
obligations hereunder, then the Deposit shall be paid over to
the Seller and the Deposit shall be deemed liquidated damages
and this Agreement shall terminate, be null and void and of no
further force or effect and neither party shall have any
further obligations or liabilities hereunder. Otherwise,
should the Closing not occur, the Deposit shall be paid over
to Purchaser.
4. Simultaneously with the execution hereof, Seller shall cause Fabricaciones
Metalicas Mexicanas S.A. (the "Corporation") to execute and deliver to Purchaser
the Lease Modification Agreement annexed hereto and made a part hereof as
Exhibit "B", and Seller shall cause the Corporation to give proper legal notice
to Tecnologias Internacionales de Manufactura, S.A. de C.V. ("NASSCO")
page 3
to vacate, quit and surrender that certain approximately 100,000 square feet of
outside space that NASSCO is presently leasing from the Corporation pursuant to
that certain lease dated July 1, 1995, between NASSCO and the Corporation.
5. Seller acknowledges that it has not satisfied all of the conditions precedent
to Closing that are required to be satisfied by it on or before the Closing Date
in accordance with the terms and provisions of the Agreement. Seller agrees that
Purchaser's willingness to consummate the Closing as of the Closing Date shall
not be deemed a waiver by Purchaser of Seller's obligation to satisfy said
conditions precedent. Seller hereby undertakes to prepare, execute and deliver
to Purchaser such documents, take such actions and expend such monies which are
necessary in order to satisfy the conditions precedent pursuant to the Agreement
and all of Seller's closing delivery obligations pursuant to Section 6(a) of the
Agreement within thirty (30) days from the date hereof, including without
limitation satisfaction of all of the items set forth in the letters of Xxxxx &
XxXxxxxx dated February 23, 1996, March 29, 1996 and April 11, 1996 which are
annexed hereto and made a part hereof as Exhibit "C". Seller further agrees to
execute and deliver within three (3) business days of Seller's receipt thereof
any documents requested by Purchaser from time to time in order to satisfy
Seller's obligations pursuant to this paragraph. All adjustments shall be made
as of the Closing Date. If the amount of any adjustment item is not able to be
ascertained on the Closing Date, it shall be apportioned on a basis which is
agreed to by Buyer and Seller, subject to apportionment following the Closing.
6. It is agreed and understood that neither Purchaser nor the Corporation shall
sell, transfer, hypothecate nor otherwise dispose of any material assets of the
Corporation while monies are owed to Seller from Purchaser under the Agreement.
7. Except as otherwise set forth in this letter amendment, all of the terms and
provisions of the Agreement and related documents shall remain unmodified and in
full force and effect.
8. No waiver of any of the provisions hereof shall be effective unless in
writing and signed by the party to be charged with such waiver. No waiver shall
be deemed a continuing waiver or waiver in respect of any subsequent breach or
default, whether of similar or different nature, unless so expressly stated in
writing.
9. This letter amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which together shall constitute but one and the same instrument.
Please confirm PI's acceptance of the foregoing amendments to the
page 4
Agreement by having an authorized representative of PI execute a copy of this
letter under the caption "Accepted and Agreed to:" and return a copy of the
executed letter to me by facsimile and the original by overnight delivery.
We are looking forward to a prompt closing of this matter.
Sincerely,
Xxxxxxxx LLC
By:____________________________
Xxxxx Xxxxxxxxxx
NJK/sm
ACCEPTED and AGREED TO:
PERFORMANCE INDUSTRIES, INC.
By:___________________________
DEPOSIT ESCROW AGREEMENT
------------------------
Agreement dated as of February __, 1996, by and among Performance Industries,
Inc. ("Performance"), with an address at 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000 (Performance may hereinafter be referred to as "Seller")
and Xxxxxxxx LLC with an address at 00 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000
("Purchaser") (Seller and Purchaser may hereinafter be jointly referred to as
"Principal Parties") and Xxxxxx and Xxxxxx, P.C. ("Escrow Agent"), with offices
at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
- - - - - - - - - -
Whereas, the Principal Parties have entered into an agreement dated even date
herewith ("Stock Purchase Agreement") for the sale by Seller to Purchaser of (i)
all of the issued and outstanding capital stock of Fabricaciones Metalicas
Mexicanas, S.A., a corporation formed under the laws of Mexico and (ii) all of
Seller's right, title and interest, as payee and obligee, in and to that certain
promissory note, dated ______________, evidencing the indebtedness of the
Corporation to Seller in the principal amount of US$2.1 million, together with
interest thereon, subject to and in accordance with the terms and provisions of
the Stock Purchase Agreement;
Whereas, Purchaser has paid the sum of One Hundred Thousand (US$100,000.00)
Dollars as a contract deposit pursuant to the Stock Purchase Agreement; and
Whereas, the Principal Parties desire that Escrow Agent hold such contract
deposit ("Escrow Fund") in trust pursuant to the terms of this agreement and
Escrow Agent is willing to so hold the Escrow Fund subject to the terms and
conditions hereinafter set forth.
Now, therefore, the parties hereto agree as follows:
1. The Principal Parties hereby jointly and severally designate Escrow Agent to
receive, hold and deliver the Escrow Fund and Escrow Agent hereby accepts such
designation, on the terms and conditions set forth in this agreement.
2. Upon the execution of this agreement, Purchaser has delivered to Escrow Agent
a check, subject to collection, payable to the order of Escrow Agent, as
attorneys, in the amount of $100,000.00, representing the Escrow Fund. Escrow
Agent shall deposit the Escrow Fund in a federally insured interest bearing
account. All interest or income earned in respect of the Escrow Fund shall
accrue and be paid to such party entitled to payment
or refund of the Escrow Fund pursuant to the terms of this agreement. Such
interest or income shall be paid by Escrow Agent when the aforementioned payment
or refund is made.
3. If the transactions close pursuant to and in accordance with the provisions
of the Stock Purchase Agreement, Escrow Agent is authorized, empowered and
directed to deliver the Escrow Fund to Seller. If the transactions fail to close
pursuant to and in accordance with the provisions of the Stock Purchase
Agreement for any reason whatsoever, Escrow Agent is authorized, empowered and
directed to deliver the Escrow Fund to Purchaser, less an amount equal to the
Extension Fee which may be due from Purchaser to Seller pursuant to the
provisions of the Stock Purchase Agreement. In that event, Escrow Agent is
hereby authorized, empowered and directed to deduct from the Escrow Fund and
deliver to Seller an amount equal to the Extension Fee due from Purchaser to
Seller.
4. Escrow Agent is hereby expressly authorized and directed by the Principal
Parties to comply with any and all orders, judgments or decrees relating to this
transaction, and if Escrow Agent obeys or complies with any such order, judgment
or decree it shall not be liable to the Principal Parties or to any other person
by reason of such compliance, notwithstanding that any such order, judgment or
decree may be subsequently reversed, modified, annulled, set aside or vacated,
or found to have been entered without jurisdiction.
5. In consideration of the acceptance of this agreement by Escrow Agent, the
Principal Parties hereby agree, jointly and severally, to indemnify and hold
Escrow Agent harmless as to any liability it may incur to any other person by
reason of its having entered into this agreement, or in connection herewith, and
to reimburse Escrow Agent for all of its expenses, including, among other
things, attorneys' fees (either paid to retained attorneys or in an amount
representing the fair value of legal services rendered to itself), incurred in
connection herewith otherwise than in connection with the performance of its
ministerial duties hereunder.
6. If any disagreement or dispute shall arise between or among any or all of the
Principal Parties and/or any other persons resulting in adverse claims or
demands being made for all or any portion of the Escrow Fund, whether or not
litigation has been instituted, then and in any such event, Escrow Agent may
refuse to comply with any claims or demands made on or against it for the Escrow
Fund, in which event Escrow Agent shall continue to hold the Escrow Fund until
Escrow Agent receives either (i) a written notice or notices signed and
acknowledged by both of the Principal Parties directing the actions to be taken
with respect to the Escrow Fund or (ii) as set forth in paragraph 4 above, an
order, judgment or decree entered in an action, suit or proceeding in which both
of the Principal Parties are parties, directing the actions to be taken with
respect to the Escrow
Fund, in either of which events Escrow Agent shall then take such actions in
accordance with such direction. Escrow Agent shall not be or become liable in
any way or to any person for its refusal to comply with any such claims and
demands unless and until it has received such direction. Upon compliance with
such direction, Escrow Agent shall be released of and from all liability
hereunder.
7. Without limiting the foregoing, Escrow Agent shall have the following
additional rights in the circumstances described in the immediately preceding
paragraph 6: (a) if Escrow Agent shall have received a notice signed by either
of the Principal Parties advising that a litigation between the Principal
Parties over the actions to be taken with respect to the Escrow Fund has been
commenced, Escrow Agent may, on notice to the Principal Parties, deposit the
Escrow Fund with the clerk of the Court in which such litigation is pending; or
(b) Escrow Agent may, on notice to the Principal Parties, take such affirmative
steps as it may, at its option, elect in order to terminate its duties as Escrow
Agent, including, but not limited to, the deposit of the Escrow Fund in its
possession with a Court of competent jurisdiction and the commencement of an
action for interpleader, the costs of which action shall be borne, jointly and
severally, by whichever of the Principal Parties is the losing party. Upon
taking the action described in either clause (a) or (b) of the previous
sentence, Escrow Agent shall be released of and from all liability hereunder.
8. Escrow Agent shall not be responsible or liable in any manner whatsoever for
(a) the sufficiency, correctness, genuineness or validity of any document
deposited with it, or any notice or demand given to it, or (b) the form of
execution of such document, notice or demand, or (c) the identification,
authority or rights of any person executing, depositing or giving the same, or
(d) the terms and conditions of any instrument pursuant to which the parties may
act.
9. Escrow Agent shall not have any duties or responsibilities except those set
forth in this agreement, which the parties agree are ministerial in nature, and
Escrow Agent shall not incur any liability: (a) in acting upon any signature,
notice, demand, request, waiver, consent, receipt or other paper or document
believed by Escrow Agent to be genuine, and Escrow Agent may assume that any
person purporting to give it any notice on behalf of one or both of the
Principal Parties in accordance with the provisions hereof has been duly
authorized to do so; or (b) in otherwise acting or failing to act under this
agreement except in the case of Escrow Agent's gross negligence or willful
default.
10. Escrow Agent shall not be bound by any modification, cancellation or
rescission of this agreement unless and until the same is in writing and signed
by all of the parties hereto and a duly executed original or counterpart thereof
has been received by Escrow Agent. In no event, however, shall any modification
of
this agreement which shall affect the rights or duties of Escrow Agent be
binding on the Escrow Agent unless Escrow Agent shall have given its prior
written consent thereto.
11. Notwithstanding the substance of this agreement, Seller agrees that Escrow
Agent may represent Purchaser as Purchaser's counsel in connection with any
dispute or any action, suit or other proceeding between the Principal Parties.
12. Any notice to or demand upon Escrow Agent shall be sufficient only if in
writing and received by Escrow Agent within the applicable time periods set
forth herein, if any. Notices to or demands upon Escrow Agent shall be sent to
Xxxxxx and Xxxxxx, P.C., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention:
Xxxxx X. Xxxxxx, Esq., by certified mail, return receipt requested or served
personally upon the foregoing with receipt acknowledged. Notices and deliveries
from Escrow Agent to any party hereto shall be given in accordance with the
provisions of paragraph 13 of this agreement.
13. Any notices and other communications required or permitted to be given under
this agreement shall be in writing and shall be sent by United States registered
or certified mail, postage prepaid, return receipt requested or by personal
delivery, receipt requested, or by facsimile with a confirmation copy delivered
on the second business day by recognized overnight courier service, to the
Principal Parties at their respective addresses set forth above and, in the case
of Purchaser, with a copy of each notice sent in like manner to Xxxxxx and
Xxxxxx, P.C., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
X. Xxxxxx, or at such other address as either party may from time to time
designate to the other party by notice given in accordance with the terms of
this paragraph. Notices shall be deemed given three (3) business days after
mailing in any post office or branch post office regularly maintained by the
United States government, or on the date personal delivery or facsimile
transmission is effected, as the case may be.
14. No waiver of any of the provisions hereof shall be effective unless in
writing and signed by the party to be charged with such waiver. No waiver shall
be deemed a continuing waiver or waiver in respect of any subsequent breach or
default, whether of similar or different nature, unless expressly so stated in
writing.
15. The provisions of this agreement shall extend to, bind and inure to the
benefit of each of the parties hereto and its respective heirs, personal
representatives, successors and permitted assigns, if any.
16. This agreement and any documents executed in connection herewith may be
executed in any number of counterparts and by different parties hereto or
thereto in separate counterparts, each of which counterparts when so executed
shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement or document.
17. This agreement shall be construed without regard to any presumption or other
rule requiring construction or interpretation against the party causing this
agreement to be drafted.
18. This agreement, including all other documents referred to herein which form
a part hereof, contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This agreement
supersedes all prior agreements and understandings between or among the parties
with respect to such subject matter.
19. This agreement may not be orally cancelled, changed, modified or amended,
and no cancellation, change, modification or amendment shall be effective or
binding, unless in writing and signed by all the parties to this agreement.
20. If any provision hereof is found to be void and unenforceable by a court of
competent jurisdiction, the remaining provisions of this agreement shall
nevertheless be binding upon the parties with the same effect as though the void
or unenforceable part had been severed and deleted.
21. If any words or phrases in this agreement shall have been stricken out or
otherwise eliminated, whether or not any other words or phrases have been added,
this agreement shall be construed as if the words or phrases so stricken out or
otherwise eliminated had never appeared in this agreement.
22. Regardless of the place of execution or performance hereof, this agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to conflict of laws, applicable to agreements
made and to be performed entirely within such State. The parties hereby
irrevocably consent to (i) the jurisdiction of the courts of the State of New
York, subject to venue requirements, and (ii) service of process upon each of
the parties hereto by the method prescribed for the giving of notice pursuant to
Section 13 above.
23. Each party hereto shall cooperate and shall take such further action and
shall execute and deliver such further documents as may be reasonably requested
by any other party in order to carry out the provisions and purposes of this
agreement.
24. Capitalized terms not otherwise defined herein shall have the same meanings
as set forth in the Stock Purchase Agreement.
In witness whereof, the parties hereto have executed this agreement as of the
day and year first above written.
Performance Industries, Inc., Seller
By:________________________________
Xxxxxxxx LLC
By:_________________________________
Escrow Agent:
Xxxxxx and Xxxxxx, P.C.
By:_____________________________
