ASSET PURCHASE AGREEMENT
AMONG
XXXX XXXXXXXXX XXXX DE XX XXXX,
XXXX XXXXX XXXXX XXXX DE XX XXXX,
GRUPO INDUSTRIAL HERRADURA, S.A. DE C.V.,
CERTAIN SUBSIDIARIES AND AFFILIATES
OF
GRUPO INDUSTRIAL HERRADURA, S.A. DE C.V.,
XXXXX-XXXXXX CORPORATION
AND
XXXXX-XXXXXX TEQUILA MEXICO, S. DE X.X. DE C.V.
DATED AS OF AUGUST 25, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES..............2
Section 1.1 Purchase of Assets......................................2
Section 1.2 Excluded Assets.........................................3
Section 1.3 Assumed Liabilities.....................................5
Section 1.4 Liabilities Not Assumed.................................6
Section 1.5 Purchased Subsidiaries..................................6
ARTICLE II PURCHASE PRICE................................................6
Section 2.1 Amount..................................................6
Section 2.2 Allocation..............................................6
ARTICLE III CLOSING DATE; CASH PAYMENTS; PURCHASE PRICE ADJUSTMENT........7
Section 3.1 Closing.................................................7
Section 3.2 Cash Payments; Escrow...................................7
Section 3.3 Purchase Price Adjustment...............................8
Section 3.4 Accounts Receivables...................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS....................11
Section 4.1 Organization, Power, Standing and Qualification........11
Section 4.2 Due Authorization......................................12
Section 4.3 Outstanding Equity Securities..........................12
Section 4.4 Freedom to Contract....................................13
Section 4.5 Assets.................................................14
Section 4.6 Financial Information..................................19
Section 4.7 Absence of Changes.....................................20
Section 4.8 Title to Property......................................22
Section 4.9 Sufficiency of Assets; Condition of Property...........23
Section 4.10 Transactions with Affiliates; Entire Business..........23
Section 4.11 Litigation.............................................23
Section 4.12 Compliance with Law....................................24
Section 4.13 Employees..............................................24
Section 4.14 Employee Benefit Plans.................................25
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TABLE OF CONTENTS
(continued)
PAGE
Section 4.15 Tax Matters............................................26
Section 4.16 Environmental Matters..................................27
Section 4.17 Customers and Suppliers................................28
Section 4.18 Accounts Receivable....................................28
Section 4.19 Trade Accounts Payables................................29
Section 4.20 Inventory..............................................29
Section 4.21 Brokers................................................29
Section 4.22 Disclaimer of Sellers..................................29
ARTICLE V REPRESENTATION AND WARRANTIES OF BUYER AND BFC...............29
Section 5.1 Organization, Power and Standing.......................29
Section 5.2 Authorization..........................................29
Section 5.3 Freedom to Contract....................................30
Section 5.4 Litigation.............................................30
Section 5.5 Brokers................................................30
Section 5.6 Financial Capability...................................31
Section 5.7 Non-Reliance...........................................31
ARTICLE VI PRE-CLOSING COVENANTS........................................31
Section 6.1 Transactions and Conduct of Business Pending the
Closing................................................31
Section 6.2 Regulatory and Other Approvals.........................32
Section 6.3 Certain Matters Relating to CEM, Xxxxxxx Xxxxx.........33
Section 6.4 Appraisal..............................................34
Section 6.5 Intercompany Accounts..................................34
Section 6.6 Manufacturing Review...................................34
Section 6.7 Certain Matters Relating to Las Norias; Other
Matters................................................34
Section 6.8 Certain Historical Matters.............................36
Section 6.9 Certain Lease Matters..................................36
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING..............................36
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TABLE OF CONTENTS
(continued)
PAGE
Section 7.1 Conditions Precedent to the Obligations of Buyer
to Complete the Closing................................36
Section 7.2 Conditions Precedent to the Obligations of Sellers
to Complete the Closing................................39
ARTICLE VIII POST-CLOSING AGREEMENTS......................................40
Section 8.1 Further Information; Further Transfers.................40
Section 8.2 Record Retention.......................................41
Section 8.3 Tax Matters............................................41
Section 8.4 Prorations.............................................45
Section 8.5 Waste Treatment Plant Completion.......................45
Section 8.6 Post Closing Matters Related to Permits................45
Section 8.7 Intellectual Property Rights...........................46
Section 8.8 Removal of Certain Assets..............................48
Section 8.9 Certain Insurance Matters..............................48
Section 8.10 Employer Substitution..................................48
Section 8.11 Collective Bargaining Agreements.......................49
Section 8.12 The Hacienda and Related Lands.........................49
Section 8.13 Release................................................49
Section 8.14 Seller Non-Compete.....................................49
Section 8.15 Tequila Advisory Board.................................50
Section 8.16 Bonus Matters..........................................51
Section 8.17 Certain Receivables Matters............................51
ARTICLE IX SURVIVAL; INDEMNIFICATION....................................53
Section 9.1 Survival of Representations and Warranties.............53
Section 9.2 Indemnification of Buyer...............................53
Section 9.3 Indemnification of Sellers.............................55
Section 9.4 Tax Benefit; Insured Loss..............................57
Section 9.5 Damages Limitations....................................57
Section 9.6 Exclusive Provisions; No Rescission....................57
Section 9.7 Exclusive Remedy.......................................58
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE X TERMINATION OF AGREEMENT.....................................58
Section 10.1 Termination............................................58
Section 10.2 Effect of Termination..................................59
ARTICLE XI MISCELLANEOUS................................................59
Section 11.1 Certain Definitions....................................59
Section 11.2 Nonassignable Contracts or Real Property Leases........71
Section 11.3 Expenses...............................................72
Section 11.4 Notices................................................72
Section 11.5 Publicity; Confidentiality.............................74
Section 11.6 Entire Agreement.......................................74
Section 11.7 Waivers and Amendments.................................75
Section 11.8 Governing Law..........................................75
Section 11.9 Arbitration............................................75
Section 11.10 Binding Effect; No Assignment..........................75
Section 11.11 Certain Interpretation Matters.........................76
Section 11.12 Counterparts...........................................76
Section 11.13 Severability of Provisions.............................76
Section 11.14 Guarantee of Performance...............................76
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ASSET PURCHASE AGREEMENT
Asset Purchase Agreement dated as of August 25, 2006 ("AGREEMENT"), among
(a) Xxxxx-Xxxxxx Tequila Mexico, S. de X.X. de C.V., a corporation formed under
the laws of Mexico ("BUYER"), (b) Xxxxx-Xxxxxx Corporation, a Delaware
corporation ("BFC"), (c) Xxxx Xxxxxxxxx Xxxx de xx Xxxx ("JGR") and Xxxx Xxxxx
Xxxxx Xxxx de xx Xxxx ("LPR" and together with JGR, the "XXXX DE LA PENA
BROTHERS"), (d) Grupo Industrial Herradura, S.A. de C.V., a corporation formed
under the laws of Mexico ("PARENT"), Fabrica de Tequila Hacienda Las Norias
S.A., de C.V., a corporation organized under the laws of Mexico ("LAS NORIAS"),
Comercializadora Herradura, S.A. de C.V., a corporation organized under the laws
of Mexico ("COMERCIALIZADORA"), Tequila Herradura, S.A. de C.V., a corporation
organized under the laws of Mexico ("TEQUILA HERRADURA"), Sociedad Xxxx, X.X. de
C.V., a corporation organized under the laws of Mexico ("SOCIEDAD XXXX"), and
Transportes de Carga Millenium, S.A. de C.V., a corporation organized under the
laws of Mexico ("TRANSPORTES" and together with the Xxxx de la Pena Brothers,
Parent, Las Norias, Comercializadora, Tequila Herradura and Sociedad Xxxx, the
"SELLERS") and (e) Corporacion de Servicios Herradura, S.A. de C.V., a
corporation organized under the laws of Mexico ("COSESA"), CH Acciones S.A. de
C.V., a corporation organized under the laws of Mexico ("CH ACCIONES"),
Corporativo Herradura, S.A. de C.V., a corporation organized under the laws of
Mexico, La Moraleda Operadora Comercial, S.A. de C.V., a corporation organized
under the laws of Mexico, and Destilados de Agave, S.A. de C.V., a corporation
organized under the laws of Mexico (the Persons listed in this clause (e),
collectively, the "ADDITIONAL SELLER PARTIES"). Capitalized terms used herein
are defined in Section 11.1.
RECITALS
A. Sellers are engaged in the manufacturing, marketing, sale and
distribution of tequila and other related beverage alcohol; the purchase and
sale of certain wines and liquors and non-alcoholic beverages; and the
cultivation and management of land for the sowing, harvesting and trade of agave
(the "BUSINESS");
X. Xxxxx de Amatitan, S.A. de C.V., a corporation organized under the
laws of Mexico ("XXXXX"), is wholly owned by Parent and engages primarily in the
cultivation and management of land for the sowing, harvesting and trade of
agave;
C. Cosesa is an indirect wholly owned subsidiary of Parent and provides
administrative and personnel services, including all employees, to the Business;
and
X. Xxxxxxx desire to sell, transfer and assign to Buyer and BFC, and
Buyer and BFC desire to purchase and assume from Sellers, certain assets and
liabilities related to the Business, all as more specifically provided herein.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 1.1 PURCHASE OF ASSETS. (a) On the terms and subject to the
conditions set forth in this Agreement and except as provided in Section 1.2, on
the Closing Date: (i) Tequila Herradura will sell, transfer, assign, convey and
deliver to BFC, and BFC will purchase, acquire and accept from Tequila
Herradura, all of Tequila Herradura's right, title and interest in and to all of
the Trademarks, as and to the extent existing on the Closing; and (ii) Sellers
will sell, transfer, assign, convey and deliver to Buyer, and Buyer will
purchase, acquire and accept from Sellers, all of Sellers' and their Affiliates'
right, title and interest in and to all of the assets, properties and rights
owned or used by Sellers or their Affiliates or useful in the conduct of the
Business (excluding all of the Trademarks addressed in clause (i) of this
sentence), as and to the extent existing at the Closing (such assets, properties
and rights and the Trademarks are hereinafter collectively referred to as the
"ASSETS"), in each case, free and clear of all Liens other than, in the case of
Assets other than the Outstanding Equity Securities of the Purchased
Subsidiaries, Permitted Liens, and, in the case of the Owned Real Properties,
the Real Property Encumbrances.
(b) Without limitation of the foregoing, but except as provided in
Section 1.2, the Assets include the following as and to the extent existing on
the Closing:
(i) OWNED REAL PROPERTY. The Owned Real Property described on
SCHEDULE 4.5(C)(I), together with all buildings, facilities
and other structures, fixtures and improvements thereon,
currently or hereafter located thereon, all privileges,
easements and appurtenances appertaining thereto;
(ii) REAL PROPERTY LEASES. To the extent assignable, the Real
Property Leases listed on SCHEDULE 4.5(C)(II);
(iii) INVENTORY. All Inventory which is owned by any Seller with
respect to the conduct of the Business;
(iv) ACCOUNTS RECEIVABLE. All accounts receivable owned by any
Seller (other than Excluded Receivables as provided in
Section 1.2) and arising out of the conduct of the Business
(the "PURCHASED RECEIVABLES");
(v) TANGIBLE PERSONAL PROPERTY. All Tangible Property owned or
used by any Seller with respect to the conduct of the
Business, including the Tangible Property set forth on
SCHEDULE 4.5(a);
(vi) EQUITY SECURITIES. All Outstanding Equity Securities of
Xxxxx and, unless Buyer notifies Parent to the contrary in
writing on or before the 10th Business Day before the
Closing, Las Norias (but only to the extent Buyer has not
exercised its rights under
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Section 6.7(a)(y) hereof) (collectively, the "PURCHASED
SUBSIDIARIES");
(vii) CONTRACTS. To the extent assignable, all contracts and other
agreements (other than Real Property Leases listed in
SCHEDULE 4.5(C)(II)) to which any Seller is a party or by
which any of them or any of their assets, rights or
properties are bound and which relate to the conduct of the
Business (the "CONTRACTS"), including those set forth on
SCHEDULE 4.5(D);
(viii) UNDERGROUND WATER RIGHTS. All rights and interests of
Sellers in or relating to the Underground Water Rights;
(ix) PREPAID EXPENSES. All prepaid expenses, credits and advance
payments relating to the conduct of the Business;
(x) INTELLECTUAL PROPERTY. All Intellectual Property owned or
used by any Seller with respect to, or useful in, the
conduct of the Business, including the Intellectual Property
described on SCHEDULE 4.5(B), in each case whether or not
used or registered before the competent Governmental
Authority;
(xi) PERMITS. To the extent assignable or permitted by Law, all
Permits relating to the conduct of the Business;
(xii) BOOKS AND RECORDS. All general, financial and personnel
records, correspondence and other files and records,
including customer lists and sales records, of any Seller
pertaining to the conduct of the Business or to the Assumed
Liabilities;
(xiii) GOODWILL. To the extent assignable or permitted by Law, all
of any Seller's goodwill in the Business;
(xiv) CLAIMS. All claims, causes of action, rights of recovery and
rights of set-off arising out of the conduct of the
Business; and
(xv) OTHER ASSETS. Any other assets of any Seller pertaining to
the conduct of the Business or the Assumed Liabilities.
Section 1.2 EXCLUDED ASSETS. Any provision of this Agreement to the
contrary notwithstanding, Buyer will not acquire and there will be excluded from
the Assets the following (the "EXCLUDED ASSETS"):
(i) HACIENDA. The Hacienda, together with all buildings,
facilities and other structures and improvements thereon and
all privileges, easements and appurtenances appertaining
thereto;
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(ii) CERTAIN OFFICES. The offices located at Prolongacion
Americas No. 1520-1530, Col. Country Club, X.X. 00000,
Xxxxxxxxxxx, Xxxxxxx, Xxxxxx, together with all improvements
thereon and appurtenances thereto and equipment, furniture,
art work and personal items located thereat;
(iii) LAS NORIAS. The real property ("LAS NORIAS REAL PROPERTY")
more fully described on SCHEDULE 1.2(III) and all movable
equipment, machinery and other tangible property located
thereon that is not used in the Business and that is
described in Attachment A to SCHEDULE 1.2(III);
(iv) CASH. All cash, marketable securities, commercial paper,
certificates of deposit and other bank deposits, treasury
bills and other cash equivalents;
(v) BANK ACCOUNTS. All rights with respect to bank accounts of
Sellers;
(vi) INSURANCE. All insurance policies and all rights (including
related deposits, prepayments and investments) of every
nature and description under or arising out of such policies
(except as provided in Section 8.9);
(vii) BOOKS AND RECORDS. All minute books, stock records and
corporate seals other than those of the Purchased
Subsidiaries;
(viii) PRE-CLOSING TAX REFUNDS. All deposits or claims for refund
or credit of Taxes and other governmental charges of
whatever nature to the extent relating to periods prior to
the Closing Date (other than any Transfer Taxes arising out
of, in connection with or related to (x) the sale of the
Assets pursuant to this Agreement or (y) the assumption of
the Assumed Liabilities pursuant to this Agreement) or to
the extent they are not derived from or related to the
Business;
(ix) OWNERSHIP INTERESTS. All ownership interests in any
Subsidiary or Affiliate of any of the Sellers, other than
the Outstanding Equity Securities;
(x) OTHER ASSETS. The vehicles, other assets and real property
described on SCHEDULE 1.2(X) and all right, title and
interest of Sellers therein;
(xi) TEQUILA HERRADURA ACCOUNTS RECEIVABLE. The accounts
receivable of Tequila Herradura as of the Closing to the
extent included in the Closing Date Excluded Receivables
(plus all
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receivables for IVA and IEPS in respect of such accounts
receivable, the "EXCLUDED RECEIVABLES");
(xii) PURCHASED RECEIVABLES IVA AND IEPS. All receivables for IVA
and IEPS in respect of the Purchased Receivables; and
(xiii) OTHER MATTERS. All rights of Sellers under this Agreement
and the agreements and instruments delivered to Sellers by
Buyer pursuant to this Agreement and all other assets of
Sellers which are not owned or used by Sellers in the
conduct of the Business.
Section 1.3 ASSUMED LIABILITIES. Subject to the terms and conditions
set forth in this Agreement and except as provided in Section 1.4, on the
Closing Date, Buyer will assume and thereafter pay, perform and discharge when
due the following obligations and liabilities of Sellers with respect to the
Business as and to the extent existing on the Closing (the "ASSUMED
LIABILITIES"):
(i) LIABILITIES RELATING TO THE ASSETS. Any liability and
obligation to the extent (a) relating to the Assets or the
Business (other than the Excluded Assets) and (b) arising
out of any circumstance, condition, occurrence or event to
the extent occurring after the Closing;
(ii) TRADE ACCOUNTS PAYABLE. To the extent specifically reflected
on the Closing Date Balance Sheet, all trade accounts
payable of the Business (including IVA and IEPS included
therein) that are payable and existing after the Closing;
(iii) UNDERGROUND WATER RIGHTS. All obligations and liabilities to
the extent arising after the Closing in respect of or
relating to the Underground Water Rights;
(iv) LITIGATION. All liabilities and obligations of any Seller in
connection with each Action or Proceeding set forth on
SCHEDULE 1.3(iv);
(v) WASTE WATER TREATMENT PLANT. All liabilities and obligations
(other than those liabilities and obligations that relate to
or arise out of any act or omission of any Seller prior to
the Closing) of any Seller in connection with the
construction (including completion thereof) and operation of
the waste water treatment plant (the "WWTP") described on
SCHEDULE 1.3(V); and
(vi) OTHER MATTERS. All liabilities and obligations expressly set
forth as being assumed or payable by Buyer pursuant to
Section 8.3, Section 8.4 or Section 8.5.
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Section 1.4 LIABILITIES NOT ASSUMED. Except for the Assumed
Liabilities, Buyer will not assume by virtue of this Agreement or the
transactions contemplated hereby or otherwise, and will have no liability for,
any obligations and liabilities of the Business or the Assets or of any Seller
or any of its Affiliates, of any kind, character or description whatsoever,
including any liabilities and obligations that relate to or arise out of any
occurrence, condition, circumstance or event occurring prior to the Closing (the
"EXCLUDED LIABILITIES"). Notwithstanding anything herein to the contrary, the
following shall be Excluded Liabilities: any obligations or liabilities for
Excluded Taxes or Excluded Claims and, for the avoidance of doubt, any
Environmental Claims that relate to or arise out of any occurrence, condition,
circumstance or event occurring prior to the Closing. Sellers will pay, perform
and discharge in full in a timely manner all of the Excluded Liabilities in
accordance with their terms.
Section 1.5 PURCHASED SUBSIDIARIES. Notwithstanding any other
provision of this Agreement, other than Sections 1.2(iii), 1.2(vii) and 9.2(a),
it is understood that Buyer is purchasing the Outstanding Equity Securities, and
that as such (a) Buyer will not be required to purchase or assume any of the
assets or liabilities of any Purchased Subsidiary, (b) the assets and
liabilities of each of the Purchased Subsidiaries will remain the assets and
liabilities of each such Purchased Subsidiary (subject in the case of
liabilities to clause (d)), (c) the assets of each of the Purchased Subsidiaries
will not be deemed to be Excluded Assets, and (d) the liabilities of each of the
Purchased Subsidiaries (other than those liabilities to the extent both relating
to the Assets or the Business and arising out of or relating to any occurrence
or event occurring after the Closing) will be deemed to be Excluded Liabilities.
ARTICLE II
PURCHASE PRICE
Section 2.1 AMOUNT. The aggregate purchase price for the Assets will
be (i) an amount equal to the difference between US$876,000,000.00 and the
amount of the Closing Excluded Net Receivables (such difference, the "INITIAL
PURCHASE PRICE"); and (ii) the assumption by Buyer of the Assumed Liabilities.
The Initial Purchase Price will be payable at the Closing upon satisfaction or
waiver of each of the conditions set forth in Article VII, and in the manner
provided in Section 3.2. The Initial Purchase Price will be subject to
adjustment after the Closing as provided in Section 3.3(d) (the Initial
Purchase Price, as so adjusted, the "FINAL PURCHASE PRICE") and does not include
Impuesto Especial Sobre Produccion y Servicios ("IEPS") and Impuesto al Valor
Agregado ("IVA"). For the avoidance of doubt, Buyer will, as provided in Section
8.3(a) and in addition to the Initial Purchase Price, pay and be solely
responsible for any IEPS, IVA and any Transfer Tax arising out of or in
connection with the sale of the Assets effected pursuant to this Agreement.
Section 2.2 ALLOCATION. The Final Purchase Price will be allocated
among the Assets in the manner set forth on SCHEDULE 2.2. Each of the parties
hereto will not, and will not permit any of its Affiliates to, take a position
(except as required pursuant to any final, non-appealable Order) on any Tax
Return, before any
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Governmental Authority or in any judicial proceeding, that is
in any way inconsistent with the Final Purchase Price allocation set forth on
SCHEDULE 2.2.
ARTICLE III
CLOSING DATE; CASH PAYMENTS; PURCHASE PRICE ADJUSTMENT
Section 3.1 CLOSING. The consummation of the transactions contemplated
hereby (the "CLOSING") shall take place at 10:00 a.m., New York time, at the
offices of Xxxxx Day, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, XXX on the
second Business Day following the satisfaction or waiver of each of the
conditions set forth in Article VII (other than those conditions that are to be
satisfied at the Closing), or on such other date or at such other time and place
as the parties hereto agree in writing (the date of the Closing, the "CLOSING
DATE").
Section 3.2 CASH PAYMENTS; ESCROW. (a) On or prior to the 10th
Business Day prior to the Closing, Parent, on behalf of Sellers, will deliver to
Buyer a good faith estimate of (i) Sellers' calculation of the gross amount of
the Excluded Receivables (inclusive of IVA and IEPS in respect thereof and
excluding any provision for doubtful accounts receivable) as of the Closing,
certified by Sellers and prepared in accordance with Mexican FIS and the
accounting principles used in the preparation of the Financial Statements and
the Interim Financial Statements on a basis consistent with the preparation of
the Financial Statements and the Interim Financial Statements, and (ii) Sellers'
calculation of the Other Cash Payment. Buyer will promptly review the
calculation referred to in clause (i) and clause (ii) of the immediately
preceding sentence and if Buyer shall, in good faith, have any objections
thereto, Parent and Buyer shall use their respective good faith efforts to
resolve such objections and revise Sellers' calculation of the Excluded
Receivables and to include in such estimate any changes since the date of
delivery of Sellers' calculation in such Excluded Receivables up to and
including the Closing Date; PROVIDED, HOWEVER, that notwithstanding anything
herein to the contrary, Sellers will have sole and final control over the
preparation of and amounts set forth in the estimate of the Excluded
Receivables. For the avoidance of doubt, nothing in the immediately preceding
sentence will limit the rights of any party under Section 3.3. At the Closing,
Parent, on behalf of Sellers, will deliver to Buyer the statement of the gross
amount of the Excluded Receivables as of the Closing certified by Sellers and
prepared in accordance with the foregoing sentences of this Section 3.2(a) and
incorporating any revisions and changes in accordance with the immediately
foregoing sentence (such statement, the "EXCLUDED RECEIVABLES STATEMENT"). The
gross amount of the Excluded Receivables included in the Excluded Receivables
Statement, net of all IVA and IEPS in respect of such Excluded Receivables and
excluding any provision for doubtful accounts receivable, will be the "CLOSING
EXCLUDED NET RECEIVABLES." The Closing Excluded Net Receivables will be in
Mexican pesos and converted to United States dollars as of the Closing Date
based upon the average of the noon buying rates in New York City for cable
transfers payable in Mexican pesos, as certified by the Federal Reserve Bank of
New York for customs purposes, for each of the 20 Business Days immediately
preceding the Closing Date.
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(b) At the Closing, (i) Buyer will pay to the Sellers an amount equal
to the Other Cash Payment less the sum of (A) the amount of the Escrowed Funds
and (B) the Receivables Holdback, by wire transfer of immediately available
funds to a bank account designated in writing by Parent, in consideration for
the sale, transfer, conveyance and assignment of the Assets (other than the
Trademarks) to Buyer pursuant to Section 1.1, and (ii) BFC will pay to Tequila
Herradura an amount equal to the difference between the Initial Purchase Price
and the Other Cash Payment (such difference, the "TRADEMARK CASH PAYMENT"), by
wire transfer of immediately available funds to a bank account designated in
writing by Parent, in consideration for the sale, transfer, conveyance and
assignment of the Trademarks to BFC pursuant to Section 1.1. Notice of any
account to which funds are to be wire transferred as provided above will be
delivered to BFC and Buyer at least five Business Days prior to the Closing.
(c) Notwithstanding the foregoing, $22,000,000 of the Initial
Purchase Price (the "ESCROWED FUNDS") will be delivered by Buyer by wire
transfer of immediately available funds to one of the escrow agents set forth on
SCHEDULE 3.2(C) agreed to by Buyer and Parent (or, if none of such escrow agents
shall be available to serve in such capacity or the parties hereto otherwise
agree in writing, such other major financial institution located in the United
States of America agreed to by Buyer and Parent) ("ESCROW AGENT") under an
escrow agreement substantially in the form of EXHIBIT A with such changes
thereto as Buyer and Sellers may agree (the "ESCROW AGREEMENT") to be entered
into on the Closing Date by Sellers, Buyer, BFC and the Escrow Agent.
Section 3.3 PURCHASE PRICE ADJUSTMENT. (a) No later than the 10th
Business Day following May 31, 2007 (the "DETERMINATION DATE"), Buyer will
prepare and deliver to the Sellers a statement of Working Capital of the
Business as of the Closing Date (the "CLOSING STATEMENT OF WORKING CAPITAL"), a
statement of the Excluded Receivables as of the Closing Date (the "CLOSING
STATEMENT OF EXCLUDED RECEIVABLES") and a balance sheet of the Business as of
the Closing Date (the "CLOSING DATE BALANCE SHEET", and together with the
Closing Statement of Working Capital and the Closing Statement of Excluded
Receivables, the "CLOSING STATEMENTS"). Parent and its accountant, in the name
and on behalf of Sellers, will have the right to participate in the preparation
of the Closing Statements, including by having the right to consult with Buyer
concerning the method of presentation and formulation of the Closing Statements,
and Buyer will consider in good faith the comments of Parent with respect
thereto; PROVIDED, HOWEVER, that, notwithstanding anything herein to the
contrary, but without in any way limiting or affecting Sellers' or Parent's
right to object as provided in Section 3.3(c), Buyer will have sole and final
control over the preparation of and amounts set forth in the Closing Statements
to be delivered to Sellers as provided in the first sentence of this Section
3.3(a). The Closing Date Balance Sheet will consist of the assets and
liabilities transferred to Buyer pursuant to this Agreement. The Closing
Statement of Working Capital will be derived from the Closing Date Balance
Sheet, present Closing Date Working Capital in reasonably sufficient detail to
determine any amounts owing to Buyer or Parent under this Section 3.3, be
presented in substantially the form of SCHEDULE 3.3 and include only those
assets and liabilities transferred to Buyer hereunder. The Closing Statement of
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Working Capital and Closing Date Balance Sheet will be prepared in accordance
with Mexican FIS and the accounting principles used in the preparation of the
Financial Statements and Interim Statements, including those set forth on
SCHEDULE 3.3, applied on a basis consistent with the preparation of the
Financial Statements and Interim Statements except as otherwise provided on
SCHEDULE 3.3, and in accordance with any other methodologies set forth on
SCHEDULE 3.3. The Closing Statement of Excluded Receivables will present Closing
Date Excluded Receivables in reasonably sufficient detail to determine any
amounts owing to Buyer or Parent under this Section 3.3 and be prepared in
accordance with Mexican FIS and the accounting principles used in the
preparation of the Financial Statements and the Interim Financial Statements on
a basis consistent with the preparation of the Financial Statements and the
Interim Financial Statements and otherwise consistent with the calculation of
the Closing Excluded Net Receivables in accordance with Section 3.2(a). All
calculations under this Section 3.3 will be in Mexican pesos and converted to
United States dollars as of the Closing Date based upon the average of the noon
buying rates in New York City for cable transfers payable in Mexican pesos, as
certified by the Federal Reserve Bank of New York for customs purposes, for each
of the 20 Business Days immediately preceding the Closing Date.
(b) Parent will notify Buyer in writing of any objection to the
calculation of the Closing Statement of Working Capital, the Closing Statement
of Excluded Receivables or the Closing Date Balance Sheet no later than 30 days
after Buyer's delivery of the Closing Statements to Parent. Such notice of
objection will specify in reasonable detail such items that Parent believes are
not calculated properly and the reasons therefor. Buyer and Parent will
negotiate in good faith to resolve such disputed items. In the event that Buyer
and Parent shall not have resolved all such items in writing within 30 days
after such notice of objection, such parties will forthwith jointly submit all
unresolved disputed items to the Mexican affiliate of KPMG International or, if
the Mexican affiliate of KPMG International is not willing or able to undertake
such engagement, the Mexican affiliate of Ernst & Young, or, if the Mexican
affiliate of Ernst & Young is not willing or able to undertake such engagement,
a mutually acceptable internationally recognized firm of independent public
accountants that has no current (or, within the two years prior to the Closing
Date, past) material audit relationship with any party hereto) (the
"ACCOUNTANT") for resolution. The Accountant will, within 30 days after such
submission, make a determination of those disputed items in accordance with this
Agreement. The decision of the Accountant will be delivered in a written report
addressed to Buyer and Parent and will be binding and conclusive upon the
parties hereto. The costs and fees of the Accountant will be borne one-half by
Buyer and one-half by Parent.
(c) The Working Capital set forth in the Closing Statement of Working
Capital (as adjusted, if a proper notice of objection is received in accordance
with Section 3.3(b), by the written agreement of Parent and Buyer and/or the
written report prepared by the Accountant in accordance with Section 3.3(b)) is
referred to as the "CLOSING DATE WORKING CAPITAL", and the Excluded Receivables
set forth in the Closing Statement of Excluded Receivables (as adjusted, if a
proper notice of objection is received in accordance with Section 3.3(b), by the
written agreement of Parent and
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Buyer and/or the written report prepared by the Accountant in accordance with
Section 3.3(b)) is referred to as the "CLOSING DATE EXCLUDED RECEIVABLES."
(d) (i) If the Closing Date Working Capital is less than the
difference between (i) the Target Working Capital and (ii) 5,000,000 Mexican
pesos, the Initial Purchase Price will be reduced by the aggregate amount of the
difference between the Target Working Capital and the Closing Date Working
Capital. If the Closing Date Working Capital is greater than the sum of (i) the
Target Working Capital and (ii) 5,000,000 Mexican pesos, the Initial Purchase
Price will be increased by the aggregate amount of the difference between the
Closing Date Working Capital and the Target Working Capital. If the Closing Date
Working Capital is at least equal to the difference between (i) the Target
Working Capital and (ii) 5,000,000 Mexican pesos but less than or equal to the
sum of (A) the Target Working Capital and (B) 5,000,000 Mexican pesos, the
Initial Purchase Price will not be adjusted pursuant to this Section 3.3(d)(i).
(ii) If the Closing Date Excluded Receivables is less than the
Closing Excluded Net Receivables, the Initial Purchase Price will be increased
by the aggregate amount of the difference between the Closing Excluded Net
Receivables and the Closing Date Excluded Receivables. If the Closing Date
Excluded Receivables is greater than the Closing Excluded Net Receivables, the
Initial Purchase Price will be reduced by the aggregate amount of the difference
between the Closing Date Excluded Receivables and the Closing Excluded Net
Receivables. If the Closing Date Excluded Receivables is equal to the Closing
Excluded Net Receivables, the Initial Purchase Price will not be adjusted
pursuant to this Section 3.3(d)(ii).
(iii)The aggregate amount of the reduction to the Initial Purchase
Price in accordance with this Section 3.3(d) (taking into account the net effect
of any increases or reductions in the Initial Purchase Price pursuant to Section
3.3(d)(i) and Section 3.3(d)(ii)), if any, is referred to herein as the
"SHORTFALL", and the aggregate amount of the increase in the Initial Purchase
Price in accordance with this Section 3.3(d), if any, is referred to as the
"OVERAGE".
(e) Notwithstanding the foregoing:
(i) if the Initial Purchase Price is reduced as provided in
Section 3.3(d), then (A) if the Shortfall is less than or equal to the
Receivables Holdback, Buyer will (1) pay Parent, on behalf of Sellers, an
amount equal to the difference, if any, between the Receivables Holdback
and the Shortfall and (2) retain from the Receivables Holdback an amount,
if any, equal to the difference between the Receivables Holdback and the
amount referred to in the immediately preceding clause (1); and (B) if the
Shortfall is greater than the Receivables Holdback, Buyer will (1) retain
the Receivables Holdback and (2) Parent, on behalf of Sellers, will pay
Buyer an amount equal to the difference between the Shortfall and the
Receivables Holdback; and
(ii) if the Initial Purchase Price is increased or if there is
no adjustment to the Initial Purchase Price, in each case, as provided in
Section
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3.3(d), Buyer will pay to Parent, on behalf of Sellers, (A) the entire
amount of the Receivables Holdback and (B) an amount equal to the Overage,
if any.
(f) Any amounts (including amounts released to Sellers from the
Receivables Holdback) required to be paid as provided in Section 3.3(e)
will be paid by bank wire transfer of immediately available funds to an
account designated in writing by the party entitled to receive such payment
and will bear interest from the Closing Date to the date of payment at the
prime rate as reported in the WALL STREET JOURNAL on the Business Day
immediately prior to the Closing Date, which interest will be paid on the
same date as such payment.
(g) In the event that Buyer shall receive any payments in respect
of the Purchased Receivables after the Closing and prior to the
Determination Date, Buyer will pay to Parent an amount equal to the portion
of such payment attributable to IVA and IEPS. For purposes of determining
the portion of the payment attributable to IVA and IEPS, the payment
received by Buyer will be deemed to consist of a payment in respect of the
Purchased Receivables plus the applicable IVA and IEPS on such payment such
that the sum of such payment and IVA and IEPS is equal to the total payment
received.
Section 3.4 ACCOUNTS RECEIVABLES. From the date hereof until the
Closing, Sellers will maintain the accounts receivable to be included in the
Purchased Receivables and the Excluded Receivables in the ordinary course of
business consistent with past practice (including by continuing to sell the
Products, and to conduct the Business, of Tequila Herradura as currently
conducted through that Person and by continuing to sell the Products, and to
conduct the Business, of Comercializadora as currently conducted through that
Person) and otherwise consistent with the terms set forth on SCHEDULE 3.4, and
Sellers will not, other than in the ordinary course of business consistent with
past practice and otherwise consistent with the terms set forth on SCHEDULE 3.4,
(i) modify payment terms of the accounts receivable to be included in the
Purchased Receivables or the Excluded Receivables (including by accelerating
payment thereof) or (ii) grant any payment discounts or other similar
inducements with respect to such accounts receivable, including in order to
accelerate or discount payment thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant as of the date hereof and as of the Closing
Date to Buyer as follows:
Section 4.1 ORGANIZATION, POWER, STANDING AND QUALIFICATION. Each of
the Purchased Subsidiaries and Sellers (other than the Xxxx de la Pena Brothers)
is a corporation (SOCIEDAD ANONIMA DE CAPITAL VARIABLE) duly incorporated and
validly existing under the laws of Mexico, and has all requisite corporate power
and authority to own, lease, use and operate the portion of the Assets owned by
it and to carry on the Business as currently conducted by it. With respect to
the Business, each of the Sellers
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and the Purchased Subsidiaries is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the ownership of
the portion of the Assets owned by it and the conduct of the Business by it
makes such qualification or good standing necessary, except for any failure to
be so qualified or in good standing that would not, individually or in the
aggregate, have a Material Adverse Effect. With respect to the Sellers, (a) each
of Sellers (other than the Xxxx de la Pena Brothers) has all requisite corporate
power and authority to enter into and perform this Agreement and each Ancillary
Agreement to which it is a party, and (b) in the case of each Seller that is an
individual, he is a Mexican national, either single or married under the marital
regime set forth in SCHEDULE 4.1, with legal capacity to execute and deliver
this Agreement and the other Ancillary Agreements to which such Seller is a
party, and to perform his obligations hereunder and thereunder, and, in the case
of each Seller that is an individual married, but not under separate asset
regime (SEPARACION DE BIENES), then the valid and binding requisite consent of
the spouse of such individual Seller is attached to SCHEDULE 4.1 hereof.
Section 4.2 DUE AUTHORIZATION. The execution and delivery by each of
the Sellers of this Agreement and each Ancillary Agreement to which it is a
party, the performance by each of its obligations hereunder and thereunder, and
the transactions contemplated hereby and thereby, where applicable, have been
duly and validly authorized by all necessary corporate (including all required
approvals and consents by the shareholders and board of directors) action on the
part of each such Seller. No additional authorization, registration or
notification of or to any shareholder or board of directors or other corporate
action is required for the execution and performance by the Sellers of this
Agreement or the Ancillary Agreements that has not been obtained in full as of
the date hereof. This Agreement has been duly and validly executed and delivered
by Sellers and is a valid and binding obligation of each Seller enforceable
against such Seller in accordance with its terms, and each Ancillary Agreement
to which a Seller is a party will, upon the Closing, be duly and validly
executed and delivered by the Sellers and be a valid and binding obligation of
such Seller enforceable against such Seller in accordance with its terms,
except, in respect of this Agreement and each such Ancillary Agreement, as such
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors, (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law), and (iii)
with respect to a Seller that is an individual, as described in SCHEDULE 4.1.
Section 4.3 OUTSTANDING EQUITY SECURITIES. (a) The entire authorized,
issued and outstanding capital stock of each of the Purchased Subsidiaries and
the number of shares of such capital stock that are issued and outstanding is
set forth on SCHEDULE 4.3(A); there are no other Outstanding Equity Securities
in either Purchased Subsidiary. Other than pursuant to this Agreement, there are
no contracts or other agreements providing for the issuance, sale or transfer
of, or otherwise relating to, the Outstanding Equity Securities. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require any of the Purchased Subsidiaries to issue, sell or otherwise
cause to become outstanding any of its capital stock, equity
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securities or voting interests. Each of the Purchased Subsidiaries does not own
or have any contract or other agreement to acquire any option, warrant,
subscription, equity securities or other securities of any Person or any direct
or indirect equity or other ownership interest in any other business.
(b) SCHEDULE 4.3(A) sets forth the name and, as applicable,
jurisdiction of organization of the record and beneficial holders of the
Outstanding Equity Securities. Each of such holders has good and valid title to
all of the Outstanding Equity Securities as set forth on SCHEDULE 4.3(A), in
each case, free and clear of any and all Liens other than under applicable Law.
All of the Outstanding Equity Securities have been duly authorized, are validly
issued, fully paid and non-assessable and are not subject to any preemptive or
subscription rights (and were not issued in violation of any preemptive or
subscription rights). There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require any of the holders set forth
on SCHEDULE 4.3(A) to sell or otherwise transfer any of the Outstanding Equity
Securities.
(c) Complete and correct copies of the articles of incorporation and
by-laws, as amended, and the corporate books of each of the Purchased
Subsidiaries have been made available to Buyer, including the Stock Registry
Books (LIBRO DE REGISTRO DE ACCIONISTAS), the Capital Variations Registry Books
(LIBRO DE REGISTRO DE VARIACIONES DE CAPITAL), the Shareholders' Meetings
Minutes Books (LIBRO DE REGISTRO DE ACTAS DE ASAMBLEAS) and the Board of
Directors' Meetings Minutes Book (LIBRO DE REGISTRO DE ACTAS DE SESIONES DEL
CONSEJO DE ADMINISTRACION), and such minute books contain complete and accurate
records of all meetings held by the board of directors and shareholders of each
of the Purchased Subsidiaries and of all corporate actions authorized at such
meetings since its respective date of incorporation. The corporate books and
records of each of the Purchased Subsidiaries have been maintained in accordance
with the requirements of applicable Laws.
Section 4.4 FREEDOM TO CONTRACT. Except as set forth on SCHEDULE 4.4,
the execution and delivery of this Agreement does not, and the performance of
this Agreement and the consummation of the transactions contemplated hereby will
not, (i) violate or conflict with the provisions of the certificate of
incorporation or by-laws (or their equivalent organizational documents) of any
Seller or any Purchased Subsidiary, (ii) result in the imposition of any Lien
under, cause the acceleration of any material obligation under, result in a
material breach of, constitute a default under or otherwise violate or conflict
with the terms, conditions or provisions of, any material note, indenture,
trust, pledge, mortgage, lease, guaranty or other agreement or instrument to
which any Seller or any Purchased Subsidiary is a party or by which any Seller
or any Purchased Subsidiary is bound or which is otherwise included in the
Assets, (iii) result in a material breach or violation by any Seller or any
Purchased Subsidiary of any of the terms, conditions or provisions of any Law or
Order or (iv) (A) except for filings by Buyer under Mexican Federal Economic
Competition Laws, including the preparation and submittal of any and all filings
required before the Mexican Federal Competition Commission (COMISION FEDERAL DE
COMPETENCIA) as described in Section 6.2 and issuance of a non-objection
opinion from the Mexican Federal Competition Commission,
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(B) except for filings under the HSR Act as described in Section 6.2 and the
expiration or termination of the applicable waiting period under the HSR Act,
and (C) except for filings (if required by law) under the German Act Against
Restraints of Competition (GESETZ GEGEN WETTBEWERBSBESCHRAENKUNGEN) (the "GERMAN
COMPETITION ACT") as described in Section 6.2 and the expiration or termination
of the applicable waiting periods under the German Competition Act, require any
consent or approval of, filing with or notice to, any Governmental Authority.
Section 4.5 ASSETS. (a) TANGIBLE PROPERTY. SCHEDULE 4.5(A) sets forth
a true, correct and complete list, as of the date of this Agreement, of each
material item of Tangible Property owned by Sellers or the Purchased
Subsidiaries and used with respect to the conduct of the Business. None of the
Tangible Property included in the Assets is subject to any Lien other than a
Permitted Lien and other than as set forth on SCHEDULE 4.5(A). Except as set
forth on SCHEDULE 4.5(A), no contract or other agreement to which any of the
Sellers or any Purchased Subsidiary is a party or by which any of them or any of
their assets, rights or properties is bound exists that would materially impede
or prevent Sellers from selling, assigning, transferring, conveying and
delivering to Buyer all of the Sellers' and, through the sale, assignment,
transfer, conveyance and delivery of the Outstanding Equity Securities to Buyer,
the Purchased Subsidiaries' right, title and interest in and to the Tangible
Property that is material to the Business. SCHEDULE 3.3 includes a list of the
amount and age of the agave plants under the Agave Contracts or owned by Sellers
as of June 30, 2006 and included in the Assets, such list is based on Tequila
Herradura's program of physical taking of agave inventory, and since June 30,
2006, the amount and quality of such agave plants have not changed in any
material respect other than in the ordinary course of business consistent with
past practice.
(b) INTELLECTUAL PROPERTY.
(i) SCHEDULE 4.5(B)(I) sets forth a true, correct and complete
list, as of the date of this Agreement, of all trademark registrations,
trademark applications and domain name registrations owned, registered or
used by Sellers or their Affiliates in or with respect to the conduct of
the Business (whether or not used or registered before any Governmental
Authority). The Intellectual Property included in the Assets is all of the
Intellectual Property necessary to conduct the Business in all material
respects as currently conducted. Except as set forth on SCHEDULE 4.5(B)(I),
the Sellers and their Affiliates possess or otherwise own all right, title
and interest in and to the Intellectual Property set forth on SCHEDULE
4.5(B)(I) or otherwise included in the Assets, free of all Liens (other
than Permitted Liens), and owns such Intellectual Property outright. CEM
does not possess or otherwise own any right, title or interest in and to
any Intellectual Property set forth on SCHEDULE 4.5(B)(I). All material
registrations and applications in relation to such Intellectual Property
have been registered, filed and/or issued in or by the appropriate registry
for the benefit of Sellers or their Affiliates, are unexpired and
subsisting, and have not been abandoned or cancelled. Except as set forth
in SCHEDULE 1.3(IV), none of the Intellectual Property set forth on
SCHEDULE 4.5(B)(I) or otherwise included in the Assets
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(1) infringes upon, misappropriates or violates (and within the last five
years, has not infringed, misappropriated or violated) the rights of any
other Person in any material respect, (2) is infringed upon,
misappropriated, misused, or violated (and within the last five years has
not been infringed upon, misused or violated) by any other Person in any
material respect, (3) is the subject of a written notice or a pending or,
to the knowledge of the Sellers, threatened claim and there has been no
such pending, or to the knowledge of Sellers, threatened claim in the last
five years either (x) asserting any infringement on or by any other Person
or (y) challenging the legality, validity, enforceability, use or ownership
of the Intellectual Property or (4) is subject to any outstanding
injunction, judgment, order, decree or ruling that would challenge the
ownership or use thereof. No claim is pending or, to the Sellers'
knowledge, has been threatened to the effect that the present or past
operations of the Sellers, their Affiliates or the Business infringe or
conflict in any material respect with the rights of others in respect of
any Intellectual Property or any intellectual property rights of others.
Except as set forth on SCHEDULE 4.5(B)(I), no contract or other agreement
to which any of the Sellers or their Affiliates is a party or by which any
of them or any of their assets, rights or properties is bound exists which
would impede or prevent Sellers from selling, assigning, transferring,
conveying and delivering to Buyer or BFC, as provided herein, the entire
right, title and interest in and to any Intellectual Property that,
individually or in the aggregate, is material to the Business. Immediately
after the Closing, Buyer or a designee of Buyer will own all of the
Intellectual Property included in the Assets free and clear of all Liens
(other than Permitted Liens and Liens created, or suffered or permitted to
exist after the Closing by BFC, Buyer or its Affiliates), and BFC, Buyer or
Buyer's designee will own or have the right to use in the operation of the
Business all of the Intellectual Property necessary to run the Business, on
terms and conditions substantially the same as those in effect immediately
prior to the Closing.
(ii) The Intellectual Property includes complete and accurate
written instructions (including those currently in use by the Sellers,
their Affiliates or the Business) of all formulae and processes (including
for additives) for the manufacture of each of the tequila and
tequila-based products (including ready-mixed beverages) produced or sold
by the Sellers or the Business (whether historically or currently) or in
development for production or sale by the Sellers or the Business (such
products, collectively, the "PRODUCTS"), true and complete copies of which
instructions will be delivered to the Buyer at least 30 days before
Closing in accordance with Section 6.6 of this Agreement. Such
instructions shall include the ISO 9000 Certification, lists and
specifications of all ingredients, the name and address of each
manufacturer and each supplier (if different) of such ingredients (other
than agave, which is separately addressed under this Agreement), and each
vendor from whom the Sellers, the Purchased Subsidiaries or the Business
purchases (or, during the past five years, has purchased) each ingredient,
a description of any special requirements for storage of ingredients, and
a description of all processes for the manufacturing of the Products,
including fermentation, distillation, aging, rectifying, processing,
handling, storing and bottling. Such written instructions are sufficient
for a
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competent individual reasonably experienced in distillery operations,
following such instructions and using the facilities of the Business, to
manufacture the Products identical to those currently manufactured by the
Business. Except in connection with New Mix products, each ingredient used
in the Products is a naturally occurring substance and no ingredient used
is subject to industrial property rights of third parties. Except as set
forth on SCHEDULE 4.5(B)(II), the ingredients have been the same for the
Products for at least three years or, if later, their introduction. There
is not currently, nor is there reasonably expected to be, any shortage in
availability of any ingredient required for the manufacture of the
Products. There are at least two suppliers of each ingredient (other than
agave) in sufficient quantities to meet projected requirements for the
Products at competitive costs.
(c) OWNED REAL PROPERTY AND REAL PROPERTY LEASES.
(i) SCHEDULE 4.5(C)(I) contains legal descriptions, addresses and
tax parcel and catastral identification numbers (NUMEROS DE REGISTRO
PREDIAL Y CATASTRAL), in each case, as of the date of this Agreement, of
all Owned Real Property included in the Assets and each Seller's or the
Purchased Subsidiary's interest therein. The Owned Real Property described
on SCHEDULE 4.5(C)(I) and the Hacienda comprise all material real property
interests (other than the Excluded Assets described under Section 1.2(ii))
used in the conduct of the Business. Sellers have made available to Buyer
true, correct and complete copies of (A) the most recent title deeds
relating to the Owned Real Property and (B) all contracts and other
agreements evidencing, creating or constituting material Liens on the Owned
Real Property. Except as set forth on SCHEDULE 4.5(C)(I), the Owned Real
Property is in material compliance with all applicable Laws and its current
use is permitted under applicable Laws.
(ii) SCHEDULE 4.5(C)(II) sets forth a true, correct and complete
list, as of the date of this Agreement, of all Real Property Leases and all
material amendments or modifications thereto to which any Seller or
Purchased Subsidiary is a party or by which any of them or any of their
assets, rights or properties are bound and which relate to the conduct of
the Business. Sellers have heretofore delivered to Buyer true, correct and
complete copies of all of such Real Property Leases and all amendments
thereto.
(d) MATERIAL CONTRACTS. SCHEDULE 4.5(D) sets forth a true, correct
and complete list, as of the date of this Agreement, of each of the
following contracts and other agreements to which any Seller or any
Purchased Subsidiary is a party or by which any of them or any of their
assets, rights or properties are bound and which relate to the conduct of
the Business (other than contracts and other agreements which (x) are not
included in the Assumed Liabilities or (y) are not included in the Assets)
(collectively, the "MATERIAL CONTRACTS"):
(i) contracts and other agreements for the future acquisition
or sale of any assets involving $500,000 individually (or in the aggregate,
in the
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case of any related series of contracts and other agreements), other than
acquisitions or sales of Inventory in the ordinary course of business;
(ii) all material contracts and other agreements relating to the
supply of materials, including bottles, bottle caps and labeling and
packaging, related to the Business to any Seller or any Purchased
Subsidiary;
(iii) all contracts and other agreements relating to the
cultivation or administration of land for the sowing, harvesting or trade
of agave by means of leaseholds, sharecropping agreements (CONTRATOS DE
APARCERIA) or any contracts and other agreements entered into for such
purpose by any Seller or its Affiliate, or for the acquisition of agave,
agave seeds and other agricultural products related to the Business from
any Person (the "AGAVE CONTRACTS");
(iv) all material contracts and other agreements relating to the
distribution of alcoholic and non-alcoholic beverages by any Seller or any
Purchased Subsidiary or on behalf of any Seller or any Purchased
Subsidiary;
(v) contracts and other agreements relating to joint ventures
or partnerships;
(vi) contracts and other agreements that require or would
reasonably be expected to require future aggregate payments to or from any
Seller or any Purchased Subsidiary in any one year of more than $500,000 in
any one case (or in the aggregate, in the case of any related series of
contracts and other agreements);
(vii) contracts and other agreements that contain any exclusive
dealing arrangements;
(viii) contracts and other agreements containing covenants of any
Seller or any Purchased Subsidiary prohibiting or materially limiting its
or any of its Affiliates' right to compete in any line of business,
prohibiting or restricting its or any of its Affiliates' ability to conduct
business with any Person or in any geographical area or prohibiting or
restricting its or any of its Affiliates' ability to solicit or hire any
Person;
(ix) contracts and other agreements relating to the acquisition
by any Seller or any Purchased Subsidiary of any operating business, the
capital stock of any other Person or, except for Inventory and Tangible
Property acquired in the ordinary course of business, any other assets or
property (real or personal) for an aggregate purchase price of more than
$500,000 (or in the aggregate, in the case of any series of contracts and
other agreements);
(x) contracts and other agreements that require or would
reasonably be expected to require the payment by or to any Seller or any
Purchased Subsidiary of a royalty, override or similar commission or fee of
more than $500,000 in any one year;
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(xi) all collective bargaining agreements and union contracts
and other agreements;
(xii) contracts and other agreements (other than labor agreements
covered by clause (xi) above) providing for the indemnification of any
Person (other than indemnification mandated by applicable Mexican Law);
(xiii) contracts and other agreements relating to the creation of
Liens or the guarantee of the payment of liabilities or performance of
obligations of any other Person by any Seller or any Purchased Subsidiary;
(xiv) contracts and other agreements pursuant to which any Person
has granted to any Seller or any Purchased Subsidiary or has been granted
by any Seller or any Purchased Subsidiary the right to use or purchase any
Tangible Property or Intellectual Property and that involve or would
reasonably be expected to involve the payment of amounts in excess of
$500,000 in any year; and
(xv) contracts and other agreements entered into outside the
ordinary course of business or that are otherwise material to the Business.
True, correct and complete copies of all of the Material Contracts have been
delivered or made available by Sellers to Buyer.
(e) VALIDITY OF REAL PROPERTY LEASES AND CONTRACTS. Except as
disclosed on SCHEDULE 4.5(E), each of the Real Property Leases and Contracts is
a valid and binding agreement of the applicable Seller or the applicable
Purchased Subsidiary, enforceable against such Seller or Purchased Subsidiary in
accordance with its terms, and, to the knowledge of Sellers, of each other party
thereto, except as such enforcement may be limited by: (A) bankruptcy (CONCURSO
MERCANTIL), insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (B) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), and none of Sellers and the Purchased
Subsidiaries is in default in any material respect under any of such Real
Property Leases or Contracts, nor does any condition exist that with notice or
lapse of time or both would constitute such a default. To the knowledge of
Sellers, no other party to any such Real Property Lease or Contract is in
default in any material respect thereunder, nor does any condition exist that
with notice or lapse of time or both would constitute such a default.
(f) PERMITS. SCHEDULE 4.5(F) contains a complete list, as of the date
of this Agreement, of all material Permits issued to Sellers and their
Affiliates that are currently used or otherwise required by Sellers or their
Affiliates in connection with the Business or the Assets. All such material
Permits are valid, binding and in full force and effect in all material
respects; and to the knowledge of Sellers, no suspension or cancellation of such
Permits has been threatened and Seller is in material compliance with all such
Permits. The Permits set forth on SCHEDULE 4.5(F) are all material Permits
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necessary for Sellers and their Affiliates to operate the Business and the
Assets as presently operated.
Section 4.6 FINANCIAL INFORMATION. (a) Sellers have attached as
SCHEDULE 4.6(A)-1 true, correct and complete copies of (i) the audited
consolidated balance sheet of Parent and the balance sheet of each of the
Purchased Subsidiaries, each as of December 31, 2005, December 31, 2004 and
December 31, 2003 and the related audited consolidated statements of operations
for each of the fiscal years ended December 31, 2005, December 31, 2004 and
December 31, 2003 and footnotes thereto and the related audit report of Galaz,
Yamazaki, Xxxx Xxxxxxx, S.C., Member of Deloitte Touche Tohmatsu, independent
auditor of Parent and the Purchased Subsidiaries (collectively, the "FINANCIAL
STATEMENTS"); and (ii) the unaudited consolidated balance sheet of Parent, as
well as the unaudited balance sheet of each of the Purchased Subsidiaries, each
as of June 30, 2006, and the related unaudited consolidated, as applicable,
statement of operations for the six-month period then ended (collectively, the
"INTERIM FINANCIAL STATEMENTS"). SCHEDULE 4.6(A)-2 sets forth a true, correct
and complete list of all costs and expenses included in the Financial Statements
for the year ended December 31, 2005 and in the Interim Financial Statements
that do not affect the Business (including the results of operations or
performance thereof as presented in the Financial Statements for the year ended
December 31, 2005 and in the Interim Financial Statements).
(b) Except as disclosed on SCHEDULE 4.6(B), the Financial Statements
(i) present fairly in all material respects the consolidated financial position
and results of operations of the Parent, as of the respective dates thereof and
for the respective periods covered thereby, (ii) were compiled from books and
records regularly maintained by Parent's management used to prepare the
financial statements of the Parent in accordance with the principles stated
therein and (iii) were prepared in accordance with Mexican FIS, consistently
applied for all such dates and periods. Except as disclosed on SCHEDULE 4.6(B),
the Interim Financial Statements (i) present fairly in all material respects the
consolidated financial position and results of operations of the Parent at the
date and for the period indicated, (ii) were compiled from books and records
regularly maintained by Parent's management used to prepare the financial
statements of the Parent in accordance with the principles stated therein and
(iii) were prepared in accordance with Mexican FIS, except for the absence of
footnote disclosure and customary year-end adjustments. With respect to the
fiscal periods covered by the Financial Statements and the Interim Financial
Statements, no auditor of Parent, any other Seller or any Purchased Subsidiary
or the Business has issued any report or opinion in connection with the audit of
the financial statements of Parent, any other Seller, any Purchased Subsidiary
or the Business (including the Financial Statements and the Interim Financial
Statements) that contains any qualification or exception to such report or
opinion that questions the treatment or classification of any item in such
financial statements related to or arising from the Business (including the
Financial Statements and the Interim Financial Statements).
(c) Parent is not aware of (i) any significant deficiencies and
material weaknesses in the design or operation of internal controls over
financial reporting which
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are reasonably likely to adversely affect Parent's ability to record, process,
summarize and report financial information and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Parent's internal controls over financial reporting.
(d) Since January 1, 2003, (i) neither Parent nor any of its
Subsidiaries nor, to the knowledge of Sellers, any director, officer, employee,
auditor, accountant or representative of Parent or any of its Subsidiaries has
received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of Parent
or any of its Subsidiaries or their respective internal accounting controls,
including any material complaint, allegation, assertion or claim that Parent or
any of its Subsidiaries has engaged in questionable accounting or auditing
practices, and (ii) no attorney representing Parent or any of its Subsidiaries,
whether or not employed by Parent has reported to such Persons or to any
director, executive officer or in-house counsel of such Persons evidence of a
material violation of Law, breach of fiduciary duty or similar violation by
Parent, any of its Subsidiaries or any of their respective officers, directors,
employees or agents acting on behalf of Parent or any of its Subsidiaries.
Section 4.7 ABSENCE OF CHANGES. Except for the execution and delivery
of this Agreement and the transactions to take place pursuant hereto and except
as set forth on SCHEDULE 4.7, since December 31, 2005, there has not been any
change, or any event or development (including any damage, destruction or loss,
whether or not covered by insurance) which, individually or together with other
such events, would reasonably be expected to result in a Material Adverse
Effect. None of the Sellers and the Purchased Subsidiaries had any liabilities
as of December 31, 2005, and none of the Sellers and the Purchased Subsidiaries
has incurred any liabilities since December 31, 2005, other than (i) liabilities
incurred in the ordinary course of business of the Business consistent with past
practice, (ii) liabilities which individually or in the aggregate are not
material to the Business and (iii) liabilities which are not Assumed
Liabilities. Without limiting the generality of the foregoing, except as set
forth on SCHEDULE 4.7, since December 31, 2005, none of the Sellers and the
Purchased Subsidiaries has:
(i) permitted the subjection of or subjected any of the Assets
to any Liens, except Permitted Liens;
(ii) (A) acquired (whether by merger, consolidation or
acquisition of stock or assets or otherwise) any corporation, partnership
or other business organization or division thereof, or any other assets,
other than purchases of inventory and other assets in the ordinary course
of business consistent with past practice or (B) sold, assigned, leased,
transferred or otherwise disposed of (whether by merger, consolidation,
dividend, distribution or disposition of stock or assets or otherwise) any
Assets other than the sale of Inventory in the ordinary course of business
consistent with past practice;
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(iii) released, compromised, waived or canceled any debts or
claims, except in the ordinary course of business consistent with past
practice and involving only the payment of moneys;
(iv) (A) with respect to any Purchased Subsidiary, amended its
by-laws (ESTATUTOS SOCIALES) or taken any action with respect to any such
amendment or any recapitalization, transformation, reorganization,
liquidation or dissolution of any such Purchased Subsidiary; (B)
authorized, issued, sold, granted or otherwise disposed of any shares of
capital stock of, or any option with respect to, such Purchased Subsidiary,
or modified or amended any right of any holder of outstanding shares of
capital stock of, or any option with respect to, such Purchased Subsidiary;
(C) directly or indirectly redeemed, purchased or otherwise acquired any
capital stock of, or any option with respect to, such Purchased Subsidiary,
or reclassified, combined, split, subdivided any of the capital stock of
such Purchased Subsidiary; and (D) declared, set aside, made or paid any
dividend or other distribution, payable in cash, stock or property, with
respect to any capital stock or other equity or ownership interest in such
Purchased Subsidiary;
(v) terminated, materially modified or allowed to lapse any
Real Property Lease or any contracts and other agreements (including any
sharecropping agreement) whereby the use, management, cultivation, sowing
or harvesting of land is granted to such Seller or any Purchased
Subsidiary;
(vi) sold, transferred or conveyed any material property;
(vii) released, compromised or waived any material rights of
value or suffered any material loss;
(viii) settled or compromised any litigation or investigation
if such litigation or investigation would reasonably be expected to impose
any material obligation or liability on or in respect of the Assets or the
Assumed Liabilities;
(ix) granted any license or sublicense, or disposed of, sold,
encumbered or otherwise transferred any rights under or with respect to the
Intellectual Property;
(x) (A) increased the salary, wages, compensation, or benefits
payable to any Business Employee (other than any increases required
pursuant to a Plan as in effect prior to the date hereof or increases in
salary or wages of employees other than officers, or as required by the
terms of a Collective Bargaining Agreement as in effect prior to the date
hereof, in each case in the ordinary course of business consistent with
past practice) or paid any amounts not otherwise due, (B) entered into,
adopted, made or granted any material increase in, amended in any material
respect, or terminated, any Plan or (C) granted or accelerated the vesting
of any incentive awards for the benefit of any Business Employee;
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(xi) made any material change in accounting principles,
practices or policies from those utilized in the preparation of the
Financial Statements;
(xii) paid, loaned, or advanced any amount to, or sold,
transferred or leased any of its assets to, or entered into any agreement
or arrangement with, any of the other Sellers, any Purchased Subsidiary or
any of its or their respective Affiliates or directors, officers or
employees, except in the ordinary course of business consistent with past
practice;
(xiii) failed to comply in all material respects with all
applicable Laws and Orders relating to the Business, or cancelled, amended,
assigned or otherwise transferred any or all the Permits relating to the
Business;
(xiv) amended, modified, entered into, renewed, failed to renew
or terminated any material contract or other Material Contract or entered
into any contract or other agreement that would, if entered into on the
date hereof, have been a Material Contract;
(xv) entered into or accepted any material purchase orders or
otherwise shipped or sold or committed to ship or sell any Products other
than in the ordinary course of business consistent with past practice;
(xvi) sold finished Products to wholesalers or distributors in
quantities that are not consistent with past practice;
(xvii) solely with respect to any Purchased Subsidiary (A) made,
changed or revoked any material election relating to Taxes, (B) settled or
compromised any material claim relating to Taxes, (C) prepared any Tax
Returns in a manner that is inconsistent in any material respect with the
past practice with respect to the treatment of material items on such Tax
Returns, (D) incurred any material liability for Taxes other than in the
ordinary course of business, or (E) filed an amended Tax Return or a claim
for refund;
(xviii) commenced or terminated any material line of business;
(xix) received written notice from any supplier that such
supplier has ceased or will cease to do business with any Seller; or
(xx) committed or agreed to, or authorized, any of the foregoing
actions.
Section 4.8 TITLE TO PROPERTY. Each Seller has, and at the Closing
will convey to Buyer, good and valid title to all the Assets (except for Real
Property Leases and leasehold and licensed interests in Tangible Property and in
Intellectual Property) free and clear of any Liens, except for (i) assets and
properties disposed of in the ordinary course of business, (ii) Permitted Liens
and (iii) in the case of the Owned Real Properties, the Real Property
Encumbrances. There are no outstanding agreements,
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options, rights of first refusal or commitments of any nature obligating Sellers
or any Purchased Subsidiary to transfer any of the Assets or rights or interests
therein to any other person or entity, and, as of and immediately after the
Closing, there will be no leases, subleases, licenses or other rental agreements
or occupancy agreements (including sharecropping agreements) which grant any
right of use or possessory interest in and to any space situated on or in the
Owned Real Property.
Section 4.9 SUFFICIENCY OF ASSETS; CONDITION OF PROPERTY. Except for
the Excluded Assets, the Assets are the only assets, properties, rights and
interests used by any Seller, any Affiliate of a Seller or any Purchased
Subsidiary in connection with the Business. The Assets constitute all the assets
necessary to conduct the Business in substantially the same manner as conducted
by Sellers and their Affiliates (including the Purchased Subsidiaries) prior to
the date of this Agreement. All material items of Tangible Property owned or
used by each Seller and each Purchased Subsidiary in the conduct of the Business
and included in the Assets are in good operating condition, normal wear and tear
excepted.
Section 4.10 TRANSACTIONS WITH AFFILIATES; ENTIRE BUSINESS. Except as
set forth on SCHEDULE 4.10, (i) none of Sellers, the Purchased Subsidiaries and
their respective shareholders, executive officers, directors and any Affiliates
(x) provides or causes to be provided any assets, services or facilities to the
Business (other than, in the case of executive officers and directors, such
Persons' services to the Business in their capacity as such) or (y) is a party
to any contract with or binding upon any Purchased Subsidiary, or binding upon
the Business or any of its assets or otherwise included in the Assumed
Liabilities, and (ii) the Business does not provide or cause to be provided any
assets, services or facilities to any Seller, any Purchased Subsidiary or any of
their shareholders, executive officers, directors and any of the foregoing
Persons' Affiliates. Except as set forth on SCHEDULE 4.10, the conveyance of the
Assets will convey to Buyer the entire Business, except for the Excluded Assets,
the Excluded Liabilities and assets and properties disposed of in the ordinary
course of business prior to the Closing without violation of this Agreement.
Section 4.11 LITIGATION. Except as described in SCHEDULE 4.11: (a)
there is no material Action or Proceeding pending or, to the knowledge of
Sellers, threatened since December 31, 2003 against any Seller or any Purchased
Subsidiary or any of their respective Affiliates which relates to the Business,
the Assets, the Assumed Liabilities or the Purchased Subsidiaries (including any
claim involving use of or exposure to any of the Products (or any part or
component) designed, manufactured, serviced or sold, or services performed, by
the Business); and (b) there is no Order (x) to which any Seller, any Purchased
Subsidiary or any of their respective Affiliates is subject which relates to the
Business, the Assets, the Assumed Liabilities or any Purchased Subsidiary, or
(y) to which any Seller, any Purchased Subsidiary or any of their respective
Affiliates is subject which would reasonably be expected to adversely affect or
restrict the ability of Sellers to consummate the transactions contemplated by
this Agreement.
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Section 4.12 COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
4.12, (i) none of Sellers and the Purchased Subsidiaries is in material
violation of any Law or Order to which the Business, the Assets (other than the
Owned Real Property or any property subject to a Lease), the Assumed
Liabilities, the Sellers or the Purchased Subsidiaries are subject or otherwise
bound; and (ii) each of Sellers and the Purchased Subsidiaries has all material
Permits necessary for the conduct of the Business or the ownership or use of the
Assets.
Section 4.13 EMPLOYEES. (a) SCHEDULE 4.13(A) contains a complete and
accurate list of all the Business Employees as of the most recent practicable
date (such list to be updated prior to the Closing Date). With respect to each
Business Employee, Sellers have provided to Buyer a list indicating such
employee's position, seniority, monthly salary, other compensation and benefits,
any employment agreement to which such employee is a party, and which collective
bargaining unit, if any, represents such employee. Except as set forth on
SCHEDULE 4.13(A), none of the Business Employees is covered by any union,
collective bargaining or other similar labor agreements. Seller has delivered to
Buyer a true, correct and complete copy of all collective bargaining agreements
and other similar labor agreements covering Business Employees (including all
amendments, side letters and similar documents relating thereto) (collectively,
the "COLLECTIVE BARGAINING AGREEMENTS").
(b) The Sellers and their Affiliates have complied in all material
respects with all applicable Laws relating to the Business Employees, including
all payment obligations and payment of applicable withholding and
Employment-Related Taxes and all Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and occupational
health, safety and workplace environment. Since January 1, 2005, no Governmental
Authority has imposed any material fine or penalty on Seller or any of its
Affiliates for any failure to comply with applicable Law in respect of the
Business Employees. Except as otherwise provided in SCHEDULE 4.13(B), with
respect to the Business: (i) the Sellers and their Affiliates are in compliance,
in all material respects, with the Collective Bargaining Agreements; (ii) there
has not been, there is not presently pending or existing, and to the knowledge
of Sellers, there is not threatened, any strike or employee grievance process or
any application for certification of a collective bargaining agent; (iii) there
are no material workers' compensation claims received by Sellers or their
Affiliates and none of Sellers and their Affiliates is aware of any facts that
would give rise to such a claim; (iv) none of Seller and their Affiliates has
received a written claim from any Business Employee, or former employee, with
respect to any Intellectual Property; (v) none of Sellers and their Affiliates
has received a written claim from any union requesting the management or
administration, or both, of a collective bargaining agreement; and (vi) to the
Sellers' knowledge, no event has occurred or circumstances exist that may
provide the basis for any work stoppage or other labor dispute materially
affecting the Business.
(c) There are no material controversies, including strikes, disputes,
slowdowns or work stoppages, pending, or to the knowledge of the Sellers,
threatened which involve any Business Employee or employee of a subcontractor or
services
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provider. With respect to the Business, (A) no labor organization or group of
employees of any Seller or any Affiliate thereof has made a pending demand for
recognition or certification, and there are and have been no representation or
certification proceedings or petitions seeking a representation proceeding with
any labor relations tribunal or authority, nor have any such demands,
proceedings or petitions been brought or filed or threatened to be brought or
filed since January 1, 2004 and (B) there are not now, nor have there been at
any time since January 1, 2004, any actual or threatened organizing activities,
strikes, work stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes against or involving any Seller or
any Affiliate thereof.
(d) Each of the Sellers has complied in all material respects with
all applicable Laws and the terms and conditions of the service contracts or
agreements relating to employees of a subcontractor or services provider. Each
subcontractor or services provider is in compliance, in all material respects,
with all the Collective Bargaining Agreements and individual employment
agreements, as applicable, with respect to employment practices, terms and
conditions of employment, payment of salaries, and benefits, severance (as
applicable), Employment-Related Taxes and occupational safety, health and
workplace environment; there has not been, there is not presently pending or
existing, and to the knowledge of the Sellers, there is not threatened, any
strike or employee grievance process against any subcontractor or services
provider; there are no material workers' compensation claims received by the
Sellers and none of the Sellers is aware of any facts that would give rise to
such a claim; none of the Sellers and Cosesa has received a written claim from
any employee, or former employee, of a subcontractor or services provider with
respect to any Intellectual Property; and to the best of the Sellers' knowledge,
no event has occurred or circumstance exists that may provide the basis for any
work stoppage or other labor dispute materially affecting Cosesa, the Assets or
the Business.
Section 4.14 EMPLOYEE BENEFIT PLANS. SCHEDULE 4.14 identifies each
Plan and specifically denotes each Plan maintained or sponsored by a Purchased
Subsidiary. With respect to each Plan identified on SCHEDULE 4.14, Sellers have
made available to Buyer true and complete copies of each of the following
documents: (i) a copy of the Plan (or to the extent no such copy exists, an
accurate written description thereof); (ii) a copy of any employee
communications relating to any material amendment or modification of such Plan;
(iii) a copy of each trust or other funding arrangement; and (iv) the most
recent actuarial report, if any. Except as disclosed on SCHEDULE 4.14, each of
the Plans (i) has been, and is being, operated and administered in all material
respects in accordance with its terms and in material compliance with applicable
Laws, (ii) if intended to qualify for special tax treatment, qualifies for such
treatment, and (iii) if intended to be book-reserved, is fully book-reserved,
based upon reasonable actuarial assumptions. There are no material claims
pending by any Business Employee or beneficiary covered under any of the Plans
or otherwise involving any of the Plans. SCHEDULE 4.14 lists each Plan under
which the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby could (either alone or in conjunction with any
other event), cause the accelerated vesting, funding or delivery of, or increase
the amount or value of, any
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payment or benefit to any Business Employee, or could limit the right of any
Seller or any Purchased Subsidiary to amend, merge, terminate or receive a
reversion of assets from any Plan or related trust or could result in funding of
any benefit related obligations. With respect to the Business, all liabilities
for employee benefits under Plans or otherwise have been properly calculated in
accordance with Mexican FIS and applicable Laws, and are appropriately reflected
on the financial statements and the books and records of Sellers and Cosesa
pursuant to applicable Law.
Section 4.15 TAX MATTERS. Except as disclosed in SCHEDULE 4.15 (with
paragraph references corresponding to those set forth below):
(a) Each Corporate Seller and each Purchased Subsidiary has
filed (or has had filed on its behalf) all Tax Returns required by
applicable Law to be filed by it. As of the time of filing, the foregoing
Tax Returns correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities, status or
other matters of the applicable Corporate Seller or Purchased Subsidiary,
and any other information required to be shown thereon. None of the
Corporate Sellers or Purchased Subsidiaries has requested any extension of
time within which to file a Tax Return that has not already been filed.
(b) Each of the Corporate Sellers and each Purchased Subsidiary
has paid (or has had paid on its behalf) all Taxes due with respect to any
such Tax Return except for (i) Taxes not yet due and payable and (ii) Taxes
otherwise being contested in good faith. The Corporate Sellers and the
Purchased Subsidiaries have withheld and paid all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other Person.
(c) There are no Liens with respect to any Taxes, upon any of
the Assets or the assets of the Purchased Subsidiaries, other than (i)
liens for current Taxes not yet delinquent, or (ii) Taxes being contested
in good faith through appropriate proceedings and for which adequate
reserves have been established.
(d) No Audit by a Tax Authority is pending or to the Sellers'
knowledge, threatened, with respect to any Tax Return filed by, or Taxes
due from, any Corporate Seller or Purchased Subsidiary. No issue has been
raised by any Tax Authority in any Audit of the Corporate Sellers or the
Purchased Subsidiaries that could reasonably be expected to result in a
material proposed deficiency. No deficiency or adjustment for any Taxes has
been proposed, asserted, assessed or to Sellers' knowledge, threatened,
against any Corporate Seller or Purchased Subsidiary, except for
deficiencies or adjustments that have been paid or otherwise settled.
(e) Except for the group of which the Corporate Sellers and the
Purchased Subsidiaries are currently members, none of the Corporate Sellers
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and the Purchased Subsidiaries has ever been a member of an Affiliated
Group of corporations under Title II, Chapter VI of the Mexican Income Tax
Law (LEY DEL IMPUESTO SOBRE la RENTA) or any similar provision of state,
local or foreign law, other than an Affiliated Group of which a Corporate
Seller or a Purchased Subsidiary was the parent.
(f) None of the Corporate Sellers or Purchased Subsidiaries has
given or been requested to give any waiver of statutes of limitations
relating to the payment of Taxes nor has executed powers of attorney with
respect to Tax matters, which in each case will be outstanding as of the
Closing Date.
(g) There are no Tax sharing, Tax indemnity or similar
agreements to which any Corporate Seller or Purchased Subsidiary is a
party, by which it is bound, or under which it has any obligation or
liability for Taxes.
(h) No claim that is still outstanding has been made by an
authority in a jurisdiction where any Corporate Seller or Purchased
Subsidiary does not file Tax Returns that it is or may be required to file
Tax Returns and/or be subject to taxation by that jurisdiction.
(i) None of Sellers and the Purchased Subsidiaries has received
any letter ruling, determination letter or similar document issued by any
Tax Authority, or entered into any closing agreement with any Tax
Authority, which, in either case, would materially adversely affect any
Corporate Seller or Purchased Subsidiary.
(j) None of the Sellers and the Purchased Subsidiaries has
applied any tax subsidy or other tax benefit with respect to the production
of any alcoholic beverages produced or distributed by any of the Sellers or
the Purchased Subsidiaries.
(k) No Purchased Subsidiary has any liability for Taxes of any
person as a transferee or successor by contract, as member of an Affiliated
Group or otherwise.
Section 4.16 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
4.16:
(a) the operation of the Business with respect to the Owned
Real Properties and to the facilities and assets located thereon or related
thereto are and have at all times been in material compliance with all
Environmental Laws, and the use, maintenance, or operation of such
properties, facilities and assets have been and are in material compliance
with all applicable Environmental Laws;
(b) to the knowledge of the Sellers, there are no Environmental
Conditions nor have there been any Releases or threats of Releases of
Hazardous Substances at, on, in, over, from, under or in any way affecting
the
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Owned Real Property or the Leased Real Property in connection with the
Business arising from or related to the current or former operations of the
Sellers;
(c) none of Sellers and the Purchased Subsidiaries is in
material violation of, has received from any Governmental Authority or
third party any written claim or notice that it is in violation of, or has
been found to have any material liability under any Environmental Law in
connection with the Assets and the conduct of the Business and, there is no
pending or, to the knowledge of the Sellers, threatened Environmental
Claim, litigation or administrative proceeding alleging non-compliance with
or violation of any Environmental Law or requiring Remedial Actions at any
of the Owned Real Property or the Leased Real Property;
(d) Sellers have provided or made available to Buyer copies of
all environmental reports for the past three years relating to the Owned
Real Property or the Leased Real Property; and
(e) none of Sellers and the Purchased Subsidiaries has directly
Released, handled, transported, stored, treated or disposed of, and to the
knowledge of Sellers, none of the Sellers and the Purchased Subsidiaries
has allowed or arranged for any third persons to Release, handled,
transport, store, treat or dispose of, any Hazardous Substance at or from
the Owned Real Property or Leased Real Property, except in material
compliance with Environmental Laws.
Section 4.17 CUSTOMERS AND SUPPLIERS. Except as set forth on SCHEDULE
4.17, none of Sellers and the Purchased Subsidiaries is involved in any material
controversy with any of the customers or suppliers to the Business. SCHEDULE
4.17 sets forth a true, correct and complete list of (i) the 10 largest
customers of the Business in terms of sales during the twelve-month period ended
December 31, 2005 and (ii) the suppliers to the Business which, during the 12
months ended December 31, 2005, individually accounted for $2.0 million or more
of Sellers' orders for the purchase of raw materials, supplies, equipment or
parts. None of Sellers and the Purchased Subsidiaries has been advised by any
customer or supplier listed on SCHEDULE 4.17 that such customer or supplier was
or is intending to terminate its relationship with any Seller or any Purchased
Subsidiary or would not continue to purchase supplies or services relating to
the Business for future periods on account of any dissatisfaction with any
Seller's or any Purchased Subsidiary's performance.
Section 4.18 ACCOUNTS RECEIVABLE. All accounts and notes receivable of
Sellers and the Purchased Subsidiaries included in the Assets represent sales
actually made in the ordinary course of business or valid claims as to which
full performance has been rendered. All of the accounts and notes receivable of
Sellers and the Purchased Subsidiaries included in the Assets are for sales of
goods or services to customers of the Business, none of whom are Affiliates or
directors or officers of any Seller or any Purchased Subsidiary.
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Section 4.19 TRADE ACCOUNTS PAYABLES. The trade accounts payable
included in the Assumed Liabilities were incurred in the ordinary course of
business consistent with past practice. All of the accounts and notes payable
included in the Assumed Liabilities are for purchases of goods or services from
suppliers of the Business, none of whom are Affiliates or directors or officers
of any Seller or any Purchased Subsidiary.
Section 4.20 INVENTORY. The Inventory relating to the Business is of a
quality and quantity useable and saleable in the normal and ordinary course of
Business, subject to appropriate and adequate allowances reflected on the
Financial Statements for obsolete, excess, slow-moving and other irregular
items.
Section 4.21 BROKERS. Except for Michel Dyens & Co. LLC and Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx, Inc., whose fees, commissions and expenses are
the sole responsibility of Sellers and are not included in the Assumed
Liabilities, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Sellers directly with Buyer and BFC
without the intervention of any Person on behalf of Sellers in such manner as to
give rise to any valid claim by any Person against Buyer, BFC or any Purchased
Subsidiary for a finder's fee, brokerage commission or similar payment.
Section 4.22 DISCLAIMER OF SELLERS. Except as otherwise provided in
this Article IV, the Assets to be sold hereunder to Buyer are to be sold WITHOUT
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY INTENDED USE OR OTHER
EXPRESS OR IMPLIED WARRANTY OF ANY KIND OR NATURE (EXCEPT IF AND TO THE EXTENT
EXPRESSLY SET FORTH HEREIN).
ARTICLE V
REPRESENTATION AND WARRANTIES OF BUYER AND BFC
Each of Buyer and BFC represents and warrants to Sellers that:
Section 5.1 ORGANIZATION, POWER AND STANDING. Each of Buyer and BFC is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each of Buyer and BFC has all the
corporate power, authority and Permits necessary to carry on its business as it
has been and is currently being conducted, and to own, lease and operate the
properties and assets used in connection therewith. Each of Buyer and BFC has
all requisite corporate power and authority to enter into and perform this
Agreement and each Ancillary Agreement to which it is a party.
Section 5.2 AUTHORIZATION. The execution and delivery of this
Agreement and each Ancillary Agreement to which it is a party by Buyer and BFC
and the performance by it of its obligations hereunder and thereunder and the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of Buyer and BFC. This
Agreement has been
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duly and validly executed and delivered by Buyer and BFC and is a valid and
binding obligation of Buyer and BFC enforceable against Buyer and BFC in
accordance with its terms, and each Ancillary Agreement to which Buyer or BFC is
a party will, prior to Closing, be duly and validly executed and delivered by
Buyer or BFC and be a valid and binding obligation of Buyer or BFC enforceable
against Buyer in accordance with its terms, except, in respect of this Agreement
and each such Ancillary Agreement, as such enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
Section 5.3 FREEDOM TO CONTRACT. The execution and delivery of this
Agreement does not, and the performance of this Agreement and the consummation
of the transactions contemplated hereby will not, (i) violate or conflict with
the provisions of the certificate of incorporation or by-laws (or their
equivalent organizational documents) of Buyer or BFC, (ii) result in the
imposition of any Lien under, cause the acceleration of any obligation under,
result in a breach of, constitute a default under or otherwise violate or
conflict with the terms, conditions or provisions of, any note, indenture,
mortgage, lease, guaranty or other agreement or instrument to which Buyer or BFC
is a party or by which it is bound, (iii) result in a breach or violation by
Buyer or BFC of any of the terms, conditions or provisions of any Law or Order
or (iv) (A) except for filings by Buyer under Mexican Federal Economic
Competition Laws including the preparation and submittal of any and all filings
required before the Mexican Federal Competition Commission (COMISION FEDERAL DE
COMPETENCIA) as described in Section 6.2 and issuance of a non-objection
opinion from the Mexican Federal Competition Commission, (B) except for filings
under the HSR Act as described in Section 6.2 and the expiration or termination
of the applicable waiting period under the HSR Act, and (C) except for filings
(if required by law) under the German Competition Act as described in Section
6.2 and the expiration or termination of the applicable waiting periods under
the German Competition Act, require any consent or approval of, filing with or
notice to any Governmental Authority.
Section 5.4 LITIGATION. None of Buyer and BFC is a party to any Action
or Proceeding pending or, to the knowledge of Buyer or BFC, threatened, which,
if adversely determined, would reasonably be expected to adversely affect or
restrict the ability of Buyer or BFC to consummate the transactions contemplated
by this Agreement. There is no Order to which Buyer or BFC is subject which
would reasonably be expected to adversely affect or restrict the ability of
Buyer or BFC to consummate the transactions contemplated by this Agreement.
Section 5.5 BROKERS. Except for Xxxxxx Brothers, Inc., whose fees,
commissions and expenses are the sole responsibility of Buyer and BFC, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried out by Buyer and BFC directly with Sellers without the
intervention of any Person on behalf of Buyer or BFC in such manner as to give
rise to any valid claim by such Person against any Seller or any Purchased
Subsidiary for a finder's fee, brokerage commission or similar payment.
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Section 5.6 FINANCIAL CAPABILITY. Each of Buyer and BFC has, or will
have at Closing, the financial wherewithal to consummate the transactions
contemplated hereby, and neither Buyer's nor BFC's obligations hereunder are
subject to a financing condition.
Section 5.7 NON-RELIANCE. In evaluating and entering into this
Agreement, each of Buyer and BFC has not relied and is not relying on any
representations, warranties or other statements, whether oral or written, except
those representations and warranties specifically set forth in this Agreement or
in any Ancillary Agreement or in any certificate delivered pursuant to this
Agreement or any Ancillary Agreement.
ARTICLE VI
PRE-CLOSING COVENANTS
Section 6.1 TRANSACTIONS AND CONDUCT OF BUSINESS PENDING THE
CLOSING.
(a) EXAMINATIONS AND INVESTIGATIONS. At any time prior to the
Closing Date, (i) Buyer will be entitled, through its authorized employees
and representatives, to have access to the assets, properties and
operations of the Business, as Buyer may reasonably request (but not for
purposes of conducting any environmental audit, testing or sampling of any
Owned Real Property or Leased Real Property), and (ii) Sellers will provide
Buyer with all cooperation reasonably requested by Buyer that is necessary
in connection with any third-party financing by Buyer and its Affiliates in
connection with the transactions contemplated by this Agreement. In
addition, prior to the Closing, Sellers will permit Buyer to discuss, and
will, if requested by Buyer, assist Buyer (including by making
introductions) in its discussions of, the affairs, finances and accounts of
the Sellers with key customers, key distributors, key suppliers of or to
the Business, provided Buyer (i) informs Sellers reasonably in advance of
any such discussions and (ii) informs Sellers in reasonable detail of the
material aspects of such discussions after their completion to the extent
Buyer is not prohibited from so disclosing such information pursuant to any
confidentiality or fiduciary obligation or commitment. Any such
investigation, examination and discussions will be conducted at reasonable
times, upon reasonable advance notice and under reasonable circumstances;
PROVIDED, HOWEVER, that such investigation and cooperation will not
unreasonably interfere with the business operations of any Seller or any
Purchased Subsidiary. All information provided to Buyer or its financing
sources pursuant to this Section 6.1(a) will be subject to the provisions
of the Confidentiality Agreement.
(b) CONDUCT OF BUSINESS. From the date hereof through the Closing
Date, each of Sellers will, and will cause each of their Affiliates
(including the Purchased Subsidiaries) to, use its reasonable best efforts
(i) to conduct the Business in the ordinary course consistent with past
practice and continue normal maintenance, marketing, advertising,
distributional and promotional
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expenditures in connection with the Business, (ii) to preserve
substantially intact the Business and its material assets, and the present
relationships and goodwill with customers, suppliers, governmental entities
and other persons with which it has significant business relations, (iii)
comply, in all material respects, with all Laws and Orders applicable to
the Business and (iv) not engage in any practice or take any action of the
sort described in Section 4.7 (or agree to take any such action or
knowingly permit such action to take place) without the prior written
consent of Buyer. Without limiting the generality of the foregoing, the
Sellers will advise Buyer from time to time of any material new product,
service or program that any Seller or Purchased Subsidiary proposes to
offer or engage in.
(c) EFFORTS TO CLOSE. Sellers and Buyer agree to use their
reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement (including Sellers' regularizations with
respect to partial and annual water extraction and waste water duty
payments), including obtaining all necessary Permits, waivers, consents and
approvals and continuing in full force and effect the contracts and other
agreements that are necessary for the conduct of the Business and that are
set forth on the Schedules and the fulfillment of each condition to the
other party's obligations set forth in Article VII; PROVIDED, HOWEVER, that
none of the Sellers and Buyer will be required to pay or incur any material
cost or expense in connection with their obligations under this Section
6.1(c). In furtherance with the foregoing, (i) Sellers will undertake the
actions set forth on SCHEDULE 6.1(C)(I), (ii) Sellers will grant, prior to
the Closing, a special and limited irrevocable power of attorney in favor
of Buyer, duly authenticated by a Mexican notary public, for lawsuits and
collections, acts of administration and acts of dominion, limited in scope
and of sufficient duration to pursue and obtain necessary approvals to the
Water Rights Assignments and the Water Correction Permits, in form and
substance reasonably satisfactory to Buyer (the "POWER OF ATTORNEY"), and
(iii) Sellers and Buyer shall use their respective commercially reasonable
efforts to enter into a water supply agreement incorporating the terms set
forth on SCHEDULE 6.1(C)(III) and such other terms as the parties may agree
(the "WATER SUPPLY AGREEMENT").
Section 6.2 REGULATORY AND OTHER APPROVALS. Buyer will take all steps
reasonably necessary, and proceed diligently and in good faith as promptly as
practicable, to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to Governmental Authorities required of
Buyer or its Affiliates to consummate the transactions contemplated hereby, and
Buyer will be required to comply or agree to comply with any conditions
(including the obligation of Buyer to dispose of any Assets or to have any limit
or restriction imposed on the conduct of the Business, in each case, after the
Closing) that are imposed in connection with obtaining or making any such
consents, approvals, actions and filings; PROVIDED, HOWEVER, that,
notwithstanding anything herein to the contrary, Buyer will not be required to
comply or agree to comply with any conditions, or take any actions (including
dispositions of assets), that would have a material adverse effect on the assets
and operations of BFC
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and the Business, taken as a whole. Sellers will take all steps reasonably
necessary or desirable, and proceed diligently and in good faith as promptly as
practicable, to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to Governmental Authorities required of
such parties or their Affiliates to consummate the transactions contemplated
hereby. Sellers and Buyer will (a) provide as promptly as practicable such other
information and communications to such Governmental Authorities as such parties
or such Governmental Authorities may reasonably request in connection therewith;
and (b) cooperate with each other as promptly as practicable in connection with
the foregoing. Each party hereto will provide prompt notification to the other
parties hereto when any such consent, approval, action, filing or notice
referred to above in this Section 6.2 is obtained, taken, made or given, as
applicable, and will advise each other party hereto of any communications (and,
unless precluded by Law, provide copies to each other party hereto of any such
communications that are in writing, other than the filings under the HSR Act,
Mexican Federal Economic Competition Laws and the German Competition Act,
described below) with any Governmental Authority regarding any of the
transactions contemplated by this Agreement. In addition to and not in
limitation of the foregoing, Sellers and Buyer will (a) take promptly (and in
any event within 10 Business Days after the execution of this Agreement) all
actions necessary to make the filings required of each of them or their
Affiliates under the HSR Act; (b) comply at the earliest practicable date with
any request for additional information or documentary material received by each
of them or their Affiliates from the Federal Trade Commission or the Antitrust
Division of the U.S. Department of Justice pursuant to the HSR Act; and (c)
cooperate with each other in connection with any filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by the Federal Trade
Commission, the Antitrust Division of the U.S. Department of Justice or state
attorneys general. As promptly as practicable after the date of this Agreement,
Buyer will file a notice of concentration before the Mexican Federal Competition
Commission as required by the Mexican Federal Economic Competition Laws. Sellers
will cooperate with Buyer and its representatives in providing all information
and documents attributable to Sellers or relating to the Business that are
required under the Mexican Federal Economic Competition Laws to submit such
notice of concentration. As promptly as practicable after the date of this
Agreement, Buyer and Sellers will file a merger control notification with the
German Federal Cartel Office (BUNDESKARTELLAMT) in accordance to the German
Competition Act. Sellers hereby agree to cooperate with Buyer and its
representatives in providing all information and documents attributable to
Sellers or relating to the Business that are required under the German
Competition Act or by the German Federal Cartel Office (BUNDESKARTELLAMT).
Section 6.3 CERTAIN MATTERS RELATING TO CEM, XXXXXXX XXXXX. Prior to
the Closing, Sellers will take all necessary action to terminate in full,
effective prior to the Closing, all agreements between CEM and the Sellers,
including any option or other agreement, relating to the Trademarks and Assets,
without payment therefor other than the payment of moneys. Immediately upon
receipt of the Other Cash Payment at the Closing, Parent will repay to Xxxxxxx
Xxxxx Mortgage Capital ("XXXXXXX XXXXX") all amounts (including principal and
accrued and unpaid interest thereon) then outstanding under the Xxxxxxx Xxxxx
Bridge Loan in full satisfaction thereof.
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Section 6.4 APPRAISAL. Prior to the Closing, Sellers shall, at their
sole cost and expense, obtain an appraisal of the Assets, other than the
Trademarks, setting forth, for each Seller and for each Purchased Subsidiary,
the fair market or replacement value of each of the Assets owed by such Seller
or such Purchased Subsidiary (the "APPRAISAL") made by an independent appraiser
(CORREDOR PUBLICO OR PERITO VALUADOR AUTORIZADO) that is licensed in Mexico (the
"APPRAISER") and that is selected in good faith by Sellers. The Appraiser shall
certify the Appraisal to Sellers and Buyer.
Section 6.5 INTERCOMPANY ACCOUNTS. Sellers will ensure that, except as
otherwise expressly contemplated by this Agreement, all Intercompany Accounts
will be terminated and paid or offset on or before the Closing, without transfer
of non-financial assets. Sellers will terminate, or cause another Person to be
substituted in all respects for, all obligations under any Excluded Liability
for which Buyer or any Purchased Subsidiary may be liable, whether as guarantor,
original tenant, primary obligor or otherwise.
Section 6.6 MANUFACTURING REVIEW. No later than 30 days prior to the
Closing, (x) Sellers will consult with Buyer regarding the production process of
the Business, including by permitting Buyer's designated representative to
review and discuss with the Sellers, and by delivering true and complete copies
to Buyer's designated representative of, all of the manufacturing instructions
used in connection with the Products prior to such date (including those
instructions described in Section 4.5(b)(ii)), and (y) Sellers will provide
Buyer's designated representative the opportunity to witness the full production
process by the Sellers and their Affiliates, and (c) Buyer will be permitted to
conduct a physical inventory of the agave plants and fields, the finished goods
inventory and the work-in-progress inventory that constitute Assets.
Section 6.7 CERTAIN MATTERS RELATING TO LAS NORIAS; OTHER MATTERS. (a)
In the event that Las Norias constitutes a Purchased Subsidiary pursuant to
Section 1.2(b)(vi), (x) Sellers will, prior to the Closing, convey, transfer and
assign all of the Las Norias Real Property, and all right, title and interest of
Las Norias therein, to Sellers or their designee(s) and (y) on or before the end
of the 24th month after the end of the month in which the Closing occurs, Buyer
will have the right to transfer and assign in full to Parent (or its designee),
and, if such right is exercised, Parent (or its designee) shall acquire and
accept in full, all of the Outstanding Equity Securities of Las Norias, at the
time specified by Buyer, without any requirement of further consideration from
Parent of any of its Affiliates for such transfer and assignment, PROVIDED (1)
Buyer shall represent and warrant to Parent in writing that (A) none of Buyer
and its Affiliates has taken any action or failed to take any action that would
result in or permit to exist any Lien on or in respect of the Outstanding Equity
Securities of Las Norias or cause Las Norias to have any liability other than
liabilities existing as of the Closing or incurred in the ordinary course of
business with respect to the operations and business of Las Norias as described
in the immediately following clause (B), and (B) since the Closing Date, Las
Norias has not conducted any operations or business other than granting to Buyer
the use of and, if permitted under applicable Law, assigning to Buyer those
Permits issued to Las Norias as of the Closing and that are used or otherwise
required by Buyer or its Affiliates and activities in furtherance of the
foregoing (including, after the Closing, Las
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Norias and Xxxxx) in connection with the Business or the ownership and use of
the Assets, and (2) Buyer agrees in writing to indemnify and hold harmless
Parent and its Affiliates from and against any Losses resulting from any action
or inaction of Buyer or any of its Affiliates, or any liability or obligation
incurred by Las Norias, during the period commencing immediately after the
Closing and ending immediately before the transfer and assignment of the
Outstanding Equity Securities of Las Norias to Parent (or its designees) as
provided above.
(b) Prior to Closing, Buyer and Parent will negotiate in good faith
and enter into an agreement (the "COLLECTION AGREEMENT") pursuant to which Buyer
shall act as the collection agent for the Excluded Receivables. The Collection
Agreement shall incorporate the terms and conditions set forth in this Section
6.7(b) and such other customary terms and conditions for agreements of this type
as the Buyer and Parent may agree. The Collection Agreement shall provide, among
other things, that (i) Buyer shall have no right or title to or interest in the
Excluded Receivables, (ii) Buyer shall act solely as the exclusive agent of
Sellers with respect to the Excluded Receivables and shall only be liable for
its willful misconduct, (iii) Buyer shall, in its capacity as collection agent,
endeavor to collect the Excluded Receivables consistent with BFC's best business
practices applicable to its accounts receivable; PROVIDED, HOWEVER, that in the
exercise of such efforts Buyer may, but shall not be obligated to, commence any
litigation to collect any such Excluded Receivables and Sellers shall have the
right after the Determination Date to commence litigation to collect any such
Excluded Receivables, (iv) the receipt or collection of any Excluded Receivables
by Buyer shall be on behalf of and in the name of Sellers, (v) subject to
Section 8.17, any risk of non-collection with respect to the Excluded
Receivables shall be borne by Sellers, (vi) with respect to any such Excluded
Receivable that is more than 90 days past due, Sellers will have the right by
written notice to Buyer to assume collection of and responsibility for such
Excluded Receivable; (vii) if Buyer modifies or alters the payment terms
(including as a result of any settlement) of any Excluded Receivable to provide
that it will be payable after the Determination Date or would otherwise
adversely affect Sellers' right or ability to collect the remaining balance of
such account receivable in full in any material respect, such Excluded
Receivable will be deemed, for the purpose of this Section 6.7(b), to have been
collected in full; (viii) in the event that any Products underlying the Excluded
Receivables shall be returned to Tequila Herradura, Tequila Herradura will sell
to Buyer, and Buyer will purchase from Tequila Herradura, all such Products to
the extent saleable for a purchase price in cash equal to the Standard Cost of
such Products as of the Closing (i.e., net of margin); (ix) Sellers shall pay
Buyer a fixed fee of $1,000,000 for its services as collection agent with
respect to the Excluded Receivables plus reimbursement of reasonable costs and
expenses (including attorneys' fees) incurred in connection with the performance
of its services hereunder; and (x) any collections from a customer which is both
an obligor with respect to an Excluded Receivable and an account receivable
generated after the Closing shall, unless such Excluded Receivable is in dispute
as of the Closing as a result of any act or omission of Sellers, be applied
against amounts payable in respect of such Excluded Receivable until such
Excluded Receivable is paid in full.
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Section 6.8 CERTAIN HISTORICAL MATTERS. Prior to the Closing, Sellers
and BFC will work together in good faith and will enter into an agreement
setting forth a reasonable framework within which BFC will be able, in
connection with the Assets and the Business, to publicize and use the historical
facts relating to, and the history of the successes of, the founders and the
Xxxx de la Pena Brothers and their ancestors, in order for BFC to promote and
develop the brands and their brand equity. In addition, prior to the Closing,
Sellers and BFC will work together in good faith and will enter a reasonable
agreement conveying to BFC whatever items the Sellers (a) own and are not
otherwise as of the date hereof precluded from conveying in full or (b) have the
ability to convey in full, in order for BFC to effectively use the history and
heritage of the brands of the Business in promoting and developing them after
the Closing, including, for example, labels, bottles, drawings and other
materials, if any, used for the brands in the past.
Section 6.9 CERTAIN LEASE MATTERS. Promptly after the date hereof, the
Sellers will enter into a lease agreement (COMODATO) with Buyer or any of its
Subsidiaries with respect to a plot of land (or portion thereof) to be
determined by the Parties and selected from one of the parcels of land that are
part of the Owned Real Property and that will be purchased by Buyer pursuant
hereto, with the sole purposes to allow Buyer or any of its Subsidiaries to meet
the necessary requirements to file for a new concession title to use water from
groundwater sources at the hidrological basin (CUENCA HIDROLOGICA) of Amatitan,
in Tequila, State of Jalisco, Mexico. Such lease agreement (COMODATO) will
provide that the Buyer will not pay any rent and shall terminate at the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING.
Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO
COMPLETE THE CLOSING. The obligations of Buyer and BFC to consummate the Closing
(and the obligation of BFC to make the payments contemplated by Section 3.2) are
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived in writing by Buyer:
(a) PERFORMANCE; COMPLIANCE. Each of Sellers shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by
such Seller on or prior to the Closing Date.
(b) REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Sellers contained in this Agreement
(which for purposes of this paragraph shall be read as though none of them
contained any materiality or Material Adverse Effect qualifier or
exception) shall be true and correct on the date of this Agreement and as
of the Closing with the same effect as though made as of the Closing,
except where the failure of such representations and warranties to be true
and correct in all respects as of the
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applicable time would not in the aggregate have a Material Adverse Effect
on Sellers.
(c) CERTAIN FILINGS AND CONSENTS.
(i) The applicable waiting period under the HSR Act in respect
of the transactions contemplated hereby shall have expired or been
terminated.
(ii) The Mexican Federal Competition Commission (COMISION
FEDERAL DE COMPETENCIA) shall have issued a non-objection opinion in
respect of the transactions contemplated hereby.
(iii) The transaction can be consummated without violation of
Section 41 (1) sentence 1 of the German Competition Act.
(iv) As a result of the consummation of the acquisition, if any,
of the Outstanding Equity Securities of Las Norias pursuant to this
Agreement, Buyer shall, upon the Closing, indirectly have each of the
Permits set forth on SCHEDULE 7.1(C)(IV) and each such Permit shall be in
full force and effect.
(d) INJUNCTIONS, ETC. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that prevents
the consummation of, and no Action or Proceeding shall be pending or
threatened against a party hereto which questions the legality of or seeks
to restructure or to restrain or prevent the consummation of, the
transactions contemplated by this Agreement.
(e) CLOSING CERTIFICATE OF SELLERS. Sellers shall have
delivered to Buyer certificates signed by an authorized officer of each
Seller, dated the Closing Date, (i) as to the matters set forth in Section
7.1(a) and Section 7.1(b) and in form and substance reasonably
satisfactory to Buyer, and (ii) certifying the names and signatures of the
officers of each Seller authorized to sign this Agreement and the other
Ancillary Agreements to be delivered hereunder.
(f) CONVEYANCE DOCUMENTS AND RELATED ITEMS.
(i) Sellers and, if applicable, Xxxxxxxxx Xxxx Xxxxxx and
Xxxxxxxx Xxxxxxxxx Xxxx Xxxxxx shall have executed and delivered to Buyer,
BFC or Xxxxx, as applicable:
(1) an Asset Purchase and Assignment Agreement documenting
the sale and purchase of the Inventory, Purchased Receivables,
Tangible Personal Property, Other Assets and Contracts, duly granted
before a Mexican Notary Public (the "ASSET PURCHASE AND ASSIGNMENT
AGREEMENT") in substantially the form of EXHIBIT B;
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(2) an assignment of Intellectual Property (other than the
Trademarks) (the "ASSIGNMENT OF IP") in substantially the form of
EXHIBIT C;
(3) an assignment of the Trademarks (the "ASSIGNMENT OF THE
TRADEMARKS") in substantially the form of EXHIBIT D.
(4) one or more valid invoices for the sale of the Assets,
stating separately the applicable IVA and IEPS, when applicable and
which complies with all the formal requirements in accordance with
the applicable Mexican tax laws, including articles 29 and 29A of the
Mexican Tax Code;
(5) the agreements for the assignment of all rights and
interests to the Underground Water Rights (each a "WATER RIGHTS
ASSIGNMENT" and collectively the "WATER RIGHTS ASSIGNMENTS"), each in
substantially the form of EXHIBIT E;
(6) the Power of Attorney; and
(7) the Water Supply Agreement.
(ii) Sellers shall have filed or caused to be filed with the
National Waters Commission, the SEMADES or any other competent Governmental
Authority as applicable and as required by applicable Law, any
applications, request forms or other documentation necessary to obtain the
approvals of, and give effect to, the Water Rights Assignments, and shall
have initiated any and all actions required therefore.
(iii) Sellers shall have delivered to Buyer original certificates
representing the Outstanding Equity Securities of the Purchased
Subsidiaries, duly endorsed in favor of Buyer and the books and records of
the Purchased Subsidiaries, which shall reflect entries evidencing, as
required under applicable Law, registration of the transactions
contemplated hereby, in particular, the Stock Registry Books (LIBRO DE
REGISTRO DE ACCIONISTAS) of the Purchased Subsidiaries.
(g) ESCROW AGREEMENT. The Sellers shall have executed and
delivered to Buyer the Escrow Agreement.
(h) PAY-OFF LETTERS; RELEASE OF LIENS. (i) Xxxxxxx Xxxxx and
Scotia shall have executed and delivered to Buyer Pay-off Letters in
customary form evidencing the full payment of the Xxxxxxx Loan and the
Scotia Loan, respectively, and (ii) Sellers shall deliver to Buyer (A)
original certificates of encumbrance to be issued by the relevant
Governmental Authority (including the corresponding Public Registry of
Property and Commerce) showing all Liens and Real Property Encumbrances
granted in favor of Xxxxxxx Xxxxx and Scotia by the Sellers or their
Affiliates, and (B) documents evidencing the due and valid release and
cancellation by Xxxxxxx Xxxxx and Scotia of each of the Liens over the
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Assets and the Real Property Encumbrances over the Owned Real Properties,
in each case under this Section 7.1(h) duly and validly executed by all
parties thereto pursuant to applicable Law.
(i) COMPETITION COMPENSATION AGREEMENTS. Each of the Sellers
and the Additional Seller Parties shall have executed and delivered to
Buyer a Competition Compensation Agreement (the "COMPETITION COMPENSATION
AGREEMENT") substantially in the form of EXHIBIT F.
(j) REAL PROPERTY MATTERS.
(i) Sellers shall have delivered to Buyer public deeds (the
"REAL PROPERTY DEEDS"), in each case, substantially in the form of EXHIBIT
G, duly executed before and to be notarized by a Mexican civil law notary
public selected by Buyer, and at Buyer's expense, with respect to each
parcel of Owned Real Property, transferring fee title to the Owned Real
Property free and clear of all Liens, except for the Permitted Liens and
the Real Property Encumbrances.
(ii) The Xxxx de la Pena Brothers shall have terminated the
Amatitan Lease.
Section 7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS TO
COMPLETE THE CLOSING. The obligations of Sellers to enter into and complete the
Closing are subject to the fulfillment on or prior to the Closing Date, of the
following conditions, any one or more of which may be waived by Sellers.
(a) PERFORMANCE; COMPLIANCE. Each of Buyer and BFC shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by
it on or prior to the Closing Date.
(b) REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Buyer and BFC contained in this Agreement
(which for purposes of this paragraph shall be read as though none of them
contained any materiality or Material Adverse Effect qualifier or
exception) shall be true and correct on the date of this Agreement and as
of the Closing with the same effect as though made as of the Closing,
except where the failure of such representations and warranties to be true
and correct in all respects as of the applicable time would not in the
aggregate have a Material Adverse Effect on BFC.
(c) CERTAIN FILINGS AND CONSENTS.
(i) The applicable waiting period under the HSR Act in respect
of the transactions contemplated hereby shall have expired or been
terminated.
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(ii) The Mexican Federal Competition Commission (COMISION
FEDERAL DE COMPETENCIA) shall have issued a non-objection opinion in
respect of the transactions contemplated hereby.
(iii) The transaction can be consummated without violation of
Section 41 (1) sentence 1 of the German Competition Act.
(d) INJUNCTION, ETC. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that prevents
the consummation, and no Action or Proceeding shall be pending or
threatened against a party hereto which questions the legality of, seeks to
restructure or to restrain or prevent the consummation of, the transactions
contemplated by this Agreement.
(e) CLOSING CERTIFICATE OF BUYER AND BFC. Each of Buyer and BFC
shall have delivered to Sellers a certificate signed by an authorized
officer of Buyer and BFC, dated the Closing Date, as to the matters set
forth in Section 7.2(a) and Section 7.2(b) and in form and substance
reasonably satisfactory to Sellers, and (ii) certifying the names and
signatures of the officers of Buyer and BFC authorized to sign this
Agreement and the other Ancillary Agreements to be delivered hereunder;
(f) DELIVERY OF FUNDS. At the Closing, Buyer and BFC, as
applicable, shall have (i) delivered to Parent the payments required under
Section 3.2 and (ii) paid any items or amounts chargeable or payable as
provided in the last sentence of Section 2.1.
(g) CONVEYANCE DOCUMENTS. Each of Buyer and BFC shall have
executed and delivered to Parent each of the Ancillary Agreements to which
such Person is a party.
ARTICLE VIII
POST-CLOSING AGREEMENTS.
Section 8.1 FURTHER INFORMATION; FURTHER TRANSFERS. (a) Following the
Closing, each party will afford to the other party, its counsel and its
accountants, during normal business hours, reasonable access to the books and
records relating to the Assets or the Assumed Liabilities in its possession with
respect to periods prior to the Closing and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably required by
the requesting party (i) to facilitate the preparation of the Closing Statements
and the investigation, litigation and final disposition of any third party
claims which may have been or may be made against any party or its Affiliates or
the calculation of the Closing Excluded Net Receivables and (ii) for any other
reasonable business purpose. Each Seller and its agents will keep confidential
and not disclose any information learned as a result of any examination
conducted pursuant to this Section 8.1 to any other Person without the prior
written
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consent of Buyer unless (i) the disclosure is in response to legal order
or subpoena; or (ii) the terms are readily ascertainable from public or
published information or trade sources (without violation of the foregoing
provisions of this sentence).
(b) After the Closing, Sellers will (i) use their commercially
reasonable best efforts to execute such notices (including notices of
assignment) and other documents, and take such other commercially reasonable
actions, to transfer all accounts receivable that are included in the Closing
Date Working Capital and (ii) pay to Buyer, as promptly as practicable after
receipt, any amounts received by or paid to the Sellers in respect of any
account receivable that is included in the Closing Date Working Capital.
(c) After the Closing, Buyer will use its commercially reasonable best
efforts to execute such notices and other documents, and take such other
commercially reasonable actions, to effect the transfer of all trade accounts
payable that are reflected in the Closing Date Working Capital.
(d) Each party hereto will execute and deliver such further
instruments of conveyance and transfer, including any and all documents required
under the laws of foreign countries necessary in connection with the assignment
to Buyer or BFC of individual trademark applications or registrations in any
country where Sellers have pending or registered trademarks, and take such
additional commercially reasonable actions as any other party may reasonably
request to effect, consummate, confirm or evidence the consummation of the
transactions contemplated hereby.
(e) The parties' respective obligations under Sections 8.1(b), 8.1(c)
and 8.1(d) will terminate on the second anniversary of the Closing Date.
Section 8.2 RECORD RETENTION. Until the fifth anniversary of the
filing of the Corporate Sellers' Tax Returns for the taxable period that
includes the Closing Date, each party hereto will not destroy or otherwise
dispose of any of the books and records relating to the Assets or the Assumed
Liabilities in its possession with respect to periods prior to the Closing. Each
party hereto will have the right to destroy all or part of such books and
records after the fifth anniversary of the Closing Date or at an earlier time by
giving each other party hereto 30 days' prior written notice of such intended
disposition and by offering to deliver to the other party, at the other party's
expense, custody of such books and records as such first party may intend to
destroy.
Section 8.3 TAX MATTERS.
(a) TRANSFER TAXES. Except with respect to Excluded Taxes, Buyer
will pay all sales, use, transfer, real property transfer, IVA, IEPS,
recording, gains, stock transfer and other similar taxes and fees (such
taxes and fees, including any interest or penalties thereon, are herein
sometimes called "TRANSFER TAXES") arising out of or in connection with the
sale of the Assets effected pursuant to this Agreement, in each case, as
required by applicable Laws, which amounts shall be appropriately adjusted
to take into account any
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adjustment to the Initial Purchase Price pursuant to Section 3.3(d);
PROVIDED, HOWEVER, that in the case of IVA and IEPS, Sellers shall promptly
pay over such amounts to the appropriate Tax Authority and shall provide
Buyer appropriate written evidence of such prompt payment.
(b) TAX RETURNS. Buyer will timely prepare and timely file, or
cause to be timely prepared and timely filed, all Tax Returns of each of
the Purchased Subsidiaries due after the Closing Date and will cause each
of the Purchased Subsidiaries to pay or cause to be paid the Taxes shown to
be due thereon. Sellers will furnish to Buyer all information and records
in their possession and reasonably requested by Buyer for use in
preparation of any such Tax Returns relating to a Straddle Period or
Pre-Closing Tax Period. Buyer will allow the Sellers to review, comment
upon, and reasonably approve without undue delay any such Tax Returns for a
Pre-Closing Tax Period ("PRE-CLOSING TAX RETURNS") or Straddle Period Tax
Returns beginning at least 45 days before the filing of the Pre-Closing Tax
Returns or Straddle Period Tax Returns. At least five days prior to the due
date of any tax liability with respect to such Tax Return, the Sellers will
pay to Buyer, and Buyer will pay when due, an amount equal to the Sellers'
share of any such tax liability, PROVIDED Sellers have approved such Tax
Returns.
(c) TAX COOPERATION. The Sellers and Buyer will reasonably
cooperate, and will cause their respective Affiliates, officers, employees,
agents, auditors and representatives reasonably to cooperate (including by
maintaining and making available to each other all relevant records), in
preparing and filing all Tax Returns and in resolving all disputes and
audits with respect to Taxes of any Purchased Subsidiary (or with respect
to the Business or the Assets) for any Pre-Closing Tax Period and for any
Straddle Period.
(d) CONTESTS. Upon receipt by Buyer or any Affiliate of Buyer of
any notice of any Audit with respect to Excluded Taxes or any other Taxes
for which the Sellers may be liable hereunder (any such Audit, a "TAX
MATTER"), Buyer will notify the Sellers of any such Tax Matter within (x)
three Business Days if, under applicable Law, the written response to such
Tax Matter is required within 20 days after the receipt by Buyer of such
notice of such Tax Matter, and (y) ten calendar days in all other cases.
The Sellers may, at their expense, participate in and, upon notice to
Buyer, assume the defense of any such Tax Matter. Upon receipt of such
notice from Sellers, Buyer will grant to Sellers a special and limited
power of attorney in favor of Sellers, duly authenticated by a Mexican
notary public, for lawsuits and collections to permit Sellers to properly
defend or contest such Tax Matter. No delay in or failure by Buyer to give
notice of such Tax Matter or to deliver such power of attorney pursuant to
this Section 8.3(d) will alter or relieve the Sellers of their obligation
to indemnify Buyer, except to the extent that the Sellers are prejudiced
thereby or are prevented or in any way restricted from being able to assume
the defense of such Tax Matter. If the Sellers assume such defense, the
Sellers will have the authority, with respect to any Tax Matter, to
represent the interests of the
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applicable Purchased Subsidiary before the relevant Taxing Authority and
will have the right to control the defense, compromise or other resolution
of any such Tax Matter, including responding to inquiries and contesting,
defending against and resolving any assessment for additional Taxes or
notice of Tax deficiency or other adjustment of Taxes of, or relating to,
such Tax Matter; provided, however, the Sellers will not enter into any
settlement of or otherwise compromise any such Tax Matter to the extent
that it could reasonably be expected to adversely affect the Tax liability
of any Purchased Subsidiary for a period (or portion thereof) beginning
after the Closing Date without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. Buyer has the right (but not
the duty) to participate in the defense of such Tax Matter and to employ
counsel, at its own expense, separate from the counsel employed by the
Sellers. If Buyer elects to participate in the defense of any Tax Matter,
then (i) Buyer shall be entitled to (A) without in any way limiting or
affecting Sellers' right to assume the defense of such Tax Matter,
participate fully in the conduct of such Tax Matter, including
participating in all conferences and attending all meetings with the
relevant authorities, and (B) consult with the Sellers, at its own expense,
regarding any such Tax Matter, and Sellers shall consider in good faith any
suggestions made by Buyer, (ii) the Sellers shall provide Buyer with a copy
of all documents (or portions thereof) relating to such Tax Matter and
(iii) the Sellers will not enter into any settlement of or otherwise
compromise any such Tax Matter to the extent that it could reasonably be
expected to adversely affect the Tax liability of any Purchased Subsidiary
for a period (or portion thereof) beginning after the Closing Date without
the prior written consent of Buyer, which consent shall not be unreasonably
withheld. The Sellers will allow Buyer to consult with Sellers regarding
the conduct of or positions taken in any such proceeding.
(e) COOPERATION. The parties hereto will cooperate with each
other in contesting any Tax Claim of any Purchased Subsidiary, which
cooperation will include the retention and, upon request of any party
hereto, the provision of records and information which are reasonably
relevant to such Tax Claim and making employees available to provide
additional information or explanation of any material provided hereunder;
provided, however, subject to Section 8.2, that the parties hereto need
only retain records and information in accordance with their record
retention policy unless timely and promptly notified in writing by any
other party hereto.
(f) REFUNDS. The Sellers will be entitled to any Tax refunds (or
reductions in Tax liability), including interest paid therewith, in respect
of Taxes paid by any Purchased Subsidiary with respect to any Pre-Closing
Tax Period or Pre-Closing Straddle Period (applying the principles set
forth in Section 8.3(h)), other than any IVA or IEPS. Buyer will forward to
the Sellers any such Tax refunds received or reductions utilized by it to
which the Sellers are entitled within 10 days after receipt or utilization
net of any costs to Buyer or any of its Affiliates.
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(g) AMENDMENT OF TAX RETURNS. None of Buyer and its Affiliates
will amend, refile, revoke or otherwise modify any Tax Return or Tax
election of any Purchased Subsidiary with respect to a Pre-Closing Tax
Period or Straddle Period without the prior written consent of the Sellers,
which consent will not be unreasonably withheld or delayed.
(h) TAX PRORATION. For purposes of this Agreement, the portion
of Tax with respect to the income, property or operations of any Purchased
Subsidiary or Corporate Seller that is attributable to a Straddle Period
will be apportioned between the period of the Straddle Period that extends
before the Closing Date through the Closing Date (the "PRE-CLOSING STRADDLE
PERIOD") and the period of the Straddle Period that extends from the day
after the Closing Date to the end of the Straddle Period (the "POST-CLOSING
STRADDLE PERIOD") in accordance with this Section 8.3(h). Except as
otherwise provided in Section 8.4(b), the portion of such Tax attributable
to the Pre-Closing Straddle Period (i) in the case of any Taxes other than
sales or use taxes, value-added taxes, employment taxes, withholding taxes,
and any Tax based on, or measured by, income, receipts or profits earned
during a Straddle Period, shall be deemed equal to the amount of such Tax
for the entire taxable period multiplied by a fraction, the numerator of
which is the number of days in the Pre-Closing Straddle Period, and
denominator of which is the number of days in the Straddle Period, and (ii)
in the case of any sales or use taxes, value added taxes, employment taxes,
withholding taxes and any Tax based on or measured by income, receipts or
profits earned during a Straddle Period, be deemed equal to the amount that
would be payable if the Straddle Period ended on and included the Closing
Date. To the extent that any Tax for a Straddle Period is based on the
greater of a Tax on net income, on the one hand, and a Tax measured by net
worth or some other basis not otherwise measured by income, on the other
hand, the portion of such Tax related to the Pre-Closing Straddle Period
will be deemed to be (A) if the amount of such Tax for the Straddle Period
is measured by net worth or such other basis, the amount of such Tax
determined as though the taxable values for the entire Straddle Period
equal the respective values as of the end of the Closing Date and
multiplying the amount of such Tax by a fraction, the numerator of which is
the number of days during the Straddle Period that are in the Pre-Closing
Straddle Period, and the denominator of which is the number of days in the
Straddle Period or (B) if the amount of such Tax for the Straddle Period is
measured by net income, the amount of such Tax determined as though the
applicable Tax period terminated at the end of the day on the Closing Date.
For purposes of this Section 8.3(h), any exemption, deduction, credit or
other item that is calculated on an annual basis will be allocated to the
Pre-Closing Straddle Period on a pro rata basis by multiplying the total
amount of such items for the Straddle Period by a fraction, the numerator
of which is the number of calendar days in the Pre-Closing Straddle Period,
and the denominator of which is the number of calendar days in the Straddle
Period.
(i) Prior to Closing, Sellers shall provide to Buyer a transfer pricing study
(ESTUDIO DE PRECIO DE TRANSFERENCIA) for each of the 2004 and 2005
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fiscal years (the "TRANSFER PRICING STUDIES") with respect to any
transactions between Tequila Herradura and any foreign related party
(within the meaning of Mexican Income Tax Law (LEY DEL IMPUESTO SOBRE LA
RENTA)) which Transfer Pricing Studies shall be similar in form and
substance to the transfer pricing studies previously delivered to Buyer
with respect to 2003 and which satisfy the requirements of Mexican Income
Tax Law (LEY DEL IMPUESTO SOBRE LA RENTA).
Section 8.4 PRORATIONS. (a) All Utility Charges will be apportioned
between Sellers and Buyer as of the Closing Date. Sellers and Buyer will
cooperate in (i) assuring that Utility Charges are promptly paid and (ii) having
meter readings for Utility Charges and other necessary arrangements carried out
so that Utility Charges relating to periods of time after the Closing Date are
billed directly to Buyer. For purposes of this Section 8.4(a), "UTILITY
CHARGES" means water, sewer, electricity, gas, telephone and other utility
charges, if any, applicable to the Owned Real Property or the Real Property
Leases.
(b) Real Property Taxes (as defined below) and all Personal Property
Taxes (as defined below) with respect to the Assets will be prorated as of the
Closing Date with (i) Sellers being liable for such taxes relating to any time
period or periods ending on or prior to the Closing Date and (ii) Buyer being
liable for such taxes relating to any time period or periods beginning after the
Closing Date. Proration of Real Property Taxes and Personal Property Taxes will
be made on the basis of the most recent officially certified tax valuation and
assessment for the Assets. If such valuation pertains to a tax period other than
that in which the Closing occurs, such apportionment will be recalculated at
such time as actual tax bills for such period are available, and the parties
will cooperate with each other in all respects in connection with such
recalculation and pay any sums due in consequence thereof to the party entitled
to recover the same within 60 days after the issuance of such actual tax bills.
For purposes of this Section 8.4(b), "REAL PROPERTY TAXES" mean real property
taxes, ad valorem taxes, general assessments and special assessments with
respect to real property. "PERSONAL PROPERTY TAXES" mean ad valorem taxes with
respect to the Assets other than real property.
Section 8.5 WASTE TREATMENT PLANT COMPLETION. Buyer will use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
complete construction of the waste water treatment plant described in SCHEDULE
1.3(V). Sellers will use commercially reasonable efforts to assist Buyer with
information, documentation and advice relating to the completion of the
construction and the operation of the waste water treatment plant described in
SCHEDULE 1.3(V). Buyer will, as promptly as practicable, reimburse Sellers for
any reasonable out-of-pocket costs and expenses of any Seller to the extent
incurred in connection with Sellers' obligations under the immediately preceding
sentence.
Section 8.6 POST CLOSING MATTERS RELATED TO PERMITS. (a) As soon as
reasonably practicable after the Closing, but in no event later than 90 (ninety)
calendar days after the Closing, Sellers and Buyer shall enter into an
assignment agreement
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substantially in the form of the Water Rights Assignment whereby Tequila
Herradura will assign to Buyer all rights and interests to the Water Correction
Permits (to the extent and as permitted by applicable Law). Buyer and Sellers
will jointly, at the sole cost and expense of Buyer, file with Mexico's National
Waters Commission or other competent Governmental Authorities the Water Rights
Assignment for all Water Correction Permits (to the maximum extent permitted by
applicable Law), together with any forms, exhibits or documents required by
applicable Law, and register such assignments with Mexico's Public Registry of
Water Rights as applicable, and fulfill all other legal requirements in terms of
applicable Law, of the contemplated Water Rights Assignment (including with
respect to the Underground Water Rights and the Water Correction Permits, as
applicable). Buyer and Sellers will be jointly responsible for all related
filing and notice requirements in connection with the Water Rights Assignments
related to the Water Correction Permits and the Underground Water Rights if and
as applicable in accordance with applicable Law, and any and all other acts
required for such assignment after the Closing. Sellers will timely provide
Buyers with any and all documentation requested by the National Water Commission
related to the Water Rights Assignment (including with respect to the
Underground Water Rights and the Water Correction Permits, as applicable).
Notwithstanding anything to the contrary contained in this Section
8.6(a), the Sellers shall be under no obligation to assign or enter into any
Water Rights Assignment with respect to any Water Correction Permit that may
have been denied by a competent Governmental Authority in accordance with
applicable Law.
(b) Upon reasonable advance written notice from Buyer, Sellers will
use their commercially reasonable efforts to assist Buyer with the filing of any
and all notices, applications, documents or other similar requirements before
the National Waters Commission or any other competent Governmental Authorities
to obtain the assignment of any relevant Permits not listed on SCHEDULE
7.1(C)(IV) (to the extent permitted by applicable law), including the approval
of the Water Rights Assignments (both with respect to the Underground Water
Rights and the Water Correction Permits, as applicable), and including by
appearing before a notary public to ratify all of the Water Rights Assignments
(including those related to the Underground Water Rights and the Water
Correction Permits), and shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions, as may be reasonably necessary to
achieve the foregoing.
Section 8.7 INTELLECTUAL PROPERTY RIGHTS. (a) After the Closing, at
Buyer's request and expense, Sellers or their designee will execute and deliver
such additional documents and shall take such further actions as may be
reasonably required to allow Buyer (or its applicable Affiliate) to record with
all applicable Governmental Authorities its ownership of all Intellectual
Property. Buyer will be solely responsible for all filing, attorneys' or other
fees incurred in connection with such additional documents and recordations. In
the event that for whatever reason the registration of the assignment of the
Intellectual Property is objected to by the Mexican Industrial Property
Institute (INSTITUTO MEXICANO DE LA PROPIEDAD INDUSTRIAL), or by any other
Governmental Authority
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or by any third party whether in Mexico or throughout the world, Sellers and
their Affiliates will use their best efforts and cooperate diligently with
Buyer, including executing any document that may be required or convenient for
the registration of the relevant assignment. Sellers and their Affiliates will
comply with such obligation within five Business Days following Buyer's written
request to do so.
(b) Sellers acknowledge that, after the Closing, the Intellectual
Property set forth on SCHEDULE 4.5(B) and all goodwill arising out of the use
thereof shall inure to the sole benefit of Buyer.
(c) Each of Sellers and Buyer will not, and will cause each of their
controlled Affiliates not to, produce, market, manufacture or distributed or
sell (for themselves or any third parties) any beverage alcohol products bearing
the names that comprise Excluded Marks. The parties will cooperate with each
other to ensure that third parties do not use any of the Excluded Marks as
provided in the immediately preceding sentence.
(d) If, after the Closing, any of the Sellers is issued or for any
reason is deemed to be the owner or beneficiary, in any country, of any right,
title or interest in any registration covering any of the Intellectual Property,
or any xxxx that is confusingly similar to, or a translation and or
transliteration of, the marks on SCHEDULE 4.5(B) (collectively, the "RELATED
MARKS"), such Seller or Sellers will so notify Buyer and agree that it has acted
or will act as an agent on and for Buyer's behalf, and will execute any and all
instruments deemed by Buyer, its attorneys or representatives, to be necessary
to transfer such right, title or interest in or to the Related Marks to Buyer.
Related Marks will thereafter be considered included in the defined term
Intellectual Property for all purposes of this Section 8.7.
(e) Each of Sellers further covenants and agrees that, after the
Closing, it shall not, directly or indirectly through any direct family member
(that is, the current or former spouse of any Seller or any descendant of any
Seller), agent, employee, affiliate or representative, and will cause its
Affiliates and Subsidiaries not to:
(i) use and/or register anywhere in the world any of the
Intellectual Property, or anything identical or confusingly similar
thereto;
(ii) make any attempt, file any document with any Governmental
Authority, or take any other action to challenge, dispute, attack, contest
or adversely affect the full and exclusive ownership or validity of Buyer's
rights in the Intellectual Property; including the use, validity, term,
enforceability and/or any modification or translation of the Intellectual
Property, or the Trademarks, before the Mexican Industrial Property
Institute (INSTITUTO MEXICANO DE LA PROPIEDAD INDUSTRIAL) or any other
Governmental Authority or Person; in particular, the Sellers and their
Affiliates will not challenge, claim, dispute or demand in the future,
anywhere in the world, the right of Buyer to use and/or register the
Intellectual Property and the Trademarks, as well as any other xxxx,
trademark, service xxxx, brand name, design, commercial advertisements,
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domain names, trade names, slogans or other intellectual property rights
either identical or similar, to the extent of confusion with the
Intellectual Property and the Trademarks, anywhere in the world;
(iii) make use of, in connection with any other beverage product,
any imagery, packaging, bottles, trade dress or advertising that are
confusingly similar to those used by the Business;
(iv) disparage the Business, the Assets, the Assumed Liabilities
or the Intellectual Property; or
(v) aid or abet anyone else in doing any of the foregoing acts.
Section 8.8 REMOVAL OF CERTAIN ASSETS. All tangible property
constituting Assets that is located on the Las Norias Real Property (but not
including any Excluded Assets located thereon) will be moved by Buyer, at
Buyer's sole cost and expense, within 180 calendar days after the Closing Date
from the Las Norias Real Property and in a manner so as to not cause damage to
such premises. Buyer will give Seller reasonable advance notice of the date(s)
on which Buyer intends to remove such property, and Sellers or their designee
will have the right to be present during such removal.
Section 8.9 CERTAIN INSURANCE MATTERS. With respect to any loss,
liability or damage suffered by Buyer or any of its Affiliates after the Closing
Date relating to, resulting from or arising out of the conduct of the Business
prior to the Closing, for which any Seller or any of its Affiliates would be
entitled to assert, or cause any other Person to assert, a claim for recovery
under any policy of insurance that is an Excluded Asset in respect of the
Business, each of the Sellers, at the request of Buyer, will use its reasonable
efforts (a) to cause BFC and Buyer to be added as named insureds under each such
policy effective from and after the Closing and (b) to assert one or more claims
under any such policy of insurance covering such loss, liability or damage if
Buyer is not itself entitled to assert such claim and to pay all amounts
received in respect of such claims to Buyer, PROVIDED that all of each such
Seller's reasonable out-of-pocket costs and expenses incurred in connection with
the foregoing are promptly reimbursed by Buyer. Nothing in this Section 8.9 will
affect or modify or be deemed to affect or modify in any way any of any Seller's
obligations under Article IX of this Agreement.
Section 8.10 EMPLOYER SUBSTITUTION. As promptly as practicable after
the Closing, Buyer will notify the Business Employees in writing, in accordance
with the provisions of Article 41 of the Mexican Federal Labor Law, of the
occurrence of an Employer Labor Substitution (as defined under the Mexican
Federal Labor Law), and will procure the execution of an Employee Substitution
Agreement (as defined under the Mexican Federal Labor Law) among Buyer, Sellers
and the corresponding union. Each of the Sellers will, within five Business Days
after the Closing, withdraw all Business Employees before INSTITUTO MEXICANO DEL
SEGURO SOCIAL, INSTITUTO DEL FONDO NACIONAL DE LA VIVIENDA PARA LOS TRABAJADORES
or SISTEMA DE AHORRO PARA EL RETIRO and provide
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evidence thereof to Buyer. In the event that Buyer or any assignee of Buyer
permitted hereunder is not also the employer of the Business Employees after the
Closing, Buyer or each such assignee will, as promptly as practicable, enter
into a written agreement with such employer pursuant to which such employer will
provide all employee services to Buyer or such assignee.
Section 8.11 COLLECTIVE BARGAINING AGREEMENTS. From and after the
Closing, Buyer will honor the existing Collective Bargaining Agreements listed
on SCHEDULE 4.13(A) pursuant to which Buyer will provide to all Business
Employees the same terms and conditions of employment, including in respect of
wage levels, job classifications, benefits and seniority, that existed
immediately prior to the Closing. Each of Sellers will, and will, where
applicable, cause its respective directors, officers and employees to, use their
reasonable best efforts to assist Buyer and its Affiliates in their discussions
with the corresponding unions.
Section 8.12 THE HACIENDA AND RELATED LANDS. Buyer and Sellers agree
to the terms and conditions set forth on SCHEDULE 8.12 with respect to (a) the
Hacienda and (b) the Owned Real Property identified on SCHEDULE 8.12, effective
from and after the Closing.
Section 8.13 RELEASE. Effective at the Closing each of the Sellers and
the Additional Seller Parties hereby agrees to unconditionally, irrevocably and
forever release and discharge BFC, Buyer, and each of their respective
Affiliates, successors and assigns and any present or former directors,
officers, employees or agents of any of the foregoing (in each case after giving
effect to the Closing and the transactions contemplated by this Agreement)
(collectively, the "RELEASED PARTIES") of and from, and hereby agrees to
unconditionally, irrevocably and forever waive any and all claims, debts,
losses, expenses, proceedings, covenants, liabilities, suits, judgments,
damages, actions and causes of action, rights, obligations, accounts, and
liabilities, of any kind or character whatsoever, known or unknown, suspected or
unsuspected, contingent or non contingent, direct or indirect, at law or in
equity, arising out of, resulting from or relating to the Business, the Assets,
the Trademarks or the Related Marks, in each case that such Persons ever had,
now has or ever may in the future have or claim to have against any Released
Party, for or by reason of any matter, circumstance, event, action, inaction,
omission, cause or thing whatsoever arising prior to, on or after the date
hereof; PROVIDED that this Section 8.13 shall not apply to (i) the rights of any
Seller or any Additional Seller Party under this Agreement or under any
Ancillary Agreement or (ii) any of the obligations of any Released Party under
this Agreement or any Ancillary Agreement, including in respect of the Assumed
Liabilities.
Section 8.14 SELLER NON-COMPETE. (a) During the period beginning on
the Closing Date and ending on the tenth (10th) anniversary of the Closing Date
(the "NON-COMPETE PERIOD"), none of the Sellers and the Additional Seller
Parties and none of their respective controlled Affiliates shall, directly or
indirectly (including through any controlled Affiliate), (i) produce, market,
manufacture, distribute or sell (for themselves or a third party), or (ii)
license or otherwise permit any Person to use either the Excluded Marks or the
Intellectual Property in connection with: (A) any products or services that
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use imagery, packaging, bottles, trade dress or advertising that imitates or is
confusingly similar to that of any of the Products, the Trademarks or the
Related Marks or containing or marketed, advertised, distributed or sold using
the Products, the Trademarks or the Related Marks, (B) any products containing
or marketed, advertised, distributed or sold as containing beverage alcohol,
tequila or products containing tequila, tequila-like flavors or agave, or (C)
any alcoholic beverages with advertising that refers to or compares itself to
the Business or the names "SAN XXXX DEL XXXXXXX" or "HACIENDA SAN XXXX DEL
XXXXXXX" or any likeness of the Hacienda. Without limitation of the foregoing,
each of the Sellers and the Additional Seller Parties acknowledges and agrees
that the provisions of this Section 8.14 and Section 8.7 would preclude in all
cases and in perpetuity each of the Sellers, the Additional Seller Parties and
their respective controlled Affiliates from selling any such products with
advertising that refers to or compares itself to the Business, the Intellectual
Property (including the Trademarks) or the Excluded Marks.
(b) Each of the Sellers and the Additional Seller Parties understands
and acknowledges that (i) it would be difficult to calculate damages to Buyer
from any breach of their obligations under this Section 8.14, (ii) injury to
Buyer from any such breach would be irreparable and impossible to measure and
(iii) the remedy at law for any breach or threatened breach of this Section 8.14
would therefore be an inadequate remedy and, accordingly, Buyer shall, in
addition to all other available remedies (including seeking such damages as it
can show it has sustained by reason of such breach and/or the exercise of all
other rights it has under this Agreement), be entitled to seek injunctive
relief, specific performance and other equitable remedies without the necessity
of showing actual damages or posting bond.
(c) The parties understand and acknowledge that the restrictive
covenants and other agreements contained in this Section 8.14 are an essential
part of this Agreement and the transactions contemplated by this Agreement. It
is the intention of the parties that, if any of the restrictions or covenants
contained in this Section 8.14 are held to cover a geographic area or to be for
a length of time that is not permitted by any applicable Law, or is in any way
construed to be too broad or to any extent invalid, such provision shall not be
construed to be null, void and of no effect, but to the extent that such
provision would then be valid or enforceable under any applicable Law, such
provision shall be construed and interpreted or reformed to provide for a
restriction or covenant having the maximum enforceable geographic area, time
period and other provisions as shall be valid and enforceable under any
applicable Law. The parties also understand and acknowledge that nothing in this
Section 8.14 shall limit, diminish or abrogate any obligation of the Sellers or
any of the Additional Seller Parties under this Section 8.14 to refrain from
limiting, infringing or violating any of Buyer's or BFC's right, title and
interest in, to and under the Intellectual Property, the Trademarks or the
Related Marks.
Section 8.15 TEQUILA ADVISORY BOARD. BFC and the Xxxx Brothers
recognize the rich tradition and history that the Xxxx family has built
surrounding the Tequila Herradura and El Jimador brands. In order to best enable
BFC to capture the value that this heritage brings to the brands and to provide
advice to BFC about the
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business and the industry, the Xxxx de la Pena Brothers each agree to serve as a
member of the Tequila Advisory Board of Buyer (the "TEQUILA ADVISORY BOARD") for
a period of at least one year after the Closing. The Xxxx de la Pena Brothers
and BFC may extend the term of the Tequila Advisory Board if both BFC and the
Xxxx de la Pena Brothers jointly elect to do so in their respective discretion.
The Tequila Advisory Board will serve an advisory function to Buyer with respect
to the transition and operation of the Business by Buyer and its group
companies, the tequila industry in Mexico, governmental and regulatory matters
relating to the Business, the agave production and supply business and the
tequila suppliers, wholesalers, retailers and other customers. The Xxxx de la
Pena Brothers will advise BFC in respect of the traditions and heritage built
around the Tequila Herradura and El Jimador brands. Members of the Tequila
Advisory Board will agree to act in the best interests of the Business and will
not act contrary to or compete with the Business. (For the avoidance of doubt,
the Tequila Advisory Board will be an advisory body and shall not have
decision-making or operational authority with respect to the Business.) The
Tequila Advisory Board will be expected to meet two to four times per calendar
year at such times, and at such places, primarily in Mexico and the United
States, as may be selected by Buyer. Buyer will reimburse each of the Xxxx de la
Pena Brothers for his reasonable out-of-pocket costs and travel expenses
incurred in connection with the performance of his duties as a member of the
Tequila Advisory Board.
Section 8.16 BONUS MATTERS. Seller may, but will have no obligation
to, pay certain bonuses to each of the Business Employees set forth on SCHEDULE
4.7 in the amounts set forth opposite such person's name in such Schedule (the
"SALE BONUS"). Any such Sale Bonus would be a single payment conditioned upon
the Closing and would be paid by the Sellers. As a condition to any payment to
the Business Employee by Sellers of the Sale Bonus, the relevant Business
Employee will execute and deliver a receipt which, among others includes the
acknowledgements, agreements and releases issued by the Business Employees to
its current and future employer (including Buyer or any substitute employer of
the Business Employees designated by Buyer) in substantially the terms set forth
in SCHEDULE 4.7, and all communications with the Business Employees will include
such acknowledgements, agreements and releases. Sellers will indemnify and hold
harmless Buyer or any substitute employer of the Business Employees designated
by Buyer for any Losses to the extent resulting from any Business Employee's
requests or claims, by any means, that (a) the payment made under any Sale Bonus
be replicated thereafter on an annual basis, or (b) be included as part of the
daily integrated salary of the relevant Business Employee for the calculation of
any severance payment made to such Business Employee who received the Sales
Bonus for any reason, and Sellers agree that all such Losses and Sale Bonuses
shall be deemed to be Excluded Liabilities for all purposes of this Agreement.
Section 8.17 CERTAIN RECEIVABLES MATTERS. (a) In the event that Buyer
shall not have collected the Excluded Receivables of Sazerac Company, Inc. or
Xxxxxx Xxxxxxx, Ltd. as of the Determination Date that were not in dispute as a
result of any act or omission of Sellers by such Person as of the Closing, Buyer
shall pay an amount equal to the uncollected amounts (net of IVA and IEPS) under
such Excluded Receivables to Parent, on behalf of Sellers, and Buyer shall
thereafter be entitled to
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receive all amounts payable in respect of such Excluded Receivables for Buyer's
own account. In the event that any Products underlying the Excluded Receivables
shall be returned to Tequila Herradura, Tequila Herradura will sell to Buyer,
and Buyer will purchase from Tequila Herradura, all such Products to the extent
saleable for a purchase price in cash equal to the inventory cost of such
Products as of the Closing (i.e., net of margin).
(b) Buyer will endeavor to collect the Purchased Receivables consistent
with BFC's best business practices applicable to BFC's accounts receivable and,
as promptly as practicable after the end of each calendar month (but in any
event within five Business Days after the end of each such month) after the
Closing, provide Sellers with a reasonably detailed written summary of all
collection activities in respect of the Purchase Receivables during such month;
PROVIDED, HOWEVER, that (i) in the exercise of such efforts Buyer may, but shall
not be obligated to, commence any litigation to collect any Purchased
Receivables and Sellers shall have the right to commence litigation to collect
any such Purchased Receivable that have been transferred to Sellers pursuant to
clause (ii) of this sentence; (ii) with respect to any such Purchased
Receivables that have not been collected in full at any time after the
Determination Date, Sellers will have the right by written notice to Buyer to
assume collection of and responsibility for any such Purchased Receivables and
if Sellers so elect, Buyer will (A) transfer and assign to Sellers (without any
consideration therefor) all of Buyer's right, title and interest in and to such
Purchased Receivables and be released from any obligation with respect to such
Purchased Receivables and (B) as promptly as practicable after it receives any
payment in respect of such Purchased Receivables, turn over and pay to Parent,
on behalf of Sellers, such payment; (iii) if Buyer modifies or alters the
payment terms (including as a result of any settlement) of any Purchased
Receivable to provide that it will be payable after the Determination Date or
would otherwise adversely affect Sellers' right or ability to collect the
remaining balance of such account receivable in full in any material respect,
such Purchased Receivable will be deemed, for the purpose of determining the
Closing Date Working Capital under Section 3.3, to have been collected in full;
and (iv) any collections from a customer which is both an obligor with respect
to a Purchased Receivable and an account receivable generated after the Closing
shall, unless such Purchased Receivable is in dispute as of the Closing as a
result of any act or omission of Sellers, be applied against amounts payable in
respect of such Purchased Receivable until such Purchased Receivable is paid in
full. In the event that any Products underlying the Purchased Receivables shall
be returned to Tequila Herradura, Tequila Herradura will sell to Buyer, and
Buyer will purchase from Tequila Herradura, all such Products to the extent
saleable for a purchase price in cash equal to the Standard Cost of such
Products as of the Closing (i.e., net of margin).
(c) In the event Buyer collects or receives any payment in respect of any
Purchased Receivable, Buyer shall remit to Parent, on behalf of the Sellers, the
portion of such payment constituting IVA and IEPS, and the Sellers shall as
promptly as practicable pay over such portion to the appropriate Tax Authority
and shall provide Buyer appropriate written evidence of such prompt payment.
Notwithstanding the foregoing, in the event Buyer makes a payment in respect of
any trade accounts payable constituting Assumed Liabilities, Buyer may reduce
the amount to be remitted
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to the Sellers pursuant to the immediately preceding sentence by an amount (the
"REDUCTION AMOUNT") equal to the portion of any payment made by Buyer in respect
of such trade accounts payable constituting IVA; provided that in the event that
the Reduction Amount exceeds the amount of the IVA and IEPS collected or
received by Buyer in respect of any Purchased Receivable, Parent, on behalf of
Sellers, shall remit such excess to Buyer within 5 days of receipt of the
summary described in the following sentence. A summary of the calculation of
such IVA and IEPS payments payable to Sellers and the Reduction Amounts shall be
set forth in the monthly summaries provided in accordance with Section 8.17(b).
ARTICLE IX
SURVIVAL; INDEMNIFICATION.
Section 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Sellers and Buyer contained in this Agreement
will survive the Closing until the end of the 18th calendar month after the
calendar month in which the Closing occurs; PROVIDED, HOWEVER that the
representations and warranties in Section 4.2, Section 4.3, Section 4.8,
Section 4.16, Section 5.2, the last sentence of Section 4.1 and the last
sentence of Section 5.1 will survive until the expiration of the applicable
statute of limitations and the representations and warranties in Section 4.15
will survive until the third anniversary of the Closing Date. No claim may be
made against any party hereto and no party hereto will have any liability to any
other party hereto after the applicable survival period for a representation or
warranty specified above shall have expired, except that, if any claim shall be
made by a party hereto against another party hereto prior to the expiration of
such survival period, then such survival period shall be extended as it relates
to such claim until such claim has been satisfied or otherwise resolved as
provided in this Article IX.
Section 9.2 INDEMNIFICATION OF BUYER. (a) Subject to the limitations
contained in this Article IX, Sellers and the Additional Seller Parties will
indemnify, defend and hold harmless Buyer and any of its Affiliates and Buyer's
and Buyer's Affiliates' directors, officers, employees, successors and assigns
(each, a "BUYER INDEMNIFIED PARTY") from and against any and all losses,
liabilities, and damages, costs and expenses (including reasonable fees and
disbursements of counsel) (hereinafter individually, a "LOSS" and collectively,
"LOSSES") which arise out of, or result from, or relate to (i) any breach or
inaccuracy of any representation, warranty, covenant or agreement of Sellers
contained in this Agreement or in the certificate delivered by any Seller
pursuant to Section 7.1(e) (which representations and warranties for purposes of
this Section 9.2 shall be read as though none of them contained any materiality
or Material Adverse Effect qualifier or exception), or (ii) any Excluded
Liability. Notwithstanding anything to the contrary in this Agreement, (i)
neither of the Xxxx de la Pena Brothers will have any obligations or liability
under this Section 9.2 unless and until all other Sellers shall have failed to
make any payments otherwise required under this Section 9.2; and (ii) subject to
clause (i) of this sentence, the Xxxx de la Pena Brothers will be severally (not
jointly and severally) liable for any payments required under this Section 9.2,
but the maximum liability of each of the Xxxx de xx Xxxx
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Brothers will not exceed 50% of the aggregate amounts required to be paid under
this Section 9.2. In addition, without affecting or limiting Buyer's obligations
under or as a result of Section 8.10 or Section 9.3(a), the Sellers agree to
indemnify, defend and hold harmless each of the Buyer Indemnified Parties from
and against any and all Losses and claims relating to any Business Employee as a
result of or in connection with any act or omission of the Sellers or any
Affiliate of the Sellers occurring before the Closing.
(b) No claim may be made against Sellers or the Additional Seller
Parties for indemnification pursuant to Section 9.2(a)(i) with respect to any
individual item of Loss arising from a breach or inaccuracy of any
representation or warranty of Sellers ("SELLERS WARRANTY BREACHES") in this
Agreement, unless the aggregate of all Losses of Buyer Indemnified Parties with
respect to all such breaches and inaccuracies exceeds 0.5% of the Final Purchase
Price and then, in any case, only to the extent of such excess. Notwithstanding
the foregoing, (i) in no event will Sellers' and Additional Seller Parties'
aggregate liability under Section 9.2(a)(i) exceed $100,000,000.00; (ii) none of
the limitations set forth in this Section 9.2(b) shall apply to or otherwise
limit the Buyer Indemnified Parties' right to indemnification for all Losses
arising out of, or resulting from, or relating to any breach or inaccuracy of
the representations and warranties set forth in Section 4.2, Section 4.3 or
Section 4.8; and (iii) for purposes of (A) determining whether Losses relating
to Sellers Warranty Breaches exceed 0.5% of the Final Purchase Price and (B)
calculating Losses for which Sellers and Additional Seller Parties are liable
under Section 9.2(a)(i), Sellers and Additional Seller Parties will not have any
liability for such Losses unless the aggregate amount of such Losses relating to
a single claim (or group of claims relating to the same or similar event, fact
or circumstance) exceeds $25,000.
(c) If a Buyer Indemnified Party is entitled to indemnification from
the Sellers and the Additional Seller Parties hereunder for any Losses, such
indemnification obligations of the Sellers will be satisfied first from the
Escrowed Funds pursuant to the Escrow Agreement and, after any such Escrowed
Funds are released from escrow pursuant to the Escrow Agreement or otherwise
claimed against hereunder, by Sellers and the Additional Seller Parties, subject
to the limitations contained herein; provided, however, that with respect to any
Loss that arises out of, or results from, or relates to any Excluded Tax Matter,
the Buyer Indemnified Parties may, but shall not be required to, first satisfy
such indemnifiable Loss from the Escrowed Funds pursuant to the Escrow Agreement
and may proceed against the Sellers and the Additional Seller Parties in respect
thereof, subject to the limitations contained herein.
(d) Each Buyer Indemnified Party will give Sellers prompt written
notice of any claim, assertion, event or proceeding (collectively, a "BUYER
CLAIM") by or in respect of a third party of which such Buyer Indemnified Party
has knowledge concerning any Loss as to which such Buyer Indemnified Party may
request indemnification hereunder. Any delay in the giving of such notice will
not relieve the Sellers of their indemnification obligations under Section
9.2(a) except to the extent that the Sellers are actually damaged as a result of
such delay. Sellers will have the right to direct, through counsel of their own
choosing, the defense or settlement of any such Buyer Claim at its own expense.
If Sellers elect to assume the defense of any such
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Buyer Claim, such Buyer Indemnified Party may participate in such defense, but
in such case the expenses of such Buyer Indemnified Party will be paid by such
Buyer Indemnified Party. If and to the extent reasonably requested by Sellers,
such Buyer Indemnified Party will provide Sellers with access to its records and
personnel relating to any such Buyer Claim during normal business hours and will
otherwise cooperate with Sellers in the defense or settlement thereof, and
Sellers will reimburse such Buyer Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If Sellers elect to direct the
defense of any such Buyer Claim, (i) such Buyer Indemnified Party will not pay,
or permit to be paid, any part of any Loss claimed by the third party claimant
in respect of such Buyer Claim, unless (1) Sellers consent in advance in writing
to such payment (which consent will not be unreasonably withheld, delayed or
conditioned), (2) Sellers, subject to the last sentence of this Section 9.2y(d),
withdraw from the defense of such asserted liability or (3) the Buyer
Indemnified Party is so ordered or directed by a Governmental Authority or
arbitral authority (which order or direction is not stayed) or a final judgment
from which no appeal may be taken by or on behalf of Sellers is entered against
the Buyer Indemnified Party for such Loss and (ii) Sellers will not enter into
any settlement or compromise of such Buyer Claim that does not include as a
unconditional term thereof the giving by the claimant or plaintiff to the Buyer
Indemnified Parties a full release of all liability with respect to the subject
matter of the Buyer Claim or that involves any term or condition applicable to
the Buyer Indemnified Parties other than the payment of money by Sellers, in
each case, without the prior written consent of Buyer. If Sellers fail to defend
any Buyer Claim, or if, after commencing or undertaking any such defense, fail
to prosecute or withdraws from such defense, such Buyer Indemnified Party will
have the right to undertake the defense or settlement thereof, at Sellers'
expense. If such Buyer Indemnified Party assumes the defense of such Buyer Claim
pursuant to this Section 9.2y(c) and proposes to settle such Buyer Claim prior
to a final judgment thereof or to forego appeal with respect thereto, then such
Buyer Indemnified Party will give Sellers prompt written notice thereof and
Sellers will have the right to participate in the settlement or assume or
reassume the defense of such Buyer Claim. The foregoing provisions of this
Section 9.2(d) will not apply to Tax Matters, which shall instead be governed by
Section 8.3(d).
Section 9.3 INDEMNIFICATION OF SELLERS. (a) Subject to the limitations
contained in this Article IX, Buyer agrees to indemnify, defend and hold
harmless Sellers and any of their Affiliates, and its and its Affiliates'
directors, officers, employees, successors and assigns (each, a "SELLER
INDEMNIFIED PARTY") from and against any and all Losses which arise out of, or
result from, or relate to (i) any breach or inaccuracy of any representation,
warranty, covenant or agreement of Buyer contained in this Agreement or in the
officer's certificate delivered by Buyer pursuant to Section 7.2(e) (which
representations and warranties for purposes of this Section 9.3 shall be read as
though none of them contained any materiality or Material Adverse Effect
qualifier or exception), (ii) any Assumed Liability, (iii) Liabilities incurred
by Buyer resulting from the operation of the Business on and after the Closing
Date, (iv) claims relating to any Owned Real Property arising on and after the
Closing Date or (v) claims made by any other party to a Real Property Lease on
and after the Closing Date, in each case, in the case of clauses (iii) - (v), to
the extent such Liabilities and claims would otherwise constitute an Assumed
Liability hereunder. In addition, Buyer agrees to indemnify,
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defend and hold harmless each of the Seller Indemnified Parties from and against
any and all Losses and claims relating to any Business Employee as a result of
or in connection with any act or omission of Buyer or any Affiliate of Buyer
occurring on or after the Closing.
(b) No claim may be made against Buyer for indemnification pursuant to
Section 9.3(a)(i) with respect to any individual item of Loss arising from a
breach or inaccuracy of any representation or warranty in this Agreement, unless
the aggregate of all Losses of the Seller Indemnified Parties with respect such
breaches exceeds 0.5% of the Final Purchase Price and then only to the extent of
such excess, and in no event will Buyer's aggregate liability for such breaches
and inaccuracies exceed $100,000,000.00. Notwithstanding the foregoing, none of
the limitations set forth in this Section 9.3(b) shall apply to or otherwise
limit the Seller Indemnified Parties' right to indemnification for all Losses
arising out of, or resulting from, or relating to any breach or inaccuracy of
the representations and warranties set forth in Section 5.2. Notwithstanding the
foregoing, for purposes of determining whether Losses for which indemnification
pursuant to Section 9.3(a)(i) is available exceed 0.5% of the Final Purchase
Price, Buyer will not have any liability for such Losses unless the aggregate
amount of such Losses relating to a single claim (or group of claims relating to
the same or similar event, fact or circumstance) exceeds $25,000.
(c) Each Seller Indemnified Party will give Buyer prompt written
notice of any claim, assertion, event or proceeding (collectively, a "SELLER
CLAIM") by or in respect of a third party of which such Seller Indemnified Party
has knowledge concerning any Loss as to which such Seller Indemnified Party may
request indemnification hereunder. Any delay in the giving of such notice will
not relieve Buyer of its indemnification obligations under Section 9.3(a) except
to the extent that Buyer is actually damaged as a result of such delay. Buyer
will have the right to direct, through counsel of its own choosing, the defense
or settlement of any such Seller Claim at its own expense. If Buyer elects to
assume the defense of any such Seller Claim, such Seller Indemnified Party may
participate in such defense, but in such case the expenses of such Seller
Indemnified Party will be paid by such Seller Indemnified Party. If and to the
extent reasonably requested by Buyer, such Seller Indemnified Party will provide
Buyer with access to its records and personnel relating to any such Seller Claim
during normal business hours and will otherwise cooperate with Buyer in the
defense or settlement thereof, and Buyer will reimburse such Seller Indemnified
Party for all its reasonable out-of-pocket expenses in connection therewith. If
Buyer elects to direct the defense of any such Seller Claim, (i) such Seller
Indemnified Party will not pay, or permit to be paid, any part of any Loss
claimed by the third party claimant in respect of such Seller Claim, unless (1)
Buyer consents in advance in writing to such payment (which consent will not be
unreasonably withheld, delayed or conditioned), (2) Buyer, subject to the last
sentence of this Section 9.2y(c), withdraws from the defense of such asserted
liability or (3) the Seller Indemnified Party is so ordered or directed by a
Governmental Authority or arbitral authority (which order or direction is not
stayed) or a final judgment from which no appeal may be taken by or on behalf of
Buyer is entered against the Seller Indemnified Party for such Loss and (ii)
Buyer will not enter into any settlement or compromise of such Seller Claim that
does not include as a unconditional
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term thereof the giving by the claimant or plaintiff to the Seller Indemnified
Parties a full release of all liability with respect to the subject matter of
the Seller Claim or that involves any term or condition applicable to the Seller
Indemnified Parties other than the payment of money by Buyer, without the prior
written consent of Parent. If Buyer fails to defend any Seller Claim, or if,
after commencing or undertaking any such defense, fails to prosecute or
withdraws from such defense, such Seller Indemnified Party will have the right
to undertake the defense or settlement thereof, at Buyer's expense. If such
Seller Indemnified Party assumes the defense of any such Seller Claim and
proposes to settle such Seller Claim prior to a final judgment thereon or to
forego appeal with respect thereto, then such Seller Indemnified Party will give
Buyer prompt written notice thereof and Buyer will have the right to participate
in the settlement or assume or reassume the defense of such Seller Claim. The
foregoing provisions of this Section 9.3(c) will not apply to Tax Matters, which
shall instead be governed by Section 8.3(d).
Section 9.4 TAX BENEFIT; INSURED LOSS. Notwithstanding anything to the
contrary in Section 9.2 or Section 9.3, in the event any claim pursuant to
this Article IX is an insured loss to the indemnified Person, the indemnifying
Person will be entitled to a credit against any liability thereunder in the net
amount of and to the extent of any insurance proceeds to which the indemnified
Person shall have actually received. If an indemnified Person receives payment
required by this Agreement from any indemnifying Person in respect of an
indemnifiable Loss and subsequently receives insurance proceeds in reduction of
such indemnifiable Loss, then the indemnified Person will promptly pay to the
indemnifying Person an amount equal to the excess of the indemnity payment
received from such indemnified Person in respect of such indemnifiable Loss over
the amount of the indemnity payment that would have been due if the insurance
proceeds had be actually received prior to such indemnity payment.
Notwithstanding anything to the contrary in Section 9.2 or Section 9.3, any
amounts payable by the indemnifying Person to or on behalf of an indemnified
Person pursuant to this Article IX will be (i) increased to take account of any
net Tax cost incurred by the indemnified Person arising from the receipt of
indemnity payments hereunder (grossed up for such increase) and (ii) reduced to
take account of any net Tax benefit realized by the indemnified Person arising
from the incurrence or payment of any such Loss, in each case when and as such
Tax cost or benefit is actually realized through an increase or reduction of
Taxes otherwise due.
Section 9.5 DAMAGES LIMITATIONS. Notwithstanding anything to the
contrary herein, none of Sellers or Buyer will be permitted to recover any
consequential, indirect or punitive damages arising out of or related to this
Agreement and the transactions contemplated hereby, regardless of the form of
the claim, including claims for indemnification, tort, breach of contract,
warranty, representation or covenant, unless, and then only to the extent, such
damages (a) arise out of or result from any common law fraud by the indemnifying
Person or (b) are awarded in an action involving a third party claim against the
party to this Agreement that is seeking recovery for such damages.
Section 9.6 EXCLUSIVE PROVISIONS; NO RESCISSION. Except as otherwise
set forth in this Agreement or in any Ancillary Agreement, none of Buyer and the
Sellers
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is making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Anything herein to the contrary notwithstanding,
no breach of any representation, warranty, covenant or agreement contained
herein will give rise to any right on the part of Buyer or any Seller, after the
consummation of the purchase and sale of the Assets contemplated hereby, to
rescind this Agreement or any of the transactions contemplated hereby except in
the event of fraud.
Section 9.7 EXCLUSIVE REMEDY. Except as provided in any Ancillary
Agreement, Section 10.2 and Section 11.5, and except for the right to seek
specific performance of the covenants and agreements contained in this Agreement
and except for fraud or willful breach of this Agreement, the indemnification
rights under this Article IX will be the exclusive remedy of the parties hereto
with respect to any dispute arising out of or related to this Agreement.
ARTICLE X
TERMINATION OF AGREEMENT.
Section 10.1 TERMINATION. This Agreement may be terminated prior to
the Closing as follows:
(a) by the mutual written consent of Sellers and Buyer;
(b) by Sellers or by Buyer, if the Closing shall not have
occurred on or before the 120th calendar day after the date of this
Agreement; PROVIDED, HOWEVER, that the right to terminate this Agreement
under this Section 10.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
cause of, or resulted in, the failure of the Closing to occur prior to such
date;
(c) by Buyer if Sellers have committed a material breach of any
provision of this Agreement such that either of Section 7.1(a) or Section
7.1(b) would not then be capable of satisfaction, Buyer has not waived such
breach in writing and such breach is not curable, or, if curable, is not
cured within 30 days after written notice of such breach is given to
Sellers by Buyer;
(d) by Sellers if Buyer has committed a material breach of any
provision of this Agreement such that either of Section 7.2(a) or Section
7.2(b) would not then be capable of satisfaction, Sellers have not waived
such breach in writing and such breach is not curable, or, if curable, is
not cured within 30 days after written notice of such breach is given to
Buyer by Sellers; or
(e) by Sellers or by Buyer, if any Governmental Authority has
issued a final, non-appealable order, decree or ruling permanently
enjoining or prohibiting the consummation of the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that, for the avoidance of doubt,
Buyer will not have any right to terminate this Agreement pursuant to this
Section 10.1(e) if any such order, decree or ruling is subject to any
obligation of Buyer to dispose of
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Assets after the Closing or imposes any limit or restriction on the conduct
of the Business after the Closing, so long as compliance with such order,
decree or ruling would not have a material adverse effect on the assets and
operations of BFC and the Business, taken as a whole.
Section 10.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 10.1, (i) this Agreement will become null and
void and of no further force and effect, except for this Section 10.2, the last
sentence of Section 6.1(a), Section 11.3, Section 11.5, Section 11.8 and
Section 11.9 and the Confidentiality Agreement, each of which will survive such
termination, and (ii) there will be no liability on the part of any Seller or
Buyer or their respective officers, directors or Affiliates; PROVIDED, HOWEVER,
that if such termination results from the willful breach by a party of the
provisions contained in this Agreement, such party will be fully liable for any
and all damages, costs and expenses sustained or incurred by the other party
hereto as a result of such breach.
ARTICLE XI
MISCELLANEOUS.
Section 11.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
"ACCOUNTANT" has the meaning set forth in Section 3.3(b).
"ACTION OR PROCEEDING" means any action, suit, proceeding or arbitration by
any Person, or any investigation, inquiry (whether formal or informal),
administrative proceeding, suit, claim, whether civil or criminal, including
XXXXXX, charge or Audit by or before any Governmental Authority or arbitrator.
"ADDITIONAL SELLER PARTIES" has the meaning set forth in the preamble.
"AFFILIATE" means with respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means, with respect to a Person, the ownership by
another Person of 50% or greater of the income or voting interests of such
Person or such other arrangement as constitutes the direct or indirect ability
to direct the management, affairs or actions of such Person.
"AFFILIATED GROUP" means the affiliated group of corporations within the
meaning of Title II, Chapter VI of the Mexican Income Tax Law (LEY DEL IMPUESTO
SOBRE LA RENTA) of which either Purchased Subsidiary is or has been a member
during any period preceding the Closing Date or any similar group defined under
a similar provision of state, local or foreign law.
"AGAVE CONTRACTS" has the meaning set forth in Section 4.5(d)(iii).
"AGREEMENT" has the meaning set forth in the preamble.
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"AMATITAN LEASE" means, collectively, (a) the Lease Agreement dated
October 30, 2001, among Tequila Herradura, as lessee, and Xxxx Xxxxx Xxxxx Xxxx
de xx Xxxx and Xxxxxxxx Xxxxxxxxx Xxxx Xxxxxx, as lessors and co-owners of the
piece of land named "La Higuerita", and (b) the Lease Agreement dated October
20, 2001, among Tequila Herradura, as lessee, and the Xxxx de la Pena Brothers,
as lessors and co-owners of each of the pieces of land named San Xxxx del
Xxxxxxx Fraccion Norte and Xxxxxx de Alfalfa.
"ANCILLARY AGREEMENTS" means each of the agreements to be delivered
pursuant to Section 7.1(f), (g), (h) and (i).
"APPRAISAL" has the meaning set forth in Section 6.4.
"APPRAISER" has the meaning set forth in Section 6.4.
"ASSET PURCHASE AND ASSIGNMENT AGREEMENT" has the meaning set forth in
Section 7.1(f).
"ASSETS" has the meaning set forth in Section 1.1.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" has the meaning set forth in Section
7.1(f).
"ASSIGNMENT OF IP" has the meaning set forth in section 7.1(f).
"ASSIGNMENT OF TRADEMARKS" has the meaning set forth in Section 7.1(f).
"ASSUMED LIABILITIES" has the meaning set forth in Section 1.3.
"AUDIT" means any audit, inquiry, investigation, assessment of Taxes,
other examination by any Tax Authority, and any other proceeding or appeal of
such proceeding relating to Taxes
"BUSINESS" has the meaning set forth in the Recitals.
"BUSINESS DAY" means any day on which commercial banks are not authorized
or required by law to close in New York, New York, USA or Mexico City, Federal
District, Mexico.
"BUSINESS EMPLOYEE" means the employees of Sellers or any Purchased
Subsidiary employed in the Business.
"BUYER CLAIM" has the meaning set forth in Section 9.2(d).
"BUYER INDEMNIFIED PARTY" has the meaning set forth in Section 9.2(a).
"BUYER OBLIGATIONS" has the meaning set forth in Section 11.14(a).
"BUYER PARTIES" has the meaning set forth in Section 11.14(a).
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"CEM" means Meltum-Consultadoria E Marketing LTDA, a limited liability
company organized under the laws of the Republic of Portugal.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"CLOSING DATE BALANCE SHEET" has the meaning set forth in Section 3.3(a).
"CLOSING DATE EXCLUDED RECEIVABLES" has the meaning set forth in Section
3.3(c).
"CLOSING DATE WORKING CAPITAL" has the meaning set forth in Section
3.3(c).
"CLOSING EXCLUDED NET RECEIVABLES" has the meaning set forth in Section
3.2(a).
"CLOSING STATEMENT OF EXCLUDED RECEIVABLES" has the meaning set forth in
Section 3.3(a).
"CLOSING STATEMENT OF WORKING CAPITAL" has the meaning set forth in
Section 3.3(a).
"CLOSING STATEMENTS" has the meaning set forth in Section 3.3(a).
"COLLECTION AGREEMENT" has the meaning set forth in Section 6.7(b).
"COLLECTIVE BARGAINING AGREEMENTS" has the meaning set forth in Section
4.13(a).
"COMPETITION COMPENSATION AGREEMENT" has the meaning set forth in Section
7.1(i).
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement
dated March 3, 2006 between Parent and Buyer.
"CONTRACTS" has the meaning set forth in Section 1.1(b)(vii).
"CONTRACTS AND OTHER AGREEMENTS" means all executory contracts,
agreements, understandings, indentures, notes, bonds, loans, instruments,
leases, mortgages, franchises, licenses or commitments which are legally
binding.
"CORPORATE SELLERS" means the Sellers other than the Xxxx de la Pena
Brothers.
"COSESA" has the meaning set forth in the Recitals.
"DETERMINATION DATE" has the meaning set forth in Section 3.3(a).
"DISPUTE" has the meaning set forth in Section 11.9.
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"EMPLOYMENT-RELATED TAXES" means, payments of (a) employer contribution
quotas to each of the Mexican Institute of Social Security (INSTITUTO MEXICANO
DEL SEGURO SOCIAL), the Institute of the Employees National Housing Fund
(INSTITUTO DEL FONDO NACIONAL DE LA VIVIENDA PARA LOS TRABAJADORES) and the
Retirement Savings System (Sistema de Ahorro para el Retiro); and (b) employee
and employer related Taxes.
"ENVIRONMENT" means the indoor and outdoor environment including the air,
surface water, underground water (and in general any waters and water bodies
defined as Mexican national waters (AGUAS NACIONALES) or recipient bodies of
Mexican national waters (CUERPOS RECEPTORES DE AGUAS NACIONALES)), any land,
wetland, sediment, soil or subsurface strata, and natural resources and the
environment as defined in any Environmental Laws.
"ENVIRONMENTAL CLAIM" means, any suit, claim, action, demand, order,
proceeding, demand of payment, litigation, administrative proceeding or other
proceeding in connection with the Business and the Assets, any written notice or
claim by any other Person alleging or asserting such first Person's liability
for investigatory costs, cleanup costs, Governmental Authority response costs,
damages to the Environment, natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence or Release into the Environment, of any Hazardous Substance or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"ENVIRONMENTAL CONDITION" means, with respect to any Owned Real Property,
Leased Real Property or with respect to the operation of the Business: (i)
existing conditions, ongoing activities or failures to act, which violate
Environmental Laws, or have resulted or could result in a Release of Hazardous
Substances; and (ii) existing conditions resulting from past Releases of
Hazardous Substances that have affected the Environment, real property, or human
health.
"ENVIRONMENTAL LAWS" means any Law of Mexico or Order issued by a
Governmental Authority of Mexico, relating to the regulation or protection of
human health, safety or the Environment or to Remedial Actions, Releases, or
threatened Releases of pollutants, contaminants or toxic or Hazardous Substances
into the Environment and shall include Mexico's LEY GENERAL DEL EQUILIBRIO
ECOLOGICO Y LA PROTECCION AL AMBIENTE, Mexico's LEY DE AGUAS NACIONALES,
Mexico's LEY GENERAL PARA LA PREVENCION Y GENTION INTEGRAL DE LOS RESIDUOS,
Mexican official norms NOM-052-SEMARNAT-2006, NOM-053-SEMARNAT-1993,
NOM-138-SEMARNAT/SS-2003 and PROY-NOM-147-SEMARNAT/SSA1-2004, Mexico's LEY
GENERAL DE SALUD, MEXICO'S REGLAMENTO FEDERAL DE SEGURIDAD, HIGIENE Y MEDIC
AMBIENTE EN EL TRABAJO and Mexican official norm NOM-010-STPS-1999, as such
laws, regulations and Mexican official norms have been amended or supplemented.
"ENVIRONMENTAL PERMIT" means any consent, license, permit, permission,
grant, waiver, order, registration, authorization, concession, approval,
exemption or similar right or privilege issued by any Governmental Authority of
Mexico pursuant to Environmental Law.
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"ESCROW AGENT" has the meaning set forth in Section 3.2(b).
"ESCROW AGREEMENT" has the meaning set forth in Section 3.2(b).
"ESCROWED FUNDS" has the meaning set forth in Section 3.2(b).
"EXCLUDED ASSETS" has the meaning set forth in Section 1.2.
"EXCLUDED CLAIMS" means any obligations, claims, charges, actions, causes
of action, claims for relief, demands, rights, damages and costs, attorneys'
fees, compensatory or punitive or exemplary damages of any nature whatsoever,
known or unknown, suspected or unsuspected, which any of the Persons set forth
on SCHEDULE 11.1(A) or any of their respective Affiliates, or any of their
respective successors, assigns, heirs or estates, ever had, now have or
hereafter claim to have, in law or in equity, by reason of any matter, cause or
thing whatsoever, to the extent arising out of, or related to, or otherwise in
connection with the Sellers, the Business, the Assets or this Agreement or the
transactions contemplated hereby or relating hereto; PROVIDED that the
litigation set forth in Item 7 of Schedule 1.3(iv) (Assumed Litigation) shall
not be an Excluded Claim.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 1.4.
"EXCLUDED MARKS" means the trademarks (or any derivation thereof) that are
listed on Attachment C to SCHEDULE 1.2(X).
"Excluded Receivables" has the meaning set forth in Section 1.2.
"Excluded Receivables Statement" has the meaning set forth in Section
3.2(a).
"EXCLUDED TAX MATTER" has the meaning set forth on SCHEDULE 11.1(B).
"EXCLUDED TAXES" means, without duplication, (a) any Taxes of, or required
under applicable law to be paid by, any Seller for any period, (b) any Taxes of
or relating to the Business, or the Assets (including the Outstanding Equity
Securities) for or applicable to any Pre-Closing Tax Period or Pre-Closing
Straddle Period, (c) any Taxes of, or required to be paid by, any Purchased
Subsidiary for any Pre-Closing Tax Period or Pre-Closing Straddle Period (d) any
Taxes resulting from, arising out of or relating to the transactions
contemplated by Section 6.3 hereof, (e) any Taxes for which Buyer or any of its
Affiliates become liable pursuant to Section IV of Article 26 of the Federal
Fiscal Code (CODIGO FISCOL DE LA FEDERACION) arising as a result of the
transactions contemplated by this Agreement or any Ancillary Agreement, and (f)
any Taxes imposed in connection with the transactions contemplated by the
Agreement or any Ancillary Agreement under Title V of the Mexican Income Tax Law
(LEY DEL IMPUESTO SOBRE LA RENTA). Notwithstanding the foregoing, Excluded Tax
shall not include any liability for Taxes attributable to any action taken
simultaneously with or after the Closing by Buyer, any of its Affiliates
(including any Purchased Subsidiary), or any transferee of Buyer or any of its
Affiliates (other than any such action contemplated by this Agreement or any of
the Ancillary Agreements) or the manner in which Buyer
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finances the transactions contemplated by this Agreement or attributable to a
breach by Buyer of its obligations under this Agreement.
"FEDERAL DUTIES LAW" means Mexico's LEY FEDERAL DE DERECHOS.
"FINAL PURCHASE PRICE" has the meaning set forth in Section 2.1.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.6(a).
"GERMAN COMPETITION ACT" has the meaning specified in Section 4.4.
"GOVERNMENTAL AUTHORITY" means any court, tribunal, arbitrator or any
government or political subdivision thereof, whether federal, state, municipal,
county, local or foreign, or any agency, authority, official or instrumentality
of any such government or political subdivision or any self-regulatory
organization, chamber or association and any official, political or other
subdivision, department or branch of any of the foregoing.
"HACIENDA" means the real property named San Xxxx del Xxxxxxx Fraccion
Sur, located in Amatitan, Jalisco, Mexico and including (a) all structures and
leasehold improvements located thereon, (b) all appurtenances relating thereto,
(c) all fixtures, machinery, apparatus or equipment affixed thereon and (d) all
tangible property that is and historically has been located thereon, except for
such tangible property that Sellers agree to transfer to BFC pursuant to Section
6.8.
"HAZARDOUS SUBSTANCES" means any substance, waste or matter regulated
under or defined as such under any Environmental Law or Mexican human health and
safety law, including any wastes, materials or substances, or any constituents
thereof, which are (i) designated as a "hazardous material" or as a "hazardous
waste" or both pursuant to Mexico's LEY GENERAL DEL EQUILIBRIO ECOLOGICO Y LA
PROTECCION AL AMBIENTE, (ii) listed or characterized as "hazardous" under
Mexican Official Norms NOM-052-SEMARNAT-2006 and NOM-053-SEMARNAT-1993, and
(iii) designated as "hazardous waste" under Mexico's LEY GENERAL PARA LA
PREVENCION Y GESTION INTEGRAL DE LOS RESIDUOS.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"ICC RULES" has the meaning set forth in Section 11.9.
"IEPS" has the meaning set forth in Section 2.1.
"INITIAL PURCHASE PRICE" has the meaning set forth in Section 2.1.
"INTELLECTUAL PROPERTY" means the intellectual property rights related to
the Business including: patents, trademarks (including the Trademarks), service
marks, brand names, certification marks, copyrights and copyrightable works (and
any registrations, applications or renewals relating thereto), license rights,
software rights,
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trade dress, trade secrets, technology, know-how, ways of doing business and
confidential information and proprietary information, processes, drawings, plans
and files used in the production of any bottles and packaging, all bottle or
package designs and molds, bottle caps, all design rights and registered and
unregistered designs, formulae, customer lists and data, process technology,
recipes, methodologies, and all other similar or allied proprietary or
industrial property rights in any of the foregoing, whether such rights are now
known or hereafter discovered, whether patentable or unpatentable, registrable
or unregistrable, assumed names, trade names and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions and industrial designs (including any applications therefor,
continuations, divisionals, continuations-in-part, re-examinations, provisionals
and reissues), discoveries and ideas, whether patentable or not in any
jurisdiction; domain name registrations; all other intellectual property rights
which are used or useful, or which have been used in connection with the
Business; and any claims, causes of action or rights to past, present and future
damages arising out of or related to any infringement or misappropriation of any
of the foregoing.
"INTERCOMPANY ACCOUNTS" means all obligations of any Seller or the
Purchased Subsidiary, on the one hand, to any other Seller or any director or
officer of any Seller or any shareholder of Parent or any Affiliate of such
director, officer or shareholder, on the other hand.
"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in Section
4.6(a).
"IVA" has the meaning set forth in Section 2.1.
"INVENTORY" means all raw materials; dry goods; agave; tequila, tequila
cocktails, sangrita and all other alcoholic and non-alcoholic beverages (in each
case, whether in process, in barrels or in bottles or cans); and merchandise,
packaging materials and other supplies related thereto.
"LAS NORIAS REAL PROPERTY" has the meaning set forth in Section 1.2(iii).
"LAW" or "LAWS" means any constitution, law, statute, treaty, rule,
standard, regulation, ordinance and other pronouncement having the effect of law
in Mexico, United States of America, any foreign country or any domestic or
foreign state, municipal, county, city or other political subdivision or of any
Governmental Authority.
"LEASED PROPERTY" means all real property that is subject to a Real
Property Lease.
"LIEN" means any trust, limitation of ownership, whether recorded or not
before a Public Registry of Property (REGISTRO PUBLICO DE LA PROPIEDAD),
agrarian limitation (including any request of expansion of adjoining or near
ejido lands pending resolution), trespassing or occupancy, mortgage, lien,
pledge, encumbrance, security interest, claim, charge, defect in title or other
restriction.
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"LOSS" and "LOSSES" has the meaning set forth in Section 9.2(a).
"MATERIAL ADVERSE EFFECT" means (a) with respect to Sellers or any
Purchased Subsidiary, a material adverse effect on the Assets, Assumed
Liabilities, results of operations or condition (financial or otherwise) of the
Business or the ability to use any Owned Real Property or any property subject
to a Real Property Lease in substantially the same manner as such Owned Property
or Leased Property was used in the conduct of the Business prior to the Closing
Date or the ability to consummate the transactions contemplated hereby and (b)
with respect to Buyer, a material adverse effect on the ability of Buyer to
consummate the transactions contemplated hereby.
"MATERIAL CONTRACTS" has the meaning set forth in Section 4.5(d).
"XXXXXXX BRIDGE LOAN" means all outstanding indebtedness (and interest
thereon) of CH Acciones under that certain Loan Agreement dated as of July 11,
2006, between Xxxxxxx Xxxxx and CH Acciones.
"XXXXXXX XXXXX" has the meaning set forth in Section 6.3.
"MEXICAN FEDERAL ECONOMIC COMPETITION LAWS" means LEY FEDERAL DE
COMPETENCIA ECONOMICA and its regulations.
"MEXICAN FIS" means the Mexican Financial Information Standards
(previously known as the Mexican generally accepted accounting principles issued
by the Accounting Principles Commission of the INSTITUTO MEXICANO DE CONTADORES
PUBLICOS, A.C. or Mexican GAAP).
"NATIONAL WATER COMMISSION" means Mexico's COMISION NACIONAL DEL AGUA.
"NATIONAL WATERS LAW" means Mexico's LEY DE AGUAS NACIONALES.
"NON-COMPETE PERIOD" has the meaning set forth in Section 8.14.
"ORDER" means any writ, judgment, decree, injunction, or similar order or
requirement of any Governmental Authority or arbitral tribunal, in each case
whether preliminary or final with respect to the operation of the Business.
"OTHER CASH PAYMENT" has the meaning set forth in SCHEDULE 2.2.
"OUTSTANDING EQUITY SECURITIES" means all outstanding equity securities
of, and ownership and voting interests in, the Purchased Subsidiaries.
"OVERAGE" has the meaning set forth in Section 3.3(d).
"OWNED REAL PROPERTY" means all real property owned in fee by any Seller
or any Purchased Subsidiary.
"PARENT" has the meaning set forth in the preamble.
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"PERMITS" means any notification, license, concession, permit (including
limitation any Environmental Permit, any import, export, construction and
operation permit), authorization, approval, franchise, certificate, exemption,
classification, registration, qualification or similar document or authority
that has been issued or granted by any Governmental Authority, and applications
therefore.
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established, (ii) any statutory Lien arising in the ordinary
course of business by operation of Law with respect to an obligation or
liability that is not yet due or delinquent and (iii) any minor imperfection of
title or similar Lien or encumbrance which individually or in the aggregate with
other such imperfections of title, Liens or encumbrances on such property would
not reasonably be expected to materially affect the value or use of such
property.
"PERSON" means any individual, sole proprietorship, entity, limited
liability company, corporation, partnership, firm, joint venture, association,
unincorporated syndicate, joint-stock company, trust, unincorporated
organization, Governmental Authority, body corporate or other entity (in each
case whether or not having separate legal personality).
"PERSONAL PROPERTY TAXES" has the meaning set forth in Section 8.4(b)
"PLAN" means all material compensation or benefit plans, programs,
policies, or practices, contracts or arrangements which are sponsored,
administered, maintained or contributed to by Sellers or the Purchased
Subsidiary or any of their respective Affiliates for the benefit of Business
Employees (or former employees of the Business) or under which Sellers or the
Purchased Subsidiary have any liability or obligation of any kind relating to
employee benefits of any kind in respect of the Business Employees, including
any retirement, retirement savings or pensions, bonus, incentive or deferred
compensation, post-retirement medical or life insurance, profit sharing, stock
option, severance or termination pay, health, medical, dental, life, disability
or other insurance and supplemental employment or unemployment benefits, whether
written or unwritten, tax-qualified or non-qualified, funded or unfunded.
"POST-CLOSING STRADDLE PERIOD" has the meaning set forth in Section
8.3(h).
"POWER OF ATTORNEY" has the meaning set forth in Section 6.1(c).
"PRE-CLOSING STRADDLE PERIOD" has the meaning set forth in Section 8.3(h).
"PRE-CLOSING TAX PERIOD" taxable periods ending on or before the Closing
Date.
"PRE-CLOSING TAX RETURNS" has the meaning set forth in Section 8.3(b).
"PRODUCTS" has the meaning set forth in Section 4.5(b)(ii).
"PURCHASED RECEIVABLES" has the meaning set forth in Section 1.1(b)(iv).
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"PURCHASED SUBSIDIARY" has the meaning set forth in Section 1.1(b)(vi).
"REAL PROPERTY DEEDS" has the meaning set forth in Section 7.1(j).
"REAL PROPERTY ENCUMBRANCES" means all covenants, restrictions, easements
and other matters of title recorded against or otherwise affecting all or any
portion of Owned Real Property and set forth on SCHEDULE 11.1(C).
"REAL PROPERTY LEASES" means any leases, subleases of real property or
sharecropping agreements (CONTRATOS DE APARCERIA) as to which any Seller or any
Purchased Subsidiary is the lessor, sublessor, landowner, lessee, sublessee,
sharecropper or assignee/successor in interest thereof, together with any
options to purchase the underlying property, its profits or products and
leasehold improvements thereon.
"REAL PROPERTY TAXES" has the meaning set forth in Section 8.4(b).
"RECEIVABLES HOLDBACK" means an amount in cash equal to $10,000,000.
"RELATED MARKS" has the meaning set forth in Section 8.7(c).
"RELEASE" means any release, spill, emission, escape, leaking, pumping,
dumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into or through the indoor or outdoor Environment or into, through or
out of any property, including the movement of Hazardous Substances through or
in the air, soil, surface water, ground water or land.
"RELEASED PARTIES" has the meaning set forth in Section 8.13.
"REMEDIAL ACTION" means all actions to: (a) clean up, remove, treat,
restore, contain, xxxxx, cover or in any other way address any Hazardous
Substance; (b) prevent or control the Release of any Hazardous Substance so that
it does not migrate, endanger or threaten to endanger public health or welfare
or the Environment; or (c) perform pre-remedial studies and investigations or
post-remedial monitoring and care.
"XXXX DE LA PENA BROTHERS" has the meaning set forth in the preamble.
"SALE BONUS" has the meaning set forth in Section 8.16.
"SCOTIA" means Scotiabank Inverlat, S.A.
"SCOTIA LOAN" means all indebtedness outstanding under that certain Credit
Agreement dated November 15, 2004, among Tequila Herradura, as the Borrower, the
lenders parties thereto and Scotiabank, and related ancillary agreements.
"SELLER" and "SELLERS" has the meaning set forth in the preamble.
"SELLER CLAIM" has the meaning set forth in Section 9.3(c).
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"SELLER INDEMNIFIED PARTY" has the meaning set forth in Section 9.3(a).
"SELLERS WARRANTY BREACHES" has the meaning set forth in Section 9.2(b).
"SEMADES" means the SECRETARIA DE MEDIO AMBIENTE Y DESAROLLO SUSTENTABLE
of the Government of the State of Jalisco, Mexico.
"SHORTFALL" has the meaning set forth in Section 3.3(d).
"STANDARD COST" has the meaning set forth on Schedule 3.3,
"STRADDLE PERIOD" means taxable periods beginning before the Closing Date
and ending after the Closing Date.
"SUBSIDIARY" means with respect to any Person (the "OWNER"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are directly or indirectly held by the Owner and/or one
or more of its Subsidiaries or any corporation or other Person in which the
Owner and/or one or more of its Subsidiaries directly or indirectly has the
right (whether by contract, organizational agreement or otherwise) to elect a
majority of that corporation's or other Person's board of directors or similar
governing body or to direct the business and policies of that corporation or
other Person.
"TANGIBLE PROPERTY" means all tangible personal property including
personal property, plant and equipment, furniture, fixtures, equipment
(including motor vehicles), machinery and spare parts.
"TARGET WORKING CAPITAL" means 1,575,290,886.00 Mexican pesos, as per
SCHEDULE 3.3.
"TAX" and "TAXES" means (a) any and all federal, state, provincial, local,
foreign and other contributions, taxes, levies, fees, imposts, duties and
similar governmental charges or credits (including any interest, fines, charges,
surcharges, assessments, penalties or additions to tax imposed in connection
therewith or with respect thereto), including taxes and duties imposed on, or
measured by, income, assets, inventory, franchise, profits or gross receipts, ad
valorem, value added, capital gains, sales, goods and services, use, real or
personal property, capital stock, license, branch, payroll, estimated
withholding, employment, social security (or similar), housing fund contribution
quota, retirement fund contribution quota, unemployment, compensation, utility,
severance, production including mandatory profit sharing applicable under the
Mexican Federal Labor Law (LEY FEDERAL DEL TRABAJO), excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes, and customs duties,
countervailing duties, water and related fees for public works imposed by any
governmental agency, and (b) any transferee liability in respect of any items
described in clause (a) above.
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"TAX AUTHORITY" means the Internal Revenue Service and any governmental,
federal, state, local or foreign authority, agency or commission which is
competent to assess, impose, enforce, levy and/or collect a Tax.
"TAX CLAIM" means any claim by a Tax Authority which, if successful, might
result in additional tax liability.
"TAX MATTER" has the meaning set forth in Section 8.3(d).
"TAX RETURN" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any federal, state or foreign governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"TEQUILA ADVISORY BOARD" has the meaning set forth in Section 8.15.
"TRADEMARK CASH PAYMENT" has the meaning set forth in Section 3.2(b).
"TRADEMARKS" means the trademarks, service marks, trade names and other
indications of origin of the Business, and all other registered and unregistered
trademarks, service marks, trade names, brand names, fictitious or assumed
names, corporate names, domain names, URLs, logos, designs, slogans, labels, and
trade dress, authorizations to use denominations or indicia of origin and other
source indicators, all registrations, applications, pending applications, and
renewals relating thereto together with the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; and any claims, causes of
action or rights to past, present and future damages arising out of or related
to any infringement or misappropriation of any of the foregoing.
"TRANSFER TAXES" has the meaning set forth in Section 8.3.
"UNDERGROUND WATER RIGHTS" means all rights relating to the extraction,
use, and exploitation of underground national water with an aggregate water
demand not to exceed (a) 240,000 cubic meters per annum in accordance with the
08JAL124374/12AMGR00 Water Concession; (b) 40,000 cubic meters per annum in
accordance with the 08JAL123473/12FMGR00 Water Concession, and (c) 47,174 cubic
meters per annum in accordance with the 08JAL124434/12FMGR00 Water Concession;
and (d) 241,825 cubic meters per annum in accordance with the
08JAL124361/12IMGR00 Water Concession.
"UTILITY CHARGES" has the meaning set forth in Section 8.4(a).
"XXXXX" has the meaning set forth in the Recitals.
"WATER CORRECTION PERMITS" has the meaning given to such term in SCHEDULE
6.1(C)(I).
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"WATER RIGHTS ASSIGNMENTS" has the meaning set forth in Section 7.1(f).
"WATER SUPPLY AGREEMENT" has the meaning given to such term in Section
6.1(c).
"WORKING CAPITAL" means Working Capital as calculated in the manner (and
using the line items) set forth on SCHEDULE 3.3 and otherwise in accordance with
Section 3.3.
"WWTP" has the meaning given to such term in Section 1.3(v) hereof.
"08JAL123473/12FMGR00 WATER CONCESSION" means the underground water
consumption concession issued by the Mexican National Water Commission (COMISION
NACIONAL DEL AGUA) in favor of Tequila Herradura, with a maximum annual demand
of 40,000 cubic meters for industrial purposes, recorded in the Public Registry
of Water Rights under entry R08JAL118640, Folio 1, Tomo N-R08, Foja 15.
"08JAL124361/12IMGR00 WATER CONCESSION" means the underground water
consumption concession issued by the Mexican National Water Commission (COMISION
NACIONAL DEL AGUA) in favor of Xxxxx, with a maximum annual demand of 241,825
cubic meters for industrial purposes, recorded in the Public Registry of Water
Rights under entry R08JAL100969, Folio 1, Tomo 1-R08, Foja 61.
"08JAL124374/12AMGR00 WATER CONCESSION" means the underground water
consumption concession issued by the Mexican National Water Commission (COMISION
NACIONAL DEL AGUA) in favor of Xxxxxxxxx Xxxx Xxxxxx, with a maximum annual
demand of 240,000 cubic meters for agricultural purposes, recorded in the Public
Registry of Water Rights under entry R08JAL100970 Folio 1, Tomo 1 R08, Foja 61.
"08JAL124434/12FMGR00 WATER CONCESSION" means the underground water
consumption concession issued by the (COMISION NACIONAL DEL AGUA) in favor of
Tequila Herradura, with a maximum annual demand of 47,174 cubic meters for
industrial purposes, recorded in the Public Registry of Water Rights under entry
R08 JAL101026, Folio 1, Tomo 1, R08, Foja 65.
Section 11.2 NONASSIGNABLE CONTRACTS OR REAL PROPERTY LEASES. To the
extent that assignment hereunder by each Seller to Buyer of any Contract or Real
Property Lease is not permitted by law or is not permitted without the consent
of any third party, this Agreement will not be deemed to constitute an
undertaking to assign the same if such consent is not given or if such an
undertaking otherwise would constitute a breach of or cause a loss of benefits
thereunder. Sellers will use commercially reasonable best efforts to obtain any
and all such required approvals and third party consents prior to the Closing in
accordance with Section 6.1(c); PROVIDED, HOWEVER, that Sellers will not be
required to pay or incur any material cost or expense to obtain approval or any
third party consent which Sellers are not otherwise required to pay or incur in
accordance with the terms of the applicable Contract or Real Property Lease. If
any such third party consent is not obtained before the Closing, Sellers will
use reasonable best efforts to obtain any and all such required approvals and
third party
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consents as promptly as practicable thereafter and will cooperate with Buyer in
any reasonable arrangement designed to provide to Buyer all of the benefits and
for Buyer to assume all the obligations after the Closing under the applicable
Contract or Real Property Lease, including enforcement for the benefit of Buyer
of any and all rights of any Seller against any other Person arising out of
breach or cancellation by such other Person of the Contract or Real Property
Lease and including, if so requested by Buyer, acting as an agent on behalf of
Buyer, or as Buyer will otherwise reasonably request.
Section 11.3 EXPENSES. Except as otherwise expressly provided herein,
whether or not the transactions contemplated by this Agreement are consummated,
each of the parties hereto will pay its own expenses (including attorneys' and
accountants' fees and out-of-pocket expenses) incident to this Agreement and the
transactions contemplated hereby; PROVIDED, HOWEVER, that Buyer will pay all
filing fees for any filing required under the HSR Act, the German Competition
Act or the Mexican Federal Economic Competition Laws.
Section 11.4 NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder will be in writing
and will be given personally, sent by facsimile transmission or sent by prepaid
air courier. Any such notice will be deemed to have been given when received, if
delivered in person, sent by facsimile transmission and, in the case of
facsimile, confirmed in writing within three Business Days thereafter, or sent
by prepaid air courier in any such case as follows (or to such other address or
addresses as a party may have advised the other in the manner provided in this
Section 11.4):
IF TO PARENT OR SELLERS:
Av. Americas 1520
Colonia Country Club
Xxxxxxxxxxx, Xxxxxxx
00000 Xxxxxx
Facsimile: (000) 00 00 00 00 0000
with copies to:
Xxxxx Day
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxx Xxxx
Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
-00-
Xxx. Xxxxxxxx Xxxxxxx Xxxxx
XXXXXX X XXXXXXX, X.X.
Xxxxx Xxxxxx No. 235, 2(degree) Piso
Col. Xxxxx xx Xxxxxxxxxxx
00000 Xxxxxx, D.F.
Facsimile: (011) (00) 0000-0000
IF TO XXXX XXXXXXXXX XXXX DE XX XXXX:
Av. Americas 1520
Colonia Country Club
Xxxxxxxxxxx, Xxxxxxx
00000 Xxxxxx
Facsimile: (000) 00 00 00 00 0000
with a copy to:
Lic. Xxxxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Angoitia, Xxxxxx x Xxxxxxx, S.C.
Xxxxxx Urales 000-0
Xxxxx xx Xxxxxxxxxxx
00000 Xxxxxx, D.F.
Facsimile: (00) 0000-0000
IF TO XXXX XXXXX XXXXX XXXX DE XX XXXX:
Av. Americas 1520
Colonia Country Club
Xxxxxxxxxxx, Xxxxxxx
00000 Xxxxxx
Facsimile: (000) 00 00 00 00 0000
with a copy to:
Lic. Xxxxxxxx Xxxxxxx Llano
CARAZA Y MORAYTA, S.C.
Xxxxx Xxxxxx No. 235, 2(degree) Piso
Col. Xxxxx xx Xxxxxxxxxxx
00000 Xxxxxx, D.F.
Facsimile: (011) (00) 0000-0000
IF TO BUYER OR BFC:
Xxxxx-Xxxxxx Corporation
000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
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Attention: General Counsel
Facsimile: (000) 000-0000
Attention: Vice President/Director Corporate Development
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
and
Xxxxx, Xxxxxx-Xxxxxxx y Xxxxxxxxxx
Paseo De Los Tamarindos 00
Xxxxxxx Xx Xxx Xxxxx
00000 Xxxxxx, D.F.
Attention: Lic. Xxxxxx Xxxxx
Facsimile: (011) (52) (00) 0000-0000
Section 11.5 PUBLICITY; CONFIDENTIALITY. Except for a joint press
release relating to this Agreement and the transactions contemplated hereby and
to be approved in writing by BFC and Parent prior to the date hereof, no
publicity release or public announcement concerning this Agreement or the
transactions contemplated hereby will be made by Buyer, BFC or Sellers without
advance approval thereof by Buyer, BFC and Parent. While this Agreement is in
effect and after this Agreement terminates, each party hereto and its Affiliates
will keep confidential, and will not disclose, the terms of this Agreement to
any other Person without the prior written consent of Buyer and Parent unless
(i) the disclosure is in response to legal order or subpoena or otherwise
required by Law or any applicable securities exchange, (ii) the terms are
readily ascertainable from public or published information, or trade sources
(without violation of the foregoing provisions of this sentence), (iii) the
disclosure is (A) in connection with any Action or Proceeding in respect of this
Agreement or (B) to a Governmental Authority the filing with or consent of which
is required in connection with the transactions contemplated by this Agreement
or to receive any Permit or consent or authorization of, or notice to, any third
party, or (iv) the disclosure is to any officer, director, employee, agent or
advisor of any party hereto or of any of its Affiliates and such Person needs to
know such information for purposes of consummating the transactions contemplated
by or the performance of this Agreement. Notwithstanding anything to the
contrary in this Agreement, BFC may file this Agreement and disclose the
transactions contemplated hereby publicly with the U.S. Securities and Exchange
Commission without the requirement of any consent hereunder.
Section 11.6 ENTIRE AGREEMENT. The Confidentiality Agreement and this
Agreement (including the Exhibits and Schedules) and the agreements,
certificates and
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other documents delivered pursuant to this Agreement (including the Ancillary
Agreements) contain the entire agreement among the parties with respect to the
transactions described herein, and supersede all prior agreements, written or
oral, with respect thereto.
Section 11.7 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties hereto or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder will operate as a waiver
thereof.
Section 11.8 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of New York without regard to principles
of conflicts of law.
Section 11.9 ARBITRATION. In the event any dispute ("DISPUTE") arises
regarding or pertaining to the validity, intention or interpretation, execution
or compliance of this Agreement, the parties to this Agreement will, in good
faith, use their reasonable best efforts to settle such Dispute. If, within the
60 calendar days following the date in which one of the parties gives notice to
the other of the existence of a Dispute, such Dispute has not been finally
resolved in writing to the mutual satisfaction of the parties to this Agreement,
each of the parties hereto hereby irrevocably and unconditionally agrees to
submit such Dispute, for itself and its property, to be fully and finally
resolved by arbitration. Such arbitration shall be conducted in Manhattan, in
New York, New York, in English language, pursuant to the Arbitration Rules of
the International Chamber of Commerce then in effect (the "ICC RULES") by a
panel of three arbitrators, one designated by Sellers, one designated by Buyer,
and the third, who shall act as chairman, designated by the other two
arbitrators so appointed. In the event that the first two arbitrators fail to
appoint the third arbitrator within 30 days after their selection, such third
arbitrator shall be appointed pursuant to the ICC Rules. The arbitration panel
shall, in respect of any Dispute submitted thereto grant an award, strictly
grounded in law, not later than the end of the 9th calendar month after the
month in which such Dispute is submitted to arbitration. The award of the
arbitration panel will be final and binding on the parties to this Agreement and
such award may be entered in any court having jurisdiction for its enforcement,
and the parties to this Agreement hereby expressly submit to the jurisdiction of
said court. The fees and expenses of the arbitration panel shall be borne
equally by the parties to this Agreement; provided, however, each such party
shall be solely responsible for all fees and expenses of counsel retained by
such party in connection with any such arbitration.
Section 11.10 BINDING EFFECT; NO ASSIGNMENT. This Agreement will be
binding upon and inure to the benefit of the parties and their respective
successors, permitted assignees and legal representatives. Except as expressly
set forth in Article IX, this Agreement is not intended to, and shall not,
confer upon any Person not a party hereto (other than successors, legal
representatives and permitted assigns of parties hereto) any rights or remedies
hereunder. This Agreement (or any right hereunder) is not assignable by any
party hereto without the prior written consent of the other parties
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hereto and any such purported assignment without such consent will be null and
void, except that either or both of Buyer and BFC may assign all or any part of
its benefits and obligations under this Agreement to one or more Subsidiaries of
Buyer or BFC (provided that any such assignment shall not relieve Buyer or BFC
of any of its obligations hereunder).
Section 11.11 CERTAIN INTERPRETATION MATTERS. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require. Except as otherwise provided herein, all
payments required to be made under or pursuant to this Agreement will be made in
United States dollars and all references to amounts herein will be to United
States dollars. The Exhibits and Schedules are a part of this Agreement as if
fully set forth herein. All references herein to Sections, subsections, clauses,
Exhibits and Schedules will be deemed references to such parts of this
Agreement, unless the context otherwise requires. The headings in this Agreement
are for reference only, and will not affect the interpretation of this
Agreement. The term "including" means "including without limitation."
Section 11.12 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered will be an original, but all such counterparts will together
constitute one and the same instrument. Each counterpart may consist of a number
of copies, facsimiles or facsimiles of copies hereof each signed by less than
all, but together signed by all of the parties hereto.
Section 11.13 SEVERABILITY OF PROVISIONS. If any provision or any
portion of any provision of this Agreement or the application of such provision
or any portion thereof to any Person or circumstance, is held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, will not be
affected thereby.
Section 11.14 GUARANTEE OF PERFORMANCE. (a) BFC hereby irrevocably and
unconditionally guarantees to Sellers the prompt and full discharge by Buyer of
all of Buyer's covenants, agreements, obligations and liabilities under this
Agreement including the due and punctual payment of all amounts which are or may
become due and payable by Buyer or any of its permitted assignees or designees
hereunder (such assignees and designees together with Buyer for purposes of this
Section 11.14, the "BUYER PARTIES"), when and as the same shall become due and
payable (collectively, the "BUYER OBLIGATIONS"), in accordance with the terms
hereof. BFC acknowledges and agrees that, with respect to all Buyer Obligations
to pay money, such guaranty shall be a guaranty of payment and performance and
not of collection and shall not be conditioned or contingent upon the pursuit of
any remedies against any Buyer Party. If any Buyer Party shall default in the
due and punctual performance of any Buyer Obligation, including the full and
timely payment of any amount due and payable pursuant to any Buyer Obligation,
BFC will forthwith perform or cause to be performed such Buyer Obligation and
will forthwith make full payment of any amount due with
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respect thereto at its sole cost and expense. This Section 11.14(a) shall
terminate and be of no further force or effect upon and after the date that the
Buyer Obligations shall have been paid or performed in full.
(b) Subject to Section 11.14(g), liabilities and obligations of BFC
pursuant to Section 11.14(a) are unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any acceleration, extension, renewal, settlement,
compromise, waiver or release in respect of any Buyer Obligation by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement entered into in accordance with its terms;
(iii) any change in the existence, structure or ownership of any
Buyer Party or BFC or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any of them or their assets; or
(iv) any other act, omission to act, delay of any kind by any
party hereto or any other Person, or any other circumstance whatsoever that
might, but for the provisions of this Section 11.14, constitute a legal or
equitable discharge of the obligations of BFC, as guarantor to the extent
set forth hereunder.
(c) BFC hereby waives any right, whether legal or equitable,
statutory or non-statutory, to require any Seller to proceed against or take any
action against or pursue any remedy with respect to any Buyer Party or any other
Person or make presentment or demand for performance or give any notice of
nonperformance before any party hereto may enforce its rights hereunder against
BFC as guarantor.
(d) The obligations of BFC as BFC to the extent set forth hereunder
shall remain in full force and effect until the Buyer Obligations shall have
been paid or performed in full. If at any time any performance by any Person of
any Buyer Obligation is rescinded or must be otherwise restored or returned,
whether upon the insolvency, bankruptcy or reorganization of any Buyer Party or
otherwise, BFC's obligations hereunder with respect to such Buyer Obligation
shall be reinstated at that time as though that Buyer Obligation had become due
and had not been performed.
(e) Upon payment or performance by BFC of any Buyer Obligation, BFC
shall be subrogated to the rights of Seller against such Buyer Party with
respect to that Buyer Obligation.
(f) The obligations of BFC under this Section 11.14 shall be limited
to an aggregate amount that is equal to the largest amount that would not render
its obligations under this Section 11.14 subject to avoidance under Xxxxxxx 000
xx xxx Xxxxxx Xxxxxx Bankruptcy Code or any comparable provisions of any
applicable state law.
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(g) Notwithstanding anything expressed or implied herein to the
contrary, BFC shall be entitled to assert any and all defenses to payment or
performance of any Buyer Obligation that could be asserted by any Buyer Party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement on the date first above written.
XXXXX-XXXXXX TEQUILA MEXICO, S. DE X.X. DE C.V.
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: Attorney-in-Fact
XXXXX-XXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
SELLERS:
/s/ Xxxx Xxxxxxxxx Xxxx de xx Xxxx
-----------------------------------------
Xxxx Xxxxxxxxx Xxxx de xx Xxxx
/s/ Xxxx Xxxxx Xxxxx Xxxx de xx Xxxx
-----------------------------------------
Xxxx Xxxxx Xxxxx Xxxx de xx Xxxx
GRUPO INDUSTRIAL HERRADURA, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
TEQUILA HERRADURA, S.A. DE C.V
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
FABRICA DE TEQUILA HACIENDA LAS NORIAS, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
COMERCIALIZADORA HERRADURA, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
TRANSPORTES DE CARGA MELLENIUM, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
ADDITIONAL SELLER PARTIES:
CORPORACION DE SERVICIOS HERRADURA, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
CH ACCIONES S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxxx Xxxx de xx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx Xxxx de xx Xxxx
Title: Authorized Officer
CORPORATIVO HERRADURA, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxxx Xxxx de xx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx Xxxx de xx Xxxx
Title: Authorized Officer
LA MORALEDA OPERADORA COMERCIAL, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
DESTILADOS DE AGAVE, S.A. DE C.V.
By: /s/ Xxxx Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxx Xxxxxxxx Xxxx
Title: Chief Financial Officer
