PURCHASE AGREEMENT
EXHIBIT 10.4
AGREEMENT, dated as of April
30, 2010, by and between XXXXXX
XXXXX (the "Seller") and JE MEXICAN HOLDINGS, INC., a
Delaware corporation (the “Purchaser”).
W I T N E S S E T H:
WHEREAS, Seller is the owner
of the entire (100%) membership interest in Jefferson Electric Mexico
Holdings LLC, a Wisconsin limited liability company (the “Company”);
and
WHEREAS, Seller desires to
sell and transfer, and Purchaser desires to purchase, all of Seller’s right,
title and interest in and to the Purchased Interest, i.e., the entire (100%)
membership interest in the Company, subject to the terms and conditions set
forth below;
NOW, THEREFORE, in
consideration of the premises and the respective representations, warranties,
covenants, agreements and conditions contained herein, the parties hereto agree
as follows:
ARTICLE
I
PURCHASE AND SALE OF
PURCHASED INTEREST
1.1 Sale and Transfer of
Purchased Interest. Upon the terms and subject to the
conditions hereinafter set forth, at the Closing (as hereinafter defined),
Seller shall sell, assign, transfer and deliver to Purchaser, and Purchaser
shall acquire from Seller, all of Seller’s right, title and interest in and to
the Purchased Interest (as hereinafter defined), free and clear of all liens,
pledges, security interests, encumbrances, charges and claims of any kind or
nature whatsoever other than the Bank Lien (as defined below). For
purposes hereof, the “Purchased Interest” shall mean the entire (100%)
membership interest in the Company owned beneficially and of record by
Seller.
The
Purchased Interest is being sold and purchased hereunder in connection with the
closing of the transactions contemplated by the Agreement and Plan of Merger,
dated as of April 30, 2010 (the “Merger Agreement”), among Pioneer Power
Solutions, Inc. (“Parent”), JEI Acquisition Corp. (“Merger Sub”), Jefferson
Electric, Inc. (“Jefferson”) and Seller, as the Company Stockholder, i.e., the
sole stockholder of Jefferson.
This
Agreement constitutes the “JEM Purchase Agreement” under the Merger
Agreement. Pursuant to the Merger Agreement, the Purchased Interest
is being sold and purchased hereunder for a nominal purchase
price. This Agreement, as the JEM Purchase Agreement, constitutes a
condition to closing of, and is a material inducement to Parent entering into,
such Merger Agreement. As set forth below, the Company is the holder
of a minority equity interest in Mexico Sub (as hereinafter defined), which is
the principal manufacturing subsidiary and/or affiliate of Jefferson located in
Reynosa, Mexico.
Pursuant
to a certain loan agreement between Xxxxxxx Bank, as Lender (the “Bank”), and
Jefferson Electric Inc., an affiliate of the Company, as Borrower, as additional
collateral security for the loans made by the Bank pursuant thereto, Seller has
previously furnished a to Lender a pledge and security interest in the Purchased
Interest, i.e., the
entire (100%) membership interest in the Company (the “Bank
Lien”). Purchaser hereby consents to the continuation of such
Bank Lien in respect of the Purchased Interest.
1.2 Closing
Date. The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Shiboleth LLP, Xxx Xxxx
Xxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, at 10:00 a.m., local time, on April 30,
2010 (the “Closing Date”), or such other date, time and place as shall be
mutually agreed to among the parties. The parties hereto may also
mutually agree to effect the Closing hereunder by mail or via
facsimile.
1.3 Closing
Deliveries.
(a) At
the Closing, Seller shall deliver or cause to be delivered to Purchaser the
following documents and instruments: (i) all such assignments, instruments and
other documents evidencing the sale, transfer and assignment of the Purchased
Interest hereunder as, in the opinion of Purchaser and its counsel, shall be
necessary to effect the transfer of, and to vest title in and to, the Purchased
Interest, free and clear of all manner of liens, pledges, security interests,
encumbrances, charges and claims thereon; (ii) evidence of ownership of each of
the Purchased Interest by Seller (as hereinafter defined); and (iii) such other
instruments of transfer and other documents as Purchaser and/or its counsel may
reasonably request.
(b) At
the Closing, Purchaser shall deliver or cause to be delivered to Seller the
following documents and instruments: (i) payment of the Purchase Price (as
hereinafter defined); and (ii) such other instruments and documents as Seller
and or its counsel may reasonably request.
ARTICLE
II
PURCHASE
PRICE
2.1 Purchase
Price. The purchase price to be paid by Purchaser to Seller
for the Purchased Interest hereunder shall be ONE HUNDRED DOLLARS ($100.00) in
the aggregate (the “Purchase Price”). The Purchase Price shall be payable in its
entirety by Purchaser to Seller at the Closing by wire transfer to a bank
account (or accounts) designated by Seller, or in immediately available
funds.
Seller
hereby acknowledges and agrees that the Purchase Price has been negotiated by
Seller at arm’s length, and that Seller in good faith believes that such
Purchase Price constitutes fair and adequate consideration, and that the
transactions contemplated under this Agreement constitute a material inducement
to Parent and Merger Sub to enter into the Merger Agreement.
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ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF SELLER
Seller
hereby makes the following representations and warranties to
Purchaser:
3.1 Valid Corporate
Existence. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin, and has the limited liability company power to carry on its business
as now being conducted and to own its assets.
3.2 Company
Interests. Seller is the sole record and beneficial
owner of the Purchased Interest, i.e., the entire (100%) membership interest in
the Company. The Purchased Interest is duly authorized and validly issued and
outstanding, fully paid and non-assessable. There are no equity
securities of the Company authorized, issued or outstanding other than the
Purchased Interest. In addition, there are no subscriptions, options, warrants,
rights, calls or other commitments or agreements of any kind or nature to which
the Company and/or Seller and/or any other person or entity is a party, or by
which any of such persons or entities is bound, in respect of the purchase of
any equity interests or other securities of the Company, or calling for the
issuance, transfer, sale or other disposition of any equity interests or other
securities of the Company or securities convertible into, or exchangeable for,
any such equity interests.
3.3 No
Consents. There are no consents and approvals of governmental
and other regulatory agencies, foreign or domestic, and of other third parties
which are required to be obtained by or on behalf of the Company and/or Seller
in order to enable each such party to enter into and carry out this Agreement in
all material respects, except for any consent which may be required to be
obtained from the Bank in respect of the Bank Lien.
3.4 Authority and Binding
Effect. Seller has the full power and authority to enter into,
execute and deliver this Agreement and to carry out Seller's obligations
hereunder. This Agreement constitutes the valid and binding
obligation of Seller, and is enforceable in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium or similar laws relating to
the enforcement of creditors' rights generally and the application of general
principles of equity.
3.5 Title to Purchased
Interest. Seller is, and at the Closing shall be, the sole
record and beneficial owner of all of the Purchased Interest, i.e., the entire
(100%) membership interest of the Company, free and clear of all manner of
liens, charges, pledges, encumbrances, security interests, restrictions on
transfer or claims of any kind or nature whatsoever, except for the Bank
Lien. Seller has, and at the Closing shall have, good, valid and
marketable title to the Purchased Interest, and the absolute and unqualified
right to sell, transfer and deliver the Purchased Interest to Purchaser as
contemplated hereby. The delivery of the Purchased Interest to Purchaser at the
Closing pursuant to the provisions of this Agreement shall transfer good and
valid title thereto, free and clear of all manner of liens, charges, pledges,
encumbrances, security interests, restrictions on transfer or claims of any kind
or nature whatsoever.
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3.6 No
Agreements. As of the date hereof, there is no (and since
inception, there has not been any) operating and/or limited liability company
and/or similar agreement relating to the Company and/or the Purchased
Interest.
3.7 No
Litigation. There are no actions, suits, proceedings or
governmental investigations, at law or in equity, relating to or involving
Seller, the Company and/or their respective assets, properties or businesses by
or before any court, arbitrator or governmental or other regulatory agency or
commission either pending or, to the knowledge of Seller, after reasonable
inquiry, threatened, or any outstanding order, injunction, judgment, writ, award
or decree against Seller, the Company and/or their respective assets, properties
or businesses.
3.8 No
Breach. Neither the execution and delivery of this Agreement
nor compliance by Seller and/or the Company with any of the provisions hereof
nor consummation of the transactions contemplated hereby, will:
(a) violate
or conflict with any provision of the organizational documents of the
Company;
(b) violate
or, alone or with notice or the passage of time, result in the material breach
or termination of, or otherwise give any contracting party the right to
terminate, or declare a default under, the terms of any agreement, lease, note,
mortgage, instrument or other document or undertaking, oral or written, to which
the Company and/or Seller is a party or by which any of them may be bound
(except for such violations, conflicts, breaches or defaults as to which
required waivers or consents by other parties have been, or will, prior to the
Closing, be obtained);
(c) result
in the creation of any lien, security interest, charge or encumbrance upon any
of the assets, properties or businesses of the Company;
(d) violate
any judgment, order, injunction, decree or award against, or binding upon the
Company and/or Seller and/or any of their respective assets, properties or
businesses; and/or
(e) violate
in any material respect any law or regulation of any jurisdiction relating to
the Company and/or Seller and/or any of their respective assets, properties,
businesses or securities.
3.9 No
Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly with Purchaser by
Seller without the intervention of any broker, finder, investment banker or
other third party. Seller has not engaged, consented to, or
authorized any broker, finder, investment banker or other third party to act on
his or its behalf, directly or indirectly, as a broker or finder in connection
with the transactions contemplated by this Agreement. Seller hereby
agrees to indemnify Purchaser, and to hold Purchaser harmless, from and against
any claim for brokerage or similar fees, commissions or other compensation which
may be made against Purchaser by any third party in connection with any of the
transactions contemplated hereby, which claim shall be based upon any action by
or on behalf of Seller.
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3.10 No
Operations. As of the date hereof, and since inception (in
April 2008), the Company does not conduct, and has not conducted, any business
operations of any kind or nature whatsoever. The sole asset of the
Company is the ownership of one (1) share of common stock of Nexus Magneticos de
Mexico, S. de X.X. de C.V. (“Mexico Sub”), constituting 0.03% of the total
issued and outstanding shares of common stock of Mexico Sub. As set forth
above, Mexico Sub is the principal manufacturing subsidiary and/or
affiliate of Jefferson located in Reynosa, Mexico.
ARTICLE
IV
INDEMNIFICATION
4.1 Survival. The
parties hereby agree that their respective representations, warranties,
covenants and agreements contained in this Agreement shall survive the Closing
for a period of three (3) years.
4.2 Indemnification. Seller
hereby agrees to save, defend, indemnify and hold harmless Purchaser and its
shareholders, directors, officers, agents and/or affiliates (collectively, the
"Indemnified Parties") from and against any and all demands, claims, losses,
damages, liabilities, obligations, costs and expenses of every kind, nature and
description (including, without limitation, reasonable attorneys' fees and
expenses in connection with any action, claim or proceeding relating to such
liabilities) (collectively, the "Liabilities"), suffered, sustained, incurred or
required to be paid at any time by any of the Indemnified Parties resulting
from, arising out of or relating to: (a) the untruth, inaccuracy or breach of
any representation, warranty, covenant or agreement of Seller contained in or
made pursuant to this Agreement or in any document, instrument or certificate
delivered by or on behalf of Seller pursuant hereto; or (b) any transaction,
action or event commencing or occurring on or prior to the Closing Date
involving the Company and/or its business operations and/or its financial or
other condition, whether absolute or contingent, matured or unmatured or known
or unknown.
No claim
for indemnification under this Section 4.2 may be made unless such claim,
together with all other claims under this Section 4.2 in the aggregate, exceeds
$50,000.00. For purposes hereof, the determination of the deductible amount
($50,000.00) hereunder shall be consolidated with such deductible amount under
Sections 7.01 and 7.04(a), respectively, under the Merger
Agreement.
4.3 Defense of
Claims.
(a) Purchaser
hereby agrees to notify Seller with reasonable promptness of any claim asserted
against any of the Indemnified Parties by any third party (a "Claim") which
Seller may be obligated to indemnify under this Agreement, which notification
shall be accompanied by a written statement setting forth the basis of the Claim
in reasonable detail, and, if possible, the manner of calculation
thereof.
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(b) Seller
shall have the right to assume the defense of any Claim asserted against Seller
and/or Purchaser, whereupon Seller shall defend such Claim at Seller's own
expense and with counsel of his choice, which counsel shall be reasonably
satisfactory to Purchaser, and Seller shall not be liable to Purchaser for any
fees of other counsel, unless, in the reasonable judgment of Purchaser, the
representation of both Purchaser and Seller by the same counsel would be
inappropriate due to an actual or potential conflict of interest between such
parties. Seller shall not in any event settle or compromise any such
Claim without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing,
Purchaser may, at its sole option, employ counsel to represent it in connection
with such action, at Purchaser's sole expense, and in such event, counsel
selected by Seller shall cooperate with Purchaser's counsel in the defense,
compromise or settlement of such Claim. If, however, in the
reasonable opinion of Purchaser, any such Claim shall involve a matter which
could have a material adverse effect upon the Company, then Purchaser shall have
the right to assume the defense of such Claim. In the event that
Seller fails or elects not to exercise their his right to defend such Claim or
Purchaser otherwise assumes the defense of any such Claim hereunder, then
Purchaser may take whatever action it deems appropriate, and any final action
with respect to such Claim shall be binding and conclusive upon Seller as to the
amount of and the liability for such Claim; provided, however, that
Purchaser will not settle such action or Claim without the prior consent of
Seller, which consent shall not be unreasonably withheld or
delayed. The parties hereby agree to cooperate to the fullest extent
possible in connection with any Claim for which indemnification is or may be
sought hereunder.
4.4 Rights without
Prejudice. The rights of Purchaser under this Article V are
without prejudice to any other right or remedies that they may have by reason of
this Agreement or as otherwise provided at law or in equity.
ARTICLE
V
MISCELLANEOUS
PROVISIONS
5.1 Expenses. Each
of the parties hereto shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
5.2 Modification, Termination or
Waiver. This Agreement may be amended, modified, superseded or
terminated, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, but only by a written instrument executed by
the party waiving compliance. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right of such party at a later time to enforce the same.
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5.3 Publicity. The
parties hereby agree that no publicity, release or other public announcement
concerning the transactions contemplated by this Agreement shall be issued by
either party without the advance approval of both the form and substance of the
same by the other party and its counsel, which approval, in the case of any
publicity, release or other public announcement required by applicable law,
shall not be unreasonably withheld or delayed.
5.4 Notices. Any
notice or other communication required or which may be given hereunder shall be
in writing and shall be deemed given: (i) upon receipt, if delivered
personally, or if sent via facsimile transmission (subject to confirmation of
transmission thereof) or via nationally recognized overnight courier; or (ii)
five (5) days after the date of mailing, if mailed by certified mail, return
receipt requested, in each case, to the following addresses of the
parties:
if to
Seller, to:
Xxxxxx
Xxxxx
0000
Xxxxxxxxx Xxxx
Xxxxxxx,
XX 00000
if to
Purchaser, to:
JE
Mexican Holdings, Inc.
One
Xxxxxx Plaza
400 Kelby
Street, 0xx Xxxxx
Xxxx Xxx,
XX 00000
The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice of any such change as set
forth herein; provided, however, that any such notice of change of address shall
be effective only upon receipt thereof.
5.5 Binding Effect and
Assignment. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and the heirs, executors, personal
representatives, successors and assigns of Seller, and the successors and
assigns of Purchaser. No assignment of any rights or delegation of
any obligations provided for herein may be made by any party hereto without the
express written consent of the other party; provided, however, that Purchaser
may at any time assign all or any portion of its right, title and interest under
this Agreement to any of its affiliates without the consent or approval of
Seller, and/or any other party.
5.6 Entire
Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof, and merges and
supersedes all prior agreements and understandings, written or oral, with
respect thereto.
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5.7 Governing
Law. This
Agreement shall in all respects be governed by, and construed in accordance
with, the applicable laws of the State of Delaware, U.S.A., without giving
effect to principles of conflicts of law. Each party hereto
irrevocably and unconditionally consents to submit the exclusive jurisdiction of
the United States District Court for the Southern District of New York, or if
jurisdiction in such court is lacking, any court of the State of New York of
competent jurisdiction sitting in New York City, in connection with any action,
suit or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby, and
agrees that service of process may be made in any manner acceptable for use in
such New York courts.
Each party hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
and/or the transactions contemplated hereby, in the above New York courts, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum. The parties
hereby expressly waive the right to any jury trial in any action or proceeding
involving this Agreement.
5.8 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but which together shall constitute one and the same
instrument.
[Balance
of page intentionally left blank.]
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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above
written.
| SELLER: | |||
| /s/ Xxxxxx Xxxxx | |||
| Xxxxxx Xxxxx | |||
| PURCHASER: | |||
| JE MEXICAN HOLDINGS, INC. | |||
| By: | /s Xxxxxx X. Xxxxxxx | ||
| Xxxxxx X. Xxxxxxx, President | |||
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