KIDS HOLDING AGREEMENT
Between
ELAMEX USA, CORP.
A Delaware Corporation and Wholly-owned
Subsidiary of Elamex, S.A. de C.V.
"Elamex USA"
and
KIDS HOLDING CORP.
A Delaware Corporation
"Kids Holding"
June 28, 2002
Contents
Page
----
1. Date ................................................................... 1
2. Parties ................................................................ 1
2.1 Elamex USA, Corp. ................................................ 1
2.2 Kids Holding Corp. ............................................... 1
3. Defined Terms .......................................................... 1
3.1 "Accel" .......................................................... 1
3.2 "Agreement" ...................................................... 1
3.3 "Xxxx" ........................................................... 1
3.4 "Xxxx Agreement" ................................................. 1
3.5 "Closing" ........................................................ 1
3.6 "Effective Date and Time" ........................................ 2
3.7 "Escrow Agent" ................................................... 2
3.8 "Escrow Agreement" ............................................... 2
3.9 "Escrowed Shares" ................................................ 2
3.10 "Franklin Connections" ........................................... 2
3.11 "Franklin Food Products" ......................................... 2
3.12 "Franklin Inmobiliarios" ......................................... 2
3.13 "Franklin Inmobiliarios Agreements" .............................. 2
3.14 "Kids Holding's Interests in Franklin Food Products" ............. 2
3.15 "Mt. Franklin Holdings" .......................................... 2
3.16 "Mt. Franklin Options" ........................................... 2
3.17 "Parties" ........................................................ 3
3.18 "Reprop Merger" .................................................. 3
4. Recitals ............................................................... 3
5. Agreements ............................................................. 4
5.1 Sale and Purchase of Kids Holding's Interests in Franklin Food
Products ......................................................... 4
5.2 Purchase Price; Payment of the Purchase Price .................... 4
(a) Shares Not Subject to Escrow ............................... 4
(b) Escrowed Shares ............................................ 4
5.3 Rights of First Refusal to Acquire Shares of Elamex, S.A. de
C.V.; Permitted Transfers of Shares to Affiliates of Kids
Holding .......................................................... 4
5.4 Agreement to Keep Non-public Information Confidential ............ 5
5.5 Representations and Warranties of Elamex USA ..................... 5
(a) Organization of Elamex USA ................................. 5
(b) Authorization of Transaction; Restricted Shares of Elamex,
S.A. de C.V. ............................................... 5
(c) Noncontravention ........................................... 6
(d) No Pending or Threatened Litigation or Claims .............. 6
(e) Access to Information; SEC Filings ......................... 6
(f) No Representations ......................................... 7
5.6 Representations and Warranties of Kids Holding ................... 7
(a) Organization of Kids Holding ............................... 7
(b) Authorization of Transaction ............................... 7
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding") June 28, 2002
Contents Page i of ii
(c) No Lien or Other Encumbrance Relating to Kids Holding's
Interests in Franklin Food Products ........................ 8
(d) Noncontravention ........................................... 8
(e) No Pending or Threatened Litigation or Claims .............. 8
(f) Mt. Franklin Options ....................................... 8
(g) Information About Elamex, S.A. de C.V. ..................... 8
(h) Investment ................................................. 8
(i) Manner of Offering ......................................... 8
(j) Restricted Shares; Not Registered with SEC or Any State .... 8
(k) Disclosure of Information Concerning Franklin Food Products
and Mt. Franklin Holdings .................................. 9
5.7 Conditions Precedent to Closing .................................. 9
(a) Conditions Precedent to the Obligations of Elamex USA ...... 9
(b) Conditions Precedent to the Obligations of Kids Holdings .. 10
5.8 Miscellaneous ................................................... 10
(a) Entire Agreement; Integration ............................. 10
(b) Survival of Representations and Warranties ................ 10
(c) Binding Nature; No Assignments . .......................... 11
(d) Further Action ............................................ 11
(e) Time is of the Essence .................................... 11
(f) Amendments, Modifications, Approvals, and Consents ........ 11
(g) Parties in Interest; No Third-Party Beneficiaries ......... 11
(h) Notices ................................................... 11
(i) Costs and Expenses ........................................ 12
(j) No Brokerage Commissions, Finders Fees, or Similar Costs .. 12
(k) Attorneys Fees ............................................ 12
(l) Governing Law ............................................. 12
(m) Construction .............................................. 13
(n) Rights and Remedies ....................................... 13
(o) Arbitration ............................................... 13
(p) No Waiver ................................................. 14
(q) Severability .............................................. 14
(r) Covenant of Good Faith .................................... 14
(s) Force Majeure ............................................. 14
(t) Titles and Captions ....................................... 14
(u) Pronouns and Plurals ...................................... 14
(v) Counterparts .............................................. 15
Exhibit A - Form of Escrow Agreement ......................................... A
Exhibit B - Mt. Franklin Options ............................................. B
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Contents Page ii of ii
KIDS HOLDING AGREEMENT
1. DATE: June 28, 2002
2. PARTIES:
2.1 Elamex USA, Corp., a Delaware corporation and wholly-owned subsidiary
of Elamex, S.A. de C.V., having a mailing address of Attention:
Xxxxxxx X. Xxxxxxx, Elamex Third Floor, 0000 X. Xxxx, Xxxxxxxx X, Xx
Xxxx, Xxxxx 00000, and a facsimile (fax) number of (000) 000-0000
(herein "Elamex USA").
2.2 Kids Holding Corp., a Delaware corporation, having a mailing address
of Attention: Xxxx Xxxxxx, Esq., 000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000, and a facsimile (fax) number of
(000) 000-0000 (herein together with any permitted transferee pursuant
to section 5.3 hereof collectively referred to as "Kids Holding").
3. DEFINED TERMS: The terms defined in this Part 3 shall have the meanings
herein specified for all purposes of this Agreement, unless the context
clearly otherwise requires:
3.1 "Accel" means Accel, S.A. de C.V., a Mexican corporation.
3.2 "Agreement" or "Kids Holding Agreement" means this Kids Holding
Agreement together with and including any and all attachments,
appendices, or exhibits referred to herein and any and all
modifications, alterations, amendments, and supplements hereto--all of
which shall be deemed for all purposes of this Agreement to have been
incorporated in this Agreement by this reference as if separately
spelled out in this Agreement. The words "hereby," "herein," "hereof,"
"hereto," "hereunder," and "herewith" when used in this Agreement
shall refer to and mean a reference to this entire Agreement unless
restricted to a reference in context to a particular portion of this
Agreement.
3.3 "Xxxx" means Xxxx Nut Company, a Delaware corporation.
3.4 "Xxxx Agreement" means that certain agreement between Elamex USA and
Xxxx dated on or as of June 28, 2002.
3.5 "Closing" means the completion and closing of all of the actions and
delivery of all of the documents and other items called for by this
Agreement, which shall occur on Friday, June 28, 2002, at 10:00 a.m.
local time, at the offices of Elamex USA, or such other day, date,
time, and place as shall be mutually agreed upon by the Parties.
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 1 of 15
3.6 "Effective Date and Time" means the close of business on Friday, June
28, 2002.
3.7 "Escrow Agent" means that person or entity named as the escrow agent
in the Escrow Agreement.
3.8 "Escrow Agreement" means an escrow agreement in the form attached
hereto as Exhibit A.
3.9 "Escrowed Shares" means those restricted shares of common stock of
Elamex, S.A. de C.V., to be delivered to the Escrow Agent (subject to
the Escrow Agreement) at Closing in accordance with subsection 5.2(b)
of this Agreement.
3.10 "Franklin Connections" means Franklin Connections, LP, a Delaware
limited partnership.
3.11 "Franklin Food Products" means Franklin Food Products LLC, a Delaware
limited liability company.
3.12 "Franklin Inmobiliarios" means Franklin Inmobiliarios, S.A. de C.V., a
Mexican corporation.
3.13 "Franklin Inmobiliarios Agreements" means those respective agreements
between the owners of Franklin Inmobiliarios and Elamex USA dated on
or as of June 28, 2002, which may include an option or options to
acquire all of the ownership of Franklin Inmobiliarios with a closing
thereon at a later date.
3.14 "Kids Holding's Interests in Franklin Food Products" means all of Kids
Holding's ownership in Franklin Food Products including all of Kids
Holdings's 49.9% member, profit, and capital interests in Franklin
Food Products together with all other rights, interests, or claims
relating to Franklin Food Products, Mt. Franklin Holdings, Franklin
Connections, and its two partners, or in any other way relating to the
assets or operations of such entities; provided, however, that any
amounts owing to Kids Holding for loans including accrued interest or
other advances and the rights attached thereto shall not be included
in the definition of Kids Holding's Interests in Franklin Food
Products.
3.15 "Mt. Franklin Holdings" means Mt. Franklin Holdings, LLC, a Delaware
limited liability company.
3.16 "Mt. Franklin Options" means those options to purchase ownership units
in Mt. Franklin Holdings listed in attached Exhibit B that were issued
by Mt. Franklin
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 2 of 15
Holdings pursuant to the Mt. Franklin Holdings, LLC Option and Bonus
Plan or otherwise.
3.17 "Parties" means the entities named in Part 2 hereof; and "Party" means
either one of such Parties.
3.18 "Reprop Merger" means that merger or acquisition of Reprop
Corporation, a Delaware corporation, into or by Elamex USA pursuant to
that certain Plan and Agreement of Merger or other acquisition
agreement dated on or as of June 28, 2002, between Elamex USA and
Reprop Corporation or Accel.
4. RECITALS:
4.1 Mt. Franklin Holdings is a holding company whose only activity is the
ownership of 100% of Franklin Connections and its partners. Franklin
Connections operates a retail nut and foodservice nut packaging and
marketing company whose operations are located in El Paso, Texas, and
a general line candy manufacturing facility in Juarez, Mexico. The nut
business operates under the trade name "Xxxx Nuts" while the candy
sector generally operates under the "Sunrise" trade name. In addition
to the nut and candy operations, Franklin Connections has a small
operation in El Paso involved in providing contract warehousing and
distribution to other food companies.
4.2 Mt. Franklin Holdings is presently owned 34.262% by Azar and 65.738%
by Franklin Food Products. Franklin Food Products is presently owned
50.1% by Reprop Corporation and 49.9% by Kids Holding. Reprop
Corporation is a wholly-owned subsidiary of Accel.
4.3 Franklin Inmobiliarios owns the candy manufacturing building located
in Juarez, Mexico. The process equipment and leasehold improvements
for this building are owned by Franklin Connections. Franklin
Inmobiliarios is owned 50% by Corporacion Chihuahua, a Mexican
corporation that is an affiliate of Accel and Elamex USA-including one
share owned by Xxxx X. Xxxxxxx, and 50% by Naiv, S.A. de C.V., a
Mexican corporation.
4.4 Elamex USA desires to acquire all of the ownership of Mt. Franklin
Holdings and thereby all of the ownership of Franklin Connections and
its two partners. The acquisition of all of the ownership of Mt.
Franklin Holdings will be accomplished pursuant to the Xxxx Agreement,
the Reprop Merger, and this Agreement.
4.5 Elamex USA also desires to acquire all of the ownership of Franklin
Inmobiliarios. The acquisition of all of the ownership of Franklin
Inmobiliarios will be accomplished pursuant to the Franklin
Inmobiliarios Agreements.
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 3 of 15
4.6 Kids Holding desires to sell all of Kids Holding's Interests in
Franklin Food Products to Elamex USA pursuant to the terms and
provisions of this Agreement, including the condition by Elamex USA
that the Xxxx Agreement and Reprop Merger shall have closed pursuant
to their terms or as otherwise agreed by Elamex USA and that the
Franklin Inmobiliarios Agreements shall have been executed.
4.7 The Parties have agreed that the Escrowed Shares, representing a
portion of the consideration for the purchase of Kids Holding's
Interests in Franklin Food Products, shall be made subject to the
terms and provisions set forth in the Escrow Agreement.
5. AGREEMENTS: NOW, THEREFORE, in consideration of the mutual agreements,
representations, warranties, covenants, and provisions contained in this
Agreement, together with other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the Parties hereby adopt
the definitions set forth in Parts 2 and 3 hereof, acknowledge that the
recitals in Part 4 are substantially correct, and further agree as follows:
5.1 Sale and Purchase of Kids Holding's Interests in Franklin Food
Products. Subject to the other provisions hereof, Kids Holding hereby
sells to Elamex USA, and Elamex USA hereby purchases from Kids
Holding, all of Kids Holding's Interests in Franklin Food Products.
Such sale and purchase shall be effective for accounting and tax
purposes as of the Effective Date and Time.
5.2 Purchase Price; Payment of the Purchase Price. The purchase price (the
"Purchase Price") for all of Kids Holding's Interests in Franklin Food
Products shall be Three Hundred Sixty-five Thousand Four Hundred
Twenty-nine (365,429) restricted shares of the common stock of Elamex,
S.A. de C.V., a Mexican corporation that owns 100% of Elamex USA.
The Purchase Price shall be paid as follows:
(a) Shares Not Subject to Escrow. By the delivery to Kids Holding at
Closing of one certificate in the name of Kids Holding
representing Two Hundred Seventy-four Thousand Seventy-two
(274,072) restricted shares of the common stock of Elamex, S.A.
de C.V.; and
(b) Escrowed Shares. By the delivery to Escrow Agent (subject to the
Escrow Agreement) at Closing of one certificate in the name of
Kids Holding representing Ninety-one Thousand Three Hundred
Fifty-seven (91,357) restricted shares of the common stock of
Elamex, S.A. de C.V.
5.3 Rights of First Refusal to Acquire Shares of Elamex, S.A. de C.V.;
Permitted Transfers of Shares to Affiliates of Kids Holding. Elamex
USA requires a condition
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 4 of 15
to Closing that the shares of common stock of Elamex, S.A. de C.V.,
transferred to Kids Holding pursuant to section 5.2 of this Agreement
shall be subject to a one year right of first refusal (which shall be
reflected on the restrictive legend on each certificate representing
such shares) for Elamex USA or its assign to acquire such shares on
the same price per share and terms as any bona fide third-party offer;
provided, however, that Elamex USA or its assigns shall exercise this
right and pay for such shares within 15 days of notice from Kids
Holding of any such bona fide third-party offer.
Anything herein to the contrary notwithstanding, Kids Holding shall
have the right at any time to transfer the record or beneficial
ownership of any of the shares of common stock of Elamex, S.A. de
C.V., transferred to Kids Holding (including those delivered to Escrow
Agent) pursuant to section 5.2 of this Agreement to any affiliate of
Kids Holding provided that such transferee shall be subject to the
right of first refusal set forth in this section. The word "affiliate"
herein shall have the meaning defined in the federal securities laws.
5.4 Agreement to Keep Non-public Information Confidential. Kids Holding
expressly agrees to keep confidential all non-public information
concerning Elamex, S.A. de C.V., and its subsidiaries (including
Elamex USA), and to not personally use such information in connection
with the purchase or sale of any shares of Elamex, S.A. de C.V., or
any other public company.
5.5 Representations and Warranties of Elamex USA. Elamex USA represents
and warrants to Kids Holding that the following statements contained
in this section 5.5 are true, correct, and complete as of the date of
this Agreement and will be true, correct, and complete as of the date
of Closing:
(a) Organization of Elamex USA. Elamex USA is a corporation, duly
organized, validly existing, and in good standing under the laws
of the state of Delaware. Elamex, S.A. de C.V., is a corporation,
duly organized, validly existing, and in good standing under the
laws of Mexico.
(b) Authorization of Transaction; Restricted Shares of Elamex, S.A.
de C.V. Elamex USA has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
All corporate action on the part of Elamex USA that would be
necessary to execute and deliver this Agreement and to consummate
the transactions contemplated hereby, including without
limitation the approval of Elamex USA's board of directors, has
been duly taken. This Agreement constitutes the valid and legally
binding obligation of Elamex USA, enforceable in accordance with
its terms and conditions, subject to bankruptcy,
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 5 of 15
insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally and to general equity
principles.
Elamex USA shall purchase for cash from Elamex, S.A. de C.V., all
of the shares of common stock of Elamex, S. A. de C.V., to be
delivered by Elamex USA at Closing pursuant to section 5.2
hereof, and at Closing all such shares shall be duly authorized,
validly issued, nonassessable, free of all liens or other
encumbrances, and restricted as herein set forth. Elamex USA
agrees that forthwith after Closing a minimum of $7.5 million of
new equity capital shall be contributed to Mt. Franklin Holdings
or its subsidiaries by Elamex, S.A. de C.V., or its subsidiaries.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement nor the performance of the obligations hereunder will
violate any provision of any agreement to which Elamex USA or
Elamex, S.A. de C.V., is a party.
(d) No Pending or Threatened Litigation or Claims. There is no
pending or threatened litigation or claim against Elamex USA.
(e) Access to Information; SEC Filings. Elamex USA has had access to
all documents, records, books and other information pertaining to
Franklin Food Products, Mt. Franklin Holdings, and Kids Holding's
Interests in Franklin Food Products to be acquired pursuant to
this Agreement that it has desired to review, and there are no
additional materials or documents that have been sought by Elamex
USA that have not been available to Elamex USA. Elamex USA has
had an opportunity to ask questions of and receive answers from
Kids Holding's representatives about Franklin Food Products, Mt.
Franklin Holdings, and Kids Holding's Interests in Franklin Food
Products to be acquired pursuant to this Agreement, and any
decision not to ask questions of Kids Holding's representatives
was a conscious decision on Elamex USA's part and reflects its
belief that no additional information is necessary in order to
make an informed decision about consummating the transactions
contemplated by this Agreement.
Elamex USA or Elamex, S.A. de C.V., has heretofore delivered to
Kids Holdings (1) the Elamex, S.A. de C.V., annual report on Form
10-K for the year ended December 31, 2001, as filed with the U.
S. Securities and Exchange Commission ("SEC"), (2) the Elamex,
S.A. de C.V., quarterly report of Form 10-Q for the fiscal
quarter ended March 31, 2002, as filed with the SEC, (3) the
Elamex, S.A. de C.V., proxy statements relating to the meetings
of shareholders of Elamex, S.A. de C.V. (whether annual or
special) since December 31, 2001, and (4) all other reports or
registration statements filed by Elamex, S.A. de C.V., with the
SEC since December 31, 2001 (collectively, the "SEC Filings").
The SEC
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 6 of 15
Filings were prepared in accordance and complied in all material
respects with the applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), or the Securities and
Exchange Act of 1934, as amended, as the case may be, and the
rules and regulations promulgated thereunder. None of such forms,
reports, and statement, including any financial statements,
exhibits, and schedules included therein and documents
incorporated by reference therein, at the time filed, declared
effective, or mailed, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Except to the extent information contained in any of
the SEC Filings, including any financial statements, exhibits, or
schedules included therein and documents incorporated by
reference therein, has been revised, corrected, or superseded by
a later-filed such form, report, or document, none of the SEC
Filings, including any financial statements, exhibits, or
schedules included therein and documents incorporated by
reference therein, currently contains an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of circumstances under which they were made,
not misleading.
(f) No Representations. Except for the representations and warranties
expressly set forth in this Agreement, Elamex USA has not and
will not rely on any representation by Kids Holding regarding
Franklin Food Products or Mt. Franklin Holdings, or its or their
financial condition or operations, or the Kids Holding's
Interests in Franklin Food Products to be acquired under this
Agreement.
5.6 Representations and Warranties of Kids Holding. Kids Holding
represents and warrants to Elamex USA that the statements contained in
this section 5.6 are true, correct, and complete as of the date of
this Agreement and will be true, correct, and complete as of the date
of Closing:
(a) Organization of Kids Holding. Kids Holding is corporation, duly
organized, validly existing, and in good standing under the laws
of the state of Delaware.
(b) Authorization of Transaction. Kids Holding has full power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Kids Holding, enforceable in
accordance with its terms and conditions, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally and to general equity
principles.
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 7 of 15
(c) No Lien or Other Encumbrance Relating to Kids Holding's Interests
in Franklin Food Products. There is no lien or other encumbrance
relating to Kids Holding's Interests in Franklin Food Products as
of the date of this Agreement, nor will there be any lien or
other encumbrance relating to Kids Holding's Interests in
Franklin Food Products as of Closing.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement nor the performance of the obligations hereunder will
violate any provision of any agreement to which Kids Holding is a
party.
(e) No Pending or Threatened Litigation or Claims. There is no
pending or threatened litigation or claim against Kids Holding.
(f) Mt. Franklin Options. To the knowledge of Kids Holding, the only
issued and outstanding options to purchase ownership units in Mt.
Franklin Holdings held by Xxxx are the Mt. Franklin Options
listed in attached Exhibit B that were issued by Mt. Franklin
Holdings.
(g) Information About Elamex, S.A. de C.V. Kids Holding hereby
acknowledges that it has had an opportunity to review all
pertinent facts concerning an investment in the shares of Elamex,
S.A. de C.V., and to ask questions of and receive answers from
Elamex USA or Elamex, S.A. de C.V., concerning the terms and
conditions of this Agreement, the financial status and operations
of Elamex, S.A. de C.V., and to obtain any additional information
it considered necessary to verify the accuracy of any information
publicly available or provided to it by Elamex USA or Elamex,
S.A. de C.V.
(h) Investment. To the extent Kids Holding acquires restricted shares
of Elamex, S.A. de C.V., pursuant to this Agreement, Kids Holding
will acquire all such shares for investment for its own account
and not with the view to, or for resale in connection with, any
distribution thereof. Kids Holding understands that the
restricted shares of Elamex, S.A. de C.V., have not been
registered under the Securities Act by reason of an exemption
from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of its
investment intent as expressed herein.
(i) Manner of Offering. At no time was Kids Holding presented with or
solicited by or through any leaflet, public promotional meeting,
television advertisement, or any other form of general
solicitation or advertising.
(j) Restricted Shares; Not Registered with SEC or Any State. Kids
Holding understands that the shares of Elamex, S.A. de C.V., have
not been registered
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 8 of 15
under the Securities Act, or the securities laws of any state, in
reliance upon exemptions from registration thereunder, and it
understands and agrees that the shares of Elamex, S.A. de C.V.,
may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with
the Securities Act and any applicable state securities laws. Kids
Holding has been advised that Elamex, S.A. de C.V., has no
obligation and does not intend to cause the shares of Elamex,
S.A. de C.V., to be registered under the Securities Act (or the
securities laws of any state). Kids Holding understands that it
may not be possible to liquidate an investment in the shares of
Elamex, S.A. de C.V., on an emergency basis. Kids Holding
understands the legal consequences of the foregoing to mean that
it must bear the economic risk of its investment in the shares of
Elamex, S.A. de C.V., for an indefinite period of time. Kids
Holding is aware (i) of the limitations and applicability of SEC
Rule 144, (ii) that Elamex, S.A. de C.V., may intervene in the
event of attempts to improperly transfer any such shares, and
(iii) that a restrictive legend will be placed on certificate
representing such shares.
(k) Disclosure of Information Concerning Franklin Food Products and
Mt. Franklin Holdings. Kids Holding has provided Elamex USA with
all information requested by Elamex USA regarding Kids Holding's
Interests in Franklin Food Products as well as the assets and
operations of Franklin Food Products and Mt. Franklin Holdings.
All such information provided by Kids Holding has been true and
accurate to the best knowledge and belief of Kids Holding.
5.7 Conditions Precedent to Closing. The following conditions must be met
by the Parties at Closing.
(a) Conditions Precedent to the Obligations of Elamex USA. The
obligations of Elamex USA to consummate the transactions to be
performed by it in connection with the Closing of this Agreement
are subject to satisfaction of the following conditions or waiver
thereof by Elamex USA:
(1) Kids Holding shall have signed and delivered an assignment
of all of Kids Holding's Interests in Franklin Food Products
in form and substance satisfactory to Elamex USA; and
(2) The Xxxx Agreement shall have closed to the satisfaction of
Elamex USA; and
(3) The Reprop Merger shall have closed to the satisfaction of
Elamex USA; and
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 9 of 15
(4) The Franklin Inmobiliarios Agreements shall have been
executed; and
(5) JPMorgan Chase Bank shall have provided a commitment letter
to extend its $7,000,000 line of credit to Franklin
Connections through April 15, 2003, on terms substantially
unchanged.
(b) Conditions Precedent to the Obligations of Kids Holdings. The
obligations of Kids Holding to consummate the transactions to be
performed by it in connection with the Closing of this Agreement
are subject to satisfaction of the following conditions or waiver
thereof by Kids Holding:
(1) Elamex USA shall have paid the Purchase Price by:
(A) Shares Not Subject to Escrow. The delivery to Kids
Holding at Closing of one certificate in the name of
Kids Holding representing Two Hundred Seventy-four
Thousand Seventy-two (274,072) restricted shares of the
common stock of Elamex, S.A. de C.V.; and
(B) Escrowed Shares. The delivery to Escrow Agent (subject
to the Escrow Agreement) at Closing of one certificate
in the name of Kids Holding representing Ninety-one
Thousand Three Hundred Fifty-seven (91,357) restricted
shares of the common stock of Elamex, S.A. de C.V.; and
(2) Arrangements satisfactory to Kids Holding shall have been
made for the immediate repayment to Kids Holding by Franklin
Connections of the $1 million loan and accrued interest.
5.8 Miscellaneous:
(a) Entire Agreement; Integration. This Agreement and the Escrow
Agreement constitute the entire agreement between and among the
Parties pertaining to the subject matter hereof, and supersedes
all written or oral, prior, or contemporaneous agreements,
representations, warranties, or understandings of the Parties
pertaining or with respect thereto. No covenant, representation,
or condition not expressed herein shall affect or be deemed to
interpret, change, or restrict the express provisions hereof.
(b) Survival of Representations and Warranties. All representations,
warranties, covenants, and agreements of the Parties contained in
this Agreement shall survive the execution and delivery of this
Agreement and shall not be deemed
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 10 of 15
merged into any documents delivered at the time of such execution
and delivery of this Agreement or the closing hereunder.
(c) Binding Nature; No Assignments. The covenants and agreements
contained herein shall bind and inure to the benefit of the
Parties hereto, their respective heirs, executors,
administrators, personal or legal representatives, successors, or
permitted assigns; provided, however, that nothing in this
subsection shall be deemed to permit the conveyance, transfer,
assignment, or delegation, expressly, by operation of law, or
otherwise, by any Party of any right or interest herein without
the prior written consent of the other Party. Anything herein to
the contrary notwithstanding, however, no permitted assignment or
other disposition of all or any part of a Party's interests
herein shall relieve such Party of its obligations hereunder.
(d) Further Action. The Parties each agree to execute and deliver all
documents, provide all information, and take or forebear from all
such action as may be necessary and appropriate to achieve the
purposes hereof.
(e) Time is of the Essence. Time is of the essence in this Agreement.
(f) Amendments, Modifications, Approvals, and Consents. Any
amendment, modification, alteration, or supplement hereto, or any
approval or consent requested of any Party, shall be ineffective
unless it is in writing and signed by the Party against whom
enforcement is sought.
(g) Parties in Interest; No Third-Party Beneficiaries. Except as
specifically set forth herein, nothing in this Agreement is
intended to confer any right or remedy under or by reason of this
Agreement on any person other than the Parties to this Agreement
and their respective heirs, executors, administrators, personal
or legal representatives, successors, or permitted assigns, nor
is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third person to any Party to
this Agreement, nor shall any provision hereof give any third
person any right of subrogation or action over or against any
Party to this Agreement.
(h) Notices. Any notice, consent, request, directive, demand, or
other communication made hereunder, pursuant hereto, or in
accordance herewith by any Party intended for any other Party
shall be in writing and shall be physically delivered, sent by
facsimile (fax) if a fax number is included for the other Party
in part 2 hereof, or sent by registered or certified mail,
properly addressed and return receipt requested with postage
prepaid, to such other Party at the address set forth
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 11 of 15
in Part 2 hereof, unless such other Party shall have previously
designated a different address or fax number by due notice
hereunder.
Notices hereunder that are physically delivered shall be deemed
effective and complete at the time of the delivery thereof with
written evidence of such delivery. Notices hereunder that are
given by facsimile (fax) shall be deemed effective and complete
at the time such facsimile (fax) is successfully sent with
printed or written evidence of such successful sending. Notices
hereunder that are given by mail shall be deemed effective and
complete as of the applicable delivery date set forth on the
requested return receipt.
(i) Costs and Expenses. Except as may be otherwise specifically set
forth herein or as otherwise agreed to by the Parties, each Party
shall bear its own costs and expenses (including attorneys and
accountants fees and costs) in connection herewith and in
connection with all things required to be done by such Party
hereunder.
(j) No Brokerage Commissions, Finders Fees, or Similar Costs. Each of
the Parties hereby represents and warrants that there is no claim
for brokerage commissions, finders fees, or similar costs or fees
in connection with the transactions contemplated by this
Agreement. Each of the Parties hereto will pay or discharge, and
will indemnify, defend, and hold harmless the other Party from
and against, any and all claims for any such brokerage
commissions, finders fees, or similar costs or fees incurred by
reason of any action taken by such indemnifying Party.
(k) Attorneys Fees. If any legal action or other proceeding is
brought or commenced by any Party to enforce any of the terms
hereof because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions
hereof, the successful or prevailing Party shall be entitled to
receive as additional compensation hereunder or as additional
damages under such action all necessary and reasonable attorneys
fees, expenses, and costs, both before and after judgment, in
addition to any other relief to which such Party may be entitled.
(l) Governing Law. This Agreement shall be governed in all respects
and construed according to the laws of the state of Texas applied
to contracts made and to be fully performed entirely within the
state of Texas between residents of the state of Texas without
giving effect to any choice or conflict of law provision or rule
(whether of the state of Texas any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than
the state of Texas, unless any obligations hereunder shall be
invalid or unenforceable under such laws, in which event the laws
of the state whose laws can apply to and validate the
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 12 of 15
obligations hereunder shall apply. This Agreement shall be deemed
executed in El Paso, Texas.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless
the context otherwise requires. Whenever used herein, the word
"or" shall mean "and/or," unless the context clearly otherwise
requires. Whenever used herein, the word "including" shall mean
"including without limitation," and the word "include" shall mean
"include without limitation."
(n) Rights and Remedies. The rights and remedies of the Parties
hereunder shall not be mutually exclusive, and the exercise of
one or more of the provisions hereof shall not preclude the
exercise of any other provisions. Each of the Parties confirms
that damages may be an inadequate remedy for a breach or
threatened breach of any provision hereof. The respective rights
and obligations hereunder shall be enforceable by specific
performance, injunction, or other equitable remedy, but nothing
herein contained is intended to or shall limit or affect any
rights at law or by statute or otherwise of any Party aggrieved
as against the other Party for a breach or threatened breach of
any provision hereof, it being the intention of this subsection
5.12(n) to make clear the agreement of the Parties that the
respective rights and obligations of the Parties hereunder shall
be enforceable in equity as well as at law or otherwise.
(o) Arbitration. Anything herein to the contrary notwithstanding, any
controversy or dispute arising out of or relating to this
Agreement or its subject matter which the Parties are unable to
resolve within thirty (30) days after written notice by one Party
to the other Party of the existence of such controversy or
dispute, may be submitted to binding arbitration by any Party. If
so submitted to arbitration, the matter shall be finally settled
by binding arbitration conducted in accordance with the then
current rules and procedures of the American Arbitration
Association. Such arbitration shall take place in El Paso, Texas.
The decision by the arbitrator on any matter submitted to
arbitration shall be binding and conclusive upon the Parties,
their respective heirs, executors, administrators, personal or
legal representatives, successors, or permitted assigns, as the
case may be, and they shall comply with such decision in good
faith. Each Party hereby submits itself to the jurisdiction of
the state and federal courts within the state of Texas for the
entry of judgment with respect to the decision of the arbitrator
hereunder.
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 13 of 15
Judgment upon the award may be entered in any state or federal
court within the state of Texas or any other court having
jurisdiction.
(p) No Waiver. No failure by any Party to insist upon the strict
performance of any covenant, duty, agreement, term, or condition
hereof or to exercise any right or remedy upon a breach thereof
shall constitute a waiver of any such breach or of such or any
other covenant, duty, agreement, term, or condition, whether or
not similar. Any Party by notice pursuant to the terms hereof
may, but shall be under no obligation, waive any of its rights or
any condition or conditions to its obligations hereunder, or any
covenant, duty, agreement, term, or condition of any other Party.
No waiver shall constitute a continuing waiver or affect or alter
the remainder hereof, and each and every other covenant, duty,
agreement, term, and condition hereof shall continue in full
force and effect with respect to any other then existing or
subsequently occurring breach.
(q) Severability. In the event that any condition, covenant, term, or
other provision contained herein is held to be invalid or void by
any court of competent jurisdiction, the same shall be deemed
severable from the remainder hereof and shall in no way affect
any other condition, covenant, term, or provision contained
herein. If such condition, covenant, term, or other provision
shall be deemed invalid due to its scope and breadth, such
provision shall be deemed valid to the extent of the scope or
breadth permitted by law.
(r) Covenant of Good Faith. Each Party agrees to act reasonably and
in good faith in the performance of any acts required of such
Party hereunder.
(s) Force Majeure. No Party shall be responsible for delays or
failure in performance resulting from acts beyond the reasonable
control of such Party. Such acts shall include acts of God,
strikes, lockouts, riots, acts of war or terrorism, epidemics,
governmental regulation imposed after the fact, fires,
communication line failures, power failures, earthquakes, or
other disasters.
(t) Titles and Captions. All part, section, subsection, and other
titles, headings, and captions herein are included for purposes
of convenience only, and shall not be deemed a part hereof and
shall in no way define, limit, extend, or describe the scope or
intent of any of the provisions hereof.
(u) Pronouns and Plurals. Whenever the context may require, any
pronoun used herein shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns,
pronouns, and verbs shall include the plural and vice versa.
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 14 of 15
(v) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
Agreement binding on the executing Parties if each Party named in
Part 2 hereof shall have executed at least one counterpart
signature page of this Agreement notwithstanding that all of the
Parties are not signatories of the same full copy of this
Agreement or the same counterpart signature page of this
Agreement.
IN WITNESS WHEREOF, each of the Parties hereto has executed this Agreement on or
as of the date first set forth above.
"Elamex USA" ELAMEX USA, CORP.
A Delaware Corporation
By /s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
President
"Kids Holding" KIDS HOLDING CORP.
A Delaware Corporation
By /s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx
President
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Page 15 of 15
Exhibit A - Form of Escrow Agreement
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Exhibit A
Exhibit B - Mt. Franklin Options
Management Options - Pre-2000:
Representing 70,730 Options held by Xxxx in Mt. Franklin Holdings that were
exercisable only to the extent that the following "mirror options" held by
the individuals named below in Xxxx were exercised:
Xxxxxx X. Xxxxxx ....................... 17,520
Xxxxxxx X. Xxxxxx ...................... 38,210
Xxxxxxx Xxxxxxx ........................ 7,500
Xxxxxx Xxxxxxxx ........................ 7,500
------
Total .............................. 70,730
======
Non-management Options - Pre-2000:
Representing 32,600 Options held by Xxxx in Mt. Franklin Holdings that were
exercisable only to the extent that the following "mirror options" held by
the individuals named below in Xxxx were exercised:
Estate of Xxxxxx X. Xxxxxx ............. 4,680
Xxxxxxx X. Xxxxxxxx .................... 5,160
Xxxxx X. Xxxxxx ........................ 20,360
F. Xxxxxx Xxxxx ........................ 1,200
Xxxxxxxx X. van den Broek .............. 1,200
----------
Total .............................. 32,600
xxxxxxxxxx
Xx. Xxxxxxxx Time Options @ $12.87:
Xxxxxx X. Xxxxxx ....................... 18,000
Xxxxxxx X. Xxxxxx ...................... 32,000
Xxxxxxx Xxxxxxx ........................ 12,000
Xxxxxx Xxxxxxxx ........................ 12,000
Xxxx Xxxxxxx ........................... 3,000
Xxxxx Xxxxxxx-Morodo ................... 50,000
----------
Total .............................. 127,000
xxxxxxxxxx
Xx. Xxxxxxxx Performance Options @ $12.87:
Xxxxxx X. Xxxxxx ....................... 25,000
Xxxxxxx X. Xxxxxx ...................... 43,000
Xxxxxxx X. Xxxxxx ...................... 1,000
Xxxxxxx Xxxxxxx ........................ 18,000
Xxxxxx Xxxxxxxx ........................ 18,000
Xxxx X. Xxxxxxx ........................ 5,000
Xxxx Xxxxxxx ........................... 1,800
Xxxx Xxxxxx ............................ 3,000
Xxxxx Xxxx ............................. 8,000
Xxxxxxx Xxxxx .......................... 1,000
Xxxxx Xxxxxx ........................... 2,000
Xxx Xxxxxxxx ........................... 000
Xxxxxxxx Xxxxxxxxx ..................... 4,000
Xxxx Xxxxxx ............................ 2,000
Xxxx Xxxxxx ............................ 2,000
Grant Basset ........................... 2,000
Xxxxx Xxxxxxx .......................... 2,000
Xxxxxxx Xxxxxx ......................... 1,000
Xxxx Xxxxxx ............................ 1,000
Xxx Xxxxxx ............................. 200
Xxx Xxxx ............................... 2,000
Xxxx Xxxxxxx ........................... 1,500
Xxxx Xxxxxxx ........................... 1,500
Xxxxx Xxxxxxx .......................... 1,500
Xxx Xxxxx .............................. 1,500
----------
Total .............................. 148,500
==========
Kids Holding Agreement between
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
June 28, 2002
Exhibit B
ESCROW AGREEMENT-KIDS HOLDING
Between and Among
ELAMEX USA, CORP.
A Delaware Corporation
and Wholly-owned Subsidiary of Elamex, S.A. de C.V.
"Elamex USA"
KIDS HOLDING CORP.
A Delaware Corporation
"Kids Holding"
and
XXXXX X. XXXXXXXXXXX
Attorney at Law
"Escrow Agent"
June 28, 2002
Contents
Page
----
1. Date ................................................................... 1
2. Parties ................................................................ 1
2.1 Elamex USA, Corp. ................................................ 1
2.2 Kids Holding Corp. ............................................... 1
2.3 Xxxxx X. Xxxxxxxxxxx ............................................. 1
3. Defined Terms .......................................................... 1
3.1 "Agreement" ...................................................... 1
3.2 "Escrowed Shares" ................................................ 1
3.3 "Kids Holding Agreement" ......................................... 2
3.4 "Parties" ........................................................ 2
4. Recitals ............................................................... 2
5. Agreements ............................................................. 2
5.1 Deposit of Escrowed Shares ....................................... 2
5.2 Terms of Escrow .................................................. 3
(a) Holding of Escrowed Shares by Escrow Agent ................. 3
(b) Delivery of Escrowed Shares by Escrow Agent ................ 3
(1) Additional Defined Terms ............................. 3
(A) "Franklin Audited Net Income (Loss) for 2002" .. 3
(B) "Franklin Audited Net Income for 2003" ......... 3
(C) "Franklin Base Net Loss for 2002" .............. 4
(D) "Xxxxxxxx Xxxxx Loss for 2002" ................. 4
(E) "Franklin Claw-Back Loss" ...................... 4
(2) Determination of Franklin Audited Net Income (Loss)
for 2002 ............................................. 5
(3) Delivery of Escrowed Shares IF Franklin Audited Net
Income (Loss) for 2002 is ($1,220,000) or Less ....... 5
(4) Delivery of Escrowed Shares IF Franklin Audited Net
Income (Loss) for 2002 is Greater Than ($1,220,000) .. 5
(A) Determination of Franklin Audited Net Income
for 2003 ....................................... 5
(B) Determination of Franklin Claw-Back Loss ....... 5
(C) IF Franklin Claw-Back Loss is (3,341,996.90)
or Greater .................................... 6
(D) IF Franklin Claw-Back Loss is Greater than
$0.00 But Less Than ($3,341,996.90) ............ 6
(c) Right of Kids Holding to Purchase Escrowed Shares .......... 7
(d) Additional Understandings Between Elamex USA and Kids
Holding .................................................... 7
5.3 Duties and Obligations of Escrow Agent ........................... 9
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page i of ii
(a) Specifically Provided Duties and Obligations ............... 9
(b) Advice of Counsel .......................................... 9
(c) Not Bound by Other Agreements; Amendment to this Agreement . 9
(d) Uncertain or Conflicting Demands ........................... 9
(e) Reliance Upon Written Documents ........................... 10
(f) No Required Legal Proceedings ............................. 10
(g) Resignation of Escrow Agent ............................... 10
(h) No Fiduciary Duty by Escrow Agent to Elamex USA or Kids
Holding ................................................... 10
5.4 Escrow Agent Compensation and Expenses .......................... 11
5.5 Indemnification ................................................. 11
5.6 Miscellaneous ................................................... 11
(a) Entire Agreement; Integration ............................. 11
(b) Survival of Representations and Warranties ................ 11
(c) Binding Nature; No Assignments ............................ 11
(d) Further Action ............................................ 12
(e) Time is of the Essence .................................... 12
(f) Amendments, Modifications, Approvals, and Consents ........ 12
(g) Parties in Interest; No Third-Party Beneficiaries ......... 12
(h) Notices ................................................... 12
(i) Costs and Expenses ........................................ 13
(j) No Brokerage Commissions, Finders Fees, or Similar Costs .. 13
(k) Attorneys Fees ............................................ 13
(l) Governing Law ............................................. 13
(m) Construction .............................................. 13
(n) Rights and Remedies ....................................... 14
(o) Arbitration ............................................... 14
(p) No Waiver ................................................. 14
(q) Severability .............................................. 15
(r) Covenant of Good Faith .................................... 15
(s) Force Majeure ............................................. 15
(t) Titles and Captions ....................................... 15
(u) Pronouns and Plurals ...................................... 15
(v) Counterparts .............................................. 15
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page ii of ii
ESCROW AGREEMENT-KIDS HOLDING
1. DATE: June 28, 2002
2. PARTIES:
2.1 Elamex USA, Corp., a Delaware corporation and wholly-owned subsidiary
of Elamex, S.A. de C.V., having a mailing address of Attention:
Xxxxxxx X. Xxxxxxx, Elamex Third Floor, 0000 X. Xxxx, Xxxxxxxx X, Xx
Xxxx, Xxxxx 00000, and a facsimile (fax) number of (000) 000-0000
(herein "Elamex USA").
2.2 Kids Holding Corp., a Delaware corporation, having a mailing address
of Attention: Xxxx Xxxxxx, Esq., 000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000, and a facsimile (fax) number of
(000) 000-0000 (herein together with any permitted transferee pursuant
to subsection 5.2(a) hereof collectively referred to as "Kids
Holding").
2.3 Xxxxx X. Xxxxxxxxxxx, Attorney at Law, having a mailing address of
0000 Xxxxx 0000 Xxxx, Xxxxx Xxxxx, Xxxx 00000, and a facsimile (fax)
number of (000) 000-0000 (herein "Escrow Agent").
3. DEFINED TERMS: The terms defined in this Part 3 shall have the meanings
herein specified for all purposes of this Agreement, unless the context
clearly otherwise requires:
3.1 "Agreement" or "Escrow Agreement-Kids Holding" means this Escrow
Agreement-Kids Holding together with and including any and all
attachments, appendices, or exhibits referred to herein and any and
all modifications, alterations, amendments, and supplements
hereto--all of which shall be deemed for all purposes of this
Agreement to have been incorporated in this Agreement by this
reference as if separately spelled out in this Agreement. The words
"hereby," "herein," "hereof," "hereto," "hereunder," and "herewith"
when used in this Agreement shall refer to and mean a reference to
this entire Agreement unless restricted to a reference in context to a
particular portion of this Agreement.
3.2 "Escrowed Shares" means those Ninety-one Thousand Three Hundred
Fifty-seven (91,357) restricted shares of common stock of Elamex, S.A.
de C.V., delivered to Escrow Agent and subject to this Agreement
pursuant to subsection 5.2(b) of the Kids Holding Agreement, together
with and including any related stock powers and any stock dividends or
other distributions relating thereto.
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page 1 of 16
3.3 "Kids Holding Agreement" means that certain agreement between Elamex
USA and Kids Holding dated on or as of June 28, 2002. Capitalized
terms that are used and not defined in this Agreement but that are
defined in the Kids Holding Agreement shall have the meanings set
forth in the Kids Holding Agreement.
3.4 "Parties" means the entities or individuals named in Part 2 hereof;
and "Party" means any one of such Parties.
4. RECITALS:
4.1 Elamex USA and Kids Holding have entered into the Kids Holding
Agreement for the purpose of Elamex USA acquiring all of Kids
Holding's Interests in Franklin Food Products.
4.2 Elamex USA and Kids Holding have agreed in the Kids Holding Agreement
that the Escrowed Shares (representing approximately 25% of the
Purchase Price of all of Kids Holding's Interests in Franklin Food
Products) shall be made subject to the terms and provisions of this
Agreement.
4.3 Elamex USA and Kids Holding desire to provide herein a mechanism for
the holdback of the Escrowed Shares and for the delivery of all or
part of the Escrowed Shares to Kids Holding or for the delivery of all
or part of the Escrowed Shares back to Elamex USA conditioned upon the
events described herein.
4.4 Escrow Agent is willing to act as Escrow Agent with respect to the
receipt, holding, and delivery of the Escrowed Shares, all in
accordance with the terms, provisions, and conditions of this
Agreement.
5. AGREEMENTS: NOW, THEREFORE, in consideration of the mutual agreements,
covenants, and provisions contained in this Agreement, together with other
good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby adopt the definitions set forth in
Parts 2 and 3 hereof, acknowledge that the recitals in Part 4 are
substantially correct, and further agree as follows:
5.1 Deposit of Escrowed Shares. Concurrently with the execution hereof and
pursuant to subsections 5.2(b) and 5.7(b)(1)(B) of the Kids Holding
Agreement, Elamex USA and Kids Holding shall deliver and deposit with
Escrow Agent the Escrowed Shares (i.e., one certificate in the name of
Kids Holding representing Ninety-one Thousand Three Hundred
Fifty-seven (91,357) restricted shares of the common stock of Elamex,
S.A. de C.V., together with a duly executed stock power relating
thereto).
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page 2 of 16
5.2 Terms of Escrow.
(a) Holding of Escrowed Shares by Escrow Agent. Escrow Agent shall
hold the Escrowed Shares in escrow until the Escrowed Shares are
delivered out of escrow pursuant to this section 5.2 or as
otherwise set forth in the Agreement.
Anything herein to the contrary notwithstanding and as set forth
in the Kids Holding Agreement, Kids Holding shall have the right
at any time to transfer the record or beneficial ownership of any
of the shares of common stock of Elamex, S.A. de C.V., held by
Escrow Agent in escrow to any affiliate of Kids Holding. The word
"affiliate" herein shall have the meaning defined in the federal
securities laws.
(b) Delivery of Escrowed Shares by Escrow Agent.
(1) Additional Defined Terms. The terms defined in this
subsection 5.2(b)(1) shall have the meanings herein
specified for all purposes of this Agreement, unless the
context clearly otherwise requires:
(A) "Franklin Audited Net Income (Loss) for 2002" means the
audited net income (loss) before taxes of Mt. Franklin
Holdings and its subsidiaries for calendar year 2002
calculated using generally accepted accounting
principles consistently applied and consistent with
accounting principles used in the audited financial
statements of Mt. Franklin Holdings and its
subsidiaries for the year ended December 31, 2001;
provided, however, that there shall be appropriate
adjustments in arriving at the Franklin Audited Net
Income (Loss) for 2002 to eliminate the incremental
effects of any asset write-ups, depreciation thereon,
liability accruals, or similar items that are the
result of the transactions contemplated by this
Agreement and the Xxxx Agreement, the Reprop Merger,
and the Franklin Inmobiliarios Agreements.
(B) "Franklin Audited Net Income for 2003" means the
audited net income before taxes of Mt. Franklin
Holdings and its subsidiaries for calendar year 2003
calculated using generally accepted accounting
principles consistently applied and consistent with
accounting principles used in the audited financial
statements of Mt. Franklin Holdings and its
subsidiaries for the years ended December 31, 2001, and
December 31, 2002; provided, however, that there shall
be appropriate adjustments in arriving at the Franklin
Audited Net Income for 2003 to eliminate the
incremental effects of any asset
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page 3 of 16
write-up, depreciation thereon, liability accruals, and
similar items that are the result of the transactions
contemplated by this Agreement and the Xxxx Agreement,
the Reprop Merger, and the Franklin Inmobiliarios
Agreements; and provided further, however, that if the
audited net income (loss) before taxes of Mt. Franklin
Holdings and its subsidiaries for calendar year 2003
shall be a net loss, then and in such event the
Franklin Audited Net Income for 2003 shall be deemed to
be zero ($0.00) for all purposes of this Agreement.
(C) "Franklin Base Net Loss for 2002" means the positive
amount of one million two hundred twenty thousand
dollars ($1,220,000).
(D) "Xxxxxxxx Xxxxx Loss for 2002" means the sum of the
Franklin Audited Net Income (Loss) for 2002 plus the
Franklin Base Net Loss for 2002.
By way of example only: if the Franklin Audited Net
Income (Loss) for 2002 were a net (loss) of
($1,970,000), then the Xxxxxxxx Xxxxx Loss for 2002
would be ($750,000) - i.e., ($1,970,000) plus
$1,220,000.
By way of example only: if the Franklin Audited Net
Income (Loss) for 2002 were a net (loss) of
($5,000,000), then the Xxxxxxxx Xxxxx Loss for 2002
would be ($3,780,000) - i.e., ($5,000,000) plus
$1,220,000.
(E) "Franklin Claw-Back Loss" means the sum of the Xxxxxxxx
Xxxxx Loss for 2002 plus the Franklin Audited Net
Income for 2003.
By way of example only and using the same numbers as
used in the first example in subsection 5.2(b)(1)(D)
above: if the Xxxxxxxx Xxxxx Loss for 2002 were
($750,000) and the Franklin Audited Net Income for 2003
were a net income of $3,000,000, then the Franklin
Claw-Back Loss would be $2,250,000 - i.e., the
($750,000) plus $3,000,000. In this example the
Franklin Claw-Back Loss is a positive number and the
effect is that the Franklin Claw-Back Loss is zero.
By way of example only and using the same numbers as
used in the second example in subsection 5.2(b)(1)(D)
above: if the Xxxxxxxx Xxxxx Loss for 2002 were
($3,780,000) and the Franklin Audited Net Income for
2003 were a net income of $3,000,000, then the Franklin
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page 4 of 16
Claw-Back Loss would be ($780,000) - i.e., the
($3,780,000) plus $3,000,000.
(2) Determination of Franklin Audited Net Income (Loss) for
2002. Notice of the Franklin Audited Net Income (Loss) for
2002 shall be given Escrow Agent by Elamex USA and Kids
Holding as soon as practicable, including a complete copy of
such financial statements with the auditors report manually
signed.
(3) Delivery of Escrowed Shares IF Franklin Audited Net Income
(Loss) for 2002 is ($1,220,000) or Less. If the Franklin
Audited Net Income (Loss) for 2002 is ($1,220,000) or less -
i.e., if it is not a loss of greater than such amount, then
and in such event Escrow Agent shall forthwith deliver all
certificates representing the Escrowed Shares out of escrow
to Kids Holding. Anything herein to the contrary
notwithstanding, upon such delivery of the certificates
representing the Escrowed Shares to Kids Holding pursuant to
this subsection 5.2(b)(3), Escrow Agent shall be discharged
from any and all further responsibility or liability with
respect to the Escrowed Shares or this Agreement, Elamex USA
shall promptly pay to Escrow Agent all monies which may be
owed Escrow Agent for Escrow Agent's services and expenses
hereunder, and this Agreement shall be deemed terminated and
of no further force or effect, and subsection 5.2(b)(4)
hereof shall not apply.
(4) Delivery of Escrowed Shares IF Franklin Audited Net Income
(Loss) for 2002 is Greater Than ($1,220,000). If the
Franklin Audited Net Income (Loss) for 2002 is greater than
($1,220,000) - i.e., if it is a loss of greater than such
amount), then and in such event Escrow Agent shall continue
to hold the Escrowed Shares until a reasonable time after
Escrow Agent has received notice in 2004 of the Franklin
Audited Net Income for 2003.
(A) Determination of Franklin Audited Net Income for 2003.
Notice of the Franklin Audited Net Income for 2003
shall be given Escrow Agent by Elamex USA and Kids
Holding as soon as practicable, including a complete
copy of such financial statements with the auditors
report manually signed.
(B) Determination of Franklin Claw-Back Loss. As soon as
practicable after the Franklin Audited Net Income for
2003 shall have been determined and notice thereof
given to Escrow Agent, Elamex USA
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
xxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent") June 28, 2002
Contents Page 5 of 16
and Kids Holding shall determine the Franklin Claw-Back
Loss and shall give notice thereof to Escrow Agent.
(C) IF Franklin Claw-Back Loss is (3,341,996.90) or
Greater. If the Franklin Claw-Back Loss is
(3,341,996.90)(1) or greater and subject to right of
Kids Holding set forth in subsection 5.2(c), then and
in such event Escrow Agent shall deliver all
certificates representing the Escrowed Shares out of
escrow to Elamex USA. Escrow Agent shall give notice to
Kids Holding of Escrow Agent's intent to deliver such
certificates to Elamex USA, and Kids Holding shall have
twenty (20) days after such notice to exercise its
right set forth in subsection 5.2(c) and pay for the
Escrowed Shares. Anything herein to the contrary
notwithstanding, upon such delivery of the certificates
representing the Escrowed Shares to Elamex USA or Kids
Holding pursuant to this subsection 5.2(b)(4)(C),
Escrow Agent shall be discharged from any and all
further responsibility or liability with respect to the
Escrowed Shares or this Agreement, Elamex USA shall
promptly pay to Escrow Agent all monies which may be
owed Escrow Agent for Escrow Agent's services and
expenses hereunder, and this Agreement shall be deemed
terminated and of no further force or effect, and
subsection 5.2(b)(4)(D) hereof shall not apply.
(D) IF Franklin Claw-Back Loss is Greater than $0.00 But
Less Than ($3,341,996.90). If the Franklin Claw-Back
Loss is greater than zero dollars but less than
($3,341,996.90) and subject to right of Kids Holding
set forth in subsection 5.2(c), then and in such event
Escrow Agent shall deliver the Escrowed Shares out of
escrow as follows:
(1) Escrowed Shares to Elamex USA. The number of
Escrowed Shares that shall be delivered by Escrow
Agent out of escrow to Elamex USA shall be
determined by multiplying the Franklin Claw-Back
Loss by 16.401%(2) and dividing the product thus
derived by $6.00.
By way of example only: if the Franklin Claw-Back
Loss were ($780,000), then the number of Escrowed
Shares that Escrow Agent would deliver out of
escrow to Elamex USA would be
----------
(1)$3,341,996.90 times 50% times 49.9% times 65.738% equals $548,142.
$548,142 divided by $6 equals 91,357.
(2)50% times 49.9% times 65.738% equals 16.401%.
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 6 of 16
21,321 Escrowed Shares - i.e., ($780,000) times
16.401% divided by $6.00.
Escrow Agent shall give notice to Kids Holding of
Escrow Agent's intent to deliver such certificates
to Elamex USA, and Kids Holding shall have twenty
(20) days after such notice to exercise its right
set forth in subsection 5.2(c) and pay for the
Escrowed Shares.
(2) Escrowed Shares to Kids Holding. The remaining
Escrowed Shares, after the delivery out of escrow
to Elamex USA pursuant to subsection
5.2(b)(4)(D)(1), shall be delivered by Escrow
Agent out of escrow to Kids Holding.
By way of example only: if the number of Escrowed
Shares otherwise delivered out of escrow to Elamex
USA were 21,321, then the number of Escrowed
Shares to be delivered out of escrow to Kids
Holding would be 70,036 - i.e., 91,357 minus
21,321.
Anything herein to the contrary notwithstanding, upon
such delivery of all of the Escrowed Shares to Elamex
USA and Kids Holding pursuant to this subsection
5.2(b)(4)(D), Escrow Agent shall be discharged from any
and all further responsibility or liability with
respect to the Escrowed Shares or this Agreement,
Elamex USA shall promptly pay to Escrow Agent all
monies which may be owed Escrow Agent for Escrow
Agent's services and expenses hereunder, and this
Agreement shall be deemed terminated and of no further
force or effect.
(c) Right of Kids Holding to Purchase Escrowed Shares. Anything to
the contrary herein notwithstanding, if pursuant to the terms and
provisions of this Agreement any Escrowed Shares would otherwise
be delivered back to Elamex USA, then and in such event Kids
Holding shall have the right (which may be assigned to any
affiliate of Kids Holding) to purchase the applicable Escrowed
Shares for the payment to Elamex USA of six dollars ($6.00) per
share.
(d) Additional Understandings Between Elamex USA and Kids Holding.
For purposes of determining net income (loss) before taxes of Mt.
Franklin Holdings and its subsidiaries for any period described
herein or any other amounts described herein, the following shall
apply:
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 7 of 16
(1) Elamex USA agrees that it will cause Mt. Franklin Holdings
and its subsidiaries to be operated in a manner not to
intentionally affect the computation or determination of the
Franklin Claw-Bank Loss.
(2) Elamex USA agrees that it will promptly deliver to Kids
Holding complete copies of the Franklin Audited Net Income
(Loss) for 2002, as well as the Franklin Audited Net Income
for 2003, before the same shall be given Escrow Agent.
Further, Elamex USA agrees that it will likewise deliver its
computation of the Franklin Claw-Back Loss before the same
shall be given Escrow Agent. In each case and anything
herein to the contrary notwithstanding, Kids Holding shall
have a reasonable period of time to review such information
and shall have reasonable access to the books and records of
Mt. Franklin Holdings and its subsidiaries, as well as the
ability to meet and discuss any questions and seek such
additional information as Kids Holding shall feel it needs
from the chief financial officer of Elamex USA or Mt.
Franklin Holdings and its subsidiaries; and Elamex USA
agrees that it will not deliver any of such information to
Escrow Agent until Kids Holding shall be reasonably
satisfied that all calculations have been properly made and
applied.
(3) The shelter agreement between Franklin Connections and
Elamex, S.A. de C.V., or its subsidiary, will remain in
effect under its current terms and conditions.
(4) The Xxxxxx xxxxx building lease or guaranty between Franklin
Connections and Confecciones xx Xxxxxx, X.X. de C.V., will
remain in effect under no less favorable terms and
conditions, except that it will be treated as a capital
lease.
(5) Except for direct expenses incurred on behalf of Mt.
Franklin Holdings and its subsidiaries, Elamex, S.A. de
C.V., and its subsidiaries will not make any charges to Mt.
Franklin Holdings and its subsidiaries for any general
corporate overhead.
(6) In the case that the current CFO of Mt. Franklin Holdings
and its subsidiaries provides CFO services to Elamex, S.A.
de C.V., and its subsidiaries, his salary including benefits
shall be prorated between Elamex, S.A. de C.V., and its
subsidiaries, and Mt. Franklin Holdings and its
subsidiaries.
(7) At its option, Elamex USA can continue to keep in place the
$3,000,000 subordinated loan made to Franklin Connections
accruing interest at 12% per annum.
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 8 of 16
(8) To the extent Elamex, S.A. de C.V., and its subsidiaries are
required to make funds available to Mt. Franklin Holdings
and its subsidiaries to fund short term working capital
requirements in addition to the minimum of $7.5 million of
new equity already contemplated, Elamex, S.A. de C.V., and
its subsidiaries shall be entitled to receive interest on
such funds based on commercial lending rates not to exceed
the same rate charged by JPMorgan Chase Bank on its line of
credit.
(9) In the event that Elamex, S.A. de C.V., and its subsidiaries
are required to make additional funds available to Mt.
Franklin Holdings and its subsidiaries in order to maintain
financial covenants required by any lender to Mt. Franklin
Holdings and its subsidiaries or to fund capital
expenditures for Phase I or II or to fund payments for long
term slotting arrangements, Elamex, S.A. de C.V., and its
subsidiaries may do so by making subordinated loans with
interest not to exceed twelve percent (12%) per annum.
5.3 Duties and Obligations of Escrow Agent.
(a) Specifically Provided Duties and Obligations. The Parties agree
that the duties and obligations of the Escrow Agent are only such
as are herein specifically provided and no other. Escrow Agent's
duties are as a depositary only, and the Escrow Agent shall incur
no liability whatsoever, except as a direct result of Escrow
Agent's gross negligence or willful misconduct.
(b) Advice of Counsel. Escrow Agent may consult with counsel of
Escrow Agent's choice, and shall not be liable for any action
taken, suffered, or omitted by Escrow Agent in accordance with
the advice of such counsel.
(c) Not Bound by Other Agreements; Amendment to this Agreement.
Escrow Agent shall not be bound in any way by the terms of any
other agreement to which Elamex USA and Kids Holding are parties,
whether or not Escrow Agent has knowledge thereof, and the Escrow
Agent shall not in any way be required to determine whether or
not any other agreement has been complied with by Elamex USA or
Kids Holding, or any other party thereto. Escrow Agent shall not
be bound by any modification, amendment, termination,
cancellation, or rescission of this Agreement unless the same
shall be in writing and signed by each of Elamex USA and Kids
Holding, and agreed to in writing by Escrow Agent.
(d) Uncertain or Conflicting Demands. In the event that Escrow Agent
shall be uncertain as to Escrow Agent's duties or rights
hereunder or shall receive instructions, claims, or demands
which, in Escrow Agent's opinion, are in conflict
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 9 of 16
with any of the provision of this Agreement, Escrow Agent shall
be entitled to refrain from taking any action, other than to keep
safely all Escrowed Shares held in escrow, until Escrow Agent
shall jointly be directed otherwise in writing by Elamex USA and
Kids Holding or by a final award of an arbitrator or a final
judgment of a court of competent jurisdiction.
(e) Reliance Upon Written Documents. Escrow Agent shall be fully
protected in relying upon any written notice, demand,
certificate, or document which Escrow Agent, in good faith,
believes to be genuine. Escrow Agent shall not be responsible for
the sufficiency or accuracy of the form, execution, validity, or
genuineness of documents or securities now or hereafter deposited
hereunder, or of any endorsement thereon, or for any lack of
endorsement thereon, or for any description therein; nor shall
Escrow Agent be responsible or liable in any respect on account
of the identity, authority, or rights of the persons executing or
delivering or purporting to execute or deliver any such
documents, security, or endorsement.
(f) No Required Legal Proceedings. Escrow Agent shall not be required
to institute legal proceedings of any kind and shall not be
required to defend any legal proceedings that may be instituted
against Escrow Agent or with respect to the Escrowed Shares.
(g) Resignation of Escrow Agent. If Escrow Agent at any time, in
Escrow Agent's sole discretion, deems it necessary or advisable
to relinquish custody of the Escrowed Shares, Escrow Agent may do
so by giving at least 30 days written notice to the other Parties
of Escrow Agent's intention and thereafter delivering the
Escrowed Shares to any other escrow agent mutually agreeable to
Elamex USA and Kids Holding, or, if no such escrow agent shall be
selected within 20 days of Escrow Agent's notification to Elamex
USA and Kids Holding of Escrow Agent's desire to so relinquish
custody of the Escrowed Shares, then and in such event Escrow
Agent may choose a replacement Escrow Agent hereunder. Upon
delivery of the Escrowed Shares to the replacement Escrow Agent,
the Escrow Agent shall be discharged from any and all further
responsibility or liability with respect to the Escrowed Shares
or this Agreement and Elamex USA shall promptly pay to Escrow
Agent all monies which may be owed Escrow Agent for Escrow
Agent's services and expenses hereunder.
(h) No Fiduciary Duty by Escrow Agent to Elamex USA or Kids Holding.
This Agreement shall not create any fiduciary duty on Escrow
Agent's part to Elamex USA or Kids Holding, nor disqualify Escrow
Agent from representing any Party in any dispute with any other
Party, including any dispute with respect to the
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 10 of 16
Escrowed Shares. Kids Holding understands, acknowledges, and
agrees that Escrow Agent has acted and will continue to act as
counsel to Elamex USA.
5.4 Escrow Agent Compensation and Expenses. Escrow Agent shall be entitled
to reasonable compensation for serving as Escrow Agent, as well as
reimbursement of all costs and expenses incurred in connection
herewith. Elamex USA shall pay all Escrow Agent compensation and
expenses hereunder.
5.5 Indemnification. Elamex USA and Kids Holding, jointly and severally,
hereby indemnify and hold the Escrow Agent harmless from and against
any and all losses, damages, taxes, liabilities, and expenses that may
be incurred, directly or indirectly, by the Escrow Agent, arising out
of or in connection with Escrow Agent's acceptance of appointment as
the Escrow Agent hereunder or the performance of Escrow Agent's duties
pursuant to this Agreement, including all legal costs and expenses of
the Escrow Agent incurred defending itself against any claim or
liability in connection with Escrow Agent's performances hereunder and
the costs of recovery of amounts pursuant to this section 5.5.
Notwithstanding the foregoing, Escrow Agent shall not be entitled to
indemnification for any losses, damages, taxes, liabilities, and
expenses arising as a direct result of Escrow Agent's gross negligence
or willful misconduct.
5.6 Miscellaneous:
(a) Entire Agreement; Integration. This Agreement and the Kids
Holding Agreement constitute the entire agreement between and
among the Parties pertaining to the subject matter hereof, and
supersedes all written or oral, prior, or contemporaneous
agreements, representations, warranties, or understandings of the
Parties pertaining or with respect thereto. No covenant,
representation, or condition not expressed herein shall affect or
be deemed to interpret, change, or restrict the express
provisions hereof.
(b) Survival of Representations and Warranties. All representations,
warranties, covenants, and agreements of the Parties contained in
this Agreement shall survive the execution and delivery of this
Agreement and shall not be deemed merged into any documents
delivered at the time of such execution and delivery of this
Agreement or the closing hereunder.
(c) Binding Nature; No Assignments. The covenants and agreements
contained herein shall bind and inure to the benefit of the
Parties hereto, their respective heirs, executors,
administrators, personal or legal representatives, successors, or
permitted assigns; provided, however, that nothing in this
subsection shall be deemed to permit the conveyance, transfer,
assignment, or delegation, expressly, by operation of law, or
otherwise, by any Party of any right or interest herein
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 11 of 16
without the prior written consent of the other Party. Anything
herein to the contrary notwithstanding, however, no permitted
assignment or other disposition of all or any part of a Party's
interests herein shall relieve such Party of its obligations
hereunder.
(d) Further Action. The Parties each agree to execute and deliver all
documents, provide all information, and take or forebear from all
such action as may be necessary and appropriate to achieve the
purposes hereof.
(e) Time is of the Essence. Time is of the essence in this Agreement.
(f) Amendments, Modifications, Approvals, and Consents. Any
amendment, modification, alteration, or supplement hereto, or any
approval or consent requested of any Party, shall be ineffective
unless it is in writing and signed by the Party against whom
enforcement is sought.
(g) Parties in Interest; No Third-Party Beneficiaries. Except as
specifically set forth herein, nothing in this Agreement is
intended to confer any right or remedy under or by reason of this
Agreement on any person other than the Parties to this Agreement
and their respective heirs, executors, administrators, personal
or legal representatives, successors, or permitted assigns, nor
is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third person to any Party to
this Agreement, nor shall any provision hereof give any third
person any right of subrogation or action over or against any
Party to this Agreement.
(h) Notices. Any notice, consent, request, directive, demand, or
other communication made hereunder, pursuant hereto, or in
accordance herewith by any Party intended for any other Party
shall be in writing and shall be physically delivered, sent by
facsimile (fax) if a fax number is included for the other Party
in part 2 hereof, sent by nationally recognized overnight
delivery service (with receipt requested), or sent by registered
or certified mail, properly addressed and return receipt
requested with postage prepaid, to such other Party at the
address set forth in Part 2 hereof, unless such other Party shall
have previously designated a different address or fax number by
due notice hereunder. The Escrow Agent shall be given copies of
all notices given by any Party under this Agreement.
Notices hereunder that are physically delivered shall be deemed
effective and complete at the time of the delivery thereof with
written evidence of such delivery. Notices hereunder that are
given by facsimile (fax) shall be deemed effective and complete
at the time such facsimile (fax) is successfully sent with
printed or written evidence of such successful sending. Notices
hereunder that
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 12 of 16
are given by nationally recognized overnight delivery service
shall be deemed effective and complete the next business day.
Notices hereunder that are given by mail shall be deemed
effective and complete as of the applicable delivery date set
forth on the requested return receipt.
(i) Costs and Expenses. Except as may be otherwise specifically set
forth herein or as otherwise agreed to by the Parties, each Party
shall bear its own costs and expenses (including attorneys and
accountants fees and costs) in connection herewith and in
connection with all things required to be done by such Party
hereunder.
(j) No Brokerage Commissions, Finders Fees, or Similar Costs. Each of
the Parties hereby represents and warrants that there is no claim
for brokerage commissions, finders fees, or similar costs or fees
in connection with the transactions contemplated by this
Agreement. Each of the Parties hereto will pay or discharge, and
will indemnify, defend, and hold harmless the other Party from
and against, any and all claims for any such brokerage
commissions, finders fees, or similar costs or fees incurred by
reason of any action taken by such indemnifying Party.
(k) Attorneys Fees. If any legal action or other proceeding is
brought or commenced by any Party to enforce any of the terms
hereof because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions
hereof, the successful or prevailing Party shall be entitled to
receive as additional compensation hereunder or as additional
damages under such action all necessary and reasonable attorneys
fees, expenses, and costs, both before and after judgment, in
addition to any other relief to which such Party may be entitled.
(l) Governing Law. This Agreement shall be governed in all respects
and construed according to the laws of the state of Texas applied
to contracts made and to be fully performed entirely within the
state of Texas between residents of the state of Texas without
giving effect to any choice or conflict of law provision or rule
(whether of the state of Texas any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than
the state of Texas, unless any obligations hereunder shall be
invalid or unenforceable under such laws, in which event the laws
of the state whose laws can apply to and validate the obligations
hereunder shall apply. This Agreement shall be deemed executed in
El Paso, Texas.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 13 of 16
Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated
thereunder, unless the context otherwise requires. Whenever used
herein, the word "or" shall mean "and/or," unless the context
clearly otherwise requires. Whenever used herein, the word
"including" shall mean "including without limitation," and the
word "include" shall mean "include without limitation."
(n) Rights and Remedies. The rights and remedies of the Parties
hereunder shall not be mutually exclusive, and the exercise of
one or more of the provisions hereof shall not preclude the
exercise of any other provisions. Each of the Parties confirms
that damages may be an inadequate remedy for a breach or
threatened breach of any provision hereof. The respective rights
and obligations hereunder shall be enforceable by specific
performance, injunction, or other equitable remedy, but nothing
herein contained is intended to or shall limit or affect any
rights at law or by statute or otherwise of any Party aggrieved
as against the other Party for a breach or threatened breach of
any provision hereof, it being the intention of this subsection
5.12(n) to make clear the agreement of the Parties that the
respective rights and obligations of the Parties hereunder shall
be enforceable in equity as well as at law or otherwise.
(o) Arbitration. Anything herein to the contrary notwithstanding, any
controversy or dispute arising out of or relating to this
Agreement or its subject matter which the Parties are unable to
resolve within thirty (30) days after written notice by one Party
to the other Party of the existence of such controversy or
dispute, may be submitted to binding arbitration by any Party. If
so submitted to arbitration, the matter shall be finally settled
by binding arbitration conducted in accordance with the then
current rules and procedures of the American Arbitration
Association. Such arbitration shall take place in El Paso, Texas.
The decision by the arbitrator on any matter submitted to
arbitration shall be binding and conclusive upon the Parties,
their respective heirs, executors, administrators, personal or
legal representatives, successors, or permitted assigns, as the
case may be, and they shall comply with such decision in good
faith. Each Party hereby submits itself to the jurisdiction of
the state and federal courts within the state of Texas for the
entry of judgment with respect to the decision of the arbitrator
hereunder. Judgment upon the award may be entered in any state or
federal court within the state of Texas or any other court having
jurisdiction.
(p) No Waiver. No failure by any Party to insist upon the strict
performance of any covenant, duty, agreement, term, or condition
hereof or to exercise any right or remedy upon a breach thereof
shall constitute a waiver of any such breach or of
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 14 of 16
such or any other covenant, duty, agreement, term, or condition,
whether or not similar. Any Party by notice pursuant to the terms
hereof may, but shall be under no obligation, waive any of its
rights or any condition or conditions to its obligations
hereunder, or any covenant, duty, agreement, term, or condition
of any other Party. No waiver shall constitute a continuing
waiver or affect or alter the remainder hereof, and each and
every other covenant, duty, agreement, term, and condition hereof
shall continue in full force and effect with respect to any other
then existing or subsequently occurring breach.
(q) Severability. In the event that any condition, covenant, term, or
other provision contained herein is held to be invalid or void by
any court of competent jurisdiction, the same shall be deemed
severable from the remainder hereof and shall in no way affect
any other condition, covenant, term, or provision contained
herein. If such condition, covenant, term, or other provision
shall be deemed invalid due to its scope and breadth, such
provision shall be deemed valid to the extent of the scope or
breadth permitted by law.
(r) Covenant of Good Faith. Each Party agrees to act reasonably and
in good faith in the performance of any acts required of such
Party hereunder.
(s) Force Majeure. No Party shall be responsible for delays or
failure in performance resulting from acts beyond the reasonable
control of such Party. Such acts shall include acts of God,
strikes, lockouts, riots, acts of war or terrorism, epidemics,
governmental regulation imposed after the fact, fires,
communication line failures, power failures, earthquakes, or
other disasters.
(t) Titles and Captions. All part, section, subsection, and other
titles, headings, and captions herein are included for purposes
of convenience only, and shall not be deemed a part hereof and
shall in no way define, limit, extend, or describe the scope or
intent of any of the provisions hereof.
(u) Pronouns and Plurals. Whenever the context may require, any
pronoun used herein shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns,
pronouns, and verbs shall include the plural and vice versa.
(v) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
Agreement binding on the executing Parties if each Party named in
Part 2 hereof shall have executed at least one counterpart
signature page of this Agreement notwithstanding that all of the
Parties are not signatories of the same full copy of this
Agreement or the same counterpart signature page of this
Agreement.
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 15 of 16
IN WITNESS WHEREOF, each of the Parties hereto has executed this Agreement on or
as of the date first set forth above.
"Elamex USA" ELAMEX USA, CORP.
A Delaware Corporation
By /s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
President
"Kids Holding" KIDS HOLDING CORP.
A Delaware Corporation
By /s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx
President
"Escrow Agent" /s/ Xxxxx X. Xxxxxxxxxxx
------------------------
Xxxxx X. Xxxxxxxxxxx
Attorney at Law
Escrow Agreement-Kids Holding between and among
Elamex USA, Inc., a Delaware Corporation ("Elamex USA")
Kids Holding Corp., a Delaware Corporation ("Kids Holding")
Xxxxx X. Xxxxxxxxxxx, Attorney at Law ("Escrow Agent")
June 28, 2002
Page 16 of 16
