STOCK PURCHASE AGREEMENT
BY AND AMONG
KANSAS CITY SOUTHERN,
a Delaware corporation,
GRUPO TMM, S.A.,
a sociedad anonima
organized under the laws of the United Mexican States,
TFM, S.A. de C.V.,
a sociedad anonima de capital variable
organized under the laws of the United Mexican States,
Table of Contents
ARTICLE I. PURCHASE AND SALE OF TRANSFERRED SHARES...........................2
1.1 Purchase and Sale. ...................................................2
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1.2 The Initial Closing. .................................................2
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1.3 Purchase Price. ......................................................2
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1.4 Purchase Option ......................................................2
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1.5 Deliveries at Closing. ...............................................2
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1.6 Voting Trust. ........................................................2
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ARTICLE II. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION........2
2.1 Representations and Warranties of GTMM and TFM. ......................2
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2.2 Representations and Warranties of KCS. ...............................3
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ARTICLE III. REPRESENTATIONS AND WARRANTIES CONCERNING MX AND TMX............4
3.1 Organization, Qualification, and Corporate Power. ....................4
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3.2 Capitalization of MX and TMX...........................................4
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3.3 Brokers' Fees..........................................................5
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3.4 Title to Assets........................................................5
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3.5 Financial Statements...................................................5
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3.6 Events Subsequent to Most Recent Fiscal Year End.......................6
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3.7 Undisclosed Liabilities................................................7
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3.8 Legal Compliance.......................................................7
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3.9 Tax Matters............................................................7
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3.10 Real Property.........................................................8
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3.11 Intellectual Property.................................................9
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3.12 Tangible Assets. ...................................................11
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3.13 Contracts............................................................11
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3.14 Employee Benefit Plans...............................................12
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3.15 Labor Matters........................................................14
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3.16 Notes and Accounts Receivable. .....................................14
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3.17 Powers of Attorney. ................................................14
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3.18 Insurance............................................................14
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3.19 Litigation...........................................................15
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3.20 Guaranties. ........................................................15
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3.21 Environmental Matters................................................15
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3.22 Corporate Books and Records. .......................................16
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3.23 Disclosure. ........................................................16
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ARTICLE IV. COVENANTS OF GTMM AND TFM.......................................16
4.1 Conduct of MX and TMX Through Closing Date. .........................16
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4.2 Access to Information. ..............................................16
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4.3 Notice of Developments................................................16
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ARTICLE V. COVENANTS OF ALL PARTIES.........................................17
5.1 General. ............................................................17
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5.2 Cooperation to Obtain STB Approval....................................17
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5.3 Notice of Developments. .............................................17
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ARTICLE VI. CONDITIONS TO OBLIGATION TO CLOSE...............................17
6.1 Mutual Conditions to Obligations to Close.............................17
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6.2 Conditions to Obligations of KCS to Close. ..........................18
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6.3 Conditions to Obligations of TFM to Close. ..........................18
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ARTICLE VII. REMEDIES FOR BREACHES OF THIS AGREEMENT........................19
7.1 Survival of Representations and Warranties. .........................19
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7.2 Indemnification Provisions for Benefit of KCS.........................19
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7.3 Indemnification Provisions for Benefit of GTMM and TFM. .............19
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7.4 Determination of Adverse Consequences. ..............................20
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7.5 Specific Performance. ...............................................20
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ARTICLE VIII. TERMINATION...................................................20
8.1 Termination of Agreement..............................................20
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8.2 Effect of Termination. ..............................................20
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ARTICLE IX..................................................................21
ARTICLE IX. MISCELLANEOUS...................................................21
9.1 Amendments and Waivers. .............................................21
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9.2 Entire Agreement. ...................................................21
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9.3 Counterparts. .......................................................21
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9.4 No Third-Party Beneficiaries. .......................................21
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9.5 Succession and Assignment. ..........................................21
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9.6 Headings. ...........................................................21
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9.7 Notices...............................................................22
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9.8 Expenses. ...........................................................22
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9.9 Announcements. ......................................................22
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9.10 Governing Law; Venue and Jurisdiction................................22
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9.11 Severability. ......................................................23
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9.12 Construction. ......................................................23
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9.13 Incorporation of Exhibits, Annexes, and Schedules. .................23
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ARTICLE X. DEFINITIONS......................................................23
Exhibit A Form of Voting Trust Agreement
Annex I Exceptions to Representations and Warranties of GTMM and TFM
Concerning the Transaction Disclosure Schedule: Exceptions to
Representations and Warranties Concerning MX and TMX
Annex II Exceptions to Representations and Warranties of KCS Concerning the
Transaction Disclosure Schedule: Exceptions to Representations and
Warranties Concerning MX and TMX
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of April 20, 2003, is
made and entered into by and among:
1. Grupo TMM, S.A., ("GTMM"), a sociedad anonima, organized under the laws
of the United Mexican States ("UMS");
2. TFM, S.A. de C.V. ("TFM"), a sociedad anonima de capital variable,
organized under the laws of the UMS; and
3. Kansas City Southern ("KCS"), a Delaware corporation,
each of them a "Party" and collectively the "Parties."
RECITALS
A. GTMM owns more than 96% of the capital stock of TMM Multimodal, X.X.xx C.V.
a sociedad anonima de capital variable ("MM").
B. KCS owns all of the capital stock of The Kansas City Southern Railway
Company ("KCSR").
C. MM directly owns 51% and KCS indirectly owns 49% (through Nafta Rail, S.A.
de C.V., a sociedad anonima de capital variable and wholly-owned Subsidiary of
KCS) of the full voting shares of Grupo TFM, S.A. de C.V., a sociedad anonima
de capital variable ("GTFM").
D. GTFM owns all of the full voting shares of the capital stock of TFM.
E. Mexrail, Inc., a Delaware corporation, ("MX") is a wholly-owned Subsidiary
of TFM. MX owns all of the capital stock of the Texas Mexican Railway Company,
a Texas corporation ("TMX"). MX also owns other assets (including real estate)
and the northern one-half of the railroad bridge between Laredo, Texas (USA)
and Nuevo Laredo, Mexico.
F. TFM wishes to sell, and KCS wishes to acquire, 51% of the outstanding
shares of the capital stock of MX (the "Initially Transferred Shares") and in
addition grant KCS an exclusive option to purchase the remaining shares of the
capital stock of MX as of the date of the exercise of such option to purchase
(the "Subsequently Transferred Shares"). All of the issued and outstanding
shares of the capital stock of MX acquired by KCS, including the Initially
Transferred Shares and the Subsequently Transferred Shares are referred to
hereinafter as the "MX Shares" or as the "Transferred Shares."
NOW, THEREFORE, in consideration of the above recitals and
the representations, warranties and covenants contained in this Agreement,
the parties, intending to be legally bound, agree as follows:
ARTICLE I.
PURCHASE AND SALE OF TRANSFERRED SHARES
1.1 Purchase and Sale. Upon the terms and subject to the conditions of this
Agreement and in reliance upon the representations, warranties and covenants
herein set forth, TFM shall sell, assign, transfer, convey and deliver to KCS,
free and clear of all Liens, and KCS shall purchase and accept from TFM, the
Transferred Shares.
1.2 The Initial Closing. Subject to Article VI of this Agreement, the
initial closing of the purchase and sale of the Initially Transferred Shares
(the "Initial Closing") shall take place on such date as the parties agree, at
the offices of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, 4520 Main, Kansas City, Missouri,
or at such other time (no later than June 30, 2003) or place as agreed to in
writing by KCS, GTMM and TFM (the date on which the Closing occurs, the "Initial
Closing Date"). The Initial Closing shall be effective as of the close of
business on the Initial Closing Date.
1.3 Purchase Price. The aggregate purchase price to be paid by KCS for the
Initially Transferred Shares shall be the sum of $32,680,000 (the "Initial
Purchase Price"). The Initial Purchase Price shall be paid to TFM in cash (U.S.
dollars) at the Initial Closing by wire transfer of same day funds.
1.4. Purchase Option. TFM hereby grants to KCS an irrevocable and exclusive
option until 5:00 PM (Eastern Standard Time) on December 31, 2005 to purchase
the Subsequently Transferred Shares (the "Purchase Option"). Any purchase made
by KCS pursuant to the Purchase Option may be exercised by KCS upon three (3)
days written notice to TFM (the "Subsequent Closing" and as with the Initial
Closing, each a "Closing") and shall be upon the same terms and conditions set
forth in this Agreement, including, but not limited to, the per share purchase
price, which shall be the same as the Initial Purchase Price, and the conditions
to closing set forth in Article VI of this Agreement. TFM is expressly
prohibited from taking any action or non-action which would render any of the
representations, warranties and covenants set forth in this Agreement untrue or
ineffective between the Initial Closing Date and the Subsequent Closing.
1.5 Deliveries at Closing. At each Closing, (i) GTMM and TFM will deliver
to KCS the various certificates and documents referred to in ss.6.2 below, (ii)
KCS will deliver to GTMM and TFM the certificate referred to in ss.6.3 below,
(iii) TFM will deliver to KCS stock certificates representing the applicable
Transferred Shares for such Closing, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) KCS will deliver to TFM the applicable
Purchase Price for such Closing.
1.6 Voting Trust. Simultaneously with the purchase by KCS from TFM of the
Transferred Shares, KCS shall deposit the Initially Transferred Shares into an
irrevocable voting
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trust (the "Voting Trust") in accordance with the terms and conditions of a
voting trust agreement (the "Voting Trust Agreement") substantially in the form
attached hereto as Exhibit A.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
2.1 Representations and Warranties of GTMM and TFM. GTMM and TFM represent
and warrant to KCS that the statements contained in this ss.2.1 are correct and
complete as of the date of this Agreement and will be correct and complete as of
each Closing (as though made then and as though such Closing date were
substituted for the date of this Agreement throughout this ss.2.1), except as
set forth in Annex I attached hereto.
(a) Organization of GTMM and TFM. GTMM is a sociedad anonima and TFM
is a sociedad anonima de capital variable, each duly organized, validly
existing, and in good standing under the laws of the UMS.
(b) Authorization of Transaction. The execution, delivery and
performance of this Agreement by each of GTMM and TFM, and the consummation
by TFM of the transaction contemplated hereby, are within the respective
corporate powers of each of them, and have been duly authorized, as to each
of them, by all necessary corporate action. This Agreement constitutes the
valid and legally binding obligation of each of GTMM and TFM, enforceable
in accordance with its terms and conditions. Neither GTMM nor TFM need give
any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate
the transaction contemplated by this Agreement.
(c) Non-Contravention. Except as set forth in ss.2.1 of the Disclosure
Schedule, the execution, delivery and performance of this Agreement by each
of GTMM and TFM, and the consummation by TFM of the transaction
contemplated hereby, do not and will not (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which GTMM or TFM is subject, or violate any provision of the
charter or bylaws of GTMM or TFM, or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which GTMM or TFM is a party or by which any of them
is bound or to which any of their assets is subject.
(d) Brokers' Fees. Neither GTMM nor TFM has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transaction contemplated by this Agreement for which
KCS, MX or TMX could become liable or obligated.
(e) MX Shares. TFM holds of record and owns beneficially the MX
Shares, free and clear of any restrictions on transfer (other than those
set forth in the Stock Purchase Agreement, dated as of February 27, 2002,
among GTMM, MM, KCS and TFM (the "2002 Stock Purchase Agreement"), the GTFM
bylaws, and the Shareholders Agreement.), Taxes, Liens, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. TFM
is not a party to any option, warrant, purchase right, or other contract or
commitment that
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could require TFM to sell, transfer, or otherwise dispose of any of the MX
Shares (other than this Agreement). TFM is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of
the MX Shares (other than the 2002 Stock Purchase Agreement, the GTFM
bylaws, and the Shareholders Agreement). Prior to the Subsequent Closing,
TFM shall not, directly or indirectly, transfer, sell, give, encumber,
assign, pledge or otherwise deal with or dispose of all or any part of the
MX Shares (other than pursuant to this Agreement).
2.2 Representations and Warranties of KCS. KCS represents and warrants to
GTMM and TFM that the statements contained in this ss.2.2 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Initial Closing Date (as though made then and as though the Initial Closing
Date were substituted for the date of this Agreement throughout this ss.2.2),
except as set forth in Annex II attached hereto.
(a) Organization of KCS. KCS is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware.
(b) Authorization of Transaction. The execution, delivery and
performance by KCS of this Agreement and the consummation by KCS of the
transaction contemplated hereby are within KCS's corporate powers and have
been duly authorized by all necessary corporate action. This Agreement
constitutes the valid and legally binding obligation of KCS, enforceable in
accordance with its terms and conditions. KCS need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transaction contemplated by this Agreement.
(c) Non-Contravention. The execution, delivery and performance of this
Agreement by KCS, and the consummation by KCS of the transaction
contemplated hereby, do not and will not (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which KCS is subject, or violate any provision of its charter or
bylaws, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which KCS is a party or by which it is bound or to which any of its assets
is subject, except the consents required under the KCS Credit Agreement
(d) Brokers' Fees. KCS has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the
transaction contemplated by this Agreement for which GTMM or TFM could
become liable or obligated.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES CONCERNING MX AND TMX
GTMM and TFM represent and warrant to KCS that the statements contained in
this Article III are correct and complete as of the date of this Agreement and
will be correct and complete as of the Initial Closing Date (as though made then
and as though the Initial Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set
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forth in the disclosure schedule delivered by GTMM and TFM to KCS on the date
hereof and initialed by the Parties (the "Disclosure Schedule").
3.1 Organization, Qualification, and Corporate Power. MX is a corporation
duly organized, validly existing, and in good standing under the laws of
Delaware. TMX is a corporation duly organized, validly existing, and in good
standing under the laws of Texas. Each of MX and TMX is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not reasonably be expected to have a Material Adverse
Effect. Each of MX and TMX has full corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. ss.3.1 of the Disclosure Schedule lists the directors and
officers of each of MX and TMX.
3.2 Capitalization of MX and TMX.
(a) The entire authorized capital stock of MX consists of 10,000
shares of common stock, no par value, of which 10,000 shares are issued and
outstanding. MX holds no shares of MX's capital stock in its treasury. All
of the issued and outstanding shares have been duly authorized, and are
validly issued, fully paid, and nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, preemptive rights or other contracts or
commitments that could require MX to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to MX. TFM is the record and beneficial owner
of 100% of the MX Shares, and TFM owns the MX Shares free and clear of all
Liens, and there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of MX, other
than the 2002 Stock Purchase Agreement, the GTFM bylaws, and the
Shareholders Agreement.
(b) The entire authorized capital stock of TMX consists of 25,009
shares of common stock, [no] par value, of which 25,009 shares are issued
and outstanding. TMX holds no shares of TMX's capital stock in its
treasury. All of the issued and outstanding shares have been duly
authorized, and are validly issued, fully paid, and nonassessable. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, preemptive rights
or other contracts or commitments that could require TMX to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are
no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to TMX. MX is the record and
beneficial owner of 100% of the TMX capital stock (except for one
qualifying share of the capital stock of TMX owned by each of its
directors, the equitable interest of each such share being held by MX). MX
owns the TMX capital stock free and clear of all Liens, and there are no
voting trusts, proxies, or other agreements or understandings with respect
to the voting of the capital stock of TMX, other than the 2002 Stock
Purchase Agreement, the GTFM bylaws, and the Shareholders Agreement.
3.3 Brokers' Fees. Neither MX nor TMX has any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transaction contemplated by this Agreement.
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3.4 Title to Assets. MX and TMX each own or have a right to possess and use
all of the properties and assets necessary to operate the business of MX and TMX
as each has been conducted immediately prior to the date of this Agreement.
3.5 Financial Statements. The financial statements (collectively the
"Financial Statements") heretofore provided to KCS by GTMM and TFM, consisting
of (i) the audited consolidated balance sheets and statements of income, changes
in stockholders' equity, and cash flow as of and for the fiscal years ended
1999, 2000, 2001 and 2002, for MX and TMX have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby and
present fairly, in all material respects, the financial condition of MX and TMX
as of such dates and the results of operations of MX and TMX for such periods
(subject in the case of any interim financial statements to normal year-end
adjustments and lack footnotes and other presentation items).
3.6 Events Subsequent to Most Recent Fiscal Year End. Since December 31,
2002 MX and TMX have carried out their respective businesses in an ordinary
manner, consistent with past practices and there has not been any event or
occurrence that has had or would reasonably be expected to have a Material
Adverse Effect.
3.7 Undisclosed Liabilities. Except as disclosed in the Financial
Statements, neither MX nor TMX has any liabilities or obligations of any nature
that would be required under GAAP to be included on a consolidated balance sheet
of MX or the notes to the consolidated balance sheet, except as would not
reasonably be expected to have a Material Adverse Effect.
3.8 Legal Compliance. Each of MX and TMX has complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against either of them alleging any failure so to comply,
except where the failure to comply would not have a Material Adverse Effect.
3.9 Tax Matters.
(a) Except as stated in ss.3.9 of the Disclosure Schedule or as would
not reasonably be expected to have a Material Adverse Effect, all MX and
TMX Tax returns required to be filed on or before the Closing Date have
been duly and timely filed (taking into account all proper extensions) with
the appropriate Taxing authorities and all such Tax returns were complete
and accurate, and all Taxes shown on the described returns have been paid.
(b) Except as stated in ss.3.9 of the Disclosure Schedule or as would
not reasonably be expected to have a Material Adverse Effect: (i) neither
GTMM, TFM, MX or TMX has received any written notice of deficiency or
assessment for Taxes of MX or TMX, which have not been paid or finally
settled; (ii) no claim has been made in writing by any Taxing authority in
a jurisdiction where MX and TMX do not file Tax returns that either company
is or may be subject to Taxation by that jurisdiction; (iii) no audit of
any Tax return filed by MX or TMX is pending, ongoing, or to the Knowledge
of GTMM or TFM, threatened; (iv) neither MX nor TMX has asked for or
received a waiver of any statute of limitation concerning Taxes or the
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payment of Taxes that are due or would be due prior to the Closing Date;
and (v) neither MX nor TMX has any liability for the Taxes of any other
person.
(c) There are no liens for Taxes on any assets of MX or TMX other than
Liens for current Taxes (i) not yet due and payable or (ii) that would not
have a Material Adverse Effect.
(d) There are no Tax sharing or Tax indemnity agreements or similar
arrangements involving MX and TMX and any other person.
(e) MX and TMX have each complied in all material respects with all
applicable governmental rules relating to the payment, collection and
withholding of Taxes.
(f) Except as stated on ss.3.9 of the Disclosure Schedule, there is no
Tax litigation pending or to the Knowledge of GTMM and TFM (or the
directors of TFM appointed by GTMM) threatened against MX or TMX.
(g) From December 31, 2002 until the date of this Agreement, MX and
TMX (i) have made no change in any accounting method used for Tax purposes
or in depreciation or amortization policies, and have made no election for
Tax purposes which is not consistent with the method, policies and
elections made prior to the date of the Financial Statements; and (ii) have
not settled any pending Tax audits or settled any Tax liability.
3.10 Real Property.
(a) ss.3.10 of the Disclosure Schedule lists and describes briefly all
real property that either MX or TMX owns. With respect to each such parcel
of owned real property the identified owner has good and marketable title
to the parcel of real property, free and clear of any Lien, easement,
covenant, or other restriction, except for installments of special
assessments not yet delinquent, recorded easements, covenants, and other
restrictions, and utility easements, building restrictions, zoning
restrictions, and other easements and restrictions existing generally with
respect to properties of a similar character which do not affect materially
and adversely the current use, occupancy, or value, or the marketability of
title, of the property subject thereto.
3.11 ss.3.10 of the Disclosure Schedule (and all Annexes thereto) lists and
describes briefly all real property leased or subleased to either MX or TMX or
from either MX or TMX. With respect to each material lease and sublease listed
in ss.3.10 of the Disclosure Schedule (or any Annex thereto), (i) the lease or
sublease is legal, valid, binding, enforceable, and in full force and effect in
all material respects, (ii) no party to the lease or sublease is in material
breach or default, and (iii) no event has occurred which, with notice or lapse
of time, would constitute a material breach or default or permit termination,
modification, or acceleration thereunder.
3.12 Tangible Assets. The buildings, machinery, equipment, and other
tangible assets that MX and TMX own and lease, other than tangible assets having
a book value of less than $1 million, are in good condition and repair, normal
wear and tear excepted.
3.13 Contracts. As of the date of this Agreement, the Scheduled Contracts
(as defined below) of MX and TMX are legal, valid and binding obligations of MX
or TMX, respectively,
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and are in full force and effect, enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating generally to the enforceability of
contracts and the availability of equitable remedies. As of the date of this
Agreement, neither GTMM, TFM, MX or TMX has received notice of cancellation of
or default under any Scheduled Contract, where such default would reasonably be
expected to have a Material Adverse Effect. ss.3.13 of the Disclosure Schedule
lists the following contracts and other agreements to which either MX or TMX is
a party (the "Scheduled Contracts"):
(a) any agreements to which either GTMM or TFM or any of their
Affiliates (other than MX or TMX) are a party;
(b) any agreements which constitute nondisclosure agreements or
confidentiality agreements which could reasonably be expected to have a
significant effect on the conduct of the business of MX, TMX, or KCS; (c)
any agreements pursuant to which MX or TMX is either obligated to pay or
entitled to receive in excess of $2 million during any twelve month period;
(d) any agreements that are employment, management, consulting or
severance agreements with any officer or director of MX or TMX;
(e) any agreements that include any noncompetition or nonsolicitation
covenant or any exclusive dealing or similar arrangement that limits the
ability of MX or TMX to compete (geographically or otherwise) in any line
of business or which would so limit KCS following the Closing; or
(f) any trackage rights agreements, interline or interchange
agreements with other railroads.
3.14 Employee Benefit Plans.
(a) ss.3.14 of the Disclosure Schedule identifies each Employee Plan.
TFM has made available to KCS copies of each such Employee Plan (and, if
applicable, related trust agreements) and all amendments thereto and
written interpretations thereof together with the most recent annual report
(Form 5500 including, if applicable, Schedule B thereto) and the most
recent actuarial valuation report prepared in connection with any Employee
Plan and, if applicable, the Internal Revenue Service determination
letters. No Employee Plan is a Title IV Plan.
(b) As of the Most Recent Fiscal Month End, MX and TMX did not have an
aggregate unfunded liability of MX and TMX in respect of all Employee Plans
or Benefit Arrangements described under Sections 4(b)(5) or 401(a)(1) of
ERISA, computed using reasonable actuarial assumptions that would
reasonably be expected to have a Material Adverse Effect.
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(c) No transaction prohibited by ss.406 of ERISA or ss.4975 of the
Code has occurred with respect to any Employee Plan or arrangement which is
covered by Part 4, Title I of ERISA, which transaction has or will cause MX
and TMX to incur any liability under ERISA, the Code or otherwise which
would reasonably be expected to result in a Material Adverse Effect,
excluding transactions effected pursuant to and in compliance with a
statutory or administrative exemption. Neither MX, TMX nor any ERISA
Affiliate of them has (i) except where the failure thereof would not
reasonably be expected to result in a Material Adverse Effect, engaged in,
or is a successor or parent corporation to an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA or (ii)
incurred, or reasonably expects to incur prior to the Initial Closing Date,
(A) any liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA or (B) any liability under
ss.4971 of the Code that in either case could become a liability of MX and
TMX or KCS or any of its ERISA Affiliates after the Initial Closing Date
which would reasonably be expected to have a Material Adverse Effect.
(d) Each Employee Plan that is intended to be qualified under
ss.401(a) of the Code has received a favorable determination, and, to the
Knowledge of any of GTMM, TFM and the directors (appointed by TFM) and
officers of MX and TMX, nothing has occurred since that determination that
would adversely affect such determination in a manner which would
reasonably be expected to have a Material Adverse Effect. Each Employee
Benefit Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Code, except to
the extent that failure to so comply would not reasonably be expected to
have a Material Adverse Effect.
(e) ss.3.14 of the Disclosure Schedule identifies each material
Benefit Arrangement. TFM has made available to KCS copies or descriptions
of each material Benefit Arrangement (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations thereof.
Each Benefit Arrangement has been maintained in compliance with its terms
and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations and has been maintained in good standing with
applicable regulatory authorities, except to the extent that failure to so
comply would not reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth on ss.3.14 of the Disclosure Schedule and
except as provided in this Agreement, there is no contract, plan or
arrangement (written or otherwise) to which MX or TMX are parties covering
any employee or former employee of MX or TMX that, individually or
collectively, could give rise to the payment of any amount that would not
be deductible pursuant to the terms of ss.280G of the Code, to the extent
that such payments would reasonably be expected to have a Material Adverse
Effect.
(g) Except as set forth on ss.3.14 of the Disclosure Schedule and
except as provided in this Agreement, no employee or former employee of MX
or TMX will become entitled to any bonus, retirement, severance, job
security or similar benefit (including acceleration of vesting or exercise
of an incentive award) as a result of the transaction contemplated hereby,
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to the extent that such benefits would reasonably be expected to have a
Material Adverse Effect.
3.15 Labor Matters. MX and TMX are in compliance with all currently
applicable legislation in the various jurisdictions where they operate, with
respect to terms and conditions of employment of their workforce, including
legislation governing unionized labor, and are not engaged in any unfair labor
practice, failure to comply with which or engagement in which, as the case may
be, would reasonably be expected to have a Material Adverse Effect. Except as
disclosed in ss.3.15 of the Disclosure Schedule, (i) neither MX nor any of its
Subsidiaries is a party, or is otherwise subject, to any collective bargaining
agreement or other labor union contract applicable to its employees, (ii) there
are no material activities or proceedings by a labor union or representative
thereof to organize any employees of MX or TMX outside of the Ordinary Course of
Business, (iii) there are no pending negotiations between MX or TMX and any
labor union or representative thereof regarding any proposed material changes to
any existing collective bargaining agreement, (iv) there are no pending, and MX
and TMX have not experienced since January 1, 2000, any labor disputes,
lockouts, strikes, slowdowns, work stoppages, or threats thereof which would
reasonably be expected to have a Material Adverse Effect, (v) MX and TMX are not
in default and have not breached in any material respect the terms of any
applicable collective bargaining or other labor union contract, and there are no
material grievances outstanding against MX, TMX or any of its Subsidiaries or
their employees under any such agreement or contract which would reasonably be
expected to have a Material Adverse Effect, (vi) there is no unfair labor
practice complaint pending, or to the Knowledge of any of GTMM, TFM and the
directors (appointed by TFM) and officers of MX and TMX threatened, against MX
or TMX before the National Labor Relations Board or any other investigation,
charge, prosecution, suit or other proceeding before any court or arbitrator or
any governmental body, agency or official relating to the employees of MX or TMX
or the representation thereof which would reasonably be expected to have a
Material Adverse Effect, (vii) there are no claims or actions pending, or to the
Knowledge of any of GTMM, TFM and the directors (appointed by TFM) and officers
of MX and TMX threatened, between MX or TMX and any of their employees or labor
organizations representing or seeking to represent such employees which would
reasonably be expected to have a Material Adverse Effect and (viii) to the
Knowledge of any of GTMM, TFM and the directors (appointed by TFM) and officers
of MX and TMX, there are no facts or circumstances involving any employee that
would form the basis of, or give rise to, any cause of action, including,
without limitation, unlawful termination based on discrimination of any kind
that would reasonably be expected to result in a Material Adverse Effect.
3.16 Powers of Attorney. Other than those powers of attorney approved by
the Boards of Directors of either MX or TMX, to the Knowledge of any of GTMM,
TFM and the directors (appointed by TFM) and officers of MX and TMX, there are
no material outstanding powers of attorney executed on behalf of MX or TMX.
3.17 Insurance. ss.3.17 of the Disclosure Schedule includes a list of all
policies of fire, liability, product liability, workers' compensation, health
and other forms of insurance presently in effect with respect to MX's and TMX's
business (the "Insurance Policies"), including the named insured(s) and all
beneficiaries thereunder, and true and complete copies of the Insurance Policies
have been made available to KCS. Neither MX nor TMX has been refused any
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insurance with respect to any aspect of the operations of its business, nor has
its coverage been rescinded by any insurance carrier to which it has applied for
insurance or with which it has carried insurance. No notice of cancellation or
termination has, as of the date of this Agreement, been received with respect to
any such policy. The activities, business, and operations of MX and TMX have
been conducted in such a manner so as to conform in all material respects to all
material provisions of the Insurance Policies.
3.18 Litigation. There are no legal, administrative, arbitral or other
proceedings (including disciplinary proceedings), claims, suits, actions or
governmental or regulatory investigations of any nature that are pending or, to
the knowledge of GTMM, TFM, MX or TMX threatened against MX or TMX or any of
their officers, directors or properties which would reasonably be expected to
have a Material Adverse Effect or that challenge the validity or propriety of
the transactions contemplated by this Agreement. There is no injunction, order,
judgment or decree imposed upon MX or TMX, or any material portion of the assets
or business of MX or TMX.
3.19 Environmental Matters. MX and TMX (i) are in compliance with, and are not
subject to any liability under applicable Environmental Laws; (ii) hold all
Environmental Permits necessary to conduct their current operations and (iii)
are in compliance with their respective Environmental Permits, except where the
failure to hold or be in compliance with such Environmental Permits would not be
expected to have a Material Adverse Effect. Except as would not reasonably be
expected to have a Material Adverse Effect on MX or TMX, neither GTMM, TFM, MX
nor TMX has received any written notice, demand, letter, claim or request for
information alleging that MX or TMX may be in violation of, or have liability
under, any Environmental Law. Neither MX nor TMX (x) has entered into or agreed
to any consent decree or order or is subject to any judgment, decree or judicial
order relating to compliance with Environmental Laws, Environmental Permits or
the investigation, sampling, monitoring, treatment, remediation, removal or
cleanup of Hazardous Materials and no investigation, litigation or other
proceeding is pending or, to the Knowledge of GTMM and TFM, threatened, with
respect thereto or (y) is an indemnitor or has assumed liability in connection
with any pending demand, notice, claim, or other allegation, or to the Knowledge
of GTMM and TFM, any claim threatened, by or against any third-party relating to
any liability under any Environmental Law or relating to any Hazardous
Materials. None of the real property owned or leased from/to or operated by MX
or TFM is listed or, to the Knowledge of GTMM and TFM, proposed for listing, on
any list of sites maintained by any competent governmental authority requiring
investigation or cleanup.
ARTICLE IV.
COVENANTS OF GTMM AND TFM
4.1 Conduct of MX and TMX Through Initial Closing Date. Except as otherwise
expressly set forth in this Agreement, during the period from the date of this
Agreement through the Initial Closing Date, GTMM and TFM will not cause or
permit MX or TMX to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, neither MX nor TMX will declare, set aside, or pay
any dividend or make any distribution with respect to its capital stock or
redeem, purchase,
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or otherwise acquire any of its capital stock. GTMM and TFM will use their
commercially reasonable efforts to cause each of MX and TMX to keep its business
and properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
4.2 Access to Information. From the date of this Agreement through the
Initial Closing Date, GTMM and TFM give (and will cause each of MX and TMX to
give) KCS, its counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books and records of MX
and TMX, will furnish to KCS, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as such Persons may reasonably request, and GTMM and TFM will
cooperate (and will instruct the employees, counsel and financial advisors of MX
and TMX to cooperate) with KCS in its investigation of the business of MX and
TMX, as the case may be. KCS will treat and hold as such any Confidential
Information it receives from any of GTMM, TFM, MX and TMX in the course of the
reviews contemplated by this ss.4.2, and will not use any of the Confidential
Information except in connection with this Agreement.
4.3 Notice of Developments. From the date of this Agreement through the
Initial Closing Date, GTMM and TFM will give prompt written notice to KCS of any
material adverse development causing a breach of any of the representations and
warranties in Article III above. No disclosure by any Party pursuant to this
ss.4.3, however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
ARTICLE V.
COVENANTS OF ALL PARTIES
5.1 General. Subject to the terms and conditions of this Agreement, each of
the Parties will use its commercially reasonable efforts to take all action and
to do all things necessary, proper, or advisable under applicable laws and
regulations in order to consummate and make effective the transaction
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Article VI below).
5.2 Cooperation to Obtain STB Approval. From the date of this Agreement
until such time as the Surface Transportation Board ("STB") either approves or
denies KCS's request to acquire control of TMX and such an order becomes final
after judicial review or failure to appeal, GTMM and TFM will cooperate with
KCS, and KCS will cooperate with GTMM, and TFM, to obtain approval from the STB
for KCS to acquire control of TMX.
5.3 Notice of Developments. From the date of this Agreement through the
Subsequent Closing Date, each Party will give prompt written notice to other all
Parties of any material adverse development causing a breach by the notifying
Party of any of the representations and warranties in Article II above. No
disclosure by any Party pursuant to this ss.5.3, however, shall be deemed to
amend or supplement Annex I or Annex II, or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
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ARTICLE VI.
CONDITIONS TO OBLIGATION TO CLOSE
6.1 Mutual Conditions to Obligations to Close. The obligations of both KCS
and TFM to consummate the transaction contemplated by this Agreement are subject
to satisfaction of the following conditions:
(a) No Governmental Action: As of each Closing, no action shall have
been taken, and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any state or federal government or
governmental agency in the United States or Mexico that would prevent the
consummation of the transaction contemplated by this Agreement.
(b) No Litigation: As of each Closing, there shall be no injunction,
restraining order or order of any nature by any court of competent
jurisdiction that prevents the consummation of the transaction contemplated
by this Agreement.
(c) Governmental Approvals: As of each Closing, all governmental
approvals (if any) required to consummate the transaction contemplated by
this Agreement shall have been obtained.
6.2 Conditions to Obligations of KCS to Close. The obligations of KCS to
consummate the transaction contemplated by this Agreement are subject to
satisfaction, at or before each Closing, of all of the following conditions. KCS
may waive in writing any or all of these conditions, in whole or in part, at or
at any time prior to the applicable Closing, with or without prior notice, but
no such waiver by KCS shall constitute a waiver by KCS of any condition not so
waived or of any other right or remedy of KCS, at law or in equity.
(a) Performance: Each of GTMM and TFM shall have performed and
complied in all material respects, through each Closing, with each of its
respective agreements, obligations and covenants under this Agreement.
(b) Representations and Warranties: The representations and warranties
made by each of GTMM and TFM in Article II of this Agreement shall be true
and correct in all material respects (i) at the date when made and (ii) at
each Closing. The representations and warranties made by each of GTMM and
TFM concerning MX and TMX in Article III of this Agreement shall be true
and correct in all material respects (i) at the date when made and (ii) at
the Initial Closing Date.
(c) Certificates: KCS shall have received certificates, reasonably
satisfactory in form and substance to KCS, of officers of GTMM and TFM
certifying that, to the best of each such officer's Knowledge, the
conditions set forth in Sections 6.2(a) and 6.2(b) have been satisfied in
all respects and that the Board of Directors of each GTMM and TFM has
approved the execution of this Agreement and has authorized the
consummation of the transaction contemplated by this Agreement.
(d) Resignations: KCS shall have received the resignations, effective
as of the Initial Closing, and reasonably satisfactory in form and
substance to KCS, of each director
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of MX and TMX. Following the Initial Closing, the Trustee shall vote the
Trust Stock in the Trustee's sole discretion, having due regard for the
interests of the holders of the Trust Certificates and the minority
shareholders in MX and TMX, to nominate and elect directors to fill those
vacant director positions. The Trustee shall not, without the prior
approval of the STB, vote the Trust Stock to elect any current officer or
director of GTMM, GTFM, TFM, KCS, or any of their majority owned
affiliates.
6.3 Conditions to Obligations of TFM to Close. The obligations of TFM to
consummate the transaction contemplated by this Agreement are subject to
satisfaction, at or before each Closing, of all of the following conditions. TFM
may waive in writing any or all of these conditions, in whole or in part, at or
at any time prior to each Closing, with or without prior notice, but no such
waiver by TFM shall constitute a waiver by TFM of any condition not so waived or
of any other right or remedy of TFM, at law or in equity.
(a) Performance: KCS shall have performed and complied in all material
respects, through each Closing, with each of its respective agreements,
obligations and covenants under this Agreement.
(b) Representations and Warranties: The representations and warranties
made by KCS in this Agreement shall be true and correct in all material
respects (i) at the date when made and (ii) at each Closing.
(c) Certificate: TFM shall have received a certificate, reasonably
satisfactory in form and substance to TFM, of an officer of KCS certifying
that, to the best of such officer's Knowledge, the conditions set forth in
Sections 6.3(a) and 6.3(b) have been satisfied in all respects and that the
Board of Directors of KCS has approved the execution of this Agreement and
has authorized the consummation of the transaction contemplated by this
Agreement.
(d) Fairness Opinion: TFM shall have received a fairness opinion
complying with the requirements of the agreements listed in ss.6.3 of the
Disclosure Schedule.
ARTICLE VII.
REPURCHASE RIGHT
7.1 TFM's Right to Repurchase. TFM shall retain the right to repurchase all
of the Transferred Shares from KCS at any time for an amount equal to the
Purchase Price. Such right shall be unconditional and may be exercised in the
sole discretion of TFM by written notice to KCS given by the Chairman of TFM and
without any other corporate approvals of TFM or GTMM.
(a) Closing Of The Repurchase. Subject to any STB approval
requirements, the "Repurchase Closing" shall take place on the fifth
business day after receipt of such notice by KCS at such time and place as
agreed to in writing by KCS and TFM. At the Repurchase Closing and subject
to any STB orders or directions, TFM shall pay the Purchase Price for its
repurchase of the Transferred Shares in cash by wire transfer of same day
funds. At the Repurchase Closing, KCS shall deliver to TFM stock
certificates representing the Transferred Shares endorsed in blank or
accompanied by duly executed assignment documents or, if the
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Transferred Shares are being held by the Trustee pursuant to the Voting
Trust Agreement, KCS shall deliver to TFM a certificate certifying that KCS
has given the Trustee irrevocable instructions to deliver to TFM stock
certificates representing the Transferred Shares endorsed in blank or
accompanied by duly executed assignment documents.
(b) Termination Of The Repurchase Right. If not exercised within two
years of the date of this Agreement, TFM's right to repurchase the
Transferred Shares under ss.7.1 shall expire.
(c) Termination of Agreement. Upon any such repurchase, this Agreement
shall automatically terminate and be of no further force or effect;
provided, however, that in the event of termination of this Agreement, if
TFM shall for any reason reacquire the Transferred Shares, then the parties
intend for the terms and conditions of the 2002 Stock Purchase Agreement,
the GTFM bylaws, and the Shareholders Agreement to become again valid and
fully enforceable against the parties thereto.
ARTICLE VIII.
COVENANTS OF KCS
8.1 Except with the written consent of TFM, KCS shall not, for a period of
five years from the date hereof, sell, lease or encumber, or permit MX to sell,
lease or encumber, the northern half of the railroad bridge between Laredo and
Nuevo Laredo.
ARTICLE IX.
REMEDIES FOR BREACHES OF THIS AGREEMENT
9.1 Survival of Representations and Warranties. All of the representations
and warranties of GTMM and TFM contained in Article III above (other than
ss.3.19 above) shall survive the Initial Closing hereunder and continue in full
force and effect for a period of two years thereafter; provided, however, that
the representations and warranties contained in ss.3.19 above shall survive the
Initial Closing hereunder and continue in full force and effect for a period of
five years thereafter. All of the other representations and warranties of the
Parties contained in this Agreement (including the representations and
warranties of the Parties contained in Article II above and the representations
and warranties of GTMM and TFM contained in ss.3.9 above) shall survive for the
applicable statutes of limitations.
9.2 Indemnification Provisions for Benefit of KCS.
(a) In the event either GTMM or TFM breaches any of its
representations, warranties, and covenants contained herein, and, if there
is an applicable survival period pursuant to ss.9.1 above, provided that
KCS makes a written claim for indemnification within such survival period,
then GTMM and TFM, jointly and severally, agree to indemnify KCS from and
against any Adverse Consequences KCS may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences KCS
may suffer after the end of any
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applicable survival period) resulting from, arising out of, or caused by
the breach of any such representation or warranty or covenant.
(b) The obligation of GTMM and TFM to indemnify KCS pursuant to
ss.9.2(a) above for any breach of representation or warranty shall be
limited to 51% of the Adverse Consequences and then only to the extent that
such 51% of the Adverse Consequences amount to, in the aggregate, $2
million or more; provided, that for purposes of calculating this limitation
on indemnification, (i) Adverse Consequences shall be calculated without
regard to any Material Adverse Effect and (ii) shall not apply to any
Adverse Consequences arising out of or resulting from any action or
omission on the part of GTMM or TFM or any of their respective affiliates
that involve a crime, fraud, willful misconduct or gross negligence.
9.3 Indemnification Provisions for Benefit of GTMM and TFM. In the event
KCS breaches any of its representations, warranties, and covenants contained
herein, and, if there is an applicable survival period pursuant to ss.9.1 above,
provided that GTMM or TFM makes a written claim for indemnification against KCS
within such survival period, then KCS agrees to indemnify the claiming Party
from and against the entirety of any Adverse Consequences such Party may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences GTMM or TFM may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach.
9.4 Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for Tax consequences and insurance coverage and take
into account the time cost of money in determining Adverse Consequences for
purposes of this Article IX. All indemnification payments under this Article IX
shall be deemed adjustments to the Purchase Price.
9.5 Specific Performance. Notwithstanding the indemnification provisions of
this Article IX, the Parties acknowledge that monetary damages would not provide
an adequate remedy in the event that one or more Parties were to fail to comply
with the terms and conditions of the Agreement. Accordingly, the Parties agree
that, in addition to any right to monetary damages that any Party may have at
law and under the terms of this Agreement, each Party shall be entitled to the
equitable remedy of specific performance in order to force any other Party to
strictly comply with the terms and conditions of this Agreement.
ARTICLE X.
TERMINATION
10.1 Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(a) this Agreement may terminated by mutual written consent of all of
the Parties at any time prior to the Initial Closing;
(b) KCS may terminate this Agreement by giving written notice to GTMM
and TFM at any time prior to the Initial Closing in the event GTMM or TFM
has breached any material
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representation, warranty, or covenant contained in this Agreement in any
material respect, KCS has notified GTMM and TFM of
the breach, and the breach has continued without cure for a period of 30
days after the notice of breach; and
(c) GTMM and TFM may terminate this Agreement by giving written notice
to KCS at any time prior to the Initial Closing in the event KCS has
breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, GTMM or TFM has notified KCS of the
breach, and the breach has continued without cure for a period of 30 days
after the notice of breach.
10.2 Effect of Termination. If any Party terminates this Agreement pursuant
to ss.10.1 above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party then in breach).
ARTICLE XI.
MISCELLANEOUS
11.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement, and no consent to any departure from any of such terms by any of
the Parties, shall be valid unless the same shall be in writing and signed by
all of the Parties (except that a permitted waiver of a Closing condition under
ss. 6.2 or ss. 6.3 hereof need not be signed by all Parties). No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
11.2 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties concerning the sale
of the Transferred Shares by TFM to KCS, and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof;
provided, that in the event of termination of this Agreement or if
notwithstanding the occurrence of a Closing, if TFM shall for any reason
reacquire the MX Shares, then the parties intend for the terms and conditions of
the 2002 Stock Purchase Agreement, the GTFM bylaws, and the Shareholders
Agreement to become again valid and fully enforceable against the parties
thereto.
11.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.4 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.5 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of all of the Parties; provided, however, that KCS may (i)
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assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases KCS nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
11.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be made in writing (including fax communications,
with delivery confirmation as provided hereunder) and delivered at the domicile
or fax number of the addressee thereof, or at such other domicile as any of the
Parties shall notify the other Parties in writing as provided in this Section.
Any notice, request, demand, claim, or other communication hereunder shall be
effective when received by the Party to whom it is addressed. All communication
by fax shall be affirmatively confirmed by confirmation page from the sending
fax machine and by telephonic confirmation of receipt by an officer of the
receiving Party. For purposes of this Section and until changed by written
notice to each of the other Parties, each of the Parties designates the domicile
for receipt of notices and communications as is written below such Party's
corporate name in the signature pages hereof.
11.8 Expenses. Whether of not the transaction contemplated by this
Agreement is consummated, all costs and expenses, including (without limitation)
legal fees, consulting fees, finder's fees, investment banking fees and
trustee's fees, incurred in connection with this Agreement and the transaction
contemplated thereby shall be paid by the Party incurring such costs or expenses
except as otherwise provided in this Agreement.
11.9 Announcements. The Parties shall consult with one another with regard
to all media releases and other announcements issued at or prior to a Closing
concerning the transaction contemplated by this Agreement; and, except as may be
required by applicable laws or the applicable rules and regulations of any
governmental agency or stock exchange, no Party hereto shall issue any such
press release or other publicity concerning the transaction contemplated by this
Agreement without the prior written consent of the other Parties.
11.10 Governing Law; Dispute Resolution.
(a) Resolution of any and all disputes between KCS, on the one
hand, and one or more of GTMM or TFM, on the other hand (each of KCS,
on the one hand, and one or more of GTMM or TFM, on the other hand, a
"Dispute Party" and together, the "Dispute Parties") arising from or
in connection with this Agreement or any transactions contemplated by
this Agreement, whether based on contract, tort, common law, equity,
statute, regulation, order or otherwise, ("Disputes") including
Disputes arising in connection with claims by third persons, shall be
exclusively governed by and settled in accordance with the provisions
of this ss.11.10; provided, that the foregoing shall not preclude
equitable or other judicial relief to enforce the provisions hereof or
to preserve the status quo pending resolution of Disputes hereunder.
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(b) THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES
HERETO AND THE ADJUDICATION AND ENFORCEMENT THEREOF, SHALL BE GOVERNED
BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF DELAWARE AND THE FEDERAL LAWS OF THE UNITED
STATES OF AMERICA, WITHOUT REGARD TO APPLICABLE CHOICE OF LAW
PROVISIONS THEREOF.
(c) As to any Dispute which is not resolved in the ordinary
course of business, the Dispute Parties shall first attempt in good
faith to promptly resolve any Dispute by negotiations between
executives. Either of the Dispute Parties may initiate this procedure
by delivery of written notice of the Dispute (the "Dispute Notice") to
the other. Not later than 20 days after delivery of the Dispute
Notice, one executive of one of the Dispute Parties with authority to
settle the Dispute shall meet with the one executive of the other
Dispute Party with authority to settle the Dispute at a reasonably
acceptable time and place, and thereafter as such executives shall
deem reasonably necessary. The executives shall exchange relevant
information and endeavor to resolve the Dispute. Prior to any such
meeting, each Dispute Party's executive shall advise the other as to
any individuals who will attend such meeting with the executive. All
negotiations pursuant to this ss.11.10(c) shall be confidential and
shall be treated as compromise negotiations for purposes of Rule 408
of the Federal Rules of Evidence and similarly under other local or
foreign rules of evidence.
(d) Each Dispute Party hereby agrees to submit all Disputes not
resolved pursuant to ss.11.10(c) hereof to final and binding
arbitration in New York, New York. Either Dispute Party may initiate
such arbitration by delivery of a demand therefor (the "Arbitration
Demand") to the other Dispute Party not sooner than 60 days after the
date of delivery of the Dispute Notice but promptly thereafter;
provided, that if a Dispute Party rejects participation in the
procedures provided under ss.11.10(c), the other Dispute Party may
initiate arbitration at such earlier time as such rejection shall
become reasonably apparent, and, whenever arbitration is initiated,
may seek recovery of any damages or expenses arising from such
rejection, including attorney's fees and expenses, Arbitration Costs
(as defined below) in connection with arbitration hereunder.
(i) Three Arbitrators shall be appointed (the
"Arbitrators"), one of whom shall be appointed by KCS, one by
GTMM, and the third of whom, who shall act as the chairman of the
arbitral tribunal, shall be appointed by the first two
Arbitrators within 10 business days of the first two Arbitrators
confirmation by the American Arbitration Association. If either
Dispute Party fails to appoint an Arbitrator within 10 business
days of a request in writing by the other Dispute Party to do so
or if the first two Arbitrators cannot agree on the appointment
of the third Arbitrator within 10 business days of their
confirmation by the American Arbitration Association, then such
Arbitrator shall be appointed by the American Arbitration
Association in accordance with its International Arbitration
Rules. As soon as the arbitration tribunal has been convened, a
hearing date shall be set within 15 days thereafter; provided,
that the Arbitrators may extend the date of the hearing upon
request of any Dispute Party to the extent necessary to insure
that such Dispute Party is given a reasonable period of time to
prepare for the hearing. Written submittals in the English
language shall be presented and exchanged by
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both Dispute Parties five business days before the hearing date.
At such time the Dispute Parties shall also exchange copies of
all documentary evidence upon which they will rely at the
arbitration hearing and a list of the witnesses whom they intend
to call to testify at the hearing. The Arbitrators shall make
their determination as promptly as practicable after conclusion
of the hearing.
(ii) The arbitration shall be conducted in the English
language pursuant to the Commercial Arbitration Rules of American
Arbitration Association. Notwithstanding the foregoing, (A) each
Dispute Party shall have the right to audit the books and records
of the other Dispute Party that are reasonably related to the
Dispute; (B) each Dispute Party shall provide to the other,
reasonably in advance of any hearing, copies of all documents
which a Dispute Party intends to present in such hearing; (C) all
hearings shall be conducted on an expedited schedule; and (D) all
proceedings shall be confidential, except that either Dispute
Party may at its expense make a stenographic record thereof.
(iii) The Arbitrators shall endeavor to complete all
hearings not later than 120 days after their tribunal has been
convened, and shall make a final award as promptly as practicable
thereafter. Such award shall be communicated, in writing, by the
Arbitrators to the Dispute Parties, and shall contain specific
findings of fact and conclusions of law in accordance with the
governing law set forth in ss.11.10(c) of this Agreement. Any
award of such Arbitrators shall be final and binding upon the
Parties to this Agreement and shall not be attacked by any of the
Parties to this Agreement in any court of law and may be enforced
in any court having jurisdiction, including expressly the courts
of the State of Delaware, United States of America, and the
courts of the Federal District of Mexico. The Arbitrators shall
apportion all costs and expenses of the arbitration, including
the Arbitrators' fees and expenses, fees and expenses of experts
and fees and expenses of translators ("Arbitration Costs")
between the prevailing and non-prevailing Dispute Party as the
Arbitrators shall deem fair and reasonable. In circumstances
where (A) a Dispute has been asserted or defended against on
grounds that the Arbitrators deem manifestly unreasonable, or (B)
the non-prevailing Dispute Party has rejected participation in
procedures under ss.11.10(c), the Arbitrators may assess all
Arbitration Costs against the non-prevailing Dispute Party and
may include in the award the prevailing Dispute Party's
attorney's fees and expenses in connection with any and all
proceedings under this ss.11.10. Notwithstanding the foregoing,
in no event may the arbitrator award multiple or punitive
damages.
(e) Pursuant to an agreement of the Parties or a judicial
determination that a Dispute is not subject to final and binding
arbitration as set forth in ss.11.10, KCS and each of GTMM and TFM
irrevocably agrees that any legal action or proceeding against it with
respect to this Agreement and any transaction contemplated by this
Agreement shall be brought only in the courts of the State of
Delaware, or of Federal courts of the United States of America sitting
in Delaware, and by execution and delivery of this Agreement, KCS and
each of GTMM and TFM irrevocably submits to the venue and jurisdiction
of each such court and irrevocably waives any
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objection or defense such party may have to venue or personal
jurisdiction in any such court for the purpose of resolving any claim,
dispute, cause of action arising out of or related to this Agreement
(including any claim that the suit or action has been brought in an
inconvenient forum and any right to which it may become entitled on
account of place of residence or domicile), the alleged breach of this
Agreement, the enforcement of the terms of this Agreement and the
other terms contemplated hereby. A final judgment in any suit, action
or proceeding shall be conclusive and may be enforced in any court
where jurisdiction over the Parties may be had or in which the Parties
are subject to service of process.
(f) Each of the Parties irrevocably appoints CT Corporation (the
"Process Agent"), at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx of Xxx
Xxxxxx, Xxxxxxxx 00000 (302-658-7581), as its agent and true and
lawful attorney-in-fact in its name, place and stead to accept on
behalf of each of the Parties and their respective properties and
revenues, service of copies of the summons and complaint and any other
process which may be served in any such suit, action or proceeding
brought in the State of Delaware, and each of the Parties agrees that
failure of the Process Agent to give any notice of any such service of
process to any of the Parties shall not impair or affect the validity
of such service or the enforcement of any judgment based thereon.
11.11 Severability. If any one or more of the provisions contained in this
Agreement or in any document executed in connection herewith shall be held
invalid, illegal or unenforceable under applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
not be affected or impaired and shall remain in full force and effect.
11.12 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 requires otherwise. The
word "including" shall mean including without limitation.
11.13 Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
ARTICLE XII.
DEFINITIONS
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, Taxes, Liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
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"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Arbitration Costs" has the meaning set forth in ss.11.10(d) above.
"Arbitration Demand" has the meaning set forth in ss.11.10(d) above.
"Arbitrators" has the meaning set forth in ss.11.10(d) above.
"Benefit Arrangement" means any employment, severance or similar contract
or arrangement (whether or not written) or any plan, policy, fund, program or
contract or arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option, or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-assured arrangements), health or medical benefits,
disability benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or other benefits) that
(i) is not an Employee Plan, (ii) is entered into, maintained, administered or
contributed to, by MX or TMX or any of their ERISA Affiliates, and (iii) covers
any employee or former employee of MX or TMX.
"Closing" has the meaning set forth in ss.1.2 above.
"Closing Date" has the meaning set forth in ss.1.2 above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means, with respect to MX or TMX, all
proprietary and confidential business information and data of MX or TMX that is
not generally known by or readily ascertainable by or available to, on a legal
or authorized basis, the general public; provided, however, that "Confidential
Information" shall not include any information: (a) which is already known by
the receiving Party; or (b) which before being divulged by the disclosing Party
(i) has become generally known to the public through no wrongful act of the
receiving Party or its representatives or agents, (ii) has been received by the
receiving Party from a third party without (to the receiving Party's knowledge)
restriction on disclosure and without (to the receiving Party's knowledge) a
breach by the third party of an obligation of confidentiality, or (iii) is
independently developed by the receiving Party without use of the Confidential
Information received from a disclosing Party.
"Disclosure Schedule" has the meaning set forth in Article III above.
"Dispute Notice" has the meaning set forth in ss.11.10(c) above.
"Dispute Parties" has the meaning set forth in ss.11.10(a) above.
"Dispute Party" has the meaning set forth in ss.11.10(a) above.
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"Disputes" has the meaning set forth in ss.11.10(a) above.
"Employee Benefit Plan" means any "employee benefit plan" (as such term is
defined in ERISA ss.3(3)) and any other employee benefit plan, program or
arrangement of any kind maintained by MX and TMX.
"Employee Plan" means any "employee benefit plan", as defined in ss.3(3)
of ERISA, that (i) is subject to any provision of ERISA, (ii) is maintained,
administered or contributed to by MX or TMX or any of their ERISA Affiliates,
and (iii) covers any employee or former employee of MX or TMX.
"Environmental Laws" means any applicable federal, state, local,
provincial or foreign law (including, without limitation, common law), treaty,
judicial decision, regulation, rule, judgment, order, decree, injunction,
permit, or legally binding governmental restriction or requirement, or any
legally binding agreement with any governmental authority or other third party,
relating to human health and safety (as relating to the environment), the
environment or, as impacting human health or the environment, to pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials.
"Environmental Permits" means, as to any entity, all permits, licenses,
franchises, certificates, approvals and other similar authorizations of
governmental authorities required by Environmental Laws regarding the business
of such entity as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single employer
with MX for purposes of Code ss.414.
"Financial Statement" has the meaning set forth in ss.3.5 above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GTFM" has the meaning set forth in the Recitals above.
"GTMM" has the meaning set forth in the preface above.
"Hazardous Substances" means, in each case as regulated under any
Environmental Law, any pollutant, contaminant, waste or chemical or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substance,
waste or material, or any substance, waste or material having any constituent
elements displaying any of the foregoing characteristics, including, without
limitation, petroleum, its derivatives, by-products and other hydrocarbons, and
any substance, waste or material regulated under any Environmental Law.
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"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Initial Closing" has the meaning set forth in ss.1.2 above.
"Initial Closing Date" has the meaning set forth in ss.1.2 above.
"Initial Purchase Price" has the meaning set forth in ss.1.3 above.
"Initially Transferred Shares" has the meaning set forth in the Recitals
above.
"KCS Credit Agreement" means the Amended and Restated Agreement dated as
of June 12, 2002 among Kansas City Southern, The Kansas City Southern Railway
Company, the Lenders Party thereto, and X.X.Xxxxxx Xxxxx Bank, Administrative
Agent.
"KCSR" has the meaning set forth in the Recitals above.
"Knowledge" means actual knowledge after reasonable investigation.
"Lien" means, with respect to any asset, any mortgage, pledge,
encumbrance, charge, or other security interest of any kind in respect of such
asset, other than (a) mechanic's, materialmen's, and similar liens, (b) liens
for Taxes not yet due and payable , (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d) other liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money.
"Material Adverse Effect" means, with respect to MX, a change, event or
occurrence that has had, or is reasonably likely to have, a material adverse
effect on the business, assets, properties, liabilities, financial condition or
results of operations of MX and its Subsidiaries, taken as a whole, other than
any change, event or occurrence resulting from (i) changes in the railroad
industry in the United States or Mexico generally, (ii) changes in general
economic conditions in the United States or the securities markets in general,
(iii) terrorist activities or the commencement or escalation of any war or armed
hostilities, which do not disproportionately affect MX or its Subsidiaries, or
(iv) performance of this Agreement in accordance with its terms.
"MM" has the meaning set forth in the Recitals above.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.3.5
above.
"Most Recent Fiscal Month End" has the meaning set forth in ss.3.5 above.
"Most Recent Fiscal Year End" has the meaning set forth in ss.3.5 above.
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"Multiemployer Plan" means a multiemployer plan, as defined in ss.3(37) of
ERISA, which is subject to ss.4022A of ERISA.
"MX" has the meaning set forth in the Recitals above.
"MX Shares" has the meaning set forth in the Recitals above.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Process Agent" has the meaning set forth in ss.11.10(f) above.
"Purchase Option" has the meaning set forth in ss.1.4 above.
"Purchase Price" has the meaning set forth in ss.1.3 above.
"Shareholders Agreement" means the Agreement dated May 1997 by and
among KCS, Caymex Transportation, Grupo Servia, S.A. de C.V., Transportacion
Maritima Mexicana, S.A. de C.V. and TMM Multimodal, S.A. de C.V.
"Subsequent Closing" has the meaning set forth in ss.1.2 above.
"Subsequently Transferred Shares" has the meaning set forth in the
Recitals above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surface Transportation Board" or "STB" shall mean that government
agency that administers the ICC Termination Act of 1995 Pub. L. No. 104-88,
109 Stat. 803, enacted December 29, 1995.
"Tax" means any federal, state, local, or foreign tax, including any
interest, penalty, or addition thereto, whether disputed or not.
"TFM" has the meaning set forth in the preface above.
"Title IV Plan" means an Employee Plan subject to Title IV of ERISA other
than any Multiemployer Plan.
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"TMX" has the meaning set forth in the Recitals above.
"Transferred Shares" has the meaning set forth in the Recitals above.
*****
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
KANSAS CITY SOUTHERN
By: /s/ X.X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, President & CEO
GRUPO TMM, S.A.
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
TFM, S.A. de C.V.
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
Title: President
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
