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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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December 12, 1997
Dixon Ticonderoga Company<PAGE>
(Exact name of registrant as specified in its charter)
Delaware<PAGE>
0-2655 23-0973760<PAGE>
(State or the Jurisdiction (Commission File Number) (IRS Employer
of incorporation)<PAGE>
Identification Number)
195 International Parkway, Heathrow, FL 32746
(Address of principal executive offices) (Zip Code)<PAGE>
Registrant's telephone number including area code: (407) 829 - 9000
<PAGE>
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ITEM 2. Acquisition or Disposition of Assets
On December 12, 1997, Dixon Ticonderoga Company's publicly held
Mexican subsidiary, Dixon Ticonderoga de Mexico, S.A. de C.V. ("Dixon
Mexico") completed its acquisition of all the capital stock of Vinci de Mexico,
S.A. de C.V., ("Vinci") and certain assets of a related entity, for a total
purchase price of 27.2 million pesos (or $3.3 million) in cash. The acquisition
was financed entirely through Dixon Mexico's on-hand cash and cash
equivalents.
Dixon Mexico acquired the capital stock and assets from Grupo Ifam,
S.A. de C.V. and Guillermo Almazan Cueto. Dixon Ticonderoga Company and
Dixon Mexico had no prior relationship with the sellers.
Vinci, a 50-year-old company with average annual revenues during the
past five years of U.S. $8 million, manufactures and markets artist paints,
chalks, modeling clay and crayons, as well as geometric sets, rulers and
compasses. It operates a 50,000-square-foot manufacturing facility in Mexico
City and currently employs about 200 people. The assets acquired include
manufacturing equipment which will continue to be utilized in the manufacture
of all the aforementioned product lines. The Vinci brand name is well-known
among consumers and educators in Mexico and elsewhere in Latin America.
Management believes its products complement those currently sold by Dixon
Mexico.
Dixon Mexico manufactures wood-case graphite and coloring pencils,
crayons, chalks, markers, erasers and allied products. It operates a 55,000-
square-foot manufacturing facility in Tlalnepantla, D.F., Mexico and employs
approximately 375 people in manufacturing, distribution, marketing and
administrative operations. Dixon Mexico has 33 million shares outstanding,
of which Dixon Ticonderoga Company owns 80%. The shares are traded on the
Mexican Intermediate Market.
ITEM 7. Financial Statements and Exhibits
(a) Financial statements for business acquired:
As it is impracticable to file the required financial statements for the
business acquired at this time, the Company will file these statements under
cover of Form 8 as soon as they become available, but in no event later than
February 25, 1998.
(b) Pro forma financial information:
As it is impracticable to file the required pro forma financial
information at this time, the Company will file this information under cover
of Form 8 as soon as it becomes available, but in no event later than
February 25, 1998.
(c) Exhibits
The following exhibit is required to be filed as part of this report on
Form 8-K:
(2) Share Purchase Agreement by and among Dixon Ticonderoga de
Mexico, S.A. de C.V. and by Grupo Ifam, S.A. de C.V. and
Guillermo Almazan Cueto with respect to the capital stock
of Vinci de Mexico, S.A. de C.V. (English translation).
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 26, 1997 By: /s/ Gino N. Pala
Gino N. Pala, Chairman of
the Board, President, Chief
Executive Officer and Director
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Exhibit (2)
STOCK PURCHASE AGREEMENT ENTERED INTO, ON THE ONE PART BY
DIXON TICONDEROGA DE MEXICO, S.A. DE C.V., HEREIN REPRESENTED
BY MR. DIEGO CESPEDES CREIXELL, HEREINAFTER "THE PURCHASER",
AND ON THE OTHER PART BY GRUPO IFAM, S.A. de C.V., HEREIN
REPRESENTED BY MESSRS. RAMON E. BETETA DE COU AND BERND
ULRICH KLINCKWORT, AND MR. GUILLERMO ALMAZAN CUETO, ON HIS
OWN BEHALF, HEREINAFTER JOINTLY REFERRED TO AS "THE SELLERS",
IN ACCORDANCE WITH THE FOLLOWING STATEMENTS AND CLAUSES.
STATEMENTS
I. GRUPO IFAM, S.A. de C.V., through its representatives, declares
that:
a) It is a legally organized business corporation in accordance with
the laws of the United Mexican States, as evidenced with public document
6,852 of August 28, 1981, executed by Mr. Francisco Carbia Pizarro Suarez,
Notary Public 148 of the Federal District, first testimony of which was
registered at Public Registry of Property and Commerce of the Federal District
under mercantile folio 42559 of October 29, 1981, and is registered at the
Federal Taxpayers' Registry of the Secretariat of the Treasury and Public
Credit under number GIF810831-KB4.
b) Its representatives, Messrs. Ramon E. Beteta De Cou and Bernd
Ulrich Klinckwort, are duly empowered to subscribe this contract, powers
which have not been revoked, limited or modified in any way whatsoever, as
evidenced in public document 41,387 of January 4, 1991, executed by Mr.
Jorge Tinoco Aiza, Notary Public 88 of the Federal District, first testimony of
which was registered at the Public Registry of Property and Commerce of the
Federal District in mercantile folio 42559 on March 11, 1991.
c) In accordance with its corporate purpose, Grupo Ifam, S.A. de
C.V., is empowered to assume each and every one of the obligations contained
in this document.
d) Grupo Ifam, S.A. de C.V., is the lawful and sole holder of
24,999,999 (twenty four million nine hundred and ninety nine thousand nine
hundred and ninety nine) common shares of stock, registered, with par value
of $1.00 (one peso 00/100, Mexican currency) each (hereinafter, and jointly
with the share referred to in paragraph b) of item II. of Statements hereof,
"THE SHARES"), representing the capital stock of VINCI DE MEXICO, S.A.
DE C.V., (hereinafter and for all the purposes hereof "THE COMPANY").
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e) The stockholding described in paragraph d) above is faithfully
reflected on the Stock Ledger of THE COMPANY.
f) THE SHARES are to date free from any encumbrance, burden and
without any limitation of ownership whatsoever.
g) It is its will to sell to THE PURCHASER all the shares described
in paragraph d) above, subject to the terms hereof, thus, the subscription,
delivery and fulfillment of this Contract, and its related documents, by THE
COMPANY and THE SELLERS, have been authorized by means of the corporate
resolutions necessary or others that, as the case may be, may be required.
The obligations assumed hereunder by THE SELLERS are lawful, valid and
obligatory.
II. Mr. Guillermo Almazan Cueto declares that:
a) He is a Mexican national, with domicile at Lago Como 262, colonia
Anahuac, 11320, Mexico City, Federal District, and is registered at the
Federal Taxpayers' Registry of the Secretariat of the Treasury and Public
Credit under number AACG550806S81.
b) He is the lawful and sole owner of 1 (one) share of common stock,
registered, with par value of $1.00 (one peso 00/100, Mexican currency)
(hereinafter, and jointly with the shares referred to in paragraph d) of item
I. of Statements hereof, "THE SHARES"), representing the capital stock of
THE COMPANY.
c) The stockholding described in paragraph b) above, is faithfully
reflected on the Stock Ledger of THE COMPANY.
d) THE SHARES are to date free from any encumbrance, burden and
without any limitation of ownership whatsoever.
e) He wishes to sell to THE PURCHASER, or to the person or entity
to be designated for such purpose by THE PURCHASER, the share referred
to in paragraph b) above, subject to the terms hereof, therefore, the
subscription, delivery and fulfillment hereof, and of its related documents,
by THE COMPANY and THE SELLERS, have been authorized by means of the
corporate resolutions necessary or others required. The obligations assumed
hereunder by THE SELLERS are lawful, valid and obligatory.
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III. THE PURCHASER, through its representative declares, that:
a) It is a legally organized business corporation in accordance with
the laws of the United Mexican States, as evidenced with public document
17,252 of March 27, 1953, executed by Mr. Francisco Vazquez Perez, then
Notary Public 74 of the Federal District, first testimony of which was
registered at Public Registry of Property and Commerce of the Federal District
under entry 297, page 312 of volume 312, Book Third, and is registered at the
Federal Taxpayers' Registry of the Secretariat of the Treasury and Public
Credit under number DTM-841018-E5A.
b) Its representative, Mr. Diego Cespedes Creixell, is duly
empowered to subscribe this contract, powers which have not been revoked,
limited or modified in any way whatsoever, as evidenced in public document
25,585 of September 25, 1996, executed by Mr. Carlos Alejandro Duran Loera,
Notary Public 11 of the Federal District, first testimony of which was
registered at the Public Registry of Property and Commerce of Tlalnepantla,
State of Mexico, under entry 471, volume 32 of Book First of Commerce of
Tlalnepantla on September 26, 1996.
c) In accordance with its corporate purpose, Dixon Ticonderoga de
Mexico, S.A. de C.V., is empowered to assume each and every one of the
obligations contained in this document.
d) It wishes to purchase from THE SELLERS all THE SHARES
representing all the capital stock of THE COMPANY.
In virtue of the preceding Statements, the parties execute the
following:
C L A U S E S
FIRST.- THE SELLERS hereby sell to THE PURCHASER all THE SHARES and
THE PURCHASER acquires the legal holding of THE SHARES, without any
encumbrance, burden or limitation of ownership.
SECOND.- The selling price of THE SHARES purpose hereof, is the amount
of MEX.CY. $19,330,000.00 (nineteen million three hundred and thirty
thousand pesos 00/100, Mexican currency), which THE PURCHASER pays to
THE SELLERS as follows:
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a) The PURCHASER delivers the amount of MEX.CY. $11,830,000.00
(eleven million eight hundred and thirty thousand pesos 00/100, Mexican
currency) on the date of signature of this Contract, provided that on said
date THE SELLERS might have already evidenced to THE PURCHASER the
contracting of the bond described in clause thirteenth of this Contract and
precisely under the terms established in detail in said clause; otherwise, the
amount referred to in this paragraph will be delivered to THE SELLERS until
the date the condition in question is fulfilled.
b) THE PURCHASER will deliver the balance of the price of THE
SHARES, that is, the amount of MEX.CY.$7,500,000.00 (seven million five
hundred thousand pesos 00/100 Mexican currency), on the date it is fully
evidenced to THE PURCHASER that each and every one of the trademarks
related to and used by THE COMPANY, referred to in clause ninth of this
Contract, have been legally transferred and duly registered in the name of
THE COMPANY before the competent authorities, referred to in clause ninth.
In the event that to the date of signature of this Contract the aforementioned
situation might have already been evidenced to THE PURCHASER, the amount
established in this paragraph will be precisely delivered on said date.
THE SELLERS grant THE PURCHASER the fullest receipt applicable in
accordance with the law for the concept of the amount agreed as price of THE
SHARES.
THIRD.- THE SELLERS hereby deliver to THE PURCHASER and this receives
i) Stock Certificates numbers 1 and 2, covering 2,499,999 (two million four
hundred ninety nine thousand nine hundred and ninety nine) shares
representing the fixed part of the capital stock of THE COMPANY and
22,500,000 (twenty two million five hundred thousand) shares representing
the variable part of the capital stock of THE COMPANY, respectively, issued
in favor of Grupo Ifam, S.A. de C.V., duly endorsed transferring title in
favor of THE PURCHASER; and ii) Stock Certificate number 3, covering 1
(one) share representing the fixed part of the capital stock of THE
COMPANY, issued in favor of Mr. Guillermo Almazan Cueto, which, as
instructed by THE PURCHASER, is endorsed transferring title in favor of Mr.
Gino N. Pala.
THE PURCHASER grants the corresponding receipt to THE SELLERS for
the concept of delivery of the stock certificates covering all the shares
representing all the capital stock of THE COMPANY.
FOURTH.- From the date of signature hereof, all the rights granted and
resulting from THE SHARES, will be already exclusively exercised by THE
PURCHASER.
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FIFTH.- THE SELLERS in terms of this clause, state under oath to tell the
truth, assure and guaranty to THE PURCHASER that:
a) They are the lawful and sole holders of THE SHARES.
b) To the date hereof they are not aware of any contract or agreement,
either written or verbal, involving THE SHARES, and there is no reserve
orlimitation whatsoever, limiting their transfer, being unnecessary any
authorization whatsoever for the entry into hereof, and that:
(i) Exhibit "A" of this Contract, lists each agreement (either written or
verbal, including all the modifications thereto) of which THE COMPANY
is beneficiary or party to, or in virtue of which THE COMPANY or any
of its assets are obliged (jointly, the "Significant Agreements"),
including without limitation (A) any rent of real estate; (B) any
agreement which may be important for the business, operations or
expectations of THE COMPANY; (C) any agreement which may be used
as evidence, guaranty or link regarding debts of THE COMPANY; (D)
any lease of capital or operations, or conditional sale agreements related
to the vehicles, equipment or the goods of THE COMPANY; (E) any
supply or manufacture contract or agreement in virtue of which THE
COMPANY may be entitled to, or may have the obligation to require
assets from a third party; and, (F) any agreement implying a benefit
for any stockholder, member of the Board of Directors, officer or
employee of THE COMPANY, or of any affiliate or family member of said
person.
(ii) THE SELLERS have delivered to THE PURCHASER copy of each
Significant Agreement. Except for the assumptions described in Exhibit
"A", to the best of their knowledge and belief each Significant
Agreement is valid, has a compulsory nature and is in full force and
effect, exceptionable in accordance with its terms; (B) THE COMPANY
has complied with all its obligations in virtue of each Significant
Agreement, there being no breach or infringement (or any event which
may become breach or infringement upon being notified or upon
elapsing a certain time); (C) no rescission or notice of breach that they
may be aware of has occurred, as well as neither any rescission has
been threatened, in virtue of any Significant Agreement; and, (D) no
consent from anyone is required in relation to the transactions
contemplated herein in order to preserve the rights of THE COMPANY
in virtue of any Significant Agreement, or else to prevent that any
disadvantage for THE COMPANY may occur regarding any Significant
Agreement.<PAGE>
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c) THE COMPANY issuing THE SHARES is a duly organized business
corporation in accordance with the laws of the United Mexican States, in terms
of public document 219 of March 8, 1947, granted by Mr. Pedro Martinez
Arroyo, then Notary Public 131 of the Federal District, first testimony of
which was registered at the Public Registry of Commerce of the Federal
District, under number 151, folio 129, volume 227, book third, Commerce
Section. THE COMPANY does not have, either directly or indirectly, any
interest or investment in other stock companies, corporations of individuals,
subsidiaries, government entities or other entities, hereinafter "Individual".
d) THE COMPANY is duly authorized, qualified or has the permits
necessary to perform business in Mexico or abroad or in other jurisdiction
where its assets are located or elsewhere in which the performance of their
current businesses or operations may require said consent.
e) The sale of THE SHARES purpose hereof, does not create conflict, nor
implies any infraction whatsoever of any provision, permit, bylaws,
agreement, laws or regulations that THE COMPANY may be party to, or
regarding which it may be obliged.
f) The sale of THE SHARES does not release third parties from the
obligations they might have with THE COMPANY, nor will entitle them to
rescind or to the expiration in advance of any obligation in force; nor to
increase the responsibilities or obligations by THE COMPANY by virtue of
agreements, bylaws, laws, regulations, permits it may be obliged or party to.
g) The audited financial statements of THE COMPANY as of September 30,
1997, prepared by the Accounting Firm Salles, Sainz y Compania, S.C.
(hereinafter the "Financial Statements") show the financial situation of THE
COMPANY to the aforementioned date and the results of its operations in the
period specified therein, in accordance with Generally Accepted Accounting
Principles (GAAP). The Financial Statements do not contain any extraordinary
or special entry, except as expressly indicated therein. The Financial
Statements have been prepared based on the books and records of THE
COMPANY, and in accordance with Generally Accepted Accounting Principles,
which show in an accurate and adjusted manner all the transactions,
acquisitions and sales of assets and assumption of liabilities by THE
COMPANY.
h) THE COMPANY does not have any direct or indirect debt, obligation or
liability, of any nature whatsoever, either absolute or conditions, accrued or
not, known or unknown, confirmed or not, or else of any other kind,
regardless of the
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fact that it might be payable in the present or in the future (jointly known as
"Liabilities"), except for (i) liabilities specifically shown in the Financial
Statements and (ii) obligations that must be complied with in the ordinary
course of its business after the date of the Financial Statements.
i) From the date of the Financial Statements and except as specifically
contemplated herein, to the best of the knowledge of THE COMPANY and THE
SELLERS (a) no material adverse change in the financial situation or other has
occurred, in its results of operations, businesses, perspectives, assets or
liabilities of THE COMPANY or in relation to the manner in which it performs
its business or operations; (b) no payment or transfer of assets (including
without limitation any dividends, repurchase or shares or other distributions
or amortizations of debt) to any stockholder or to his respective affiliates;
(c) no breach or infringement (or events that would become breach or
infringement), rescission or threat of rescission in virtue of any Significant
Agreement; (d) no theft, data, destruction, loss due to accident,
expropriation or proceeding of material affectation that may have an effect on
the goods of THE COMPANY, except in the ordinary course of business of its
activities and which might be consequent to its preceding practices; (e) no
sale, transfer of the assets of THE COMPANY, except for the ordinary course
of its activities (f) no waiver to rights by THE COMPANY in relation to the
business thereof, its operations or assets, except in the ordinary course of
its activities; or (g) no other transaction, agreement or commitment entered
into by THE COMPANY or THE SELLERS, except in the ordinary course of
their activities and which might be consequent to their former practices.
j) To the best of the knowledge of THE SELLERS, all the returns, notices
and reports of federal, state, municipal or other taxes (including without
limitation income-tax returns, real-estate, sales, usufruct, franchise,
withholding and social security reports) directly or indirectly related to
transactions with THE COMPANY, have been duly and promptly prepared and
filed; likewise, all taxes payable in relation to the fiscal years covering said
statements have been paid in due time. No tax deficiencies whatsoever have
been proposed or evaluated against THE COMPANY and this has not
subscribed any waiver to the prescription terms related to the determination
or collection of any tax whatsoever. To the best of the knowledge of THE
COMPANY and of THE SELLERS, no pending matters are registered or tax
audits, actions, lawsuits, proceedings, researches or claims have been filed
or performed; likewise, treasury authorities have not established any
(currently pending) problems or clarifications in relation to tax returns or
reports of THE COMPANY. THE COMPANY has withheld or collected from each
payment it made to its employees, all the taxes which should have been
withheld or collected from them, having likewise fully paid said taxes to the
corresponding tax officers or to
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the authorized depositors. Neither THE SELLERS nor THE COMPANY have
granted or received requests to the effect of granting waivers or extensions
(nor either is subject to waivers or extensions granted by other Individuals)
to the prescription terms related to the payment of taxes of THE COMPANY or
which corresponded to it.
k) Except those matters mentioned in Exhibit "B", no pending matters are
registered, to the best of the knowledge of THE SELLERS, as well as lawsuits,
administrative proceedings or revisions, formal or informal complaints or
investigations by Individuals, against or else related to THE COMPANY or
with the members of its Board of Directors, employees or agents (in their
capacity as such), or else to which the assets of THE COMPANY may be
subject to. THE COMPANY is not liable or obliged in virtue of judgments,
orders, court orders, restraining orders or acts which may be presently in
force.
l) THE COMPANY, to the best of its knowledge, presently complies and
has always complied with all the bylaws, laws, regulations, acts, orders, rules
or regulations declared or issued by government entities or authorities, being
identical the case as to the use, operation and maintenance of its assets;
likewise, THE COMPANY and its assets, and the use, operation or maintenance
thereof, have never infringed or opposed any of the preceding items. All the
above with the exception of infringements that would not have material
adverse effect on THE COMPANY or its assets.
m) THE COMPANY, to the best of its knowledge, has and has obtained from
each corresponding government entity, all the rights, titles and interests
related to permits, licenses, authorizations, approvals, quality certifications,
franchises and rights (known as "Permit" in singular and "Permits" in plural)
issued by government entities or authorities and which might be necessary to
perform its business. To the best of the knowledge of THE COMPANY and of
THE SELLERS, NO loss or expiration of any Permit whatsoever IS PENDING,
nor executable, except in the case of expiration adjusted to the terms of said
Permits and which might be renewed in the ordinary course of business
without expiration.
n) Exhibit "C" hereof includes a complete list of all the employees
presently working for THE COMPANY, including date of employment, present
position and compensation and, likewise, the date and sum of the last increase
and compensation. The materialization of the transactions contemplated herein
and its exhibits will not accelerate the term of payment or will increase the
compensation to be owed to any members of the Board of Directors, officers or
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employees (present or former) of THE COMPANY. THE COMPANY has
subscribe a collective negotiation agreement with the Union of Workers of
Chemicals and Related Industries of the Federal District, Section 4 CTM. THE
COMPANY has never suffered a strike, labor problems, interruption of
activities, work or other interference which may damage the business of THE
COMPANY and likewise, neither THE COMPANY nor THE SELLERS are aware
of, or have reasonable causes to know the bases on which said events might
occur. THE COMPANY has covered and caused due compliance with all the
salaries, premiums, fees and other benefits it is obliged to before the
employees and the corresponding authorities.
o) Exhibit "D" hereof includes a complete list of all the real estate
presently belonging to THE COMPANY, of which it has evidentiary documents
of its ownership; (ii) all the real estate presently leased or used by THE
COMPANY; (iii) each asset of THE COMPANY accounting value or fair market
value of which may exceed the amount of MEX.CY.$20,000.00 (twenty
thousand pesos 00/100, Mexican currency). THE COMPANY has valid and
sufficient title on all its assets, including without limitation the assets
described in the aforementioned exhibit, except those shown in the Financial
Statements and all those used by THE COMPANY in the exploitation of its line
of business and all those assets belonging to it free from any encumbrance or
limitation of ownership, except for the encumbrances or limitations of
ownership listed in Exhibit "E" and those guarantying liabilities of THE
COMPANY, shown in the Financial Statements, hereinafter THE ASSETS.
p) All the facilities, machinery, equipment, accessories, vehicles and other
goods belonging, rented to, or used by THE COMPANY are in good state of
use and operation, except for the normal wear and tear and, likewise, they
are adequate and useful for their corresponding purposes and it is not
probable that they might require of considerable readaptings and repairs in
the near future; likewise, they are adequate and sufficient for the business
of THE COMPANY and they comply with all the laws, rules and regulations
applicable, except in case that they might not have a material adverse effect
on THE COMPANY and its assets. THE COMPANY keeps policies issued by
insurance companies of guarantied responsibility, covering its assets and
businesses against losses and risks. Said insurance policies fully protect THE
COMPANY.
To the best of the knowledge and belief of THE SELLERS, THE
COMPANY is not aware that its officers, members of the Board of Directors,
employees, agents or other representatives or, to the best of the knowledge
of THE COMPANY and of THE SELLERS, no other Individual with which THE
COMPANY is or has been linked or associated to, has directly or indirectly made
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or authorized any payment, contribution or gift of money, goods or services,
based on or infringing the corresponding legislation (a) as a manner of
corruption or bribe to any Individual or (b) to a political organization, or to
the holder or aspirant to any public position through vote or designation,
except for personal political contributions not involving the direct or indirect
use of funds of THE COMPANY. THE COMPANY to the best of its knowledge
and belief, has not infringed any federal or state antitrust bylaw, rule or
regulation, including without limitation those related to unfair competition,
establishment of prices, handling of auctions, etc.
q) THE SELLERS have disclosed to THE PURCHASER all the facts and
information that, to the best of their knowledge and belief and regarding
which they may be aware of, will be significant for the acquisition of THE
SHARES. Neither THE COMPANY nor THE SELLERS have received
evaluations, reports or other similar information in relation to the value or
situation of THE COMPANY or of its assets which THE COMPANY might have
not been provided with. The statements, guaranties and representations made
in virtue hereof (including the Exhibits thereof) are true, full and correct in
all their material aspects and do not contain any false statement regarding
material facts, and neither fail to include important and necessary facts which
may be to the knowledge of THE COMPANY so that said statements, guaranties
or representations may not lead to error in accordance with the circumstances
in which they are made. Neither THE COMPANY nor THE SELLERS have
information or knowledge or changes on any judicial or administrative action,
which might have a material adverse effect on the business or THE ASSETS of
THE COMPANY, or on their value.
r) THE SELLERS, on their own behalf and on behalf of their respective,
heirs, receivers, administrators, successors and assigns, hereby grant the
fullest, broadest and most unconditional waiver to THE COMPANY, and to its
respective employees, officers, members of the Board of Directors, successors
and assigns, regarding each and every claim, lawsuits, losses, costs,
expenses (including reasonable legal fees and expenses), obligations,
responsibilities and damages of any kind and nature, either that existed or
were known or not, and related in any direct or indirect way to THE
COMPANY and that THE SELLERS might claim in the present or future.
s) THE SELLERS recognize and accept that all the lists of real or potential
clients and the lists of marketing, sales data, intellectual property, reserved
information, trademarks related to or used by THE COMPANY, formulas and
preparation processes of products manufactured by THE COMPANY and trade
and industrial secrets of THE COMPANY (hereinafter and for all the purposes
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<PAGE> 11
hereof will be jointly identified as the "Confidential Information") are
valuable, special and unique assets, solely and exclusively belonging to THE
COMPANY and duly registered before the corresponding authorities and
registries. Consequently, THE SELLERS hereby accept and agree to treat the
Confidential Information as such and not to disclose it to any individual or
entity, or to use it for their benefit, either direct or indirect, nor for the
benefit of their respective employees, advisors, consultants, stockholders,
affiliates or subsidiaries, or of any other individual or entity, except and
exclusively for THE PURCHASER and THE COMPANY.
SIXTH.- THE SELLERS assure and guaranty that THE COMPANY has
owned and used THE ASSETS, always in accordance with the laws and
provisions applicable in environmental matters, and it has not infringed any
provision whatsoever; consequently:
a) THE COMPANY has neither used THE ASSETS, nor allowed their use,
to create, generate, refine, produce, transfer, dispose of or process
polluting substances, which may not be in accordance with the Law.
b) Neither THE COMPANY nor THE SELLERS are, nor have been, subject
to any proceeding derived from infringements to legal provisions in
environmental matters except for those contained in Exhibit "F", and THE
ASSETS are not involved in any process whatsoever by virtue of which, they
may be related to the existence of hazardous materials in the real estate
occupied by THE COMPANY.
c) THE SELLERS and THE COMPANY ignore, and they do not have reasons
to know either, of summons of a civil or criminal nature, derived from (i) the
presence of hazardous materials in the real estate occupied by THE COMPANY,
or in THE ASSETS themselves; and, (ii) infringements to the legal provisions
in environmental matters.
d) The authorizations and permits in environmental matters granted to THE
COMPANY, and that THE PURCHASER has been provided with, are to the best
of its knowledge and belief, all the permits necessary for the operation of the
company, including the machines, equipment and all those matters becoming
part of THE ASSETS. Said authorizations and permits remain in force to date
and there are no pending infringements, proceedings or warnings revoking
or limiting them.
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e) Any toxic substance located in the real estate which is part of THE
ASSETS and used by THE COMPANY, or in THE ASSETS themselves in
general, has been treated and taken care of in accordance with the laws on the
matter.
f) THE COMPANY is neither waiting for any proceeding whatsoever, nor
has knowledge of the existence of investigations or processes, which they
might be party to, related to environmental pollution or hazardous materials,
which may give as result acts infringing the law in environmental matters.
g) THE COMPANY has kept its records and authorizations in environmental
matters updated in terms of the law, and regarding the audits which may have
been practiced, the results were favorable to THE COMPANY.
h) THE COMPANY does not have knowledge that there might be
subterranean tanks with hazardous materials in THE ASSETS, or in the real
estate used or rented by THE COMPANY, which might imply infringements to
the Law.
SEVENTH.- All the statements, indemnities and guaranties which are
made and granted herein, will subsist upon the subscription and delivery
thereof and, likewise, upon the materialization of the transactions
contemplated herein, not resulting affected by any notice, investigation or
knowledge otherwise. All the affirmations expressed in the exhibits or other
documents delivered in relation hereto or the transactions contemplated
herein, will become statements and guaranties in virtue hereof.
EIGHTH.- THE SELLERS confirm and guaranty to THE PURCHASER that the
assets of Grupo Ifam, S.A. de C.V. and of Inversiones Fambes, S.A. de
C.V., which were disclosed to THE PURCHASER are already part of the assets
of THE COMPANY, which are identified in Exhibit "G" hereof.
THE PURCHASER agrees before THE SELLERS to cover the present liability
by THE COMPANY for the concept of purchase of the assets itemized in
Exhibit "G", amounting to the sum of MEX.CY.$7,836,187.13 (seven million
eight hundred and thirty six thousand one hundred and eighty seven pesos
13/100, Mexican currency) (plus the corresponding value-added tax)
precisely on the date of signature hereof.
NINTH.- THE SELLERS confirm and guaranty to THE PURCHASER that
each and all of the trademarks and Confidential Information that were
disclosed to the PURCHASER as used by or related to the business of THE
COMPANY
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<PAGE> 13
are being part, or are in process of being part, of the assets of THE
COMPANY and belong exclusively to THE COMPANY due to the fact that same
are legally and duly recorded, or are in process of that, before the
corresponding authorities, solely and exclusively in favor of THE COMPANY,
and free of any encumbrances . In the event that upon the execution of this
agreement the trademarks used by or related to the business of THE
COMPANY have not been recorded legally and duly in favor of THE COMPANY
before the corresponding authorities, THE SELLERS are hereby obligated to
carry out and to conclude any procedure or act that may be required for such
purposes, as well as to grant in favor of the corresponding person or entity
the necessary powers of attorney to proceed with the legal registry of the
trademarks in favor of THE COMPANY before the authorities and countries
that may be necessary.
TENTH.- THE PURCHASER will cause THE COMPANY to pay those liabilities
of THE COMPANY in favor of Grupo Ifam, S.A. de C.V. and Inversiones
Fambes, S.A. de C.V., contemplated in the Financial Statements, in the total
amount of $7,499,105.00 Mex. Cy. (seven million four hundred ninety nine
thousand one hundred and five pesos 00/100, Mexican currency), within a
period not to exceed forty-five calendar days following the date of this
agreement, subject to the condition precedent that in this date THE SELLERS
have already provided to THE PURCHARSER the non-competition agreement
duly executed by each and all of the current shareholders of Grupo Ifam,
S.A. de C.V. in accordance with paragraph fifth of clause fifteenth below.
In order to guarantee the payment of the amount described in the preceding
paragraph, THE PURCHASER subscribes in this date, and delivers same to
THE SELLERS, a non-negotiable promissory note in favor of THE SELLERS in
the amount of $7,499,105.00 Mex. Cy. (seven million four hundred ninety nine
thousand one hundred and five pesos 00/100, Mexican currency), which will
not accrue any interest, and will be exchange against the payment of such
amount which THE PURCHASER will make to THE SELLERS in accordance with
the preceding paragraph but subject to the condition precedent described
therein.
ELEVENTH.- THE PURCHASER declares that in virtue of the debts
of THE COMPANY in favor of the Woodforest National Bank, contemplated in
the Financial Statements, in the amount of $300,000.00 U.S. dollars (three
hundred thousand dollars 00/100, currency of the United States of America),
it will initiate with such institution a procedure to substitute the guarantees
or, if THE PURCHASERS considers it advisable, will pay the credits in order
to release the guarantees and encumbrances granted, within a period not to
exceed forty-five calendar days following the date of this agreement.
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<PAGE> 14
Likewise, THE PURCHASER declares that in virtue of the debts of THE
COMPANY in favor of the Integra Bank N.V., contemplated in the Financial
Statements, in the amount of $380,000.00 U.S. dollars (three hundred and
eighty thousand dollars 00/100, currency of the United States of America), it
will initiate with such institution a procedure to substitute the guarantees or,
if THE PURCHASERS considers it advisable, will pay the credits in order to
release the guarantees and encumbrances granted, within a period not to
exceed forty-five calendar days following the date of this agreement.
TWELFTH.- THE SELLERS confirm and guarantee to THE PURCHASER
that upon the execution of this agreement every and all of the members of the
Board of Directors, Executive Committee, if any, and attorneys-in-fact of
THE COMPANY, designated or appointed prior to the date of this agreement,
have resigned to their corresponding positions and faculties granted to THE
COMPANY the broadest release as may be necessary in accordance with the
law.
THIRTEENTH.- THE SELLERS confirm and guaranty to THE PURCHASER
that upon the consummation of this agreement they have granted a bond to
THE PURCHASER , with the bonding institution Afianzadora Insurgentes,
whose costs and expenses will be paid by THE SELLERS, for an amount equal
approximately to 20% of the share purchase price described in clause second
above, that is, in the amount of $3,880,000.00 Mex. Cy. (three million eight
hundred and eighty thousand pesos 00/100, Mexican currency), and with a
duration of five years from the date of its issuance, in order to guaranty any
tax, social security, labor or other contingent liabilities existing in THE
COMPANY for acts carried out prior to October 1st, 1997, which have not been
revealed to THE PURCHASER in the Financial Statements, but excluding any
liability derived as a consequence of devolution of inventories for non-
compliance with the terms of the Mexican Norm NOM-050-SCFI-1994. THE
SELLERS confirm to THE PURCHASER that the bond will remain in force even
in the case of any extension, release or stay, and may only be canceled by
express written authorization of the Director General of Dixon Ticonderoga de
Mexico, S.A. de C.V., and the sum which is the object of the bond will not be
reduced during the duration of the bond.
FOURTEENTH.- THE SELLERS agree that they shall be responsible for, and
indemnify THE PURCHASER, and its directors, officers, employees,
consultants or advisors, but exclusively with the bond patrimony described
in the clause thirteenth above, against any cost, loss, damage, actions,
complaints incurred by THE PURCHASER as a result, of derived from, any
tax, social security, labor or
<PAGE>
<PAGE> 15
other contingent liabilities existing in THE COMPANY for acts carried out
prior to October 1st, 1997, which have not been revealed to THE PURCHASER
in the Financial Statements, but excluding any liability derived as a
consequence of devolution of inventories for non-compliance with the terms of
the Mexican Norm NOM-050-SCFI-1994.
a) THE PURCHASER agrees to notify THE SELLERS promptly and in
writing when it has knowledge of any claim or the initiation of any procedure,
action, or claim against it, as a result of which THE PURCHASER may be
affected or it has to be indemnify in terms of this agreement against the bond,
as a result of acts occurred for transactions carried out prior to October 1st,
1997.
b) THE SELLERS may participate in the defense of any procedure, in which
case THE PURCHASER shall not be responsible before third parties of the
expenses incurred by THE SELLERS.
c) The parties may cooperate in the defense, including within such
cooperation the delivery by THE PURCHASER of the registries, documents
and relevant information for the defense of the claim and may give one or more
employees available to THE SELLERS for such purposes. In any case, THE
PURCHASER shall not admit responsibility in any manner whatsoever with
respect to such claim and shall not take any resolution without the prior
approval in writing from THE SELLERS.
d) THE SELLERS shall not be responsible with respect to THE PURCHASER
of any negotiation or settlement carried out with their prior and written
approval, with respect to any claim, legal procedure or trial related to any
of the indemnification provided for herein. THE SELLERS shall not hold their
approval without justified cause.
e) Notwithstanding the foregoing , in the case of any claim from third
parties as a result of transactions carried out prior to October 1st, 1997, by
which THE PURCHASER, acting in good faith and in reasonable manner and
in accordance with the commercial practice, is requested by law or by the
competent courts with respect to (a) claims of third parties related to
products and services provided by the business, or (b) claims made by third
parties which may put in risk the normal operations of the business, and with
the purpose of avoid damage the relations between THE PURCHASER and the
customer, or in order to maintain the rights of THE SELLERS under this
agreement, THE PURCHASER may deliver to the third party, with prior
approval in writing from THE SELLERS, the payment derives from such client
before the conclusion of the legal procedures. In the foregoing case, THE
PURCHASER may pay and
<PAGE>
<PAGE> 16
THE SELLERS shall reimburse to THE PURCHASER such payment but
exclusively with charge to the patrimony of the bond.
FIFTEENTH.- THE SELLERS and THE PURCHASER agree and
acknowledge that as a consequence of the economical benefit that THE
SELLERS, and indirectly their corresponding shareholders, obtain as a result
of the sale of THE SHARES to THE PURCHASER, during the term of 5 (five)
years following the execution of this agreement, Mr. Guillermo Almazan Cueto,
Grupo Ifam, S.A. de C.V. and all of the individuals shareholders of each of
them, shall not compete, directly or indirectly, under any circumstance, with
THE COMPANY or with THE PURCHASER, or their subsidiaries or affiliates,
in regard to the elaboration, manufacture, sale, importation and/or
exportation of products such as those produced, elaborated, manufactured,
sold, imported and/or exported by THE COMPANY.
The aforesaid non-competition obligation shall extend also to those who in the
future may acquire a participation or a interest in the corporate capital of
Grupo Ifam, S.A. de C.V. or its affiliates or subsidiaries. Therefore, said
company shall be responsible for establishing as a requirement for the
acquisition of shares issued by them, the express acceptance of the interested
party in regard to the aforesaid non-competition agreement.
Any person or entity bound by this non-competition agreement shall not
participate as an owner, partner, shareholders, director, employee,
consultant of advisor to an entity that competes, directly or indirectly, with
THE COMPANY or with THE PURCHASER, and their subsidiaries or affiliates,
in regard to the elaboration, manufacture, sale, importation and/or
exportation of products such as those produced, elaborated, manufactured,
sold, imported and/or exported by THE COMPANY.
THE SELLERS agree that they shall be responsible for, and indemnify THE
PURCHASER against any loss or damage incurred by THE COMPANY or by
THE PURCHASER as a result of any acts of competition in violation of the
terms of this clause which are undertaken by Grupo Ifam, S.A. de C.V.,
directly or indirectly, or by their shareholders or by any other person who
becomes their shareholder, director or consultant of them.
The current shareholders of Grupo Ifam, S.A. de C.V. will sign, within a
period not to exceed forty-five calendar days following the date of this
agreement, and in order to be entitled to receive the payment referred to in
clause tenth hereby, the non-competition agreement, which is attached hereto
as Exhibit "H",
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<PAGE> 17
becoming integrating part hereof for all the legal effects applicable, in order
to evidence that each of them is obligated by the non-competition agreement
described in this clause fifteenth.
The parties acknowledge that the foregoing restrictions are reasonably and
necessary for the protection of the business and goodwill of THE COMPANY.
The parties further acknowledge that any violation of the foregoing
restrictions is likely to cost THE COMPANY and/or THE PURCHASER
substantial and irreparable harm. Accordingly, the parties agree that THE
COMPANY and THE PURCHASER shall be entitled to specific performance and
injunctive relief, in addition to such other remedies as may be available.
SIXTEENTH.- For all the matters related hereto the parties state as their
domiciles the following:
THE PURCHASER:
Dixon Ticonderoga de Mexico, S.A. de C.V.
Via Gustavo Baz No. 3826
Fracc. Industrial San Nicolas
54033 Tlalnepantla, Estado de Mexico.
Attention: The Director General
THE SELLERS:
Grupo Ifam, S.A. de C.V.
and Mr. Guillermo Almazan Cueto
Lago Como 262
Col. Anahuac
11320 Distrito Federal, Mexico.
Any notice, summons or request in accordance herewith will be given
in writing and will be personally delivered by certified air mail with
acknowledgment of receipt or by courier service with acknowledgment of
receipt. The notices will be given to any of the parties to the domiciles
established above.
Any change of domicile must be notified by means of a brief, as established
herein, from one party to the other, with a (30) thirty calendar days notice.
SEVENTEENTH.- The parties expressly agree that this Contract completely
replaces, and leaves null and void, each and every one of the documents,
<PAGE>
<PAGE> 18
negotiations, correspondence, understandings and/or agreements, either
verbal or written, subscribed or negotiated among the parties, or among their
representatives, previously to the date hereof with respect to, or related to,
the purpose hereof. This Contract and the agreements and exhibits thereto
contemplated in the body hereto are the sole and total understanding between
the parties regarding the terms and conditions of their relationship. This
Contract will be obligatory and will be in favor of each of the parties and
their respectively authorized successors and assigns, in the understanding that
none of the parties may assign this Contract, either totally or partially,
without the previous consent in writing of the other party.
EIGHTEENTH.- The parties agree that their rights and obligations hereunder
will be ruled by the applicable laws of the United Mexican States, particularly
those applicable in Mexico City, Federal District. For all those matters related
to the interpretation an compliance herewith, the parties expressly submit to
the jurisdiction of the competent courts of Mexico City, Federal District,
waiving their rights to any other jurisdiction which might correspond to them
in virtue of their present or future domiciles.
NINETEENTH.- The parties agree to execute and deliver subsequently to
the date of signature hereof, any other document which may allow to cause full
and proper compliance with the obligations deriving hereof.
Once having the parties learned about the scope and content hereof, they sign
it in agreement with each and every one of its parts, in triplicate, in Mexico
City, Federal District, on December 12,1997.
DIXON TICONDEROGA DE MEXICO, GUILLERMO ALMAZAN CUETO
S.A. DE C.V.
_______(Signature) ________(Signature)
By: Diego Cespedes Creixell
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<PAGE> 19
Grupo Ifam, S.A. de C.V.
_______(Signature)
By: Ramon E. Beteta De Cou
_______(Signature)
By: Bernd Ulrich Klinckwort
