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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) April 5, 1999
Commission File #0-18018
AEROVOX INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 76-0254329
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
740 Belleville Avenue, New Bedford, MA 02745
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(Address of principal executive offices) (Zip Code)
(508) 994-9661
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Registrant's telephone number
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
On April 5, 1999, pursuant to a Stock Purchase Agreement (each a "Stock Purchase
Agreement" and collectively, the "Stock Purchase Agreements"), dated as of April
5, 1999, by and among Registrant and each of Bires Investments B.V., Hobir
Holdings B.V., Kasri Holding B.V., Kato Holding B.V., Renko Investments B.V. and
Tako Holding B.V., all corporations organized under the laws of the Netherlands
(collectively, the "Sellers"), Registrant purchased all of the outstanding
capital stock of Capacitores Unidos, S.A. de C.V., a corporation organized under
the laws of Mexico ("Capacitores") from the Sellers. The aggregate
consideration paid for the capital stock of Capacitores consisted of (i) notes
of the Registrant aggregating $1,089,000 accruing interest at a rate of 5.220%
per annum and payable in full on April 4, 2001, (ii) notes of the Registrant
aggregating $350,000, accruing interest at a rate of 5.320% per annum and
payable in full on April 5, 2002, and (iii) 700,000 shares of common stock of
Registrant (the "Registrant Stock"). Each of the Sellers executed a
Stockholders Agreement (the "Stockholders Agreement"), dated as of April 5,
1999, with the Company which provides for certain restrictions on the transfer
of the Registrant Stock and provides that, in certain circumstances, the holders
of such Registrant Stock may require Registrant to purchase the registrant Stock
at the then current book value thereof. Additionally, the Registrant assumed
the obligations of Capacitores arising from its purchase of certain assets of
CGE S.A. de C.V, principally three notes totaling $3,470,000 one of which in the
amount of $1,750,000 was paid by the Registrant on April 6, 1999. The remaining
two notes are in the amounts $1,509,000 and $211,000, and bear interest at 5.1%
and 5.22% per annum respectively, and mature at April 1,2000 and April 1, 2001,
respectively.
The foregoing description is qualified in its entirety by reference to the Stock
Purchase Agreements, copies of which are attached as Exhibits 2.1 through 2.6
and incorporated herein by reference, and the Stockholders Agreement, a copy of
which is attached as Exhibit 2.7 and incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorize;
AEROVOX INCORPORATED
DATE April 14, 1999 BY /S/ JEFFREY A TEMPLER
------------------------
Jeffrey A. Templer, Senior Vice
President and Chief Financial Officer
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
AEROVOX, INC.
As Buyer
AND
HOBIR HOLDING B.V.
As Seller
DATED AS OF APRIL 5, 1999
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TABLE OF CONTENTS
<TABLE>
<S> <C>
CLAUSE FIRST - PURCHASE AND SALE OF SHARES
CLAUSE SECOND - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE COMPANY
CLAUSE THIRD - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE SHARES
CLAUSE FOURTH - REPRESENTATIONS AND WARRANTIES OF THE BUYER
CLAUSE FIFTH - CONDITIONS TO CLOSING
CLAUSE SIXTH - INDEMNIFICATION
CLAUSE SEVENTH - OTHER AGREEMENTS
CLAUSE EIGHTH - MISCELLANEOUS
Exhibits
Disclosure Schedule
</TABLE>
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of April 5, 1999, by
and among Aerovox, Inc., a Delaware corporation (the "Buyer"), and Hobir Holding
B.V., a Dutch corporation (the "Seller"), sometimes referred herein as the
"Stockholder" or the "Seller", in accordance to the following:
STATEMENTS
1. Seller owns the number of 7894(seven thousand eight hundred ninety four)
issued and outstanding ordinary shares (collectively, the "Shares"), with P$1.00
(One 00/100 Peso Mexican currency) par value per share of common stock of
CAPACITORES UNIDOS, S.A. DE C.V, a Mexican corporation (the "Company") as set
forth opposite to such Stockholder's name on Exhibit A attached hereto; which
Shares in the aggregate represent 15.788% of all of the issued and outstanding
shares of capital stock of the Company;
2. The Buyer desires to purchase the Shares of the Company from the Seller
in consideration of the payments described herein and the indemnities and
guarantees extended hereunder by the Seller; and
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
CLAUSES
FIRST. Purchase and Sale of Shares
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1.1. Purchase of the Shares from the Seller. Subject to and upon the terms
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and conditions of this Agreement, which shall be fulfilled upon the Closing (as
this term is defined hereinafter) Seller sells, transfers, conveys, assigns and
delivers to the Buyer, and the Buyer purchases, acquires and accepts from
Seller, all the Shares owned by such Stockholder, as set forth opposite such
Stockholder's name on Exhibit A attached hereto, such purchase and sale will be
perfected at the Closing.
1.2. Further Assurances. At any time and from time to time after the
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Closing, at the
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Buyer's request, and without further consideration, the Stockholder shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares owned by such
Stockholder, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1.3. Purchase Price for the Shares.
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(a) The amount to be paid by the Buyer for the purchase of the Shares at
the Closing shall be USD$713,459.40 (Seven hundred thirteen thousand four
hundred fifty nine 40/100 U.S. Dollars) (the "Purchase Price").
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholder, a note in the amount of USD$171,931.00 (One
hundred seventy one thousand nine hundred and thirty one U.S. Dollars), payable
two years from the Closing Date, bearing interest at a rate applicable to the
United States treasury obligations of like term, on the terms of the form of
note attached hereto as Exhibit 1.3. (i).
(ii) to the Stockholder, a note in the amount of USD$55,258.00 (Fifty
five thousand two hundred fifty eight U.S. Dollars), payable three years from
the Closing Date, bearing interest at a rate applicable to the United States
treasury obligations of like term, on the terms of the form of note attached
hereto as Exhibit 1.3. (ii).
(The notes referred to in paragraphs (i) to (ii) above will be denominated
collectively the "Notes").
(iii) to the Stockholder, 110,516 (One hundred ten thousand five hundred
sixteen) shares of common stock of Aerovox, Inc. valued at USD$4.40 (four
Dollars and forty cents U.S. currency) subject to the terms and conditions of
the Stockholders Agreement attached hereto as Exhibit 1.3. (iii) (the
"Stockholders Agreement").
1.4. Closing. The closing of the purchase and sale of the Shares hereunder
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(the "Closing") shall take place on April 5, 1999, or at such other date as may
be mutually agreed by the parties hereafter (the "Closing Date").
SECOND. Representations and Warranties of the Seller regarding the Company
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The Stockholder represents and warrants to Buyer that the statements
contained in this CLAUSE SECOND are true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date, except as set forth in the
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disclosure schedule attached hereto and initialed by the Buyer (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Clause
SECOND. No representations or warranties given hereby, shall be considered to be
given on behalf of other stockholders or any other third party different from
the Stockholder.
2.1. Organization, Qualification and Corporate Power. (a) The Company is a
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corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the United Mexican States ("Mexico").
(b) The Company is duly qualified to conduct business in and has complied,
or is in the process of complying with the applicable laws of each jurisdiction
in which its businesses or the ownership or leasing of its properties are
carried out. The Company has all requisite corporate power and authority to
carry on the businesses in which its is engaged and to own and use the
properties owned and used by it. The Company is not in default under or in
violation of any provision of its Charter of Incorporation and Corporate By-laws
(Escritura Constitutiva y Estatutos Sociales).
2.2. Capitalization. The Disclosure Schedule sets forth a true, complete
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and accurate list of the authorized capital stock of the Company, indicating the
number of shares of stock held by each stockholder. All of the issued and
outstanding shares of the Company are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no outstanding
or authorized options, warrants, rights, agreements or commitments to which the
Company is party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting of any shares of the Company. All of
the issued and outstanding shares of the Company were issued in compliance with
applicable laws.
2.3. Non-contravention. Neither the execution and delivery of this
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Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated herein, will, directly or indirectly and with or
without notice or lapse of time or both, (a) conflict with or violate any
provision of the Charter or By-laws of the Company, (b) require on the part of
the Company or any of its stockholders any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) 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, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound
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or to which any of their assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge,
restriction or other lien (whether arising by contract or by operation of law).
2.4. Subsidiaries. The Company does not own or control, directly or
------------
indirectly, any interest in any corporation, partnership, trust or other
business association or entity.
2.5. Financial Statements. The Company will provide to the Buyer a balance
--------------------
sheet as of the Closing Date. Such balance sheet (the "Balance Sheet") have been
prepared in accordance with Mexican Generally Accepted Accounting Principles,
fairly present the financial condition, results of operations and cash flows of
the Company as of the Closing Date and are consistent with the books and records
of the Company.
2.6. Absence of Certain Changes. As of the Closing Date, there has not
--------------------------
been any material adverse change in the consolidated assets, business, financial
condition or results of operations of the Company, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
2.7. Undisclosed Liabilities. Except as set forth in CLAUSE 2.7 of the
-----------------------
Disclosure Schedule, the Company has no liability (whether absolute or
contingent, liquidated or non-liquidated and whether due or to become due) which
by its nature should have been known and which would have been required by
Mexican GAAP to be reflected on a balance sheet, except for liabilities shown on
the balance sheet referred to in Clause 2.6 (the "Most Recent Balance Sheet").
2.8. Tax Matters. (a) The Company has filed on a timely basis all Tax
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Returns (as defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. The Company has paid all
Taxes (as defined below) that are shown to be due on any such Tax Returns. The
Company has no actual or potential liability for any Tax obligation of any
taxpayer. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required have
been paid to the proper Governmental Entity. There are no liens for Taxes on the
assets of the Company. For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other similar assessments or liabilities, including,
without limitation, income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, service, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
Mexican States, or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United Mexican States, or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports,
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returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, if any. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated.
(c) Except for as set forth in CLAUSE 2.8 (c) of the Disclosure Schedule,
the Company has not failed to pay any penalty, fine or addition to Tax in
respect of any filing or failure to file any Tax Return, or any failure to
timely pay any Tax, or in respect of any other claim or assessment by any taxing
authority in respect of any Taxes.
2.9. Assets. The Company owns or leases all assets necessary for the
------
conduct of its business as presently conducted. Each such asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. Each of
the assets (tangible or intangible) which is not owned by the Company is in such
condition that there is no reason to assume that, the obligations of the Company
to such owner or lessor should not be discharged, upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreements between the
Company and the owner or lessor thereof. Except for those described in Exhibit
2.9 hereto, no asset of the Company (tangible or intangible) is subject to any
Security Interest. The Company is not in violation nor in breach or default on
its obligation derived from certain asset purchase agreement between Compania
General de Electronica, S.A. de C.V. and the Company, dated April 1, 1999, nor
has any knowledge or is aware that Compania General de Electronica, S.A. de C.V.
has violated, breached or defaulted such asset purchase agreement.
2.10. Owned Real Property. Other than any leases described in CLAUSE 2.13
-------------------
of the Disclosure Schedule, the Company does not own any interest in any real
property, directly or indirectly.
2.11. Intellectual Property. (a) The Company owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use all material Intellectual
Property (as defined in paragraph (d) below), that is, or that covers
technology, used to conduct its business as presently conducted or as presently
proposed to be conducted. CLAUSE 2.11 of the Disclosure Schedule lists (i) all
material patents and patent applications and all trademarks, copyrights, trade
names, service marks and trade secrets which are used in the business of the
Company, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for such
issuance or registration has been filed, and whether such Intellectual Property
is owned or licensed by the Company, (ii) all material written licenses,
sublicenses and other agreements to which the Company is party and pursuant to
which any
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person is authorized to use any Intellectual Property rights, and (iii) all
material written licenses, sublicenses and other agreements as to which the
Company is party and pursuant to which the Company is authorized to use any
third party patents, trademarks, or service marks, trade secrets, know-how or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company. The Company is not a party to any oral
license, sublicense or agreement.
(b) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any license, sublicense or other agreement relating
to Intellectual Property or Third Party Intellectual Property Rights.
(c) The Company has not been named in any suit, action or proceeding which
involves a claim of infringement of any Intellectual Property right of any third
party. To Seller's knowledge, the manufacturing, marketing, licensing and sale
of the products or performance of the service offerings of the Company do not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Seller, the rights of the Company with respect to Intellectual
Property are not being infringed by activities, products or services of any
third party.
(d) "Intellectual Property" means all patents, trademarks, trade names,
---------------------
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material.
2.12. Inventory. Except as set forth in CLAUSE 2.12 of the Disclosure
---------
Schedule, all inventory of the Company, whether or not reflected on the Most
Recent Balance Sheet, consists of a quality and quantity usable and saleable in
the Ordinary Course of Business, except for obsolete items and items of below-
standard quality, all of which have been written-off or written-down to net
realizable value on the Most Recent Balance Sheet. The quantities of each type
of inventory, whether raw materials, work-in-process or finished goods of the
Company, are appropriate in the present circumstances of the Company.
2.13. Real Property Leases. CLAUSE 2.13 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer true, correct and
complete copies of the leases and subleases (as amended to date) listed in
CLAUSE 2.13 of the Disclosure Schedule. The Company is not party to, or
otherwise obliged with respect to, any lease or sublease for facilities, which
are not occupied by the Company. With respect to each lease and sublease listed
in CLAUSE 2.13 of the Disclosure Schedule:
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(a) the lease or sublease is legal, valid, binding, enforceable and in full
force and effect;
(b) there is no reason which would impair the lease or sublease to continue
to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(c) the Company is not in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities in
the manner in which such facilities are currently operated and as presently
contemplated by the Company; and
(g) the owner of the facility leased or subleased, has stated that, it has
good and clear record and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or other restriction,
that would interfere in any material respect with the Company's operations
thereon, and there have been no actions to believe the contrary.
2.14. Contracts. CLAUSE 2.14 of the Disclosure Schedule sets forth a true,
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complete and accurate list of the following written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of USD$1,000 (One thousand U.S. Dollars) per annum;
(b) any written arrangement (or group of related written arrangements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which by its
terms may not be terminated upon 30 (thirty) days notice by the Company without
any premium, penalty or termination fee and (i) which calls for performance over
a period of more than one year, (ii) which involves more than the sum of
USD$1,000 (One thousand U.S. Dollars) or, in the case of open customer purchase
orders or purchase orders from any one purchaser or group of related purchasers,
involves in the aggregate more than USD$1,000 (One thousand U.S. Dollars) for
any such one purchaser or group of related purchasers, or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
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territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
(c) any written arrangement establishing a partnership or joint venture;
(d) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than USD$1,000 (One thousand U.S. Dollars) or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or non-competition;
(f) any written arrangement involving the Stockholder or any persons or
entities controlling, controlled by or under common control with the Stockholder
("Affiliates") in which the Company is party to;
(g) any written arrangement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect on
the assets, business, financial condition or results of operations of the
Company; and
(h) any other written arrangement (or group of related written
arrangements) either involving more than USD$1,000 (One thousand U.S. Dollars)
or not entered into in the Ordinary Course of Business.
The Company has delivered to the Buyer a true, correct and complete copy of
each written arrangement (as amended to date) listed in CLAUSE 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) the Company is not, and to the knowledge of the Stockholder, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in CLAUSE 2.14 of the Disclosure
Schedule under the terms of this Clause 2.14.
2.15. Accounts Receivable; Contracts in Progress. All accounts receivable
------------------------------------------
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and, to Seller's knowledge, collectible
as has been in the Ordinary Course of Business. All accounts receivable
reflected in the financial or accounting records of the Company
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that have arisen since the date of the Most Recent Balance Sheet are valid
receivables subject to no setoffs or counterclaims and are, to Seller's
knowledge, collectible within the Ordinary Course of Business.
2.16. Powers of Attorney. Except as set forth in CLAUSE 2.16 of the
------------------
Disclosure Schedule, the Company has not granted any general or special powers
of attorney outstanding (whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.17. Insurance. CLAUSE 2.17 of the Disclosure Schedule sets forth all the
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information with respect to each current insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is party, has been named insured, or
otherwise is the beneficiary of coverage at any time.
(i) Each such insurance policy is enforceable and in full force and effect
through the Closing; (ii) the Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices) under such
policy, and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iii) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. The Company is covered by
insurance in scope and amount customary and reasonable for the businesses in
which it is engaged.
2.18. Litigation. CLAUSE 2.18 of the Disclosure Schedule identifies, and
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contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of, in or brought before (by a private
party or otherwise) any Governmental Entity or before any arbitrator to which
any of the Company is a party or, to the knowledge of the Company, is threatened
to be made a party. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in CLAUSE 2.18 of the Disclosure Schedule
could reasonably be expected to have a material adverse effect on the assets,
business, financial condition, results of operations of the Company.
2.19. Product Warranty. Some products manufactured, sold, leased, licensed
----------------
or delivered by the Company are subject to a one year shelf or field guaranty,
and no other warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale, are applicable. The standard terms and
conditions of sale are set forth in CLAUSE 2.19 of the Disclosure Schedule.
2.20. Employees. CLAUSE 2.20 of the Disclosure Schedule contains a list of
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all
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employees of the Company, along with the position and the annual rate of
compensation of each such person. There are no confidentiality/assignment of
invention agreement signed with the employees of the Company, except as set
forth in CLAUSE 2.20 of the Disclosure Schedule. To the knowledge of the Company
but without inquiry or independent investigation, no key employee or group of
employees of the Company has any plans to terminate employment with the Company.
The Company has not experienced any strikes, material grievances, material
claims of unfair labor practices or other collective bargaining disputes.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein, will trigger or otherwise result in any
obligation of the Company to pay severance or related costs under any employment
or consulting agreement. The Company enjoys good relations with all labor unions
and employee syndicates to which their employees belong, and no notification to
any labor union or employee syndicate is required in connection with the
transactions contemplated herein.
2.21. Employee Benefits. The Company has paid all employee benefits
-----------------
required to be paid by law, including, without limitation, pension, retirement,
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, health benefits, vacations, cafeteria programs and the
like ("Employee Benefits"). Each Employee Benefit has been administered in all
material respects in accordance with its terms and the Company has in all
material respects met its obligations with respect to such Employee Benefit and
has made all required contributions thereto. The Company is in compliance with
all applicable laws and regulations relating to Employee Benefits, and there are
no investigations by any Governmental Entity with respect thereto.
2.22. Environmental Matters. (a) The Company has complied or is in the
---------------------
process of complying with all applicable Environmental Laws, when applicable.
Except as set forth in CLAUSE 2.22 of the Disclosure Schedule, there is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" or "Environmental Laws" shall mean any Mexican
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including, without limitation,
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
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processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
(b) There have been no releases or threats of release by the Company, or to
the knowledge of the Company, any other party, of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company. With respect to any such releases or threats of release of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company have no knowledge of any releases of Materials of Environmental Concern
at parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products, or
radiological materials.
(c) Set forth in CLAUSE 2.22(c) of the Disclosure Schedule is a list of all
environmental reports, investigations and audits known to the Company that
relate to premises currently or previously owned or operated by the Company
(whether conducted by or on behalf of the Company or a third party, and whether
done at the initiative of the Company or directed by a Governmental Entity or
other third party) which the Company has in its possession or knowledge of.
Complete and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer or, if not in the
possession of the Company, identified in CLAUSE 2.22(c) of the Disclosure
Schedule.
(d) Set forth in CLAUSE 2.22(d) of the Disclosure Schedule is a list of all
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities and all recycling, reclamation or re-use transporters and
facilities that have been utilized by the Company. The Company has no knowledge
of any material environmental liability of any such transporter or facility.
2.23. Legal Compliance. Except as set forth in Clause 2.23 of the
----------------
Disclosure Schedule, the Company is conducting and has conducted its respective
operations and business in compliance with each law (including rules and
regulations thereunder) of all applicable federal, state, local or foreign
government, or any Governmental Entity. The Company has not received any notice
or communication from any Governmental Entity alleging noncompliance with any
applicable federal, state, local or foreign laws, regulations or orders.
2.24. Permits. CLAUSE 2.24 of the Disclosure Schedule sets forth a list of
-------
all permits,
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licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including, without limitation, those issued or required under
Environmental Laws, relating to the occupancy or use of owned or leased real
property and relating to the import or export of materials, goods or products)
("Permits") issued to or held by the Company. Such listed Permits are the most
relevant Permits that are required for the Company to conduct its respective
businesses as presently conducted. Except as set forth in CLAUSE 2.24 of the
Disclosure Schedule, each such Permit is in full force and effect and (a) no
suspension or cancellation of such Permit is threatened and (b) there is no
basis for believing that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect immediately following the
Closing and will not be affected by this Agreement.
2.25. Certain Business Relationships with Affiliates. No Affiliate of the
----------------------------------------------
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company or (c) owes any money to any of the Company. CLAUSE 2.25 of the
Disclosure Schedule describes any transactions or relationships between the
Company, on the one hand, and any Affiliate thereof or any Stockholder, on the
other hand.
2.26. Brokers' Fees. The Company has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to this
Agreement.
2.27. Books and Records. The minute books, stock record books and other
-----------------
similar records of the Company contain true and complete records of all actions
taken at any meetings of its stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. A certification of the corresponding Secretary of the Board of
Directors of the Company is attached to the corresponding corporate books to
certify so. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28. Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture or deliver products or perform
services will result in a material loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, and there are no prices provided therein in excess of
current market prices for the products or services to be provided thereunder. No
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products, or services to the Company and no
material customer of the Company has indicated that it will stop, or decrease
the rate of, buying, leasing or licensing materials, products or services from
the Company.
2.29. Banking Facilities. CLAUSE 2.29 of the Disclosure Schedule sets forth
------------------
a true, correct and complete list of:
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(a) each bank, savings and loan or similar financial institution at which
the Company has an account, safety deposit box, line of credit or credit
facility and the numbers of the accounts or safety deposit boxes maintained by
the Company thereat and details, including terms, of any line of credit or
credit facility; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a description
of the authority (and conditions thereof, if any) of each such person with
respect thereto.
2.30. Consents. Except as set forth in CLAUSE 2.30 of the Disclosure
--------
Schedule, no filing, consent, waiver or approval of any third party or
Governmental Entity is required to be obtained by Seller or the Company in
connection with this Agreement.
2.31. Disclosure. No representation or warranty by the Stockholder
----------
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered to or
to be delivered by or on behalf of the Stockholder pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
Stockholder has not failed to disclose any information that would make the
written representations contained within this Agreement misleading.
THIRD. Representations and Warranties of the Seller regarding the Shares
-----------------------------------------------------------------
The Stockholder represents and warrants to the Buyer as follows:
3.1. Title to Shares. The Stockholder has good and marketable title to the
---------------
Shares which are to be transferred to the Buyer by such Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, preferential rights, rights of first refusal, liens,
charges, encumbrances, options and adverse claims or rights whatsoever. There
are no options, warrants or other claims to the capital stock of the Company
owned by such Stockholder.
3.2. Authorization. The Stockholder has the full right, power and authority
-------------
to enter into this Agreement and to transfer, convey and sell to the Buyer at
the Closing the Shares to be sold by such Stockholder hereunder and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
such Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
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3.3. Absence of Conflicting Agreements or Litigation. The Stockholder is
-----------------------------------------------
not a party to, subject to or bound by any agreement or any judgment, order,
writ, prohibition, injunction or decree of any court or other governmental body
which would prevent or conflict with the execution or delivery of this
Agreement by such Stockholder or the transfer, conveyance and sale of the Shares
to be sold by such Stockholder to the Buyer pursuant to the terms hereof.
3.4. Brokers. No broker or finder has acted for the Stockholder in
-------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of such Stockholder.
FOURTH. Representations and Warranties of the Buyer
-------------------------------------------
The Buyer represents and warrants to the Stockholder as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, United
States of America.
4.2. Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Notes by the Buyer and the performance of this Agreement and
the consummation of the transactions contemplated hereby by the Buyer have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the Notes have been duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms. Messrs.
Robert Elliott and Jeffrey Templer are duly appointed representatives of Buyer
for this transaction, and have all necessary power and capacity to enter into
and execute all necessary documents related hereto, on behalf of Buyer.
4.3. Buyer's stock. Buyer's shares as described in Clause 1.3 (b) (ii)
-------------
hereof, have been duly and validly authorized and issued and are fully paid and
nonassessable.
4.4. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the Charter or By-laws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject, or (d) violate
15
<PAGE>
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer or any of its properties or assets.
4.5. Brokers' Fees. No broker or finder has acted for the Buyer in
-------------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Buyer.
FIFTH. Conditions to Closing
---------------------
5.1. Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by the Buyer, of the following conditions on or prior to
the Closing:
(a) the Company shall have obtained all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement, including,
without limitation, those referred to in CLAUSE 2.30 of the Disclosure Schedule;
(b) the representations and warranties of the Stockholder set forth in
Clause SECOND and Clause THIRD hereof shall be true and correct;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Buyer to own, operate or control any of the
assets or operations of the Company, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the Stockholder shall have delivered to the Buyer the stock
certificates representing the Shares, in each case duly endorsed or with duly
executed stock powers attached;
(e) the Company shall have delivered a certificate, executed by the
Secretary of the Company, attaching and certifying as to: (i) the charter
documents (estatutos sociales) of the Company and (ii) the resolutions of the
Board of Directors of the Company required to authorize this Agreement.
(f) to the extent reasonably available in the applicable jurisdiction, the
Company shall have delivered certificates of appropriate governmental officials
in each jurisdiction in which the Company or the Stockholder is incorporated,
resident or required to qualify to do business as a
16
<PAGE>
foreign corporation, as to the due qualification (including tax) of the Company
or Stockholder, as the case may be, in each such jurisdiction;
(g) the Buyer shall have received from Mexican counsel to the Stockholder
an opinion as to the matters described in Exhibit 5.1. g) hereto, dated as of
the Closing Date;
(h) the Company shall have delivered the original corporate minute books of
the Company;
(i) the signatories to each of the bank accounts of the Company shall have
been changed as per the Buyer's instructions;
(j) the Buyer or its designee shall have entered into an Employee Agreement
with Mr. Enrique Sanchez Aldunate;
(k) the Stockholder shall have delivered to the Buyer a certificate (in
each case without regard to any qualification as to knowledge or materiality set
forth in any representation or warranty) to the effect that each of the
conditions specified in clauses (a), (b), (c), and (d), of this Clause 5.1 has
been satisfied in all respects; and
(l) the Stockholder shall have delivered to the Buyer a certificate that
establishes the share distribution of the Company, and indicating that no other
person other than the Stockholder owns or has any right upon the Shares.
5.2. Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Stockholder to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver of the following
conditions:
(a) the representations and warranties of the Buyer set forth in Clause
FOURTH hereof shall be true and correct;
(b) the Buyer shall have delivered the Purchase Price (including the Notes
and the shares referred in Clause 1.3. (b) above) to the Stockholder;
(c) the Buyer shall have executed a securities pledge agreement to guaranty
the due payment, of the Notes to the Stockholder, in accordance with the
terms and conditions established in the Securities Pledge Agreement, which
is attached to this Agreement as Exhibit 5.2 (c); and
(d) Seller shall have received from counsel to Buyer an opinion stating
that the Notes and the shares of the buyer to be received by Seller have
been duly and validly issued, that such shares are non assessable, and that
the Notes are binding upon Buyer and
17
<PAGE>
enforceable in accordance with their respective terms.
SIXTH. Indemnification
---------------
6.1. Indemnification by the Stockholder. Subject to Clause 6.6 and Clause
----------------------------------
6.8 hereof, the Stockholder shall indemnify the Company and the Buyer in respect
of, and hold harmless the Company and the Buyer against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, whether due or to become due or otherwise), monetary damages,
fines, fees, penalties, interest obligations, deficiencies, losses and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigators, fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation)
("Damages") arising out of or related to any of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Stockholder in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Stockholder
contained in this Agreement, or any other agreement, instrument or document
attached to or delivered in connection with this Agreement as an exhibit or a
schedule;
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the Stockholder or the Company pursuant to this Agreement;
(d) any claim (including, without limitation, warranty and personal injury
arising out of product liability claims), suit, action, arbitration, proceeding,
investigation or other similar matter which relates to (i) products manufactured
or sold by the Company prior to the Closing Date or (ii) the business or
operations of the Company prior to the Closing Date;
(e) any claim, action or audit by any Governmental Entity in connection
with the formation, establishment, maintenance, operation, winding-up or
dissolution of the Stockholder or the Company, including but not limited to fees
of attorneys, agents, auditors and inspectors, capital requirements and any
other amounts;
(f) any claim by a stockholder or former stockholder of the Company or any
other person, firm, corporation or entity, other than the Buyer, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
capital stock of or equity interest in the Company; (ii) any rights under the
Charter or By-laws of the Company; or (iii) any claim that his or its shares
were wrongfully repurchased by any stockholder at any time prior to the Closing;
and
(g) any claim for Taxes payable by Seller or the Company derived from this
agreement and the subject matter hereof.
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6.2. Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Stockholder in respect of, and hold such Stockholder harmless against any and
all Damages arising out of or related to each and all of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement, or any other agreement, instrument or document
contemplated by this Agreement; and
(c) any claim (including, without limitation, warranty and product
liability claims), suit, action, arbitration proceeding, investigation or other
similar matter which relates to (i) products manufactured or sold by the Company
after the Closing Date or (ii) the business or operations of the Company
following the Closing Date.
6.3. Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this CLAUSE SIXTH, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom indemnification
is sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that Stockholder shall
-------- -------
have no obligation to indemnify Company and/or Buyer and/or hold Company and/or
Buyer harmless from any Damages or claim asserted at a time beyond the time
limitation period imposed by paragraph 6.6., below. In the event of any such
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Except as provided in Clause 6.4(d), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against an Indemnified Party and the
Indemnifying Party shall not have taken control of such suit as provided in
Clause 6.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim without the Indemnifying Party's consent.
6.4. Defense by the Indemnifying Party. (a) Subject to Clause 6.4(d), in
---------------------------------
connection with any claim for indemnification hereunder resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, at his or its sole cost and expense, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, (ii) the third party seeks monetary
damages only and (iii) an adverse resolution of the third party's claim would
not have a material adverse effect on the goodwill or reputation of the
Indemnified Party.
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(b) If the Indemnifying Party so assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claim or
legal proceeding and, at the sole cost and expense of the Indemnifying Party,
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding that (i) involves any
non-monetary judgement affecting the Indemnified Party or (ii) does not involve
the delivery of a general release in favor of the Indemnified Party, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest).
(c) If the Indemnifying Party does not (or is not permitted under the terms
hereof to) assume the defense of any such claim or litigation resulting
therefrom as provided in this Clause 6.4 within 15 days after the date that the
Indemnified Party has given notice of the claim to the Indemnifying Party: (i)
the Indemnified Party may defend against such claim or litigation in such manner
as he or it may deem appropriate, including, but not limited to, settling such
claim or litigation on such terms as the Indemnified Party may deem appropriate;
and (ii) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and at his or its
own expense.
6.5. Treatment of Indemnity Payments. Subject to the express liability
-------------------------------
limitation set forth in Clause 6.8., below, to the extent that any
indemnification claim under this Clause SIXTH may be satisfied by payments to
Buyer (excluding Stockholder's defense of claims, as provided in Section 6.4),
they may be satisfied in whole or in part by delivering one or more of the
following, in such amounts or equivalent value required to pay the costs for
such indemnity claim:
(i) cash; and/or
(ii) a written instrument of accord satisfaction for the cancellation of
all or part of the outstanding principle amount and accrued interest of one
or more of the Notes; and/or
(iii) the endorsement and transfer of all or portion of the shares of
Buyer's stock received by Stockholder as provided in Clause 1.3 (b) (iii)
above. The number of the shares of Buyer's stock to be so transferred shall
be based on the book value of those shares at the end of the Buyer's most
recent fiscal year ended, as determined in accordance with GAAP as then in
effect and as shown on the audited balance sheet of the Buyer for the last
day of the most recent audited fiscal period.
20
<PAGE>
To the extent that the transactions under subclauses (ii) and (iii) above
are insufficient to satisfy Buyer's indemnity claim, the balance shall be paid
by the Stockholder in cash, or such other form as may be acceptable by written
agreement with the Buyer.
6.6. Survival. All general representations and warranties and all
--------
covenants, agreements and obligations made by the Stockholder in this Agreement,
or in any instrument or document furnished in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, any
obligation of Stockholder under this CLAUSE SIXTH to indemnify Buyer and/or
Company and/or hold Buyer and/or Company harmless, shall survive for a period of
2 (two) years after the Closing Date, except (i) for those representations and
warranties, covenants, agreements and obligations made by the Stockholder in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby that refer to title to
the assets of the Company and ownership of the Shares, which will survive for a
period of 5 (five) years counted from Closing Date, and except (ii) for those
representations and warranties, covenants, agreements and obligations made by
the Stockholder in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby referring
to Taxes and personal injuries arising out of product liability claims, which
shall expire and terminate upon the applicable statute of limitations. Any
claims asserted in writing prior to the expiration of the representation,
warranty or agreement that is the basis for such claim, if any, as provided in
this Clause 6.6, shall survive until finally resolved and satisfied in full.
6.7. Remedies. Notwithstanding any other provision of this Agreement, Buyer
--------
shall not be entitled to any reduction in the Purchase Price, setoff any amount
against the principal balance of the Notes, or to damages for breach of any
representation and warranty or for any claim for indemnity under this CLAUSE
SIXTH, unless and until the aggregate amount of claims by Buyer exceeds the sum
of USD$100,000.00 (One Hundred Thousand Dollars legal currency of the United
States of America).
Except for Seller's obligation to indemnify Buyer and/or Company for any
claim of Damages derived from Taxes payable by Seller or the Company in
connection with this agreement and the subject matter hereof, and/or Seller's
liability for any breach of the written representations and warranties of Seller
relating to Taxes, which indemnification obligation will not be subject to any
limitation, in no other event shall Seller's obligations to indemnify Buyer
and/or Company, or Seller's liability for any breach of the written
representations and warranties of Seller under this Agreement, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, exceed the Purchase Price.
6.8. Limited Indemnity Obligation. In no event shall Stockholder be liable
----------------------------
for any consequential damages, opportunity costs or lost profits incurred or
suffered by Buyer and/or Company.
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SEVENTH. Other Agreements
----------------
7.1. Proprietary Information. (a) From and after the Closing the
-----------------------
Stockholder shall hold in confidence, and shall cause all of his Affiliates to
hold in confidence, all knowledge, information and documents of a confidential
nature or not generally known to the public with respect to the Company or the
Buyer (including without limitation the financial information, Intellectual
Property, technical information or data relating to the materials, products or
components sold, or the services offered, in connection with the Company and
names of customers of the Company) (collectively, "Proprietary Information") and
shall not disclose or make use of, and shall cause their respective Affiliates
not to disclose or make use of, Proprietary Information without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge or independently obtained by
Seller, other than through a breach of this Agreement by the Stockholder or
their respective Affiliates and agents.
7.2. Releases. The Stockholder hereby releases and forever discharges the
--------
Company, its successors, assigns, agents, servants, employees, principals,
administrators, stockholders, affiliates, subsidiaries and related companies
(including the Buyer) of and from any and all actions, causes of action, claims,
demands, costs, liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which such Stockholder ever had, now has or may have
against the Company. This release is binding on the Stockholder's assignees and
personal representatives.
7.3. Cooperation in Litigation. Each party shall fully cooperate with the
-------------------------
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter by a third party against or by
such other party relating to or arising out of the conduct of the business of
the Company or the Buyer prior to or after the Closing Date (excluding
litigation arising out of the transactions contemplated by this Agreement). The
party providing such cooperation shall be entitled to designate which of its
employees shall be made available for such purpose and the party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and agents
and a reasonable charge for their time spent in such cooperation.
7.4. Restriction on Transfers of Ownership. As part of the Purchase Price
-------------------------------------
for the Shares, the Stockholder will receive certain shares of common stock of
Aerovox, Inc., as described in Clause 1.3. (b) (iii) above, which are subject to
the terms and conditions and certain transfer restrictions provided for in the
Stockholders Agreement. The Stockholder agrees, because of such consideration,
to be obliged by such transfer restrictions and to procure that the holder or
holders of its own capital stock (or other forms of ownership and corporate
control over such Stockholder) do not transfer such ownership or control to any
third party, except as provided in the Stockholders Agreement. For this purpose,
Exhibit 7.4 provides the current capital or equity structure of the Stockholder.
The Stockholder further agrees that breach of this obligation, would
22
<PAGE>
be considered a default of this Agreement, subject to the indemnification and
remedies herein established.
7.5. Right to Set-off and recoupment. Buyer will have the right to set-off
-------------------------------
any amount from the Notes, and will also have the right of recoupment, derived
from any defense or claim against the Stockholder, whether derived from any
equitable right of defense or claim extrinsic to the ones derived from this
Agreement or derived from this Agreement, in accordance to the Civil Code for
the Federal District of Mexico (Codigo Civil para el Distrito Federal), and the
General Law of Credit Instruments and Credit Operations of Mexico (Ley General
de Titulos y Operaciones de Credito).
EIGHTH. Miscellaneous
-------------
8.1. Press Releases and Announcements. The Stockholder shall not issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written consent of the Buyer.
8.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the parties and their successors
and permitted assigns.
8.3. Entire Agreement. This Agreement (including the exhibits and schedules
----------------
hereto) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
8.4. Succession and Assignment. This Agreement shall be binding upon and
---------- --- ----------
inure to the benefit of the parties named herein and their 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 the other parties; provided, however, that notwithstanding the foregoing, the
-------- -------
Buyer may assign its rights, interests and obligations hereunder to an Affiliate
of the Buyer.
8.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6. Headings. The clause headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall
23
<PAGE>
be deemed duly delivered ten (10) business days after it is sent by registered
or certified air mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable international overnight courier
service, in each case to the intended recipient as set forth below:
If to the Buyer: Aerovox, Inc.
740 Belleville Avenue
New Bedford Ma. 02745-6194
Attn: Mr. Jeffrey Templer
Senior Vice President
If to the Seller: Amsterdam Stravinskylaan 1725,
1077 XX, Amsterdam
Attn: Mr. Francisco Lucia Salazar
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
telecopy, provided that a hard copy is concurrently delivered by regular mail or
courier, or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
8.8. Governing Law. This Agreement, and all disputes hereunder, shall be
-------------
governed by and construed in accordance with the laws of the United Mexican
States.
8.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Stockholder. 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.
8.10. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the
24
<PAGE>
expiration of the time within which the judgment may be appealed.
8.11. Expenses. Each of the parties shall bear its own costs and expenses,
--------
including legal fees and expenses and fees and expenses owed to external
advisors, incurred in connection with this Agreement and the transactions
contemplated hereby.
8.12. Knowledge. For purposes of this Agreement, "knowledge" of the Company
---------
shall be deemed to mean such information as is known by the officers, directors
or management of any of the Company, that would reasonably be expected to be
known by persons in such positions.
8.13. Dispute Resolution. (a) General. In the event that any dispute should
------------------- -------
arise between the Parties with respect to any matter covered by this Agreement
or the interpretation of this Agreement, excluding, however, enforcement of a
default by the Buyer in any payment on any of the Notes, the parties shall
resolve such dispute in accordance with the procedures set forth in this Clause
8.13.
(b) Arbitration. (i) Any Party may submit any matter referred to in Clause
-----------
8.13(a) to arbitration by notifying the other parties hereto, in writing, of
such dispute. Within 10 days after receipt of such notice, the Parties shall
designate in writing one arbitrator to resolve the dispute; provided, that if
the Parties cannot agree on an arbitrator within such 10-day period, the United
States Chamber of Commerce shall select the arbitrator. The arbitrator so
designated shall not be an Affiliate, employee, consultant, officer, director or
stockholder of any Party. The arbitrator shall have at least ten (10) years'
experience in the field of international commercial transactions.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to Clause
8.13(b)(ii), to discuss each of the issues identified by the Parties. Each such
Party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
8.13(b)(iii). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto, provided
however, that the arbitrator shall have no authority to award punitive or
exemplary damages to any party. All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties.
(v) Any attorneys' fees of the Parties in any arbitration shall be borne
by the Parties as
25
<PAGE>
determined by the arbitrator, together with the fees of the arbitrator and the
costs and expenses of the arbitration.
(vi) Any arbitration pursuant to this Clause 8.13 shall be conducted in New
Bedford, Massachusetts, United States of America or other mutually acceptable
location, in the English language. Any arbitration award may be entered in and
enforced by any court having jurisdiction thereover and shall be final and
binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Clause 8.13 shall be
construed as limiting in any way the right of a Party to seek injunctive relief
with respect to any actual or threatened breach of this Agreement from a court
of competent jurisdiction.
8.14. Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any party. 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.
8.15. Currency. All amounts set forth in this Agreement are in United
--------
States Dollars. To the extent that conversion of other currencies into U.S.
Dollars is required for the computation of amounts under this Agreement, such
conversion shall be computed based on the currency conversion rate used by
Aerovox, Inc. to prepare its published financial statements on the date on which
such conversion must be computed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER
AEROVOX, INC.
BY/S/JEFFREY A. TEMPLER
-----------------------
Title: Attorney-in-fact
SELLER / STOCKHOLDER
HOBIR HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Title: Attorney-in-fact
26
<PAGE>
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
AMONG
AEROVOX, INC.
As Buyer
AND
KASRI HOLDING B.V.
As Seller
DATED AS OF APRIL 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CLAUSE FIRST - PURCHASE AND SALE OF SHARES
CLAUSE SECOND - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE COMPANY
CLAUSE THIRD - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE SHARES
CLAUSE FOURTH - REPRESENTATIONS AND WARRANTIES OF THE BUYER
CLAUSE FIFTH - CONDITIONS TO CLOSING
CLAUSE SIXTH - INDEMNIFICATION
CLAUSE SEVENTH - OTHER AGREEMENTS
CLAUSE EIGHTH - MISCELLANEOUS
Exhibits
Disclosure Schedule
</TABLE>
1
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of April 5, 1999, by
and among Aerovox, Inc., a Delaware corporation (the "Buyer"), and Kasri Holding
B.V., a Dutch corporation (the "Seller"), sometimes referred herein as the
"Stockholder" or the "Seller", in accordance to the following:
STATEMENTS
1. Seller owns the number of 7894(seven thousand eight hundred ninety four)
issued and outstanding ordinary shares (collectively, the "Shares"), with P$1.00
(One 00/100 Peso Mexican currency) par value per share of common stock of
CAPACITORES UNIDOS, S.A. DE C.V, a Mexican corporation (the "Company") as set
forth opposite to such Stockholder's name on Exhibit A attached hereto; which
Shares in the aggregate represent 15.788% of all of the issued and outstanding
shares of capital stock of the Company;
2. The Buyer desires to purchase the Shares of the Company from the Seller
in consideration of the payments described herein and the indemnities and
guarantees extended hereunder by the Seller; and
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
CLAUSES
FIRST. Purchase and Sale of Shares
---------------------------
1.1. Purchase of the Shares from the Seller. Subject to and upon the terms
--------------------------------------
and conditions of this Agreement, which shall be fulfilled upon the Closing (as
this term is defined hereinafter) Seller sells, transfers, conveys, assigns and
delivers to the Buyer, and the Buyer purchases, acquires and accepts from
Seller, all the Shares owned by such Stockholder, as set forth opposite such
Stockholder's name on Exhibit A attached hereto, such purchase and sale will be
perfected at the Closing.
1.2. Further Assurances. At any time and from time to time after the
------------------
Closing, at the
2
<PAGE>
Buyer's request, and without further consideration, the Stockholder shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares owned by such
Stockholder, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1.3. Purchase Price for the Shares.
-----------------------------
(a) The amount to be paid by the Buyer for the purchase of the Shares at
the Closing shall be USD$713,459.40 (Seven hundred thirteen thousand four
hundred fifty nine 40/100 U.S. Dollars) (the "Purchase Price").
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholder, a note in the amount of USD$171,931.00 (One
hundred seventy one thousand nine hundred and thirty one U.S. Dollars), payable
two years from the Closing Date, bearing interest at a rate applicable to the
United States treasury obligations of like term, on the terms of the form of
note attached hereto as Exhibit 1.3. (i).
(ii) to the Stockholder, a note in the amount of USD$55,258.00 (Fifty
five thousand two hundred fifty eight U.S. Dollars), payable three years from
the Closing Date, bearing interest at a rate applicable to the United States
treasury obligations of like term, on the terms of the form of note attached
hereto as Exhibit 1.3. (ii).
(The notes referred to in paragraphs (i) to (ii) above will be denominated
collectively the "Notes").
(iii) to the Stockholder, 110,516 (One hundred ten thousand five hundred
sixteen) shares of common stock of Aerovox, Inc. valued at USD$4.40 (four
Dollars and forty cents U.S. currency) subject to the terms and conditions of
the Stockholders Agreement attached hereto as Exhibit 1.3. (iii) (the
"Stockholders Agreement").
1.4. Closing. The closing of the purchase and sale of the Shares hereunder
-------
(the "Closing") shall take place on April 5, 1999, or at such other date as may
be mutually agreed by the parties hereafter (the "Closing Date").
SECOND. Representations and Warranties of the Seller regarding the Company
------------------------------------------------------------------
The Stockholder represents and warrants to Buyer that the statements
contained in this CLAUSE SECOND are true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date, except as set forth in the
3
<PAGE>
disclosure schedule attached hereto and initialed by the Buyer (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Clause
SECOND. No representations or warranties given hereby, shall be considered to be
given on behalf of other stockholders or any other third party different from
the Stockholder.
2.1. Organization, Qualification and Corporate Power. (a) The Company is a
-----------------------------------------------
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the United Mexican States ("Mexico").
(b) The Company is duly qualified to conduct business in and has complied,
or is in the process of complying with the applicable laws of each jurisdiction
in which its businesses or the ownership or leasing of its properties are
carried out. The Company has all requisite corporate power and authority to
carry on the businesses in which its is engaged and to own and use the
properties owned and used by it. The Company is not in default under or in
violation of any provision of its Charter of Incorporation and Corporate By-laws
(Escritura Constitutiva y Estatutos Sociales).
2.2. Capitalization. The Disclosure Schedule sets forth a true, complete
--------------
and accurate list of the authorized capital stock of the Company, indicating the
number of shares of stock held by each stockholder. All of the issued and
outstanding shares of the Company are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no outstanding
or authorized options, warrants, rights, agreements or commitments to which the
Company is party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting of any shares of the Company. All of
the issued and outstanding shares of the Company were issued in compliance with
applicable laws.
2.3. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated herein, will, directly or indirectly and with or
without notice or lapse of time or both, (a) conflict with or violate any
provision of the Charter or By-laws of the Company, (b) require on the part of
the Company or any of its stockholders any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) 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, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound
4
<PAGE>
or to which any of their assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge,
restriction or other lien (whether arising by contract or by operation of law).
2.4. Subsidiaries. The Company does not own or control, directly or
------------
indirectly, any interest in any corporation, partnership, trust or other
business association or entity.
2.5. Financial Statements. The Company will provide to the Buyer a balance
--------------------
sheet as of the Closing Date. Such balance sheet (the "Balance Sheet") have been
prepared in accordance with Mexican Generally Accepted Accounting Principles,
fairly present the financial condition, results of operations and cash flows of
the Company as of the Closing Date and are consistent with the books and records
of the Company.
2.6. Absence of Certain Changes. As of the Closing Date, there has not
--------------------------
been any material adverse change in the consolidated assets, business, financial
condition or results of operations of the Company, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
2.7. Undisclosed Liabilities. Except as set forth in CLAUSE 2.7 of the
-----------------------
Disclosure Schedule, the Company has no liability (whether absolute or
contingent, liquidated or non-liquidated and whether due or to become due) which
by its nature should have been known and which would have been required by
Mexican GAAP to be reflected on a balance sheet, except for liabilities shown on
the balance sheet referred to in Clause 2.6 (the "Most Recent Balance Sheet").
2.8. Tax Matters. (a) The Company has filed on a timely basis all Tax
-----------
Returns (as defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. The Company has paid all
Taxes (as defined below) that are shown to be due on any such Tax Returns. The
Company has no actual or potential liability for any Tax obligation of any
taxpayer. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required have
been paid to the proper Governmental Entity. There are no liens for Taxes on the
assets of the Company. For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other similar assessments or liabilities, including,
without limitation, income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, service, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
Mexican States, or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United Mexican States, or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports,
5
<PAGE>
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, if any. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated.
(c) Except for as set forth in CLAUSE 2.8 (c) of the Disclosure Schedule,
the Company has not failed to pay any penalty, fine or addition to Tax in
respect of any filing or failure to file any Tax Return, or any failure to
timely pay any Tax, or in respect of any other claim or assessment by any taxing
authority in respect of any Taxes.
2.9. Assets. The Company owns or leases all assets necessary for the
------
conduct of its business as presently conducted. Each such asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. Each of
the assets (tangible or intangible) which is not owned by the Company is in such
condition that there is no reason to assume that, the obligations of the Company
to such owner or lessor should not be discharged, upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreements between the
Company and the owner or lessor thereof. Except for those described in Exhibit
2.9 hereto, no asset of the Company (tangible or intangible) is subject to any
Security Interest. The Company is not in violation nor in breach or default on
its obligation derived from certain asset purchase agreement between Compania
General de Electronica, S.A. de C.V. and the Company, dated April 1, 1999, nor
has any knowledge or is aware that Compania General de Electronica, S.A. de C.V.
has violated, breached or defaulted such asset purchase agreement.
2.10. Owned Real Property. Other than any leases described in CLAUSE 2.13
-------------------
of the Disclosure Schedule, the Company does not own any interest in any real
property, directly or indirectly.
2.11. Intellectual Property. (a) The Company owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use all material Intellectual
Property (as defined in paragraph (d) below), that is, or that covers
technology, used to conduct its business as presently conducted or as presently
proposed to be conducted. CLAUSE 2.11 of the Disclosure Schedule lists (i) all
material patents and patent applications and all trademarks, copyrights, trade
names, service marks and trade secrets which are used in the business of the
Company, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for such
issuance or registration has been filed, and whether such Intellectual Property
is owned or licensed by the Company, (ii) all material written licenses,
sublicenses and other agreements to which the Company is party and pursuant to
which any
6
<PAGE>
person is authorized to use any Intellectual Property rights, and (iii) all
material written licenses, sublicenses and other agreements as to which the
Company is party and pursuant to which the Company is authorized to use any
third party patents, trademarks, or service marks, trade secrets, know-how or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company. The Company is not a party to any oral
license, sublicense or agreement.
(b) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any license, sublicense or other agreement relating
to Intellectual Property or Third Party Intellectual Property Rights.
(c) The Company has not been named in any suit, action or proceeding which
involves a claim of infringement of any Intellectual Property right of any third
party. To Seller's knowledge, the manufacturing, marketing, licensing and sale
of the products or performance of the service offerings of the Company do not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Seller, the rights of the Company with respect to Intellectual
Property are not being infringed by activities, products or services of any
third party.
(d) "Intellectual Property" means all patents, trademarks, trade names,
---------------------
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material.
2.12. Inventory. Except as set forth in CLAUSE 2.12 of the Disclosure
---------
Schedule, all inventory of the Company, whether or not reflected on the Most
Recent Balance Sheet, consists of a quality and quantity usable and saleable in
the Ordinary Course of Business, except for obsolete items and items of below-
standard quality, all of which have been written-off or written-down to net
realizable value on the Most Recent Balance Sheet. The quantities of each type
of inventory, whether raw materials, work-in-process or finished goods of the
Company, are appropriate in the present circumstances of the Company.
2.13. Real Property Leases. CLAUSE 2.13 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer true, correct and
complete copies of the leases and subleases (as amended to date) listed in
CLAUSE 2.13 of the Disclosure Schedule. The Company is not party to, or
otherwise obliged with respect to, any lease or sublease for facilities, which
are not occupied by the Company. With respect to each lease and sublease listed
in CLAUSE 2.13 of the Disclosure Schedule:
7
<PAGE>
(a) the lease or sublease is legal, valid, binding, enforceable and in full
force and effect;
(b) there is no reason which would impair the lease or sublease to continue
to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(c) the Company is not in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities in
the manner in which such facilities are currently operated and as presently
contemplated by the Company; and
(g) the owner of the facility leased or subleased, has stated that, it has
good and clear record and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or other restriction,
that would interfere in any material respect with the Company's operations
thereon, and there have been no actions to believe the contrary.
2.14. Contracts. CLAUSE 2.14 of the Disclosure Schedule sets forth a true,
---------
complete and accurate list of the following written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of USD$1,000 (One thousand U.S. Dollars) per annum;
(b) any written arrangement (or group of related written arrangements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which by its
terms may not be terminated upon 30 (thirty) days notice by the Company without
any premium, penalty or termination fee and (i) which calls for performance over
a period of more than one year, (ii) which involves more than the sum of
USD$1,000 (One thousand U.S. Dollars) or, in the case of open customer purchase
orders or purchase orders from any one purchaser or group of related purchasers,
involves in the aggregate more than USD$1,000 (One thousand U.S. Dollars) for
any such one purchaser or group of related purchasers, or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
8
<PAGE>
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
(c) any written arrangement establishing a partnership or joint venture;
(d) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than USD$1,000 (One thousand U.S. Dollars) or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or non-competition;
(f) any written arrangement involving the Stockholder or any persons or
entities controlling, controlled by or under common control with the Stockholder
("Affiliates") in which the Company is party to;
(g) any written arrangement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect on
the assets, business, financial condition or results of operations of the
Company; and
(h) any other written arrangement (or group of related written
arrangements) either involving more than USD$1,000 (One thousand U.S. Dollars)
or not entered into in the Ordinary Course of Business.
The Company has delivered to the Buyer a true, correct and complete copy of
each written arrangement (as amended to date) listed in CLAUSE 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) the Company is not, and to the knowledge of the Stockholder, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in CLAUSE 2.14 of the Disclosure
Schedule under the terms of this Clause 2.14.
2.15. Accounts Receivable; Contracts in Progress. All accounts receivable
------------------------------------------
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and, to Seller's knowledge, collectible
as has been in the Ordinary Course of Business. All accounts receivable
reflected in the financial or accounting records of the Company
9
<PAGE>
that have arisen since the date of the Most Recent Balance Sheet are valid
receivables subject to no setoffs or counterclaims and are, to Seller's
knowledge, collectible within the Ordinary Course of Business.
2.16. Powers of Attorney. Except as set forth in CLAUSE 2.16 of the
------------------
Disclosure Schedule, the Company has not granted any general or special powers
of attorney outstanding (whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.17. Insurance. CLAUSE 2.17 of the Disclosure Schedule sets forth all the
---------
information with respect to each current insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is party, has been named insured, or
otherwise is the beneficiary of coverage at any time.
(i) Each such insurance policy is enforceable and in full force and effect
through the Closing; (ii) the Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices) under such
policy, and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iii) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. The Company is covered by
insurance in scope and amount customary and reasonable for the businesses in
which it is engaged.
2.18. Litigation. CLAUSE 2.18 of the Disclosure Schedule identifies, and
----------
contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of, in or brought before (by a private
party or otherwise) any Governmental Entity or before any arbitrator to which
any of the Company is a party or, to the knowledge of the Company, is threatened
to be made a party. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in CLAUSE 2.18 of the Disclosure Schedule
could reasonably be expected to have a material adverse effect on the assets,
business, financial condition, results of operations of the Company.
2.19. Product Warranty. Some products manufactured, sold, leased, licensed
----------------
or delivered by the Company are subject to a one year shelf or field guaranty,
and no other warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale, are applicable. The standard terms and
conditions of sale are set forth in CLAUSE 2.19 of the Disclosure Schedule.
2.20. Employees. CLAUSE 2.20 of the Disclosure Schedule contains a list of
---------
all
10
<PAGE>
employees of the Company, along with the position and the annual rate of
compensation of each such person. There are no confidentiality/assignment of
invention agreement signed with the employees of the Company, except as set
forth in CLAUSE 2.20 of the Disclosure Schedule. To the knowledge of the Company
but without inquiry or independent investigation, no key employee or group of
employees of the Company has any plans to terminate employment with the Company.
The Company has not experienced any strikes, material grievances, material
claims of unfair labor practices or other collective bargaining disputes.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein, will trigger or otherwise result in any
obligation of the Company to pay severance or related costs under any employment
or consulting agreement. The Company enjoys good relations with all labor unions
and employee syndicates to which their employees belong, and no notification to
any labor union or employee syndicate is required in connection with the
transactions contemplated herein.
2.21. Employee Benefits. The Company has paid all employee benefits
-----------------
required to be paid by law, including, without limitation, pension, retirement,
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, health benefits, vacations, cafeteria programs and the
like ("Employee Benefits"). Each Employee Benefit has been administered in all
material respects in accordance with its terms and the Company has in all
material respects met its obligations with respect to such Employee Benefit and
has made all required contributions thereto. The Company is in compliance with
all applicable laws and regulations relating to Employee Benefits, and there are
no investigations by any Governmental Entity with respect thereto.
2.22. Environmental Matters. (a) The Company has complied or is in the
---------------------
process of complying with all applicable Environmental Laws, when applicable.
Except as set forth in CLAUSE 2.22 of the Disclosure Schedule, there is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" or "Environmental Laws" shall mean any Mexican
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including, without limitation,
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
11
<PAGE>
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
(b) There have been no releases or threats of release by the Company, or to
the knowledge of the Company, any other party, of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company. With respect to any such releases or threats of release of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company have no knowledge of any releases of Materials of Environmental Concern
at parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products, or
radiological materials.
(c) Set forth in CLAUSE 2.22(c) of the Disclosure Schedule is a list of all
environmental reports, investigations and audits known to the Company that
relate to premises currently or previously owned or operated by the Company
(whether conducted by or on behalf of the Company or a third party, and whether
done at the initiative of the Company or directed by a Governmental Entity or
other third party) which the Company has in its possession or knowledge of.
Complete and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer or, if not in the
possession of the Company, identified in CLAUSE 2.22(c) of the Disclosure
Schedule.
(d) Set forth in CLAUSE 2.22(d) of the Disclosure Schedule is a list of all
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities and all recycling, reclamation or re-use transporters and
facilities that have been utilized by the Company. The Company has no knowledge
of any material environmental liability of any such transporter or facility.
2.23. Legal Compliance. Except as set forth in Clause 2.23 of the
----------------
Disclosure Schedule, the Company is conducting and has conducted its respective
operations and business in compliance with each law (including rules and
regulations thereunder) of all applicable federal, state, local or foreign
government, or any Governmental Entity. The Company has not received any notice
or communication from any Governmental Entity alleging noncompliance with any
applicable federal, state, local or foreign laws, regulations or orders.
2.24. Permits. CLAUSE 2.24 of the Disclosure Schedule sets forth a list of
-------
all permits,
12
<PAGE>
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including, without limitation, those issued or required under
Environmental Laws, relating to the occupancy or use of owned or leased real
property and relating to the import or export of materials, goods or products)
("Permits") issued to or held by the Company. Such listed Permits are the most
relevant Permits that are required for the Company to conduct its respective
businesses as presently conducted. Except as set forth in CLAUSE 2.24 of the
Disclosure Schedule, each such Permit is in full force and effect and (a) no
suspension or cancellation of such Permit is threatened and (b) there is no
basis for believing that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect immediately following the
Closing and will not be affected by this Agreement.
2.25. Certain Business Relationships with Affiliates. No Affiliate of the
----------------------------------------------
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company or (c) owes any money to any of the Company. CLAUSE 2.25 of the
Disclosure Schedule describes any transactions or relationships between the
Company, on the one hand, and any Affiliate thereof or any Stockholder, on the
other hand.
2.26. Brokers' Fees. The Company has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to this
Agreement.
2.27. Books and Records. The minute books, stock record books and other
-----------------
similar records of the Company contain true and complete records of all actions
taken at any meetings of its stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. A certification of the corresponding Secretary of the Board of
Directors of the Company is attached to the corresponding corporate books to
certify so. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28. Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture or deliver products or perform
services will result in a material loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, and there are no prices provided therein in excess of
current market prices for the products or services to be provided thereunder. No
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products, or services to the Company and no
material customer of the Company has indicated that it will stop, or decrease
the rate of, buying, leasing or licensing materials, products or services from
the Company.
2.29. Banking Facilities. CLAUSE 2.29 of the Disclosure Schedule sets forth
------------------
a true, correct and complete list of:
13
<PAGE>
(a) each bank, savings and loan or similar financial institution at which
the Company has an account, safety deposit box, line of credit or credit
facility and the numbers of the accounts or safety deposit boxes maintained by
the Company thereat and details, including terms, of any line of credit or
credit facility; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a description
of the authority (and conditions thereof, if any) of each such person with
respect thereto.
2.30. Consents. Except as set forth in CLAUSE 2.30 of the Disclosure
--------
Schedule, no filing, consent, waiver or approval of any third party or
Governmental Entity is required to be obtained by Seller or the Company in
connection with this Agreement.
2.31. Disclosure. No representation or warranty by the Stockholder
----------
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered to or
to be delivered by or on behalf of the Stockholder pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
Stockholder has not failed to disclose any information that would make the
written representations contained within this Agreement misleading.
THIRD. Representations and Warranties of the Seller regarding the Shares
-----------------------------------------------------------------
The Stockholder represents and warrants to the Buyer as follows:
3.1. Title to Shares. The Stockholder has good and marketable title to the
---------------
Shares which are to be transferred to the Buyer by such Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, preferential rights, rights of first refusal, liens,
charges, encumbrances, options and adverse claims or rights whatsoever. There
are no options, warrants or other claims to the capital stock of the Company
owned by such Stockholder.
3.2. Authorization. The Stockholder has the full right, power and authority
-------------
to enter into this Agreement and to transfer, convey and sell to the Buyer at
the Closing the Shares to be sold by such Stockholder hereunder and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
such Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
14
<PAGE>
3.3. Absence of Conflicting Agreements or Litigation. The Stockholder is
-----------------------------------------------
not a party to, subject to or bound by any agreement or any judgment, order,
writ, prohibition, injunction or decree of any court or other governmental body
which would prevent or conflict with the execution or delivery of this
Agreement by such Stockholder or the transfer, conveyance and sale of the Shares
to be sold by such Stockholder to the Buyer pursuant to the terms hereof.
3.4. Brokers. No broker or finder has acted for the Stockholder in
-------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of such Stockholder.
FOURTH. Representations and Warranties of the Buyer
-------------------------------------------
The Buyer represents and warrants to the Stockholder as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, United
States of America.
4.2. Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Notes by the Buyer and the performance of this Agreement and
the consummation of the transactions contemplated hereby by the Buyer have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the Notes have been duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms. Messrs.
Robert Elliott and Jeffrey Templer are duly appointed representatives of Buyer
for this transaction, and have all necessary power and capacity to enter into
and execute all necessary documents related hereto, on behalf of Buyer.
4.3. Buyer's stock. Buyer's shares as described in Clause 1.3 (b) (iii)
-------------
hereof, have been duly and validly authorized and issued and are fully paid and
nonassessable.
4.4. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the Charter or By-laws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject, or (d) violate
15
<PAGE>
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer or any of its properties or assets.
4.5. Brokers' Fees. No broker or finder has acted for the Buyer in
-------------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Buyer.
FIFTH. Conditions to Closing
---------------------
5.1. Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by the Buyer, of the following conditions on or prior to
the Closing:
(a) the Company shall have obtained all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement, including,
without limitation, those referred to in CLAUSE 2.30 of the Disclosure Schedule;
(b) the representations and warranties of the Stockholder set forth in
Clause SECOND and Clause THIRD hereof shall be true and correct;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Buyer to own, operate or control any of the
assets or operations of the Company, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the Stockholder shall have delivered to the Buyer the stock
certificates representing the Shares, in each case duly endorsed or with duly
executed stock powers attached;
(e) the Company shall have delivered a certificate, executed by the
Secretary of the Company, attaching and certifying as to: (i) the charter
documents (estatutos sociales) of the Company and (ii) the resolutions of the
Board of Directors of the Company required to authorize this Agreement.
(f) to the extent reasonably available in the applicable jurisdiction, the
Company shall have delivered certificates of appropriate governmental officials
in each jurisdiction in which the Company or the Stockholder is incorporated,
resident or required to qualify to do business as a
16
<PAGE>
foreign corporation, as to the due qualification (including tax) of the Company
or Stockholder, as the case may be, in each such jurisdiction;
(g) the Buyer shall have received from Mexican counsel to the Stockholder
an opinion as to the matters described in Exhibit 5.1. g) hereto, dated as of
the Closing Date;
(h) the Company shall have delivered the original corporate minute books of
the Company;
(i) the signatories to each of the bank accounts of the Company shall have
been changed as per the Buyer's instructions;
(j) the Buyer or its designee shall have entered into an Employee Agreement
with Mr. Enrique Sanchez Aldunate;
(k) the Stockholder shall have delivered to the Buyer a certificate (in
each case without regard to any qualification as to knowledge or materiality set
forth in any representation or warranty) to the effect that each of the
conditions specified in clauses (a), (b), (c), and (d), of this Clause 5.1 has
been satisfied in all respects; and
(l) the Stockholder shall have delivered to the Buyer a certificate that
establishes the share distribution of the Company, and indicating that no other
person other than the Stockholder owns or has any right upon the Shares.
5.2. Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Stockholder to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver of the following
conditions:
(a) the representations and warranties of the Buyer set forth in Clause
FOURTH hereof shall be true and correct;
(b) the Buyer shall have delivered the Purchase Price (including the Notes
and the shares referred in Clause 1.3. (b) above) to the Stockholder;
(c) the Buyer shall have executed a securities pledge agreement to guaranty
the due payment, of the Notes to the Stockholder, in accordance with the
terms and conditions established in the Securities Pledge Agreement, which
is attached to this Agreement as Exhibit 5.2 (c); and
(d) Seller shall have received from counsel to Buyer an opinion stating
that the Notes and the shares of the buyer to be received by Seller have
been duly and validly issued, that such shares are non assessable, and that
the Notes are binding upon Buyer and
17
<PAGE>
enforceable in accordance with their respective terms.
SIXTH. Indemnification
---------------
6.1. Indemnification by the Stockholder. Subject to Clause 6.6 and Clause
----------------------------------
6.8 hereof, the Stockholder shall indemnify the Company and the Buyer in respect
of, and hold harmless the Company and the Buyer against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, whether due or to become due or otherwise), monetary damages,
fines, fees, penalties, interest obligations, deficiencies, losses and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigators, fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation)
("Damages") arising out of or related to any of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Stockholder in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Stockholder
contained in this Agreement, or any other agreement, instrument or document
attached to or delivered in connection with this Agreement as an exhibit or a
schedule;
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the Stockholder or the Company pursuant to this Agreement;
(d) any claim (including, without limitation, warranty and personal injury
arising out of product liability claims), suit, action, arbitration, proceeding,
investigation or other similar matter which relates to (i) products manufactured
or sold by the Company prior to the Closing Date or (ii) the business or
operations of the Company prior to the Closing Date;
(e) any claim, action or audit by any Governmental Entity in connection
with the formation, establishment, maintenance, operation, winding-up or
dissolution of the Stockholder or the Company, including but not limited to fees
of attorneys, agents, auditors and inspectors, capital requirements and any
other amounts;
(f) any claim by a stockholder or former stockholder of the Company or any
other person, firm, corporation or entity, other than the Buyer, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
capital stock of or equity interest in the Company; (ii) any rights under the
Charter or By-laws of the Company; or (iii) any claim that his or its shares
were wrongfully repurchased by any stockholder at any time prior to the Closing;
and
(g) any claim for Taxes payable by Seller or the Company derived from this
agreement and the subject matter hereof.
18
<PAGE>
6.2. Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Stockholder in respect of, and hold such Stockholder harmless against any and
all Damages arising out of or related to each and all of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement, or any other agreement, instrument or document
contemplated by this Agreement; and
(c) any claim (including, without limitation, warranty and product
liability claims), suit, action, arbitration proceeding, investigation or other
similar matter which relates to (i) products manufactured or sold by the Company
after the Closing Date or (ii) the business or operations of the Company
following the Closing Date.
6.3. Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this CLAUSE SIXTH, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom indemnification
is sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that Stockholder shall
-------- -------
have no obligation to indemnify Company and/or Buyer and/or hold Company and/or
Buyer harmless from any Damages or claim asserted at a time beyond the time
limitation period imposed by paragraph 6.6., below. In the event of any such
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Except as provided in Clause 6.4(d), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against an Indemnified Party and the
Indemnifying Party shall not have taken control of such suit as provided in
Clause 6.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim without the Indemnifying Party's consent.
6.4. Defense by the Indemnifying Party. (a) Subject to Clause 6.4(d), in
---------------------------------
connection with any claim for indemnification hereunder resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, at his or its sole cost and expense, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, (ii) the third party seeks monetary
damages only and (iii) an adverse resolution of the third party's claim would
not have a material adverse effect on the goodwill or reputation of the
Indemnified Party.
19
<PAGE>
(b) If the Indemnifying Party so assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claim or
legal proceeding and, at the sole cost and expense of the Indemnifying Party,
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding that (i) involves any
non-monetary judgement affecting the Indemnified Party or (ii) does not involve
the delivery of a general release in favor of the Indemnified Party, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest).
(c) If the Indemnifying Party does not (or is not permitted under the terms
hereof to) assume the defense of any such claim or litigation resulting
therefrom as provided in this Clause 6.4 within 15 days after the date that the
Indemnified Party has given notice of the claim to the Indemnifying Party: (i)
the Indemnified Party may defend against such claim or litigation in such manner
as he or it may deem appropriate, including, but not limited to, settling such
claim or litigation on such terms as the Indemnified Party may deem appropriate;
and (ii) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and at his or its
own expense.
6.5. Treatment of Indemnity Payments. Subject to the express liability
-------------------------------
limitation set forth in Clause 6.8., below, to the extent that any
indemnification claim under this Clause SIXTH may be satisfied by payments to
Buyer (excluding Stockholder's defense of claims, as provided in Section 6.4),
they may be satisfied in whole or in part by delivering one or more of the
following, in such amounts or equivalent value required to pay the costs for
such indemnity claim:
(i) cash; and/or
(ii) a written instrument of accord satisfaction for the cancellation of
all or part of the outstanding principle amount and accrued interest of one
or more of the Notes; and/or
(iii) the endorsement and transfer of all or portion of the shares of
Buyer's stock received by Stockholder as provided in Clause 1.3 (b) (iii)
above. The number of the shares of Buyer's stock to be so transferred shall
be based on the book value of those shares at the end of the Buyer's most
recent fiscal year ended, as determined in accordance with GAAP as then in
effect and as shown on the audited balance sheet of the Buyer for the last
day of the most recent audited fiscal period.
20
<PAGE>
To the extent that the transactions under subclauses (ii) and (iii) above
are insufficient to satisfy Buyer's indemnity claim, the balance shall be paid
by the Stockholder in cash, or such other form as may be acceptable by written
agreement with the Buyer.
6.6. Survival. All general representations and warranties and all
--------
covenants, agreements and obligations made by the Stockholder in this Agreement,
or in any instrument or document furnished in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, any
obligation of Stockholder under this CLAUSE SIXTH to indemnify Buyer and/or
Company and/or hold Buyer and/or Company harmless, shall survive for a period of
2 (two) years after the Closing Date, except (i) for those representations and
warranties, covenants, agreements and obligations made by the Stockholder in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby that refer to title to
the assets of the Company and ownership of the Shares, which will survive for a
period of 5 (five) years counted from Closing Date, and except (ii) for those
representations and warranties, covenants, agreements and obligations made by
the Stockholder in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby referring
to Taxes and personal injuries arising out of product liability claims, which
shall expire and terminate upon the applicable statute of limitations. Any
claims asserted in writing prior to the expiration of the representation,
warranty or agreement that is the basis for such claim, if any, as provided in
this Clause 6.6, shall survive until finally resolved and satisfied in full.
6.7. Remedies. Notwithstanding any other provision of this Agreement, Buyer
--------
shall not be entitled to any reduction in the Purchase Price, setoff any amount
against the principal balance of the Notes, or to damages for breach of any
representation and warranty or for any claim for indemnity under this CLAUSE
SIXTH, unless and until the aggregate amount of claims by Buyer exceeds the sum
of USD$100,000.00 (One Hundred Thousand Dollars legal currency of the United
States of America).
Except for Seller's obligation to indemnify Buyer and/or Company for any
claim of Damages derived from Taxes payable by Seller or the Company in
connection with this agreement and the subject matter hereof, and/or Seller's
liability for any breach of the written representations and warranties of Seller
relating to Taxes, which indemnification obligation will not be subject to any
limitation, in no other event shall Seller's obligations to indemnify Buyer
and/or Company, or Seller's liability for any breach of the written
representations and warranties of Seller under this Agreement, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, exceed the Purchase Price.
6.8. Limited Indemnity Obligation. In no event shall Stockholder be liable
----------------------------
for any consequential damages, opportunity costs or lost profits incurred or
suffered by Buyer and/or Company.
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<PAGE>
SEVENTH. Other Agreements
----------------
7.1. Proprietary Information. (a) From and after the Closing the
-----------------------
Stockholder shall hold in confidence, and shall cause all of his Affiliates to
hold in confidence, all knowledge, information and documents of a confidential
nature or not generally known to the public with respect to the Company or the
Buyer (including without limitation the financial information, Intellectual
Property, technical information or data relating to the materials, products or
components sold, or the services offered, in connection with the Company and
names of customers of the Company) (collectively, "Proprietary Information") and
shall not disclose or make use of, and shall cause their respective Affiliates
not to disclose or make use of, Proprietary Information without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge or independently obtained by
Seller, other than through a breach of this Agreement by the Stockholder or
their respective Affiliates and agents.
7.2. Releases. The Stockholder hereby releases and forever discharges the
--------
Company, its successors, assigns, agents, servants, employees, principals,
administrators, stockholders, affiliates, subsidiaries and related companies
(including the Buyer) of and from any and all actions, causes of action, claims,
demands, costs, liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which such Stockholder ever had, now has or may have
against the Company. This release is binding on the Stockholder's assignees and
personal representatives.
7.3. Cooperation in Litigation. Each party shall fully cooperate with the
-------------------------
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter by a third party against or by
such other party relating to or arising out of the conduct of the business of
the Company or the Buyer prior to or after the Closing Date (excluding
litigation arising out of the transactions contemplated by this Agreement). The
party providing such cooperation shall be entitled to designate which of its
employees shall be made available for such purpose and the party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and agents
and a reasonable charge for their time spent in such cooperation.
7.4. Restriction on Transfers of Ownership. As part of the Purchase Price
-------------------------------------
for the Shares, the Stockholder will receive certain shares of common stock of
Aerovox, Inc., as described in Clause 1.3. (b) (iii) above, which are subject to
the terms and conditions and certain transfer restrictions provided for in the
Stockholders Agreement. The Stockholder agrees, because of such consideration,
to be obliged by such transfer restrictions and to procure that the holder or
holders of its own capital stock (or other forms of ownership and corporate
control over such Stockholder) do not transfer such ownership or control to any
third party, except as provided in the Stockholders Agreement. For this purpose,
Exhibit 7.4 provides the current capital or equity structure of the Stockholder.
The Stockholder further agrees that breach of this obligation, would
22
<PAGE>
be considered a default of this Agreement, subject to the indemnification and
remedies herein established.
7.5. Right to Set-off and recoupment. Buyer will have the right to set-off
-------------------------------
any amount from the Notes, and will also have the right of recoupment, derived
from any defense or claim against the Stockholder, whether derived from any
equitable right of defense or claim extrinsic to the ones derived from this
Agreement or derived from this Agreement, in accordance to the Civil Code for
the Federal District of Mexico (Codigo Civil para el Distrito Federal), and the
General Law of Credit Instruments and Credit Operations of Mexico (Ley General
de Titulos y Operaciones de Credito).
EIGHTH. Miscellaneous
-------------
8.1. Press Releases and Announcements. The Stockholder shall not issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written consent of the Buyer.
8.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the parties and their successors
and permitted assigns.
8.3. Entire Agreement. This Agreement (including the exhibits and schedules
----------------
hereto) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
8.4. Succession and Assignment. This Agreement shall be binding upon and
---------- --- ----------
inure to the benefit of the parties named herein and their 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 the other parties; provided, however, that notwithstanding the foregoing, the
-------- -------
Buyer may assign its rights, interests and obligations hereunder to an Affiliate
of the Buyer.
8.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6. Headings. The clause headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall
23
<PAGE>
be deemed duly delivered ten (10) business days after it is sent by registered
or certified air mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable international overnight courier
service, in each case to the intended recipient as set forth below:
If to the Buyer: Aerovox, Inc.
740 Belleville Avenue
New Bedford Ma. 02745-6194
Attn: Mr. Jeffrey Templer
Senior Vice President
If to the Seller: Amsterdam Stravinskylaan 1725,
1077 XX, Amsterdam
Attn: Mr. Francisco Lucia Salazar
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
telecopy, provided that a hard copy is concurrently delivered by regular mail or
courier, or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
8.8. Governing Law. This Agreement, and all disputes hereunder, shall be
-------------
governed by and construed in accordance with the laws of the United Mexican
States.
8.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Stockholder. 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.
8.10. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the
24
<PAGE>
expiration of the time within which the judgment may be appealed.
8.11. Expenses. Each of the parties shall bear its own costs and expenses,
--------
including legal fees and expenses and fees and expenses owed to external
advisors, incurred in connection with this Agreement and the transactions
contemplated hereby.
8.12. Knowledge. For purposes of this Agreement, "knowledge" of the Company
---------
shall be deemed to mean such information as is known by the officers, directors
or management of any of the Company, that would reasonably be expected to be
known by persons in such positions.
8.13. Dispute Resolution. (a) General. In the event that any dispute should
------------------- -------
arise between the Parties with respect to any matter covered by this Agreement
or the interpretation of this Agreement, excluding, however, enforcement of a
default by the Buyer in any payment on any of the Notes, the parties shall
resolve such dispute in accordance with the procedures set forth in this Clause
8.13.
(b) Arbitration. (i) Any Party may submit any matter referred to in Clause
-----------
8.13(a) to arbitration by notifying the other parties hereto, in writing, of
such dispute. Within 10 days after receipt of such notice, the Parties shall
designate in writing one arbitrator to resolve the dispute; provided, that if
the Parties cannot agree on an arbitrator within such 10-day period, the United
States Chamber of Commerce shall select the arbitrator. The arbitrator so
designated shall not be an Affiliate, employee, consultant, officer, director or
stockholder of any Party. The arbitrator shall have at least ten (10) years'
experience in the field of international commercial transactions.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to Clause
8.13(b)(ii), to discuss each of the issues identified by the Parties. Each such
Party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
8.13(b)(iii). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto, provided
however, that the arbitrator shall have no authority to award punitive or
exemplary damages to any party. All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties.
(v) Any attorneys' fees of the Parties in any arbitration shall be borne
by the Parties as
25
<PAGE>
determined by the arbitrator, together with the fees of the arbitrator and the
costs and expenses of the arbitration.
(vi) Any arbitration pursuant to this Clause 8.13 shall be conducted in
New Bedford, Massachusetts, United States of America or other mutually
acceptable location, in the English language. Any arbitration award may be
entered in and enforced by any court having jurisdiction thereover and shall be
final and binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Clause 8.13 shall be
construed as limiting in any way the right of a Party to seek injunctive relief
with respect to any actual or threatened breach of this Agreement from a court
of competent jurisdiction.
8.14. Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any party. 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.
8.15. Currency. All amounts set forth in this Agreement are in United
--------
States Dollars. To the extent that conversion of other currencies into U.S.
Dollars is required for the computation of amounts under this Agreement, such
conversion shall be computed based on the currency conversion rate used by
Aerovox, Inc. to prepare its published financial statements on the date on which
such conversion must be computed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER
AEROVOX, INC.
BY/S/ JEFFREY A. TEMPLER
------------------------
Title: Attorney-in-fact
SELLER / STOCKHOLDER
KASRI HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
------------------------------
Title: Attorney-in-fact
26
<PAGE>
EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
AMONG
AEROVOX, INC.
As Buyer
AND
KATO HOLDING B.V.
As Seller
DATED AS OF APRIL 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CLAUSE FIRST - PURCHASE AND SALE OF SHARES
CLAUSE SECOND - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE COMPANY
CLAUSE THIRD - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE SHARES
CLAUSE FOURTH - REPRESENTATIONS AND WARRANTIES OF THE BUYER
CLAUSE FIFTH - CONDITIONS TO CLOSING
CLAUSE SIXTH - INDEMNIFICATION
CLAUSE SEVENTH - OTHER AGREEMENTS
CLAUSE EIGHTH - MISCELLANEOUS
Exhibits
Disclosure Schedule
</TABLE>
1
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of April 5, 1999, by
and among Aerovox, Inc., a Delaware corporation (the "Buyer"), and Kato Holding
B.V., a Dutch corporation (the "Seller"), sometimes referred herein as the
"Stockholder" or the "Seller", in accordance to the following:
STATEMENTS
1. Seller owns the number of 7894(seven thousand eight hundred ninety four)
issued and outstanding ordinary shares (collectively, the "Shares"), with P$1.00
(One 00/100 Peso Mexican currency) par value per share of common stock of
CAPACITORES UNIDOS, S.A. DE C.V, a Mexican corporation (the "Company") as set
forth opposite to such Stockholder's name on Exhibit A attached hereto; which
Shares in the aggregate represent 15.788% of all of the issued and outstanding
shares of capital stock of the Company;
2. The Buyer desires to purchase the Shares of the Company from the Seller
in consideration of the payments described herein and the indemnities and
guarantees extended hereunder by the Seller; and
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
CLAUSES
FIRST. Purchase and Sale of Shares
---------------------------
1.1. Purchase of the Shares from the Seller. Subject to and upon the terms
--------------------------------------
and conditions of this Agreement, which shall be fulfilled upon the Closing (as
this term is defined hereinafter) Seller sells, transfers, conveys, assigns and
delivers to the Buyer, and the Buyer purchases, acquires and accepts from
Seller, all the Shares owned by such Stockholder, as set forth opposite such
Stockholder's name on Exhibit A attached hereto, such purchase and sale will be
perfected at the Closing.
1.2. Further Assurances. At any time and from time to time after the
------------------
Closing, at the
2
<PAGE>
Buyer's request, and without further consideration, the Stockholder shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares owned by such
Stockholder, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1.3. Purchase Price for the Shares.
-----------------------------
(a) The amount to be paid by the Buyer for the purchase of the Shares at
the Closing shall be USD$713,459.40 (Seven hundred thirteen thousand four
hundred fifty nine 40/100 U.S. Dollars) (the "Purchase Price").
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholder, a note in the amount of USD$171,931.00 (One
hundred seventy one thousand nine hundred and thirty one U.S. Dollars), payable
two years from the Closing Date, bearing interest at a rate applicable to the
United States treasury obligations of like term, on the terms of the form of
note attached hereto as Exhibit 1.3. (i).
(ii) to the Stockholder, a note in the amount of USD$55,258.00 (Fifty
five thousand two hundred fifty eight U.S. Dollars), payable three years from
the Closing Date, bearing interest at a rate applicable to the United States
treasury obligations of like term, on the terms of the form of note attached
hereto as Exhibit 1.3. (ii).
(The notes referred to in paragraphs (i) to (ii) above will be denominated
collectively the "Notes").
(iii) to the Stockholder, 110,516 (One hundred ten thousand five hundred
sixteen) shares of common stock of Aerovox, Inc. valued at USD$4.40 (four
Dollars and forty cents U.S. currency) subject to the terms and conditions of
the Stockholders Agreement attached hereto as Exhibit 1.3. (iii) (the
"Stockholders Agreement").
1.4. Closing. The closing of the purchase and sale of the Shares hereunder
-------
(the "Closing") shall take place on April 5, 1999, or at such other date as may
be mutually agreed by the parties hereafter (the "Closing Date").
SECOND. Representations and Warranties of the Seller regarding the Company
------------------------------------------------------------------
The Stockholder represents and warrants to Buyer that the statements
contained in this CLAUSE SECOND are true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date, except as set forth in the
3
<PAGE>
disclosure schedule attached hereto and initialed by the Buyer (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Clause
SECOND. No representations or warranties given hereby, shall be considered to be
given on behalf of other stockholders or any other third party different from
the Stockholder.
2.1. Organization, Qualification and Corporate Power. (a) The Company is a
-----------------------------------------------
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the United Mexican States ("Mexico").
(b) The Company is duly qualified to conduct business in and has complied,
or is in the process of complying with the applicable laws of each jurisdiction
in which its businesses or the ownership or leasing of its properties are
carried out. The Company has all requisite corporate power and authority to
carry on the businesses in which its is engaged and to own and use the
properties owned and used by it. The Company is not in default under or in
violation of any provision of its Charter of Incorporation and Corporate By-laws
(Escritura Constitutiva y Estatutos Sociales).
2.2. Capitalization. The Disclosure Schedule sets forth a true, complete
--------------
and accurate list of the authorized capital stock of the Company, indicating the
number of shares of stock held by each stockholder. All of the issued and
outstanding shares of the Company are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no outstanding
or authorized options, warrants, rights, agreements or commitments to which the
Company is party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting of any shares of the Company. All of
the issued and outstanding shares of the Company were issued in compliance with
applicable laws.
2.3. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated herein, will, directly or indirectly and with or
without notice or lapse of time or both, (a) conflict with or violate any
provision of the Charter or By-laws of the Company, (b) require on the part of
the Company or any of its stockholders any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) 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, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound
4
<PAGE>
or to which any of their assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge,
restriction or other lien (whether arising by contract or by operation of law).
2.4. Subsidiaries. The Company does not own or control, directly or
------------
indirectly, any interest in any corporation, partnership, trust or other
business association or entity.
2.5. Financial Statements. The Company will provide to the Buyer a balance
--------------------
sheet as of the Closing Date. Such balance sheet (the "Balance Sheet") have been
prepared in accordance with Mexican Generally Accepted Accounting Principles,
fairly present the financial condition, results of operations and cash flows of
the Company as of the Closing Date and are consistent with the books and records
of the Company.
2.6. Absence of Certain Changes. As of the Closing Date, there has not
--------------------------
been any material adverse change in the consolidated assets, business, financial
condition or results of operations of the Company, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
2.7. Undisclosed Liabilities. Except as set forth in CLAUSE 2.7 of the
-----------------------
Disclosure Schedule, the Company has no liability (whether absolute or
contingent, liquidated or non-liquidated and whether due or to become due) which
by its nature should have been known and which would have been required by
Mexican GAAP to be reflected on a balance sheet, except for liabilities shown on
the balance sheet referred to in Clause 2.6 (the "Most Recent Balance Sheet").
2.8. Tax Matters. (a) The Company has filed on a timely basis all Tax
-----------
Returns (as defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. The Company has paid all
Taxes (as defined below) that are shown to be due on any such Tax Returns. The
Company has no actual or potential liability for any Tax obligation of any
taxpayer. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required have
been paid to the proper Governmental Entity. There are no liens for Taxes on the
assets of the Company. For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other similar assessments or liabilities, including,
without limitation, income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, service, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
Mexican States, or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United Mexican States, or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports,
5
<PAGE>
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, if any. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated.
(c) Except for as set forth in CLAUSE 2.8 (c) of the Disclosure Schedule,
the Company has not failed to pay any penalty, fine or addition to Tax in
respect of any filing or failure to file any Tax Return, or any failure to
timely pay any Tax, or in respect of any other claim or assessment by any taxing
authority in respect of any Taxes.
2.9. Assets. The Company owns or leases all assets necessary for the
------
conduct of its business as presently conducted. Each such asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. Each of
the assets (tangible or intangible) which is not owned by the Company is in such
condition that there is no reason to assume that, the obligations of the Company
to such owner or lessor should not be discharged, upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreements between the
Company and the owner or lessor thereof. Except for those described in Exhibit
2.9 hereto, no asset of the Company (tangible or intangible) is subject to any
Security Interest. The Company is not in violation nor in breach or default on
its obligation derived from certain asset purchase agreement between Compania
General de Electronica, S.A. de C.V. and the Company, dated April 1, 1999, nor
has any knowledge or is aware that Compania General de Electronica, S.A. de C.V.
has violated, breached or defaulted such asset purchase agreement.
2.10. Owned Real Property. Other than any leases described in CLAUSE 2.13
-------------------
of the Disclosure Schedule, the Company does not own any interest in any real
property, directly or indirectly.
2.11. Intellectual Property. (a) The Company owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use all material Intellectual
Property (as defined in paragraph (d) below), that is, or that covers
technology, used to conduct its business as presently conducted or as presently
proposed to be conducted. CLAUSE 2.11 of the Disclosure Schedule lists (i) all
material patents and patent applications and all trademarks, copyrights, trade
names, service marks and trade secrets which are used in the business of the
Company, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for such
issuance or registration has been filed, and whether such Intellectual Property
is owned or licensed by the Company, (ii) all material written licenses,
sublicenses and other agreements to which the Company is party and pursuant to
which any
6
<PAGE>
person is authorized to use any Intellectual Property rights, and (iii) all
material written licenses, sublicenses and other agreements as to which the
Company is party and pursuant to which the Company is authorized to use any
third party patents, trademarks, or service marks, trade secrets, know-how or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company. The Company is not a party to any oral
license, sublicense or agreement.
(b) The Company is not , nor will it be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any license, sublicense or other agreement relating
to Intellectual Property or Third Party Intellectual Property Rights.
(c) The Company has not been named in any suit, action or proceeding which
involves a claim of infringement of any Intellectual Property right of any third
party. To Seller's knowledge, the manufacturing, marketing, licensing and sale
of the products or performance of the service offerings of the Company do not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Seller, the rights of the Company with respect to Intellectual
Property are not being infringed by activities, products or services of any
third party.
(d) "Intellectual Property" means all patents, trademarks, trade names,
---------------------
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material.
2.12. Inventory. Except as set forth in CLAUSE 2.12 of the Disclosure
---------
Schedule, all inventory of the Company, whether or not reflected on the Most
Recent Balance Sheet, consists of a quality and quantity usable and saleable in
the Ordinary Course of Business, except for obsolete items and items of below-
standard quality, all of which have been written-off or written-down to net
realizable value on the Most Recent Balance Sheet. The quantities of each type
of inventory, whether raw materials, work-in-process or finished goods of the
Company, are appropriate in the present circumstances of the Company.
2.13. Real Property Leases. CLAUSE 2.13 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer true, correct and
complete copies of the leases and subleases (as amended to date) listed in
CLAUSE 2.13 of the Disclosure Schedule. The Company is not party to, or
otherwise obliged with respect to, any lease or sublease for facilities, which
are not occupied by the Company. With respect to each lease and sublease listed
in CLAUSE 2.13 of the Disclosure Schedule:
7
<PAGE>
(a) the lease or sublease is legal, valid, binding, enforceable and in full
force and effect;
(b) there is no reason which would impair the lease or sublease to continue
to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(c) the Company is not in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities in
the manner in which such facilities are currently operated and as presently
contemplated by the Company; and
(g) the owner of the facility leased or subleased, has stated that, it has
good and clear record and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or other restriction,
that would interfere in any material respect with the Company's operations
thereon, and there have been no actions to believe the contrary.
2.14. Contracts. CLAUSE 2.14 of the Disclosure Schedule sets forth a true,
---------
complete and accurate list of the following written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of USD$1,000 (One thousand U.S. Dollars) per annum;
(b) any written arrangement (or group of related written arrangements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which by its
terms may not be terminated upon 30 (thirty) days notice by the Company without
any premium, penalty or termination fee and (i) which calls for performance over
a period of more than one year, (ii) which involves more than the sum of
USD$1,000 (One thousand U.S. Dollars) or, in the case of open customer purchase
orders or purchase orders from any one purchaser or group of related purchasers,
involves in the aggregate more than USD$1,000 (One thousand U.S. Dollars) for
any such one purchaser or group of related purchasers, or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
8
<PAGE>
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
(c) any written arrangement establishing a partnership or joint venture;
(d) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than USD$1,000 (One thousand U.S. Dollars) or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or non-competition;
(f) any written arrangement involving the Stockholder or any persons or
entities controlling, controlled by or under common control with the Stockholder
("Affiliates") in which the Company is party to;
(g) any written arrangement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect on
the assets, business, financial condition or results of operations of the
Company; and
(h) any other written arrangement (or group of related written
arrangements) either involving more than USD$1,000 (One thousand U.S. Dollars)
or not entered into in the Ordinary Course of Business.
The Company has delivered to the Buyer a true, correct and complete copy of
each written arrangement (as amended to date) listed in CLAUSE 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) the Company is not, and to the knowledge of the Stockholder, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in CLAUSE 2.14 of the Disclosure
Schedule under the terms of this Clause 2.14.
2.15. Accounts Receivable; Contracts in Progress. All accounts receivable
------------------------------------------
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and, to Seller's knowledge, collectible
as has been in the Ordinary Course of Business. All accounts receivable
reflected in the financial or accounting records of the Company
9
<PAGE>
that have arisen since the date of the Most Recent Balance Sheet are valid
receivables subject to no setoffs or counterclaims and are, to Seller's
knowledge, collectible within the Ordinary Course of Business.
2.16. Powers of Attorney. Except as set forth in CLAUSE 2.16 of the
------------------
Disclosure Schedule, the Company has not granted any general or special powers
of attorney outstanding (whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.17. Insurance. CLAUSE 2.17 of the Disclosure Schedule sets forth all the
---------
information with respect to each current insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is party, has been named insured, or
otherwise is the beneficiary of coverage at any time.
(i) Each such insurance policy is enforceable and in full force and effect
through the Closing; (ii) the Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices) under such
policy, and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iii) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. The Company is covered by
insurance in scope and amount customary and reasonable for the businesses in
which it is engaged.
2.18. Litigation. CLAUSE 2.18 of the Disclosure Schedule identifies, and
----------
contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of, in or brought before (by a private
party or otherwise) any Governmental Entity or before any arbitrator to which
any of the Company is a party or, to the knowledge of the Company, is threatened
to be made a party. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in CLAUSE 2.18 of the Disclosure Schedule
could reasonably be expected to have a material adverse effect on the assets,
business, financial condition, results of operations of the Company.
2.19. Product Warranty. Some products manufactured, sold, leased, licensed
----------------
or delivered by the Company are subject to a one year shelf or field guaranty,
and no other warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale, are applicable. The standard terms and
conditions of sale are set forth in CLAUSE 2.19 of the Disclosure Schedule.
2.20. Employees. CLAUSE 2.20 of the Disclosure Schedule contains a list of
---------
all
10
<PAGE>
employees of the Company, along with the position and the annual rate of
compensation of each such person. There are no confidentiality/assignment of
invention agreement signed with the employees of the Company, except as set
forth in CLAUSE 2.20 of the Disclosure Schedule. To the knowledge of the Company
but without inquiry or independent investigation, no key employee or group of
employees of the Company has any plans to terminate employment with the Company.
The Company has not experienced any strikes, material grievances, material
claims of unfair labor practices or other collective bargaining disputes.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein, will trigger or otherwise result in any
obligation of the Company to pay severance or related costs under any employment
or consulting agreement. The Company enjoys good relations with all labor unions
and employee syndicates to which their employees belong, and no notification to
any labor union or employee syndicate is required in connection with the
transactions contemplated herein.
2.21. Employee Benefits. The Company has paid all employee benefits
-----------------
required to be paid by law, including, without limitation, pension, retirement,
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, health benefits, vacations, cafeteria programs and the
like ("Employee Benefits"). Each Employee Benefit has been administered in all
material respects in accordance with its terms and the Company has in all
material respects met its obligations with respect to such Employee Benefit and
has made all required contributions thereto. The Company is in compliance with
all applicable laws and regulations relating to Employee Benefits, and there are
no investigations by any Governmental Entity with respect thereto.
2.22. Environmental Matters. (a) The Company has complied or is in the
---------------------
process of complying with all applicable Environmental Laws, when applicable.
Except as set forth in CLAUSE 2.22 of the Disclosure Schedule, there is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" or "Environmental Laws" shall mean any Mexican
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including, without limitation,
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
11
<PAGE>
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
(b) There have been no releases or threats of release by the Company, or to
the knowledge of the Company, any other party, of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company. With respect to any such releases or threats of release of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company have no knowledge of any releases of Materials of Environmental Concern
at parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products, or
radiological materials.
(c) Set forth in CLAUSE 2.22(c) of the Disclosure Schedule is a list of all
environmental reports, investigations and audits known to the Company that
relate to premises currently or previously owned or operated by the Company
(whether conducted by or on behalf of the Company or a third party, and whether
done at the initiative of the Company or directed by a Governmental Entity or
other third party) which the Company has in its possession or knowledge of.
Complete and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer or, if not in the
possession of the Company, identified in CLAUSE 2.22(c) of the Disclosure
Schedule.
(d) Set forth in CLAUSE 2.22(d) of the Disclosure Schedule is a list of all
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities and all recycling, reclamation or re-use transporters and
facilities that have been utilized by the Company. The Company has no knowledge
of any material environmental liability of any such transporter or facility.
2.23. Legal Compliance. Except as set forth in Clause 2.23 of the
----------------
Disclosure Schedule, the Company is conducting and has conducted its respective
operations and business in compliance with each law (including rules and
regulations thereunder) of all applicable federal, state, local or foreign
government, or any Governmental Entity. The Company has not received any notice
or communication from any Governmental Entity alleging noncompliance with any
applicable federal, state, local or foreign laws, regulations or orders.
2.24. Permits. CLAUSE 2.24 of the Disclosure Schedule sets forth a list of
-------
all permits,
12
<PAGE>
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including, without limitation, those issued or required under
Environmental Laws, relating to the occupancy or use of owned or leased real
property and relating to the import or export of materials, goods or products)
("Permits") issued to or held by the Company. Such listed Permits are the most
relevant Permits that are required for the Company to conduct its respective
businesses as presently conducted. Except as set forth in CLAUSE 2.24 of the
Disclosure Schedule, each such Permit is in full force and effect and (a) no
suspension or cancellation of such Permit is threatened and (b) there is no
basis for believing that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect immediately following the
Closing and will not be affected by this Agreement.
2.25. Certain Business Relationships with Affiliates. No Affiliate of the
----------------------------------------------
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company or (c) owes any money to any of the Company. CLAUSE 2.25 of the
Disclosure Schedule describes any transactions or relationships between the
Company, on the one hand, and any Affiliate thereof or any Stockholder, on the
other hand.
2.26. Brokers' Fees. The Company has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to this
Agreement.
2.27. Books and Records. The minute books, stock record books and other
-----------------
similar records of the Company contain true and complete records of all actions
taken at any meetings of its stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. A certification of the corresponding Secretary of the Board of
Directors of the Company is attached to the corresponding corporate books to
certify so. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28. Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture or deliver products or perform
services will result in a material loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, and there are no prices provided therein in excess of
current market prices for the products or services to be provided thereunder. No
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products, or services to the Company and no
material customer of the Company has indicated that it will stop, or decrease
the rate of, buying, leasing or licensing materials, products or services from
the Company.
2.29. Banking Facilities. CLAUSE 2.29 of the Disclosure Schedule sets forth
------------------
a true, correct and complete list of:
13
<PAGE>
(a) each bank, savings and loan or similar financial institution at which
the Company has an account, safety deposit box, line of credit or credit
facility and the numbers of the accounts or safety deposit boxes maintained by
the Company thereat and details, including terms, of any line of credit or
credit facility; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a description
of the authority (and conditions thereof, if any) of each such person with
respect thereto.
2.30. Consents. Except as set forth in CLAUSE 2.30 of the Disclosure
--------
Schedule, no filing, consent, waiver or approval of any third party or
Governmental Entity is required to be obtained by Seller or the Company in
connection with this Agreement.
2.31. Disclosure. No representation or warranty by the Stockholder
----------
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered to or
to be delivered by or on behalf of the Stockholder pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
Stockholder has not failed to disclose any information that would make the
written representations contained within this Agreement misleading.
THIRD. Representations and Warranties of the Seller regarding the Shares
-----------------------------------------------------------------
The Stockholder represents and warrants to the Buyer as follows:
3.1. Title to Shares. The Stockholder has good and marketable title to the
---------------
Shares which are to be transferred to the Buyer by such Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, preferential rights, rights of first refusal, liens,
charges, encumbrances, options and adverse claims or rights whatsoever. There
are no options, warrants or other claims to the capital stock of the Company
owned by such Stockholder.
3.2. Authorization. The Stockholder has the full right, power and authority
-------------
to enter into this Agreement and to transfer, convey and sell to the Buyer at
the Closing the Shares to be sold by such Stockholder hereunder and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
such Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
14
<PAGE>
3.3. Absence of Conflicting Agreements or Litigation. The Stockholder is
-----------------------------------------------
not a party to, subject to or bound by any agreement or any judgment, order,
writ, prohibition, injunction or decree of any court or other governmental body
which would prevent or conflict with the execution or delivery of this
Agreement by such Stockholder or the transfer, conveyance and sale of the Shares
to be sold by such Stockholder to the Buyer pursuant to the terms hereof.
3.4. Brokers. No broker or finder has acted for the Stockholder in
-------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of such Stockholder.
FOURTH. Representations and Warranties of the Buyer
-------------------------------------------
The Buyer represents and warrants to the Stockholder as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, United
States of America.
4.2. Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Notes by the Buyer and the performance of this Agreement and
the consummation of the transactions contemplated hereby by the Buyer have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the Notes have been duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms. Messrs.
Robert Elliott and Jeffrey Templer are duly appointed representatives of Buyer
for this transaction, and have all necessary power and capacity to enter into
and execute all necessary documents related hereto, on behalf of Buyer.
4.3. Buyer's stock. Buyer's shares as described in Clause 1.3 (b) (ii)
-------------
hereof, have been duly and validly authorized and issued and are fully paid and
nonassessable.
4.4. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the Charter or By-laws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject, or (d) violate
15
<PAGE>
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer or any of its properties or assets.
4.5. Brokers' Fees. No broker or finder has acted for the Buyer in
-------------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Buyer.
FIFTH. Conditions to Closing
---------------------
5.1. Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by the Buyer, of the following conditions on or prior to
the Closing:
(a) the Company shall have obtained all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement, including,
without limitation, those referred to in CLAUSE 2.30 of the Disclosure Schedule;
(b) the representations and warranties of the Stockholder set forth in
Clause SECOND and Clause THIRD hereof shall be true and correct;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Buyer to own, operate or control any of the
assets or operations of the Company, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the Stockholder shall have delivered to the Buyer the stock
certificates representing the Shares, in each case duly endorsed or with duly
executed stock powers attached;
(e) the Company shall have delivered a certificate, executed by the
Secretary of the Company, attaching and certifying as to: (i) the charter
documents (estatutos sociales) of the Company and (ii) the resolutions of the
Board of Directors of the Company required to authorize this Agreement.
(f) to the extent reasonably available in the applicable jurisdiction, the
Company shall have delivered certificates of appropriate governmental officials
in each jurisdiction in which the Company or the Stockholder is incorporated,
resident or required to qualify to do business as a
16
<PAGE>
foreign corporation, as to the due qualification (including tax) of the Company
or Stockholder, as the case may be, in each such jurisdiction;
(g) the Buyer shall have received from Mexican counsel to the Stockholder
an opinion as to the matters described in Exhibit 5.1. g) hereto, dated as of
the Closing Date;
(h) the Company shall have delivered the original corporate minute books of
the Company;
(i) the signatories to each of the bank accounts of the Company shall have
been changed as per the Buyer's instructions;
(j) the Buyer or its designee shall have entered into an Employee Agreement
with Mr. Enrique Sanchez Aldunate;
(k) the Stockholder shall have delivered to the Buyer a certificate (in
each case without regard to any qualification as to knowledge or materiality set
forth in any representation or warranty) to the effect that each of the
conditions specified in clauses (a), (b), (c), and (d), of this Clause 5.1 has
been satisfied in all respects; and
(l) the Stockholder shall have delivered to the Buyer a certificate that
establishes the share distribution of the Company, and indicating that no other
person other than the Stockholder owns or has any right upon the Shares.
5.2. Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Stockholder to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver of the following
conditions:
(a) the representations and warranties of the Buyer set forth in Clause
FOURTH hereof shall be true and correct;
(b) the Buyer shall have delivered the Purchase Price (including the Notes
and the shares referred in Clause 1.3. (b) above) to the Stockholder;
(c) the Buyer shall have executed a securities pledge agreement to guaranty
the due payment, of the Notes to the Stockholder, in accordance with the
terms and conditions established in the Securities Pledge Agreement, which
is attached to this Agreement as Exhibit 5.2 (c); and
(d) Seller shall have received from counsel to Buyer an opinion stating
that the Notes and the shares of the buyer to be received by Seller have
been duly and validly issued, that such shares are non assessable, and that
the Notes are binding upon Buyer and
17
<PAGE>
enforceable in accordance with their respective terms.
SIXTH. Indemnification
---------------
6.1. Indemnification by the Stockholder. Subject to Clause 6.6 and Clause
----------------------------------
6.8 hereof, the Stockholder shall indemnify the Company and the Buyer in respect
of, and hold harmless the Company and the Buyer against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, whether due or to become due or otherwise), monetary damages,
fines, fees, penalties, interest obligations, deficiencies, losses and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigators, fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation)
("Damages") arising out of or related to any of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Stockholder in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Stockholder
contained in this Agreement, or any other agreement, instrument or document
attached to or delivered in connection with this Agreement as an exhibit or a
schedule;
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the Stockholder or the Company pursuant to this Agreement;
(d) any claim (including, without limitation, warranty and personal injury
arising out of product liability claims), suit, action, arbitration, proceeding,
investigation or other similar matter which relates to (i) products manufactured
or sold by the Company prior to the Closing Date or (ii) the business or
operations of the Company prior to the Closing Date;
(e) any claim, action or audit by any Governmental Entity in connection
with the formation, establishment, maintenance, operation, winding-up or
dissolution of the Stockholder or the Company, including but not limited to fees
of attorneys, agents, auditors and inspectors, capital requirements and any
other amounts;
(f) any claim by a stockholder or former stockholder of the Company or any
other person, firm, corporation or entity, other than the Buyer, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
capital stock of or equity interest in the Company; (ii) any rights under the
Charter or By-laws of the Company; or (iii) any claim that his or its shares
were wrongfully repurchased by any stockholder at any time prior to the Closing;
and
(g) any claim for Taxes payable by Seller or the Company derived from this
agreement and the subject matter hereof.
18
<PAGE>
6.2. Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Stockholder in respect of, and hold such Stockholder harmless against any and
all Damages arising out of or related to each and all of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement, or any other agreement, instrument or document
contemplated by this Agreement; and
(c) any claim (including, without limitation, warranty and product
liability claims), suit, action, arbitration proceeding, investigation or other
similar matter which relates to (i) products manufactured or sold by the Company
after the Closing Date or (ii) the business or operations of the Company
following the Closing Date.
6.3. Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this CLAUSE SIXTH, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom indemnification
is sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that Stockholder shall
-------- -------
have no obligation to indemnify Company and/or Buyer and/or hold Company and/or
Buyer harmless from any Damages or claim asserted at a time beyond the time
limitation period imposed by paragraph 6.6., below. In the event of any such
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Except as provided in Clause 6.4(d), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against an Indemnified Party and the
Indemnifying Party shall not have taken control of such suit as provided in
Clause 6.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim without the Indemnifying Party's consent.
6.4. Defense by the Indemnifying Party. (a) Subject to Clause 6.4(d), in
---------------------------------
connection with any claim for indemnification hereunder resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, at his or its sole cost and expense, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, (ii) the third party seeks monetary
damages only and (iii) an adverse resolution of the third party's claim would
not have a material adverse effect on the goodwill or reputation of the
Indemnified Party.
19
<PAGE>
(b) If the Indemnifying Party so assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claim or
legal proceeding and, at the sole cost and expense of the Indemnifying Party,
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding that (i) involves any
non-monetary judgement affecting the Indemnified Party or (ii) does not involve
the delivery of a general release in favor of the Indemnified Party, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest).
(c) If the Indemnifying Party does not (or is not permitted under the terms
hereof to) assume the defense of any such claim or litigation resulting
therefrom as provided in this Clause 6.4 within 15 days after the date that the
Indemnified Party has given notice of the claim to the Indemnifying Party: (i)
the Indemnified Party may defend against such claim or litigation in such manner
as he or it may deem appropriate, including, but not limited to, settling such
claim or litigation on such terms as the Indemnified Party may deem appropriate;
and (ii) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and at his or its
own expense.
6.5. Treatment of Indemnity Payments. Subject to the express liability
-------------------------------
limitation set forth in Clause 6.8., below, to the extent that any
indemnification claim under this Clause SIXTH may be satisfied by payments to
Buyer (excluding Stockholder's defense of claims, as provided in Section 6.4),
they may be satisfied in whole or in part by delivering one or more of the
following, in such amounts or equivalent value required to pay the costs for
such indemnity claim:
(i) cash; and/or
(ii) a written instrument of accord satisfaction for the cancellation of
all or part of the outstanding principle amount and accrued interest of one
or more of the Notes; and/or
(iii) the endorsement and transfer of all or portion of the shares of
Buyer's stock received by Stockholder as provided in Clause 1.3 (b) (iii)
above. The number of the shares of Buyer's stock to be so transferred shall
be based on the book value of those shares at the end of the Buyer's most
recent fiscal year ended, as determined in accordance with GAAP as then in
effect and as shown on the audited balance sheet of the Buyer for the last
day of the most recent audited fiscal period.
20
<PAGE>
To the extent that the transactions under subclauses (ii) and (iii) above
are insufficient to satisfy Buyer's indemnity claim, the balance shall be paid
by the Stockholder in cash, or such other form as may be acceptable by written
agreement with the Buyer.
6.6. Survival. All general representations and warranties and all
--------
covenants, agreements and obligations made by the Stockholder in this Agreement,
or in any instrument or document furnished in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, any
obligation of Stockholder under this CLAUSE SIXTH to indemnify Buyer and/or
Company and/or hold Buyer and/or Company harmless, shall survive for a period of
2 (two) years after the Closing Date, except (i) for those representations and
warranties, covenants, agreements and obligations made by the Stockholder in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby that refer to title to
the assets of the Company and ownership of the Shares, which will survive for a
period of 5 (five) years counted from Closing Date, and except (ii) for those
representations and warranties, covenants, agreements and obligations made by
the Stockholder in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby referring
to Taxes and personal injuries arising out of product liability claims, which
shall expire and terminate upon the applicable statute of limitations. Any
claims asserted in writing prior to the expiration of the representation,
warranty or agreement that is the basis for such claim, if any, as provided in
this Clause 6.6, shall survive until finally resolved and satisfied in full.
6.7. Remedies. Notwithstanding any other provision of this Agreement, Buyer
--------
shall not be entitled to any reduction in the Purchase Price, setoff any amount
against the principal balance of the Notes, or to damages for breach of any
representation and warranty or for any claim for indemnity under this CLAUSE
SIXTH, unless and until the aggregate amount of claims by Buyer exceeds the sum
of USD$100,000.00 (One Hundred Thousand Dollars legal currency of the United
States of America).
Except for Seller's obligation to indemnify Buyer and/or Company for any
claim of Damages derived from Taxes payable by Seller or the Company in
connection with this agreement and the subject matter hereof, and/or Seller's
liability for any breach of the written representations and warranties of Seller
relating to Taxes, which indemnification obligation will not be subject to any
limitation, in no other event shall Seller's obligations to indemnify Buyer
and/or Company, or Seller's liability for any breach of the written
representations and warranties of Seller under this Agreement, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, exceed the Purchase Price.
6.8. Limited Indemnity Obligation. In no event shall Stockholder be liable
----------------------------
for any consequential damages, opportunity costs or lost profits incurred or
suffered by Buyer and/or Company.
21
<PAGE>
SEVENTH. Other Agreements
----------------
7.1. Proprietary Information. (a) From and after the Closing the
-----------------------
Stockholder shall hold in confidence, and shall cause all of his Affiliates to
hold in confidence, all knowledge, information and documents of a confidential
nature or not generally known to the public with respect to the Company or the
Buyer (including without limitation the financial information, Intellectual
Property, technical information or data relating to the materials, products or
components sold, or the services offered, in connection with the Company and
names of customers of the Company) (collectively, "Proprietary Information") and
shall not disclose or make use of, and shall cause their respective Affiliates
not to disclose or make use of, Proprietary Information without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge or independently obtained by
Seller, other than through a breach of this Agreement by the Stockholder or
their respective Affiliates and agents.
7.2. Releases. The Stockholder hereby releases and forever discharges the
--------
Company, its successors, assigns, agents, servants, employees, principals,
administrators, stockholders, affiliates, subsidiaries and related companies
(including the Buyer) of and from any and all actions, causes of action, claims,
demands, costs, liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which such Stockholder ever had, now has or may have
against the Company. This release is binding on the Stockholder's assignees and
personal representatives.
7.3. Cooperation in Litigation. Each party shall fully cooperate with the
-------------------------
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter by a third party against or by
such other party relating to or arising out of the conduct of the business of
the Company or the Buyer prior to or after the Closing Date (excluding
litigation arising out of the transactions contemplated by this Agreement). The
party providing such cooperation shall be entitled to designate which of its
employees shall be made available for such purpose and the party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and agents
and a reasonable charge for their time spent in such cooperation.
7.4. Restriction on Transfers of Ownership. As part of the Purchase
-------------------------------------
Price for the Shares, the Stockholder will receive certain shares of common
stock of Aerovox, Inc., as described in Clause 1.3. (b) (iii) above, which are
subject to the terms and conditions and certain transfer restrictions provided
for in the Stockholders Agreement. The Stockholder agrees, because of such
consideration, to be obliged by such transfer restrictions and to procure that
the holder or holders of its own capital stock (or other forms of ownership and
corporate control over such Stockholder) do not transfer such ownership or
control to any third party, except as provided in the Stockholders Agreement.
For this purpose, Exhibit 7.4 provides the current capital or equity structure
of the Stockholder. The Stockholder further agrees that breach of this
obligation, would
22
<PAGE>
be considered a default of this Agreement, subject to the indemnification and
remedies herein established.
7.5. Right to Set-off and recoupment. Buyer will have the right to set-off
-------------------------------
any amount from the Notes, and will also have the right of recoupment, derived
from any defense or claim against the Stockholder, whether derived from any
equitable right of defense or claim extrinsic to the ones derived from this
Agreement or derived from this Agreement, in accordance to the Civil Code for
the Federal District of Mexico (Codigo Civil para el Distrito Federal), and the
General Law of Credit Instruments and Credit Operations of Mexico (Ley General
de Titulos y Operaciones de Credito).
EIGHTH. Miscellaneous
-------------
8.1. Press Releases and Announcements. The Stockholder shall not issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written consent of the Buyer.
8.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the parties and their successors
and permitted assigns.
8.3. Entire Agreement. This Agreement (including the exhibits and schedules
----------------
hereto) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
8.4. Succession and Assignment. This Agreement shall be binding upon and
---------- --- ----------
inure to the benefit of the parties named herein and their 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 the other parties; provided, however, that notwithstanding the foregoing, the
-------- -------
Buyer may assign its rights, interests and obligations hereunder to an Affiliate
of the Buyer.
8.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6. Headings. The clause headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall
23
<PAGE>
be deemed duly delivered ten (10) business days after it is sent by registered
or certified air mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable international overnight courier
service, in each case to the intended recipient as set forth below:
If to the Buyer: Aerovox, Inc.
740 Belleville Avenue
New Bedford Ma. 02745-6194
Attn: Mr. Jeffrey Templer
Senior Vice President
If to the Seller: Amsterdam Stravinskylaan 1725,
1077 XX, Amsterdam
Attn: Mr. Francisco Lucia Salazar
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
telecopy, provided that a hard copy is concurrently delivered by regular mail or
courier, or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
8.8. Governing Law. This Agreement, and all disputes hereunder, shall be
-------------
governed by and construed in accordance with the laws of the United Mexican
States.
8.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Stockholder. 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.
8.10. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the
24
<PAGE>
expiration of the time within which the judgment may be appealed.
8.11. Expenses. Each of the parties shall bear its own costs and expenses,
--------
including legal fees and expenses and fees and expenses owed to external
advisors, incurred in connection with this Agreement and the transactions
contemplated hereby.
8.12. Knowledge. For purposes of this Agreement, "knowledge" of the Company
---------
shall be deemed to mean such information as is known by the officers, directors
or management of any of the Company, that would reasonably be expected to be
known by persons in such positions.
8.13. Dispute Resolution. (a) General. In the event that any dispute should
------------------- -------
arise between the Parties with respect to any matter covered by this Agreement
or the interpretation of this Agreement, excluding, however, enforcement of a
default by the Buyer in any payment on any of the Notes, the parties shall
resolve such dispute in accordance with the procedures set forth in this Clause
8.13.
(b) Arbitration. (i) Any Party may submit any matter referred to in Clause
-----------
8.13(a) to arbitration by notifying the other parties hereto, in writing, of
such dispute. Within 10 days after receipt of such notice, the Parties shall
designate in writing one arbitrator to resolve the dispute; provided, that if
the Parties cannot agree on an arbitrator within such 10-day period, the United
States Chamber of Commerce shall select the arbitrator. The arbitrator so
designated shall not be an Affiliate, employee, consultant, officer, director or
stockholder of any Party. The arbitrator shall have at least ten (10) years'
experience in the field of international commercial transactions.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to Clause
8.13(b)(ii), to discuss each of the issues identified by the Parties. Each such
Party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
8.13(b)(iii). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto, provided
however, that the arbitrator shall have no authority to award punitive or
exemplary damages to any party. All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties.
(v) Any attorneys' fees of the Parties in any arbitration shall be borne
by the Parties as
25
<PAGE>
determined by the arbitrator, together with the fees of the arbitrator and the
costs and expenses of the arbitration.
(vi) Any arbitration pursuant to this Clause 8.13 shall be conducted in
New Bedford, Massachusetts, United States of America or other mutually
acceptable location, in the English language. Any arbitration award may be
entered in and enforced by any court having jurisdiction thereover and shall be
final and binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Clause 8.13 shall be
construed as limiting in any way the right of a Party to seek injunctive relief
with respect to any actual or threatened breach of this Agreement from a court
of competent jurisdiction.
8.14. Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any party. 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.
8.15. Currency. All amounts set forth in this Agreement are in United
--------
States Dollars. To the extent that conversion of other currencies into U.S.
Dollars is required for the computation of amounts under this Agreement, such
conversion shall be computed based on the currency conversion rate used by
Aerovox, Inc. to prepare its published financial statements on the date on which
such conversion must be computed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER
AEROVOX, INC.
BY/S/ JEFFREY A. TEMPLER
------------------------
Title: Attorney-in-fact
SELLER / STOCKHOLDER
KATO HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Title: Attorney-in-fact
26
<PAGE>
EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
AMONG
AEROVOX, INC.
As Buyer
AND
RENKO INVESTMENTS B.V.
As Seller
DATED AS OF APRIL 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CLAUSE FIRST - PURCHASE AND SALE OF SHARES
CLAUSE SECOND - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE COMPANY
CLAUSE THIRD - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE SHARES
CLAUSE FOURTH - REPRESENTATIONS AND WARRANTIES OF THE BUYER
CLAUSE FIFTH - CONDITIONS TO CLOSING
CLAUSE SIXTH - INDEMNIFICATION
CLAUSE SEVENTH - OTHER AGREEMENTS
CLAUSE EIGHTH - MISCELLANEOUS
Exhibits
Disclosure Schedule
</TABLE>
1
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of April 5, 1999, by
and among Aerovox, Inc., a Delaware corporation (the "Buyer"), and Renko
Investments B.V., a Dutch corporation (the "Seller"), sometimes referred herein
as the "Stockholder" or the "Seller", in accordance to the following:
STATEMENTS
1. Seller owns the number of 8019(eight thousand nineteen) issued and
outstanding ordinary shares (collectively, the "Shares"), with P$1.00 (One
00/100 Peso Mexican currency) par value per share of common stock of CAPACITORES
UNIDOS, S.A. DE C.V, a Mexican corporation (the "Company") as set forth opposite
to such Stockholder's name on Exhibit A attached hereto; which Shares in the
aggregate represent approximately 16.040% of all of the issued and outstanding
shares of capital stock of the Company;
2. The Buyer desires to purchase the Shares of the Company from the
Seller in consideration of the payments described herein and the indemnities and
guarantees extended hereunder by the Seller; and
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
CLAUSES
FIRST. Purchase and Sale of Shares
---------------------------
1.1. Purchase of the Shares from the Seller. Subject to and upon the
--------------------------------------
terms and conditions of this Agreement, which shall be fulfilled upon the
Closing (as this term is defined hereinafter) Seller sells, transfers, conveys,
assigns and delivers to the Buyer, and the Buyer purchases, acquires and accepts
from Seller, all the Shares owned by such Stockholder, as set forth opposite
such Stockholder's name on Exhibit A attached hereto, such purchase and sale
will be perfected at the Closing.
1.2. Further Assurances. At any time and from time to time after the
------------------
Closing, at the
2
<PAGE>
Buyer's request, and without further consideration, the Stockholder shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares owned by such
Stockholder, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1.3. Purchase Price for the Shares.
-----------------------------
(a) The amount to be paid by the Buyer for the purchase of the Shares at
the Closing shall be USD$724,848.00 (Seven hundred twenty-four thousand eight
hundred forty-eight 00/100 U.S. Dollars) (the "Purchase Price").
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholder, a note in the amount of USD$174,676.00 (One
hundred seventy four thousand six hundred and seventy-six U.S. Dollars), payable
two years from the Closing Date, bearing interest at a rate applicable to the
United States treasury obligations of like term, on the terms of the form of
note attached hereto as Exhibit 1.3. (i).
(ii) to the Stockholder, a note in the amount of USD$56,140.00 (Fifty six
thousand one hundred forty U.S. Dollars), payable three years from the Closing
Date, bearing interest at a rate applicable to the United States treasury
obligations of like term, on the terms of the form of note attached hereto as
Exhibit 1.3. (ii).
(The notes referred to in paragraphs (i) to (ii) above will be denominated
collectively the "Notes").
(iii) to the Stockholder, 112,280 (One hundred twelve thousand two hundred
eighty) shares of common stock of Aerovox, Inc. valued at USD$4.40 (four Dollars
and forty cents U.S. currency) subject to the terms and conditions of the
Stockholders Agreement attached hereto as Exhibit 1.3. (iii) (the "Stockholders
Agreement").
1.4. Closing. The closing of the purchase and sale of the Shares hereunder
-------
(the "Closing") shall take place on April 5, 1999, or at such other date as may
be mutually agreed by the parties hereafter (the "Closing Date").
SECOND. Representations and Warranties of the Seller regarding the Company
------------------------------------------------------------------
The Stockholder represents and warrants to Buyer that the statements
contained in this CLAUSE SECOND are true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date, except as set forth in the
3
<PAGE>
disclosure schedule attached hereto and initialed by the Buyer (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Clause
SECOND. No representations or warranties given hereby, shall be considered to be
given on behalf of other stockholders or any other third party different from
the Stockholder.
2.1. Organization, Qualification and Corporate Power. (a) The Company is a
-----------------------------------------------
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the United Mexican States ("Mexico").
(b) The Company is duly qualified to conduct business in and has complied,
or is in the process of complying with the applicable laws of each jurisdiction
in which its businesses or the ownership or leasing of its properties are
carried out. The Company has all requisite corporate power and authority to
carry on the businesses in which its is engaged and to own and use the
properties owned and used by it. The Company is not in default under or in
violation of any provision of its Charter of Incorporation and Corporate By-laws
(Escritura Constitutiva y Estatutos Sociales).
2.2. Capitalization. The Disclosure Schedule sets forth a true, complete
--------------
and accurate list of the authorized capital stock of the Company, indicating the
number of shares of stock held by each stockholder. All of the issued and
outstanding shares of the Company are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no outstanding
or authorized options, warrants, rights, agreements or commitments to which the
Company is party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting of any shares of the Company. All of
the issued and outstanding shares of the Company were issued in compliance with
applicable laws.
2.3. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated herein, will, directly or indirectly and with or
without notice or lapse of time or both, (a) conflict with or violate any
provision of the Charter or By-laws of the Company, (b) require on the part of
the Company or any of its stockholders any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) 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, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound
4
<PAGE>
or to which any of their assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge,
restriction or other lien (whether arising by contract or by operation of law).
2.4. Subsidiaries. The Company does not own or control, directly or
------------
indirectly, any interest in any corporation, partnership, trust or other
business association or entity.
2.5. Financial Statements. The Company will provide to the Buyer a balance
--------------------
sheet as of the Closing Date. Such balance sheet (the "Balance Sheet") have been
prepared in accordance with Mexican Generally Accepted Accounting Principles,
fairly present the financial condition, results of operations and cash flows of
the Company as of the Closing Date and are consistent with the books and records
of the Company.
2.6. Absence of Certain Changes. As of the Closing Date, there has not
--------------------------
been any material adverse change in the consolidated assets, business, financial
condition or results of operations of the Company, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
2.7. Undisclosed Liabilities. Except as set forth in CLAUSE 2.7 of the
-----------------------
Disclosure Schedule, the Company has no liability (whether absolute or
contingent, liquidated or non-liquidated and whether due or to become due) which
by its nature should have been known and which would have been required by
Mexican GAAP to be reflected on a balance sheet, except for liabilities shown on
the balance sheet referred to in Clause 2.6 (the "Most Recent Balance Sheet").
2.8. Tax Matters. (a) The Company has filed on a timely basis all Tax
-----------
Returns (as defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. The Company has paid all
Taxes (as defined below) that are shown to be due on any such Tax Returns. The
Company has no actual or potential liability for any Tax obligation of any
taxpayer. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required have
been paid to the proper Governmental Entity. There are no liens for Taxes on the
assets of the Company. For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other similar assessments or liabilities, including,
without limitation, income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, service, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
Mexican States, or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United Mexican States, or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports,
5
<PAGE>
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, if any. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated.
(c) Except for as set forth in CLAUSE 2.8 (c) of the Disclosure Schedule,
the Company has not failed to pay any penalty, fine or addition to Tax in
respect of any filing or failure to file any Tax Return, or any failure to
timely pay any Tax, or in respect of any other claim or assessment by any taxing
authority in respect of any Taxes.
2.9. Assets. The Company owns or leases all assets necessary for the
------
conduct of its business as presently conducted. Each such asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. Each of
the assets (tangible or intangible) which is not owned by the Company is in such
condition that there is no reason to assume that, the obligations of the Company
to such owner or lessor should not be discharged, upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreements between the
Company and the owner or lessor thereof. Except for those described in Exhibit
2.9 hereto, no asset of the Company (tangible or intangible) is subject to any
Security Interest. The Company is not in violation nor in breach or default on
its obligation derived from certain asset purchase agreement between Compania
General de Electronica, S.A. de C.V. and the Company, dated April 1, 1999, nor
has any knowledge or is aware that Compania General de Electronica, S.A. de C.V.
has violated, breached or defaulted such asset purchase agreement.
2.10. Owned Real Property. Other than any leases described in CLAUSE 2.13
-------------------
of the Disclosure Schedule, the Company does not own any interest in any real
property, directly or indirectly.
2.11. Intellectual Property. (a) The Company owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use all material Intellectual
Property (as defined in paragraph (d) below), that is, or that covers
technology, used to conduct its business as presently conducted or as presently
proposed to be conducted. CLAUSE 2.11 of the Disclosure Schedule lists (i) all
material patents and patent applications and all trademarks, copyrights, trade
names, service marks and trade secrets which are used in the business of the
Company, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for such
issuance or registration has been filed, and whether such Intellectual Property
is owned or licensed by the Company, (ii) all material written licenses,
sublicenses and other agreements to which the Company is party and pursuant to
which any
6
<PAGE>
person is authorized to use any Intellectual Property rights, and (iii) all
material written licenses, sublicenses and other agreements as to which the
Company is party and pursuant to which the Company is authorized to use any
third party patents, trademarks, or service marks, trade secrets, know-how or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company. The Company is not a party to any oral
license, sublicense or agreement.
(b) The Company is not , nor will it be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any license, sublicense or other agreement relating
to Intellectual Property or Third Party Intellectual Property Rights.
(c) The Company has not been named in any suit, action or proceeding which
involves a claim of infringement of any Intellectual Property right of any third
party. To Seller's knowledge, the manufacturing, marketing, licensing and sale
of the products or performance of the service offerings of the Company do not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Seller, the rights of the Company with respect to Intellectual
Property are not being infringed by activities, products or services of any
third party.
(d) "Intellectual Property" means all patents, trademarks, trade names,
---------------------
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material.
2.12. Inventory. Except as set forth in CLAUSE 2.12 of the Disclosure
---------
Schedule, all inventory of the Company, whether or not reflected on the Most
Recent Balance Sheet, consists of a quality and quantity usable and saleable in
the Ordinary Course of Business, except for obsolete items and items of below-
standard quality, all of which have been written-off or written-down to net
realizable value on the Most Recent Balance Sheet. The quantities of each type
of inventory, whether raw materials, work-in-process or finished goods of the
Company, are appropriate in the present circumstances of the Company.
2.13. Real Property Leases. CLAUSE 2.13 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer true, correct and
complete copies of the leases and subleases (as amended to date) listed in
CLAUSE 2.13 of the Disclosure Schedule. The Company is not party to, or
otherwise obliged with respect to, any lease or sublease for facilities, which
are not occupied by the Company. With respect to each lease and sublease listed
in CLAUSE 2.13 of the Disclosure Schedule:
7
<PAGE>
(a) the lease or sublease is legal, valid, binding, enforceable and in full
force and effect;
(b) there is no reason which would impair the lease or sublease to continue
to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(c) the Company is not in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities in
the manner in which such facilities are currently operated and as presently
contemplated by the Company; and
(g) the owner of the facility leased or subleased, has stated that, it has
good and clear record and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or other restriction,
that would interfere in any material respect with the Company's operations
thereon, and there have been no actions to believe the contrary.
2.14. Contracts. CLAUSE 2.14 of the Disclosure Schedule sets forth a true,
---------
complete and accurate list of the following written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of USD$1,000 (One thousand U.S. Dollars) per annum;
(b) any written arrangement (or group of related written arrangements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which by its
terms may not be terminated upon 30 (thirty) days notice by the Company without
any premium, penalty or termination fee and (i) which calls for performance over
a period of more than one year, (ii) which involves more than the sum of
USD$1,000 (One thousand U.S. Dollars) or, in the case of open customer purchase
orders or purchase orders from any one purchaser or group of related purchasers,
involves in the aggregate more than USD$1,000 (One thousand U.S. Dollars) for
any such one purchaser or group of related purchasers, or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
8
<PAGE>
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
(c) any written arrangement establishing a partnership or joint venture;
(d) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than USD$1,000 (One thousand U.S. Dollars) or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or non-competition;
(f) any written arrangement involving the Stockholder or any persons or
entities controlling, controlled by or under common control with the Stockholder
("Affiliates") in which the Company is party to;
(g) any written arrangement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect on
the assets, business, financial condition or results of operations of the
Company; and
(h) any other written arrangement (or group of related written
arrangements) either involving more than USD$1,000 (One thousand U.S. Dollars)
or not entered into in the Ordinary Course of Business.
The Company has delivered to the Buyer a true, correct and complete copy of
each written arrangement (as amended to date) listed in CLAUSE 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) the Company is not, and to the knowledge of the Stockholder, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in CLAUSE 2.14 of the Disclosure
Schedule under the terms of this Clause 2.14.
2.15. Accounts Receivable; Contracts in Progress. All accounts receivable
------------------------------------------
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and, to Seller's knowledge, collectible
as has been in the Ordinary Course of Business. All accounts receivable
reflected in the financial or accounting records of the Company
9
<PAGE>
that have arisen since the date of the Most Recent Balance Sheet are valid
receivables subject to no setoffs or counterclaims and are, to Seller's
knowledge, collectible within the Ordinary Course of Business.
2.16. Powers of Attorney. Except as set forth in CLAUSE 2.16 of the
------------------
Disclosure Schedule, the Company has not granted any general or special powers
of attorney outstanding (whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.17. Insurance. CLAUSE 2.17 of the Disclosure Schedule sets forth all the
---------
information with respect to each current insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is party, has been named insured, or
otherwise is the beneficiary of coverage at any time.
(i) Each such insurance policy is enforceable and in full force and effect
through the Closing; (ii) the Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices) under such
policy, and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iii) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. The Company is covered by
insurance in scope and amount customary and reasonable for the businesses in
which it is engaged.
2.18. Litigation. CLAUSE 2.18 of the Disclosure Schedule identifies, and
----------
contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of, in or brought before (by a private
party or otherwise) any Governmental Entity or before any arbitrator to which
any of the Company is a party or, to the knowledge of the Company, is threatened
to be made a party. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in CLAUSE 2.18 of the Disclosure Schedule
could reasonably be expected to have a material adverse effect on the assets,
business, financial condition, results of operations of the Company.
2.19. Product Warranty. Some products manufactured, sold, leased, licensed
----------------
or delivered by the Company are subject to a one year shelf or field guaranty,
and no other warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale, are applicable. The standard terms and
conditions of sale are set forth in CLAUSE 2.19 of the Disclosure Schedule.
2.20. Employees. CLAUSE 2.20 of the Disclosure Schedule contains a list of
---------
all
10
<PAGE>
employees of the Company, along with the position and the annual rate of
compensation of each such person. There are no confidentiality/assignment of
invention agreement signed with the employees of the Company, except as set
forth in CLAUSE 2.20 of the Disclosure Schedule. To the knowledge of the Company
but without inquiry or independent investigation, no key employee or group of
employees of the Company has any plans to terminate employment with the Company.
The Company has not experienced any strikes, material grievances, material
claims of unfair labor practices or other collective bargaining disputes.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein, will trigger or otherwise result in any
obligation of the Company to pay severance or related costs under any employment
or consulting agreement. The Company enjoys good relations with all labor unions
and employee syndicates to which their employees belong, and no notification to
any labor union or employee syndicate is required in connection with the
transactions contemplated herein.
2.21. Employee Benefits. The Company has paid all employee benefits
-----------------
required to be paid by law, including, without limitation, pension, retirement,
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, health benefits, vacations, cafeteria programs and the
like ("Employee Benefits"). Each Employee Benefit has been administered in all
material respects in accordance with its terms and the Company has in all
material respects met its obligations with respect to such Employee Benefit and
has made all required contributions thereto. The Company is in compliance with
all applicable laws and regulations relating to Employee Benefits, and there are
no investigations by any Governmental Entity with respect thereto.
2.22. Environmental Matters. (a) The Company has complied or is in the
---------------------
process of complying with all applicable Environmental Laws, when applicable.
Except as set forth in CLAUSE 2.22 of the Disclosure Schedule, there is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" or "Environmental Laws" shall mean any Mexican
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including, without limitation,
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
11
<PAGE>
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
(b) There have been no releases or threats of release by the Company, or to
the knowledge of the Company, any other party, of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company. With respect to any such releases or threats of release of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company have no knowledge of any releases of Materials of Environmental Concern
at parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products, or
radiological materials.
(c) Set forth in CLAUSE 2.22(c) of the Disclosure Schedule is a list of all
environmental reports, investigations and audits known to the Company that
relate to premises currently or previously owned or operated by the Company
(whether conducted by or on behalf of the Company or a third party, and whether
done at the initiative of the Company or directed by a Governmental Entity or
other third party) which the Company has in its possession or knowledge of.
Complete and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer or, if not in the
possession of the Company, identified in CLAUSE 2.22(c) of the Disclosure
Schedule.
(d) Set forth in CLAUSE 2.22(d) of the Disclosure Schedule is a list of all
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities and all recycling, reclamation or re-use transporters and
facilities that have been utilized by the Company. The Company has no knowledge
of any material environmental liability of any such transporter or facility.
2.23. Legal Compliance. Except as set forth in Clause 2.23 of the
----------------
Disclosure Schedule, the Company is conducting and has conducted its respective
operations and business in compliance with each law (including rules and
regulations thereunder) of all applicable federal, state, local or foreign
government, or any Governmental Entity. The Company has not received any notice
or communication from any Governmental Entity alleging noncompliance with any
applicable federal, state, local or foreign laws, regulations or orders.
2.24. Permits. CLAUSE 2.24 of the Disclosure Schedule sets forth a list of
-------
all permits,
12
<PAGE>
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including, without limitation, those issued or required under
Environmental Laws, relating to the occupancy or use of owned or leased real
property and relating to the import or export of materials, goods or products)
("Permits") issued to or held by the Company. Such listed Permits are the most
relevant Permits that are required for the Company to conduct its respective
businesses as presently conducted. Except as set forth in CLAUSE 2.24 of the
Disclosure Schedule, each such Permit is in full force and effect and (a) no
suspension or cancellation of such Permit is threatened and (b) there is no
basis for believing that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect immediately following the
Closing and will not be affected by this Agreement.
2.25. Certain Business Relationships with Affiliates. No Affiliate of the
----------------------------------------------
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company or (c) owes any money to any of the Company. CLAUSE 2.25 of the
Disclosure Schedule describes any transactions or relationships between the
Company, on the one hand, and any Affiliate thereof or any Stockholder, on the
other hand.
2.26. Brokers' Fees. The Company has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to this
Agreement.
2.27. Books and Records. The minute books, stock record books and other
-----------------
similar records of the Company contain true and complete records of all actions
taken at any meetings of its stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. A certification of the corresponding Secretary of the Board of
Directors of the Company is attached to the corresponding corporate books to
certify so. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28. Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture or deliver products or perform
services will result in a material loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, and there are no prices provided therein in excess of
current market prices for the products or services to be provided thereunder. No
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products, or services to the Company and no
material customer of the Company has indicated that it will stop, or decrease
the rate of, buying, leasing or licensing materials, products or services from
the Company.
2.29. Banking Facilities. CLAUSE 2.29 of the Disclosure Schedule sets forth
------------------
a true, correct and complete list of:
13
<PAGE>
(a) each bank, savings and loan or similar financial institution at which
the Company has an account, safety deposit box, line of credit or credit
facility and the numbers of the accounts or safety deposit boxes maintained by
the Company thereat and details, including terms, of any line of credit or
credit facility; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a description
of the authority (and conditions thereof, if any) of each such person with
respect thereto.
2.30. Consents. Except as set forth in CLAUSE 2.30 of the Disclosure
--------
Schedule, no filing, consent, waiver or approval of any third party or
Governmental Entity is required to be obtained by Seller or the Company in
connection with this Agreement.
2.31. Disclosure. No representation or warranty by the Stockholder
----------
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered to or
to be delivered by or on behalf of the Stockholder pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
Stockholder has not failed to disclose any information that would make the
written representations contained within this Agreement misleading.
THIRD. Representations and Warranties of the Seller regarding the Shares
-----------------------------------------------------------------
The Stockholder represents and warrants to the Buyer as follows:
3.1. Title to Shares. The Stockholder has good and marketable title to the
---------------
Shares which are to be transferred to the Buyer by such Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, preferential rights, rights of first refusal, liens,
charges, encumbrances, options and adverse claims or rights whatsoever. There
are no options, warrants or other claims to the capital stock of the Company
owned by such Stockholder.
3.2. Authorization. The Stockholder has the full right, power and authority
-------------
to enter into this Agreement and to transfer, convey and sell to the Buyer at
the Closing the Shares to be sold by such Stockholder hereunder and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
such Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
14
<PAGE>
3.3. Absence of Conflicting Agreements or Litigation. The Stockholder is
-----------------------------------------------
not a party to, subject to or bound by any agreement or any judgment, order,
writ, prohibition, injunction or decree of any court or other governmental body
which would prevent or conflict with the execution or delivery of this
Agreement by such Stockholder or the transfer, conveyance and sale of the Shares
to be sold by such Stockholder to the Buyer pursuant to the terms hereof.
3.4. Brokers. No broker or finder has acted for the Stockholder in
-------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of such Stockholder.
FOURTH. Representations and Warranties of the Buyer
-------------------------------------------
The Buyer represents and warrants to the Stockholder as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, United
States of America.
4.2. Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Notes by the Buyer and the performance of this Agreement and
the consummation of the transactions contemplated hereby by the Buyer have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the Notes have been duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms. Messrs.
Robert Elliott and Jeffrey Templer are duly appointed representatives of Buyer
for this transaction, and have all necessary power and capacity to enter into
and execute all necessary documents related hereto, on behalf of Buyer.
4.3. Buyer's stock. Buyer's shares as described in Clause 1.3 (b) (iii)
-------------
hereof, have been duly and validly authorized and issued and are fully paid and
nonassessable.
4.4. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the Charter or By-laws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject, or (d) violate
15
<PAGE>
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer or any of its properties or assets.
4.5. Brokers' Fees. No broker or finder has acted for the Buyer in
-------------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Buyer.
FIFTH. Conditions to Closing
---------------------
5.1. Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by the Buyer, of the following conditions on or prior to
the Closing:
(a) the Company shall have obtained all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement, including,
without limitation, those referred to in CLAUSE 2.30 of the Disclosure Schedule;
(b) the representations and warranties of the Stockholder set forth in
Clause SECOND and Clause THIRD hereof shall be true and correct;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Buyer to own, operate or control any of the
assets or operations of the Company, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the Stockholder shall have delivered to the Buyer the stock
certificates representing the Shares, in each case duly endorsed or with duly
executed stock powers attached;
(e) the Company shall have delivered a certificate, executed by the
Secretary of the Company, attaching and certifying as to: (i) the charter
documents (estatutos sociales) of the Company and (ii) the resolutions of the
Board of Directors of the Company required to authorize this Agreement.
(f) to the extent reasonably available in the applicable jurisdiction, the
Company shall have delivered certificates of appropriate governmental officials
in each jurisdiction in which the Company or the Stockholder is incorporated,
resident or required to qualify to do business as a
16
<PAGE>
foreign corporation, as to the due qualification (including tax) of the Company
or Stockholder, as the case may be, in each such jurisdiction;
(g) the Buyer shall have received from Mexican counsel to the Stockholder
an opinion as to the matters described in Exhibit 5.1. g) hereto, dated as of
the Closing Date;
(h) the Company shall have delivered the original corporate minute books of
the Company;
(i) the signatories to each of the bank accounts of the Company shall have
been changed as per the Buyer's instructions;
(j) the Buyer or its designee shall have entered into an Employee Agreement
with Mr. Enrique Sanchez Aldunate;
(k) the Stockholder shall have delivered to the Buyer a certificate (in
each case without regard to any qualification as to knowledge or materiality set
forth in any representation or warranty) to the effect that each of the
conditions specified in clauses (a), (b), (c), and (d), of this Clause 5.1 has
been satisfied in all respects; and
(l) the Stockholder shall have delivered to the Buyer a certificate that
establishes the share distribution of the Company, and indicating that no other
person other than the Stockholder owns or has any right upon the Shares.
5.2. Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Stockholder to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver of the following
conditions:
(a) the representations and warranties of the Buyer set forth in Clause
FOURTH hereof shall be true and correct;
(b) the Buyer shall have delivered the Purchase Price (including the Notes
and the shares referred in Clause 1.3. (b) above) to the Stockholder;
(c) the Buyer shall have executed a securities pledge agreement to guaranty
the due payment, of the Notes to the Stockholder, in accordance with the
terms and conditions established in the Securities Pledge Agreement, which
is attached to this Agreement as Exhibit 5.2 (c); and
(d) Seller shall have received from counsel to Buyer an opinion stating
that the Notes and the shares of the buyer to be received by Seller have
been duly and validly issued, that such shares are non assessable, and that
the Notes are binding upon Buyer and
17
<PAGE>
enforceable in accordance with their respective terms.
SIXTH. Indemnification
---------------
6.1. Indemnification by the Stockholder. Subject to Clause 6.6 and Clause
----------------------------------
6.8 hereof, the Stockholder shall indemnify the Company and the Buyer in respect
of, and hold harmless the Company and the Buyer against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, whether due or to become due or otherwise), monetary damages,
fines, fees, penalties, interest obligations, deficiencies, losses and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigators, fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation)
("Damages") arising out of or related to any of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Stockholder in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Stockholder
contained in this Agreement, or any other agreement, instrument or document
attached to or delivered in connection with this Agreement as an exhibit or a
schedule;
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the Stockholder or the Company pursuant to this Agreement;
(d) any claim (including, without limitation, warranty and personal injury
arising out of product liability claims), suit, action, arbitration, proceeding,
investigation or other similar matter which relates to (i) products manufactured
or sold by the Company prior to the Closing Date or (ii) the business or
operations of the Company prior to the Closing Date;
(e) any claim, action or audit by any Governmental Entity in connection
with the formation, establishment, maintenance, operation, winding-up or
dissolution of the Stockholder or the Company, including but not limited to fees
of attorneys, agents, auditors and inspectors, capital requirements and any
other amounts;
(f) any claim by a stockholder or former stockholder of the Company or any
other person, firm, corporation or entity, other than the Buyer, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
capital stock of or equity interest in the Company; (ii) any rights under the
Charter or By-laws of the Company; or (iii) any claim that his or its shares
were wrongfully repurchased by any stockholder at any time prior to the Closing;
and
(g) any claim for Taxes payable by Seller or the Company derived from this
agreement and the subject matter hereof.
18
<PAGE>
6.2. Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Stockholder in respect of, and hold such Stockholder harmless against any and
all Damages arising out of or related to each and all of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement, or any other agreement, instrument or document
contemplated by this Agreement; and
(c) any claim (including, without limitation, warranty and product
liability claims), suit, action, arbitration proceeding, investigation or other
similar matter which relates to (i) products manufactured or sold by the Company
after the Closing Date or (ii) the business or operations of the Company
following the Closing Date.
6.3. Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this CLAUSE SIXTH, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom indemnification
is sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that Stockholder shall
-------- -------
have no obligation to indemnify Company and/or Buyer and/or hold Company and/or
Buyer harmless from any Damages or claim asserted at a time beyond the time
limitation period imposed by paragraph 6.6., below. In the event of any such
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Except as provided in Clause 6.4(d), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against an Indemnified Party and the
Indemnifying Party shall not have taken control of such suit as provided in
Clause 6.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim without the Indemnifying Party's consent.
6.4. Defense by the Indemnifying Party. (a) Subject to Clause 6.4(d), in
---------------------------------
connection with any claim for indemnification hereunder resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, at his or its sole cost and expense, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, (ii) the third party seeks monetary
damages only and (iii) an adverse resolution of the third party's claim would
not have a material adverse effect on the goodwill or reputation of the
Indemnified Party.
19
<PAGE>
(b) If the Indemnifying Party so assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claim or
legal proceeding and, at the sole cost and expense of the Indemnifying Party,
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding that (i) involves any
non-monetary judgement affecting the Indemnified Party or (ii) does not involve
the delivery of a general release in favor of the Indemnified Party, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest).
(c) If the Indemnifying Party does not (or is not permitted under the terms
hereof to) assume the defense of any such claim or litigation resulting
therefrom as provided in this Clause 6.4 within 15 days after the date that the
Indemnified Party has given notice of the claim to the Indemnifying Party: (i)
the Indemnified Party may defend against such claim or litigation in such manner
as he or it may deem appropriate, including, but not limited to, settling such
claim or litigation on such terms as the Indemnified Party may deem appropriate;
and (ii) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and at his or its
own expense.
6.5. Treatment of Indemnity Payments. Subject to the express liability
-------------------------------
limitation set forth in Clause 6.8., below, to the extent that any
indemnification claim under this Clause SIXTH may be satisfied by payments to
Buyer (excluding Stockholder's defense of claims, as provided in Section 6.4),
they may be satisfied in whole or in part by delivering one or more of the
following, in such amounts or equivalent value required to pay the costs for
such indemnity claim:
(i) cash; and/or
(ii) a written instrument of accord satisfaction for the cancellation of
all or part of the outstanding principle amount and accrued interest of one
or more of the Notes; and/or
(iii) the endorsement and transfer of all or portion of the shares of
Buyer's stock received by Stockholder as provided in Clause 1.3 (b) (iii)
above. The number of the shares of Buyer's stock to be so transferred shall
be based on the book value of those shares at the end of the Buyer's most
recent fiscal year ended, as determined in accordance with GAAP as then in
effect and as shown on the audited balance sheet of the Buyer for the last
day of the most recent audited fiscal period.
20
<PAGE>
To the extent that the transactions under subclauses (ii) and (iii) above
are insufficient to satisfy Buyer's indemnity claim, the balance shall be paid
by the Stockholder in cash, or such other form as may be acceptable by written
agreement with the Buyer.
6.6. Survival. All general representations and warranties and all
--------
covenants, agreements and obligations made by the Stockholder in this Agreement,
or in any instrument or document furnished in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, any
obligation of Stockholder under this CLAUSE SIXTH to indemnify Buyer and/or
Company and/or hold Buyer and/or Company harmless, shall survive for a period of
2 (two) years after the Closing Date, except (i) for those representations and
warranties, covenants, agreements and obligations made by the Stockholder in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby that refer to title to
the assets of the Company and ownership of the Shares, which will survive for a
period of 5 (five) years counted from Closing Date, and except (ii) for those
representations and warranties, covenants, agreements and obligations made by
the Stockholder in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby referring
to Taxes and personal injuries arising out of product liability claims, which
shall expire and terminate upon the applicable statute of limitations. Any
claims asserted in writing prior to the expiration of the representation,
warranty or agreement that is the basis for such claim, if any, as provided in
this Clause 6.6, shall survive until finally resolved and satisfied in full.
6.7. Remedies. Notwithstanding any other provision of this Agreement, Buyer
--------
shall not be entitled to any reduction in the Purchase Price, setoff any amount
against the principal balance of the Notes, or to damages for breach of any
representation and warranty or for any claim for indemnity under this CLAUSE
SIXTH, unless and until the aggregate amount of claims by Buyer exceeds the sum
of USD$100,000.00 (One Hundred Thousand Dollars legal currency of the United
States of America).
Except for Seller's obligation to indemnify Buyer and/or Company for any
claim of Damages derived from Taxes payable by Seller or the Company in
connection with this agreement and the subject matter hereof, and/or Seller's
liability for any breach of the written representations and warranties of Seller
relating to Taxes, which indemnification obligation will not be subject to any
limitation, in no other event shall Seller's obligations to indemnify Buyer
and/or Company, or Seller's liability for any breach of the written
representations and warranties of Seller under this Agreement, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, exceed the Purchase Price.
6.8. Limited Indemnity Obligation. In no event shall Stockholder be liable
----------------------------
for any consequential damages, opportunity costs or lost profits incurred or
suffered by Buyer and/or Company.
21
<PAGE>
SEVENTH. Other Agreements
----------------
7.1. Proprietary Information. (a) From and after the Closing the
-----------------------
Stockholder shall hold in confidence, and shall cause all of his Affiliates to
hold in confidence, all knowledge, information and documents of a confidential
nature or not generally known to the public with respect to the Company or the
Buyer (including without limitation the financial information, Intellectual
Property, technical information or data relating to the materials, products or
components sold, or the services offered, in connection with the Company and
names of customers of the Company) (collectively, "Proprietary Information") and
shall not disclose or make use of, and shall cause their respective Affiliates
not to disclose or make use of, Proprietary Information without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge or independently obtained by
Seller, other than through a breach of this Agreement by the Stockholder or
their respective Affiliates and agents.
7.2. Releases. The Stockholder hereby releases and forever discharges the
--------
Company, its successors, assigns, agents, servants, employees, principals,
administrators, stockholders, affiliates, subsidiaries and related companies
(including the Buyer) of and from any and all actions, causes of action, claims,
demands, costs, liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which such Stockholder ever had, now has or may have
against the Company. This release is binding on the Stockholder's assignees and
personal representatives.
7.3. Cooperation in Litigation. Each party shall fully cooperate with the
-------------------------
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter by a third party against or by
such other party relating to or arising out of the conduct of the business of
the Company or the Buyer prior to or after the Closing Date (excluding
litigation arising out of the transactions contemplated by this Agreement). The
party providing such cooperation shall be entitled to designate which of its
employees shall be made available for such purpose and the party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and agents
and a reasonable charge for their time spent in such cooperation.
7.4. Restriction on Transfers of Ownership. As part of the Purchase Price
-------------------------------------
for the Shares, the Stockholder will receive certain shares of common stock of
Aerovox, Inc., as described in Clause 1.3. (b) (iii) above, which are subject to
the terms and conditions and certain transfer restrictions provided for in the
Stockholders Agreement. The Stockholder agrees, because of such consideration,
to be obliged by such transfer restrictions and to procure that the holder or
holders of its own capital stock (or other forms of ownership and corporate
control over such Stockholder) do not transfer such ownership or control to any
third party, except as provided in the Stockholders Agreement. For this purpose,
Exhibit 7.4 provides the current capital or equity structure of the Stockholder.
The Stockholder further agrees that breach of this obligation, would
22
<PAGE>
be considered a default of this Agreement, subject to the indemnification and
remedies herein established.
7.5. Right to Set-off and recoupment. Buyer will have the right to set-off
-------------------------------
any amount from the Notes, and will also have the right of recoupment, derived
from any defense or claim against the Stockholder, whether derived from any
equitable right of defense or claim extrinsic to the ones derived from this
Agreement or derived from this Agreement, in accordance to the Civil Code for
the Federal District of Mexico (Codigo Civil para el Distrito Federal), and the
General Law of Credit Instruments and Credit Operations of Mexico (Ley General
de Titulos y Operaciones de Credito).
EIGHTH. Miscellaneous
-------------
8.1. Press Releases and Announcements. The Stockholder shall not issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written consent of the Buyer.
8.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the parties and their successors
and permitted assigns.
8.3. Entire Agreement. This Agreement (including the exhibits and schedules
----------------
hereto) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
8.4. Succession and Assignment. This Agreement shall be binding upon and
---------- --- ----------
inure to the benefit of the parties named herein and their 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 the other parties; provided, however, that notwithstanding the foregoing, the
-------- -------
Buyer may assign its rights, interests and obligations hereunder to an Affiliate
of the Buyer.
8.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6. Headings. The clause headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall
23
<PAGE>
be deemed duly delivered ten (10) business days after it is sent by registered
or certified air mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable international overnight courier
service, in each case to the intended recipient as set forth below:
If to the Buyer: Aerovox, Inc.
740 Belleville Avenue
New Bedford Ma. 02745-6194
Attn: Mr. Jeffrey Templer
Senior Vice President
If to the Seller: Amsterdam Stravinskylaan 1725,
1077 XX, Amsterdam
Attn: Mr. Francisco Lucia Salazar
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
telecopy, provided that a hard copy is concurrently delivered by regular mail or
courier, or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
8.8. Governing Law. This Agreement, and all disputes hereunder, shall be
-------------
governed by and construed in accordance with the laws of the United Mexican
States.
8.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Stockholder. 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.
8.10. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the
24
<PAGE>
expiration of the time within which the judgment may be appealed.
8.11. Expenses. Each of the parties shall bear its own costs and expenses,
--------
including legal fees and expenses and fees and expenses owed to external
advisors, incurred in connection with this Agreement and the transactions
contemplated hereby.
8.12. Knowledge. For purposes of this Agreement, "knowledge" of the Company
---------
shall be deemed to mean such information as is known by the officers, directors
or management of any of the Company, that would reasonably be expected to be
known by persons in such positions.
8.13. Dispute Resolution. (a) General. In the event that any dispute should
------------------- -------
arise between the Parties with respect to any matter covered by this Agreement
or the interpretation of this Agreement, excluding, however, enforcement of a
default by the Buyer in any payment on any of the Notes, the parties shall
resolve such dispute in accordance with the procedures set forth in this Clause
8.13.
(b) Arbitration. (i) Any Party may submit any matter referred to in Clause
-----------
8.13(a) to arbitration by notifying the other parties hereto, in writing, of
such dispute. Within 10 days after receipt of such notice, the Parties shall
designate in writing one arbitrator to resolve the dispute; provided, that if
the Parties cannot agree on an arbitrator within such 10-day period, the United
States Chamber of Commerce shall select the arbitrator. The arbitrator so
designated shall not be an Affiliate, employee, consultant, officer, director or
stockholder of any Party. The arbitrator shall have at least ten (10) years'
experience in the field of international commercial transactions.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to Clause
8.13(b)(ii), to discuss each of the issues identified by the Parties. Each such
Party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
8.13(b)(iii). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto, provided
however, that the arbitrator shall have no authority to award punitive or
exemplary damages to any party. All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties.
(v) Any attorneys' fees of the Parties in any arbitration shall be borne
by the Parties as
25
<PAGE>
determined by the arbitrator, together with the fees of the arbitrator and the
costs and expenses of the arbitration.
(vi) Any arbitration pursuant to this Clause 8.13 shall be conducted in
New Bedford, Massachusetts, United States of America or other mutually
acceptable location, in the English language. Any arbitration award may be
entered in and enforced by any court having jurisdiction thereover and shall be
final and binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Clause 8.13 shall be
construed as limiting in any way the right of a Party to seek injunctive relief
with respect to any actual or threatened breach of this Agreement from a court
of competent jurisdiction.
8.14. Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any party. 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.
8.15. Currency. All amounts set forth in this Agreement are in United
--------
States Dollars. To the extent that conversion of other currencies into U.S.
Dollars is required for the computation of amounts under this Agreement, such
conversion shall be computed based on the currency conversion rate used by
Aerovox, Inc. to prepare its published financial statements on the date on which
such conversion must be computed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER
AEROVOX, INC.
BY/S/JEFFREY A. TEMPLER
-----------------------
Title: Attorney-in-fact
SELLER / STOCKHOLDER
RENKO INVESTMENTS B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Title: Attorney-in-fact
26
<PAGE>
EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
AMONG
AEROVOX, INC.
As Buyer
AND
TAKO HOLDING B.V.
As Seller
DATED AS OF APRIL 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CLAUSE FIRST - PURCHASE AND SALE OF SHARES
CLAUSE SECOND - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE COMPANY
CLAUSE THIRD - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE SHARES
CLAUSE FOURTH - REPRESENTATIONS AND WARRANTIES OF THE BUYER
CLAUSE FIFTH - CONDITIONS TO CLOSING
CLAUSE SIXTH - INDEMNIFICATION
CLAUSE SEVENTH - OTHER AGREEMENTS
CLAUSE EIGHTH - MISCELLANEOUS
Exhibits
Disclosure Schedule
</TABLE>
1
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of April 5, 1999, by
and among Aerovox, Inc., a Delaware corporation (the "Buyer"), and Tako Holding
B.V., a Dutch corporation (the "Seller"), sometimes referred herein as the
"Stockholder" or the "Seller", in accordance to the following:
STATEMENTS
1. Seller owns the number of 10,404(ten thousand four hundred four)
issued and outstanding ordinary shares (collectively, the "Shares"), with P$1.00
(One 00/100 Peso Mexican currency) par value per share of common stock of
CAPACITORES UNIDOS, S.A. DE C.V, a Mexican corporation (the "Company") as set
forth opposite to such Stockholder's name on Exhibit A attached hereto; which
Shares in the aggregate represent 20.808% of all of the issued and outstanding
shares of capital stock of the Company;
2. The Buyer desires to purchase the Shares of the Company from the
Seller in consideration of the payments described herein and the indemnities and
guarantees extended hereunder by the Seller; and
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
CLAUSES
FIRST. Purchase and Sale of Shares
---------------------------
1.1. Purchase of the Shares from the Seller. Subject to and upon the
--------------------------------------
terms and conditions of this Agreement, which shall be fulfilled upon the
Closing (as this term is defined hereinafter) Seller sells, transfers, conveys,
assigns and delivers to the Buyer, and the Buyer purchases, acquires and accepts
from Seller, all the Shares owned by such Stockholder, as set forth opposite
such Stockholder's name on Exhibit A attached hereto, such purchase and sale
will be perfected at the Closing.
1.2. Further Assurances. At any time and from time to time after the
------------------
Closing, at the
2
<PAGE>
Buyer's request, and without further consideration, the Stockholder shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares owned by such
Stockholder, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1.3. Purchase Price for the Shares.
-----------------------------
(a) The amount to be paid by the Buyer for the purchase of the Shares at
the Closing shall be USD$940,314.40 (Nine hundred forty thousand three hundred
fourteen 40/100 U.S. Dollars) (the "Purchase Price").
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholder, a note in the amount of USD$226,599.00 (Two
hundred twenty-six thousand five hundred and ninety-nine U.S. Dollars), payable
two years from the Closing Date, bearing interest at a rate applicable to the
United States treasury obligations of like term, on the terms of the form of
note attached hereto as Exhibit 1.3. (i).
(ii) to the Stockholder, a note in the amount of USD$72,828.00 (Seventy-
two thousand eight hundred twenty-eight U.S. Dollars), payable three years from
the Closing Date, bearing interest at a rate applicable to the United States
treasury obligations of like term, on the terms of the form of note attached
hereto as Exhibit 1.3. (ii).
(The notes referred to in paragraphs (i) to (ii) above will be denominated
collectively the "Notes").
(iii) to the Stockholder, 145,656 (One hundred forty-five thousand six
hundred fifty-six) shares of common stock of Aerovox, Inc. valued at USD$4.40
(four Dollars and forty cents U.S. currency) subject to the terms and conditions
of the Stockholders Agreement attached hereto as Exhibit 1.3. (iii) (the
"Stockholders Agreement").
1.4. Closing. The closing of the purchase and sale of the Shares hereunder
-------
(the "Closing") shall take place on April 5, 1999, or at such other date as may
be mutually agreed by the parties hereafter (the "Closing Date").
SECOND. Representations and Warranties of the Seller regarding the Company
------------------------------------------------------------------
The Stockholder represents and warrants to Buyer that the statements
contained in this CLAUSE SECOND are true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date, except as set forth in the
3
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disclosure schedule attached hereto and initialed by the Buyer (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Clause
SECOND. No representations or warranties given hereby, shall be considered to be
given on behalf of other stockholders or any other third party different from
the Stockholder.
2.1. Organization, Qualification and Corporate Power. (a) The Company is a
-----------------------------------------------
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the United Mexican States ("Mexico").
(b) The Company is duly qualified to conduct business in and has complied,
or is in the process of complying with the applicable laws of each jurisdiction
in which its businesses or the ownership or leasing of its properties are
carried out. The Company has all requisite corporate power and authority to
carry on the businesses in which its is engaged and to own and use the
properties owned and used by it. The Company is not in default under or in
violation of any provision of its Charter of Incorporation and Corporate By-laws
(Escritura Constitutiva y Estatutos Sociales).
2.2. Capitalization. The Disclosure Schedule sets forth a true, complete
--------------
and accurate list of the authorized capital stock of the Company, indicating the
number of shares of stock held by each stockholder. All of the issued and
outstanding shares of the Company are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no outstanding
or authorized options, warrants, rights, agreements or commitments to which the
Company is party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting of any shares of the Company. All of
the issued and outstanding shares of the Company were issued in compliance with
applicable laws.
2.3. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated herein, will, directly or indirectly and with or
without notice or lapse of time or both, (a) conflict with or violate any
provision of the Charter or By-laws of the Company, (b) require on the part of
the Company or any of its stockholders any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) 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, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound
4
<PAGE>
or to which any of their assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge,
restriction or other lien (whether arising by contract or by operation of law).
2.4. Subsidiaries. The Company does not own or control, directly or
------------
indirectly, any interest in any corporation, partnership, trust or other
business association or entity.
2.5. Financial Statements. The Company will provide to the Buyer a balance
--------------------
sheet as of the Closing Date. Such balance sheet (the "Balance Sheet") have been
prepared in accordance with Mexican Generally Accepted Accounting Principles,
fairly present the financial condition, results of operations and cash flows of
the Company as of the Closing Date and are consistent with the books and records
of the Company.
2.6. Absence of Certain Changes. As of the Closing Date, there has not
--------------------------
been any material adverse change in the consolidated assets, business, financial
condition or results of operations of the Company, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
2.7. Undisclosed Liabilities. Except as set forth in CLAUSE 2.7 of the
-----------------------
Disclosure Schedule, the Company has no liability (whether absolute or
contingent, liquidated or non-liquidated and whether due or to become due) which
by its nature should have been known and which would have been required by
Mexican GAAP to be reflected on a balance sheet, except for liabilities shown on
the balance sheet referred to in Clause 2.6 (the "Most Recent Balance Sheet").
2.8. Tax Matters. (a) The Company has filed on a timely basis all Tax
-----------
Returns (as defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. The Company has paid all
Taxes (as defined below) that are shown to be due on any such Tax Returns. The
Company has no actual or potential liability for any Tax obligation of any
taxpayer. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required have
been paid to the proper Governmental Entity. There are no liens for Taxes on the
assets of the Company. For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other similar assessments or liabilities, including,
without limitation, income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, service, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
Mexican States, or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United Mexican States, or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports,
5
<PAGE>
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, if any. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated.
(c) Except for as set forth in CLAUSE 2.8 (c) of the Disclosure Schedule,
the Company has not failed to pay any penalty, fine or addition to Tax in
respect of any filing or failure to file any Tax Return, or any failure to
timely pay any Tax, or in respect of any other claim or assessment by any taxing
authority in respect of any Taxes.
2.9. Assets. The Company owns or leases all assets necessary for the
------
conduct of its business as presently conducted. Each such asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. Each of
the assets (tangible or intangible) which is not owned by the Company is in such
condition that there is no reason to assume that, the obligations of the Company
to such owner or lessor should not be discharged, upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreements between the
Company and the owner or lessor thereof. Except for those described in Exhibit
2.9 hereto, no asset of the Company (tangible or intangible) is subject to any
Security Interest. The Company is not in violation nor in breach or default on
its obligation derived from certain asset purchase agreement between Compania
General de Electronica, S.A. de C.V. and the Company, dated April 1, 1999, nor
has any knowledge or is aware that Compania General de Electronica, S.A. de C.V.
has violated, breached or defaulted such asset purchase agreement.
2.10. Owned Real Property. Other than any leases described in CLAUSE 2.13
-------------------
of the Disclosure Schedule, the Company does not own any interest in any real
property, directly or indirectly.
2.11. Intellectual Property. (a) The Company owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use all material Intellectual
Property (as defined in paragraph (d) below), that is, or that covers
technology, used to conduct its business as presently conducted or as presently
proposed to be conducted. CLAUSE 2.11 of the Disclosure Schedule lists (i) all
material patents and patent applications and all trademarks, copyrights, trade
names, service marks and trade secrets which are used in the business of the
Company, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for such
issuance or registration has been filed, and whether such Intellectual Property
is owned or licensed by the Company, (ii) all material written licenses,
sublicenses and other agreements to which the Company is party and pursuant to
which any
6
<PAGE>
person is authorized to use any Intellectual Property rights, and (iii) all
material written licenses, sublicenses and other agreements as to which the
Company is party and pursuant to which the Company is authorized to use any
third party patents, trademarks, or service marks, trade secrets, know-how or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company. The Company is not a party to any oral
license, sublicense or agreement.
(b) The Company is not , nor will it be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any license, sublicense or other agreement relating
to Intellectual Property or Third Party Intellectual Property Rights.
(c) The Company has not been named in any suit, action or proceeding which
involves a claim of infringement of any Intellectual Property right of any third
party. To Seller's knowledge, the manufacturing, marketing, licensing and sale
of the products or performance of the service offerings of the Company do not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Seller, the rights of the Company with respect to Intellectual
Property are not being infringed by activities, products or services of any
third party.
(d) "Intellectual Property" means all patents, trademarks, trade names,
---------------------
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material.
2.12. Inventory. Except as set forth in CLAUSE 2.12 of the Disclosure
---------
Schedule, all inventory of the Company, whether or not reflected on the Most
Recent Balance Sheet, consists of a quality and quantity usable and saleable in
the Ordinary Course of Business, except for obsolete items and items of below-
standard quality, all of which have been written-off or written-down to net
realizable value on the Most Recent Balance Sheet. The quantities of each type
of inventory, whether raw materials, work-in-process or finished goods of the
Company, are appropriate in the present circumstances of the Company.
2.13. Real Property Leases. CLAUSE 2.13 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer true, correct and
complete copies of the leases and subleases (as amended to date) listed in
CLAUSE 2.13 of the Disclosure Schedule. The Company is not party to, or
otherwise obliged with respect to, any lease or sublease for facilities, which
are not occupied by the Company. With respect to each lease and sublease listed
in CLAUSE 2.13 of the Disclosure Schedule:
7
<PAGE>
(a) the lease or sublease is legal, valid, binding, enforceable and in full
force and effect;
(b) there is no reason which would impair the lease or sublease to continue
to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(c) the Company is not in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities in
the manner in which such facilities are currently operated and as presently
contemplated by the Company; and
(g) the owner of the facility leased or subleased, has stated that, it has
good and clear record and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or other restriction,
that would interfere in any material respect with the Company's operations
thereon, and there have been no actions to believe the contrary.
2.14. Contracts. CLAUSE 2.14 of the Disclosure Schedule sets forth a true,
---------
complete and accurate list of the following written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of USD$1,000 (One thousand U.S. Dollars) per annum;
(b) any written arrangement (or group of related written arrangements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which by its
terms may not be terminated upon 30 (thirty) days notice by the Company without
any premium, penalty or termination fee and (i) which calls for performance over
a period of more than one year, (ii) which involves more than the sum of
USD$1,000 (One thousand U.S. Dollars) or, in the case of open customer purchase
orders or purchase orders from any one purchaser or group of related purchasers,
involves in the aggregate more than USD$1,000 (One thousand U.S. Dollars) for
any such one purchaser or group of related purchasers, or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
8
<PAGE>
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
(c) any written arrangement establishing a partnership or joint venture;
(d) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than USD$1,000 (One thousand U.S. Dollars) or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or non-competition;
(f) any written arrangement involving the Stockholder or any persons or
entities controlling, controlled by or under common control with the Stockholder
("Affiliates") in which the Company is party to;
(g) any written arrangement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect on
the assets, business, financial condition or results of operations of the
Company; and
(h) any other written arrangement (or group of related written
arrangements) either involving more than USD$1,000 (One thousand U.S. Dollars)
or not entered into in the Ordinary Course of Business.
The Company has delivered to the Buyer a true, correct and complete copy of
each written arrangement (as amended to date) listed in CLAUSE 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) the Company is not, and to the knowledge of the Stockholder, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in CLAUSE 2.14 of the Disclosure
Schedule under the terms of this Clause 2.14.
2.15. Accounts Receivable; Contracts in Progress. All accounts receivable
------------------------------------------
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and, to Seller's knowledge, collectible
as has been in the Ordinary Course of Business. All accounts receivable
reflected in the financial or accounting records of the Company
9
<PAGE>
that have arisen since the date of the Most Recent Balance Sheet are valid
receivables subject to no setoffs or counterclaims and are, to Seller's
knowledge, collectible within the Ordinary Course of Business.
2.16. Powers of Attorney. Except as set forth in CLAUSE 2.16 of the
------------------
Disclosure Schedule, the Company has not granted any general or special powers
of attorney outstanding (whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.17. Insurance. CLAUSE 2.17 of the Disclosure Schedule sets forth all the
---------
information with respect to each current insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is party, has been named insured, or
otherwise is the beneficiary of coverage at any time.
(i) Each such insurance policy is enforceable and in full force and effect
through the Closing; (ii) the Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices) under such
policy, and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iii) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. The Company is covered by
insurance in scope and amount customary and reasonable for the businesses in
which it is engaged.
2.18. Litigation. CLAUSE 2.18 of the Disclosure Schedule identifies, and
----------
contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of, in or brought before (by a private
party or otherwise) any Governmental Entity or before any arbitrator to which
any of the Company is a party or, to the knowledge of the Company, is threatened
to be made a party. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in CLAUSE 2.18 of the Disclosure Schedule
could reasonably be expected to have a material adverse effect on the assets,
business, financial condition, results of operations of the Company.
2.19. Product Warranty. Some products manufactured, sold, leased, licensed
----------------
or delivered by the Company are subject to a one year shelf or field guaranty,
and no other warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale, are applicable. The standard terms and
conditions of sale are set forth in CLAUSE 2.19 of the Disclosure Schedule.
2.20. Employees. CLAUSE 2.20 of the Disclosure Schedule contains a list of
---------
all
10
<PAGE>
employees of the Company, along with the position and the annual rate of
compensation of each such person. There are no confidentiality/assignment of
invention agreement signed with the employees of the Company, except as set
forth in CLAUSE 2.20 of the Disclosure Schedule. To the knowledge of the Company
but without inquiry or independent investigation, no key employee or group of
employees of the Company has any plans to terminate employment with the Company.
The Company has not experienced any strikes, material grievances, material
claims of unfair labor practices or other collective bargaining disputes.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein, will trigger or otherwise result in any
obligation of the Company to pay severance or related costs under any employment
or consulting agreement. The Company enjoys good relations with all labor unions
and employee syndicates to which their employees belong, and no notification to
any labor union or employee syndicate is required in connection with the
transactions contemplated herein.
2.21. Employee Benefits. The Company has paid all employee benefits
-----------------
required to be paid by law, including, without limitation, pension, retirement,
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, health benefits, vacations, cafeteria programs and the
like ("Employee Benefits"). Each Employee Benefit has been administered in all
material respects in accordance with its terms and the Company has in all
material respects met its obligations with respect to such Employee Benefit and
has made all required contributions thereto. The Company is in compliance with
all applicable laws and regulations relating to Employee Benefits, and there are
no investigations by any Governmental Entity with respect thereto.
2.22. Environmental Matters. (a) The Company has complied or is in the
---------------------
process of complying with all applicable Environmental Laws, when applicable.
Except as set forth in CLAUSE 2.22 of the Disclosure Schedule, there is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" or "Environmental Laws" shall mean any Mexican
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including, without limitation,
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
11
<PAGE>
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
(b) There have been no releases or threats of release by the Company, or to
the knowledge of the Company, any other party, of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company. With respect to any such releases or threats of release of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company have no knowledge of any releases of Materials of Environmental Concern
at parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products, or
radiological materials.
(c) Set forth in CLAUSE 2.22(c) of the Disclosure Schedule is a list of all
environmental reports, investigations and audits known to the Company that
relate to premises currently or previously owned or operated by the Company
(whether conducted by or on behalf of the Company or a third party, and whether
done at the initiative of the Company or directed by a Governmental Entity or
other third party) which the Company has in its possession or knowledge of.
Complete and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer or, if not in the
possession of the Company, identified in CLAUSE 2.22(c) of the Disclosure
Schedule.
(d) Set forth in CLAUSE 2.22(d) of the Disclosure Schedule is a list of all
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities and all recycling, reclamation or re-use transporters and
facilities that have been utilized by the Company. The Company has no knowledge
of any material environmental liability of any such transporter or facility.
2.23. Legal Compliance. Except as set forth in Clause 2.23 of the
----------------
Disclosure Schedule, the Company is conducting and has conducted its respective
operations and business in compliance with each law (including rules and
regulations thereunder) of all applicable federal, state, local or foreign
government, or any Governmental Entity. The Company has not received any notice
or communication from any Governmental Entity alleging noncompliance with any
applicable federal, state, local or foreign laws, regulations or orders.
2.24. Permits. CLAUSE 2.24 of the Disclosure Schedule sets forth a list of
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all permits,
12
<PAGE>
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including, without limitation, those issued or required under
Environmental Laws, relating to the occupancy or use of owned or leased real
property and relating to the import or export of materials, goods or products)
("Permits") issued to or held by the Company. Such listed Permits are the most
relevant Permits that are required for the Company to conduct its respective
businesses as presently conducted. Except as set forth in CLAUSE 2.24 of the
Disclosure Schedule, each such Permit is in full force and effect and (a) no
suspension or cancellation of such Permit is threatened and (b) there is no
basis for believing that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect immediately following the
Closing and will not be affected by this Agreement.
2.25. Certain Business Relationships with Affiliates. No Affiliate of the
----------------------------------------------
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company or (c) owes any money to any of the Company. CLAUSE 2.25 of the
Disclosure Schedule describes any transactions or relationships between the
Company, on the one hand, and any Affiliate thereof or any Stockholder, on the
other hand.
2.26. Brokers' Fees. The Company has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to this
Agreement.
2.27. Books and Records. The minute books, stock record books and other
-----------------
similar records of the Company contain true and complete records of all actions
taken at any meetings of its stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. A certification of the corresponding Secretary of the Board of
Directors of the Company is attached to the corresponding corporate books to
certify so. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28. Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture or deliver products or perform
services will result in a material loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, and there are no prices provided therein in excess of
current market prices for the products or services to be provided thereunder. No
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products, or services to the Company and no
material customer of the Company has indicated that it will stop, or decrease
the rate of, buying, leasing or licensing materials, products or services from
the Company.
2.29. Banking Facilities. CLAUSE 2.29 of the Disclosure Schedule sets forth
------------------
a true, correct and complete list of:
13
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(a) each bank, savings and loan or similar financial institution at which
the Company has an account, safety deposit box, line of credit or credit
facility and the numbers of the accounts or safety deposit boxes maintained by
the Company thereat and details, including terms, of any line of credit or
credit facility; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a description
of the authority (and conditions thereof, if any) of each such person with
respect thereto.
2.30. Consents. Except as set forth in CLAUSE 2.30 of the Disclosure
--------
Schedule, no filing, consent, waiver or approval of any third party or
Governmental Entity is required to be obtained by Seller or the Company in
connection with this Agreement.
2.31. Disclosure. No representation or warranty by the Stockholder
----------
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered to or
to be delivered by or on behalf of the Stockholder pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
Stockholder has not failed to disclose any information that would make the
written representations contained within this Agreement misleading.
THIRD. Representations and Warranties of the Seller regarding the Shares
-----------------------------------------------------------------
The Stockholder represents and warrants to the Buyer as follows:
3.1. Title to Shares. The Stockholder has good and marketable title to the
---------------
Shares which are to be transferred to the Buyer by such Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, preferential rights, rights of first refusal, liens,
charges, encumbrances, options and adverse claims or rights whatsoever. There
are no options, warrants or other claims to the capital stock of the Company
owned by such Stockholder.
3.2. Authorization. The Stockholder has the full right, power and authority
-------------
to enter into this Agreement and to transfer, convey and sell to the Buyer at
the Closing the Shares to be sold by such Stockholder hereunder and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
such Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
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3.3. Absence of Conflicting Agreements or Litigation. The Stockholder is
-----------------------------------------------
not a party to, subject to or bound by any agreement or any judgment, order,
writ, prohibition, injunction or decree of any court or other governmental body
which would prevent or conflict with the execution or delivery of this
Agreement by such Stockholder or the transfer, conveyance and sale of the Shares
to be sold by such Stockholder to the Buyer pursuant to the terms hereof.
3.4. Brokers. No broker or finder has acted for the Stockholder in
-------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of such Stockholder.
FOURTH. Representations and Warranties of the Buyer
-------------------------------------------
The Buyer represents and warrants to the Stockholder as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, United
States of America.
4.2. Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Notes by the Buyer and the performance of this Agreement and
the consummation of the transactions contemplated hereby by the Buyer have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the Notes have been duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms. Messrs.
Robert Elliott and Jeffrey Templer are duly appointed representatives of Buyer
for this transaction, and have all necessary power and capacity to enter into
and execute all necessary documents related hereto, on behalf of Buyer.
4.3. Buyer's stock. Buyer's shares as described in Clause 1.3 (b) (iii)
-------------
hereof, have been duly and validly authorized and issued and are fully paid and
nonassessable.
4.4. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the Charter or By-laws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject, or (d) violate
15
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any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer or any of its properties or assets.
4.5. Brokers' Fees. No broker or finder has acted for the Buyer in
-------------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Buyer.
FIFTH. Conditions to Closing
---------------------
5.1. Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by the Buyer, of the following conditions on or prior to
the Closing:
(a) the Company shall have obtained all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement, including,
without limitation, those referred to in CLAUSE 2.30 of the Disclosure Schedule;
(b) the representations and warranties of the Stockholder set forth in
Clause SECOND and Clause THIRD hereof shall be true and correct;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Buyer to own, operate or control any of the
assets or operations of the Company, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the Stockholder shall have delivered to the Buyer the stock
certificates representing the Shares, in each case duly endorsed or with duly
executed stock powers attached;
(e) the Company shall have delivered a certificate, executed by the
Secretary of the Company, attaching and certifying as to: (i) the charter
documents (estatutos sociales) of the Company and (ii) the resolutions of the
Board of Directors of the Company required to authorize this Agreement.
(f) to the extent reasonably available in the applicable jurisdiction, the
Company shall have delivered certificates of appropriate governmental officials
in each jurisdiction in which the Company or the Stockholder is incorporated,
resident or required to qualify to do business as a
16
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foreign corporation, as to the due qualification (including tax) of the Company
or Stockholder, as the case may be, in each such jurisdiction;
(g) the Buyer shall have received from Mexican counsel to the Stockholder
an opinion as to the matters described in Exhibit 5.1. g) hereto, dated as of
the Closing Date;
(h) the Company shall have delivered the original corporate minute books of
the Company;
(i) the signatories to each of the bank accounts of the Company shall have
been changed as per the Buyer's instructions;
(j) the Buyer or its designee shall have entered into an Employee Agreement
with Mr. Enrique Sanchez Aldunate;
(k) the Stockholder shall have delivered to the Buyer a certificate (in
each case without regard to any qualification as to knowledge or materiality set
forth in any representation or warranty) to the effect that each of the
conditions specified in clauses (a), (b), (c), and (d), of this Clause 5.1 has
been satisfied in all respects; and
(l) the Stockholder shall have delivered to the Buyer a certificate that
establishes the share distribution of the Company, and indicating that no other
person other than the Stockholder owns or has any right upon the Shares.
5.2. Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Stockholder to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver of the following
conditions:
(a) the representations and warranties of the Buyer set forth in Clause
FOURTH hereof shall be true and correct;
(b) the Buyer shall have delivered the Purchase Price (including the Notes
and the shares referred in Clause 1.3. (b) above) to the Stockholder;
(c) the Buyer shall have executed a securities pledge agreement to guaranty
the due payment, of the Notes to the Stockholder, in accordance with the
terms and conditions established in the Securities Pledge Agreement, which
is attached to this Agreement as Exhibit 5.2 (c); and
(d) Seller shall have received from counsel to Buyer an opinion stating
that the Notes and the shares of the buyer to be received by Seller have
been duly and validly issued, that such shares are non assessable, and that
the Notes are binding upon Buyer and
17
<PAGE>
enforceable in accordance with their respective terms.
SIXTH. Indemnification
---------------
6.1. Indemnification by the Stockholder. Subject to Clause 6.6 and Clause
----------------------------------
6.8 hereof, the Stockholder shall indemnify the Company and the Buyer in respect
of, and hold harmless the Company and the Buyer against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, whether due or to become due or otherwise), monetary damages,
fines, fees, penalties, interest obligations, deficiencies, losses and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigators, fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation)
("Damages") arising out of or related to any of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Stockholder in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Stockholder
contained in this Agreement, or any other agreement, instrument or document
attached to or delivered in connection with this Agreement as an exhibit or a
schedule;
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the Stockholder or the Company pursuant to this Agreement;
(d) any claim (including, without limitation, warranty and personal injury
arising out of product liability claims), suit, action, arbitration, proceeding,
investigation or other similar matter which relates to (i) products manufactured
or sold by the Company prior to the Closing Date or (ii) the business or
operations of the Company prior to the Closing Date;
(e) any claim, action or audit by any Governmental Entity in connection
with the formation, establishment, maintenance, operation, winding-up or
dissolution of the Stockholder or the Company, including but not limited to fees
of attorneys, agents, auditors and inspectors, capital requirements and any
other amounts;
(f) any claim by a stockholder or former stockholder of the Company or any
other person, firm, corporation or entity, other than the Buyer, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
capital stock of or equity interest in the Company; (ii) any rights under the
Charter or By-laws of the Company; or (iii) any claim that his or its shares
were wrongfully repurchased by any stockholder at any time prior to the Closing;
and
(g) any claim for Taxes payable by Seller or the Company derived from this
agreement and the subject matter hereof.
18
<PAGE>
6.2. Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Stockholder in respect of, and hold such Stockholder harmless against any and
all Damages arising out of or related to each and all of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement, or any other agreement, instrument or document
contemplated by this Agreement; and
(c) any claim (including, without limitation, warranty and product
liability claims), suit, action, arbitration proceeding, investigation or other
similar matter which relates to (i) products manufactured or sold by the Company
after the Closing Date or (ii) the business or operations of the Company
following the Closing Date.
6.3. Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this CLAUSE SIXTH, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom indemnification
is sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that Stockholder shall
-------- -------
have no obligation to indemnify Company and/or Buyer and/or hold Company and/or
Buyer harmless from any Damages or claim asserted at a time beyond the time
limitation period imposed by paragraph 6.6., below. In the event of any such
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Except as provided in Clause 6.4(d), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against an Indemnified Party and the
Indemnifying Party shall not have taken control of such suit as provided in
Clause 6.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim without the Indemnifying Party's consent.
6.4. Defense by the Indemnifying Party. (a) Subject to Clause 6.4(d), in
---------------------------------
connection with any claim for indemnification hereunder resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, at his or its sole cost and expense, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, (ii) the third party seeks monetary
damages only and (iii) an adverse resolution of the third party's claim would
not have a material adverse effect on the goodwill or reputation of the
Indemnified Party.
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<PAGE>
(b) If the Indemnifying Party so assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claim or
legal proceeding and, at the sole cost and expense of the Indemnifying Party,
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding that (i) involves any
non-monetary judgement affecting the Indemnified Party or (ii) does not involve
the delivery of a general release in favor of the Indemnified Party, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest).
(c) If the Indemnifying Party does not (or is not permitted under the terms
hereof to) assume the defense of any such claim or litigation resulting
therefrom as provided in this Clause 6.4 within 15 days after the date that the
Indemnified Party has given notice of the claim to the Indemnifying Party: (i)
the Indemnified Party may defend against such claim or litigation in such manner
as he or it may deem appropriate, including, but not limited to, settling such
claim or litigation on such terms as the Indemnified Party may deem appropriate;
and (ii) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and at his or its
own expense.
6.5. Treatment of Indemnity Payments. Subject to the express liability
-------------------------------
limitation set forth in Clause 6.8., below, to the extent that any
indemnification claim under this Clause SIXTH may be satisfied by payments to
Buyer (excluding Stockholder's defense of claims, as provided in Section 6.4),
they may be satisfied in whole or in part by delivering one or more of the
following, in such amounts or equivalent value required to pay the costs for
such indemnity claim:
(i) cash; and/or
(ii) a written instrument of accord satisfaction for the cancellation of
all or part of the outstanding principle amount and accrued interest of one
or more of the Notes; and/or
(iii) the endorsement and transfer of all or portion of the shares of
Buyer's stock received by Stockholder as provided in Clause 1.3 (b) (iii)
above. The number of the shares of Buyer's stock to be so transferred shall
be based on the book value of those shares at the end of the Buyer's most
recent fiscal year ended, as determined in accordance with GAAP as then in
effect and as shown on the audited balance sheet of the Buyer for the last
day of the most recent audited fiscal period.
20
<PAGE>
To the extent that the transactions under subclauses (ii) and (iii) above
are insufficient to satisfy Buyer's indemnity claim, the balance shall be paid
by the Stockholder in cash, or such other form as may be acceptable by written
agreement with the Buyer.
6.6. Survival. All general representations and warranties and all
--------
covenants, agreements and obligations made by the Stockholder in this Agreement,
or in any instrument or document furnished in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, any
obligation of Stockholder under this CLAUSE SIXTH to indemnify Buyer and/or
Company and/or hold Buyer and/or Company harmless, shall survive for a period of
2 (two) years after the Closing Date, except (i) for those representations and
warranties, covenants, agreements and obligations made by the Stockholder in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby that refer to title to
the assets of the Company and ownership of the Shares, which will survive for a
period of 5 (five) years counted from Closing Date, and except (ii) for those
representations and warranties, covenants, agreements and obligations made by
the Stockholder in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby referring
to Taxes and personal injuries arising out of product liability claims, which
shall expire and terminate upon the applicable statute of limitations. Any
claims asserted in writing prior to the expiration of the representation,
warranty or agreement that is the basis for such claim, if any, as provided in
this Clause 6.6, shall survive until finally resolved and satisfied in full.
6.7. Remedies. Notwithstanding any other provision of this Agreement, Buyer
--------
shall not be entitled to any reduction in the Purchase Price, setoff any amount
against the principal balance of the Notes, or to damages for breach of any
representation and warranty or for any claim for indemnity under this CLAUSE
SIXTH, unless and until the aggregate amount of claims by Buyer exceeds the sum
of USD$100,000.00 (One Hundred Thousand Dollars legal currency of the United
States of America).
Except for Seller's obligation to indemnify Buyer and/or Company for any
claim of Damages derived from Taxes payable by Seller or the Company in
connection with this agreement and the subject matter hereof, and/or Seller's
liability for any breach of the written representations and warranties of Seller
relating to Taxes, which indemnification obligation will not be subject to any
limitation, in no other event shall Seller's obligations to indemnify Buyer
and/or Company, or Seller's liability for any breach of the written
representations and warranties of Seller under this Agreement, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, exceed the Purchase Price.
6.8. Limited Indemnity Obligation. In no event shall Stockholder be liable
----------------------------
for any consequential damages, opportunity costs or lost profits incurred or
suffered by Buyer and/or Company.
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<PAGE>
SEVENTH. Other Agreements
----------------
7.1. Proprietary Information. (a) From and after the Closing the
-----------------------
Stockholder shall hold in confidence, and shall cause all of his Affiliates to
hold in confidence, all knowledge, information and documents of a confidential
nature or not generally known to the public with respect to the Company or the
Buyer (including without limitation the financial information, Intellectual
Property, technical information or data relating to the materials, products or
components sold, or the services offered, in connection with the Company and
names of customers of the Company) (collectively, "Proprietary Information") and
shall not disclose or make use of, and shall cause their respective Affiliates
not to disclose or make use of, Proprietary Information without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge or independently obtained by
Seller, other than through a breach of this Agreement by the Stockholder or
their respective Affiliates and agents.
7.2. Releases. The Stockholder hereby releases and forever discharges the
--------
Company, its successors, assigns, agents, servants, employees, principals,
administrators, stockholders, affiliates, subsidiaries and related companies
(including the Buyer) of and from any and all actions, causes of action, claims,
demands, costs, liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which such Stockholder ever had, now has or may have
against the Company. This release is binding on the Stockholder's assignees and
personal representatives.
7.3. Cooperation in Litigation. Each party shall fully cooperate with the
-------------------------
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter by a third party against or by
such other party relating to or arising out of the conduct of the business of
the Company or the Buyer prior to or after the Closing Date (excluding
litigation arising out of the transactions contemplated by this Agreement). The
party providing such cooperation shall be entitled to designate which of its
employees shall be made available for such purpose and the party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and agents
and a reasonable charge for their time spent in such cooperation.
7.4. Restriction on Transfers of Ownership. As part of the Purchase Price
-------------------------------------
for the Shares, the Stockholder will receive certain shares of common stock of
Aerovox, Inc., as described in Clause 1.3. (b) (iii) above, which are subject to
the terms and conditions and certain transfer restrictions provided for in the
Stockholders Agreement. The Stockholder agrees, because of such consideration,
to be obliged by such transfer restrictions and to procure that the holder or
holders of its own capital stock (or other forms of ownership and corporate
control over such Stockholder) do not transfer such ownership or control to any
third party, except as provided in the Stockholders Agreement. For this purpose,
Exhibit 7.4 provides the current capital or equity structure of the Stockholder.
The Stockholder further agrees that breach of this obligation, would
22
<PAGE>
be considered a default of this Agreement, subject to the indemnification and
remedies herein established.
7.5. Right to Set-off and recoupment. Buyer will have the right to set-off
-------------------------------
any amount from the Notes, and will also have the right of recoupment, derived
from any defense or claim against the Stockholder, whether derived from any
equitable right of defense or claim extrinsic to the ones derived from this
Agreement or derived from this Agreement, in accordance to the Civil Code for
the Federal District of Mexico (Codigo Civil para el Distrito Federal), and the
General Law of Credit Instruments and Credit Operations of Mexico (Ley General
de Titulos y Operaciones de Credito).
EIGHTH. Miscellaneous
-------------
8.1. Press Releases and Announcements. The Stockholder shall not issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written consent of the Buyer.
8.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the parties and their successors
and permitted assigns.
8.3. Entire Agreement. This Agreement (including the exhibits and schedules
----------------
hereto) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
8.4. Succession and Assignment. This Agreement shall be binding upon and
---------- --- ----------
inure to the benefit of the parties named herein and their 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 the other parties; provided, however, that notwithstanding the foregoing, the
-------- -------
Buyer may assign its rights, interests and obligations hereunder to an Affiliate
of the Buyer.
8.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6. Headings. The clause headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall
23
<PAGE>
be deemed duly delivered ten (10) business days after it is sent by registered
or certified air mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable international overnight courier
service, in each case to the intended recipient as set forth below:
If to the Buyer: Aerovox, Inc.
740 Belleville Avenue
New Bedford Ma. 02745-6194
Attn: Mr. Jeffrey Templer
Senior Vice President
If to the Seller: Amsterdam Stravinskylaan 1725,
1077 XX, Amsterdam
Attn: Mr. Francisco Lucia Salazar
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
telecopy, provided that a hard copy is concurrently delivered by regular mail or
courier, or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
8.8. Governing Law. This Agreement, and all disputes hereunder, shall be
-------------
governed by and construed in accordance with the laws of the United Mexican
States.
8.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Stockholder. 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.
8.10. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the
24
<PAGE>
expiration of the time within which the judgment may be appealed.
8.11. Expenses. Each of the parties shall bear its own costs and expenses,
--------
including legal fees and expenses and fees and expenses owed to external
advisors, incurred in connection with this Agreement and the transactions
contemplated hereby.
8.12. Knowledge. For purposes of this Agreement, "knowledge" of the Company
---------
shall be deemed to mean such information as is known by the officers, directors
or management of any of the Company, that would reasonably be expected to be
known by persons in such positions.
8.13. Dispute Resolution. (a) General. In the event that any dispute should
------------------- -------
arise between the Parties with respect to any matter covered by this Agreement
or the interpretation of this Agreement, excluding, however, enforcement of a
default by the Buyer in any payment on any of the Notes, the parties shall
resolve such dispute in accordance with the procedures set forth in this Clause
8.13.
(b) Arbitration. (i) Any Party may submit any matter referred to in
-----------
Clause 8.13(a) to arbitration by notifying the other parties hereto, in writing,
of such dispute. Within 10 days after receipt of such notice, the Parties shall
designate in writing one arbitrator to resolve the dispute; provided, that if
the Parties cannot agree on an arbitrator within such 10-day period, the United
States Chamber of Commerce shall select the arbitrator. The arbitrator so
designated shall not be an Affiliate, employee, consultant, officer, director or
stockholder of any Party. The arbitrator shall have at least ten (10) years'
experience in the field of international commercial transactions.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to Clause
8.13(b)(ii), to discuss each of the issues identified by the Parties. Each such
Party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
8.13(b)(iii). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto, provided
however, that the arbitrator shall have no authority to award punitive or
exemplary damages to any party. All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties.
(v) Any attorneys' fees of the Parties in any arbitration shall be borne by
the Parties as
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<PAGE>
determined by the arbitrator, together with the fees of the arbitrator and the
costs and expenses of the arbitration.
(vi) Any arbitration pursuant to this Clause 8.13 shall be conducted in New
Bedford, Massachusetts, United States of America or other mutually acceptable
location, in the English language. Any arbitration award may be entered in and
enforced by any court having jurisdiction thereover and shall be final and
binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Clause 8.13 shall be
construed as limiting in any way the right of a Party to seek injunctive relief
with respect to any actual or threatened breach of this Agreement from a court
of competent jurisdiction.
8.14. Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any party. 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.
8.15. Currency. All amounts set forth in this Agreement are in United
--------
States Dollars. To the extent that conversion of other currencies into U.S.
Dollars is required for the computation of amounts under this Agreement, such
conversion shall be computed based on the currency conversion rate used by
Aerovox, Inc. to prepare its published financial statements on the date on which
such conversion must be computed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER
AEROVOX, INC.
BY/S/JEFFREY A. TEMPLER
-----------------------
Title: Attorney-in-fact
SELLER / STOCKHOLDER
TAKO HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Name: Mr.
Title: Attorney-in-fact
26
<PAGE>
EXHIBIT 2.6
STOCK PURCHASE AGREEMENT
AMONG
AEROVOX, INC.
As Buyer
AND
BIRES INVESTMENTS B.V.
As Seller
DATED AS OF APRIL 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CLAUSE FIRST - PURCHASE AND SALE OF SHARES
CLAUSE SECOND - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE COMPANY
CLAUSE THIRD - REPRESENTATIONS AND WARRANTIES OF THE
SELLER REGARDING THE SHARES
CLAUSE FOURTH - REPRESENTATIONS AND WARRANTIES OF THE BUYER
CLAUSE FIFTH - CONDITIONS TO CLOSING
CLAUSE SIXTH - INDEMNIFICATION
CLAUSE SEVENTH - OTHER AGREEMENTS
CLAUSE EIGHTH - MISCELLANEOUS
Exhibits
Disclosure Schedule
</TABLE>
1
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of April 5, 1999, by
and among Aerovox, Inc., a Delaware corporation (the "Buyer"), and Bires
Investments B.V., a Dutch corporation (the "Seller"), sometimes referred herein
as the "Stockholder" or the "Seller", in accordance to the following:
STATEMENTS
1. Seller owns the number of 7894(seven thousand eight hundred ninety
four) issued and outstanding ordinary shares (collectively, the "Shares"), with
P$1.00 (One 00/100 Peso Mexican currency) par value per share of common stock of
CAPACITORES UNIDOS, S.A. DE C.V, a Mexican corporation (the "Company") as set
forth opposite to such Stockholder's name on Exhibit A attached hereto; which
Shares in the aggregate represent 15.788% of all of the issued and outstanding
shares of capital stock of the Company;
2. The Buyer desires to purchase the Shares of the Company from the
Seller in consideration of the payments described herein and the indemnities and
guarantees extended hereunder by the Seller; and
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
CLAUSES
FIRST. Purchase and Sale of Shares
---------------------------
1.1. Purchase of the Shares from the Seller. Subject to and upon the
--------------------------------------
terms and conditions of this Agreement, which shall be fulfilled upon the
Closing (as this term is defined hereinafter) Seller sells, transfers, conveys,
assigns and delivers to the Buyer, and the Buyer purchases, acquires and accepts
from Seller, all the Shares owned by such Stockholder, as set forth opposite
such Stockholder's name on Exhibit A attached hereto, such purchase and sale
will be perfected at the Closing.
1.2. Further Assurances. At any time and from time to time after the
------------------
Closing, at the
2
<PAGE>
Buyer's request, and without further consideration, the Stockholder shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares owned by such
Stockholder, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1.3. Purchase Price for the Shares.
-----------------------------
(a) The amount to be paid by the Buyer for the purchase of the Shares at
the Closing shall be USD$713,459.40 (Seven hundred thirteen thousand four
hundred fifty nine 40/100 U.S. Dollars) (the "Purchase Price").
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholder, a note in the amount of USD$171,931.00 (One
hundred seventy one thousand nine hundred and thirty one U.S. Dollars), payable
two years from the Closing Date, bearing interest at a rate applicable to the
United States treasury obligations of like term, on the terms of the form of
note attached hereto as Exhibit 1.3. (i).
(ii) to the Stockholder, a note in the amount of USD$55,258.00 (Fifty
five thousand two hundred fifty eight U.S. Dollars), payable three years from
the Closing Date, bearing interest at a rate applicable to the United States
treasury obligations of like term, on the terms of the form of note attached
hereto as Exhibit 1.3. (ii).
(The notes referred to in paragraphs (i) to (ii) above will be
denominated collectively the "Notes").
(iii) to the Stockholder, 110,516 (One hundred ten thousand five hundred
sixteen) shares of common stock of Aerovox, Inc. valued at USD$4.40 (four
Dollars and forty cents U.S. currency) subject to the terms and conditions of
the Stockholders Agreement attached hereto as Exhibit 1.3. (iii) (the
"Stockholders Agreement").
1.4. Closing. The closing of the purchase and sale of the Shares
-------
hereunder (the "Closing") shall take place on April 5, 1999, or at such other
date as may be mutually agreed by the parties hereafter (the "Closing Date").
SECOND. Representations and Warranties of the Seller regarding the Company
------------------------------------------------------------------
The Stockholder represents and warrants to Buyer that the statements
contained in this CLAUSE SECOND are true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date, except as set forth in the
3
<PAGE>
disclosure schedule attached hereto and initialed by the Buyer (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Clause
SECOND. No representations or warranties given hereby, shall be considered to be
given on behalf of other stockholders or any other third party different from
the Stockholder.
2.1. Organization, Qualification and Corporate Power. (a) The Company is a
-----------------------------------------------
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the United Mexican States ("Mexico").
(b) The Company is duly qualified to conduct business in and has complied,
or is in the process of complying with the applicable laws of each jurisdiction
in which its businesses or the ownership or leasing of its properties are
carried out. The Company has all requisite corporate power and authority to
carry on the businesses in which its is engaged and to own and use the
properties owned and used by it. The Company is not in default under or in
violation of any provision of its Charter of Incorporation and Corporate By-laws
(Escritura Constitutiva y Estatutos Sociales).
2.2. Capitalization. The Disclosure Schedule sets forth a true, complete
--------------
and accurate list of the authorized capital stock of the Company, indicating the
number of shares of stock held by each stockholder. All of the issued and
outstanding shares of the Company are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no outstanding
or authorized options, warrants, rights, agreements or commitments to which the
Company is party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting of any shares of the Company. All of
the issued and outstanding shares of the Company were issued in compliance with
applicable laws.
2.3. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated herein, will, directly or indirectly and with or
without notice or lapse of time or both, (a) conflict with or violate any
provision of the Charter or By-laws of the Company, (b) require on the part of
the Company or any of its stockholders any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) 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, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound
4
<PAGE>
or to which any of their assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge,
restriction or other lien (whether arising by contract or by operation of law).
2.4. Subsidiaries. The Company does not own or control, directly or
------------
indirectly, any interest in any corporation, partnership, trust or other
business association or entity.
2.5. Financial Statements. The Company will provide to the Buyer a balance
--------------------
sheet as of the Closing Date. Such balance sheet (the "Balance Sheet") have been
prepared in accordance with Mexican Generally Accepted Accounting Principles,
fairly present the financial condition, results of operations and cash flows of
the Company as of the Closing Date and are consistent with the books and records
of the Company.
2.6. Absence of Certain Changes. As of the Closing Date, there has not
--------------------------
been any material adverse change in the consolidated assets, business, financial
condition or results of operations of the Company, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
2.7. Undisclosed Liabilities. Except as set forth in CLAUSE 2.7 of the
-----------------------
Disclosure Schedule, the Company has no liability (whether absolute or
contingent, liquidated or non-liquidated and whether due or to become due) which
by its nature should have been known and which would have been required by
Mexican GAAP to be reflected on a balance sheet, except for liabilities shown on
the balance sheet referred to in Clause 2.6 (the "Most Recent Balance Sheet").
2.8. Tax Matters. (a) The Company has filed on a timely basis all Tax
-----------
Returns (as defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. The Company has paid all
Taxes (as defined below) that are shown to be due on any such Tax Returns. The
Company has no actual or potential liability for any Tax obligation of any
taxpayer. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required have
been paid to the proper Governmental Entity. There are no liens for Taxes on the
assets of the Company. For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other similar assessments or liabilities, including,
without limitation, income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, service, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
Mexican States, or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United Mexican States, or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports,
5
<PAGE>
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, if any. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated.
(c) Except for as set forth in CLAUSE 2.8 (c) of the Disclosure Schedule,
the Company has not failed to pay any penalty, fine or addition to Tax in
respect of any filing or failure to file any Tax Return, or any failure to
timely pay any Tax, or in respect of any other claim or assessment by any taxing
authority in respect of any Taxes.
2.9. Assets. The Company owns or leases all assets necessary for the
------
conduct of its business as presently conducted. Each such asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. Each of
the assets (tangible or intangible) which is not owned by the Company is in such
condition that there is no reason to assume that, the obligations of the Company
to such owner or lessor should not be discharged, upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreements between the
Company and the owner or lessor thereof. Except for those described in Exhibit
2.9 hereto, no asset of the Company (tangible or intangible) is subject to any
Security Interest. The Company is not in violation nor in breach or default on
its obligation derived from certain asset purchase agreement between Compania
General de Electronica, S.A. de C.V. and the Company, dated April 1, 1999, nor
has any knowledge or is aware that Compania General de Electronica, S.A. de C.V.
has violated, breached or defaulted such asset purchase agreement.
.
2.10 Owned Real Property. Other than any leases described in CLAUSE 2.13
-------------------
of the Disclosure Schedule, the Company does not own any interest in any real
property, directly or indirectly.
2.11. Intellectual Property. (a) The Company owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use all material Intellectual
Property (as defined in paragraph (d) below), that is, or that covers
technology, used to conduct its business as presently conducted or as presently
proposed to be conducted. CLAUSE 2.11 of the Disclosure Schedule lists (i) all
material patents and patent applications and all trademarks, copyrights, trade
names, service marks and trade secrets which are used in the business of the
Company, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for such
issuance or registration has been filed, and whether such Intellectual Property
is owned or licensed by the Company, (ii) all material written licenses,
sublicenses and other agreements to which the Company is party and pursuant to
which any
6
<PAGE>
person is authorized to use any Intellectual Property rights, and (iii) all
material written licenses, sublicenses and other agreements as to which the
Company is party and pursuant to which the Company is authorized to use any
third party patents, trademarks, or service marks, trade secrets, know-how or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company. The Company is not a party to any oral
license, sublicense or agreement.
(b) The Company is not , nor will it be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any license, sublicense or other agreement relating
to Intellectual Property or Third Party Intellectual Property Rights.
(c) The Company has not been named in any suit, action or proceeding which
involves a claim of infringement of any Intellectual Property right of any third
party. To Seller's knowledge, the manufacturing, marketing, licensing and sale
of the products or performance of the service offerings of the Company do not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Seller, the rights of the Company with respect to Intellectual
Property are not being infringed by activities, products or services of any
third party.
(d) "Intellectual Property" means all patents, trademarks, trade names,
---------------------
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material.
2.12. Inventory. Except as set forth in CLAUSE 2.12 of the Disclosure
---------
Schedule, all inventory of the Company, whether or not reflected on the Most
Recent Balance Sheet, consists of a quality and quantity usable and saleable in
the Ordinary Course of Business, except for obsolete items and items of below-
standard quality, all of which have been written-off or written-down to net
realizable value on the Most Recent Balance Sheet. The quantities of each type
of inventory, whether raw materials, work-in-process or finished goods of the
Company, are appropriate in the present circumstances of the Company.
2.13. Real Property Leases. CLAUSE 2.13 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer true, correct and
complete copies of the leases and subleases (as amended to date) listed in
CLAUSE 2.13 of the Disclosure Schedule. The Company is not party to, or
otherwise obliged with respect to, any lease or sublease for facilities, which
are not occupied by the Company. With respect to each lease and sublease listed
in CLAUSE 2.13 of the Disclosure Schedule:
7
<PAGE>
(a) the lease or sublease is legal, valid, binding, enforceable and in full
force and effect;
(b) there is no reason which would impair the lease or sublease to continue
to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(c) the Company is not in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities in
the manner in which such facilities are currently operated and as presently
contemplated by the Company; and
(g) the owner of the facility leased or subleased, has stated that, it has
good and clear record and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or other restriction,
that would interfere in any material respect with the Company's operations
thereon, and there have been no actions to believe the contrary.
2.14. Contracts. CLAUSE 2.14 of the Disclosure Schedule sets forth a true,
---------
complete and accurate list of the following written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of USD$1,000 (One thousand U.S. Dollars) per annum;
(b) any written arrangement (or group of related written arrangements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which by its
terms may not be terminated upon 30 (thirty) days notice by the Company without
any premium, penalty or termination fee and (i) which calls for performance over
a period of more than one year, (ii) which involves more than the sum of
USD$1,000 (One thousand U.S. Dollars) or, in the case of open customer purchase
orders or purchase orders from any one purchaser or group of related purchasers,
involves in the aggregate more than USD$1,000 (One thousand U.S. Dollars) for
any such one purchaser or group of related purchasers, or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
8
<PAGE>
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
(c) any written arrangement establishing a partnership or joint venture;
(d) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than USD$1,000 (One thousand U.S. Dollars) or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or non-competition;
(f) any written arrangement involving the Stockholder or any persons or
entities controlling, controlled by or under common control with the Stockholder
("Affiliates") in which the Company is party to;
(g) any written arrangement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect on
the assets, business, financial condition or results of operations of the
Company; and
(h) any other written arrangement (or group of related written
arrangements) either involving more than USD$1,000 (One thousand U.S. Dollars)
or not entered into in the Ordinary Course of Business.
The Company has delivered to the Buyer a true, correct and complete copy of
each written arrangement (as amended to date) listed in CLAUSE 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) the Company is not, and to the knowledge of the Stockholder, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in CLAUSE 2.14 of the Disclosure
Schedule under the terms of this Clause 2.14.
2.15. Accounts Receivable; Contracts in Progress. All accounts receivable
------------------------------------------
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and, to Seller's knowledge, collectible
as has been in the Ordinary Course of Business. All accounts receivable
reflected in the financial or accounting records of the Company
9
<PAGE>
that have arisen since the date of the Most Recent Balance Sheet are valid
receivables subject to no setoffs or counterclaims and are, to Seller's
knowledge, collectible within the Ordinary Course of Business.
2.16. Powers of Attorney. Except as set forth in CLAUSE 2.16 of the
------------------
Disclosure Schedule, the Company has not granted any general or special powers
of attorney outstanding (whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.17. Insurance. CLAUSE 2.17 of the Disclosure Schedule sets forth all the
---------
information with respect to each current insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is party, has been named insured, or
otherwise is the beneficiary of coverage at any time.
(i) Each such insurance policy is enforceable and in full force and effect
through the Closing; (ii) the Company is not in breach or default (including
with respect to the payment of premiums or the giving of notices) under such
policy, and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iii) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. The Company is covered by
insurance in scope and amount customary and reasonable for the businesses in
which it is engaged.
2.18. Litigation. CLAUSE 2.18 of the Disclosure Schedule identifies, and
----------
contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of, in or brought before (by a private
party or otherwise) any Governmental Entity or before any arbitrator to which
any of the Company is a party or, to the knowledge of the Company, is threatened
to be made a party. None of the complaints, actions, suits, proceedings,
hearings, and investigations set forth in CLAUSE 2.18 of the Disclosure Schedule
could reasonably be expected to have a material adverse effect on the assets,
business, financial condition, results of operations of the Company.
2.19. Product Warranty. Some products manufactured, sold, leased, licensed
----------------
or delivered by the Company are subject to a one year shelf or field guaranty,
and no other warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale, are applicable. The standard terms and
conditions of sale are set forth in CLAUSE 2.19 of the Disclosure Schedule.
2.20. Employees. CLAUSE 2.20 of the Disclosure Schedule contains a list of
---------
all
10
<PAGE>
employees of the Company, along with the position and the annual rate of
compensation of each such person. There are no confidentiality/assignment of
invention agreement signed with the employees of the Company, except as set
forth in CLAUSE 2.20 of the Disclosure Schedule. To the knowledge of the Company
but without inquiry or independent investigation, no key employee or group of
employees of the Company has any plans to terminate employment with the Company.
The Company has not experienced any strikes, material grievances, material
claims of unfair labor practices or other collective bargaining disputes.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein, will trigger or otherwise result in any
obligation of the Company to pay severance or related costs under any employment
or consulting agreement. The Company enjoys good relations with all labor unions
and employee syndicates to which their employees belong, and no notification to
any labor union or employee syndicate is required in connection with the
transactions contemplated herein.
2.21. Employee Benefits. The Company has paid all employee benefits
-----------------
required to be paid by law, including, without limitation, pension, retirement,
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, health benefits, vacations, cafeteria programs and the
like ("Employee Benefits"). Each Employee Benefit has been administered in all
material respects in accordance with its terms and the Company has in all
material respects met its obligations with respect to such Employee Benefit and
has made all required contributions thereto. The Company is in compliance with
all applicable laws and regulations relating to Employee Benefits, and there are
no investigations by any Governmental Entity with respect thereto.
2.22. Environmental Matters. (a) The Company has complied or is in the
---------------------
process of complying with all applicable Environmental Laws, when applicable.
Except as set forth in CLAUSE 2.22 of the Disclosure Schedule, there is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" or "Environmental Laws" shall mean any Mexican
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including, without limitation,
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
11
<PAGE>
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
(b) There have been no releases or threats of release by the Company, or to
the knowledge of the Company, any other party, of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company. With respect to any such releases or threats of release of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company have no knowledge of any releases of Materials of Environmental Concern
at parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products, or
radiological materials.
(c) Set forth in CLAUSE 2.22(c) of the Disclosure Schedule is a list of all
environmental reports, investigations and audits known to the Company that
relate to premises currently or previously owned or operated by the Company
(whether conducted by or on behalf of the Company or a third party, and whether
done at the initiative of the Company or directed by a Governmental Entity or
other third party) which the Company has in its possession or knowledge of.
Complete and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer or, if not in the
possession of the Company, identified in CLAUSE 2.22(c) of the Disclosure
Schedule.
(d) Set forth in CLAUSE 2.22(d) of the Disclosure Schedule is a list of all
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities and all recycling, reclamation or re-use transporters and
facilities that have been utilized by the Company. The Company has no knowledge
of any material environmental liability of any such transporter or facility.
2.23. Legal Compliance. Except as set forth in Clause 2.23 of the
----------------
Disclosure Schedule, the Company is conducting and has conducted its respective
operations and business in compliance with each law (including rules and
regulations thereunder) of all applicable federal, state, local or foreign
government, or any Governmental Entity. The Company has not received any notice
or communication from any Governmental Entity alleging noncompliance with any
applicable federal, state, local or foreign laws, regulations or orders.
2.24. Permits. CLAUSE 2.24 of the Disclosure Schedule sets forth a list of
-------
all permits,
12
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licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including, without limitation, those issued or required under
Environmental Laws, relating to the occupancy or use of owned or leased real
property and relating to the import or export of materials, goods or products)
("Permits") issued to or held by the Company. Such listed Permits are the most
relevant Permits that are required for the Company to conduct its respective
businesses as presently conducted. Except as set forth in CLAUSE 2.24 of the
Disclosure Schedule, each such Permit is in full force and effect and (a) no
suspension or cancellation of such Permit is threatened and (b) there is no
basis for believing that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect immediately following the
Closing and will not be affected by this Agreement.
2.25. Certain Business Relationships with Affiliates. No Affiliate of the
----------------------------------------------
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company or (c) owes any money to any of the Company. CLAUSE 2.25 of the
Disclosure Schedule describes any transactions or relationships between the
Company, on the one hand, and any Affiliate thereof or any Stockholder, on the
other hand.
2.26. Brokers' Fees. The Company has no liability or obligation to pay any
-------------
fees or commissions to any broker, finder or agent with respect to this
Agreement.
2.27. Books and Records. The minute books, stock record books and other
-----------------
similar records of the Company contain true and complete records of all actions
taken at any meetings of its stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. A certification of the corresponding Secretary of the Board of
Directors of the Company is attached to the corresponding corporate books to
certify so. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28. Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture or deliver products or perform
services will result in a material loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, and there are no prices provided therein in excess of
current market prices for the products or services to be provided thereunder. No
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products, or services to the Company and no
material customer of the Company has indicated that it will stop, or decrease
the rate of, buying, leasing or licensing materials, products or services from
the Company.
2.29. Banking Facilities. CLAUSE 2.29 of the Disclosure Schedule sets forth
------------------
a true, correct and complete list of:
13
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(a) each bank, savings and loan or similar financial institution at which
the Company has an account, safety deposit box, line of credit or credit
facility and the numbers of the accounts or safety deposit boxes maintained by
the Company thereat and details, including terms, of any line of credit or
credit facility; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a description
of the authority (and conditions thereof, if any) of each such person with
respect thereto.
2.30. Consents. Except as set forth in CLAUSE 2.30 of the Disclosure
--------
Schedule, no filing, consent, waiver or approval of any third party or
Governmental Entity is required to be obtained by Seller or the Company in
connection with this Agreement.
2.31. Disclosure. No representation or warranty by the Stockholder
----------
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered to or
to be delivered by or on behalf of the Stockholder pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
Stockholder has not failed to disclose any information that would make the
written representations contained within this Agreement misleading.
THIRD. Representations and Warranties of the Seller regarding the Shares
-----------------------------------------------------------------
The Stockholder represents and warrants to the Buyer as follows:
3.1. Title to Shares. The Stockholder has good and marketable title to the
---------------
Shares which are to be transferred to the Buyer by such Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, preferential rights, rights of first refusal, liens,
charges, encumbrances, options and adverse claims or rights whatsoever. There
are no options, warrants or other claims to the capital stock of the Company
owned by such Stockholder.
3.2. Authorization. The Stockholder has the full right, power and authority
-------------
to enter into this Agreement and to transfer, convey and sell to the Buyer at
the Closing the Shares to be sold by such Stockholder hereunder and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
such Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
14
<PAGE>
3.3. Absence of Conflicting Agreements or Litigation. The Stockholder is
-----------------------------------------------
not a party to, subject to or bound by any agreement or any judgment, order,
writ, prohibition, injunction or decree of any court or other governmental body
which would prevent or conflict with the execution or delivery of this
Agreement by such Stockholder or the transfer, conveyance and sale of the Shares
to be sold by such Stockholder to the Buyer pursuant to the terms hereof.
3.4. Brokers. No broker or finder has acted for the Stockholder in
-------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of such Stockholder.
FOURTH. Representations and Warranties of the Buyer
-------------------------------------------
The Buyer represents and warrants to the Stockholder as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, United
States of America.
4.2. Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Notes by the Buyer and the performance of this Agreement and
the consummation of the transactions contemplated hereby by the Buyer have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the Notes have been duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms. Messrs.
Robert Elliott and Jeffrey Templer are duly appointed representatives of Buyer
for this transaction, and have all necessary power and capacity to enter into
and execute all necessary documents related hereto, on behalf of Buyer.
4.3. Buyer's stock. Buyer's shares as described in Clause 1.3 (b)
-------------
(iii) hereof, have been duly and validly authorized and issued and are fully
paid and nonassessable.
4.4. Non-contravention. Neither the execution and delivery of this
-----------------
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the Charter or By-laws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject, or (d) violate
15
<PAGE>
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer or any of its properties or assets.
4.5. Brokers' Fees. No broker or finder has acted for the Buyer in
-------------
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Buyer.
FIFTH. Conditions to Closing
---------------------
5.1. Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by the Buyer, of the following conditions on or prior to
the Closing:
(a) the Company shall have obtained all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement, including,
without limitation, those referred to in CLAUSE 2.30 of the Disclosure Schedule;
(b) the representations and warranties of the Stockholder set forth in
Clause SECOND and Clause THIRD hereof shall be true and correct;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Buyer to own, operate or control any of the
assets or operations of the Company, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the Stockholder shall have delivered to the Buyer the stock
certificates representing the Shares, in each case duly endorsed or with duly
executed stock powers attached;
(e) the Company shall have delivered a certificate, executed by the
Secretary of the Company, attaching and certifying as to: (i) the charter
documents (estatutos sociales) of the Company and (ii) the resolutions of the
Board of Directors of the Company required to authorize this Agreement.
(f) to the extent reasonably available in the applicable jurisdiction, the
Company shall have delivered certificates of appropriate governmental officials
in each jurisdiction in which the Company or the Stockholder is incorporated,
resident or required to qualify to do business as a
16
<PAGE>
foreign corporation, as to the due qualification (including tax) of the Company
or Stockholder, as the case may be, in each such jurisdiction;
(g) the Buyer shall have received from Mexican counsel to the Stockholder
an opinion as to the matters described in Exhibit 5.1. g) hereto, dated as of
the Closing Date;
(h) the Company shall have delivered the original corporate minute books of
the Company;
(i) the signatories to each of the bank accounts of the Company shall have
been changed as per the Buyer's instructions;
(j) the Buyer or its designee shall have entered into an Employee Agreement
with Mr. Enrique Sanchez Aldunate;
(k) the Stockholder shall have delivered to the Buyer a certificate (in
each case without regard to any qualification as to knowledge or materiality set
forth in any representation or warranty) to the effect that each of the
conditions specified in clauses (a), (b), (c), and (d), of this Clause 5.1 has
been satisfied in all respects; and
(l) the Stockholder shall have delivered to the Buyer a certificate
that establishes the share distribution of the Company, and indicating that no
other person other than the Stockholder owns or has any right upon the Shares.
5.2. Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Stockholder to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or waiver of the following
conditions:
(a) the representations and warranties of the Buyer set forth in Clause
FOURTH hereof shall be true and correct;
(b) the Buyer shall have delivered the Purchase Price (including the Notes
and the shares referred in Clause 1.3. (b) above) to the Stockholder;
(c) the Buyer shall have executed a securities pledge agreement to guaranty
the due payment, of the Notes to the Stockholder, in accordance with the
terms and conditions established in the Securities Pledge Agreement, which
is attached to this Agreement as Exhibit 5.2 (c); and
(d) Seller shall have received from counsel to Buyer an opinion stating
that the Notes and the shares of the buyer to be received by Seller have
been duly and validly issued, that such shares are non assessable, and that
the Notes are binding upon Buyer and
17
<PAGE>
enforceable in accordance with their respective terms.
SIXTH. Indemnification
---------------
6.1. Indemnification by the Stockholder. Subject to Clause 6.6 and Clause
----------------------------------
6.8 hereof, the Stockholder shall indemnify the Company and the Buyer in respect
of, and hold harmless the Company and the Buyer against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, whether due or to become due or otherwise), monetary damages,
fines, fees, penalties, interest obligations, deficiencies, losses and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigators, fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation)
("Damages") arising out of or related to any of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Stockholder in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Stockholder
contained in this Agreement, or any other agreement, instrument or document
attached to or delivered in connection with this Agreement as an exhibit or a
schedule;
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the Stockholder or the Company pursuant to this Agreement;
(d) any claim (including, without limitation, warranty and personal injury
arising out of product liability claims), suit, action, arbitration, proceeding,
investigation or other similar matter which relates to (i) products manufactured
or sold by the Company prior to the Closing Date or (ii) the business or
operations of the Company prior to the Closing Date;
(e) any claim, action or audit by any Governmental Entity in connection
with the formation, establishment, maintenance, operation, winding-up or
dissolution of the Stockholder or the Company, including but not limited to fees
of attorneys, agents, auditors and inspectors, capital requirements and any
other amounts;
(f) any claim by a stockholder or former stockholder of the Company or any
other person, firm, corporation or entity, other than the Buyer, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
capital stock of or equity interest in the Company; (ii) any rights under the
Charter or By-laws of the Company; or (iii) any claim that his or its shares
were wrongfully repurchased by any stockholder at any time prior to the Closing;
and
(g) any claim for Taxes payable by Seller or the Company derived from this
agreement and the subject matter hereof.
18
<PAGE>
6.2. Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Stockholder in respect of, and hold such Stockholder harmless against any and
all Damages arising out of or related to each and all of the following:
(a) any misrepresentation or breach of any representation or warranty made
by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement, or any other agreement, instrument or document
contemplated by this Agreement; and
(c) any claim (including, without limitation, warranty and product
liability claims), suit, action, arbitration proceeding, investigation or other
similar matter which relates to (i) products manufactured or sold by the Company
after the Closing Date or (ii) the business or operations of the Company
following the Closing Date.
6.3. Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this CLAUSE SIXTH, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom indemnification
is sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that Stockholder shall
-------- -------
have no obligation to indemnify Company and/or Buyer and/or hold Company and/or
Buyer harmless from any Damages or claim asserted at a time beyond the time
limitation period imposed by paragraph 6.6., below. In the event of any such
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Except as provided in Clause 6.4(d), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
-------- -------
that if suit shall have been instituted against an Indemnified Party and the
Indemnifying Party shall not have taken control of such suit as provided in
Clause 6.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim without the Indemnifying Party's consent.
6.4. Defense by the Indemnifying Party. (a) Subject to Clause 6.4(d), in
---------------------------------
connection with any claim for indemnification hereunder resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, at his or its sole cost and expense, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, (ii) the third party seeks monetary
damages only and (iii) an adverse resolution of the third party's claim would
not have a material adverse effect on the goodwill or reputation of the
Indemnified Party.
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<PAGE>
(b) If the Indemnifying Party so assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claim or
legal proceeding and, at the sole cost and expense of the Indemnifying Party,
shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding that (i) involves any
non-monetary judgement affecting the Indemnified Party or (ii) does not involve
the delivery of a general release in favor of the Indemnified Party, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest).
(c) If the Indemnifying Party does not (or is not permitted under the terms
hereof to) assume the defense of any such claim or litigation resulting
therefrom as provided in this Clause 6.4 within 15 days after the date that the
Indemnified Party has given notice of the claim to the Indemnifying Party: (i)
the Indemnified Party may defend against such claim or litigation in such manner
as he or it may deem appropriate, including, but not limited to, settling such
claim or litigation on such terms as the Indemnified Party may deem appropriate;
and (ii) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and at his or its
own expense.
6.5. Treatment of Indemnity Payments. Subject to the express liability
-------------------------------
limitation set forth in Clause 6.8., below, to the extent that any
indemnification claim under this Clause SIXTH may be satisfied by payments to
Buyer (excluding Stockholder's defense of claims, as provided in Section 6.4),
they may be satisfied in whole or in part by delivering one or more of the
following, in such amounts or equivalent value required to pay the costs for
such indemnity claim:
(i) cash; and/or
(ii) a written instrument of accord satisfaction for the cancellation of
all or part of the outstanding principle amount and accrued interest of one
or more of the Notes; and/or
(iii) the endorsement and transfer of all or portion of the shares of
Buyer's stock received by Stockholder as provided in Clause 1.3 (b) (iii)
above. The number of the shares of Buyer's stock to be so transferred shall
be based on the book value of those shares at the end of the Buyer's most
recent fiscal year ended, as determined in accordance with GAAP as then in
effect and as shown on the audited balance sheet of the Buyer for the last
day of the most recent audited fiscal period.
20
<PAGE>
To the extent that the transactions under subclauses (ii) and (iii) above
are insufficient to satisfy Buyer's indemnity claim, the balance shall be paid
by the Stockholder in cash, or such other form as may be acceptable by written
agreement with the Buyer.
6.6. Survival. All general representations and warranties and all
--------
covenants, agreements and obligations made by the Stockholder in this Agreement,
or in any instrument or document furnished in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, any
obligation of Stockholder under this CLAUSE SIXTH to indemnify Buyer and/or
Company and/or hold Buyer and/or Company harmless, shall survive for a period of
2 (two) years after the Closing Date, except (i) for those representations and
warranties, covenants, agreements and obligations made by the Stockholder in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby that refer to title to
the assets of the Company and ownership of the Shares, which will survive for a
period of 5 (five) years counted from Closing Date, and except (ii) for those
representations and warranties, covenants, agreements and obligations made by
the Stockholder in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby referring
to Taxes and personal injuries arising out of product liability claims, which
shall expire and terminate upon the applicable statute of limitations. Any
claims asserted in writing prior to the expiration of the representation,
warranty or agreement that is the basis for such claim, if any, as provided in
this Clause 6.6, shall survive until finally resolved and satisfied in full.
6.7. Remedies. Notwithstanding any other provision of this Agreement, Buyer
--------
shall not be entitled to any reduction in the Purchase Price, setoff any amount
against the principal balance of the Notes, or to damages for breach of any
representation and warranty or for any claim for indemnity under this CLAUSE
SIXTH, unless and until the aggregate amount of claims by Buyer exceeds the sum
of USD$100,000.00 (One Hundred Thousand Dollars legal currency of the United
States of America).
Except for Seller's obligation to indemnify Buyer and/or Company for any
claim of Damages derived from Taxes payable by Seller or the Company in
connection with this agreement and the subject matter hereof, and/or Seller's
liability for any breach of the written representations and warranties of Seller
relating to Taxes, which indemnification obligation will not be subject to any
limitation, in no other event shall Seller's obligations to indemnify Buyer
and/or Company, or Seller's liability for any breach of the written
representations and warranties of Seller under this Agreement, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, exceed the Purchase Price.
6.8. Limited Indemnity Obligation. In no event shall Stockholder be liable
----------------------------
for any consequential damages, opportunity costs or lost profits incurred or
suffered by Buyer and/or Company.
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SEVENTH. Other Agreements
----------------
7.1. Proprietary Information. (a) From and after the Closing the
-----------------------
Stockholder shall hold in confidence, and shall cause all of his Affiliates to
hold in confidence, all knowledge, information and documents of a confidential
nature or not generally known to the public with respect to the Company or the
Buyer (including without limitation the financial information, Intellectual
Property, technical information or data relating to the materials, products or
components sold, or the services offered, in connection with the Company and
names of customers of the Company) (collectively, "Proprietary Information") and
shall not disclose or make use of, and shall cause their respective Affiliates
not to disclose or make use of, Proprietary Information without the written
consent of the Buyer, except to the extent that such knowledge, information or
documents shall have become public knowledge or independently obtained by
Seller, other than through a breach of this Agreement by the Stockholder or
their respective Affiliates and agents.
7.2. Releases. The Stockholder hereby releases and forever discharges the
--------
Company, its successors, assigns, agents, servants, employees, principals,
administrators, stockholders, affiliates, subsidiaries and related companies
(including the Buyer) of and from any and all actions, causes of action, claims,
demands, costs, liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which such Stockholder ever had, now has or may have
against the Company. This release is binding on the Stockholder's assignees and
personal representatives.
7.3. Cooperation in Litigation. Each party shall fully cooperate with the
-------------------------
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter by a third party against or by
such other party relating to or arising out of the conduct of the business of
the Company or the Buyer prior to or after the Closing Date (excluding
litigation arising out of the transactions contemplated by this Agreement). The
party providing such cooperation shall be entitled to designate which of its
employees shall be made available for such purpose and the party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and agents
and a reasonable charge for their time spent in such cooperation.
7.4. Restriction on Transfers of Ownership. As part of the Purchase Price
-------------------------------------
for the Shares, the Stockholder will receive certain shares of common stock of
Aerovox, Inc., as described in Clause 1.3. (b) (iii) above, which are subject to
the terms and conditions and certain transfer restrictions provided for in the
Stockholders Agreement. The Stockholder agrees, because of such consideration,
to be obliged by such transfer restrictions and to procure that the holder or
holders of its own capital stock (or other forms of ownership and corporate
control over such Stockholder) do not transfer such ownership or control to any
third party, except as provided in the Stockholders Agreement. For this purpose,
Exhibit 7.4 provides the current capital or equity structure of the Stockholder.
The Stockholder further agrees that breach of this obligation, would
22
<PAGE>
be considered a default of this Agreement, subject to the indemnification and
remedies herein established.
7.5. Right to Set-off and recoupment. Buyer will have the right to set-off
-------------------------------
any amount from the Notes, and will also have the right of recoupment, derived
from any defense or claim against the Stockholder, whether derived from any
equitable right of defense or claim extrinsic to the ones derived from this
Agreement or derived from this Agreement, in accordance to the Civil Code for
the Federal District of Mexico (Codigo Civil para el Distrito Federal), and the
General Law of Credit Instruments and Credit Operations of Mexico (Ley General
de Titulos y Operaciones de Credito).
EIGHTH. Miscellaneous
-------------
8.1. Press Releases and Announcements. The Stockholder shall not issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written consent of the Buyer.
8.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the parties and their successors
and permitted assigns.
8.3. Entire Agreement. This Agreement (including the exhibits and schedules
----------------
hereto) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
8.4. Succession and Assignment. This Agreement shall be binding upon and
---------- --- ----------
inure to the benefit of the parties named herein and their 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 the other parties; provided, however, that notwithstanding the foregoing, the
-------- -------
Buyer may assign its rights, interests and obligations hereunder to an Affiliate
of the Buyer.
8.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6. Headings. The clause headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall
23
<PAGE>
be deemed duly delivered ten (10) business days after it is sent by registered
or certified air mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable international overnight courier
service, in each case to the intended recipient as set forth below:
If to the Buyer: Aerovox, Inc.
740 Belleville Avenue
New Bedford Ma. 02745-6194
Attn: Mr. Jeffrey Templer
Senior Vice President
If to the Seller: Amsterdam Stravinskylaan 1725,
1077 XX, Amsterdam
Attn: Mr. Francisco Lucia Salazar
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
telecopy, provided that a hard copy is concurrently delivered by regular mail or
courier, or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
8.8. Governing Law. This Agreement, and all disputes hereunder, shall be
-------------
governed by and construed in accordance with the laws of the United Mexican
States.
8.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Stockholder. 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.
8.10. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the
24
<PAGE>
expiration of the time within which the judgment may be appealed.
8.11. Expenses. Each of the parties shall bear its own costs and expenses,
--------
including legal fees and expenses and fees and expenses owed to external
advisors, incurred in connection with this Agreement and the transactions
contemplated hereby.
8.12. Knowledge. For purposes of this Agreement, "knowledge" of the Company
---------
shall be deemed to mean such information as is known by the officers, directors
or management of any of the Company, that would reasonably be expected to be
known by persons in such positions.
8.13. Dispute Resolution. (a) General. In the event that any dispute should
------------------- -------
arise between the Parties with respect to any matter covered by this Agreement
or the interpretation of this Agreement, excluding, however, enforcement of a
default by the Buyer in any payment on any of the Notes, the parties shall
resolve such dispute in accordance with the procedures set forth in this Clause
8.13.
(b) Arbitration. (i) Any Party may submit any matter referred to in
-----------
Clause 8.13(a) to arbitration by notifying the other parties hereto, in writing,
of such dispute. Within 10 days after receipt of such notice, the Parties shall
designate in writing one arbitrator to resolve the dispute; provided, that if
the Parties cannot agree on an arbitrator within such 10-day period, the United
States Chamber of Commerce shall select the arbitrator. The arbitrator so
designated shall not be an Affiliate, employee, consultant, officer, director or
stockholder of any Party. The arbitrator shall have at least ten (10) years'
experience in the field of international commercial transactions.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to Clause
8.13(b)(ii), to discuss each of the issues identified by the Parties. Each such
Party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
8.13(b)(iii). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto, provided
however, that the arbitrator shall have no authority to award punitive or
exemplary damages to any party. All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties.
(v) Any attorneys' fees of the Parties in any arbitration shall be borne
by the Parties as
25
<PAGE>
determined by the arbitrator, together with the fees of the arbitrator and the
costs and expenses of the arbitration.
(vi) Any arbitration pursuant to this Clause 8.13 shall be conducted in
New Bedford, Massachusetts, United States of America or other mutually
acceptable location, in the English language. Any arbitration award may be
entered in and enforced by any court having jurisdiction thereover and shall be
final and binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Clause 8.13 shall be
construed as limiting in any way the right of a Party to seek injunctive relief
with respect to any actual or threatened breach of this Agreement from a court
of competent jurisdiction.
8.14. Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any party. 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.
8.15. Currency. All amounts set forth in this Agreement are in United
--------
States Dollars. To the extent that conversion of other currencies into U.S.
Dollars is required for the computation of amounts under this Agreement, such
conversion shall be computed based on the currency conversion rate used by
Aerovox, Inc. to prepare its published financial statements on the date on which
such conversion must be computed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER
AEROVOX, INC.
BY /S/ JEFFREY A. TEMPLER
-------------------------
Title: Attorney-in-fact
SELLER / STOCKHOLDER
BIRES INVESTMENTS B.V.
BY /S/ FRANCISCO LUCIA SALAZAR
------------------------------
Title: Attorney-in-fact
26
<PAGE>
EXHIBIT 2.7
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the "Agreement") is made as of April 5, 1999
---------
by and among:
(i) Aerovox Incorporated (the "Company");
-------
(ii) Hobir Holding B.V., Kato Holding B.V., Bires Investments B.V., Kasri
Holding B.V., Tako Holding B.V. and Renko Investments B.V., each a
corporation organized under the laws of The Netherlands (the
"Sellers"); and
-------
(iii) Enrique Sanchez Aldunate (the "Seller Stockholders")
-------------------
Recitals
--------
1. On or about the date hereof, the Company has acquired or will acquire
substantially all of the outstanding stock of Capacitores Unidos S.A. de. C.V.
pursuant to Stock Purchase Agreements dated April 5, 1999 between the Company
and each of the Sellers (the "Stock Purchase Agreements").
-------------------------
2. The Seller Stockholders own all of the outstanding shares of Sellers
stock (the "Seller Shares") of the Sellers.
-------------
3. Upon the Closing (as defined below), Sellers shall have acquired
700,000 Company Shares (as defined herein) of the Company's common stock, par
value U.S.$0.01 per share ("Common Stock").
------------
4. The parties believe that it is in the best interests of the Company,
the Seller and the Seller Stockholders to set forth their agreements on certain
matters with respect to the transfer of the Company Shares and the Seller
Shares.
Agreement
---------
Therefore, the parties hereto hereby agree as follows:
5. EFFECTIVENESS; DEFINITIONS.
5.1. Closing. This Agreement shall become effective upon consummation of
-------
the closing (the "Closing") under the Stock Purchase Agreements.
-------
5.2. Definitions. Certain terms are used in this Agreement as specifically
-----------
defined herein. These definitions are set forth or referred to in Section 10
hereof.
1
<PAGE>
6. PUT OPTION.
6.1. Put Options. At any time during the period commencing on the fourth
-----------
anniversary of this Agreement and ending on the thirtieth day thereafter, the
holders of the Company Shares shall have the right to sell, and the Company
shall be required to purchase, for the Put Price (as determined herein) all, but
not less than all, of the Company Shares (the "Put Option"). In order to
----------
obligate the Company to purchase the Company Shares pursuant to this Section
2.1, a majority of the holders of the Company Shares must deliver to the Company
written notice of the exercise of such Put Option (the "Put Notice") on or prior
----------
to the thirtieth day after the fourth anniversary of this Agreement and if such
notice is given, all holders of Company Shares shall be obligated to sell their
Company Shares pursuant to this Section 2.
6.2. Put Price. The purchase price for the purchase and sale of the Company
---------
Shares pursuant to Section 2.1 (the "Put Price") shall be the book value of the
---------
Company Shares at the end of the Company's most recent fiscal year ended
immediately prior to the fourth anniversary of the date of this Agreement, as
determined in accordance with GAAP as then in effect and as shown on the audited
balance sheet of the Company for the last day of the most recent audited fiscal
period.
6.3. Closing. The closing of the purchase and sale of the Company Shares
-------
pursuant to the exercise of the Put Option pursuant to this Section 2 shall take
place no later than 60 days after the Put Notice (the "Put Closing Date") at the
----------------
principal office of the Company or if such closing would violate applicable law,
at such later date as permitted by applicable law, but in no event later than 90
days after the Put Notice. At the closing of the purchase and sale of Company
Shares pursuant to this Section 2, each holder of Company Shares shall deliver
to the Company a certificate or certificates representing its Company Shares
duly endorsed, or with stock (or equivalent) powers duly endorsed, for transfer
with signature guaranteed, free and clear of any lien or encumbrance, with any
necessary stock (or equivalent) transfer tax stamps affixed, and the Company
shall pay to such holder by certified or bank check or wire transfer of
immediately available federal funds the Put Price. The delivery of a
certificate or certificates for the Company Shares by any Person selling Company
Shares pursuant to this Section 2 shall be deemed a representation and warranty
by such Person that: (i) such Person has full right, title and interest in and
to such Company Shares; (ii) such Person has all necessary power and authority
and has taken all necessary action to sell such Company Shares as contemplated;
and (iii) such Company Shares are free and clear of any and all liens or
encumbrances.
7. SHAREHOLDER TRANSFER RESTRICTIONS.
7.1. Transfer Restrictions. So long as no default has occurred and is
---------------------
continuing under any of the notes issued under the Stock Purchaser Agreement,
prior to the fourth anniversary of the date hereof, no holder of Company Shares
shall Transfer any of such Company Shares to any other Person except that a
holder of the Company Shares may Transfer any or all of such Company Shares to
any Seller or any Seller Stockholder (a "Permitted Transferee"). Any attempted
--------------------
Transfer of the Shares not in compliance with this Section 3 shall be null and
void, and the Company shall not in any way give effect to any such impermissible
Transfer.
2
<PAGE>
8. SELLER STOCKHOLDER TRANSFER RESTRICTIONS.
8.1. Transfer Restrictions. So long as no default has occurred and is
---------------------
continuing under any of the notes issued under the Stock Purchase Agreements,
prior to the fourth anniversary of the date hereof, no holder of Seller Shares
shall Transfer any of such Seller Shares to any other Person except to another
holder of Seller Shares (other than any such holder that received such Shares in
a Transfer prohibited by this Agreement) (also a "Permitted Transferee"). Any
--------------------
attempted Transfer of such Seller Shares not in compliance with this Section 4
shall be null and void, and the applicable Seller shall not in any way give
effect to any such impermissible Transfer.
9. CERTAIN ISSUANCES AND TRANSFERS, ETC.
9.1. Transfers to Permitted Transferees. Each holder of Company Shares or
----------------------------------
Seller Shares agrees that no Transfer of any such Company Shares or Seller
Shares to any Permitted Transferee shall be effective unless such Permitted
Transferee has delivered to the Company and the applicable Seller a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company and the applicable Seller that such Company Shares or Seller Shares
to be received by such Permitted Transferee shall continue to be subject to all
of the provisions of this Agreement and that such Permitted Transferee shall be
bound by and be a party to this Agreement as the holder of such Company Shares
or Seller Shares, as applicable; provided, however, that no Transfer by any
-------- -------
party to a Permitted Transferee shall relieve such party of any of its
obligations hereunder.
10. PREEMPTIVE RIGHT.
10.1. Notice of Sale. The Company will give to each holder of Company
--------------
Shares at least 30 days prior written notice of any proposed sale or issuance by
the Company of any Common Stock, any stock or security convertible into or
exchangeable for Common Stock or any right, warrant or option to acquire Common
Stock or such convertible securities ("Common Stock Equivalents") or any
------------------------
evidence of indebtedness issued in conjunction with Common Stock Equivalents
("Notice of Sale"). The Notice of Sale will identify the number of shares or
- ----------------
amount of securities to be issued, the class of shares or securities to be
issued, the approximate date of issuance, and the price and other terms and
conditions of the issuance. The Notice of Sale will also include an offer (the
"Offer") to sell to each holder of Company Shares its Proportionate Percentage
-----
of such securities (the "Offered Securities") at the price and on the other
------------------
terms as are proposed for such sale or issuance, which Offer by its terms shall
remain open for a period of 30 days from the date of receipt of such Notice of
Sale and which offer may be accepted by any such holder of Company Shares in its
sole discretion.
10.2. Acceptance. Each holder of Company Shares shall give written
----------
notice to the Company of its intention to accept an Offer prior to the end of
the 30-day period of such Offer, setting forth such portion of the Offered
Securities which such holder of Company Shares elects to purchase (the "Notice
------
of Acceptance"). If any holder of Company Shares fails to subscribe for its
- -------------
3
<PAGE>
Proportionate Percentage of the Offered Securities, such holder of Company
Shares will be deemed to have waived its rights with respect to the Offered
Securities and the other subscribing holders of Company Shares shall be entitled
to purchase such Offered Securities as are not subscribed for by such holder of
Company Shares on a pro-rata basis. The Company shall notify each holder of
Company Shares five days following the expiration of the 30-day period described
above of the amount of Offered Securities which each holder of Company Shares
may purchase pursuant to the foregoing sentence, and each holder of Company
Shares shall then have 10 days from the delivery of such notice to indicate such
additional amount, if any, that such holder of Company Shares wishes to
purchase.
10.2.1. Irrevocable Acceptance. The receipt by the Company of each
----------------------
subscribing holder of Company Shares' Notice of Acceptance shall be
irrevocable except as hereinafter provided.
10.2.2. Time Limitation. If at the end of the 180th day following
---------------
the date of the effectiveness of the Notice of Sale the Company has not
completed the issuance, each subscribing holder of Company Shares shall be
released from its obligations under the Notice of Acceptance, the Notice of
Acceptance shall be null and void, and it shall be necessary for a separate
Notice of Sale to be furnished, and the terms and provisions of Section 6.1
and 6.2 separately complied with, in order to consummate such issuance
pursuant to this Section 6.
10.3. Closing. Upon the closing of the sale or issuance as to which the
-------
Company has given notice under Section 6.1, each subscribing holder of Company
Shares shall purchase from the Company, and the Company shall sell to each
subscribing holder of Company Shares, the Offered Securities subscribed for by
such holder of Company Shares at the terms specified in the Offer, which shall
be the same terms at which all other persons or entities acquire such securities
in connection with such sale or issuance. The closing of an issuance pursuant to
Section 6 shall take place at such time and place as the Company shall specify
by notice to each subscribing holder of Company Shares. At the closing of any
issuance under this Section 6.3, each subscribing holder of Company Shares shall
be delivered the notes, certificates or other instruments evidencing the
securities to be issued to such holder of Company Shares, registered in the name
of such holder of Company Shares or his designated nominee, free and clear of
any liens or encumbrances, with any transfer tax stamps affixed, against
delivery by such holder of Company Shares of the applicable consideration.
10.4. Excluded Transactions. Notwithstanding the preceding provisions of
---------------------
this Section 6, the provisions of this Section 6 shall not restrict:
10.4.1. Any issuance by the Company of Common Stock upon the exercise
or conversion of any Common Stock, Options or Convertible Securities
outstanding on the date hereof or issued after the date hereof in
compliance with the provisions of this Section 6;
4
<PAGE>
Stock, Options or Convertible Securities to officers, employees, directors
or consultants of the Company or its subsidiaries as compensation for
services;
10.4.2. Any issuance by the Company of shares of Common Stock,
Options or Convertible Securities in connection with any business
combination or acquisition transaction involving the Company or any of its
subsidiaries in a bona fide third party transaction; and
10.4.3. Any issuance by the Company of Common Stock pursuant to any
Public Offering.
10.5. Post-Issuance Notice. Notwithstanding the notice requirements of
--------------------
Sections 6.1, the Company may proceed with any issuance prior to having complied
with the provisions of Section 6.1; provided that the Company shall:
--------
10.5.1. provide to each holder of Company Shares with (i) prompt
notice of such issuance and (ii) the Notice of Sale described in Section
6.1 in which the actual price per unit of Offered Securities shall be set
forth; and
10.5.2. permit each holder of Company Shares to purchase from the
Company what would have been each holder of Company Shares' Proportionate
Percentage of such issuance had the Company delivered the Notice of Sale in
compliance with Section 6.1, such purchase to be at the same price and
subject to the same terms as such issuance.
11. REMEDIES.
11.1. Generally. The Company and each holder of the Company Shares and
---------
Seller Shares shall have all remedies available at law, in equity or otherwise
in the event of any breach or violation of this Agreement or any default
hereunder by the Company or any holder of Company Shares or Seller Shares. The
parties acknowledge and agree that in the event of any breach of this Agreement,
in addition to any other remedies which may be available, each of the parties
hereto shall be entitled to specific performance of the obligations of the other
parties hereto and, in addition, to such other equitable remedies (including,
without limitation, preliminary or temporary relief) as may be appropriate in
the circumstances.
12. LEGENDS.
12.1. Restrictive Legend. Each certificate representing the Company
------------------
Shares and the Seller Shares shall have the following legend endorsed
conspicuously thereupon:
The sale, encumbrance or other disposition of the shares of stock
represented by this certificate, are subject to the provisions of a
Stockholders Agreement to which the issuer and certain of its stockholders
are party, a copy of which may be inspected at the principal office of the
issuer or obtained from the issuer without charge.
5
<PAGE>
Any person who acquires Company Shares or the Seller Shares which are not
subject to all or part of the terms of this Agreement shall have the right to
have such legend (or the applicable portion thereof) removed from certificates
representing such Shares or Seller Shares, as applicable.
12.2. 1933 Act Legends. Each certificate representing Company Shares
----------------
shall have the following legend endorsed conspicuously thereupon:
The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act of 1933,
as amended (the "Act"), and may not be sold, assigned, pledged or otherwise
---
transferred in the absence of an effective registration under the Act
covering the transfer or an opinion of counsel, satisfactory to the issuer,
that registration under the Act is not required.
12.3. Stop Transfer Instruction. The Company will instruct any transfer
-------------------------
agent not to register the Transfer of any Shares, and no such Transfer shall be
effective, until the conditions specified in the foregoing legends are
satisfied.
12.4. Termination of 1933 Act Legend. The requirement imposed by Section
------------------------------
8.2 hereof shall cease and terminate as to any particular Shares (a) when, in
the opinion of Ropes & Gray, or other counsel reasonably acceptable to the
Company, such legend is no longer required in order to assure compliance by the
Company with the Securities Act or (b) when such Shares have been effectively
registered under the Securities Act or transferred pursuant to Rule 144.
Wherever (x) such requirement shall cease and terminate as to any Shares or (y)
such Shares shall be transferable under paragraph (k) of Rule 144, the holder
thereof shall be entitled to receive from the Company, without expense, new
certificates not bearing the legend set forth in Section 8.2 hereof.
13. AMENDMENT, TERMINATION, ETC.
13.1. Oral Modifications. This Agreement may not be orally amended,
------------------
modified, extended or terminated, nor shall any oral waiver of any of its terms
be effective.
13.2. Written Modifications. This Agreement may be amended, modified,
---------------------
extended or terminated, and the provisions hereof may be waived, only by an
agreement in writing signed by the Company and the Stockholders.
13.3. Termination. No termination under this Agreement shall relieve any
-----------
Person of liability for breach prior to termination.
6
<PAGE>
14. DEFINITIONS. For purposes of this Agreement:
14.1. Certain Matters of Construction. In addition to the definitions
-------------------------------
referred to or set forth below in this Section 10
(a) The words "hereof", "herein", "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof;
(b) Definitions shall be equally applicable to both nouns and verbs
and the singular and plural forms of the terms defined; and
(c) The masculine, feminine and neuter genders shall each include the
other.
14.2. Definitions. The following terms shall have the following meanings:
----- -----------
"Agreement" shall have the meaning set forth in the Preamble.
---------
"Closing" shall have the meaning set forth in Section 1.1.
-------
"Common Stock Equivalents" shall have the meaning set forth in Section
------------------------
6.1.
"Company" shall have the meaning set forth in the Preamble.
-------
"Company Shares" mean the shares of Common Stock of the Company issued
--------------
to the Shareholders pursuant to the Purchase Agreements; provided, however,
-------- -------
that such Company Shares shall cease to be Company Shares for purposes of
this Agreement upon the Transfer of such Company Shares (other than to a
Permitted Transferee) in a transaction not prohibited by the Agreement.
"Convertible Securities" shall mean any evidence of indebtedness,
----------------------
shares of stock (other than Common Stock) or other securities (other than
Options) which are directly or indirectly convertible into or exchangeable
or exercisable for shares of Common Stock.
"Notice of Acceptance" shall have the meaning set forth in Section
--------------------
6.2.
"Notice of Sale" shall have the meaning set forth in Section 6.1.
--------------
"Offer" shall have the meaning set forth in Section 6.1.
-----
"Offered Securities" shall have the meaning set forth in Section 6.1.
------------------
"Options" shall mean any options or warrants to subscribe for,
-------
purchase or otherwise
7
<PAGE>
acquire either Common Stock or Convertible Securities.
"Person" shall mean any individual, partnership, corporation, company,
------
association, trust, joint venture, unincorporated organization, entity or
division, or any government, governmental department or agency or political
subdivision thereof.
"Proportionate Percentage" shall mean with respect to any holder of
------------------------
Company Shares (i) the number of shares of Common Stock held by such holder
of Company Shares divided by (ii) the aggregate number of issued and
------- --
outstanding shares of Common Stock.
"Public Offering" shall mean a bona fide underwritten public offering
---------------
through a recognized broker dealer and sale of Common Stock for cash
pursuant to an effective registration statement under the Securities Act.
"Put Closing Date" shall have the meaning set forth in Section 2.3.
----------------
"Put Notice" shall have the meaning set forth in Section 2.1.
----------
"Put Option" shall have the meaning set forth in Section 2.1.
----------
"Put Price" shall have the meaning set forth in Section 2.2.
---------
"Rule 144" shall mean Rule 144 under the Securities Act (or any
--------
successor Rule).
"Securities Act" shall mean the Securities Act of 1933, as in effect
--------------
from time to time.
"Sellers" shall have the meaning set forth in the Preamble.
-------
"Seller Shares" shall have the meaning set forth in the Preamble.
-------------
"Stock Purchase Agreements" shall have the meaning set forth in the
-------------------------
Recitals.
"Transfer" shall mean any sale, pledge, assignment, encumbrance or
--------
other transfer or disposition of any Shares to any other Person, whether
directly, indirectly, voluntarily, involuntarily, by operation of law,
pursuant to judicial process or otherwise.
15. MISCELLANEOUS.
15.1. Authority; Effect. Each party hereto represents and warrants to and
-----------------
agrees with each other party that the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized on behalf of such party and do not violate any agreement or other
instrument applicable to such party or by which its assets are bound. This
Agreement does not, and shall not be construed to, give rise to the creation of
a partnership
8
<PAGE>
among any of the parties hereto, or to constitute any of such parties members of
a joint venture or other association.
15.2. Notices. Any notices and other communications required or
-------
permitted in this Agreement shall be effective if in writing and (a) delivered
personally or (b) sent (i) by Federal Express, DHL or UPS, (ii) by facsimile
(with confirmation of receipt) or (iii) by registered or certified mail, postage
prepaid, in each case, addressed as follows:
If to the Company:
Aerovox Incorporated
740 Belleville Avenue
New Bedford, MA 02745
Attention: Jeffrey A. Templer
Facsimile: 508-910-3179
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: David A. Fine
Facsimile: 617-951-7050
If to a Seller, to such Seller at the address set forth for such
Seller in the Stock Purchase Agreement to which such Seller is a Party.
Notice to the holder of record of any shares of capital stock shall be
deemed to be notice to the holder of such shares for all purposes hereof.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date received, if personally delivered or
sent via facsimile, (b) two business days after being sent by Federal Express,
DHL or UPS and (c) three business days after deposit with the U.S. Postal
Service, if sent by registered or certified mail. Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.
15.3. Binding Effect, etc. This Agreement constitutes the entire
-------------------
agreement of the parties with respect to its subject matter, supersedes all
prior or contemporaneous oral or written agreements or discussions with respect
to such subject matter, and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, representatives, successors and
assigns.
15.4. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are for convenience of reference only, are not to be considered a part hereof
and shall not be construed to define or limit any of the terms or provisions
hereof.
9
<PAGE>
15.5. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.
15.6. Severability. In the event that any provision hereof would, under
------------
applicable law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible under, applicable law. The
provisions hereof are severable, and in the event any provision hereof should be
held invalid or unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
16. GOVERNING LAW, CONSENT TO JURISDICTION.
16.1. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of laws provision
or rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
16.2. Arbitration; Consent to Jurisdiction. Any dispute between the
------------------------------------
parties which arises hereunder shall be revolved exclusively in accordance with
the arbitration procedures set forth in clause 8.13 of the Stock Purchase
Agreements. Each party to this Agreement, by its execution hereof, (a) hereby
irrevocably submits to the jurisdiction of the state courts of the Commonwealth
of Massachusetts sitting in the Norfolk County or the United States District
Court for the Eastern District of Massachusetts for the purpose of enforcement
of any award resulting from such arbitration, (b) hereby waives to the extent
not prohibited by applicable law, and agrees not to assert, and agrees not to
allow any of its subsidiaries to assert, by way of motion, as a defense or
otherwise, in any such action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that any such proceeding brought in one of
the above-named courts is improper, or that this Agreement or the subject matter
hereof or thereof may not be enforced in or by such court and (c) hereby agrees
not to commence or maintain any action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation arising out
of or based upon this Agreement or relating to the subject matter hereof or
thereof other than in the courts and for the purpose described in clause (a)
above nor to make any motion or take any other action seeking or intending to
cause the transfer or removal of any such action, claim, cause of action or suit
(in contract, tort or otherwise), inquiry, proceeding or investigation to any
court other than one of the above-named courts whether on the grounds of
inconvenient forum or otherwise. Each party hereto hereby consents to service of
process in any such proceeding in any manner permitted by Massachusetts law, and
agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 11.2 hereof is
reasonably calculated to give actual notice.
16.3 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
--------------------
LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT
IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
10
<PAGE>
DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR
OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT
IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 12.3
CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION 12.3 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
16.4 Exercise of Rights and Remedies. No delay of or omission in the
-------------------------------
exercise of any right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor shall any such delay, omission nor waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.
[REMAINING OF PAGE INTENTIONALLY LEFT IN BLANK]
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement (or caused this Agreement to be executed on its behalf by its officer
or representative thereunto duly authorized) under seal as of the date first
above written.
THE COMPANY: AEROVOX INCORPORATED
BY/S/JEFFREY A. TEMPLER
-----------------------
Title: Attorney in-fact
THE SELLERS: HOBIR HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
------------------------------
Title: Attorney in-fact
KATO HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Title: Attorney in-fact
BIRES INVESTMENTS, B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Title: Attorney in-fact
TAKO HOLDING, B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Title: Attorney in-fact
KASRI HOLDING B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
12
<PAGE>
Title: Attorney in-fact
RENKO INVESTMETS, B.V.
BY/S/ FRANCISCO LUCIA SALAZAR
-----------------------------
Name: Francisco Lucia Salazar
Title: Attorney in-fact
THE SELLER STOCKHOLDERS:
BY/S/ ENRIQUE SANCHEZ ALDUNATE
------------------------------
13
