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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 9, 1997
TOWER AUTOMOTIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-12733 41-1746238
(Commission File Number) (I.R.S. Employer Identification No.)
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
(Address of Principal Executive Offices) (Zip Code)
(612) 342-2310
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 9, 1997, Tower Automotive, Inc. through, its wholly owned
subsidiary R.J. Tower Corporation, (the Company) completed an agreement to
become a partner in Metalsa, S.A. de C.V. (Metalsa) with Promotora de Empresas
Zano, S.A. de C.V. (Proeza). Metalsa is the largest manufacturer of vehicle
frames and structures in Mexico. Metalsa's operations are headquartered in
Monterrey, Mexico, with manufacturing facilities in Monterrey and San Luis
Potosi, Mexico. Revenues for the year ended December 31, 1996 and eight months
ended August 31, 1997 were $160 million and $125 million, respectively.
Customers include Chrysler, General Motors, Ford, Nissan and Mercedes Benz.
Under the terms of the agreement, the Company acquired a 40% equity
interest in Metalsa. The Company and Metalsa also entered into a license
agreement which grants Metalsa the rights to use certain technology owned by the
Company. As consideration for the license agreement, Metalsa agreed to pay the
Company a royalty equal to 1.5% of Metalsa's net revenues. In addition, the
Company, Metalsa and Proeza agreed to cooperate with respect to the sharing of
product and process technology, the marketing of the companies' products in the
United States, Canada and Mexico and the pursuit of strategic acquisition and
joint venture opportunities in South America. In connection with this
agreement, the Company paid $120 million to Proeza, with an additional amount of
up to $45 million payable based upon the net earnings of Metalsa in 1998, 1999
and 2000. The acquisition was financed with proceeds from borrowings under the
Company's $750 million revolving credit facility. The consideration related to
this transaction was determined by negotiations between the parties.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of businesses acquired.
Pursuant to the requirements of Rule 3-05 of Regulation S-X,
financial statements of the business acquired are not required to
be included in this filing and have therefore been omitted.
(b) Pro forma financial information.
Pro forma financial information is not required to be included in
this filing and has therefore been omitted.
(c) Exhibits.
2.1 Joint Venture Agreement by and among Promotora de Empresas
Zano, S.A. de C.V., Metalsa, S.A. de C.V. and R.J. Tower
Corporation dated as of September 26, 1997.
99.1 Press release dated October 9, 1997 - Tower Automotive, Inc.
Completes Mexican Partnership Arrangement.
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SIGNATURES
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 authorized.
TOWER AUTOMOTIVE, INC.
DATE: OCTOBER 9, 1997 BY:/S/ANTHONY A. BARONE
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NAME: ANTHONY A. BARONE
TITLE: VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER (PRINCIPAL ACCOUNTING AND
FINANCIAL OFFICER)
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EXHIBIT 2.1
JOINT VENTURE AGREEMENT
BY AND AMONG
PROMOTORA DE EMPRESAS ZANO, S.A. DE C.V.
METALSA, S.A. DE C.V.
AND
R. J. TOWER CORPORATION
DATED AS OF
SEPTEMBER 26, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions. 2
Section 1.2 Interpretation. 7
ARTICLE II
ISSUANCE AND SUBSCRIPTION
Section 2.1 Closing. 8
Section 2.2 Additional Consideration. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Tower. 9
Section 3.2 Representations and Warranties of Proeza. 10
Section 3.3 Representations and Warranties of the Company. 17
ARTICLE IV
COVENANTS
Section 4.1 Taking of Necessary Action. 18
Section 4.2 Notice of Certain Changes. 19
Section 4.3 Access to Information. 19
Section 4.4 Conduct of Business. 19
Section 4.5 Expenses. 19
Section 4.6 Confidentiality; Press Releases. 20
Section 4.7 Indebtedness. 20
Section 4.8 Environmental Compliance. 20
Section 4.9 Corporate Filings. 20
Section 4.10 Company Bylaws 20
Section 4.11 Corporate Structure of the Company 21
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions of All Parties. 22
Section 5.2 Conditions of Each Party. 24
ARTICLE VI
SURVIVAL, INDEMNIFICATION
Section 6.1 Indemnification by Proeza. 26
Section 6.2 Indemnification by Tower. 27
Section 6.3 Indemnification by the Company. 27
Section 6.4 Notice, Participation and Duration. 28
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Section 6.5 Reimbursement. 28
Section 6.6 Indemnification Threshold and Limitations. 28
Section 6.7 No Third Party Beneficiaries. 30
Section 6.8 Exclusive Remedy. 30
ARTICLE VII
MISCELLANEOUS
Section 7.1 No Third Party Beneficiaries. 30
Section 7.2 Notices. 31
Section 7.3 Assignment. 32
Section 7.4 Resolution of Disputes. 32
Section 7.5 Governing Law. 37
Section 7.6 Headings. 37
Section 7.7 Entire Agreement. 37
Section 7.8 Counterparts. 37
Section 7.9 Amendments; Waivers; Consents. 38
Section 7.10 Limitation on Damages. 38
Section 7.11 Termination. 38
EXHIBIT A: Technology Agreement
EXHIBIT B: Directors Agreement
EXHIBIT C: Marketing Agreement
EXHIBIT D: Company Shareholders Agreement
EXHIBIT E: Services Agreement
EXHIBIT F: US Reconciliation GAAP
EXHIBIT G: The Reorganization
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JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT, dated as of September 24, 1997, is by and
among PROMOTORA DE EMPRESAS ZANO, S.A. DE C.V., a Mexican SOCIEDAD ANONIMA DE
CAPITAL VARIABLE ("PROEZA"), METALSA, S.A. DE C.V., a Mexican SOCIEDAD ANONIMA
DE CAPITAL VARIABLE (the "COMPANY") and R.J. TOWER CORPORATION, a Michigan
corporation ("TOWER").
R E C I T A L S
A. Capitalized terms used herein and not otherwise defined are defined in
Section 1.1.
B. The Company is in the business of manufacturing Automotive Structural
Components. As of the Closing Proeza will own approximately 100 percent of the
shares of the Company's Capital Stock, consisting of 6,640,799 shares of Class A
Common Stock ("CLASS A COMMON STOCK") and 2,383,328 shares of Class B Common
Stock ("CLASS B COMMON STOCK").
C. Proeza and Tower each desire to enter into a business alliance
concerning the ownership, strategic direction, marketing and use and development
of technology of the Company and any potential joint ventures or interests in
the Republic of Mexico, other parts of Latin America or as agreed by the parties
D. Prior to the Closing, the Company will consummate the Reorganization
as described in EXHIBIT G and declare the Dividends as described on Schedule
3.2.16.
E. At Closing Proeza will cause the Company to issue to Tower, and Tower
will subscribe for, shares of Company Capital Stock representing, after taking
into account such issuance, subscription, reimbursement, Reorganization, and
declaration of dividends described in SCHEDULE 3.2.16, 40% of the Company
Capital Stock, all of which shares shall be Class B Common Shares, and Tower
will pay for such shares (the "CLASS B COMMON SHARES") an aggregate of
US$120,000,000.
F. After the foregoing subscription has occurred Proeza shall be
reimbursed by the Company an aggregate amount of US$109,500,000 as set forth in
Section 2.2 (the "REIMBURSEMENT").
G. Tower is uniquely qualified to provide technological services and
information to the Company. Accordingly, Tower and Proeza believe that it is in
the Company's best interest to enter into a Technology Agreement substantially
in the form of EXHIBIT A (the "TECHNOLOGY AGREEMENT") at the Closing.
H. To enhance the understanding and communications between Proeza and
Tower, as well as to provide Tower with additional insight into the Latin
American auto
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parts industry, Proeza and Tower believe that it is in their mutual best
interest to enter into at the Closing a Directors Agreement, substantially in
the form of EXHIBIT B (the "DIRECTORS AGREEMENT"), pursuant to which Tower shall
place a representative from the Company on Tower's Board of Directors.
I. Tower and Proeza believe that it is in the Company's best interests
for Tower and the Company to enter into a Marketing Agreement in substantially
the form attached as EXHIBIT C (the "MARKETING AGREEMENT") at the Closing
pursuant to which Tower and the Company will agree on how to proceed with
respect to investment and growth opportunities.
J. To govern the relationship among Tower, Proeza, the Company and its
shareholders, after the Closing, Tower and Proeza believe that it is in their
mutual and the Company's best interests to enter into a Company Shareholders
Agreement, substantially in the form attached as EXHIBIT D (the "COMPANY
SHAREHOLDERS AGREEMENT"). Tower, Proeza and the Company agree to cause the
Company to adopt bylaws (the "COMPANY BYLAWS"), which will set forth such of the
provisions in the Shareholders Agreement as are enforceable only if included in
the bylaws of a company, so as to preserve the rights and responsibilities of
the parties contemplated by and pursuant to the Shareholders Agreement, and will
include such other provisions as are customary, necessary and appropriate.
K. Proeza and Tower believe that it is in the Company's best interest to
enter into a services agreement between the Company and Proeza at the Closing
substantially in the form attached as EXHIBIT E (the "SERVICES AGREEMENT")
whereby Proeza shall provide certain administrative assistance and services to
the Company pursuant to terms and conditions currently in place.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
As used herein, the following terms shall have the following meanings:
"ACTION" means any claim, action, suit, proceeding, formal complaint,
show cause order or cease and desist order, arbitration, adjudication,
settlement proceeding, or formal Governmental Body investigation, in each case
whether at equity or at law.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person, or any person ascendant relative, descendant up to the second degree or
spouse of such Person.
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The term "control" for the purpose of this definition means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"APPLICABLE ENVIRONMENTAL AND SAFETY LAWS" means any and all
environmental or health or safety related laws, regulations, rules, permits,
orders, ordinances, decrees or determinations of Governmental Bodies in effect
prior to the Closing Date, and all environmental, health or safety related
common laws in any and all jurisdictions in which the Company or its
Subsidiaries has conducted or conducts operations or applicable to such
operations, as the case may be, including the Mexican General Law on Ecological
Equilibrium and Environmental Protection, The Mexican Regulations on Hazardous
Wastes, The Mexican Regulation for the Land Transportation of Hazardous Wastes
and Materials and the Mexican Law on National Waters.
"ARBITRATION CLAIMS" is defined in Section 7.4.9.
"AUDITED HISTORICAL FINANCIAL STATEMENTS" is defined in Section 3.2.8.
"AUTOMOTIVE STRUCTURAL COMPONENTS" is defined as automotive frames,
light, medium and heavy truck frames, suspension systems, and inner body parts
and other vehicle structures.
"BALANCE SHEET DATE" is defined in Section 3.2.8.
"CLAIM" is defined in Section 6.4.
"CLASS A COMMON STOCK" is defined in the Recitals.
"CLASS B COMMON STOCK" is defined in the Recitals.
"CLASS B COMMON SHARES" is defined in the Recitals.
"CLOSING" is defined in Section 2.2.
"CLOSING DATE" is defined in Section 2.2.
"COMMITMENTS" means preemptive rights, subscriptions, options, warrants,
calls, rights, commitments or any other contracts of any character obligating a
Person to issue any shares of its capital stock or any other securities
convertible into, exchangeable or exercisable for, or evidencing the right to
subscribe for, any such shares.
"COMPANY BYLAWS" is defined in the Recitals.
"COMPANY CAPITAL STOCK" means the Class A Common Stock and Class B
Common Stock.
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"COMPANY SHAREHOLDERS AGREEMENT" is defined in the Recitals.
"CONFIDENTIAL INFORMATION" means proprietary or confidential
information, including but not limited to the following: confidential
information, ideas, concepts, software, designs, drawings, techniques, models,
data, documentation, research, development, processes, procedures, business
acquisition or disposition plans, "know how," marketing techniques and
materials, marketing and development plans, customer names and other information
related to customers, price lists, pricing policies, details of customer,
distributor, agency or consultant contracts, financial information and any other
information relating to the business, customers, trade, trade secrets or
industrial practices of the Person in question; PROVIDED that, "Confidential
Information" shall not include information that: (i) is or hereafter becomes
generally available to the public other than by reason of any default by such
party with respect to a confidentiality obligation under this Agreement; (ii)
was already known to the recipient on a nonconfidential basis and not in
contravention of applicable law prior to its disclosure to the recipient by the
disclosing party hereunder; (iii) is disclosed to the recipient by a third party
who is not known by the recipient to be in default of any confidentiality
obligation to the disclosing party hereunder; (iv) is developed by or on behalf
of the receiving Person, without reliance on confidential information received
hereunder; (v) is otherwise required to be disclosed in compliance with
applicable laws or regulations or order by a court or other regulatory body
having competent jurisdiction; (vi) is disclosed in connection with any public
offering of Shares; or (vii) is disclosed to any professional advisor of the
recipient in connection with such advisor's retention, or the performance of its
duties, as such, who is also subject to a confidentiality agreement to the same
extent as the recipient. For this Agreement, specific disclosures made, e.g.
"640 F to 650 F" or "US$50,000" shall not be deemed to be within the exceptions
listed above merely because such specific disclosure is embraced by a general
disclosure, e.g. "600 F to 800 F" or "US$40,000 to US$80,000", which general
disclosure is in the public domain or in a Person's possession. In addition,
any combination of features disclosed to a Person shall not be deemed to be
within the exceptions listed above merely because individual features are
separately in the public domain or in a Person's possession, but shall be within
the exceptions only if the combination itself and its principle of operation are
in the public domain or in a Person's possession as provided in the exceptions
listed above.
"CONTRACT" means any contract, lease, license, deed of trust, mortgage,
commitment, license, franchise, indenture, note, other agreement, instrument or
obligation.
"DIRECTORS AGREEMENT" is defined in the Recitals.
"DISPUTE" is defined in Section 7.4.1.
"DIVIDENDS" are defined in SCHEDULE 3.2.16.
"DOLLARS", "$" and "US$" mean United States Dollars.
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"ENFORCEABLE" with respect to an agreement or contract, means that such
agreement or contract constitutes the legal, valid and binding obligation of the
applicable Person, enforceable against such Person in accordance with its terms,
subject to (i) bankruptcy, reorganization, insolvency and similar laws of
general application relating to or affecting the rights of creditors, and
subject to general principles of equity and (ii) policies against rights to
indemnity and contribution.
"GOVERNMENTAL BODY" means a court, agency, official, authority, other
governmental body or political subdivision or other agency or instrumentality
thereof.
"HAZARDOUS MATERIAL" means petroleum, asbestos, noise, radiation, and
any pollutant, contaminant, toxic substance, hazardous waste or hazardous
substance, as defined in or pursuant to any Applicable Environmental and Safety
Laws, including the Mexican General Law on Ecological Equilibrium and
Environmental Protection, the Mexican Regulations on Hazardous Wastes, the
Mexican Regulation for the Land Transportation of Hazardous Wastes and Materials
and the Mexican Law on National Waters.
"INDEMNITEE" is defined in Section 6.4.
"INDEMNITOR" is defined in Section 6.4.
"INTELLECTUAL PROPERTY" means all registered trademarks, service marks,
trade dress, logos, trade names, copyrights.
"INTERIM HISTORICAL BALANCE SHEET" is defined in Section 3.2.8.
"INVESTMENT AMOUNT" is defined in Article II.
"KNOWLEDGE" means actual knowledge without independent investigation.
"LAWS" means all statutes, ordinances, rules, regulations and decrees.
"LIABILITIES" means, as to any Person, any liability, obligation, cost
or expense.
"LIEN" means, as to any asset, any mortgage, lien, pledge, charge,
trust, security interest, right of first offer or first refusal, claim or other
encumbrance of any kind or nature whatsoever with respect to such asset.
"LOSSES" means all damages, losses (including any diminution in value),
liabilities (joint or several), payments, obligations, penalties, fines, claims,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses (including reasonable, necessary and duly documented fees, and actual
fees, disbursements and expenses of attorneys, accountants and other
professional advisors and of expert witnesses and costs of investigation and
preparation) of any kind or nature whatsoever.
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"MARKETING AGREEMENT" is defined in the Recitals.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect on or with respect to the business, assets, condition (financial
or otherwise) or results of operations of such Person and its Subsidiaries,
taken as a whole.
"MEXICAN GAAP" means Mexican generally accepted accounting principles
consistently applied and as adjusted from time to time.
"MEXICAN PESOS" means the lawful currency in the United Mexican States.
"NEGOTIATION PERIOD" is defined in Section 7.4.1.
"NET INCOME" means the Company's net income before non-operating items
and extraordinary items, as determined by US Reconciliation GAAP, as in effect
on the date hereof, plus 3.75% of the Company's net sales multiplied by the
difference of 1 (one) minus the sum of the income tax rate and the legally
required profit sharing rate (each expressed as a decimal fraction) (for
example, if the sum of such two rates is 25%, the difference would be .75, and
3.75% would be multiplied by .75, and equal 2.8125%).
"ORDER" means any order, injunction, decree of a court or charge of a
Governmental Body.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
generally consistent with past custom and practice.
"PERSON" means an individual, corporation, limited liability company,
partnership (general or limited), association, trust or other entity or
organization, including a Governmental Body.
"PROCEEDING" means any claim, action, suit, proceeding, arbitration,
adjudication, settlement proceeding, or formal Governmental Body investigation,
in each case, if applicable, whether at equity or at law.
"PROEZA INDEMNITEES" is defined in Section 6.2.
"REIMBURSEMENT AMOUNT" is defined in Article II.
"RELEASE" means any release, spill, disposal or discharge into, under or
from air, soil, surface water or ground water.
"REORGANIZATION" is defined in EXHIBIT G.
"REQUISITE REGULATORY APPROVALS" means all permits, approvals, notices,
filings and consents required to be obtained or made, and all waiting periods
required to expire, before the consummation of the transactions contemplated by
this Agreement, as
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applicable, under all applicable Laws of any jurisdiction, domestic or foreign,
having jurisdiction over the transactions contemplated by this Agreement.
"SERVICES AGREEMENT" is defined in the Recitals.
"SUBJECT DOCUMENTS" is defined in Section 7.4.1.
"SUBSIDIARY" means, as to any Person, any corporation, joint venture,
partnership or other business entity more than 50% of the equity of which is
owned, directly or indirectly, by such Person.
"TAX RETURN" shall include any statement, form or return, required to be
supplied to a taxing authority in connection with Taxes.
"TAXES" means all taxes, charges, fees, levies, or other assessments,
social security (seguro social, SAR, or other similar contributions or
payments), estimated, severance, transfer, stamp and recording taxes, fees and
charges imposed by any Governmental Body whether computed on a separate,
consolidated, unitary, combined or any other basis.
"TECHNOLOGY AGREEMENT" is defined in the Recitals.
"THRESHOLD AMOUNT" is defined in Section 6.6.1.
"TOWER INDEMNITEES" is defined in Section 6.1.1.
"TRANSFERRED PROPERTY" means the property to be transferred to Proeza in
connection with the Reorganization.
"TRANSACTIONS" means the transactions contemplated by this Agreement.
"TRANSACTION DOCUMENTS" is defined in Section 3.1.2.
"US GAAP" means United States generally accepted accounting principles
consistently applied and as adjusted from time to time.
"US RECONCILIATION GAAP" means the procedure by which Mexican GAAP shall
be reconciled to US GAAP, subject to the clarifications detailed in EXHIBIT F.
1.2 INTERPRETATION.
For the purposes hereof, (i) words in the singular shall be held to
include the plural and VICE VERSA and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof",
"herein", and "herewith", and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules, Exhibits and Annexes hereto) and
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not to any particular provision of this Agreement, and Article, Section,
paragraph, Exhibit, Schedule and Annex references are to the Articles, Sections,
paragraphs, Exhibits, Schedules and Annexes to this Agreement unless otherwise
specified, (iii) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (iv) the word "or" shall not
be exclusive, (v) provisions shall apply, when appropriate, to successive events
and transactions, and (vi) all references to any period of days shall be deemed
to be to the relevant number of calendar days, unless otherwise specified. This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted.
ARTICLE II
ISSUANCE AND SUBSCRIPTION
AT THE CLOSING, SUBJECT TO THE TERMS AND CONDITIONS SET FORTH HEREIN,
THE COMPANY AGREES TO ISSUE TO TOWER AND PROEZA AS SOLE SHAREHOLDER OF THE
COMPANY AGREES TO APPROVE THE ISSUANCE FROM THE COMPANY TO TOWER, AND TOWER
AGREES TO SUBSCRIBE FOR FROM THE COMPANY, THE CLASS B COMMON SHARES FOR AN
AGGREGATE SUBSCRIPTION VALUE OF US$120,000,000 (THE "INVESTMENT AMOUNT"). The
difference between the subscription value and the par value of the Class B
Common Shares shall be deemed a premium for the subscription of the Class B
Common Shares. After the foregoing subscription has occurred, Proeza will be
reimbursed by the Company in an amount of US$109,500,000 (the "REIMBURSEMENT
AMOUNT"). As a result of both the subscription by Tower and the reimbursement
to Proeza as set forth herein, Tower shall own 40% of the Company Capital Stock
represented by all of the Class B Common Shares.
2.1 CLOSING.
Within three business days following the satisfaction of all of the
conditions to Closing set forth in Sections 5.1 and 5.2, the Closing (the
"CLOSING", and the date on which the Closing occurs the "CLOSING DATE") of the
issuance of the Class B Common Shares to Tower shall take place and payment of
the Investment Amount shall be
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made by Tower by wire transfer (or any other mode acceptable to the Company) of
immediately available funds to such account(s) as shall have been designated at
least three business days prior to the Closing Date by the Company against
receipt by Tower of certificates representing the Class B Common Shares and the
other documents contemplated hereby. Within one day after the Investment Amount
has been received, the Company will pay to Proeza the Reimbursement Amount by
wire transfer (or any other mode acceptable to Proeza) of immediately available
funds to such account(s) as shall have been designated at least three business
days prior to the Closing Date by Proeza.
2.2 ADDITIONAL CONSIDERATION.
TOWER ADDITIONAL CONSIDERATION. In addition to the subscription
payment set forth in Article II, Tower hereby agrees to pay to the Company the
additional premium consideration set forth in this Section 2.3. The Company
shall have the right to receive from Tower the amount by which Net Income
exceeds US$20,000,000 for the fiscal year ended December 31, 1998, the amount by
which Net Income exceeds US$25,000,000 for the fiscal year ended December 31,
1999 and the amount by which Net Income exceeds US$28,000,000 for the fiscal
year ended December 31, 2000; PROVIDED, HOWEVER, that such additional premium
consideration shall not exceed, in the aggregate, US$45,000,000. All additional
consideration shall be paid, subject to the last three sentences of this Section
2.3, (i) within 30 days of delivery of audited financial statements of the
Company (in accordance with US Reconciliation GAAP) for the applicable year to
Tower, (ii) by wire transfer (or any other mode acceptable to the Company) of
immediately available funds, and (iii) to such account(s) as shall have been
designated by the Company. Tower shall have 30 days after the receipt of the
Company's audited financial statements to dispute its obligations to make any
payment of additional consideration in accordance with this Section 2.3,
including the calculation of the Net Income for such relevant period. In case
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Tower raises such objection within the requisite time period, the parties shall
have 15 days following the time Tower raises such objection to resolve any such
dispute. If the parties fail to reach agreement within such period, then they
shall follow the procedures for Resolution of Disputes provided in Section 7.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF TOWER.
Tower represents and warrants to Proeza, that:
CORPORATE EXISTENCE AND POWER. Tower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan,
and has all corporate powers required to own its properties and carry on its
business. Tower is authorized or duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities make such
qualification necessary, except insofar as the failure to be so qualified would
not reasonably be expected to enjoin, alter, call into question, affect or delay
the Transaction.
CORPORATE AUTHORIZATION. The execution, delivery and performance by
Tower of this Agreement, the Company Shareholders Agreement, the Technology
Agreement, the Marketing Agreement, the Services Agreement, the Directors
Agreement and any related agreements or instruments (collectively, the
"TRANSACTION DOCUMENTS") and the consummation by Tower of the Transactions are
within Tower's corporate power and have been duly authorized by all necessary
corporate action on the part of Tower. Each of the Transaction Documents is, or
will be upon execution thereof at the Closing, Enforceable against Tower.
NON-CONTRAVENTION. The execution, delivery and performance by Tower
of this Agreement, does not and will not (A) contravene Tower's certificate of
incorporation or by-laws, or (B) except as would not be reasonably likely to
result in a liability to Tower in excess of US$250,000 (i) contravene or
constitute a violation of any provision of any federal, state or local law,
regulation, judgment, injunction, order or decree binding upon or applicable to
Tower, or (ii) except as set forth on SCHEDULE 3.1.3, require any consent,
notice, approval or other action by any Person or constitute a breach or default
(with or without the giving of notice or the passage of time or both) under or
give rise to any right of termination, cancellation or acceleration of any right
or obligation of Tower or a loss of any benefit to which Tower is entitled under
any provision of any agreement, contract, indenture, lease or other instrument,
license, franchise, permit or other similar authorization binding upon or held
by Tower.
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LITIGATION. Except as set forth on SCHEDULE 3.1.4, there is no Action
pending, or, to Tower's Knowledge, threatened, against Tower or any of its
properties before any Governmental Body which in any manner would enjoin, alter,
call into question, affect or delay any of the Transactions.
3.2 REPRESENTATIONS AND WARRANTIES OF PROEZA.
Proeza hereby represents and warrants to Tower that (all references to
the "COMPANY" in this Section 3.2 shall refer to the Company and its
Subsidiaries):
CORPORATE EXISTENCE AND POWER. Proeza is a SOCIEDAD ANONIMA DE
CAPITAL VARIABLE duly formed, validly existing and in good standing under the
laws of Mexico, and has all corporate powers required to own its properties and
carry on its business. Proeza is authorized or duly qualified to do business as
a corporation and is in good standing in each jurisdiction where the character
of the property owned or leased by it or the nature of its activities make such
qualification necessary.
CORPORATE AUTHORIZATION. The execution, delivery and performance by
Proeza of the Transaction Documents and the consummation by Proeza of the
Transactions are within Proeza's corporate power and have been duly authorized
by all necessary corporate action on the part of Proeza. Each of the
Transaction Documents is, or will be upon execution thereof at the Closing,
Enforceable against Proeza.
NON-CONTRAVENTION. The execution, delivery and performance by Proeza
of this Agreement and the issuance and subscription of the Class B Common Shares
does not and will not (A) contravene Proeza's ESTATUTOS (as used herein,
"ESTATUTOS" means the "BY-LAWS" of such entity) or, (B) except as would not be
reasonably likely to result in a liability to Proeza in excess of US$250,000 (i)
contravene or constitute a violation of any provision of any Mexican federal,
state or local law, regulation, judgment, injunction, order or decree binding
upon or applicable to Proeza, or (ii) except as set forth on SCHEDULE 3.2.3,
require any consent, notice, approval or other action by any Person or
constitute a breach or default (with or without the giving of notice or the
passage of time or both) under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Proeza or a loss of
any benefit to which Proeza is entitled under any provision of any agreement,
contract, indenture, lease, or other instrument binding upon Proeza or any
license, franchise, permit or other similar authorization binding upon or held
by Proeza.
CAPITALIZATION OF THE COMPANY. The capitalization of the Company as
of August 31,1997 and as of the Closing Date after giving effect to the
Transactions, is set forth on SCHEDULE 3.2.4A and the stock ownership of the
Company as of the date hereof and as of the Closing Date after giving effect to
the Transactions, is set forth on SCHEDULE 3.2.4B. Except as set forth on
SCHEDULE 3.2.4 and as contemplated hereby, there are no outstanding Commitments
with respect to the capital stock or any other equity interests of the Company.
When payment has been made therefore as contemplated hereby, the Class
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B Common Shares will be validly issued, fully paid and non-assessable; and when
the Class B Common Shares are delivered to Tower against payment therefor as
contemplated hereby, Tower will acquire good and valid title to the Class B
Common Shares free and clear of all Liens, and there shall be no other shares of
Class B Common Stock outstanding.
DELIVERY AND TITLE TO THE CLASS B COMMON SHARES. Proeza will cause
the Company to issue and deliver the Class B Common Shares to Tower, free and
clear of any restrictions on transfer, taxes, Liens, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands, other than as
contemplated by the Transaction Documents, and Tower shall be registered as a
shareholder of record in the shareholder registry ledger of the Company. There
are no options, warrants, purchase rights, or other contracts or commitments
that could require the Company to sell, transfer, or otherwise dispose of any
capital stock of the Company (other than the Transaction Documents).
LITIGATION. Except as set forth on SCHEDULE 3.2.6, there is no Action
pending, or, to Proeza's Knowledge, threatened, against Proeza or any of its
properties before any Governmental Body which (i) would reasonably be expected
to result in a liability to Proeza in excess of US$250,000, or (ii) in any
manner would enjoin, alter, call into question, affect or delay any of the
Transactions.
NO GOVERNMENTAL APPROVALS. No Requisite Regulatory Approval is
required on the part of Proeza or the Company in connection with the execution
and delivery by Proeza or the Company of the Transaction Documents to which they
are party or the consummation by Proeza and the Company of the transactions
contemplated by the Transaction Documents, except for compliance with the
Requisite Regulatory Approvals set forth on SCHEDULE 3.2.7.
HISTORICAL FINANCIAL STATEMENTS. The Company has delivered to Tower
(i) Audited Historical Financial Statements of the Company for the fiscal year
ending December 31, 1994, 1995 and 1996 (the "AUDITED HISTORICAL FINANCIAL
STATEMENTS"), (ii) an unaudited consolidated balance sheet (the "INTERIM
HISTORICAL BALANCE SHEET") of the Company as of` August 31, 1997 (the "BALANCE
SHEET DATE"). The Interim Historical Balance Sheet and the Audited Historical
Financial Statements and notes have been prepared in accordance with Mexican
GAAP and present fairly and accurately the financial position and results of
operations of the Company as of the dates of such statements and for the periods
covered thereby, subject to normal recurring year-end adjustments the effect of
which will not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
TITLE TO ASSETS. The Company has good and valid title to, or a valid
leasehold interest in, the assets and rights used in the conduct of its
business, free and clear of all Liens, except as set forth on Schedule 3.2.9,
and such assets and rights are sufficient to conduct its business in a manner
consistent with such conduct prior to the
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Reorganization.
INSURANCE. SCHEDULE 3.2.10 sets forth a list of all policies of
insurance to which the Company is a party or under which the Company, or any
director or officer of the Company, is covered. Complete copies of all such
policies have been delivered to Tower. All such policies are in full force and
effect. Neither Proeza nor the Company has received notice from any insurance
carrier of the intention of such carrier to discontinue any insurance coverage
afforded to the Company.
COMPLIANCE WITH LAWS. Except as set forth in SCHEDULES 3.2.11 and
4.8, and with respect to the matters addressed by Section 3.2.12, the businesses
of the Company have been conducted in compliance with all Laws. No
investigation or review by any Governmental Body with respect to the Company or
any of its respective properties is pending or threatened.
ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.2.12 to this
Agreement:
The Company has complied, and is in compliance, with all Applicable
Environmental and Safety Laws. There is no Proceeding now pending or, to the
Knowledge of Proeza, threatened, against or affecting the Company (i) for
noncompliance by the Company with any Applicable Environmental and Safety Laws
or (ii) relating to a Release at any location of any material, including any
Hazardous Material that would reasonably be expected to give rise to liability
of the Company under any Applicable Environmental and Safety Laws.
The Company does not have any Liability (whether accrued, absolute,
contingent, unliquidated or otherwise), arising out of or resulting from the
treatment, storage, disposal or Release, whether on or off its own premises or
by or through other Persons, of any material, including any Hazardous Material.
There are no unpaid citations, fines or penalties assessed against the
Company under any Applicable Environmental and Safety Law, and the Company has
not received any written notices or other communications or information from any
Person, including any Governmental Body of Mexico with respect to any violations
or alleged violations of, or any actual or potential Liability under, any
Applicable Environmental and Safety Law including any investigation, remedial or
corrective obligation.
The Company has obtained all permits required by any Applicable
Environmental and Safety Law and all such permits are in good standing and in
full force and effect and the Company is are in compliance with all terms and
conditions of such permits.
None of the following exists at any property or facility owned or
operated by the Company: (1) underground storage tanks, (2) asbestos-containing
material in any
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form or condition, (3) materials or equipment containing polychlorinated
biphenyls, or (4) landfills, surface impoundments, or disposal areas.
The Company has not, either expressly or by operation of law, assumed,
undertaken or otherwise become subject to any liability, including any
obligation for corrective or remedial action, of any other Person pursuant to
any Applicable Environmental and Safety Laws.
No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company, or any of its predecessors
will prevent, hinder or limit continued compliance with any Applicable
Environmental and Safety Laws, give rise to any investigatory, remedial or
corrective obligations pursuant to any Applicable Environmental and Safety Laws,
or give rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to any Applicable Environmental and Safety
Laws, including any relating to onsite or offsite Releases or threatened
Releases of Hazardous Materials, personal injury, property damage or natural
resources damages.
TAXES. Except as set forth on SCHEDULE 3.2.13,
All Tax Returns required to be filed on or before the Closing Date by
the Company have been or will be filed.
The Tax Returns so filed are complete and accurate representations of
the Tax Liabilities of the Company.
The Company has paid or has made adequate provision in the Interim
Historical Balance Sheet for the payment of all Taxes due or accrued by the
Company for periods ending on or before the date hereof.
To the Knowledge of the Company, there is no investigation, audit, or
claim pending with respect to the Company regarding any Tax.
The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee.
The Company has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
Proeza has made available to Tower correct and complete copies of all
Tax Returns, examination reports, and fiscal credit assessed against or agreed
to by the Company for all taxable periods beginning on or after January 1, 1995
and ending as of the date hereof.
INTELLECTUAL PROPERTY. SCHEDULE 3.2.14 contains a list of all
material Intellectual Property owned by, issued to, licensed by or used by the
Company. The
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Intellectual Property listed on SCHEDULE 3.2.14 comprises all Intellectual
Property necessary to conduct the business currently conducted by the Company.
The Company owns or has valid, binding and enforceable rights to use of all of
such Intellectual Property. The Company has not granted any outstanding
licenses or other rights, and has no obligations to grant licenses or other
rights, under any of such Intellectual Property. The Company has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any such Intellectual Property. The Company, in the conduct of its
business as currently conducted, does not infringe or conflict with any right of
any third party as to Intellectual Property.
CONTRACTS. SCHEDULE 3.2.15 sets forth a list of all Contracts in
excess of US$250,000 to which the Company is a party or to which any of its
business is subject and which are not terminable by the Company on notice of 30
days or less without penalty or additional cost. All of such Contracts are
valid, binding and in full force and effect, and are enforceable by the Company
in accordance with their respective terms. Except as disclosed on SCHEDULE
3.2.15, there are no defaults by the Company under any Contracts required to be
listed thereon, and, to the Knowledge of Proeza, there are no defaults
thereunder by any other party thereto, and no event has occurred that with the
lapse of time or action or inaction by any party thereto would result in a
violation thereof or a default thereunder.
ABSENCE OF CHANGES OR EVENTS. Except as set forth on SCHEDULE 3.2.16,
since the Balance Sheet Date, the Company has operated its businesses in the
Ordinary Course of Business and has not:
incurred any Liability, except for Liabilities incurred in the
Ordinary Course of Business;
declared or paid any dividend or repurchased any shares of capital
stock.
created or permitted to be created any Lien on any of its assets,
having a value in excess of US$250,000;
sold, transferred, leased to or otherwise disposed of any of its
assets, except for inventory sold in the Ordinary Course of Business, or
canceled or compromised any material debt or claim, or waived or released any
right of material value except in the Ordinary Course of Business, having a
value in excess of US$250,000;
suffered any damage, destruction or casualty loss (whether or not
covered by insurance), having a value in excess of US$250,000;
instituted, settled or agreed to settle any Proceeding before any
Governmental Body, having a value in excess of US$250,000;
entered into any transaction or Contract other than in the Ordinary
Course of Business, and except for the Transaction Documents, having a value in
excess of
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US$250,000;
amended, modified or terminated any Contract having a value in excess
of US$250,000, except in the Ordinary Course of Business;
made any increase in the compensation payable or to become payable, or
any increase in benefits or benefit plan costs, or any increase in bonus,
insurance, pension, compensation or other benefit plans, in each case, with
respect to its employees, having a value in excess of US$250,000;
entered into any agreement or made any commitment to take any of the
types of action described in subparagraphs (ii) through (viii) above; or
suffered any event or experience which has had, or with the passage of
time would reasonably be expected to have, a Material Adverse Effect on the
Company.
LICENSES, PERMITS AND TARIFFS. The Company possesses all the licenses
and permits listed in SCHEDULE 3.2.17, copies of all of which have been made
available to Tower. Such licenses and permits constitute all the licenses and
permits necessary under Law for the Company to conduct its business as now
conducted. Each of such licenses and permits and the rights of the Company with
respect thereto are valid and subsisting and in full force and effect. The
Company is in compliance with the terms of such licenses and permits. No such
license or permit has been, or, to the Knowledge of Proeza, is threatened to be,
revoked, canceled, suspended or modified.
NO BROKER. Except for the services of Violy, Byorum & Partners, LLC
(for which Proeza shall be solely responsible) Proeza has not incurred any
material obligation or Liability for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement or the
transactions contemplated hereby.
LABOR RELATIONS; COMPLIANCE. All applicable labor relations and/or
obligations within the scope of this Agreement and, in particular, labor
relations dealing with the Company, shall be construed and subject to applicable
Mexican Labor Law. Except as set forth on SCHEDULE 3.2.19, since December 31,
1996, the Company has not been and is not currently a party to any collective
bargaining or other labor contract. Since December 31, 1996, there has not
been, there is not presently pending or existing and, to Knowledge of Proeza,
there is not threatened: (i) any strike, slowdown, picketing, work stoppage, or
employee grievance process; (ii) any Proceeding against or affecting the Company
relating to the alleged violation of any Law pertaining to labor relations or
employment matters, organizational activity, or other labor or employment
dispute against or affecting the Company or its premises; or (iii) any
application for certification of a collective bargaining agent. The Company has
complied with all applicable Mexican Laws relating to employment.
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EMPLOYEE BENEFIT PLANS.
SCHEDULE 3.2.20 includes a correct and complete list of all pension
and welfare plans and all other employee benefit agreements or arrangements to
which the Company contributes. Proeza has delivered to Tower, as to each plan,
agreement or arrangement, as applicable, a true and correct copy of (i) the
plan, agreement or arrangement, (ii) the trust, group annuity contract or other
document that provides the funding for the plan, agreement or arrangement, if
any, (iii) the most recent actuarial report or valuation statement, if any, or
(iv) the most current summary plan description, booklet, or other descriptive
written materials, if any, and each summary of modifications prepared after the
last summary plan description.
Every employee welfare benefit plan and every employee pension benefit
plan on SCHEDULE 3.2.20: (i) is in compliance with all requirements of
applicable labor Laws; (ii) has no issue pending (other than the payment of
benefits in the normal course) nor any issue resolved adversely to the Company
that may subject the Company in the future to the payment of a penalty; and
(iii) can be unilaterally terminated or amended on no more than 90 days notice,
except as set forth in SCHEDULE 3.2.20. Except as set forth in SCHEDULE 3.2.20,
the Company does not provide employee post-retirement medical or health coverage
or contribute to or maintain any employee welfare benefit plan that provides for
health benefit coverage following termination of employment. All premiums due
with respect to each employee pension benefit plan listed on SCHEDULE 3.2.20 for
which premiums are required have been paid when due. No employee pension
benefit plan listed on SCHEDULE 3.2.20, has been, or is reasonably expected to
be, terminated. All amounts owed under the deferred compensation arrangements
described in SCHEDULE 3.2.20 are included as liabilities in the Interim
Historical Balance Sheet.
DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as set
forth in this Agreement, Proeza makes no other representation or warranty,
express or implied, at law or in equity, in respect of the Company, its
Subsidiaries, or any of their respective assets, liabilities, or operations,
including with respect to merchantability, or fitness for any particular
purpose, and any such other representations or warranties are hereby expressly
disclaimed.
TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 3.2.22,
neither Proeza nor any Affiliate of Proeza or the Company is a party to any
Contract with the Company.
NO SIGNIFICANT UNITED STATES PRESENCE. The Company and its
Subsidiaries collectively (i) do not hold assets (other than investment assets)
located in the United States having an aggregate book value or market value of
US$15million or more, and (ii) have not, made aggregate sales in or into the
Unites States in excess of US$25 million in their most recent fiscal year.
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3.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Tower that:
CORPORATE EXISTENCE AND POWER. The Company is a Mexican SOCIEDAD
ANONIMA DE CAPITAL VARIABLE duly formed and validly existing as stated in the
Public document number 16, granted on August 21, 1981 before Notary Public
Number 1 duly registered in the Public registry of San Luis Potosi, S.L.P.; and
is in good standing under the laws of Mexico, and has all corporate powers
required to own its properties and carry on its business. The Company will have
no Subsidiaries at the Closing, except for Herramientas y Matrices, S.A. de C.V.
The Company and its Subsidiaries are authorized or duly qualified to do business
as foreign corporations and are in good standing in each jurisdiction where the
character of the property owned or leased by them or the nature of their
activities make such qualification necessary.
CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Company of each of the Transaction Documents and the consummation by the
Company and its Subsidiaries of the transactions contemplated hereby and thereby
are within their corporate power and have been duly authorized by all necessary
corporate action on the part of the Company and its Subsidiaries. Each of the
Transaction Documents is, or will be upon execution thereof at the Closing,
enforceable against the Company.
NON-CONTRAVENTION. The execution, delivery and performance by the
Company of each of the Transaction Documents does not and will not (A)
contravene the Company's ESTATUTOS, or (B) (i) contravene or constitute a
violation of any provision of any federal, state or local law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (ii) except as set forth on SCHEDULE 3.3.3, require any
consent, notice, approval or other action by any Person or constitute a breach
or default (with or without the giving of notice or passage of time or both)
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of the Company or any Subsidiary or a loss of any
benefit to which the Company or any Subsidiary is entitled under any provision
of any agreement, contract, indenture, lease, other instrument license,
franchise, permit or other similar authorization binding upon or held by the
Company or any Subsidiary, or (iii) result in the creation or imposition of any
Liens on the Class B Common Shares.
DUE AUTHORIZATION AND VALIDITY OF THE CLASS B COMMON SHARES. All of
the Class B Common Shares have been duly authorized and, when delivered against
payment therefor as contemplated hereby, will be validly issued, fully paid and
non-assessable and Tower shall be registered as a shareholder of record in the
shareholder registry ledger of the Company.
LITIGATION. Except as set forth in SCHEDULE 3.3.5, there is no Action
pending or, to the Company's Knowledge, threatened, against the Company or any
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Subsidiary any of their properties before any Governmental Body which (i) would
reasonably be expected to result in a liability to the Company in excess of
US$250,000, or (ii) in any manner would enjoin, alter, call into question,
affect or delay any of the Transactions.
REAL ESTATE.
(i) By means of Public document number 30,360 granted on February 13,
1992 before Mr. Jesus Montano Garcia, Notary Public Number 60 duly registered in
the Public registry of property of the City of Monterrey Nuevo Leon, under
registration number 4626, book 96, volume 44, Section I PROPIEDAD, UNIDAD
Apodaca dated October 28, 1992, and number 8486, book 213, volume 224, Section I
PROPIEDAD dated October 26, 1992, the Company acquired by means of a merger with
Manufacturas Metalicas Monterrey, S.A. de C.V. real estate property with the
characteristics, metes and bounds as described therein.
(ii) By means of Public document number 28 granted on December 14,
1984 before Mr. Octaviano Gomez y Gomez, Notary Public Number 4 duly
registered in the Public registry of property of the City of San Luis Potosoi
under registration number 12549, book 138M, folium 227, the Company acquired
by means of a donation real estate property with the characteristics, metes
and bounds as described therein.
Industrial buildings are erected on the parcels of land described in
paragraphs (i)and (ii) above and such buildings are owned by the Company.
Except as set forth in Schedule 3.2.9, the real estate properties
described in (i) and (ii) above are free from all liens and without any
reservation or limitation of domain, whether of a legal or contractual nature,
and are current in the payment of real estate taxes and fees for water use
corresponding to each one of them, and official receipts for the payment of such
taxes and fees which the Company has provided.
ARTICLE IV
COVENANTS
4.1 TAKING OF NECESSARY ACTION.
Subject to the terms and conditions of this Agreement and to
applicable law, Proeza shall and shall cause the Company to, and Tower shall,
use all commercially reasonable efforts promptly to take or cause to be taken
all action and promptly to do or cause to be done all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Transactions. Without limiting the foregoing, each of Proeza, the
Company and Tower shall use all commercially reasonable efforts to obtain or
make all consents, approvals, assurances or filings of or with third
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parties and Governmental Bodies necessary for the consummation of the
Transactions. Each party shall cooperate with the others in good faith to help
the others satisfy their obligations under this Section. If at any time after
the Closing Date any further commercially reasonable action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers or
directors of each party to this Agreement shall take that necessary action.
4.2 NOTICE OF CERTAIN CHANGES.
Each party hereto shall give prompt written notice to the other
parties hereto of the occurrence, or non-occurrence, of any event which would be
reasonably likely to cause any representation or warranty herein to be untrue or
inaccurate, or any covenant, condition or agreement herein not to be complied
with or satisfied.
4.3 ACCESS TO INFORMATION.
(i) Proeza shall cause the Company to afford to Tower and its
accountants, counsel and other representatives, reasonable access during normal
business hours to its properties, books, contracts, commitments, tax returns,
records and operating data, (ii) each of Proeza and the Company shall provide
from time to time such office space within its executive offices as Tower may
reasonably request for use by Tower's representatives or agents in reviewing the
materials referred to in clause (i) of this Section, and (iii) Proeza shall
cause the Company to afford to Tower and its accountants, counsel and other
representatives reasonable access during normal business hours to their officers
and other appropriate employees to discuss the condition, operation, business
and prospects of the Company as a whole. All information provided hereunder
shall be deemed Confidential Information.
4.4 CONDUCT OF BUSINESS.
From the date hereof through the Closing Date, except as contemplated
hereby, (a) Proeza shall cause the Company to, and the Company shall, conduct
its business in the ordinary course, consistent with past practices, and shall
abstain from any action the taking of which would have to be disclosed pursuant
to Section 3.2.16, and (b) the Company shall: (1) promptly inform Tower of any
variances from the representations and warranties or any breach of covenants,
(2) not issue any capital stock, (3) not merge or consolidate, except as
contemplated by the Reorganization, (4) not transact business with Affiliates or
insiders other than in the Ordinary Course of Business, and (5) use its
reasonable efforts to cause the conditions to Closing to be satisfied.
4.5 EXPENSES.
Whether or not the Transactions are consummated, (i) Proeza shall pay
all costs and expenses that it incurs in connection with this Agreement and the
Transactions, including the fees and expenses of its counsel, accountants, and
other advisors, and (ii) Tower shall pay all costs and expenses that it incurs
in connection with this Agreement
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and the Transactions, including the fees and expenses of its counsel,
accountants, and other advisors.
4.6 CONFIDENTIALITY; PRESS RELEASES.
Except as may be required by law or as otherwise permitted or
expressly contemplated herein, neither Tower, on the one hand, nor Proeza and
the Company, on the other, nor any of their respective Affiliates, employees,
agents and representatives shall disclose to any third party the contents of
this Agreement, the subject matter or terms hereof or any Confidential
Information concerning the business or affairs of the other which may be
acquired in the course of pursuing the Transactions without the prior written
consent of the other party hereto. Proeza and Tower shall consult with each
other as to the timing, form and substance of any press release or public
disclosure of matters related to this Agreement or any of the transactions
contemplated by this Agreement.
4.7 INDEBTEDNESS.
Following the execution of this Agreement and until the Closing, the
Company shall not, (a) except pursuant to its existing credit facilities or
otherwise in the Ordinary Course of Business and specifically including for the
purposes permitted under this Agreement, incur any indebtedness for borrowed
money or guarantee any indebtedness, execute any indemnity, or issue or sell any
debt securities of the Company or any of its Subsidiaries or guarantee any debt
securities, or enter into or modify any Contract with respect to the foregoing,
or (b) except with respect to the debt described on SCHEDULE 4.7, make any
optional payment of principal of any term debt or otherwise permanently reduce
any of the Company's revolving credit facility.
4.8 ENVIRONMENTAL COMPLIANCE.
After the Closing, the Company shall address the issues set forth on
SCHEDULE 4.8 within 90 days of Closing, or such time as specified on such
SCHEDULE 4.8, and as soon as practicable thereafter shall comply in all material
respects with the legal requirements addressed in such items.
4.9 CORPORATE FILINGS.
After Closing, the Company shall file the "CONSTANCIA DE
INSCRIPCION" in the Foreign Investment Registry for 1996.
4.10 COMPANY BYLAWS
Tower, Proeza and the Company agree to cause the Company to adopt,
at or prior to the Closing, the Company Bylaws, which will set forth such of the
provisions in the Shareholders Agreement as are enforceable only if included in
the bylaws of a company, so as to preserve the rights and responsibilities of
the parties contemplated by and pursuant to the Shareholders Agreement, and will
include such other provisions as
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are customary, necessary and appropriate.
4.11 CORPORATE STRUCTURE OF THE COMPANY
At the request of Tower, and at Tower's sole expense, the Company
shall effect a change in its corporate structure from a Mexican SOCIEDAD ANONIMA
DE CAPITAL VARIABLE ("S.A. DE C.V.") to a Mexican SOCIEDAD DE RESPONSABILIDAD
LIMITADA DE CAPITAL VARIABLE ("S. DE R.L. DE C.V.") on or before January 1, 1998
(the "CONVERSION"). Any references herein to the Company following any
Conversion shall be to such successor entity.
In the event of a Conversion, the parties agree that if any of the
covenants set forth in Section 4.11(c) are breached, the breaching party shall
be liable to and shall indemnify and hold harmless each nonbreaching party and
its officers, directors, shareholders, Affiliates, employees and agents, from
any and all Losses, directly or indirectly resulting from, relating to, arising
out of, or otherwise attributable to such breach. The indemnification provided
for herein is an absolute indemnification and is not subject to any limitations
(including, without limitation, those set forth in Section 6.6 hereto.
Tower, the Company and Proeza, covenant and agree, and will cause
the Company to so covenant and agree, and each party hereto acknowledges that
each other party is entering into this Agreement in reliance on, the following:
(i)that any and all remedies of withdrawal or rescission that the
parties may have under Articles 38, 42 and 50 of the LEY GENERAL DE SOCIEDADES
MERCANTILES (or any successor provisions) are hereby expressly waived;
(ii)that neither Proeza nor Tower shall exercise the remedies of
withdrawal or rescission that they may have under Articles 38, 42 and 50; and
(iii)Any attempt by any party to exercise or invoke the
withdrawal rights under Article 38 and 42, and the rescission rights under
Article 50 of the LEY GENERAL DE SOCIEDADES MERCANTILES (or any successor
provisions) other than as expressly provided for herein or in the By-Laws shall
be void and shall constitute a material breach of this Agreement by such party
which shall be actionable by any other party; and
(iv)That each "Equity Participation" or other instrument issued
by the Company which represents or evidences an interest in Social Parts shall
bear a legend to the foregoing effect and such legend shall be attached to the
shareholder registry.
In the event that Proeza shall desire to effect a public offering of
all or part of its interest in the Company, in accordance with the Shareholders
Agreement, Proeza may cause the Company at the sole expense of Proeza, to change
its corporate structure from a Mexican S. DE R.L. DE C.V. to a Mexican S.A. DE
C.V., and, in the event that Tower shall desire to effect a change in the
corporate structure of the Company from
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a Mexican S. DE R.L. DE C.V. to a Mexican S.A. DE C.V. the Company shall effect
such change, at the sole expense of Tower (any such change from a Mexican S. DE
R.L DE C.V. to a Mexican S.A. DE C.V. a "REVERSION").
In the event of any Conversion or Reversion, the parties agree that
any and all rights and obligations pursuant to this Agreement will remain in
full force and effect, and that all of the provisions hereof shall be adjusted
MUTATIS MUTANDIS as may be necessary to give effect to any Conversion or
Reversion.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS OF ALL PARTIES.
The obligations of each party to this Agreement to effect the
Transactions shall be subject to the fulfillment of the following conditions:
NO INJUNCTION. No order or other legal restraint or prohibition that
would prevent or have the effect of preventing the consummation of the
Transactions shall be in effect; PROVIDED, HOWEVER, that no party hereto may
invoke this condition unless such party shall have complied fully with its
obligations under Section 4.1 and, in addition, shall have used all reasonable
efforts to have any such order vacated.
GOVERNMENTAL APPROVALS. Other than regulatory approvals that, if not
obtained, would not have a Material Adverse Effect on the affected party, all
necessary regulatory filings and approvals shall have been made and obtained and
be in full force and effect, after giving effect to the Transactions with
respect to the Closing, including as required by the Mexican Federal Commission
of Economic Competence.
THIRD PARTY CONSENTS. The applicable party shall have received all
requisite consents of third Persons necessary for the consummation of the
Transactions with respect to the Closing.
5.2 CONDITIONS OF EACH PARTY.
TOWER'S CONDITIONS. The obligation of Tower to consummate the
Transactions is subject to satisfaction on or before
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the Closing of the following conditions:
REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of Proeza contained in Section 3.2 and of the Company contained in
Section 3.3 shall be true and correct in all respects at and as of the Closing
Date (except to the extent that they expressly relate only to an earlier time,
in which case they shall have been true and correct in all respects as of such
earlier time), and Proeza and the Company shall each have complied with all of
their covenants in all respects, except in either case insofar as the failure to
be true and correct or the failure to have so complied would not reasonably be
expected to have a Material Adverse Effect on the Company or Tower. Each of
Proeza and the Company shall have delivered to Tower a certificate dated as of
the Closing Date, signed by its chairman, chief executive officer, president or
any vice president and its chief financial officer or comptroller, in their
capacities as such, to the effect set forth in this Section 5.2.1(i).
DELIVERY OF SHARES. The Company shall have delivered to Tower the
certificates representing the Class B Common Shares registered in the name of
Tower free and clear of all Liens.
ANCILLARY AGREEMENTS. The Company Shareholders Agreement, the
Directors Agreement, the Marketing Agreement, the Technology Agreement and the
Services Agreement shall each have been executed and delivered by the Company
and Proeza.
ESTATUTOS. The ESTATUTOS of the Company and corporate resolutions
pertaining to the adoption of the bylaws and the declaration of the dividends
described in SCHEDULE 3.2.16 shall have been adopted and filed in accordance
with Mexican law and in the form and substance as acceptable to each of the
parties.
OPINION OF COUNSEL. The Company shall have delivered to Tower an
opinion of DE LA GARZA Y ASOCIADOS, counsel to the Company, dated the Closing
Date, to the effect that Company is a Mexican SOCIEDAD ANONIMA DE CAPITAL
VARIABLE and is validly existing and in good standing under the laws of the
United Mexican States; all of the
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Company Capital Stock have been duly and validly authorized and issued and are
fully subscribed and paid; and that each of the Technology Agreement, Directors
Agreement, Marketing Agreement, Company Shareholders Agreement and this
Agreement have been duly authorized, executed and delivered by the Company.
CORPORATE MATTERS.
The Company shall deliver to Tower the following documents:
(A) a certificate of liens for each of the Apodaca and San Luis
Potosi facilities which reflect no material liens other than the liens disclosed
on Schedule 3.2.9.
(B) a letter signed by each of Pablo Zambrano, Gabriel Zambrano,
Enrique Zambrano and Juan Carlos Zambrano to the effect that each of them has no
direct equity interest in the Company.
(C) evidence of the "CONSTANCIA DE INSCRIPCION" in the Foreign
Investment Registry for each of 1993 and 1994 and a copy of the 1995 economic
financial questionnaire filed with such registry.
(D) a letter from International Finance Corporation consenting to
Proeza's sole ownership of Metalsa.
The Company shall have: (A) canceled all of its outstanding stock
certificates and issued new replacement stock certificates to its shareholders,
pursuant to the Reorganization; (B) corrected all entries in the shareholders
registry book; (C) canceled all general powers of attorney outstanding as of the
Closing Date (provided that the parties hereto agree to put replacement general
powers of attorney in place immediately thereafter); and (D) constituted the
Board of Directors of the Company in accordance with the Shareholders Agreement.
PROEZA'S CONDITIONS. The obligation of Proeza to consummate the
Transactions is subject to satisfaction on or before the Closing of the
following conditions:
REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of
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Tower contained in Section 3.1 shall be true and correct in all material
respects at and as of the Closing Date (except to the extent that they expressly
relate only to an earlier time, in which case they shall have been true and
correct in all material respects as of such earlier time), and Tower shall have
complied with all of its covenants in all material respects. Tower shall have
delivered to Proeza a certificate dated as of the Closing Date, signed by its
chairman, chief executive officer, president or any vice president, or the
secretary or assistant secretary of the Board and its chief financial officer,
or comptroller in their capacities as such, to the effect set forth in this
Section 5.2.2(i).
ANCILLARY AGREEMENTS. The Company Shareholders Agreement, the
Directors Agreement, the Marketing Agreement, the Technology Agreement and the
Services Agreement shall each have been executed and delivered by Tower and the
Company.
OPINION OF COUNSEL. Tower shall have delivered to Proeza an opinion
of Kirkland & Ellis, counsel to Tower, dated the Closing Date, that Tower is
duly incorporated and is validly existing as a corporation in good standing
under the laws of the state of Michigan, and that each of the Technology
Agreement, Directors Agreement, Marketing Agreement, Company Shareholders
Agreement and this Agreement have been duly authorized, executed and delivered
by Tower.
THE COMPANY'S CONDITIONS. The obligation of the Company to consummate
the Transactions is subject to satisfaction on or before Closing of the
following conditions:
REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of Tower contained in Section 3.1 shall be true and correct in all
material respects at and as of the Closing Date (except to the extent that they
expressly relate only to an earlier time, in which case they shall have been
true and correct in all material respects as of such earlier time), and Tower
shall have complied with all of its covenants in all material respects. Tower
shall have delivered to the Company a certificate dated as of the Closing Date,
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signed by its chairman, chief executive officer, president or any vice president
or the secretary of the Board and its chief financial officer, in their
capacities as such, to the effect set forth in this Section 5.2.3(i).
PAYMENT. The Company shall have received the Investment Amount as set
forth in Article II.
ARTICLE VI
SURVIVAL, INDEMNIFICATION
6.1 INDEMNIFICATION BY PROEZA.
Proeza agrees to indemnify and hold harmless Tower and its officers,
directors, shareholders, Affiliates, employees and agents (the "TOWER
INDEMNITEES") from any and all Losses, directly or indirectly resulting from,
relating to, arising out of or attributable to: (a) any liabilities resulting
from the Reorganization (whether, as of the date hereof, or, except to the
extent they expressly relate only to an earlier time, as of the Closing Date);
(b) any breach of or inaccuracy in any representation or warranty of Proeza
contained in Sections 3.2.1 through 3.2.5 and Section 3.2.23 (whether as of the
date hereof, or, except to the extent they expressly relate only to an earlier
time, as of the Closing Date); and (c) any breach of, inaccuracy in or
non-performance by Proeza of any representation or warranty of Proeza contained
in any Section of this Agreement, except Article III with respect to this
subparagraph (c) (whether as of the date hereof, or, except to the extent they
expressly relate only to an earlier time, as of the Closing Date).
Proeza agrees to indemnify and hold harmless the Company from any and
all Losses, directly or indirectly resulting from, relating to, arising out of
or attributable to: (a) any liabilities resulting from the Reorganization; (b)
any breach of or inaccuracy in any representation or warranty of Proeza
contained in Sections 3.2.6 to 3.2.22 (whether as of the date hereof, or, except
to the extent they expressly relate only to an earlier time, as of the Closing
Date); (c) any breach of or inaccuracy in any representation or warranty of the
Company contained in Section 3.3.6 (whether, as of the date hereof, or, except
to the extent they expressly relate only to an earlier time, as of the Closing
Date); (d) the Company's noncompliance prior to the Closing Date with any
Applicable Environmental and Safety Laws and any liability arising under any
Applicable Environmental and Safety Laws relating to the Transferred Property;
and (e) the failure of the Company and the shareholders of the Company to comply
with the legal formalities of a shareholder meeting; PROVIDED, HOWEVER, that
none of the transactions contemplated by the Reorganization or the Dividends
shall constitute a breach of any representation or warranty of Proeza;
6.2 INDEMNIFICATION BY TOWER.
Tower agrees to indemnify and hold harmless Proeza and the Company
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and their respective officers, directors, shareholders, Affiliates, employees
and agents (the "PROEZA INDEMNITEES") from any and all Losses resulting from,
arising out of or attributable to: (a) any breach of or inaccuracy in any
representation or warranty of Tower contained in this Agreement (whether, as of
the date hereof, or, except to the extent they expressly relate only to an
earlier time, as of the Closing Date); and (b) any breach of, or inaccuracy in
or non-performance by Tower of any covenant or agreement of Tower contained in
this Agreement.
6.3 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless the Tower
Indemnitees from any and all Losses, directly or indirectly resulting from,
relating to, arising out of or attributable to: (a) any breach of or inaccuracy
in any representation or warranty of the Company contained in this Agreement
(whether, as of the date hereof, or, except to the extent they expressly relate
only to an earlier time, as of the Closing Date); and (b) any breach or
non-performance by the Company of any covenant or agreement of the Company
contained in this Agreement; PROVIDED, HOWEVER, that none of the transactions
contemplated by the Reorganization or the Dividends shall constitute a breach of
any representation or warranty of the Company.
6.4 NOTICE, PARTICIPATION AND DURATION.
If a claim by a third party is made against a party indemnified
pursuant to this Article (the "INDEMNITEE"), and if such Indemnitee intends to
seek indemnity with respect thereto under this Article, the Indemnitee shall
promptly, and in any event within 60 days of the assertion of any claim or the
discovery of any fact upon which Indemnitee intends to base a claim for
indemnification under this Agreement (a "CLAIM"), notify the party or parties
from whom indemnification is sought (the "INDEMNITOR") of such Claim; provided
that failure to provide such notice shall not limit the Indemnitee's rights to
be indemnified hereunder except to the extent such failure has actually
prejudiced the Indemnitor. Upon being notified of any Claim, the Indemnitor, at
its option, may assume (with legal counsel reasonably acceptable to the
Indemnitee) the defense of any Action in connection with the Claim, and may
assert any defense of the Indemnitee or the Indemnitor; PROVIDED that the
Indemnitee shall have the right at its own expense to participate jointly with
the Indemnitor in the defense of any Action in connection with the Claim. If
the Indemnitor elects to undertake the defense of any Claim, the Indemnitee
shall cooperate with the Indemnitor to the extent reasonably requested in regard
to all matters relating to the Claim (including corrective actions required by
applicable law, assertion of defenses and the determination, mitigation,
negotiation and settlement of all Claims), and may participate in such
settlement or defense through counsel chosen by such Indemnitee, PROVIDED that
the fees and expenses of such Indemnitee's counsel shall be borne by such
Indemnitee. The Indemnitee shall not pay or settle any claim which the
Indemnitor is contesting, and the Indemnitor shall not settle any claim in a
manner which is prejudicial (financially or otherwise) to the Indemnitee.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay or
settle any such claim, PROVIDED
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that in such event it shall waive any right to indemnity therefor by the
Indemnitor.
6.5 REIMBURSEMENT.
If the Indemnitor shall undertake, conduct or control the defense or
settlement of any Claim and it is later determined that such Claim was not a
Claim for which the Indemnitor is required to indemnify Indemnitee under this
Article, the Indemnitee shall reimburse the Indemnitor for all its costs and
expenses with respect to such settlement or defense, including reasonable
attorneys' fees and disbursements.
6.6 INDEMNIFICATION THRESHOLD AND LIMITATIONS.
PROEZA.
PROEZA SHALL HAVE NO OBLIGATION TO INDEMNIFY, IN THE AGGREGATE, ANY
TOWER INDEMNITEES OR THE COMPANY, SINGLY OR COLLECTIVELY, PURSUANT TO SECTION
6.1 UNTIL THE AGGREGATE INDEMNIFICATION CLAIMS PURSUANT TO SECTION 6.1 AND 6.3,
BUT FOR THIS SENTENCE, EXCEED US$2,500,000 (THE "THRESHOLD AMOUNT") (and also
excluding all Claims for amounts less than US$100,000, none of which shall in
any event be cognizable hereunder or count towards the Threshold Amount);
PROVIDED that once such amount exceeds the Threshold Amount, the Tower
Indemnitees or the Company shall be entitled to recover all amounts in excess of
the Threshold Amount to which they are entitled; and PROVIDED FURTHER that
indemnification in respect of any breach of or inaccuracy in the representations
and warranties of Proeza contained in Sections 3.2.13 shall not be subject to
this clause (i) and shall not count towards the Threshold Amount.
The indemnities provided for in Section 6.1.1(a), 6.1.1(b) as to
representations and warranties, and 6.1.2 are expressly limited to Claims which
are asserted within eighteen months after the Closing Date, except for Claims
pursuant to Section 3.2.13 which may be asserted at any time prior to the
expiration of the applicable statute of limitations, claims pursuant to Section
3.2.12, which may be asserted within thirty months after the Closing Date and
claims pursuant Sections 3.2.2, 3.2.3 (with respect to clause (A)), 3.2.4 and
3.2.5 which may be asserted at any time.
Proeza's indemnity obligation to the Tower Indemnities and the Company
provided for in Section 6.1, together with the Company's indemnity obligations
to the Tower Indemnitees provided for in Section 6.3, shall not exceed
US$25,000,000.
Notwithstanding anything to the contrary set forth herein, the
limitations set forth in (iii) above shall not apply to breaches of or
inaccuracies in the representations and warranties set forth in Sections 3.2.13,
3.2.2, 3.2.3 (with respect to clause (A)), 3.2.4 and 3.2.5.
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TOWER.
Tower shall have no obligation to indemnify, in the aggregate, any
Proeza Indemnitees or the Company, singly or collectively, pursuant to Section
6.2 until the aggregate indemnification claims pursuant to Section 6.2, but for
this sentence, exceed the Threshold Amount (and also excluding all Claims for
amounts less than US$100,000, none of which shall in any event be cognizable
hereunder or count towards the Threshold Amount); PROVIDED that once such amount
exceeds the Threshold Amount, the Proeza Indemnitees or the Company shall be
entitled to recover all amounts in excess of the Threshold Amount to which they
are entitled.
The indemnities provided for in Section 6.2(a) are expressly limited
to Claims which are asserted within eighteen months after the Closing Date,
except for Claims pursuant to Sections 3.1.2 and 3.1.3 (with respect to clause
(A)).
Tower's indemnity obligation to the Proeza Indemnitees provided for in
Section 6.2 shall not exceed US$25,000,000.
Notwithstanding anything to the contrary set forth herein, the
limitations set forth in (iii) above, shall not apply to breaches of or
inaccuracies in the representations and warranties set forth in Sections 3.1.2
and 3.1.3 (with respect to clause (A)).
THE COMPANY.
The Company shall have no obligation to indemnify, in the aggregate,
any Tower Indemnitees, singly or collectively, pursuant to Section 6.3 until the
aggregate indemnification claims pursuant to Section 6.1 and 6.3, but for this
sentence, exceed the Threshold Amount (and also excluding all Claims for amounts
less than US$100,000, none of which shall in any event be cognizable hereunder
or count towards the Threshold Amount), PROVIDED that once such amount exceeds
the Threshold Amount, the Tower Indemnitees shall be entitled to recover all
amounts in excess of the Threshold amount to which they are entitled.
The indemnities provided for in Section 6.3(a) are expressly limited
to Claims which are asserted within eighteen months after the Closing Date.
The Company's indemnity obligations to the Tower Indemnitees provided
for in Section 6.3, together with Proeza's indemnity obligation to the Tower
Indemnities and the Company Indemnitees provided for in Section 6.1, shall not
exceed US$25,000,000.
6.7 NO THIRD PARTY BENEFICIARIES.
The indemnities provided in this Article are given solely for the
purpose of protecting the parties to this Agreement and the Indemnitees and
shall not extend or be deemed extended to, or interpreted in a manner to confer
any benefit, right or cause of
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Action upon, any other Person.
6.8 EXCLUSIVE REMEDY.
The indemnification provisions set forth in this Article shall be a
party's sole remedy for any Claims relating to the Transactions other than
claims for intentional misrepresentation, and other than claims for enforcement
of Section 7.4.
ARTICLE VII
MISCELLANEOUS
7.1 NO THIRD PARTY BENEFICIARIES.
This Agreement is not intended to confer any benefits upon, or create
any rights in favor of, any Person other than the parties hereto and the
Indemnitees.
7.2 NOTICES.
ADDRESSES. All notices to be provided pursuant to this Agreement (and
any consents permitted by the terms of this Agreement) shall be in writing and
delivered by hand, or sent by telecopy, air courier or registered mail, return
receipt requested, as follows:
If to Proeza, to:
Promotora de Empresas Zano, S.A. de C.V.
Oficinas Corporativas
Constitucion No. 405 Pte.
Monterrey N. L. C. P. 64000
Mexico
Attention: Mr. Enrique Zambrano
Tel: (528) 369-7000
Fax: (528) 342-869
With a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich, Esq.
Tel: (212) 403-1000
Fax: (212) 403-2000
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If to Tower, to:
Tower Automotive, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: President
Tel: (612) 332-2335
Fax: (612) 332-2012
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Tel: (312) 861-2000
Fax: (312) 861-2200
If to the Company, to:
Metalsa S.A. de C.V.
Ave. Churubusco 3890 Nte.
Monterrey, N.L.
Mexico 66490
Attention: Mr. Antonio Zarate
Tel: (528) 369-7101
Fax: (528) 369-7009
with a copy to Proeza at the address (and with such copies as are)
noted above.
The addresses and facsimile numbers for notifications given pursuant to this
Agreement may be changed by means of a written notice given to the other parties
at least 15 days prior to the effective date of such change.
EFFECTIVENESS. Any notice delivered pursuant to Section 7.2.1 shall be
deemed to have been given on receipt.
7.3 ASSIGNMENT.
Except as specifically provided herein, no rights or obligations under
this Agreement may be assigned or delegated by any party without the prior
written consent of the other parties, except that Proeza and Tower shall be able
to assign its rights and obligations under this Agreement to a wholly owned
subsidiary (but provided that no such assignment shall relieve Proeza or Tower
of any liability hereunder).
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1 RESOLUTION OF DISPUTES.
DIRECT NEGOTIATION. The parties encourage the prompt and equitable
settlement of all controversies or claims (a "DISPUTE") between or among the
parties including but not limited to those arising out of or relating to the
management of the Company and, this Agreement or any related agreements or
instruments ("SUBJECT DOCUMENTS"), including any claim based on or arising from
an alleged tort. At any time, either party can give the other written notice
that it desires to settle a Dispute. Within fifteen days of delivery of such
notice, the parties agree to cause the President of the Company and officers of
Tower and Proeza, having authority to resolve such differences, to meet for two
out of four continuous days. If the Dispute is not settled in such period, then
beginning fifteen business days after the end of such meeting, their Chief
Executive Officer or Chairman of the Board of each of Tower and Proeza shall
meet for two out of four continuous days and attempt to resolve the differences
causing the Dispute. The period from the date of delivery of notice of under
this Section 7.4.1 through the termination of the meeting between the Chief
Executive Officers of Tower and Proeza is referred to as the "NEGOTIATION
PERIOD".
MEDIATOR. If the Dispute is not resolved during the Negotiation
Period, the parties agree to submit their Dispute to a mediator to work with
them to resolve their differences. Such mediator shall be selected by mutual
agreement of parties. If they are unable to agree on a mediator, the President
of the American Mediation Association shall select a mediator who may be
rejected by a party only for bias.
MEDIATION PROCEDURE. The mediation shall be conducted pursuant to the
rules generally used by the mediator in the mediator's practice, subject to the
following:
The mediator shall act as an advocate for resolution and shall use his
or her best efforts to assist the parties in reaching a mutually acceptable
settlement. The mediator may suggest ways of resolving the Dispute, but may not
impose his or her own judgment on the issues or that of the parties. The
mediator shall not have the authority to decide any issue for the parties, but
will attempt to facilitate the voluntary resolution of the Dispute by the
parties.
Each Person participating in the mediation shall have authority to
settle, and all Persons necessary to the decision to settle shall be present
during the entire mediation session or sessions.
The mediation shall take place at a time and convenient location
agreeable to the mediator and the parties, as the mediator shall determine;
provided that such mediation shall take place no later than fifteen days after
the termination of the Negotiation Period and shall take place over two
consecutive days.
Mediation sessions shall be private, and only the parties and their
representatives may attend the mediation sessions. Other Persons may attend the
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mediation sessions only with the written permissions of the parties and with the
consent of the mediator.
There shall be no stenographic record of the mediation process, and no
person shall tape record any portion of the mediation sessions.
No subpoenas, summons, complaints, citations, writs, or other process
may be served at or away from the site of any mediation session upon any Person
who then is entering, on the way to, in attendance or leaving the session.
The parties shall participate in the mediation proceeding in good
faith with the intention to settle.
PROVISION OF INFORMATION TO MEDIATOR. No later than three business
days prior to the mediation, each party shall deliver to the mediator all
information reasonably required for the mediator to understand the issues
presented and a confidential memorandum (not to exceed five pages with normal
type size and margins) setting forth the following:
Identification of the matters in Dispute;
Concise statement of points (factual, legal, practical) that such
party believes enhances its chance of achieving a favorable outcome of the
Dispute;
History of settlement discussions and outstanding offers of
settlement; and
The above rules may be modified or amended with the written consent of
the parties.
RELEASE. The mediator shall not be a necessary or proper party in
judicial proceedings relating to the mediation. Neither the mediator, the firm
employing the mediator, nor the organization providing the mediator shall be
liable to any party for any acts or omissions in connection with any mediation
conducted pursuant to this Section 7.4.
COMPROMISE NEGOTIATION. The mediation is a compromise negotiation for
purposes of the American Mediation Association and is an alternative dispute
resolution procedure subject to New York law. The entire procedure is and shall
be confidential. All conduct, statements, promises, offers, views and opinions,
whether oral or written, made in the course of the mediation by any of the
parties, their agents, employees or other representatives and by the mediator,
who is the parties' joint agent for purposes of these compromise negotiations,
are confidential and shall, in addition where appropriate, be deemed to be work
product and privileged. Such conduct, statements, promises, offers, views and
opinions shall not be discoverable or admissible for any purposes, including
impeachment, if any litigation or other proceedings involve the
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parties and shall not be disclosed to anyone not an agent, employee, expert or
other representative for any of the parties. Evidence otherwise discoverable or
admissible is not excluded from discovery or admission as a result of its use in
the mediation. Confidential Information disclosed to the mediator by the
parties or by witnesses in the course of the mediation shall not be divulged by
the mediator. All records, reports or other documents received by the mediator
while serving in that capacity shall be confidential. The mediator shall not be
compelled to divulge such records or to testify with regard to the mediation in
any adversary proceeding or judicial forum.
COSTS OF MEDIATION. The parties shall bear their respective costs
incurred in connection with the mediation described in this Section 7.4, except
that the parties shall share equally the fees and expenses of the mediator, the
costs of obtaining the facility for the mediation, and the fees and expenses of
any experts employed at the request of the mediator.
TERMINATION OF MEDIATION. The mediation shall be terminated upon the
first to occur of the following:
By the execution of a settlement agreement resolving the Dispute by
the parties;
By a written declaration of the mediator to the effect that further
efforts at mediation are no longer worthwhile; or
After the completion of two full days of mediation sessions, by
written declaration of a party or parties to the effect that mediation
proceedings are terminated.
MANDATORY BINDING ARBITRATION. If the Dispute is unresolved prior to
the end of the mediation period, any and all claims, demands, causes of action,
Disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("ARBITRATION CLAIMS"), even though some or all
of such Arbitration Claims allegedly are extracontractual in nature, whether
such Arbitration Claims sound in contract, tort or otherwise, at law or in
equity, whether provided by statute or the common law, for damages or any other
relief, shall be arbitrated under the law, rules, regulations, jurisdiction and
venue of the International Chamber of Commerce in Paris, France (such
proceedings shall be conducted in the English language and all of the parties
hereto specifically waive any and all other jurisdictions in Mexico, or in the
United States of America, to which they may have a right by virtue of their
domicile).
The arbitration shall be held before a panel of three arbitrators
consisting of one arbitrator selected by each of the affected parties, within
three days of the termination of the mediation under this Section 7.4 and the
third then selected by those two arbitrators; provided that if there are more
than two parties involved in such arbitration, Proeza and the Company will
choose one arbitrator and Tower will choose the other. If the party appointed
arbitrators cannot agree on a third arbitrator within five days
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of their appointment, one shall be appointed by the International Chamber of
Commerce in Paris, France within seven days after being so notified. All
arbitrators shall be knowledgeable regarding the automotive industry and in
international business transactions.
The parties to such arbitration shall equally bear the costs and fees
of the arbitration and each party shall bear its own legal expenses. The
parties to such arbitration agree that a court reporter will record the
arbitration proceedings and that the reporter's record will be the agreed to
transcript of the proceedings. The parties to such arbitration will share the
expenses of this recorder.
The arbitrator(s) shall specify the basis for his/her/their decision,
the basis for the damages awarded and a breakdown of the damages awarded, and
the basis of any other remedy authorized under this Section 7.4. The decision
of the arbitrator(s) shall be considered as a final and binding resolution of
the disagreement, shall not be subject to appeal and may be entered as a
judgment in any court of competent jurisdiction. Each party agrees to submit to
the jurisdiction of any such court for purposes of the enforcement of any such
decision, award, order or judgment.
No party shall sue the other except for enforcement of this Section
7.4 or for enforcement of the arbitrator's decision if the other party is not
performing in accordance with the arbitrator's decision.
Any arbitration proceeding hereunder shall be conducted on a
confidential basis.
The parties to such arbitration shall agree upon what, if any,
discovery shall be permitted. If the parties to such arbitration cannot agree
on the form of discovery within ten days after the appointment of the
arbitrator(s), then there shall be neither discovery nor the issuance of
subpoenas. In no event, however, shall any such discovery take more than 30
days.
The arbitration shall take place over 10 days beginning on the later
of (i) 10 days after the determination of discovery rules or (ii) the date that
discovery terminates.
The arbitrators shall hand down their decision in writing within 15
days after the termination of the arbitration hearings.
The duty of the parties to arbitrate any Dispute within the scope of
this Section 7.4.9 shall survive the expiration or termination of this Agreement
for any reason.
The discretion of the arbitrator(s) to fashion remedies hereunder
shall be no broader than the legal and equitable remedies available to a court,
unless the parties expressly state elsewhere in this Agreement that the
arbitrator use broader or narrower legal and equitable remedies than would be
available to the arbitrator in this Section 7.4.9
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and, if applicable, elsewhere in this Agreement. This Section 7.4.9 shall
govern if any conflict arises between this Section and any other remedy terms in
this Agreement.
CONFLICTING PROVISIONS. To the extent any provision of this Article
is different than the other terms in this Agreement, the terms of this Article
shall prevail.
WAIVER OF JURY TRIAL. Without limiting the obligation to mediate and
arbitrate all Disputes arising under this Agreement, THE PARTIES EACH HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY
DEALINGS AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. The
scope of this waiver is intended to be all encompassing of any and all Disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. The parties each acknowledge that
this waiver is a material inducement to enter into a business relationship and
that they will continue to rely on the waiver in their related future dealings.
Each party further represents and warrants that it has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING TO
THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of any legal action,
subject to the terms and conditions of Section 7.4.9(iv), this Agreement may be
filed as a written consent to trial by a court.
7.5 GOVERNING LAW.
Regardless of the place of execution, this Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the conflict of laws principles thereof.
7.6 HEADINGS.
The headings contained in this Agreement are for convenience of
reference only and shall not affect, in any way, the meaning or interpretation
of this Agreement.
7.7 ENTIRE AGREEMENT.
This Agreement the Exhibits and Annexes hereto and thereto and any
agreement signed of even date herewith by and among the parties hereto, set
forth the entire understanding and agreement among the parties as to matters
covered herein and therein and supersede any prior understanding, agreement or
statement (written or oral) of intent, including the Letter of Intent, dated
July 17, 1997.
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7.8 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, all of
which taken together shall constitute one instrument.
7.9 AMENDMENTS; WAIVERS; CONSENTS.
To be binding, any amendment of this Agreement must be effected by
an instrument in writing signed by all of the parties. No further formalities
by the parties shall be required to amend this Agreement. Rights hereunder
shall not be waived and no consent herein shall be effective except pursuant to
a writing signed by the party against which enforcement of the waiver or consent
is sought.
7.10 LIMITATION ON DAMAGES.
Notwithstanding anything to the contrary contained in this
Agreement, no party shall be liable to the other parties for any special or
punitive damages.
7.11 TERMINATION.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
by and mutual written consent of Proeza, the Company and Tower;
by any of Proeza, the Company or Tower if the Closing has not been
consummated within 120 days of the date of this Agreement (the "FINAL
TERMINATION DATE");
by any of Proeza, the Company or Tower if there shall be any law or
regulation of any competent authority that makes consummation of the
issuance and subscription pursuant to Section 2.1 illegal or otherwise
prohibited or if any judgment, injunction, order or decree of any competent
authority prohibiting such transactions is entered and such judgment,
injunction, order or decree shall become final and nonappealable.
(b) If this Agreement is terminated pursuant to this Section 7.11,
this Agreement shall become void and of no effect with no liability on the part
of any party hereto, except with respect to any willful breach hereof, and
except that the agreements contained in Sections 4.5 and 4.6 shall survive the
termination hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the day and year
first above written.
PROMOTORA DE EMPRESAS ZANO, S.A. DE C.V.
By:
Name:
Title:
R. J. TOWER CORPORATION
By:
Name:
Title:
METALSA, S.A. DE C.V.
By:
Name:
Title:
<PAGE>
EXHIBIT 99.1
DATE: October 9, 1997
FROM: FOR:
Padilla Speer Beardsley Inc. Tower Automotive, Inc.
224 Franklin Avenue West 4508 IDS Center
Minneapolis, Minnesota 55404 Minneapolis, Minnesota 55402
John Mackay (612) 871-8877 Scott Rued (612) 342-2310
FOR IMMEDIATE RELEASE
TOWER AUTOMOTIVE, INC.
COMPLETES MEXICAN PARTNERSHIP
ARRANGEMENT
MINNEAPOLIS, October 9 - Tower Automotive, Inc. (NYSE: TWR) and Promotora
de Empresas Zano, S.A. de C.V., today announced that they have completed an
agreement to become partners in Metalsa, the largest vehicle frame and
structures supplier in Mexico, under which Tower acquired a 40 percent interest
in Metalsa. In addition, the parties have entered into a technology sharing
arrangement that will enable both companies to utilize the latest available
product and process technology.
Metalsa's operations are headquartered in Monterrey, Mexico, with
manufacturing facilities in Monterrey and San Luis Potosi, Mexico. Revenues for
the year ended December 31, 1996 and eight months ended August 31, 1997 were
$160 million and $125 million, respectively. Customers include Chrysler,
General Motors, Ford, Nissan and Mercedes Benz.
Tower Automotive, Inc., produces a broad range of stamped and welded
assemblies for vehicle body structures and suspension systems for the automotive
manufacturers, including Ford, Chrysler, General Motors, Honda, Toyota, Nissan,
Mazda and Fiat. Products include body structural assemblies such as pillars and
package trays, control arms, suspension links, engine cradles and full frame
assemblies. The Company has its operating headquarters in Grand Rapids, Mich.,
and a corporate office in Minneapolis, Minn.
