Exhibit 10.1


 


PURCHASE AND SALE AGREEMENT WITH RESERVE OF
OWNERSHIP (HEREINAFTER REFERED TO AS “AGREEMENT”) ENTERED INTO BY AND
BETWEEN CHEROKEE ELECTRÓNICA, S.A. DE C.V., REPRESENTED IN THIS ACT BY MESSRS.
JEFFREY FRANK AND ADOLFO ARTECHE, (HEREINAFTER REFERED TO AS “SELLER”);
AND INMOBILIARIA HONDARRIBIA, S.A. DE C.V., REPRESENTED IN THIS ACT BY MR. JUAN
MANUEL GÓMEZ ARREOLA (HEREINAFTER REFERED TO AS “BUYER”), IN ACCORDANCE
WITH THE FOLLOWING REPRESENTATIONS AND CLAUSES:


REPRESENTATIONS


I. The Seller  hereby
represents through its representative that as of the date hereof:


A.           It
is a variable capital limited liability company (sociedad de
responsabilidad limitada de capital variable), duly organized and
validly existing, under the laws of the United Mexican States (hereinafter, “México”),
as it is evidenced under the public deed number 20,612 dated June 8, 1988,
granted before the testimony of Mr. Álvaro Villalba Valdés, Notary Public
number 12 of the Judicial District of Texcoco, which first testimony was duly
registered in the Public Registry of Commerce. A copy of such public deed is
attached hereto as Exhibit A.


B.             As
it is evidenced by public deed number 4,379 dated February 14, 2007, granted
before the testimony of Mr. Jaime Maytorena Martínez-Negrete, Notary Public
number 86 of the city of Guadalajara, State of Jalisco, which first testimony
is pending to be registered in the Public Registry of Commerce, the execution
of this Agreement was approved by means of a board of director’s meeting of the
Seller. A copy of such public deed is attached hereto as Exhibit B.


C.             Its
legal representative has the sufficient and necessary authority for the
execution of this Agreement, authorities that as to the date hereof have not
been modified, limited or revoked in any manner, as it is evidenced in the
public deeds abovementioned.


D.            By
means of the public deeds attached hereto as Exhibit “C”, the Seller evidences
the acquisition of the real state property with a total surface area of
6,900.06 m2 (Six thousand nine hundred square meters 06/100), with a
construction with a total surface area of 3,614.20 m2 (three thousand six
hundred and fourteen square meters 20/100) (hereinafter, the “Property”),
A copy of such public deed is attached hereto as Exhibit
C.


E.              It
is the owner of the assets and equipment referred to in Exhibit “D”
hereof (the “Equipment”), which is currently located in the Property.
The property to such Equipment is dully evidenced in the invoices which form
part of such Exhibit “D” hereof.



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F.              As
for the date of this Agreement, the Property and Equipment are free form liens
and encumbrances, nor subject to any legal procedure of any nature which may
become in an obstruction for the transfer of such under this Agreement by the
Buyer. The Seller evidences such condition in respect to the Property, by means
of the No-Liens Certificates, which are attached hereto as Exhibit “E”.


G.             As
of the date of his Agreement, the Property nor the Equipment have not been
sailed, offered nor in any other way compromised in respect to its property nor
use to any third party; and consequently, as of this date no legal impediment
exists in order for Seller to transfer the Property and the Equipment in favor
of  Buyer.


H.            As
of the date of this Agreement, the Property is in compliance with all the tax
payments, rights and other contributions related to the same, including without
limitation, such payments in respect of property tax, electric and water
services, as such are dully evidenced hereto in Exhibit “F”.


I.                 Wishes
to execute this Agreement in order to transfer the title of the Property and
Equipment, in favor of the Buyer, pursuant to the terms and conditions hereto.


II. The Buyer  hereby
represents through its representative that as of the date hereof:


A.           It
is a variable capital limited liability company (sociedad de
responsabilidad limitada de capital variable), duly organized and
validly existing, under the laws of México, as it is evidenced according to
public deed number 1,018 dated January 29, 2007, granted before the testimony
of Mr. Jorge Gerardo Ortiz Monasterio, Public Broker number 43 of the state of
Jalisco, which first testimony is currently pending to be registered before the
Public Registry of Commerce. A copy of such public deed is attached hereto as Exhibit G.


B.             Its
legal representative has the sufficient and necessary authority for the
execution of this Agreement, as it is evidenced by public deed abovementioned,
authorities that as to the date hereof have not been modified, limited or
revoked in any manner.


C.             Wishes
to execute this Agreement in order to purchase the Property and Equipment.


By means of the representations above, the parties
hereby agree to enter into this Agreement, in accordance with the following:


C L A U S E S


FIRST. Purpose.



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Seller hereby sells to the Buyer, and the Buyer
acquires for itself, the Property and Equipment, with reserve of ownership (reserva de dominio), in its present conditions (ad corpus).


SECOND.
Price


The
parties hereby agree that the Buyer will pay in favor of the Seller as a
purchase price for the acquisition of the Property and Equipment in the total
amount of $13,500,000.00 (thirteen million and five hundred thousand pesos
00/100 M.N.) (the “Price”), which will be paid as provided in clause
three below, by means of a confirmed wire transfer in immediately available
funds in favor of the Seller in the following account:




	
  Client:

  	
   

  	
  Cherokee Electrónica, S.A. de C.V.

  
	
  Bank:

  	
   

  	
  Banco Santander-Serfin, S. A.

  
	
  Account Number:

  	
   

  	
  655-00742092

  
	
  Account “CLABE”:

  	
   

  	
  014320655007420924

  
	
  Branches:

  	
   

  	
  Plaza del Sol, número 4662.

  
	
  City:

  	
   

  	
  Guadalajara, Jalisco, México.

  






The parties hereby agree
that the Price does not include the payment of any tax, including without
limitation, the payment of the Value Added Tax (the “VAT”) as set forth
by the Value Added Tax Regulation (Ley del Impuesto al Valor
Agregado) in force. In consequence, Buyer hereby agrees to pay in
favor of Seller at the formalization date of this Agreement before Notary
Public, the amount of VAT which corresponds to the current appraisal value of
the constructions over the Property (the “Construction Value”) and to
the current value of the Equipment; such amounts will be withheld by Seller for
its payment to the corresponding tax authorities.


In order to determine payment of the VAT over the
Construction Value, the Buyer is obligated to perform all necessary acts in
order to deliver to Seller, in anticipation to the formalization of this
Agreement before Notary Public, of an appraisal of the construction over the
Property, which shall be previously approved by the corresponding tax
authorities. Additionally, the Buyer hereby agrees to pay the Seller any
difference that could exist in the future regarding such payment of the VAT, in
case of any change in the current applicable tax regulations or for any other
reason.


THIRD. Price Payment Form


The
parties hereto agree that the Price will be paid to the Seller as follows:


(i)             15%
(fifteen per cent) of the Price, that is, the amount of $2,025,000.00 M.N. (Two
Million Twenty five Thousand pesos 00/100 M.N.), is paid at the execution date
of this Agreement to the Seller; in accordance to that, this agreement will be
the receipt of payment.


 



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(ii) 85% (eighty five per cent) remainder of the Price, that is, the
amount of $11,475,000.00 M.N. (Eleven Million four hundred seventy five
thousand pesos 00/100 M.N.), plus the total amount which corresponds to the VAT
of the Construction Value and Equipment, will be paid to the Seller on April 30,
2007, date on which the parties will formalize this Agreement in a public
instrument and will perform the delivery of the invoices which evidence the
property of the Equipment.


FOURTH. Clearance of Property’s title.


Seller hereby agrees that it shall reimburse and be
responsible in terms of the applicable regulation for any existing encumbrance
in respect to the Property. Additionally, Seller will transfer the Property and
Equipment, free form liens and encumbrances, nor subject to any legal procedure
of any nature which may become in an obstruction for the transfer, in
compliance with all the tax payments, rights and other contributions related to
the same, including without limitation, such payments in respect of property
tax, electric and water services, as it will evidence such conditions by
delivering to Buyer of the corresponding documents upon formalization of this
Agreement.


FIFTH. Agreement Formalization


The
parties hereby agree to formalize this agreement before a Mexican Notary
Public, on April 30, 2007, date in witch the Buyer will pay the Seller the
remainder 85% (eighty five per cent) of the Price and the total amount which
corresponds to the payment of the VAT.


The
parties hereby agree that such formalization of this agreement in favor of
Buyer, may be granted in favor of such third party appointed by Buyer with at
least 5 days in anticipation to the formalization date of this agreement,
before one of the following Mexican Notary Public, as appointed by Seller: i)
Mr. Juan Carlos Vázquez Martín, Notary Public number 87 in the district of
Guadalajara, Jalisco, or ii) Mr. Pablo González Vázquez, Notary Public number
35 in the district of Zapopan, Jalisco, or iii) Mr. Ernesto Macías Ávila,
Notary Public number 5 in the district of Chapala, Jalisco.


The
Seller hereby grants in favor of such Notary Public to be appointed, all the
necessary faculties in order to perform the necessary actions for the execution
of the corresponding public deed, and to obtain any authorizations which may be
required under the applicable regulation.


SIXTH. 
Reservation of ownership and possession


In
accordance with to article 2312 of the Civil Federal Code (Codigo Civil Federal) in force, the Seller
reserves for itself the ownership and possession of the property until the Buyer
pays in full the Price and VAT in pursuit to the terms of this agreement.


The
Parties may not sell, transfer, encumber or trespass the possession, domain, or
any rights pertaining to neither the Property nor the Equipment until the
Price, VAT and all 



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other
obligations arising from this Agreement are fulfilled. The Parties acknowledge
knowing all the civil and criminal responsibilities and penalties which may
arise from the breach of this provision. Notwithstanding the above, such
prohibition shall not limit the right of Buyer to formalize this Agreement in
favor of such third party appointed by it, once it has complied with all of the
obligations set forth in this Agreement.


Moreover, the parties agree that the Seller reserves
for itself the possession of the Property and Equipment, which shall be
delivered by Seller to Buyer upon payment in full of the Price and VAT, and
until this Agreement is formalized and invoices evidencing the property of the
Equipment have been delivered.


SEVENTH.  Penalty.


Any of the Parties may, at its election, may
anticipately terminate this Agreement, being such party entitled and able to
demand the fulfillment of the obligations by the other party, or to terminate
this Agreement, in any of the following events:


a)              If
the Buyer tries to assign or encumber, in any form, the rights which may arise
from this Agreement, without the written consent from the Seller before the
formalization of this Agreement;


b)             If
the Buyer defaults with any of its obligations under this Agreement;


c)              Upon
the occurrence of an event by virtue of which the payment obligations set forth
in this Agreement may be accelerated in terms of the applicable regulation;


d)             If
the Seller defaults with any of its obligations under this Agreement,
including, without limitation, the existence of any lien or encumbrance of the
Property and Equipment.


In case that the Agreement is terminated due to any of
the aforementioned causes, Seller shall be obligated to reimburse in full the
Price and VAT received from Buyer, except if such termination results from
Buyers’ default of any of its obligations and in which Seller decides to demand
the fulfillment of Buyer’s obligations in accordance with article 1784 of the
Civil Code of Jalisco and its correlative article in the Mexican state’s
regulation. In such case, such reimbursement shall be performed in the
following 30 days after the termination of this Agreement. If applicable, if
Seller does not perform such reimbursement in such period, Seller will be
obligated to pay monthly interests on a 3% rate over such amounts, for each
month of delay in such reimbursements.


EIGHTH.  Taxes and expenses.


The parties hereby agree that any and all expenses and
fees arising from the formalization of this Agreement before notary public, its
registry before the Public Registry of Property (Registro Público de la Propiedad) and all taxes arising from
the acquisition of the Property and Equipment under this Agreement, will be
beard exclusively by the Buyer. More over, the Seller will be responsible for
the payment of the income taxes arising from 



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the sale of the Property and the payment of the VAT to the
corresponding tax authorities once such VAT is paid in full pursuant to the
provisions of this Agreement by Buyer.


NINTH. Current status of the Property and
Equipment.


The Buyer hereby agrees and confirms that he has
performed all necessary diligence and examinations over the Property and the
Equipment. Consequently, it agrees to purchase the Property in its current
conditions, “as is” and “where is”. For these purposes, the parties hereby
agree that Seller will deliver a document to Buyer evidencing the existence of
the Equipment and its location in the Property before the formalization of this
Agreement. Accordingly, Buyer hereby waives any present or future right that it
may be entitled with, to file any claim, complaint or action of any nature
against Seller in respect to any hidden defects attributable to the Property
and Equipment. Therefore, Buyer hereby releases, discharges and disclaims
Seller in respect to any present or future right that it may be entitled with
thereof.


TENTH. Notices.


All notices or other communications which are required
or permitted hereunder shall be in writing and shall be deemed sufficiently
given if performed to the addresses set forth below or such other address as
the addressee may have specified in a notice duly given to sender:


If to the Seller

Avenida Patria No. 179

Municipality of “El Manantial”

Guadalajara, Jalisco

México. C.P. 44970.


If to the Buyer

Calzada Independencia Sur no. 574

Municipality: Centro

Guadalajara, Jalisco.

México.


ELEVENTH. Applicable
law and jurisdiction.


This Agreement will be governed by and construed in
accordance with the Mexican applicable laws. For the interpretation and compliance
with the terms of this agreement, the Parties expressly agree to submit
themselves to the jurisdiction of the competent courts of the city of
Guadalajara, State of Jalisco, waiving to any other preferential jurisdiction
by means of their present or future domiciles or otherwise.


TWELVETH. Amendments.


Neither party hereto shall be bound by any
termination, amendment, supplement, waiver or modification of any term hereof
unless such party shall have consented thereto in writing. This Agreement may
not be amended, modified or supplemented without the consent of both of the
parties hereto.



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THIRTEENTH.  Headings. 


The headings used in this Agreement are for ease of
reference only and shall not be used to interpret or to construe any of the
provisions of this Agreement.


FOURTEENTH. Severability.


In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.


FIFTEENTH. Entire
Agreement.


This Agreement (including the Exhibits attached
hereto) contains the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements, negotiations and
understandings.


This Agreement is
executed in Spanish language. Any translation into English of this Agreement
shall be used by the parties for information purposes only.


IN WITNESS WHEREOF, each
of the parties hereto, intending to be legally bound, have caused this
Agreement (including its exhibits) to be duly executed on its behalf on
February 22, 2007.


 


	
  Seller

  Cherokee Electrónica, SA. de C.V.

  	
   

  	
  Buyer

  Inmobiliaria Hondarribia, S.A. de C.V.

  
	
   

  	
   

  	
   

  
	
  /s/ Jeffrey
  Frank 

  	
   

  	
   

  
	
  By: Jeffrey Frank

  	
   

  	
   

  
	
  Position: legal representative

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Adolfo
  Arteche

  	
   

  	
   

  
	
  By: Adolfo Arteche

  	
   

  	
   

  
	
  Position: legal representative

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Juan Manuel Gómez Arreola

  
	
   

  	
   

  	
  By: Juan Manuel
  Gómez Arreola

  
	
   

  	
   

  	
  Position: legal
  representative

  



 



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