EXHIBIT 99.2
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AMENDED AND RESTATED MEXICAN ASSET PURCHASE AGREEMENT
DATED AS OF JUNE 25, 2002
BY AND BETWEEN
CONEXANT SYSTEMS, INC.
AND
ALPHA INDUSTRIES, INC.
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TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS ............................................ 1
ARTICLE II SALE AND PURCHASE OF ASSETS ............................ 11
Section 2.1. Purchase and Sale of Assets ............................ 11
Section 2.2. Purchase Price ......................................... 11
Section 2.3. Assumption of Liabilities .............................. 11
Section 2.4. Allocation of Purchase Price ........................... 11
ARTICLE III SELLER'S REPRESENTATIONS AND WARRANTIES ................ 12
Section 3.1. Corporate Status, Good Standing and Authorization ...... 12
Section 3.2. Authority; Enforceability .............................. 12
Section 3.3. Consents; No Conflicts or Violations ................... 12
Section 3.4. Permits ................................................ 13
Section 3.5. Compliance with Laws ................................... 13
Section 3.6. Absence of Certain Changes or Events ................... 14
Section 3.7. Litigation ............................................. 14
Section 3.8. Tax Matters ............................................ 14
Section 3.9. Assumed Contracts ...................................... 15
Section 3.10. No Brokers ............................................. 15
Section 3.11. Title to Properties .................................... 15
Section 3.12. Sufficiency of Assets .................................. 15
Section 3.13. Insurance .............................................. 15
ARTICLE IV PURCHASER'S REPRESENTATIONS AND WARRANTIES ............. 16
Section 4.1. Organization of Purchaser .............................. 16
Section 4.2. Authority; Enforceability .............................. 16
Section 4.3. Consents; No Conflicts or Violations ................... 16
Section 4.4. Litigation ............................................. 17
Section 4.5. No Brokers ............................................. 17
ARTICLE V COVENANTS .............................................. 17
Section 5.1. Access ................................................. 17
Section 5.2. Reasonable Best Efforts ................................ 19
Section 5.3. Conduct of Business by Seller .......................... 20
Section 5.4. Supplements to Schedules ............................... 21
Section 5.5. Insurance .............................................. 21
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Page No.
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ARTICLE VI CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS ..... 23
Section 6.1. HSR Act ................................................ 23
Section 6.2. Mexican Competition Commission Approval ................ 23
Section 6.3. No Injunctions or Restraints, Illegality ............... 23
Section 6.4. Completion of the Merger ............................... 24
Section 6.5. Completion of the Stock Purchase ....................... 24
ARTICLE VII ADDITIONAL CONDITIONS TO SELLER'S AND PURCHASER'S
OBLIGATIONS ........................................... 24
Section 7.1. Conditions to Seller's Obligations ..................... 24
Section 7.2. Conditions to Purchaser's Obligations .................. 25
ARTICLE VIII CLOSING ................................................ 25
Section 8.1. Deliveries by Seller ................................... 25
Section 8.2. Deliveries by Purchaser ................................ 26
ARTICLE IX INDEMNIFICATION ........................................ 26
Section 9.1. Indemnification by Seller .............................. 26
Section 9.2. Indemnification by Purchaser ........................... 27
Section 9.3. Limitations on Indemnification Obligations ............. 27
Section 9.4. Procedures Relating to Indemnification ................. 29
Section 9.5. Sole and Exclusive Remedy .............................. 31
Section 9.6. Termination of Indemnification Obligations ............. 31
Section 9.7. Effect of Investigation ................................ 31
Section 9.8. Tax Matters ............................................ 32
ARTICLE X TAX MATTERS ............................................ 32
Section 10.1. Preparation and Filing of Tax Returns .................. 32
Section 10.2. Consistent with Past Practice .......................... 32
Section 10.3. Payment of Taxes ....................................... 32
Section 10.4. Allocation of Straddle Period Taxes .................... 32
Section 10.5. Tax Refunds and Carrybacks ............................. 33
Section 10.6. Tax Indemnification .................................... 34
Section 10.7. Notice of Indemnity .................................... 35
Section 10.8. Payments ............................................... 35
Section 10.9. Tax Contests ........................................... 36
Section 10.10. Cooperation and Exchange of Information ................ 36
Section 10.11. Mexican Income Taxes; Customs Duties; Advanced
Pricing Agreement; Transfer, Sales and Use Taxes ...... 36
Section 10.12. Tax Records ............................................ 39
Section 10.13. Dispute Resolution ..................................... 39
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Page No.
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ARTICLE XI TERMINATION ............................................ 40
Section 11.1. Voluntary Termination .................................. 40
Section 11.2. Automatic Termination .................................. 40
Section 11.3. Effect of Termination .................................. 40
ARTICLE XII MISCELLANEOUS .......................................... 40
Section 12.1. Assignment ............................................. 40
Section 12.2. Notices ................................................ 41
Section 12.3. Choice of Law; Dispute Resolution ...................... 42
Section 12.4. Survival of Representations and Warranties and Covenants 43
Section 12.5. Limitations on Representations and Warranties .......... 43
Section 12.6. Entire Agreement; Waivers .............................. 43
Section 12.7. Counterparts ........................................... 43
Section 12.8. Severability ........................................... 43
Section 12.9. Headings ............................................... 44
Section 12.10. Expenses ............................................... 44
Section 12.11. Amendments ............................................. 44
Section 12.12. Parties in Interest .................................... 44
Section 12.13. Schedules and Exhibits ................................. 44
Section 12.14. Compliance with Bulk Sales Laws ........................ 44
Section 12.15. Savings Clause ......................................... 44
Section 12.16. Cooperation Following the Closing ...................... 45
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AMENDED AND RESTATED MEXICAN ASSET PURCHASE AGREEMENT
AMENDED AND RESTATED MEXICAN ASSET PURCHASE AGREEMENT (this
"Agreement"), dated as of June 25, 2002, by and between Conexant Systems, Inc.,
a Delaware corporation ("Seller"), and Alpha Industries, Inc., a Delaware
corporation ("Purchaser"). Seller and Purchaser are sometimes hereinafter
collectively referred to as the "Parties" and individually as a "Party."
RECITALS
A. Seller and Purchaser are parties to an agreement (the "Existing
Agreement"), pursuant to which Seller agreed to sell, and Purchaser agreed to
purchase (directly or indirectly), certain tangible personal property located at
the Facility (as defined below), including machinery and equipment, that is used
by Maquiladora (as defined below) owned by Seller in the conduct of its business
and Seller is a party to certain contracts relating to Maquiladora.
B. Seller and Purchaser wish to amend the Existing Agreement.
C. Concurrently herewith, Seller and Purchaser are entering into a
Mexican Stock Purchase Agreement (the "Mexican Stock Purchase Agreement"),
pursuant to which Seller is selling, and Purchaser is purchasing, all of
Seller's right, title and interest in and to the shares of capital stock of
Maquiladora owned by Seller.
D. Seller desires to sell all of Seller's right, title and interest
in and to the Assets (as defined herein), and Purchaser desires to purchase the
Assets, all in accordance with the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the representations, warranties,
mutual covenants and promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings given those terms in this ARTICLE I or in the Section of this Agreement
referenced in
the definition provided for such term and all references to "the date of this
Agreement", "the date hereof", "a recent date" or similar references shall refer
or relate to the date as of which the Existing Agreement was originally executed
and delivered (December 16, 2001) and not the date as of which this Agreement
was amended and restated (June 25, 2002):
"Actually Realized" shall mean, for purposes of determining the
timing of any Taxes (or related Tax cost or benefit) relating to any payment,
transaction, occurrence or event, the time at which the amount of Taxes
(including estimated Taxes) payable by any Person is increased above or reduced
below, as the case may be, the amount of Taxes that such person would be
required to pay but for the payment, transaction, occurrence or event.
"Advanced Pricing Agreement" means the proposed transfer pricing
agreement among, Seller, Maquiladora, the United States Internal Revenue Service
and certain Mexican Tax authorities for transactions between Seller and
Maquiladora for the annual tax periods of Maquiladora commencing January 1, 2000
through January 1, 2004, which has been submitted to the United States Internal
Revenue Service and the appropriate Mexican Tax authorities.
"Affiliate" of a Person means any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" is defined in the first paragraph hereof.
"Assets" means all of Seller's right, title and interest in and to
(i) all tangible personal property (other than computer data, documents,
information, files, books and records), including Equipment, owned by Seller and
located at the Facility on the date hereof and used by Maquiladora in the
conduct of its business, together with prepaid expenses paid by Seller with
respect to such tangible personal property and all third party insurance
proceeds (if any) in respect of losses, liabilities or damage with respect to
such property arising out of insured incidents occurring after the date hereof
and prior to the Closing (to the extent Seller and its Affiliates have no
obligation to reimburse the insurer for such insurance proceeds), (ii) all
tangible personal property (other than computer data, documents, information,
files, books and records) owned by Seller and located at the Facility on the
Closing Date and used by Maquiladora in the conduct of its business which is
acquired by Seller after the date hereof and prior to the Closing and all third
party insurance proceeds (if any) in respect of losses, liabilities or
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damage with respect to such property arising out of insured incidents occurring
after the date hereof and prior to the Closing (to the extent Seller and its
Affiliates have no obligation to reimburse the insurer for such insurance
proceeds), (iii) the Assumed Contracts, (iv) the Books and Records and (v) all
third party insurance proceeds (if any) in respect of losses, liabilities or
damage with respect to the assets or properties of Maquiladora arising out of
insured incidents occurring after the date hereof and prior to the Closing (to
the extent Seller and its Affiliates have no obligation to reimburse the insurer
for such insurance proceeds), but, in each case, excluding (I) the Excluded
Assets and (II) all tangible personal property owned by Seller located at the
Facility and used by Maquiladora in the conduct of its business which is sold or
otherwise disposed of by Seller in the ordinary course of business consistent
with past practice and the terms of this Agreement from and after the date
hereof and prior to the Closing (and all insurance proceeds related to such
property). For clarification purposes, the term Assets does not include any
intangible property subject to Section 367(d) of the Internal Revenue Code
(other than any foreign goodwill, going concern value or operating intangibles
(within the meaning of Treas. Reg. Section 1.367(a) - 1T(d)(5)(ii) and (iii)).
"Assets Promissory Note" means a promissory note issued by
Maquiladora in favor of Seller in a principal amount equal to the portion of the
Purchase Price allocated to the Assets pursuant to Section 2.4, substantially in
the form attached hereto as Exhibit "A".
"Assumed Contracts" means all contracts listed on Schedule 3.9 and
all contracts (including purchase orders) of Seller relating to the Assets or
entered into on behalf of Maquiladora (to the extent related to the Assets)
which are entered into after the date hereof and prior to the Closing in the
ordinary course of business consistent with past practice and the terms of this
Agreement.
"Assumed Liabilities" is defined in Section 2.3.
"Books and Records" means all documents, information, computer data,
files, books and records (in each case, in whatever form or media, including
electronic media) owned by Seller that relate to the Assets, but excluding any
documents, information, files, books and records pertaining to any Excluded
Assets or Excluded Liabilities.
"Business Day" means a day other than a Saturday, a Sunday or a day
on which banks are required or authorized to close in the City of New York.
"Charter Document" means any of the certificate of incorporation,
bylaws, agreement of limited partnership, operating agreement or other
organizational or constitutive document of a Person (including, in the case of a
Mexican Person, the acta constitutiva or estatutos of such Person).
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"Claim(s)" means any action, suit, litigation, proceeding,
arbitration or other method of settling disputes or disagreements and any
grievance, complaint, claim, charge, demand, investigation or other similar
matter.
"Claims Made Policies" is defined in Section 5.5(b).
"Closing" means the consummation of the transactions contemplated by
this Agreement on the Closing Date.
"Closing Material Adverse Effect" means any event, change,
circumstance or development that is materially adverse to (i) the ability of
Seller to consummate the transactions contemplated by this Agreement, the
Mexican Stock Purchase Agreement and the Merger Agreement or (ii) the business,
financial condition or results of operations of Maquiladora, the business,
financial condition or results of operations of the Washington Business and the
Assets taken as a whole, other than, with respect to clause (ii), any event,
change, circumstance or development (A) resulting from any action taken in
connection with the transactions contemplated hereby pursuant to the terms of
this Agreement or the Merger Agreement, (B) relating to the economy or financial
markets in general, (C) relating in general to the industries in which Seller,
Maquiladora and the Washington Business operate and not specifically relating to
Seller, Maquiladora and the Washington Business or (D) relating to any action or
omission of Seller, Maquiladora or Washington or any Subsidiary of any of them
taken with the express prior written consent of Purchaser.
"Closing Date" is defined in the first paragraph of ARTICLE VIII.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Consent(s)" means any and all consents, waivers, approvals,
authorizations, declarations, filings, recordings, registrations or exemptions.
"Damages" means any and all losses, Liabilities, claims, damages,
deficiencies, obligations, fines, payments, Taxes, Encumbrances, and costs and
expenses, whether matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, known or unknown, whenever arising and
whether or not resulting from Third Party Claims (including the costs and
expenses of any and all Claims; all amounts paid in connection with any demands,
assessments, judgments, settlements and compromises relating thereto; interest
and penalties with respect thereto; out-of-pocket expenses and reasonable
attorneys', accountants' and other experts' fees and expenses reasonably
incurred in investigating, preparing for or defending against any such Claims or
in asserting, preserving or enforcing an Indemnified Party's rights hereunder;
and any losses that may result from the granting of injunctive relief as a
result of any such Claims).
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"Dispute" is defined in Section 12.3(b).
"dollars" or "U.S.$" means United States dollars.
"Effective Time" is defined in the Merger Agreement.
"Encumbrance" means any lien, pledge, easement, security interest,
mortgage, deed of trust, right-of-way, retention of title agreement or other
encumbrance of whatever nature.
"Equipment" means machinery, equipment, furniture, furnishings,
fixtures and other tangible personal property (except Inventory and Books and
Records), including, data processing equipment, motor vehicles, dies, tools,
jigs and office equipment, together with all components and auxiliary parts and
supplies used in connection therewith, and all manuals, drawings, instructions,
warranties and rights with respect thereto.
"Excluded Assets" means the assets specifically set forth on
Schedule 2.1(a), including all Inventory and any and all Intellectual Property
of Seller.
"Excluded Liabilities" is defined in Section 2.3.
"Existing Agreement" is defined in the recitals hereto.
"Facility" means the Land and Improvements, including all easements,
licenses, options, insurance proceeds and condemnation awards and all other
rights of Maquiladora in or appurtenant thereto.
"Financing Agreement" means the Financing Agreement to be dated as
of the Closing Date among Purchaser, each of Purchaser's subsidiaries listed
therein (including, upon the Closing, Maquiladora) and Seller, substantially in
form attached hereto as Exhibit "B".
"Governmental Authority" means any federal, state or local
governmental authority or regulatory body of any nation (including the United
States of America and the United Mexican States ("Mexico")), any subdivision,
agency, commission, board or authority or instrumentality thereof, or any
quasi-governmental or private body asserting, exercising or empowered to assert
or exercise any regulatory authority thereunder and any Person, directly or
indirectly, owned by and subject to the control of any of the foregoing.
"HSR Act" means the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
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"Improvements" means all buildings, structures, fixtures and real
property improvements located on the Land.
"including" means including without limiting the generality of what
precedes that term.
"Indemnified Party" is defined in Section 9.3(a).
"Indemnifying Party" is defined in Section 9.3(a).
"Indemnity Issue" is defined in Section 10.7.
"Indemnity Reduction Amounts" is defined in Section 9.3(a).
"Information" means all records, books, contracts, instruments,
computer data and other data and information (in each case, in whatever form or
medium, including electronic media).
"Injunction" is defined in Section 6.3
"Insurance Proceeds" means monies (a) received by an insured from an
insurance carrier, (b) paid by an insurance carrier on behalf of an insured or
(c) received from any third party in the nature of insurance, contribution or
indemnification in respect of any Liability.
"Intellectual Property" means trademarks, service marks, brand
names, certification marks, trade dress and other indications of origin, the
goodwill associated with the foregoing and registrations in any jurisdiction of,
and applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including divisions,
continuations, continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
"Inventory" means all raw materials, components, Semiconductor
Wafers, other inputs, work in process and finished goods.
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"Land" means that certain parcel of land owned by Maquiladora
commonly known as Ave. Iqnacio ▇▇▇▇▇ Rayon No. 1699, Colonial ▇▇▇▇▇▇, Mexicali,
Baja California, Mexico.
"Law" means all laws, principals of common law, statutes,
constitutions, treaties, rules, regulations, ordinances, codes, ruling, orders
and determinations of any Governmental Authority.
"Liabilities" means any and all claims, debts, liabilities,
commitments and obligations of whatever nature, whether fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or not
accrued, known or unknown, due or to become due, whenever or however arising and
whether or not the same would be required by generally accepted accounting
principles to be reflected as a liability in financial statements or disclosed
in the notes thereto.
"Maquila Decree" is defined in Section 3.5.
"Maquiladora" means Conexant Systems, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.
"Material Adverse Change" or "Material Adverse Effect" means any
event, change, circumstance or development that is materially adverse to (i) the
ability of Seller to consummate the transactions contemplated by this Agreement
or the Mexican Stock Purchase Agreement or (ii) the business, financial
condition or results of operations of Maquiladora and the Assets taken as a
whole, other than, with respect to clause (ii), any event, change, circumstance
or development (A) resulting from any action taken in connection with the
transactions contemplated hereby pursuant to the terms of this Agreement, (B)
relating to the economy or financial markets in general, (C) relating in general
to the industries in which Seller and Maquiladora operate and not specifically
relating to Seller and Maquiladora or (D) relating to any action or omission of
Seller or Maquiladora or any Subsidiary of either of them taken with the express
prior written consent of Purchaser.
"Merger" is defined in the recitals of the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Reorganization,
dated as of December 16, 2001, as amended as of April 12, 2002, by and among
Seller, Washington and Purchaser.
"Mexican Competition Commission" means the Mexican Comision Federal
de Competencia established under Chapter IV of the Mexican Economic Competition
Law.
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"Mexican Economic Competition Law" means the Mexican Ley Federal de
Competencia Economica published in the Mexican Official Gazette (Diario Oficial
de la Federacion) on December 24, 1992.
"Mexican Stock Purchase Agreement" is defined in the recitals
hereto.
"Obligation" is defined in the Financing Agreement.
"Occurrence Basis Policies" is defined in Section 5.9(b).
"Party" and "Parties" are defined in the first paragraph of this
Agreement.
"Permits" means licenses, permits, authorizations, consents,
certificates, registrations, variances, franchises and other approvals from any
Governmental Authority, including those relating to environmental matters.
"Permitted Encumbrance" means (i) in respect of real property,
Encumbrances consisting of zoning or planning restrictions, easements, Permits
or other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the value
of, or impair the use of, such real property as currently operated, (ii)
Encumbrances for Taxes, assessments or governmental charges or levies on
property not yet due and payable or which are being contested in good faith and
for which appropriate reserves are maintained, (iii) Encumbrances of landlords,
carriers, warehousemen, mechanics and other Encumbrances imposed by law and
incurred in the ordinary course of business, (iv) for personal property,
Encumbrances for purchase money obligations incurred in the ordinary course of
business consistent with past practice, (v) Encumbrances set forth on Schedule
2.1(b) and (vi) other Encumbrances (other than mortgages, deeds of trust, title
retention agreements or similar security interests on the Facility) which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
"Person" means an individual, corporation, limited liability entity,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act), including any Governmental Authority.
"Policies" means all insurance policies, insurance contracts and
claim administration contracts of any kind of Seller relating to the Assets
which were or are in effect at any time at or prior to the Closing, including
primary, excess and umbrella, commercial general liability, fiduciary liability,
product liability, automobile, aircraft, property and casualty, business
interruption, directors and officers liability, employment practices liability,
workers' compensation, crime, errors and omissions, special accident, cargo and
employee dishonesty insurance policies and captive insurance company
arrangements, together with all rights, benefits and privileges thereunder.
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"Privileged Information" means, with respect to a Party, Information
regarding the Party, or any of its operations, employees, assets or Liabilities
(whether in documents or stored in any other form or known to its employees or
agents) that is or may be protected from disclosure pursuant to the
attorney-client privilege, the work product doctrine or other applicable
privileges, that a Party has or may come into possession of or has obtained or
may obtain access to pursuant to this Agreement or otherwise.
"Purchase Price" is defined in Section 2.2.
"Purchaser" is defined in the first paragraph of this Agreement.
"Purchaser Indemnified Parties" is defined in Section 9.1.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Schedules" means the disclosure schedules contained in this
Agreement which schedules are attached hereto and incorporated by reference as
if specifically set forth herein.
"SECOFI" is defined in Section 3.4.
"Seller" is defined in the first paragraph of this Agreement.
"Seller Indemnified Parties" is defined in Section 9.2.
"Semiconductor Wafers" means silicon and gallium arsenide wafers,
including cut wafers and dies, for the manufacture of semiconductors supplied to
Purchaser by Seller prior to the Closing Date.
"Shares" is defined in the Mexican Stock Purchase Agreement.
"Straddle Period" is defined in Section 10.1.
"Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is, directly or indirectly, owned or controlled by such Person or
by any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
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"Tax" and "Taxes" shall mean all forms of taxation, whenever created
or imposed, and whether of the United States or elsewhere, and whether imposed
by a federal, state, municipal, governmental, territorial, local, foreign or
other body, and without limiting the generality of the foregoing, shall include
net income, gross income, gross receipts, sales, use, value added, ad valorem,
transfer, recording, franchise, profits, license, lease, service, service use,
payroll, wage, withholding, employment, unemployment insurance, workers
compensation, social security, excise, severance, stamp, business license,
business organization, occupation, premium, property, environmental, windfall
profits, customs, duties, alternative minimum, estimated or other taxes, fees,
premiums, assessments or charges of any kind whatever imposed or collected by
any governmental entity or political subdivision thereof, together with any
related interest and any penalties, additions to such tax or additional amounts
imposed with respect thereto by any Tax authority.
"Tax Proceeding" means any audit, examination, Claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Return" shall mean any return, filing, questionnaire,
information return, election or other document required or permitted to be
filed, including requests for extensions of time, filings made with respect to
estimated tax payments, claims for refund and amended returns that may be filed,
for any period with any Tax authority (whether domestic or foreign) in
connection with any Tax (whether or not a payment is required to be made with
respect to such filing).
"Third Party Claim" is defined in Section 9.4(a).
"To the knowledge of Seller" or words of similar import with respect
to a fact or matter means the actual knowledge of the executive officers of
Seller listed on Schedule 1 after reasonable inquiry.
"U.S. Asset Purchase Agreement" means the U.S. Asset Purchase
Agreement, dated December 16, 2001, by and between Seller and Purchaser, as may
be amended, modified or supplemented from time to time.
"U.S. GAAP" means generally accepted accounting principles as
applied in the United States as of the date of this Agreement.
"Washington" means Washington Sub, Inc., a Delaware corporation.
"Washington Business" is defined in the Merger Agreement.
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ARTICLE II
SALE AND PURCHASE OF ASSETS
Section 2.1. Purchase and Sale of Assets. At the Closing, Seller
shall sell, transfer, convey, assign and deliver to Purchaser's designee, and
Purchaser shall cause Purchaser's designee to purchase, acquire and accept, the
Assets, as the same shall exist on the Closing Date, free and clear of any
Encumbrances other than Permitted Encumbrances. Purchaser hereby designates
Maquiladora to purchase the Assets pursuant to this Section 2.1
Section 2.2. Purchase Price. The purchase price (the "Purchase
Price") to be paid in the aggregate by Purchaser (and Maquiladora as its
designee pursuant to Section 2.1 above) to Seller in consideration for the
Assets shall be eighty million dollars (U.S.$80,000,000), payable, at the
election of Purchaser, either (A) by wire transfer of immediately available
funds at the Closing or (B) by delivery of the Assets Promissory Note at the
Closing; provided, however, that if Purchaser shall elect to pay the Purchase
Price pursuant to clause (B), Purchaser shall provide written notice of such
election to Seller no later than thirty (30) days prior to the Closing Date.
Section 2.3. Assumption of Liabilities. At the Closing, Purchaser
shall cause Purchasers' designee to unconditionally assume and agree to pay,
perform and discharge in a timely manner and in accordance with their respective
terms those Liabilities of Seller set forth on Schedule 2.3(a) (the "Assumed
Liabilities"). Purchaser's designee shall not assume hereunder any Liabilities
of Seller related to the Assets that are not Assumed Liabilities (the "Excluded
Liabilities"). Purchaser hereby designates Maquiladora to assume the Assumed
Liabilities pursuant to this Section 2.3.
Section 2.4. Allocation of Purchase Price. Purchaser and Seller
mutually agree that the Purchase Price and the Assumed Liabilities hereunder
shall be allocated among the Assets in the manner required by Section 1060 of
the Code and Treasury Regulations promulgated thereunder. Purchaser and Seller
shall agree upon such allocation prior to the Closing and shall file Form 8594
with the United States Internal Revenue Service reflecting such allocation.
Neither Seller nor Purchaser shall take a position inconsistent with such
allocation in any Tax Proceeding, in any refund claim, in any litigation or
investigation or otherwise. If a competent Government Authority adjusts such
allocation for any reason, the allocation shall be deemed to be amended to
conform to any such adjustments.
11
ARTICLE III
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Purchaser as of the date
hereof and as of the Closing Date the following:
Section 3.1. Corporate Status, Good Standing and Authorization.
Seller is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with all requisite
corporate power and authority to own the Shares and the Assets, except where the
failure to have such power and authority, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Seller and
Maquiladora are each duly licensed or qualified to do business as a foreign
corporation in all states or jurisdictions in which the nature of its business
requires such license or qualification, except where the failure to be so
licensed or qualified, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
Section 3.2. Authority; Enforceability. Seller has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Seller. This Agreement has been duly authorized, executed and
delivered by Seller and is a legally valid and binding obligation of Seller
(assuming that this Agreement constitutes the valid and binding obligation of
Purchaser) and is enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar Laws relating to
or affecting creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 3.3. Consents; No Conflicts or Violations. Except for the
Consents set forth on Schedule 3.3 and Consents which if not obtained and
maintained by Seller, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, there are no Consents of any
Governmental Authority required in connection with (i) Seller's execution and
delivery of this Agreement and the other agreements, documents and instruments
to be executed and delivered by Seller in connection herewith or (ii) the
performance by Seller of its obligations herein or therein or the consummation
by Seller of the transactions contemplated hereby or thereby. Assuming receipt
of all of the Consents set forth on Schedule 3.3 (including any required HSR Act
approval, any approval required by the Mexican Competition Commission under the
Mexican Economic Competition Law and any approval by SECOFI (as defined below)
of any change of any Permits held by Maquiladora), neither the execution or
12
delivery by Seller of this Agreement nor the consummation by Seller of the
transactions contemplated hereby will, with or without the giving of notice or
the lapse of time or both, conflict with or result in a breach or violation of
or give rise to a default or right of termination, amendment, cancellation or
acceleration under (i) any provision of Seller's or Maquiladora's Charter
Documents, (ii) any contract, agreement, note, bond, mortgage, indenture, lease,
license, franchise, permit, concession, instrument or obligation to which Seller
or Maquiladora is a party or by which any of their respective properties or
assets are bound or (iii) any Law or license or other requirement to which
Seller or Maquiladora or their respective properties or assets is subject,
except, in the case of items (ii) and (iii) above only, for those which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
Section 3.4. Permits. Seller and Maquiladora have or will have as of
the Closing all Permits which are required in order to allow Seller to own the
Shares and to own and use the Assets in the manner in which it currently owns
and uses such Assets or which are required in order to allow Maquiladora to own
its assets and properties and to conduct its business as conducted as of the
date hereof, including all Permits required from the Mexican Ministry of
Commerce and Industrial Promotion ("SECOFI") or its successor, the Mexican
Ministry of the Economy, except, in any such case, for such Permits, which if
not obtained or maintained, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Each of Seller and
Maquiladora is and will be in compliance with each such Permit, except where the
failure to so comply, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. No suspension or cancellation of any
such Permits is or will be pending or, to the knowledge of Seller, threatened,
except for suspensions or cancellations which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Seller will
have delivered to Purchaser at or prior to Closing a list of all such Permits
held or obtained as of the Closing Date, except for such Permits, which if not
held or obtained, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
Section 3.5. Compliance with Laws. Except as disclosed on Schedule
3.5, (i) Maquiladora is in compliance in all material respects with all
applicable Laws, including the Decree for the Development and Operation of
Maquiladora Export Industry, as amended (the "Maquila Decree"), (ii) Seller is
in compliance in all material respects with all Laws applicable with respect to
the Assets and the Shares, except in the case of (i) or (ii) above, where the
failure to so comply, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and (iii) to the knowledge of
Seller, Maquiladora has not received within the past twelve (12) months any
written notice or correspondence from any Governmental Authority to the effect
that it is not in compliance with any such applicable Laws, except for such
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
13
Section 3.6. Absence of Certain Changes or Events. Except as set
forth on Schedule 3.6, since November 23, 2001, there has not been any Material
Adverse Change or any event, change, circumstance or development which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Change. Without limiting the generality of the foregoing,
except as set forth on Schedule 3.6, Maquiladora has been operating the Assets
since November 23, 2001 in the ordinary course of business consistent with past
practice (except as may be expressly contemplated by this Agreement).
Section 3.7. Litigation. Except as set forth on Schedule 3.7, there
is no action, suit or proceeding or regulatory investigation pending or, to the
knowledge of Seller, threatened against Seller, Minority Shareholder or
Maquiladora or its business or operations affecting (i) Maquiladora or its
business or operations, (ii) any of the Assets, (iii) the Purchased Shares or
(iv) this Agreement before any court or arbitrator or any governmental body,
agency or official, except for those which, if adversely determined,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. None of Seller, Minority Shareholder or Maquiladora is
a party to or subject to any judgment, order, rule, writ, injunction, or decree
of any Governmental Authority or arbitrator which relates to or affects
Maquiladora, the Assets or the Purchased Shares, except as, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.8. Tax Matters.
(a) Tax Returns. All material Tax Returns required to be filed by
Maquiladora with respect to the Assets have been timely filed. All such Tax
Returns are true, correct and complete, except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
All Taxes shown as due and payable by or with respect to such Tax Returns have
been timely paid in full.
(b) No Tax Proceedings. Except as set forth on Schedule 3.8(b),
there are no Tax Proceedings presently pending with regard to any Tax Returns or
Taxes related to the Assets, and no notice has been received from any
Governmental Authority of the expected commencement of such a Tax Proceeding.
(c) No Tax Liens. There are no Encumbrances for any Tax on the
Assets, except for Permitted Encumbrances.
(d) None of the Assets is a lease made pursuant to Section 168(f)(8)
of the Internal Revenue Code of 1954.
(e) None of the Assets constitute "tax exempt use property" within
the meaning of Section 168(h) of the Code or is "tax exempt bond financed
property" within the meaning of Section 168(g) of the Code.
14
Section 3.9. Assumed Contracts. True and correct copies of all
Assumed Contracts in effect as of the date hereof have been made available to
Purchaser. Prior to Closing, Seller shall have made available to Purchaser all
Assumed Contracts that came into effect after the date hereof. None of Seller
or, to the knowledge of Seller, any other party to any Assumed Contract, is in
default under any Assumed Contract, except for such defaults that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. To the knowledge of Seller, no event has occurred with respect to any
Assumed Contract which, with the lapse of time or the giving of notice or both,
would constitute a default under any Assumed Contract, except for such defaults
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
Section 3.10. No Brokers. Neither this Agreement nor the sale of the
Assets was induced or procured through any Person acting on behalf of or
representing Seller and no commissions or any other payment is due to any
intermediary in connection therewith.
Section 3.11. Title to Properties. Seller has good and valid title
to the Shares and the Assets and Maquiladora has good and valid title to all of
its tangible properties and assets, except, in each case, where the failure to
have such good and valid title, or valid leasehold interest, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 3.12. Sufficiency of Assets. After giving effect to the
transfers, conveyances and assignments contemplated by this Agreement, the
Mexican Stock Purchase Agreement, the U.S. Asset Purchase Agreement and the
agreements, documents and instruments executed and delivered pursuant hereto or
thereto and after taking into account any services to be provided to Purchaser
and Maquiladora pursuant to the Transition Services Agreement and the Supply
Agreement, except for the Excluded Assets (other than the Intellectual Property
being assigned pursuant to the U.S. Asset Purchase Agreement) and corporate
services provided by Seller to Maquiladora immediately after the Closing, the
assets of Maquiladora and the Assets will constitute all of the material assets
and rights of Seller and Maquiladora that are necessary to conduct the
operations of Maquiladora substantially as conducted on the date hereof.
Section 3.13. Insurance. Seller maintains insurance coverage in
respect of the Assets with reputable insurers in such amounts and covering such
risks as is deemed reasonably appropriate for its business (taking into account
the cost and availability of such insurance).
15
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser hereby represents and warrants to Seller as of the date
hereof and as of the Closing Date the following:
Section 4.1. Organization of Purchaser. Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
Section 4.2. Authority; Enforceability. Purchaser has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser and the purchase of Assets and
assumption of the Assumed Liabilities by Maquiladora, as Purchaser's designee
have been duly authorized by all necessary corporate action on the part of
Maquiladora. This Agreement has been duly authorized, executed and delivered by
Purchaser and is a legally valid and binding obligation of Purchaser (assuming
that this Agreement constitutes the valid and binding obligation of Seller) and
is enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar Laws relating to or affecting
creditors generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 4.3. Consents; No Conflicts or Violations. Except for the
Consents set forth on Schedule 4.3 and the Consents which if not obtained and
maintained by Purchaser, individually or in the aggregate, would not reasonably
be expected to have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated by this Agreement, there are no
Consents of any Governmental Authorities required in connection with (i)
Purchaser's execution and delivery of this Agreement and the other agreements,
documents and instruments to be executed and delivered by Purchaser in
connection herewith or (ii) the performance by Purchaser of its obligations
herein or therein or the consummation by Seller of the transactions contemplated
hereby or thereby. Assuming receipt of all of the Consents set forth on Schedule
4.3 (including, any required HSR Act approval and any approval required by the
Mexican Competition Commission under the Mexican Economic Competition Law),
neither the execution or delivery by Purchaser of this Agreement nor the
consummation by Purchaser of the transactions contemplated hereby will, with or
without the giving of notice or the lapse of time or both, conflict with or
result in a breach or violation of or give rise to a default or right of
termination, amendment, cancellation or acceleration
16
under (i) any provision of Purchaser's Charter Documents, (ii) any material
contract, agreement, note, bond, mortgage, indenture, lease, license, franchise,
permit, concession, instrument or obligation to which Purchaser is a party or by
which any of its properties or assets are bound or (iii) any Law or license or
other requirement to which Purchaser or its properties or assets is subject,
except, in the case of items (ii) and (iii) above only, for those which,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on Purchaser's ability to consummate the transactions
contemplated by this Agreement.
Section 4.4. Litigation. Except as set forth on Schedule 4.4, there
is no action, suit or proceeding or regulatory investigation pending or, to the
knowledge of Purchaser, threatened against Purchaser affecting this Agreement
before any court or arbitrator or any governmental body, agency or official,
except for those which, if adversely determined, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
Purchaser's ability to consummate the transactions contemplated by this
Agreement. Purchaser is not a party to or subject to any judgment, order, writ,
injunction, or decree of any Governmental Authority or arbitrator, except as,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on Purchaser's ability to consummate the transactions
contemplated by this Agreement.
Section 4.5. No Brokers. Neither this Agreement nor the purchase of
the Assets was induced or procured through any Person acting on behalf of or
representing Purchaser and no commissions or any other payment is due to any
intermediary in connection therewith.
ARTICLE V
COVENANTS
The Parties hereby covenant as follows:
Section 5.1. Access.
(a) Access to Information by Purchaser Prior to Closing. Prior to
Closing, subject to compliance with applicable laws, Seller and Maquiladora
shall, upon reasonable request, afford to Purchaser and its Representatives
reasonable access during normal business hours to all Books and Records.
Purchaser shall coordinate its requests and activities under this Section 5.1
with Seller's need for security and will assist Seller in minimizing disruption
to Maquiladora's normal business operations.
(b) Access to Information by Purchaser After Closing. From and after
the Closing, Seller will afford to Purchaser and its Representatives (at
Purchaser's
17
expense) reasonable access and duplicating rights during normal business hours
and upon reasonable advance notice to all Books and Records and all books and
records within Seller's possession or control relating to the Assets, insofar as
such access is reasonably required by Purchaser.
(c) Access to Books and Records by Seller. Purchaser shall,
following the Closing, give Seller and its Representatives such access, during
normal business hours and upon reasonable prior notice, to the Books and Records
and such other documents as shall be reasonably necessary for Seller in
connection with its performance of its obligations hereunder and for any other
reasonable purposes, and Purchaser will allow Seller and its Representatives to
make extracts and copies thereof as may be necessary for such purposes at
Seller's expense. Purchaser shall preserve and protect the Books and Records
relating to periods prior to the Closing in its possession and control for the
period required by the applicable records retention policy of Seller in effect
immediately prior to the Closing. Purchaser shall offer to deliver the Books and
Records relating to periods prior to the Closing to Seller prior to their
destruction or other disposition.
(d) Production of Witnesses. Subject to Section 5.1(e), after the
Closing, each Party will, and Purchaser will cause Maquiladora to, make
available to the other Party, upon written request and at the cost and expense
of the Party so requesting, its directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required (giving
consideration to business demands of such directors, officers, employees and
agents) in connection with any Claims or administrative or other proceedings in
which the requesting party may from time to time be involved and relating to the
Assets or arising in connection with the relationship between the Parties on or
prior to the Closing Date, provided that the same shall not unreasonably
interfere with the conduct of business by the Party of which the request is
made.
(e) Confidentiality. From and after the Closing, each of Seller and
Purchaser shall hold, and shall use reasonable efforts to cause its Affiliates
and Representatives to hold, in strict confidence all Information concerning the
other Party in its possession or control prior to the Closing or furnished to it
by another Party pursuant to the Merger and the transactions contemplated
thereby and will not release or disclose such Information to any other Person,
except its Affiliates and its and their Representatives, who will be bound by
the provisions of this Section 5.1(e); provided, however, that any Person may
disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such Person's counsel,
by other requirements of law (in which case the Party required to make such
disclosure will notify the other Party as soon as practicable of such obligation
or requirement and cooperate with the other Party to limit the Information
required to be disclosed and to obtain a protective order or other appropriate
remedy with respect to the
18
Information ultimately disclosed) or (b) such Person can show that such
Information was (i) available to such Person on a non-confidential basis (other
than from a Party) prior to its disclosure by such Person, (ii) in the public
domain through no fault of such Person or (iii) lawfully acquired by such Person
from another source after the time that it was furnished to such Person by the
other Party or its Affiliates, Representatives or Subsidiaries, and not acquired
from such source subject to any confidentiality obligation on the part of such
source known to the acquiror, or on the part of the acquiror. Each Party
acknowledges that it will be liable for any breach of this Section 5.1(e) by its
Affiliates, Representatives and Subsidiaries. Notwithstanding the foregoing,
each Party will be deemed to have satisfied its obligations under this Section
5.1(e) with respect to any Information (other than Privileged Information) if it
exercises the same care with regard to such Information as it takes to preserve
confidentiality for its own similar Information.
Section 5.2. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
Party will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, and to assist and cooperate with the
other Party in doing or causing to be done, all things necessary, proper or
advisable under this Agreement and applicable laws to consummate the
transactions contemplated by this Agreement as soon as practicable after the
date hereof, including (i) taking all reasonable actions to cause the conditions
set forth in ARTICLES VI and VII to be satisfied as promptly as practicable,
(ii) preparing and filing as promptly as practicable all documentation to obtain
as promptly as practicable all Consents set forth on Schedules 3.3 and 4.3 and
(iii) taking all reasonable steps as may be necessary to obtain all Consents set
forth on Schedules 3.3 and 4.3. In furtherance and not in limitation of the
foregoing, each Party hereto agrees to make (i) an appropriate filing (if
applicable) of a Notification and Report Form pursuant to the HSR Act and any
comparable filings (if applicable) pursuant to the Mexican Economic Competition
Act with respect to the transactions contemplated hereby as promptly as
practicable after the date hereof and (ii) all other necessary filings with
other Governmental Authorities relating to the transactions contemplated herein,
and, in each case, to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to such
applicable laws or by such Governmental Authorities and to use reasonable best
efforts to cause the expiration or termination of the applicable waiting periods
under the HSR Act and the Mexican Economic Competition Act and the receipt of
the Consents set forth on Schedules 3.3 and 4.3 under such other applicable laws
or from such Governmental Authorities as soon as practicable.
(b) Each of Seller and Purchaser shall, in connection with the
efforts referenced in Section 5.2(a) to obtain all Consents set forth on
Schedules 3.3 and 4.3, use its reasonable best efforts to (i) cooperate in all
respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry,
19
including any proceeding initiated by a private party, (ii) promptly inform the
other Party of any communication received by such Party from, or given by such
Party to, the Antitrust Division of the Department of Justice (the "DOJ"), the
Federal Trade Commission (the "FTC"), the Mexican Competition Commission or any
other Governmental Authority and of any material communication received or given
in connection with any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby, and (iii) permit the other Party to
review any communication given by it to, and consult with each other in advance
of any meeting or conference with, the DOJ, the FTC, the Mexican Competition
Commission or any such other Governmental Authority or, in connection with any
proceeding by a private party, with any other Person, and to the extent
appropriate or permitted by the DOJ, the FTC, the Mexican Competition Commission
or such other applicable Governmental Authority or other Person, give the other
Party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of the
Parties contained in Section 5.2(a) and Section 5.2(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any applicable laws, or if any
statute, rule, regulation, executive order, decree, injunction or administrative
order is enacted, entered, promulgated or enforced by a Governmental Authority
which would make transactions contemplated hereby illegal or would otherwise
prohibit or materially impair or delay the consummation of the transactions
contemplated hereby, each of the Parties shall cooperate in all respects with
each other and use its respective reasonable best efforts to contest and resist
any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement and to
have such statute, rule, regulation, executive order, decree, injunction or
administrative order repealed, rescinded or made inapplicable so as to permit
the consummation of the transactions contemplated by this Agreement.
(d) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.2 shall create an obligation by the Parties
to take any action in addition to the actions required to be taken pursuant to
the Merger Agreement to consummate the Merger.
Section 5.3. Conduct of Business by Seller. From the date hereof
until the Closing Date, Seller shall (and shall cause Maquiladora to), except as
expressly required or permitted by this Agreement and except as otherwise
consented to in writing by Purchaser:
20
(i) employ the Assets in the ordinary course of business consistent
with past practice;
(ii) not engage the Assets in any new material line of business;
(iii) not grant, create, incur or suffer to exist any Encumbrance
(other than a Permitted Encumbrance granted, created, incurred or suffered
to exist in the ordinary course of business consistent with past practice)
on the Assets; and
(iv) not authorize, or commit or agree to take, any of the foregoing
actions.
Section 5.4. Supplements to Schedules. From time to time up to the
Closing, Seller and Purchaser may supplement or amend the Schedules after they
have been delivered pursuant to this Agreement with respect to any matter first
existing or occurring on or after the date hereof which, if existing or
occurring at or prior to the date hereof, would have been required to be set
forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered inaccurate thereby;
provided, however, that if any facts that give rise to such matter existed or
occurred on or before the date hereof, no such supplement or amendment may be
made under this Section 5.4 with respect thereto. Any such supplement or
amendment to any Schedule shall not, following Closing, constitute a basis for
any Claim for indemnification pursuant to ARTICLE IX; provided, however, that no
such supplement or amendment shall be deemed to cure any breach of any
representations or warranties made pursuant to this Agreement for purposes of
Section 7.1(a) or Section 7.2(a).
Section 5.5. Insurance.
(a) Coverage. Subject to the provisions of this Section 5.5,
coverage of the Assets under all Policies shall cease as of the Closing. From
and after the Closing, Purchaser will be responsible for obtaining and
maintaining all insurance coverages for the Assets. All Policies will be
retained by Seller and Seller's Subsidiaries, together with all rights, benefits
and privileges thereunder (including the right to receive any and all return
premiums with respect thereto), except that Purchaser will have the rights in
respect of Policies to the extent described in Section 5.5(b).
(b) Rights Under Policies. From and after the Closing, Purchaser
will have no rights with respect to any Policies, except that (i) Purchaser will
have the right to assert claims (and Seller will use commercially reasonable
efforts to assist Purchaser in asserting claims) for any loss, liability or
damage with respect to the Assets under Policies with third-party insurers which
are "occurrence basis" insurance policies ("Occurrence Basis Policies") arising
out of insured incidents occurring from the date coverage thereunder first
commenced until the Closing to the extent that the terms and conditions of any
such Occurrence Basis Policies and agreements relating thereto so
21
allow and (ii) Purchaser will have the right to continue to prosecute claims
with respect to the Assets properly asserted with an insurer prior to the
Closing (and Seller will use commercially reasonable efforts to assist Purchaser
in connection therewith) under Policies with third-party insurers which are
insurance policies written on a "claims made" basis ("Claims Made Policies")
arising out of insured incidents occurring from the date coverage thereunder
first commenced until the Closing to the extent that the terms and conditions of
any such Claims Made Policies and agreements relating thereto so allow,
provided, that in the case of both clauses (i) and (ii) above, (A) all of
Seller's reasonable out-of-pocket costs and expenses incurred in connection with
the foregoing are promptly paid by Purchaser, (B) Seller may, at any time,
without liability or obligation to Purchaser (other than as set forth in Section
5.5(c)), amend, commute, terminate, buy-out, extinguish liability under or
otherwise modify any Occurrence Basis Policies or Claims Made Policies (and such
claims shall be subject to any such amendments, commutations, terminations,
buy-outs, extinguishments and modifications), (C) such claims will be subject to
(and recovery thereon will be reduced by the amount of) any applicable
deductibles, retentions or self-insurance provisions, (D) such claims will be
subject to (and recovery thereon will be reduced by the amount of) any payment
or reimbursement obligations of Seller, any of Seller's Subsidiaries or any
Affiliate of Seller or any of Seller's Subsidiaries in respect thereof and (E)
such claims will be subject to exhaustion of existing aggregate limits. Seller's
obligation to use commercially reasonable efforts to assist Purchaser in
asserting claims under applicable Policies will include using commercially
reasonable efforts in assisting Purchaser to establish its right to coverage
under such Policies (so long as all of Seller's reasonable out-of-pocket costs
and expenses in connection therewith are promptly paid by Purchaser). None of
Seller or Seller's Subsidiaries will bear any Liability for the failure of an
insurer to pay any claim under any Policy. It is understood that any Claims Made
Policies will not provide any coverage to Purchaser for incidents occurring
prior to the Closing but which are asserted with the insurance carrier after the
Closing.
(c) Seller Actions. In the event that after the Closing, Seller
proposes to amend, commute, terminate, buy-out, extinguish liability under or
otherwise modify any Policies under which Purchaser has rights to assert claims
pursuant to Section 5.5(b) in a manner that would adversely affect any such
rights of Purchaser, (i) Seller will give Purchaser prior notice thereof and
consult with Purchaser with respect to such action (it being understood that the
decision to take any such action will be in the sole discretion of Seller) and
(ii) Seller will pay to Purchaser its equitable share (which shall be determined
by Seller in good faith based on the amount of premiums paid by or allocated to
Purchaser in respect of the applicable Policy) of any net proceeds actually
received by Seller from the insurer under the applicable Policy as a result of
such action by Seller (after deducting Seller's reasonable costs and expenses
incurred in connection with such action).
(d) Administration. From and after the Closing:
22
(i) Seller or a Subsidiary of Seller, as appropriate, will be
responsible for the Claims Administration with respect to claims of Seller
and Seller's Subsidiaries under Policies; and
(ii) Purchaser will be responsible for the Claims
Administration with respect to claims of Purchaser under Policies.
(e) Insurance Premiums. From and after the Closing, Seller will pay
all premiums (retrospectively-rated or otherwise) as required under the terms
and conditions of the respective Policies in respect of periods prior to the
Closing, whereupon Purchaser will, upon the request of Seller, forthwith
reimburse Seller for that portion of such premiums paid by Seller as are
reasonably determined by Seller to be attributable to the Assets.
(f) Agreement for Waiver of Conflict and Shared Defense. In the
event that a Policy provides coverage for both Seller and/or a Subsidiary of
Seller, on the one hand, and Purchaser, on the other hand, relating to the same
occurrence, Seller and Purchaser agree to defend jointly and to waive any
conflict of interest necessary to the conduct of that joint defense. Nothing in
this Section 5.5(f) will be construed to limit or otherwise alter in any way the
indemnity obligations of the parties to this Agreement, including those created
by this Agreement, by operation of law or otherwise.
ARTICLE VI
CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
The obligations of Seller and Purchaser to complete the transactions
contemplated by this Agreement are subject to the satisfaction, on or prior to
the Closing, of each of the following conditions precedent; provided, however,
that upon consummation of the Merger, all conditions precedent contained in this
ARTICLE VI shall be deemed fully satisfied for purposes of this ARTICLE VI:
Section 6.1. HSR Act. The waiting period (and any extension thereof)
applicable to the transactions contemplated by this Agreement under the HSR Act
shall have been terminated or shall have expired.
Section 6.2. Mexican Competition Commission Approval. Seller and
Purchaser shall have received the required consent or approval of the Mexican
Competition Commission.
Section 6.3. No Injunctions or Restraints, Illegality. No Laws shall
have been adopted, promulgated or enforced by any Governmental Authority, and no
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temporary restraining order, preliminary or permanent injunction or other order
issued by a court or other Governmental Authority of competent jurisdiction (an
"Injunction") shall be in effect, having the effect of making the transactions
contemplated under this Agreement illegal or otherwise prohibiting such
transactions. No proceeding initiated by any Governmental Authority seeking, and
which is reasonably likely to result in the granting of, an Injunction shall be
pending.
Section 6.4. Completion of the Merger. The Merger shall have been
consummated.
Section 6.5. Completion of the Stock Purchase. The transactions
contemplated by the Mexican Stock Purchase Agreement and the U.S. Asset Purchase
Agreement shall have been consummated.
ARTICLE VII
ADDITIONAL CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
Section 7.1. Conditions to Seller's Obligations. The obligations of
Seller to complete the transactions contemplated by this Agreement are subject
to the satisfaction, on or prior to the Closing, of each of the following
conditions precedent; provided, however, that upon consummation of the Merger,
all conditions precedent contained in this Section 7.1 shall be deemed fully
satisfied for purposes of this ARTICLE VII:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Purchaser contained in this Agreement shall be
true and correct (without giving effect to any qualification or limitation as to
materiality or material adverse effect set forth therein) in each case as of the
date hereof and (except to the extent that such representations and warranties
speak solely as to another date) as of the Closing Date as though made on and as
of the Closing Date, except where the failure of such representations and
warranties to be true and correct, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated in this Agreement.
(b) Performance of Obligations of Purchaser. Purchaser (i) shall
have performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality or material adverse effect and (ii) shall have
performed or complied in all material respects with all other agreements and
covenants required to be performed by it under this Agreement at or prior to the
Closing Date that are not so qualified.
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Section 7.2. Conditions to Purchaser's Obligations. The obligations
of Purchaser to complete the transactions contemplated by this Agreement are
subject to the satisfaction, on or prior to the Closing, of each of the
following conditions precedent; provided, however, that upon consummation of the
Merger, all conditions precedent contained in this Section 7.2 shall be deemed
fully satisfied for purposes of this ARTICLE VII:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Seller contained in this Agreement shall have
been true and correct (without giving effect to any qualification or limitation
as to materiality or Material Adverse Effect set forth therein) in each case as
of the date hereof and (except to the extent that such representations and
warranties speak solely as to another date) as of the Closing Date as though
made on and as of the Closing Date, except where the failure of such
representations and warranties to be true and correct, individually or in the
aggregate, would not reasonably be expected to have a Closing Material Adverse
Effect.
(b) Performance of Obligations of Seller. Seller (i) shall have
performed or complied with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are qualified as
to materiality or Material Adverse Effect and (ii) shall have performed or
complied in all material respects with all other agreements and covenants
required to be performed by it under this Agreement at or prior to the Closing
Date that are not so qualified.
ARTICLE VIII
CLOSING
The Closing shall, unless another time and date is agreed to in
writing by the Parties, take place immediately following the Closing (as defined
in the Merger Agreement) under the Merger Agreement and the Closing (as defined
in the Mexican Stock Purchase Agreement) under the Mexican Stock Purchase
Agreement and will be effective immediately following the Effective Time (the
time and date of such Closing being herein called the "Closing Date"). The
Closing will take place at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the Parties may agree.
On the Closing Date, the Parties hereto shall deliver the following:
Section 8.1. Deliveries by Seller. (a) At the Closing, Seller shall
deliver to Maquiladora (as Purchaser's designee) the following, which in the
case of documents shall be reasonably satisfactory to Purchaser:
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(i) an Assets ▇▇▇▇ of Sale and Assignment and Assumption Agreement,
duly executed by Seller, in form and substance reasonably satisfactory to
Purchaser;
(ii) the Assets; and
(iii) all documents of title and instruments of conveyance necessary to
transfer record and beneficial ownership to Purchaser of all Assets which
require execution, endorsement or delivery of such a document under applicable
Law in order to vest record or beneficial ownership thereto in Purchaser.
Section 8.2. Deliveries by Purchaser. At the Closing, immediately
following the deliveries required to consummate the purchase and sale of the
Purchased Shares, Purchaser shall cause Maquiladora to deliver to Seller the
following documents which shall be reasonably satisfactory to Seller:
(i) (A) cash payment of the Purchase Price (via wire transfer
of immediately available funds, pursuant to Section 2.2), or (B) the
Assets Promissory Note, duly executed by Maquiladora, in which case,
Purchaser and/or Maquiladora, as the case may be, shall deliver to
Seller at Closing such other agreements and documents as shall be
required by the terms of the Financing Agreement in connection with the
Assets Promissory Note; and
(ii) an Asset ▇▇▇▇ of Sale and Assignment and Assumption
Agreement, duly executed by Maquiladora, in form and substance
reasonably satisfactory to Seller.
ARTICLE IX
INDEMNIFICATION
Section 9.1. Indemnification by Seller. Subject to the limitations on
and procedures for indemnification set forth in this ARTICLE IX, Seller shall
indemnify, defend and hold harmless Purchaser, its designee and their respective
Representatives and Affiliates and each of the heirs, executors, successors and
assigns of any of the foregoing (the "Purchaser Indemnified Parties") from and
against, and pay or reimburse, as the case may be, the Purchaser Indemnified
Parties for, any Damages, as incurred, suffered by any Purchaser Indemnified
Parties to the extent based upon, arising out of or relating to the following:
(i) the breach of any representation or warranty of Seller
contained in this Agreement;
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(ii) the breach by Seller of any covenant or agreement of
Seller contained in this Agreement;
(iii) the Excluded Liabilities (including the failure of
Seller to pay, perform or otherwise discharge any Excluded Liability in
accordance with its terms); or
(iv) the Excluded Assets.
Section 9.2. Indemnification by Purchaser. Subject to the limitations
on and procedures for indemnification set forth in this ARTICLE IX, Purchaser
shall indemnify, defend and hold harmless Seller and its Representatives and
Affiliates and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Seller Indemnified Parties") from and against,
and pay or reimburse, as the case may be, the Seller Indemnified Parties for,
any Damages, as incurred, suffered by any Seller Indemnified Parties to the
extent based upon, arising out of or relating to the following:
(i) the breach of any representation or warranty of Purchaser
contained in this Agreement;
(ii) the breach by Purchaser of any covenant or agreement of
Purchaser contained in this Agreement; or
(iii) the Assumed Liabilities (including, except as provided
in Section 12.16, the failure of Purchaser or Purchaser's designee as
the case may be, to pay, perform or otherwise discharge any Assumed
Liability in accordance with its terms).
Section 9.3. Limitations on Indemnification Obligations. (a) The amount
which any Party (an "Indemnifying Party") is or may be required to pay to any
Person (an "Indemnified Party") in respect of Damages or other Liability for
which indemnification is provided under this Agreement shall be reduced by any
amounts actually received (including Insurance Proceeds actually received) by or
on behalf of such Indemnified Party (net of increased insurance premiums and
charges to the extent related to Damages and costs and expenses (including
reasonable legal fees and expenses) incurred by such Indemnified Party in
connection with seeking to collect and collecting such amounts) in respect of
such Damages or other Liability (such net amounts are referred to herein as
"Indemnity Reduction Amounts"). If any Indemnified Party receives any Indemnity
Reduction Amounts in respect of Damages for which indemnification is provided
under this Agreement after the full amount of such Damages has been paid by an
Indemnifying Party or after an Indemnifying Party has made a partial payment of
such Damages and such Indemnity Reduction Amounts exceed the remaining unpaid
balance of such Damages, then the Indemnified Party shall promptly remit to the
Indemnifying Party an amount equal to the excess (if any) of (A) the amount
theretofore paid by the
27
Indemnifying Party in respect of such Damages, less (B) the amount of the
indemnity payment that would have been due if such Indemnity Reduction Amounts
in respect thereof had been received before the indemnity payment was made.
(b) In determining the amount of any indemnity payment under this
Agreement, such amount shall be (i) reduced to take into account any net Tax
benefit realized by the Indemnified Party and its Affiliates arising from the
incurrence or payment by the Indemnified Party or its Affiliates of any amount
in respect of which such payment is made and (ii) increased to take into account
any net Tax cost incurred by the Indemnified Party and its Affiliates as a
result of the receipt or accrual of payments hereunder (grossed-up for such
increase), in each case determined by treating the Indemnified Party and its
Affiliates as recognizing all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of accrual of any
payment hereunder. In determining the amount of any such Tax benefit or Tax
cost, the Indemnified Party and its Affiliates shall be deemed to be subject to
the applicable Taxes at the maximum statutory rate then in effect. It is the
intention of the Parties to this Agreement that payments made pursuant to this
Agreement are to be treated as relating back to the Closing Date as a purchase
price adjustment, and the Parties shall not take any position inconsistent with
such intention before any Tax authority, except to the extent that a final
determination (as defined in Section 1313 of the Code) with respect to the
recipient party causes any such payment not to be so treated.
(c) No monetary amount will be payable by Seller to any Purchaser
Indemnified Party with respect to the indemnification of any claims pursuant to
Section 9.1(i) until the aggregate amount of Damages actually incurred by the
Purchaser Indemnified Parties with respect to such claims, together with the
aggregate amount of Damages (as defined in the Mexican Asset Purchase Agreement
solely for purposes of this Agreement) actually incurred by the Purchaser
Indemnified Parties (as defined in the Mexican Asset Purchase Agreement) with
respect to indemnification claims pursuant to Section 9.1(i) of the Mexican
Asset Purchase Agreement, shall exceed on a cumulative basis an amount equal to
one million dollars (U.S.$1,000,000), in which event Seller shall be responsible
only for the amount of such Damages in excess of one million dollars
(U.S.$1,000,000). No monetary amount will be payable by Seller to any Purchaser
Indemnified Party with respect to the indemnification of any claims pursuant to
Section 9.1(i) after the aggregate amount of Damages actually paid by Seller
with respect to such claims, together with the aggregate amount of Damages (as
defined in the Mexican Asset Purchase Agreement) actually paid by Seller with
respect to indemnification claims pursuant to Section 9.1(i) of the Mexican
Asset Purchase Agreement, shall equal on a cumulative basis an amount equal to
ten million dollars (U.S.$10,000,000).
(d) No monetary amount will be payable by Purchaser to any Seller
Indemnified Party with respect to the indemnification of any claims pursuant to
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Section 9.2(i) until the aggregate amount of Damages actually incurred by the
Seller Indemnified Parties with respect to such claims, together with the
aggregate amount of Damages (as defined in the Mexican Asset Purchase Agreement)
actually incurred by the Seller Indemnified Parties (as defined in the Mexican
Asset Purchase Agreement) with respect to indemnification claims pursuant to
Section 9.2(i) of the Mexican Asset Purchase Agreement, shall exceed on a
cumulative basis an amount equal to one million dollars (U.S.$1,000,000), in
which event Purchaser shall be responsible only for the amount of such Damages
in excess of one million dollars (U.S.$1,000,000). No monetary amount will be
payable by Purchaser to any Seller Indemnified Party with respect to the
indemnification of any claims pursuant to Section 9.2(i) after the aggregate
amount of Damages actually paid by Purchaser with respect to such claims,
together with the aggregate amount of Damages (as defined in the Mexican Asset
Purchase Agreement) actually paid by Purchaser with respect to indemnification
claims pursuant to Section 9.2(i) of the Mexican Asset Purchase Agreement, shall
equal on a cumulative basis an amount equal to ten million dollars
(U.S.$10,000,000).
Section 9.4. Procedures Relating to Indemnification. (a) If a claim or
demand is made against an Indemnified Party, or an Indemnified Party shall
otherwise learn of an assertion, by any Person who is not a party to this
Agreement (or an Affiliate thereof) as to which an Indemnifying Party may be
obligated to provide indemnification pursuant to this Agreement (a "Third Party
Claim"), such Indemnified Party will notify the Indemnifying Party in writing,
and in reasonable detail, of the Third Party Claim reasonably promptly after
becoming aware of such Third Party Claim; provided, however, that failure to
give such notification will not affect the indemnification provided hereunder
except to the extent the Indemnifying Party shall have been actually prejudiced
as a result of such failure. Thereafter, the Indemnified Party will deliver to
the Indemnifying Party, promptly after the Indemnified Party's receipt thereof,
copies of all material notices and documents (including court papers) received
or transmitted by the Indemnified Party's relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in or to assume the defense
thereof (in either case, at the expense of the Indemnifying Party) with counsel
selected by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party. Should the Indemnifying Party so elect to assume the defense
of a Third Party Claim, the Indemnifying Party will not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; provided, however,
that if in the Indemnified Party's reasonable judgment a conflict of interest
exists in respect of such claim or if the Indemnifying Party shall have assumed
responsibility for such claim with any reservations or exceptions, such
Indemnified Party will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnified Party and
in that event the reasonable fees and expenses of such separate counsel (but not
more than one separate
29
counsel for all Indemnified Parties similarly situated) shall be paid by such
Indemnifying Party. If the Indemnifying Party assumes the defense of any Third
Party Claim, the Indemnified Party will have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party will control such defense. The Indemnifying Party will be
liable for the reasonable fees and expenses of counsel employed by the
Indemnified Party for any period during which the Indemnifying Party has failed
to assume the defense thereof. If the Indemnifying Party assumes the defense of
any Third Party Claim, the Indemnifying Party will promptly supply to the
Indemnified Party copies of all material correspondence and documents relating
to or in connection with such Third Party Claim and keep the Indemnified Party
fully informed of all material developments relating to or in connection with
such Third Party Claim (including providing to the Indemnified Party on request
updates and summaries as to the status thereof). If the Indemnifying Party
chooses to defend a Third Party Claim, the Parties will cooperate in the defense
thereof (such cooperation to be at the expense, including reasonable legal fees
and expenses, of the Indemnifying Party), which cooperation shall include the
retention in accordance with this Agreement and (upon the Indemnifying Party's
request) the provision to the Indemnifying Party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
(c) No Indemnifying Party will consent to any settlement, compromise or
discharge (including the consent to entry of any judgment) of any Third Party
Claim without the Indemnified Party's prior written consent (which consent will
not be unreasonably withheld); provided, however, that if the Indemnifying Party
assumes the defense of any Third Party Claim, the Indemnified Party will agree
to any settlement, compromise or discharge of such Third Party Claim which the
Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of Damages in connection with such
Third Party Claim and unconditionally and irrevocably releases the Indemnified
Party and its Affiliates completely from all Liability in connection with such
Third Party Claim; provided, however, that the Indemnified Party may refuse to
agree to any such settlement, compromise or discharge (x) that provides for
injunctive or other non-monetary relief affecting the Indemnified Party or any
of its Affiliates or (y) that, in the reasonable opinion of the Indemnified
Party, would otherwise materially adversely affect the Indemnified Party or any
of its Affiliates. Whether or not the Indemnifying Party shall have assumed the
defense of a Third Party Claim, the Indemnified Party will not (unless required
by law) admit any liability with respect to, or settle, compromise or discharge,
such Third Party Claim without the Indemnifying Party's prior written consent
(which consent will not be unreasonably withheld).
30
(d) Any claim on account of Damages which does not involve a Third
Party Claim will be asserted by reasonably prompt written notice given by the
Indemnified Party to the Indemnifying Party from whom such indemnification is
sought. The failure by any Indemnified Party to so notify the Indemnifying Party
will not relieve the Indemnifying Party from any liability which it may have to
such Indemnified Party under this Agreement, except to the extent that the
Indemnifying Party shall have been actually prejudiced by such failure.
(e) In the event of payment in full by an Indemnifying Party to any
Indemnified Party in connection with any Third Party Claim, such Indemnifying
Party will be subrogated to and shall stand in the place of such Indemnified
Party as to any events or circumstances in respect of which such Indemnified
Party may have any right or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
Person. Such Indemnified Party will cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 9.5. Sole and Exclusive Remedy. The indemnities contained in
this ARTICLE IX and ARTICLE X shall be the sole and exclusive remedies of the
Parties hereto, their Affiliates, successors and assigns with respect to any and
all claims arising out of or relating to this Agreement, the transactions
contemplated hereby, any provision hereof or the breach or performance thereof.
Section 9.6. Termination of Indemnification Obligations. Except as set
forth in the following sentence, the indemnification obligations of each of
Seller and Purchaser hereunder will survive the Closing, including surviving the
sale or other transfer by any party to this Agreement of any assets or
businesses or the assignment by any party of any Liabilities. The obligations of
each Party to indemnify, defend and hold harmless Indemnified Parties (i)
pursuant to Sections 9.1(i) and 9.2(i), shall terminate when the applicable
representation or warranty expires pursuant to Section 12.4, (ii) pursuant to
Sections 9.1(ii) and 9.2(ii) shall terminate upon the expiration of all
applicable statutes of limitation (giving effect to any extensions thereof,
other than extensions caused by the applicable Indemnified Party) and (iii)
pursuant to Sections 9.1(iii), 9.1(iv) and 9.2(iii) shall continue without time
limitation and shall not terminate at any time; provided, however, that as to
clauses (i) and (ii) above, such obligations to indemnify, defend and hold
harmless shall not terminate with respect to any individual claim as to which
the Indemnified Party shall have, before the expiration of the applicable
period, previously delivered a notice (stating in reasonable detail the basis of
such claim) to the Indemnifying Party.
Section 9.7. Effect of Investigation. The right to indemnification
pursuant to Sections 9.1(i) and 9.2(i) shall not be affected by any
investigation conducted with
31
respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement.
Section 9.8. Tax Matters. Notwithstanding anything in Sections 9.1,
9.2, 9.4 or 9.5 to the contrary, ARTICLE X will be the exclusive agreement among
the Parties with respect to indemnification, procedures and remedies with
respect to Tax matters.
ARTICLE X
TAX MATTERS
Section 10.1. Preparation and Filing of Tax Returns. Seller shall
prepare and file or cause to be prepared and filed all Tax Returns (including
amendments thereto) which are required to be filed in respect of the Assets for
any taxable period ending on or before the Closing Date and any taxable period
that includes (but does not end on) the Closing Date (a "Straddle Period").
Purchaser hereby irrevocably designates, and agrees to cause each of its
Affiliates to designate, Seller as its agent to take any and all actions
necessary or incidental to the preparation and filing of such Tax Returns. All
Tax Returns (including amendments thereto) required to be filed in respect of
the Assets for taxable periods beginning after the Closing Date shall be the
responsibility of Purchaser.
Section 10.2. Consistent with Past Practice. Unless Seller and
Purchaser otherwise agree in writing, all Tax Returns (including amendments
thereto) described in Section 10.1 filed after the Closing Date for taxable
periods ending on or before the Closing Date or Straddle Periods, in the absence
of a controlling change in law or circumstances, shall be prepared on a basis
consistent with the elections, accounting methods, conventions and principles of
taxation used for the most recent taxable periods for which Tax Returns
involving similar matters have been filed. Upon request of Purchaser, Seller
shall make available a draft of such Tax Return (or relevant portions thereof)
for review and comment by Purchaser. Subject to the provisions of this
Agreement, all decisions relating to the preparation of Tax Returns shall be
made in the sole discretion of the party responsible under this Agreement for
such preparation.
Section 10.3. Payment of Taxes. Except as otherwise provided in this
Agreement, Seller shall pay or cause to be paid, on a timely basis, all Taxes
due with respect to the Assets for taxable periods ending on or before the
Closing Date and the portion of any Straddle Period ending on the Closing Date.
Purchaser shall pay or cause to be paid, on a timely basis, all Taxes due with
respect to the Assets for taxable periods beginning after the Closing Date and
the portion of any Straddle Period beginning on the day after the Closing Date.
Section 10.4. Allocation of Straddle Period Taxes. In the case of any
Straddle Period:
32
(a) Periodic Taxes. (i) The periodic Taxes with respect to the Assets
that are not based on income or receipts (e.g., property Taxes) for the portion
of any Straddle Period which ends on the Closing Date shall be computed based on
the ratio of the number of days in such portion of the Straddle Period and the
number of days in the entire taxable period, and (ii) the periodic Taxes with
respect to the Assets that are not based on income or receipts for the portion
of any Straddle Period beginning on the day after the Closing Date shall be
computed based on the ratio of the number of days in such portion of the
Straddle Period and the number of days in the entire taxable period.
(b) Non-Periodic Taxes. (i) The Taxes of Purchaser or its business,
assets or activities for that portion of any Straddle Period ending on the
Closing Date (other than Taxes described in Section 10.4(a) above), shall be
computed on a "closing-of-the-books" basis as if such taxable period ended as of
the close of business on the Closing Date, and (ii) the Taxes of Purchaser or
its business, assets or activities for that portion of any Straddle Period
beginning after the Closing Date (other than Taxes described in Section 10.4(a)
above), shall be computed on a "closing-of-the-books" basis as if such taxable
period began on the day after the Closing Date.
Section 10.5. Tax Refunds and Carrybacks.
(a) Retention and Payment of Tax Refunds. Except as otherwise provided
in this Agreement, Seller shall be entitled to retain, and to receive within ten
days after Actually Realized by Purchaser and its Affiliates, the portion of all
refunds or credits of Taxes for which Seller is liable pursuant to Section 10.3
or Section 10.6(a), and Purchaser shall be entitled to retain, and to receive
within ten days after Actually Realized by Seller and its Affiliates, the
portion of all refunds or credits of Taxes for which Purchaser is liable
pursuant to Section 10.3 or Section 10.6(b). The amount of any refund or credit
of Taxes to which Seller or Purchaser is entitled to retain or receive pursuant
to the foregoing sentence shall be reduced to take account of any Taxes incurred
by Purchaser and its Affiliates, in the case of a refund or credit to which
Seller is entitled, or Seller and its Affiliates, in the case of a refund or
credit to which Purchaser is entitled, upon the receipt of such refund or
credit.
(b) Carrybacks. Unless the parties otherwise agree in writing,
Purchaser shall elect where permitted by law, to carry forward any net operating
loss, net capital loss, charitable contribution or other item arising after the
Closing Date that could, in the absence of such election, be carried back to a
taxable period ending on or before the Closing Date. Except as otherwise
provided in this Agreement, notwithstanding the provisions of Section 10.5(a),
(i) any refund or credit of Taxes resulting from the carryback of any item of
Taxes attributable to Purchaser or its Affiliates arising in a taxable period
beginning after the Closing Date to a taxable period ending on or before the
Closing Date or that portion of any Straddle Period that ends on the Closing
Date shall be for the account and benefit of Purchaser and its Affiliates, and
(ii) any refund or
33
credit of Taxes resulting from the carryback of any item of Taxes attributable
to Seller or its Affiliates arising in a taxable period beginning after the
Closing Date to a taxable period ending on or before the Closing Date or that
portion of any Straddle Period that ends on the Closing Date shall be for the
account and benefit of Seller and its Affiliates.
(c) Refund Claims. Seller shall be permitted to file at Seller's sole
expense, and Purchaser shall reasonably cooperate with Seller in connection
with, any claims for refund of Taxes to which Seller is entitled pursuant to
this Section 10.5 or any other provision of this Agreement. Seller shall
reimburse Purchaser for any reasonable out-of-pocket costs and expenses incurred
by Purchaser and its Representatives or Affiliates in connection with such
cooperation. Purchaser shall be permitted to file at Purchaser's sole expense,
and Seller shall reasonably cooperate with Purchaser in connection with, any
claims for refunds of Taxes to which Purchaser is entitled pursuant to this
Section 10.5 or any other provision of this Agreement. Purchaser shall reimburse
Seller for any reasonable out-of-pocket costs and expenses incurred by Seller
and its Representatives and Affiliates in connection with such cooperation.
Section 10.6. Tax Indemnification.
(a) Seller Indemnification. Seller shall be liable for, and shall
indemnify, defend and hold harmless the Purchaser Indemnified Parties from and
against:
(i) all Taxes due with respect to the Assets for taxable
periods ending on or before the Closing Date and the portion of any
Straddle Period ending on the Closing Date;
(ii) all Taxes for any Tax period (whether beginning before,
on or after the Closing Date) attributable to the breach by Seller or
its Affiliates of any representation, warranty, covenant or obligation
under this Agreement;
(iii) all liability for a breach by Seller of any
representation, warranty, covenant, or obligation under this Agreement
with respect to Tax matters; and
(iv) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the
foregoing.
Notwithstanding the foregoing, Seller shall not indemnify, defend or
hold harmless the Purchaser Indemnified Parties from any liability for Taxes
attributable to a Purchaser Tax Act. A Purchaser Tax Act shall mean any action
specified in Schedule 10.6(a) attached hereto. Seller's obligations under this
Section 10.6(a) shall not be subject to the limitations in Section 9.3 of this
Agreement.
(b) Purchaser Indemnification. Purchaser shall be liable for, and shall
indemnify, defend and hold harmless the Seller Indemnified Parties from and
against:
34
(i) all Taxes due with respect to the Assets (other than Taxes
for which Seller is obligated to provide indemnification pursuant to
Section 10.6(a)(i));
(ii) all Taxes for any Tax period (whether beginning before,
on or after the Closing Date) attributable to the breach by Purchaser
or its Affiliates of any representation, warranty, covenant or
obligation under this Agreement;
(iii) all liability for a breach by Purchaser of any
representation, warranty, covenant, or obligation under this Agreement
with respect to Tax matters;
(iv) all Taxes attributable to a Purchaser Tax Act; and
(v) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the
foregoing.
Purchaser's obligation under this Section 10.6(b) shall not be subject
to the limitations in Section 9.3 of this Agreement.
Section 10.7. Notice of Indemnity. Whenever an Indemnified Party
becomes aware of the existence of an issue raised by any Tax authority which
could reasonably be expected to result in a determination that would increase
the liability for any Tax of the other Party hereto or any of its
Representatives or Affiliates for any Tax period or require a payment hereunder
by the other party (hereinafter an "Indemnity Issue"), the Indemnified Party
shall in good faith promptly give notice to an Indemnifying Party of such
Indemnity Issue. The failure of the Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations under this Agreement,
except to the extent such Indemnifying Party or any of its Representatives or
Affiliates is actually prejudiced by such failure to give notice.
Section 10.8. Payments.
(a) Timing Adjustments. In the event that a final determination (which
shall include the execution of a Form 870-AD or successor form) results in a
timing difference (e.g., an acceleration of income or delay of deductions) that
would increase Seller's liability for Taxes pursuant to ARTICLE IX or this
ARTICLE X or results in a timing difference (e.g., an acceleration of deductions
or delay of income) that would increase Purchaser's liability for Taxes pursuant
to ARTICLE IX or this ARTICLE X, Purchaser or Seller, as the case may be, will
promptly make payments to Seller or Purchaser as and when Purchaser or Seller
(or its Affiliates), as the case may be, actually realizes any Tax benefits as a
result of such timing difference (or under such other method for determining the
present value of any such anticipated Tax benefits as agreed to by the Parties).
35
(b) Time for Payment. Any indemnity payment required to be made
pursuant to this Agreement shall be paid within thirty days after the
Indemnified Party makes written demand upon the Indemnifying Party, provided
that in no event shall such payment be required to be made earlier than five
business days prior to the date on which the relevant Taxes (including estimated
Taxes) are required to be paid (or would be required to be paid if no such Taxes
are due) to the relevant Tax authority.
Section 10.9. Tax Contests. The Indemnifying Party and its
Representatives, at the Indemnifying Party's expense, shall be entitled to
participate (a) in all conferences, meetings and proceedings with any Tax
authority, the subject matter of which is or includes an Indemnity Issue and (b)
in all appearances before any court, the subject matter of which is or includes
an Indemnity Issue. The Party who has responsibility for filing the Tax Return
under this Agreement with respect to which there could be an increase in
liability for any Tax or with respect to which a payment could be required
hereunder shall have the right to decide as between the Parties hereto how such
matter is to be dealt with and finally resolved with the appropriate Tax
Authority and shall control all audits and similar proceedings, provided,
however, that if such contest would be reasonably expected to result in a
material increase in the tax liability related to the Assets, for which
Purchaser would be liable, Purchaser may participate in the conduct of such
contest and Seller shall not settle any such contest without the consent of
Purchaser, which consent shall not be unreasonably withheld. If no Tax Return is
or was required to be filed in respect of an Indemnity Issue, the Indemnifying
Party shall be treated as the responsible party with respect thereto. The
responsible party agrees to cooperate in the settlement of any Indemnity Issue
with the other Party and to take such other Party's interests into account.
Section 10.10. Cooperation and Exchange of Information. Each Party
hereto agrees to provide, and to cause each of its Affiliates to provide, such
cooperation and information as such other Party shall request, on a timely
basis, in connection with the preparation or filing of any Tax Return or claim
for Tax refund not inconsistent with this Agreement or in conducting any Tax
audit, Tax dispute, or otherwise in respect of Taxes or to carry out the
provisions of this Agreement, provided, however, that neither Party shall be
obligated to provide the other Party with Tax Returns, documentation or other
information of a proprietary or confidential nature for purposes of verifying
any calculation, and provided further, that in any such case where one Party
does not provide the other Party with Tax Returns, documentation or information
because it is proprietary or confidential, both Parties shall cooperate in
developing mutually acceptable procedures including retaining a mutually
agreeable accounting firm to review such Tax Returns, documentation or
information for purposes of verifying such calculation.
Section 10.11. Mexican Income Taxes; Customs Duties; Advanced
Pricing Agreement; Transfer, Sales and Use Taxes.
36
(a) Mexican Income Taxes. Seller and Purchaser shall fully comply
with all Mexican Tax laws and with the Convention between the United States of
America and the United Mexican States for Avoidance of Double Taxation and
Prevention of Fiscal Evasion with respect to Taxes on Income in connection with
the sale of the Assets such that Purchaser shall not be required to, and
Purchaser shall not, deduct or withhold any amount from the Purchase Price.
Seller agrees to indemnify and hold Purchaser harmless from and against any
Taxes imposed on any gain from the sale of the Assets by Seller under this
Agreement due to any Governmental Authority, including any obligation Purchaser
may have to withhold or remit to Mexican Governmental Authorities Taxes levied
on Seller as a result of any gain from the sale of the Assets under this
Agreement.
(b) Advanced Pricing Agreement. Seller, at its own expense, shall
have the sole and exclusive right, power and authority to negotiate with the
appropriate Mexican Governmental Authorities and enter into the Advanced Pricing
Agreement on or prior to the Closing. Seller shall keep Purchaser informed of
the status of such negotiations and shall not enter into the Advanced Pricing
Agreement without the written consent of Purchaser, which consent shall not be
unreasonably withheld. Purchaser, Maquiladora, and Seller shall cooperate with
each other in negotiating and finalizing the Advanced Pricing Agreement after
the Closing. Purchaser shall, and shall cause Maquiladora, not to amend,
supplement or modify the Advanced Pricing Agreement as it would relate to
periods prior to the Closing without the written consent of Seller, which
consent shall not be unreasonably withheld.
(c) Mexican Customs Duties. Purchaser will cause Maquiladora at its
own expense after the Closing to timely prepare and execute any and all customs
documents required to reflect the change of ownership of the Assets in Mexico
and to timely file a virtual exportation and virtual importation pediment to
reconcile the open pediments of Maquiladora as required by Mexican law. Seller
shall reasonably cooperate with Purchaser and/or Maquiladora in preparing the
Mexican customs duties-related filings. Seller shall be responsible for any
customs duties or fees relating to periods prior to the Closing. Purchaser and
Maquiladora will be responsible for any customs duties or fees relating to
periods from and after the Closing. Purchaser and Seller share equally customs
duties or fees, if any, incurred in connection with the transactions
contemplated by this Agreement.
(d) Transfer, Sales, Use and Value Added Taxes. Pursuant to rule
2.4.5 of the Miscellaneous Resolution 2002 (Resolucion Miscelanea Fiscal para
2002) and in order to expedite the refund of the Mexican Value Added Tax
accruing under any invoice issued by Seller to Purchaser in connection with the
sale of the Assets hereunder, Seller and Purchaser hereby agree to ratify, no
later than 15 (fifteen) calendar days following the Closing Date, a Spanish
version of this Agreement before a Mexican Notary Public in the city of
Mexicali, State of Baja California, and to attach to such
37
ratification such invoice (or invoices) issued by Seller. Such invoice or
invoices shall include, inter alia, a full description of the Assets, their
unitary price, and the applicable Value Added Tax, as well as a stamp with the
legend "Impuesto retenido de conformidad con ▇▇ ▇▇▇ del Impuesto al Valor
Agregado" (Tax withheld pursuant to the Value Added Tax Law). The parties shall
further execute such other instruments and documents and take all actions as
shall be appropriate or required under Mexican law to obtain the refund of the
Value Added Tax referred to herein.
Notwithstanding anything to the contrary in this Agreement, all
transfer, documentary, sales, use, stamp, registration, value added and other
similar Taxes and fees (including any penalties and interest) incurred in
connection with the transactions contemplated by this Agreement shall be shared
equally by Seller and Purchaser. Each Party hereto agrees to file all necessary
documentation (including all Tax Returns) with respect to such Taxes in a timely
manner.
Purchaser shall have the sole and exclusive right, power and
authority to file, or cause Maquiladora to file, all necessary documentation
(including all Tax Returns in Mexico) with respect to any value added Tax
accrued in Mexico, in connection with the sale of Assets hereunder. Should the
sale of the Assets hereunder generate any value added tax credit balance in
favor of Purchaser or Maquiladora in Mexico, Purchaser shall immediately timely
make, or cause Maquiladora to timely make, all filings required to obtain a
refund (devolucion) thereof in terms of the Mexican Value Added Tax Law (Ley del
Impuesto al Valor Agregado) and any other applicable laws, regulations, rules,
decrees or tax miscellaneous. All costs and expenses incurred in connection with
the refund efforts (including any costs incurred with respect to the
registration for the ALTEX program) shall be shared equally by Seller and
Purchaser. Likewise, the amount of the refund will also be shared equally
between Seller and Purchaser. Purchaser shall be obligated to deliver to Seller
its share of such refund amount within three (3) Business Days from the date
Purchaser receives it. Purchaser shall provide Seller with a reasonable
opportunity to review drafts of all value added Tax-related filings in advance
and Purchaser shall take Seller's comments and suggestions into consideration.
To the extent value added Tax is due prior to repayment of any Obligation,
Purchaser shall notify Seller not less than three (3) Business Days before such
value added Tax is due, and Seller shall remit its share of such value added Tax
either to Purchaser, Maquiladora or the relevant Taxing Authority on or before
the applicable payment date. Notwithstanding anything to the contrary in this
Agreement or the Financing Agreement, Purchaser and Maquiladora shall be
entitled to withhold from repayment of the Obligations an amount equal to 50% of
any transfer, documentary, sales, use, stamp, registration, value added and
other similar taxes and fees (including penalties and interest) that are paid by
Purchaser or Maquiladora after the Closing in connection with the transactions
contemplated by this Agreement, and will promptly provide to Seller notice of
the amounts so paid and withheld; provided, however, Purchaser and Maquiladora
shall only be entitled to make such withholding to the extent Seller has not
paid or remitted to
38
Purchaser, Maquiladora or the relevant Taxing Authority Seller's share of such
transfer, documentary, sales, use, stamp, registration, value added or similar
tax pursuant to this Section 10.11(d). To the extent amounts are so withheld,
such withheld amounts shall be treated for all purposes of the Financing
Documents as having been paid to Seller, and shall be treated for all purposes
of this Section 10.11(d) as having been paid by Seller. Purchaser or
Maquiladora, as the case may be, shall remit to Seller within three (3) Business
Days of receipt, Seller's share of any refunds to be paid to it of any transfer,
documentary, sales, use, stamp, registration, value added and other similar
taxes and fees (including penalties and interest) in respect of which amounts
were withheld pursuant hereto.
Section 10.12. Tax Records.
(a) The Parties agree to (and to cause each of their Affiliates to)
(i) retain all Tax Returns, related schedules and work papers, and all material
records and other documents as required under Section 6001 of the Code and the
regulations promulgated thereunder relating thereto existing on the date hereof
or created through the Closing Date, for a period of at least ten years
following the Closing Date and (ii) allow the Party to this Agreement, at times
and dates reasonably acceptable to the retaining Party, to inspect, review and
make copies of such records, as the Parties may reasonably deem necessary or
appropriate from time to time. In addition, after the expiration of such
ten-year period, such Tax Returns, related schedules and workpapers, and
material records shall not be destroyed or otherwise disposed of at any time,
unless, prior to such destruction or disposal, (A) the Party proposing to
destroy or otherwise dispose of such records shall provide no less than 30 days'
prior written notice to the other Party, specifying in reasonable detail the
records proposed to be destroyed or disposed of and (B) if a recipient of such
notice shall request in writing prior to the scheduled date for such destruction
or disposal that any of the records proposed to be destroyed or disposed of be
delivered to such requesting Party, the Party proposing the destruction or
disposal shall promptly arrange for the delivery of such requested records at
the expense of the Party requesting such records.
(b) Notwithstanding anything in this Agreement to the contrary, if
any Party fails to comply with the requirements of Section 10.12(a) hereof, the
Party failing so to comply shall be liable for, and shall hold the other Party,
harmless from, any Taxes (including without limitation, penalties for failure to
comply with the record retention requirements of the Code) and other costs
resulting from such Party's failure to comply.
Section 10.13. Dispute Resolution. Any dispute, claim or controversy
arising out of or relating to any provision of ARTICLE X of this Agreement will
be resolved in accordance with the procedures set forth in Section 12.3(b) of
this Agreement, provided that each such mediator or arbitrator selected pursuant
to such procedures shall have an expertise in Tax matters.
39
ARTICLE XI
TERMINATION
Section 11.1. Voluntary Termination. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing Date by the mutual written consent of Purchaser and Seller.
Section 11.2. Automatic Termination. In the event of a termination
of the Merger Agreement, this Agreement shall automatically and immediately
terminate.
Section 11.3. Effect of Termination. In the event of the termination
of this Agreement, all further obligations of the Parties hereunder shall
terminate, and the transactions contemplated hereby shall be abandoned without
further action or liability by any of the Parties hereto, except that (i)
Section 11.3 ("Effect of Termination"), Section 12.2 ("Notices"), Section 12.3
("Choice of Law, Dispute Resolution"), Section 12.6 ("Entire Agreement;
Waivers"), Section 12.8 ("Severability"), Section 12.10 ("Expenses") and Section
12.12 ("Parties in Interest") shall survive such termination and (ii) nothing
shall relieve any Party hereto from liability for any breach of this Agreement
prior to such termination.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Assignment. No Party to this Agreement will convey,
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other Party in its sole and
absolute discretion. Notwithstanding the foregoing, any Party may (without
obtaining any consent) assign, delegate or sublicense all or any portion of its
rights and obligations hereunder to (i) the surviving entity resulting from a
merger or consolidation involving such Party, (ii) the acquiring entity in a
sale or other disposition of (A) all or substantially all of the assets of such
Party as a whole, (B) any line of business or division of such Party, or (C), in
the case of Purchaser, the Facility, (iii) any other Person that is created as a
result of a spin-off from, or similar reorganization transaction of, such Party
or any line of business or division of such Party or (iv) an Affiliate. In the
event of an assignment pursuant to (ii) or (iii) above, the non-assigning Party
shall, at the assigning Party's request, use good faith commercially reasonable
efforts to enter into separate agreements with each of the resulting entities
and take such further actions as may be reasonably required to assure that the
rights and obligations under this Agreement are preserved, in the aggregate, and
divided equitably between such resulting entities. Any conveyance, assignment or
transfer requiring the prior written consent of another Party pursuant to this
Section 12.1
40
which is made without such consent will be void ab initio. No assignment of this
Agreement will relieve the assigning Party of its obligations hereunder.
Section 12.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the date of
delivery if delivered personally, (b) upon confirmation of receipt if delivered
by telecopy or telefacsimile, (c) on the first Business Day following the date
of dispatch if delivered by a recognized next-day courier service, or (d) on the
fifth Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the Party to receive such notice:
If to Purchaser, to:
Alpha Industries, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
With copies to (not effective for purposes of notice):
Alpha Industries, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
General Counsel
or if to Seller, to:
Conexant Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Senior Vice President, General
Counsel and Secretary
41
With a copy to (not effective for purposes of notice):
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 12.3. Choice of Law; Dispute Resolution.
(a) Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (without giving effect to
choice of law principles).
(b) Dispute Resolution. In the event that from and after the
Closing, any dispute, claim or controversy (collectively, a "Dispute") arises
out of or relates to any provision of this Agreement or the breach, performance,
enforcement or validity or invalidity thereof, the designees of Seller's Chief
Executive Officer and Purchaser's Chief Executive Officer will attempt a good
faith resolution of the Dispute within thirty (30) days after either Party
notifies the other Party in writing of the Dispute. If the Dispute is not
resolved within thirty (30) days of the receipt of the notification, or within
such other time as they may agree, the Dispute will be referred for resolution
to Seller's Chief Executive Officer and Purchaser's Chief Executive Officer.
Should they be unable to resolve the Dispute within thirty (30) days following
the referral to them, or within such other time as they may agree, Seller and
Purchaser will then attempt in good faith to resolve such Dispute by mediation
in accordance with the then-existing CPR Mediation Procedures promulgated by the
CPR Institute for Dispute Resolution, New York City. If such mediation is
unsuccessful within thirty (30) days (or such other period as the Parties may
mutually agree) after the commencement thereof, such Dispute shall be submitted
by the Parties to binding arbitration, initiated and conducted in accordance
with the then-existing American Arbitration Association Commercial Arbitration
Rules, before a single arbitrator selected jointly by Seller and Purchaser, who
shall not be the same person as the mediator appointed pursuant to the preceding
sentence. If Seller and Purchaser cannot agree upon the identity of an
arbitrator within ten (10) days after the arbitration process is initiated, then
the arbitration will be conducted before three arbitrators, one selected by
Seller, one selected by Purchaser and the third selected by the first two. The
arbitration shall be conducted in San Francisco, California and shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award may be entered by any court having jurisdiction thereof.
The arbitrators shall have case management authority and shall resolve the
Dispute in a final award within one hundred eighty (180) days from the
commencement of the arbitration action, subject to any extension of time thereof
allowed by the arbitrators upon good cause shown.
42
Section 12.4. Survival of Representations and Warranties and
Covenants. The respective representations and warranties of the Parties
contained in this Agreement (other than those set forth in the following
sentence) will survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing and will
continue in full force and effect until six (6) months after the Closing Date
and will then expire. The representations and warranties of the Parties
contained in Section 3.1, Section 3.2, Section 3.3, Section 3.8, Section 3.11,
Section 4.1, Section 4.2, and Section 4.3 will survive the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the Closing and will continue in full force and effect until all
applicable statutes of limitation (including any extensions thereof) have
expired and will then expire. All covenants of the Parties contained in this
Agreement will remain in full force and effect after, and survive, the Closing
(other than those to be performed at or prior to the Closing).
Section 12.5. Limitations on Representations and Warranties. Except
for the representations and warranties set forth in this Agreement, the Assets
are being sold "AS IS, WHERE IS, AND WITH ALL FAULTS." EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE ASSUMED LIABILITIES, THE
ASSETS, THE FACILITY, THE BUSINESS OR OPERATIONS OF MAQUILADORA OR ANY OTHER
MATTER, EXPRESS OR IMPLIED, ORAL, OR WRITTEN. SELLER HEREBY SPECIFICALLY
DISCLAIMS THE IMPLIED WARRANTY OF MERCHANTABILITY AND THE IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE.
Section 12.6. Entire Agreement; Waivers. This Agreement, together
with all exhibits and Schedules hereto, and the other agreements and instruments
of the Parties delivered in connection herewith constitute the entire agreement
and supersede all prior agreements and understandings both written and oral,
among the Parties with respect to the subject matter hereof. The failure of any
Party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
Section 12.7. Counterparts. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement. This Agreement may be executed and delivered by telecopier with the
same force and effect as if it were a manually executed and delivered
counterpart.
Section 12.8. Severability. If any provision of this Agreement or
the application thereof to any Person or circumstance is determined by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and will in no
43
way be affected, impaired or invalidated thereby. If the economic or legal
substance of the transactions contemplated hereby is affected in any manner
adverse to any Party as a result thereof, the Parties will negotiate in good
faith in an effort to agree upon a suitable and equitable substitute provision
to effect the original intent of the Parties.
Section 12.9. Headings. The headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
Section 12.10. Expenses. Except as otherwise provided in this
Agreement, each of the Parties shall be liable for its own expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Agreement prior to Closing.
Section 12.11. Amendments. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Seller and
Purchaser.
Section 12.12. Parties in Interest. This Agreement is binding upon
and is for the benefit of the Parties hereto and their respective successors and
permitted assigns. This Agreement is not made for the benefit of any Person not
a Party hereto, and no Person other than the Parties hereto or their respective
successors and permitted assigns will acquire or have any benefit, right, remedy
or claim under or by reason of this Agreement, except that the provisions of
Sections 9.1, 9.2 and 10.6 hereof shall inure to the benefit of the Persons
referred to therein.
Section 12.13. Schedules and Exhibits. Inclusion of an item or
matter on any of the Schedules or Exhibits attached hereto shall not be deemed
to be an admission by any Party that such item or matter is required to be
disclosed in such Schedule or Exhibit. Each disclosure on each Schedule, to the
extent specified therein, qualifies the correspondingly numbered representation
and warranty or covenant contained herein and, to the extent it is apparent on
the face of such disclosure that such disclosure qualifies another
representation or warranty contained herein, such other representation and
warranty.
Section 12.14. Compliance with Bulk Sales Laws. The Parties hereby
waive compliance with the bulk sales laws and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement.
Section 12.15. Savings Clause. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Assumed Contract if an assignment or attempted assignment of the same
without the Consent of any other party or parties thereto or other required
Consent would constitute a breach thereof or of any applicable law or in any way
impair the rights of Seller, Purchaser or
44
Purchaser's designee thereunder. If any such Consent is not obtained or if an
attempted assignment would be ineffective or would impair any rights of either
Seller, Purchaser or Purchaser's designee under any such Assumed Contract that
Purchaser's designee would not receive all such rights, then (x) Seller will use
commercially reasonable efforts (it being understood that such efforts shall not
include any requirement of Seller to pay any consideration or offer or grant any
financial accommodation) to provide or cause to be provided to Purchaser's
designee the benefits of any such Assumed Contract and Seller will promptly pay
or cause to be paid to Purchaser's designee when received all moneys and
properties received by Seller with respect to any such Assumed Contract and (y)
to the extent that Purchaser's designee receives the benefits of such Assumed
Contract, Purchaser will cause its designee to pay, perform and discharge on
behalf of Seller all of Seller's Liabilities thereunder in a timely manner and
in accordance with the terms thereof. If and when such Consents are obtained,
the transfer of the applicable Assumed Contract shall be effected as promptly
following the Closing as shall be practicable in accordance with the terms of
this Agreement.
Section 12.16. Cooperation Following the Closing. Following the
Closing, the Parties shall each deliver to the other such further information
and documents and shall execute and deliver to the other such further
instruments and agreements as the other shall reasonably request to consummate
or confirm the transactions provided for in this Agreement, to accomplish the
purpose of this Agreement or to assure to the other the benefits of this
Agreement.
[The remainder of this page is left intentionally blank; signature page follows]
45
IN WITNESS WHEREOF, each of the Parties listed below has executed
this Amended and Restated Mexican Asset Purchase Agreement as of the day and
year first above written.
CONEXANT SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Title: Senior Vice President,
General Counsel and Secretary
ALPHA INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Chief
Financial Officer, Treasurer
and Secretary